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Date

April 28, 2026, 10 a.m. ET

Call participants

  • Chief Executive Officer — Thomas L. Deitrich
  • Chief Financial Officer — Joan S. Hooper

Takeaways

  • Total revenue -- $587 million, assisted by accelerated project deployments in the Networked Solutions and Device Solutions segments.
  • Adjusted EBITDA -- $92 million, a 5% year-over-year increase due to higher operating income and improved gross margin.
  • Non-GAAP earnings per share -- $1.49, compared to $1.52 in the prior year, with the decline primarily attributed to lower interest income.
  • Free cash flow -- $79 million, up from $67 million the previous year, reflecting lower tax payments.
  • Outcomes segment revenue growth -- 22% year over year driven by increases in recurring and services revenue.
  • Annual recurring revenue (ARR) -- $400 million at quarter-end, up 28% following strong organic growth and the addition of the Resiliency Solutions segment.
  • Resiliency Solutions revenue -- $16 million, with a 73% adjusted gross margin and a 27% operating margin, immediately accretive to gross margin and EBITDA.
  • Device Solutions revenue -- $124 million, reflecting a 9% decrease on a constant currency basis due to declines in legacy electricity products in EMEA and project timing in North America.
  • Network Solutions revenue -- $351 million, a 14% decrease on a constant currency basis due to timing of large deployments.
  • Total bookings -- $476 million for the quarter, leading to a $4.4 billion backlog at quarter end.
  • Backlog composition -- Outcomes and Resiliency Solutions now comprise 25% of total backlog, with most Resiliency Solutions revenue characterized as recurring and a majority of Outcomes revenue recurring as well.
  • Adjusted gross margin -- 40.7%, increasing by 490 basis points year over year due to favorable mix and operational efficiency.
  • GAAP net income -- $53 million, or $1.18 per diluted share, compared to $65 million, or $1.42, in the prior year, with the decline attributed to higher operating expenses from acquisitions and lower interest income.
  • Segment margin records -- Device Solutions achieved record adjusted gross margin (35.4%) and operating margin (29.7%), while Network Solutions posted an adjusted gross margin of 40.8% and operating margin of 31.4%.
  • Liquidity position -- Total debt at $1.61 billion and cash and equivalents at $713 million, with cash declining about $300 million since year-end 2025 due to acquisitions, debt repayment, share repurchase, and free cash flow generation.
  • Net leverage -- 2.4 times at quarter end.
  • Q2 guidance -- Anticipated revenue between $560 million and $570 million, with the midpoint reflecting a 7% year-over-year decline; expected non-GAAP EPS between $1.25 and $1.35 per diluted share, down approximately 8% year over year at the midpoint after adjusting for tax rate and interest income.
  • Project pipeline -- The opportunity funnel remains at or near all-time records, attributed to grid modernization and the "age-out" of infrastructure.
  • Acquisition integration progress -- Integration of Urbint and LocustView, comprising the Resiliency Solutions segment, is proceeding on track, with no early-stage revenue synergies incorporated in current results.
  • Major contract wins -- Strategic grid visibility program initiated with Duquesne Light Company and expanded Intelis StaticCas deployments with an existing utility customer.

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Risks

  • Joan S. Hooper stated, "The decrease was due to higher GAAP operating expenses related to the two recently completed acquisitions as well as lower interest income," explicitly acknowledging EPS dilution tied to acquisitions and interest income declines.
  • Q2 guidance projects both revenue and non-GAAP EPS to decline 7% and 8%, respectively, year over year at the midpoint, after normalizing for tax rate and lower interest income.
  • Thomas L. Deitrich noted, "The operating environment remains volatile, domestically and globally, and that volatility creates risks," highlighting macroeconomic uncertainty as a persisting risk factor, though the company claims operational resilience.

Summary

Itron (ITRI +0.47%) reported fiscal first-quarter 2026 revenue and profitability ahead of prior expectations due to accelerated project deployments. Adjusted gross margins improved as legacy, lower-margin contracts rolled off and operational efficiencies took hold. The company closed the quarter with a $4.4 billion backlog, supported by notable bookings and a rising share of recurring revenues across Outcomes and Resiliency Solutions. Integration of two recent acquisitions, Urbint and LocustView, is on target, yet management acknowledges near-term EPS dilution from higher operating expenses. Fiscal second-quarter and full-year 2026 guidance indicate expected sequential and year-over-year declines in revenue and earnings driven by both timing of network deployments and reduced interest income. Management remains focused on recurring revenue growth, margin expansion, and a strong pipeline, citing structural grid modernization as the basis for long-term demand.

