Breaking Down Itron, Inc. (ITRI) Financial Health: Key Insights for Investors

If you are looking at Itron, Inc. (ITRI), you need to look past the top-line dip and focus on the significant margin expansion, because that is where the real story is for 2025. Honesty, the third quarter saw revenue fall 5% year-over-year to $582 million, which is a clear headwind from project deployment delays and portfolio optimization, but the company's non-GAAP diluted earnings per share (EPS) of $1.54 still beat the analyst consensus of $1.48. That is a strong signal. The real financial health is in the efficiency gains: Itron hit a record gross margin of 37.7% and generated a record $113 million in free cash flow in Q3 2025, showing their shift to a more profitable model is defintely working. The full-year outlook is now narrowed to a revenue range of $2.35 billion to $2.36 billion, but management raised the non-GAAP EPS forecast to between $6.84 and $6.94, which is a massive 13% increase at the midpoint from their prior guidance, plus the total backlog of $4.3 billion provides great visibility for future growth. We need to break down how they are converting that backlog into sustainable profit, especially given the market's mixed reaction to the revenue miss versus the EPS beat.

Revenue Analysis

You need to know where Itron, Inc. (ITRI)'s money is actually coming from to understand its risk profile, and the near-term picture shows a strategic shift: a decline in hardware sales is being offset by growth in recurring services. For the full fiscal year 2025, Itron, Inc. projects its total revenue to land between $2.35 billion and $2.36 billion, which represents a projected year-over-year decline of about 3.5% from the 2024 actual revenue of $2.44 billion.

This slight dip is not a simple demand issue; it's a planned portfolio optimization, particularly as the company pivots toward higher-margin software and services. The total backlog of $4.3 billion, which signals strong future demand, backs this up.

The Three Pillars of Revenue

Itron, Inc. segments its revenue into three primary areas: Networked Solutions, Device Solutions, and Outcomes. The third quarter of 2025 (Q3 2025) results, totaling $582 million in revenue, clearly illustrate this business mix and the ongoing transition.

The largest segment is still the core infrastructure, but the high-margin Outcomes segment is the growth engine right now.

• Networked Solutions: This segment, which includes smart meters and communication modules, remains the largest contributor at $394 million in Q3 2025. However, revenue decreased 6% year-over-year due to the timing of large utility project deployments, a common volatility factor in this business.
• Device Solutions: Primarily traditional hardware like legacy meters, this segment brought in an estimated $104 million in Q3 2025. This revenue stream is shrinking, showing a sharp 16% decrease year-over-year, largely due to a deliberate portfolio optimization, especially in the EMEA (Europe, Middle East, and Africa) region.
• Outcomes: This is the recurring, high-margin software and services business-the part you want to see grow. Outcomes revenue increased 11% year-over-year to $84 million in Q3 2025, driven by increased recurring revenue from data collection and management services.

Shifting Revenue Mix and Growth Trends

The notable change in the revenue mix is the deliberate reduction in legacy product lines, particularly within the Device Solutions and Network Solutions segments, which is driving the overall revenue decline. This is a classic trade-off: sacrificing near-term top-line growth for a better long-term gross margin (which hit a record high of 37.7% in Q3 2025).

Here's the quick math on the segment contributions for Q3 2025, which shows the heavy reliance on Networked Solutions, but the strategic importance of Outcomes is defintely rising:

The key action for you is to monitor the Outcomes segment's growth rate and its contribution to the overall gross margin. As Itron, Inc. continues to execute on its Grid Edge Intelligence platform, the recurring revenue from software and services should accelerate, making the business model more resilient and predictable. For a deeper dive into the valuation implications of this transition, check out our full report: Breaking Down Itron, Inc. (ITRI) Financial Health: Key Insights for Investors.

Profitability Metrics

You want to know if Itron, Inc. (ITRI) is generating real profit, not just revenue. The short answer is yes, and their margins are expanding, which is a strong signal of improving operational efficiency, even with some near-term revenue headwinds.

