Itron, Inc. ITRI continues to generate strong cash flow, supported by improved operational efficiency, favorable business mix and disciplined cost management. Despite fluctuations in utility project deployments, the company delivered robust free cash flow in the second quarter of 2026, highlighting the resilience of its operating model. With deployment activity expected to accelerate in the second half, sustaining this momentum remains a key focus.
Itron generated $81 million in free cash flow during the second quarter compared with $91 million in the year-ago period. The decline primarily reflected higher tax payments and lower interest income, partially offset by favorable working-capital timing. Nevertheless, strong cash generation accompanied record profitability despite softer revenues, underscoring the benefits of structural improvements across the business.
The company reported an adjusted gross margin of 41.4%, expanding 460 basis points year over year to a quarterly record. Adjusted EBITDA increased 8% to $97 million, supported by favorable product mix, operating efficiencies and cost discipline. These improvements strengthen Itron's ability to generate cash even as deployment schedules fluctuate.
Accelerating Networked Solutions deployments are expected to drive revenue growth in the second half of 2026. Management indicated that most anticipated second-half revenues are already supported by contracted deployments, improving business visibility. The company expects third-quarter revenues between $590 million and $600 million, representing approximately 6% sequential growth at the midpoint.
Additionally, Itron's $4.4 billion backlog provides visibility into future business activity. Annual recurring revenue increased 21% year over year to $417 million, supported by continued adoption of higher-value software and services. This growing recurring revenue base further enhances the durability of its financial performance.
However, increased deployment activity could influence working capital requirements, while revenue mix may moderate margins. Management expects full-year gross margins to remain near 40%, slightly below recent quarterly levels. The company also maintains a strong liquidity position of $1.5 billion, providing financial flexibility.
Overall, Itron appears well-positioned to sustain healthy cash generation as deployments accelerate. Its expanding recurring revenue base, substantial backlog and improved operating efficiency provide a foundation, although working capital movements and deployment timing remain important factors.
Taking a Look at ITRI’s Competitors
SAP SE SAP generates solid cash flow, providing management the opportunity to invest in product innovations, acquisitions and business development. The company has historically returned significant cash to shareholders through dividends and share buybacks. It reaffirmed its expectation of approximately €10 billion in free cash flow for 2026, highlighting the strength of its subscription-based business model. Strong cash flow levels and cash balance indicate that the company is making investments in the right direction. SAP announced a new €10 billion share repurchase program, running through the end of 2027.
Oracle Corporation’s ORCL recurring cloud subscriptions and software support business provide operating cash generation as it expands infrastructure capacity. Its contractual backlog offers visibility into future demand, although fulfilling those obligations requires extensive investment. Operating cash flow reached $32 billion in fiscal 2026, up 54%, while free cash flow was negative $23.7 billion. In first-quarter fiscal 2027, operating cash flow increased to $23.1 billion from $8.1 billion a year earlier, helped by customer prepayments.
Badger Meter, Inc. BMI generated $21.9 million of free cash flow in the second quarter of 2026 despite lower earnings and temporary working-capital use. Management expects inventory and primary working capital to normalize as project shipments rise and continues to target full-year 2026 cash conversion above 100% of net income. Badger Meter ended June 2026 with $95.7 million in cash and an undrawn $150 million credit facility that was renewed for five years.
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Itron, Inc. (ITRI): Free Stock Analysis Report
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