  • The company achieved segment-level gross and operating margin records in Device Solutions and underscored a structural shift towards accretive, recurring revenue segments.
  • Management confirmed customer project activity in water and gas sectors exceeded prior levels, with North American gas endpoints more than five times historical counts and European water business outperforming expectations.
  • Although the company saw no material order cancellations—even during federal project pauses—management highlighted ongoing regulatory and customer purchase-order fragmentation as factors affecting sales conversion timing.
  • Resiliency Solutions is immediately accretive to gross margin and EBITDA but remains dilutive to EPS in 2026, expected to become fully accretive by 2027 as R&D investment scales and revenue synergies materialize.
  • Capital allocation for 2026 will focus primarily on integration of recent acquisitions, with management stating no active pursuit of further M&A, although opportunistic activity is not ruled out.

Industry glossary

  • ARR (Annual recurring revenue): The annualized value of recurring revenue streams, including subscription, service, and maintenance, measured at a specific point in time.
  • Intelis StaticCas: An Itron-branded endpoint technology for utilities offering safety features like automatic and remote shut-off.
  • Backlog: The contracted revenue yet to be recognized, inclusive of multiyear customer commitments across all segments.
  • Turns business: Sales activity involving rapid delivery and fulfillment against short-cycle orders, distinct from scheduled project deployments.
  • SPARC program: DOE (U.S. Department of Energy) initiative to fund grid projects, replacing previously paused or canceled federal programs.

Full Conference Call Transcript

Thomas begins, a reminder that our earnings release and financial presentation include non-GAAP financial information that we believe enhances the overall understanding of our current and future performance. Reconciliations of differences between GAAP and non-GAAP financial measures are available in our earnings release and on our Investor Relations website. We will be making statements during this call that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties.

Actual results could differ materially from these expectations because of factors that were presented in today’s earnings release and comments made during this conference call, as well as those presented in the Risk Factors section of our Form 10-Ks and other reports and filings with the Securities and Exchange Commission. All company comments, estimates or forward-looking statements are made in a good-faith attempt to provide appropriate insight to our current and future operating and financial environment. Materials discussed today, 04/28/2026, may materially change, and we do not undertake any duty to update any of our forward-looking statements. Now please turn to Page 4 of our presentation as our CEO, Thomas Deitrich, begins his remarks.

Thomas L. Deitrich: Thank you, Paul. Good morning, everyone, and thank you for joining our call today. Itron, Inc. had a solid start to the year. Our first quarter results were ahead of expectations due to strong execution from our teams and some first-half projects progressing ahead of schedule. Turning to Slide 4 for the highlights. Revenue of $587 million, adjusted EBITDA of $92 million, non-GAAP earnings per share of $1.49, and free cash flow of $79 million. Turning to Slide 5. While project timing provided a modest tailwind in Q1 revenue, we anticipate the first half to be consistent with our initial guidance.

Overall, the pace of ongoing field deployment of grid-edge technology is well aligned to our expectations with no material constraints for labor or materials. The adoption of flexible and intelligent solutions is accelerating and that is translating into durable, compounding growth over time. Our Outcomes segment grew 22% year-over-year. Total company annual recurring revenue at quarter end was $400 million, up 28% due to strong organic growth plus our recently acquired Resiliency Solutions segment. More broadly, the size and scope of the opportunity funnel remain outsized from historical levels, driven by the age-out of existing infrastructure and new requirements.

Grid modernization is inevitable, and we are confident in the multiyear structural investment to add intelligence to the grid, but we also understand the market we serve. Our customers continue to work in a complex environment balancing global uncertainty, affordability concerns, resiliency imperatives, and growing demand variability. We are confident our product portfolio addresses these disparate needs across electricity, gas, and water systems with flexible implementation models that are well aligned to the specific needs of our utility customers. Turning to Slide 6. Our first quarter bookings were $476 million, bringing the total backlog to $4.4 billion at quarter end, in line with our expectations. The quarter included several notable wins.