For the trailing twelve months (TTM) ending in Q3 2025, Itron, Inc. has demonstrated significantly improved profitability. Your focus should be on the margin expansion, which is outpacing the industry average, a clear sign that their high-margin software and services business-the Outcomes segment-is starting to pay off.

Here's the quick math: A TTM Net Profit Margin of about 10.7% means Itron, Inc. is keeping roughly 11 cents of every dollar of revenue as profit, which is almost double the industry average of 5.91%. This is defintely a high-conviction metric for investors.

The company's full-year 2025 revenue is projected to be between $2.35 billion and $2.36 billion. Based on the TTM margins, you can see a significant structural improvement in how they manage their costs, which is a better indicator than just looking at the top-line revenue growth.

Operational Efficiency and Margin Trends

The trend in profitability is the most compelling part of the Itron, Inc. story right now. They hit a record gross margin of 37.7% in Q3 2025, which was a massive jump of 360 basis points (3.6 percentage points) from the prior year. That's a huge move in a single quarter.

• Gross Margin: The jump to 37.7% is directly attributed to a favorable customer and product mix. This means they are selling more of their higher-value Networked Solutions and Outcomes (software/data) products, which carry better margins than the traditional Device Solutions hardware.
• Operating Profit: GAAP operating income for Q3 2025 was $82 million. This increase, despite a slight revenue decline, shows strong operational efficiency. The higher gross profit flowed through to the operating line, indicating good control over operating expenses (SG&A and R&D).
• Net Profit: The TTM net profit margin improved to 11.1%, up from 8% last year, a clear sign of structural cost cuts and the adoption of higher-margin software. This is a fundamental shift in the business model.

The strategic move toward Grid Edge Intelligence solutions is clearly driving this margin expansion. If you want to dive deeper into the strategic pivot, you can review the Mission Statement, Vision, & Core Values of Itron, Inc. (ITRI).

What this estimate hides, though, is the fact that the Outcomes segment growth, while high-margin, is still lagging some pure-play software peers, so sustaining this margin momentum depends on accelerating that software transition. The company's full-year non-GAAP diluted EPS is projected to be between $6.84 and $6.94, which is a strong indicator of their actual cash-generating power, but still requires them to execute flawlessly in the final quarter.

Debt vs. Equity Structure

When you look at Itron, Inc.'s (ITRI) balance sheet, the first thing I notice is a measured, but not overly aggressive, reliance on debt to finance their growth. For a company in the capital-intensive utility technology space, their debt-to-equity (D/E) ratio is a key metric, and it tells a story of strategic financing, not reckless leverage.

As of the third quarter ending September 30, 2025, Itron, Inc. reported a total debt of approximately $1.25 Billion. This debt is split between long-term obligations and the current portion that is due within the next year, which is important for liquidity analysis.

• Long-Term Debt: Approximately $787.91 Million.
• Total Shareholders' Equity: Approximately $1.71 Billion.

Here's the quick math on their leverage. Their debt-to-equity ratio-which measures total debt against total shareholder equity-stood at about 0.73 for the quarter ending September 30, 2025. This is a defintely manageable number. For context, the average D/E ratio for the Communication Equipment industry, a close peer group, is around 0.48. Itron, Inc.'s ratio is higher, but still well below the 2.0 mark that often flags significant risk, especially considering they operate in a sector that services utilities, which themselves are known for carrying higher debt loads.

The company recently made a significant move to manage its long-term financing. In June 2024, Itron, Inc. priced an upsized offering of $700 million in 1.375% Convertible Senior Notes due 2030. This is a smart way to raise capital: they get a low interest rate (1.375%) and the option to pay back the debt with stock if the share price is high enough at maturity, minimizing cash outflow now. This issuance helps fund their strategic initiatives and acquisitions, balancing the need for growth capital with a relatively low cost of debt.

The company's approach is to use debt as a tool for targeted growth, like funding acquisitions or major capital expenditures, while maintaining a substantial equity base. The current Altman Z-Score, a measure of bankruptcy risk, is around 2.80 as of October 2025, which places them in the 'Grey Zones.' This simply means that while their financial health is strong, the debt load requires continuous monitoring, a standard practice for any growth-oriented tech-industrial company. They are not in the clear, but they are far from distressed territory.

