ITRON, INC. - Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. Itron, Inc. is a leader in the Industrial Internet of Things (IIoT), providing solutions for utilities and municipalities. The company operates through four reportable segments: Device Solutions, Networked Solutions, Outcomes, and Resiliency Solutions (a new segment established in Q4 2025). The filing reflects the impact of the January 2026 acquisition of Locusview, Ltd., which was integrated into the Resiliency Solutions segment.
Key Financial Metrics
| Metric (in thousands, except per share) | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenues | $586,982 | $607,151 |
| Gross Profit | $236,319 | $217,219 |
| Gross Margin | 40.3% | 35.8% |
| Operating Income | $67,577 | $76,213 |
| Net Income (Attributable to Itron) | $53,459 | $65,474 |
| Diluted EPS | $1.18 | $1.42 |
| Operating Cash Flow | $85,501 | $72,117 |
| Free Cash Flow (Non-GAAP) | $78,974 | $67,478 |
| Cash and Equivalents (End of Period) | $712,850 | $1,123,267 |
| Total Debt (Gross) | $1,610,000 | $1,265,000 |
Material Changes vs. Prior Period
- Revenue Decline: Total revenues decreased 3% ($20.2 million) year-over-year. Product revenues fell 9% due to lower project deployments in North America and planned decreases in electric residential sales in EMEA. Conversely, Service revenues increased 30% ($25.2 million), driven by recurring revenue growth.
- Margin Expansion: Despite lower revenue, Gross Margin improved to 40.3% from 35.8%, driven by favorable product mix and operational efficiencies.
- Operating Expenses: Increased 20% ($27.7 million), primarily due to higher labor costs, acquisition-related expenses, and a $3.7 million increase in amortization of intangible assets following the Locusview acquisition.
- Net Income: Decreased 18% to $53.5 million, impacted by lower operating income and a significant drop in interest income ($6.1 million decrease) due to lower cash balances.
- Balance Sheet Activity: Cash decreased by $307.5 million, primarily due to the $515 million cash acquisition of Locusview and the $460 million repayment of 2021 convertible notes. This was partially offset by $805 million in proceeds from new 2026 convertible notes.
Guidance, Outlook, and Risks
- Capital Markets: In February 2026, the company issued $805 million in 0.00% convertible senior notes due 2032. Simultaneously, the company repaid its $460 million 2021 convertible notes.
- Stock Repurchases: Under the 2025 Stock Repurchase Program ($250 million authorized), the company repurchased 1.05 million shares for $100 million in February 2026. Approximately $150 million remains available under this program.
- Backlog: Total backlog stood at $4.4 billion, with a 12-month backlog of $1.6 billion as of March 31, 2026.
- Outlook: Management expects existing cash, operating cash flows, and access to capital markets to be sufficient to fund operations for the next 12 months. The company is transitioning its primary performance metric from "endpoints under management" to Annual Recurring Revenue (ARR), which was $414 million for Q1 2026.
- Risks: Key risks include global economic impacts (inflation, supply chain disruptions), foreign currency exchange rate fluctuations (27% of revenue is non-USD), and the integration of recent acquisitions. The company is also subject to ongoing tax examinations and potential impacts from OECD Pillar 2 global minimum tax rules.
Investor Verification Checklist
- Acquisition Integration: Verify the progress of integrating Locusview into the Resiliency Solutions segment and the realization of projected synergies.
- Convertible Note Dilution: Monitor the stock price relative to the conversion prices of the 2024 ($131.24) and 2026 ($123.77) notes to assess potential future dilution.
- Service Revenue Sustainability: Confirm the growth trajectory of the high-margin service revenue stream, which offset declines in product sales.
- Cash Flow Management: Track the impact of the significant cash outflow for the Locusview acquisition on future liquidity and capital allocation flexibility.
- FX Exposure: Assess the effectiveness of hedging strategies given that nearly 30% of revenue is exposed to foreign currency fluctuations.