We advanced a strategic grid visibility program with Duquesne Light Company. This engagement reflects the growing demand for distributed intelligence and grid-edge computing as utilities modernize their networks to improve reliability, resilience, and operational efficiency. Importantly, this program highlights Itron, Inc.'s abilities to deliver an integrated, first-of-its-kind solution that brings together smart devices, software, and communication to support next-generation grid operations. Additionally, an existing customer that is deploying a safety-enhanced meter program has expanded their development of Intelis StaticCas endpoints. Intelis technology offers numerous safety enhancements, which include automatic and remote shut-off capabilities, as well as reliability and efficiency features that benefit the utility and the consumers they serve.

More broadly, this activity is a perfect example of the unique value that Itron, Inc.'s multi-commodity platform creates for customers and benefits our shareholders through diversification across electricity, gas, and water verticals. The integration of our Resiliency Solutions segment is on track and the team is already contributing meaningfully. In worker safety, we established a new contract with a major U.S. electricity utility. The customer required a best-in-class system to protect thousands of field workers at the job site, leveraging intelligent workflows and real-time hazard recognition. The digital construction management team extended a contract with a large natural gas pipeline customer, a strong signal of the customer value of deploying our platform.

These are only a few examples of the kind of mission-critical problems that Itron, Inc. is uniquely positioned to solve. As a result, our backlog profile continues to evolve in quantity and quality. Outcomes and Resiliency Solutions combined now represent 25% of total backlog, and that share is growing. The reason we are winning is straightforward. We help customers make one investment dollar do more. Our solutions are designed to create multiple opportunities for value across the useful life, deepening relationships, expanding our installed base, and generating durable recurring revenue streams. With that, I will turn it over to Joan to walk through the first quarter financials in detail.

Joan S. Hooper: Thank you, Thomas. Please turn to Slide 7 for a summary of consolidated GAAP results. First quarter revenue of $587 million was above our outlook range due to an acceleration of certain first-half project deployments. As expected, revenue was down versus last year, primarily due to the timing of large Networks projects. Gross margin was 450 basis points higher than last year due to favorable mix and operational efficiencies. GAAP net income of $53 million, or $1.18 per diluted share, compares to $65 million, or $1.42, in the prior year. The decrease was due to higher GAAP operating expenses related to the two recently completed acquisitions as well as lower interest income.

Regarding non-GAAP metrics on Slide 8, adjusted gross margin of 40.7% increased 490 basis points versus 2025. Non-GAAP operating income of $84 million and adjusted EBITDA of $92 million both increased 5% year-over-year. Non-GAAP net income for the quarter was $68 million, or $1.49 per diluted share, versus $1.52 a year ago. The year-over-year decline was due to lower interest income, partially offset by higher operating income. Free cash flow was $79 million in Q1 versus $67 million a year ago. The increase was primarily due to lower tax payments. Year-over-year revenue growth by business segment is on Slide 9.

Device Solutions revenue decreased 9% on a constant currency basis due to the expected decline in legacy electricity products in EMEA and the timing of projects in North America. Network Solutions revenue decreased 14% on a constant currency basis due to the timing of large deployments. Outcomes revenue increased 20% on a constant currency basis driven by higher recurring and services revenue. Our new segment, Resiliency Solutions, which includes the Urbint and LocustView acquisitions, contributed $16 million of revenue in Q1. Moving to the non-GAAP year-over-year EPS bridge on Slide 10. Our Q1 non-GAAP EPS of $1.49 per diluted share decreased $0.03 year-over-year.

Operating income contributed an increase of $0.05 per share, but this was more than offset by the negative impact of lower interest income at $0.13 per share. Lower tax expense had a positive year-over-year impact of $0.01 per share, and FX, share count, and other items had a positive impact of $0.04 per share. Turning to Slides 11 through 14, I will review Q1 segments compared with the prior year. Device Solutions revenue was $124 million with adjusted gross margin of 35.4% and operating margin of 29.7%. Both margin results are segment-level quarterly records. Adjusted gross margin increased 540 basis points year-over-year and operating margin was up 550 basis points due to favorable mix and operational efficiencies.