The balance is clear: use low-cost debt for strategic, future-oriented projects, and rely on strong operational cash flow to service it. If you want a deeper dive into the operational side that supports this structure, check out Breaking Down Itron, Inc. (ITRI) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You want to know if Itron, Inc. (ITRI) has the cash to cover its near-term obligations, and the answer is a clear yes. The company's liquidity position is defintely strong, driven by a massive increase in cash and a healthy buffer of working capital (current assets minus current liabilities).

As of September 30, 2025, Itron, Inc. maintained a Current Ratio of 2.17. Here's the quick math: total current assets of $2.14 billion divided by total current liabilities of $987.4 million gives you that figure. A ratio over 1.0 is good, but 2.17 tells us Itron, Inc. has more than double the assets to cover its debts coming due in the next year. [cite: 2 in step 1, 3 in step 1, 6 in step 1, 9 in step 1]

Current and Quick Ratio Analysis

The Current Ratio is solid, but the Quick Ratio (or acid-test ratio) gives us a cleaner look by stripping out inventories, which can be slow to convert to cash. Itron, Inc.'s Quick Ratio stands at 1.91 as of Q3 2025. This is exceptionally strong for a manufacturing-heavy technology company, indicating that even without selling a single new smart meter from its inventory, the company can cover nearly twice its immediate liabilities with cash and receivables alone. [cite: 2 in step 1, 3 in step 1, 9 in step 1]

• Current Ratio (Q3 2025): 2.17
• Quick Ratio (Q3 2025): 1.91
• Working Capital (Q3 2025): $1.16 billion

Working Capital and Cash Flow Trends

The company's working capital-the money available for day-to-day operations-is a robust $1.16 billion as of September 30, 2025, up significantly from the prior fiscal year end. This improvement is tied to effective working capital management and strong earnings conversion, which is exactly what you want to see. [cite: 2 in step 1, 3 in step 1, 5 in step 1]

Looking at the cash flow statement, the trend is overwhelmingly positive. Cash from Operating Activities (OCF) for the trailing twelve months (TTM) ended September 30, 2025, was a strong $366.5 million. This is the lifeblood of the company, showing it's generating substantial cash from its core business operations. In fact, the third quarter of 2025 alone saw net cash provided by operating activities of $118 million. [cite: 5 in step 2, 8 in step 2]

Near-Term Risks and Opportunities

The primary near-term liquidity event is the planned acquisition of Urbint, Inc. for $325 million in the fourth quarter of 2025, which Itron, Inc. plans to fund using cash on hand. This is a strategic investment (Investing Cash Flow) that they can absorb easily, thanks to the $1.33 billion in cash and cash equivalents on the balance sheet and the strong TTM operating cash flow. [cite: 2 in step 1, 3 in step 1]

The key strength is the sheer size of the cash position, which provides a massive hedge against any project delays or unexpected costs. The only real risk is the significant increase in the current portion of debt to $458.9 million as of Q3 2025, which will need to be managed or refinanced, but the 2.17 Current Ratio suggests no immediate danger. This is a well-capitalized company making a strategic move. You can read more about the full picture in Breaking Down Itron, Inc. (ITRI) Financial Health: Key Insights for Investors.

Valuation Analysis

You're looking at Itron, Inc. (ITRI) and asking the right question: Is the stock overvalued, or is this a genuine buying opportunity? Based on the latest fiscal year 2025 data, the consensus points to a 'Moderate Buy,' suggesting the stock is currently undervalued relative to its growth prospects.

As of November 2025, Itron, Inc.'s stock price is sitting around $95.69. To be fair, that's near the lower end of its 52-week trading range, which has seen the stock climb as high as $142.00 and dip to a low of $90.11 [cite: 4, 6 in previous step, 7 in previous step]. That volatility tells you investors are still figuring out the full impact of their transition to an asset-light model and their strong backlog visibility.