Network Solutions revenue was $351 million with adjusted gross margin of 40.8% and operating margin of 31.4%. Adjusted gross margin increased 390 basis points year-over-year due to favorable mix and operational efficiencies, and operating margin was up 260 basis points. Outcomes revenue was $96 million with adjusted gross margin of 41.7% and operating margin of 23.3%. Adjusted gross margin increased 250 basis points year-over-year due to a higher margin revenue mix, and operating margin increased 510 basis points due to higher operating leverage. Resiliency Solutions had revenue of $16 million, adjusted gross margin of 73%, and operating margin of 27%. Turn to Slide 15 and I will review liquidity and debt at the end of Q1.

Total debt was $1.61 billion, and cash and equivalents were $713 million. Our cash balance declined approximately $300 million versus year-end 2025, due to the net impact of the January acquisition of LocustView, the February issuance of $[inaudible] of zero-interest convertible senior notes, the March $460 million repayment of the company’s 2021 convertible senior notes, the February share repurchase of $[inaudible], and free cash flow generation of $79 million during the first quarter. As of March 31, net leverage was 2.4 times. Now please turn to Slide 16 for our second quarter outlook. We anticipate Q2 revenue to be within a range of $560 million to $570 million, which at the midpoint is down 7% versus last year.

As previously mentioned, Q1 benefited from an acceleration of first-half projects. Our current view of 2026 is consistent with our thinking when we set the annual outlook back in February. We anticipate second quarter non-GAAP EPS to be within a range of $1.25 to $1.35 per diluted share, which at the midpoint is down approximately 8% year-over-year after normalizing for the tax rate and the level of interest income. Now I will turn the call back to Thomas.

Thomas L. Deitrich: Thank you, Joan. Utilities today are managing energy and water systems under increasing strain. Those systems were not designed for the complexity created by distributed energy resources, increasing industrial and AI-driven demand, resource scarcity, and escalating weather volatility. At the local level, electricity distribution networks are often significantly underutilized, and our customers draw an important conclusion: while investment in new generation and transmission is essential, the fastest electron available to them is the one they already have. Itron, Inc. solutions unlock time-to-power using existing capacity by working with the right data and the ability to act on it.

Itron, Inc. serves as the intelligence layer for our customers, delivering multipurpose networks, analytics, and applications that give grid operators the visibility to optimize their distribution infrastructure. Industry data suggests utility distribution spending will continue to grow at least through the end of the decade. We believe this represents a durable structural trend and that modernization will benefit consumers while reducing waste across the system. I am encouraged by our team’s strong execution this quarter. The operating environment remains volatile, domestically and globally, and that volatility creates risks. We have built a more resilient business and are delivering consistent results through these crosswinds.

Our focus is unchanged: backlog quality, recurring revenue growth, margin discipline, cash generation, and above all, ensuring our customers are successful with every engagement. Itron, Inc. is well positioned for a multiyear grid buildout that has already begun and is expected to continue for years to come. Thank you for joining us today. Operator, please open the line for some questions.

Operator: Thank you. To withdraw your question, simply press 1-1 again. Please stand by while we compile the queue roster. Our first question coming from the line of Noah Kaye with Oppenheimer. Your line is now open.

Noah Kaye: Thanks so much. You know, first, just hoping to get a little bit more color on what drove the acceleration of project timing in 1Q. And then you were very helpful in noting the first half as a whole is kind of consistent with what you had assumed in February. What the guidance had implied in February was a pickup in the back half. So can you help us think through what might be impacting the step down in run rate in 2Q and then what might account for a pickup in the back half of the year?

Joan S. Hooper: Yes. Let me start, and then a timing comment. We did mention in our prepared remarks that Q1 was better than we had guided to because of an acceleration of projects from the first half of the year. It was primarily in the Network business, but also a little bit in Devices. If you take the combination of Q1 actuals with the midpoint of our Q2 guidance, it is actually slightly higher than what we would have expected back in February—slightly higher on revenue and actually higher on gross margin, EBITDA, and EPS. So the first half is shaping up as expected.

Regarding the back half, yes, we knew the year would be more end loaded when we entered the year. We talked about it on last quarter’s call. What would drive an uptick in the second half are project deployments primarily in Networks. Certainly Outcomes continues to grow; we would expect that. Same for Resiliency Solutions. Devices is roughly flat. So that growth is going to have to happen from Networks deployments.

Thomas L. Deitrich: I would add just a bit on the operational side of things. What we saw in Q1 was no constraints when it comes to supply chain. Material was fine, labor was fine, customer deployments were ticking along quite nicely, and that led to some of the overage that you saw in the Network space primarily. Turns were at the level that we expected. We went in, and I think we even commented on this in our previous call, that turns were expected to be a little bit higher, and indeed they were.

So all in all, the market was well aligned to our expectations within the normal push and pull where some of the Network deployments were moving a little bit faster.

Noah Kaye: And then, Thomas, you mentioned the outsized funnel. I wondered if you could give us a little bit more commentary on the behavior patterns you are seeing now among customers. In particular, DOE recently provided a list to Congress of grid projects that seem to be reinstated under the SPARC program. Maybe talk a little bit about potential impact from that as you look at the bookings trajectory over the course of the year.

Thomas L. Deitrich: Sure. Maybe a broad-brush view on the market, then the specifics on the SPARC program. On a vertical basis, Water in Europe continues to be strong, above historical levels. Water in the U.S. is a little bit slower; that is a smaller segment for us overall, so where our strength is in Water continues to perform well, and you see that primarily in the Devices segment, which is punching a little bit above its weight—more pushing $120 million-plus rather than the $100 to $110 million level where we had sort of anchored expectations. On Gas, North America is particularly strong.

There is more than 5x the number of endpoints that are live at the moment on the Gas side; that is much higher than historical levels and absolutely a bright spot. Electricity is strong in Asia Pacific and in line with expectations in North America. There is a lot of activity in the press with some of the early movers in the electricity space really coming back into the marketplace for activities in, let us call it, back ’26 into 2028. Across the board, we see strength in Outcomes and Resiliency Solutions—Outcomes up 22% year-over-year, ARR up 28% year-over-year. We feel really good about that part of the strategy playing through.

Our portfolio really aligns to the way the market is operating these days. We have the ability to work with our customers depending on what pressures they may have—whether regulatory oriented or particular resiliency needs—we have the tools in the toolbox to help them. On government funding, you are correct: some time ago, some of those GRIP projects were put on hold or “canceled.” There are still some state attorney generals that are suing over those cancellations. But by and large, most of the activities are being replaced now with this new DOE program called SPARC, which clearly is part of that electricity market view I just described.

In general, we have not seen any cancellations even when projects were put on hold. Customers need to do these things; they were not discretionary. It was only a question of how they would work through all of the things going on in the marketplace. So we feel very good about the inevitability of intelligence in the grid, and we are very well positioned to benefit over the years to come.

Operator: Thank you. Now next question coming from the line of Ben Kallo with Baird. Your line is now open.

Ben Kallo: Just adding on to Noah’s question there, as you think about that TMG, Thomas, and I know it is hard to predict, could you give us your thoughts about next year and the original targets you laid out at the Analyst Day and anything that has changed, plus or minus, since the last time you updated us? And I have a follow-up.

Thomas L. Deitrich: Absolutely. I would say there is no change from how we commented on things in our prior earnings call. We are very much ahead of those 2027 targets when it comes to gross margin, EBITDA, cash flow, and EPS. Revenue is probably toward the low end of that range, as we commented before. Nothing has changed in the market that would pull us away from that view. The large opportunities that were part of my color commentary to Noah’s question really give us the view as to what the market looks like. This buildout of the grid and infrastructure in general is absolutely structural. It is inevitable.

It will happen over the years ahead, and we are in a position to benefit from it.

Ben Kallo: Following—zeroing in on that 25% backlog for Outcomes and Resiliency—could you talk about how much of that is recurring revenue? Because if I add that up with your current recurring revenue, you could get to a big number, depending on what you assume. What percentage of that 25% is actual recurring revenue versus services?

Thomas L. Deitrich: Our Outcomes segment generally runs somewhere between two-thirds to three-quarters recurring revenue. That percentage probably drifts northward over the years ahead. Resiliency Solutions—the vast majority of it is recurring revenue overall. The only caution I would give you is that the backlog number we quote is a multiyear backlog. It usually plays out over a three- to four-year timeframe depending on the mix of projects. All in all, our portion of business that is recurring revenue continues to grow—ARR at $400 million at the end of the quarter, up 28% year-over-year—still very much on track for that growth to continue in the quarters ahead.