Here's the quick math on key valuation multiples:

• Price-to-Earnings (P/E) Ratio: The trailing twelve months (TTM) P/E is about 17.18 [cite: 14 in previous step]. This looks attractive when you compare it to the US Electronic industry average of 22.6x [cite: 1 in previous step]. The forward P/E, based on 2025 earnings estimates, drops even lower to 14.44 [cite: 14 in previous step]. A lower forward P/E suggests analysts expect earnings growth, making the current price a better deal.
• Price-to-Book (P/B) Ratio: At 2.59 [cite: 14 in previous step], the P/B ratio is reasonable for a technology-driven company, indicating you're not paying an excessive premium for the company's net assets.
• Enterprise Value-to-EBITDA (EV/EBITDA): The EV/EBITDA stands at 12.09 [cite: 14 in previous step]. This metric, which is often better for comparing capital-intensive firms, suggests a solid valuation, especially considering the expected over $450 million in EBITDA for 2025 [cite: 2 in previous step].

The valuation story here is simple: Itron, Inc. is trading at a discount compared to its industry peers on a P/E basis, and its EV/EBITDA is manageable. This is defintely a value play right now.

Analyst Consensus and the Dividend Question

Wall Street's collective view reinforces the idea of undervaluation. Out of 14 analysts covering Itron, Inc., the consensus is a 'Moderate Buy,' with nine analysts recommending a Buy and five suggesting a Hold [cite: 3 in previous step, 11 in previous step]. The average 12-month price target is set at a robust $139.00 [cite: 3 in previous step, 11 in previous step]. What this estimate hides is the potential for a 45.26% upside from the current price, which is a significant margin of safety and opportunity [cite: 11 in previous step].

One thing to note is the dividend. Itron, Inc. is a growth-focused company, not an income stock. They do not currently pay a dividend, with the TTM dividend payout sitting at $0.00 and a 0.00% yield. This is typical for companies reinvesting heavily into R&D and scaling their solutions for grid modernization and smart city initiatives. If you are looking for yield, this isn't the stock for you. But if you're hunting for capital appreciation driven by fundamental shifts in utility infrastructure, the valuation multiples and analyst targets suggest a strong case for upside.

For a deeper dive into who is making these moves, you might want to check out Exploring Itron, Inc. (ITRI) Investor Profile: Who's Buying and Why?

Here is a summary of the core valuation metrics based on 2025 data:

Risk Factors

You're looking at Itron, Inc. (ITRI) because of its strong market position in utility digitalization, but honestly, the near-term risks are what you need to focus on right now. The company's financial health, while fundamentally sound, is facing headwinds that directly impacted its stock price-it was down over 20% following the Q3 2025 report, which is a material signal.

The core issue isn't demand; it's execution and timing. The updated full-year 2025 revenue guidance of $2.35 billion to $2.36 billion, while solid, came in below market consensus, largely due to operational friction.

Operational and Strategic Risks: The Deployment Lag

The biggest drag on Itron, Inc.'s stock and earnings is the delayed deployment of large-scale customer projects. This isn't a new risk for the sector, but it's been exacerbated by persistent regulatory scrutiny and utility budget constraints, which can cause significant revenue deferrals.

To be fair, the company is actively managing its product mix, which is a smart strategic move. The Device Solutions segment saw a 16% revenue decrease in Q3 2025, driven by portfolio optimization-meaning they are intentionally phasing out lower-margin, older products. But still, this creates near-term revenue volatility.

• Project Delays: Rescheduling of current customer orders creates earnings uncertainty.
• Regulatory Hurdles: Utility budget constraints can slow down infrastructure spending.
• IP Dependence: Future growth relies heavily on new product development and protecting intellectual property.

The company needs to defintely accelerate its high-margin software business to offset this hardware-side volatility.

External and Financial Pressures

Beyond the operational challenges, Itron, Inc. is exposed to broader external risks inherent to a global technology provider. The company's beta of 1.53 suggests its stock is more volatile than the overall market, which means any adverse economic news or sector-specific shock hits harder.

You also have to factor in the financial impact of a global footprint. Increasing volatility in foreign exchange (FX) rates can materially impact reported earnings, plus changes in international trade policies, tariffs, or sanctions can disrupt the complex supply chain. The guidance for Non-GAAP diluted EPS for 2025 is between $6.84 and $6.94, which shows profitability is strong, but these macro factors can erode that quickly.