Joan S. Hooper: And just to clarify, recurring revenue can include services revenue as well. It is not just software.

Ben Kallo: Right. Okay. Got it. And last thing, on the acquisition front—because multiples for software-type companies are coming down—how do you think about your capital allocation?

Joan S. Hooper: Our first priority in 2026 is the successful integration of Urbint and LocustView. Things are on track, but we have additional work to do to integrate systems and things of that nature. That is our first priority. We will opportunistically look at other things that come our way, but we are not actively going to seek something to buy in 2026. We do feel good about our balance sheet and our ability to act on something if it comes along.

Operator: Thank you. Our next question coming from the line of Martin Malloy with Johnson Rice & Company. Your line is now open.

Martin Malloy: Good morning. Thank you for taking my questions. First question was on the recent acquisitions, Urbint and LocustView, and if you could give us some perspective on progress in terms of revenue synergies with your wide customer platform—being able to sell through some of those services—any anecdotal evidence about how that is going would be helpful.

Joan S. Hooper: I would say that the results to date have not really included any synergies per se. What you are seeing in our Resiliency Solutions is the businesses we bought from Urbint and LocustView. Certainly over time we would expect the ability to drive synergies, but we are really trying to ensure in these early days that we are not getting in the way of them running their business. We have not spent a lot of time trying to build synergies; we want to get all the integration and the plumbing in place before we start doing that. So everything you saw in Resiliency Solutions is the businesses we bought, with no contribution from Itron, Inc.

Martin Malloy: And with your commentary about pipeline and confidence in the customer need for your solutions, could you talk about book-to-bill and when that might trend back over one?

Thomas L. Deitrich: The pipeline is at or very near all-time records. That buildup of pipeline we saw over the last year to eighteen months shows no signs of cooling. We feel very good about the opportunities and our portfolio positioning. Bookings in the Networking space are inherently a bit lumpy. They move around quarter to quarter depending on the size of individual projects. A large project is generally a three- to four-year effort, which yields lumpiness. Outcomes and Resiliency Solutions are a bit more normalized, and the same with Devices. We still feel great about where we are portfolio-wise and will look to capitalize on the inevitable growth in the marketplace in the quarters ahead.

Operator: Thank you. Our next question coming from the line of Scott Graham with Seaport Research Partners.

Scott Graham: Hey. Good morning. Thank you for taking my question. I know you do not update your full-year guide until the second quarter, but T&D spending is expected to be up double digit this year, and your organic guidance is minus 4% to flat, which implies an uptick in the second half of the year. How are you feeling about that uptick right now, Thomas? I know your pipeline of opportunities is increasing, but that does not necessarily translate to the second half of this year. Is it possible that second-half sales could be down given the TTM book-to-bill being below 0.9? Any color would be helpful.

Thomas L. Deitrich: We expected the year to be back-half loaded; that was part of the initial guidance. The first half, as Joan commented earlier, is in line to slightly better than where we set our view. Nothing has changed in the marketplace. Second-half guidance definitely implies an uptick in the rate of Network deployments. You saw even in first quarter how that can happen pretty quickly, and we are well positioned to continue to do that. We think we have supply chain flexibility and labor flexibility to make it happen. We will support our customers, but first half ahead of expectations is already a pretty good place for us to anchor our view for the year.

Scott Graham: Thank you. Staying on the second half, I want to make sure I understand what is going on with the backlog and how purchase orders being written against that backlog are shaping the second half. In prior quarters, you talked about having a booking in the backlog, but only writing a smaller purchase order because the utility was focused on high bang-for-the-buck near term versus out-years. What type of risk is inherent in that to your thinking that second-half sales will be up, relative to that chopping up of purchase orders?

Thomas L. Deitrich: A few things to consider. We expected turns business to be higher, and that is what we continue to expect. But the real needle mover is Network deployments for the second half of the year. In general, there is backlog there; it just needs to be converted based on the timing of deployments, and that is something we work with our customers on an ongoing basis. You can see how these things tend to move through the pipe quicker—you saw that in our first quarter results. When projects start to go well, everyone gains confidence and you can accelerate deployments.

The table is set for it to happen, and we will work with our customers to make sure we support our portion of the program.

Operator: Thank you. Our next question coming from the line of Bobby Sulphur with Raymond James. Your line is now open.

Bobby Sulphur: Hi. Thanks for taking the question. I was wondering if you could talk about the definitional differences between RPO and backlog. And then on the gross margin front, is there a good way to handicap what you have been calling out as customer mix benefits for a couple of quarters—what the customer mix benefit is in gross margins versus what the ongoing recurring gross margin of the business would be?

Joan S. Hooper: Sure. RPO appears in our revenue footnotes in our 10-Ks and 10-Qs. It starts with the total backlog that we report and backs off contracts that have a termination-for-convenience clause. Often the termination for convenience is governed by regulatory bodies, meaning the contract has to be structured that way. So at any given quarter, the mix of contracts in backlog will dictate how much is backed out to get what we call a net 606 backlog, which you refer to as remaining performance obligations. Importantly, we do not use that to forecast revenue. We use our full backlog because those contracts, while some may be cancelable, nobody ever cancels.

If you look at our historical backlog, you have not seen big adjustments for cancellations. It really is a function of the 606 literature on revenue, and it affects our 606 revenue models, but does not impact how we look at revenue flowing into the P&L. So we use the gross backlog, which is also in that footnote.

Thomas L. Deitrich: On gross margin, what you saw was the last of some of that pre-inflation backlog rolling out. Recall a couple of years ago inflation spiked and we had some contracts priced pre-inflation with limited flexibility on pricing. That is now fully played through and has helped the margin profile as we knew it would. All of the self-help over the years with factory consolidation and portfolio pruning is showing through, and I am proud of how the team has handled demand levels, managing cost structure, and ensuring material availability. So Q1 gross margin was a bit ahead of expectations based on really good execution.

Relative to our 2027 targets, Devices will be materially ahead; Networks maybe toward the upper end of the range; Outcomes will depend on mix as we scale; and Resiliency Solutions is clearly strong on gross margin and, as it scales, will pull the company average upward.

Bobby Sulphur: If I could just ask a clarifying question on Devices’ gross margin—when you say it is ahead, does that mean better than your original expectations, or should we assume it goes back to the previous long-term target?

Thomas L. Deitrich: Good clarification. It is ahead of those 2027 targets, and we believe it stays at roughly the level it is at now. There can be quarter-to-quarter variation, but the last couple of quarters are more the level that business can operate.

Operator: And I see one question just came in coming from the line of Joseph Osha with Guggenheim Partners. Your line is now open.

Joseph Osha: Hi. Yes. Thank you. To follow up a bit on the previous question, you pointed out, Thomas, Resiliency is gross margin accretive. It is a high-growth business and growing into that operating cost footprint. I assume there is a lot of R&D there. Can you give us a sense as to when Resiliency might be getting closer to the corporate average at the operating margin level? Thanks.

Joan S. Hooper: I can try to answer that. Not specific on numbers, but as we commented on the February call, Resiliency Solutions was immediately accretive to Itron, Inc.'s revenue growth and gross margins and EBITDA, dilutive to 2026 EPS due to less interest income, but on an operational basis accretive in 2026. By the time we are into 2027, it is completely accretive on an EPS level. Operationally, what drags them today is just a higher operating structure, which they will grow into. We are encouraging continued R&D spending and platform buildout.

Joseph Osha: Would it be fair to say that, simply at the percentage level, it will take them a while to grow into that higher R&D budget, even though it is accretive as you point out?

Joan S. Hooper: Over time, we will look for synergies in R&D across all segments. It is hard to give a precise answer on when the R&D percentage goes down and operating income percent goes up, but we certainly expect them to scale, and we believe these were two attractive acquisitions that we will execute on according to plan.

Operator: Thank you. I am showing no further questions. I will now turn the call back over to Mr. Thomas Deitrich for any closing remarks.

Thomas L. Deitrich: Thank you, Olivia. Thank you, everyone, for joining our call today. We look forward to updating you again next quarter.

Operator: This concludes today’s conference call. Thank you for your participation and you may now disconnect.