Here's the quick math: a strong dollar against the Euro, for instance, makes a European utility contract less valuable when translated back to USD.

Mitigation and Strategic Shifts

Itron, Inc. is not sitting still; their mitigation strategy is focused on a pivot to higher-margin, recurring revenue. This shift is already paying off in profitability, even with the revenue delays. Q3 2025 saw the gross margin expand significantly to 37.7%, a 360 basis point improvement year-over-year, driven by a favorable product mix.

The Outcomes segment, which includes value-added software and services, is the key strategic focus, and it grew 11% in Q3 2025. Furthermore, the company maintains a robust cybersecurity posture-critical for a smart grid leader-with an Information Security Steering Committee (ISSC) and a defense-in-depth security program, as detailed in their recent filings. They are also leveraging partnerships, like the one with Gordian Technologies, to integrate AI and machine learning into their Grid Edge Intelligence portfolio, aiming to deepen software capabilities.

If you want to understand the long-term vision behind these strategic moves, you should review the Mission Statement, Vision, & Core Values of Itron, Inc. (ITRI).

The strong Q3 2025 free cash flow of $113 million gives them the financial cushion to weather these near-term project delays. Their strategy is clear: trade some current revenue for better long-term margins.

Growth Opportunities

You're looking for clarity on Itron, Inc. (ITRI)'s future, and the picture is one of strategic pivot: near-term revenue growth is modest, but the shift to high-margin software and services is defintely paying off in profitability. The company is guiding for full-year 2025 revenue between $2.35 billion and $2.36 billion, which is a slight dip from 2024's total, but that's mostly due to a one-time revenue catch-up last year. Normalize for that, and you see about 2% growth. More importantly, Non-GAAP diluted Earnings Per Share (EPS) is projected to be robust, landing between $6.84 and $6.94 for the fiscal year 2025. That's a strong profitability signal.

Here's the quick math on the profit engine: Itron is focusing on its Outcomes segment, which drives recurring revenue and software licenses. This strategic shift is why the company achieved a record gross margin of 37.7% in the third quarter of 2025, a significant 360-basis-point improvement year-over-year. That's the real story.

Key Growth Drivers: AI and Grid Edge Intelligence

The core of Itron's future growth is its Grid Edge Intelligence platform. This technology is perfectly positioned to capitalize on massive macro trends, which are essentially non-negotiable infrastructure upgrades for utilities. Specifically, the demand is surging from:

• Data Center-Related Demand: The immense energy needs of new data centers and Artificial Intelligence (AI) models are straining aging grids, forcing utilities to adopt smarter, real-time management tools.
• Electrification: The shift to electric vehicles (EVs) and electric home heating requires real-time load management to prevent grid failure.
• Water Automation: Expansion into smart water sales and infrastructure automation, which helps offset declines in legacy electricity meter sales.

The company's own 2025 Resourcefulness Report shows 41% of North American utility executives have fully integrated AI, which is a huge tailwind for Itron's Edge AI offerings. This is a massive market opportunity, and they are moving fast to capture it.

Strategic Initiatives and Competitive Advantages

Itron is not just waiting for the market to come to them; they are making smart, targeted moves. The acquisition of Elpis Squared, for instance, immediately expanded the capabilities of their Grid Edge Intelligence platform. Plus, their partnership with Xcel Energy to manage EV charging loads in real-time is a concrete example of how they are embedding their technology into the future of energy consumption. You can see more on the players involved in Exploring Itron, Inc. (ITRI) Investor Profile: Who's Buying and Why?

What this estimate hides is the near-term risk of project deployment delays, but the long-term competitive advantages are clear. Itron's substantial backlog, which stood at around $4 billion, provides strong revenue visibility for the coming years. Their ability to consistently generate liquidity is another core strength, evidenced by a record free cash flow of $113 million in Q3 2025. This cash flow allows them to continue investing in high-margin software and services, which is insulating them from the cyclical hardware business.