ITRI Q2 Deep Dive: Cautious Utility Spending and Project Delays Weigh on Outlook

August 12, 2025 at 23:58 PM EDT

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Resource management provider Itron (NASDAQ: ITRI) met Wall Street’s revenue expectations in Q2 CY2025, but sales were flat year on year at $606.8 million. On the other hand, next quarter’s revenue guidance of $577.5 million was less impressive, coming in 7.5% below analysts’ estimates. Its non-GAAP profit of $1.62 per share was 21.6% above analysts’ consensus estimates.

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Itron (ITRI) Q2 CY2025 Highlights:

Revenue: $606.8 million vs analyst estimates of $608.8 million (flat year on year, in line)
Adjusted EPS: $1.62 vs analyst estimates of $1.33 (21.6% beat)
Adjusted EBITDA: $89.8 million vs analyst estimates of $82.89 million (14.8% margin, 8.3% beat)
Revenue Guidance for the full year is $2.38 billion at the midpoint, below analyst estimates of $2.46 billion
Adjusted EPS guidance for the full year is $6.10 at the midpoint, beating analyst estimates by 12.2%
Operating Margin: 12.6%, up from 10.6% in the same quarter last year
Market Capitalization: $5.76 billion

StockStory’s Take

Itron’s second quarter was shaped by resilient performance in its core Outcomes and Networked Solutions segments, as the company achieved flat year-over-year sales and expanded margins despite a challenging macroeconomic environment. Management attributed the quarter’s results to continued adoption of its Grid Edge Intelligence platform and growth in recurring software revenue, alongside operational discipline that drove record gross margin and free cash flow. However, CEO Tom Deitrich noted that ongoing trade policy uncertainty and customer budget constraints led to slower project deployments and more deliberate decision-making among utility clients, stating, “customers and regulators face a more complex environment, leading to slower project deployments and delayed decisions in certain areas.”

Looking ahead, Itron’s revised guidance reflects a cautious near-term outlook, as management expects slower activity levels from utility customers due to evolving trade policies and macroeconomic uncertainty. The company is focusing on high-value solutions in grid efficiency and resiliency, while anticipating that project delays are temporary and will not impact long-term demand. CFO Joan Hooper said, “we now anticipate a period of slower activity levels in the near term as our customers take time to assess the impact of emerging macroeconomic crosswinds on their business.” Management remains committed to margin improvement and disciplined capital allocation, and is actively pursuing software- and services-oriented acquisitions to strengthen its Outcomes segment.

Key Insights from Management’s Remarks

Itron’s management credited improved profitability to product mix shifts and operational efficiencies, while acknowledging that utility customer spending patterns have become more unpredictable due to macro and regulatory factors.

Grid Edge Intelligence traction: Adoption of distributed intelligence (DI) endpoints accelerated, with shipments rising to over 15.3 million, underscoring utility demand for real-time data and analytics despite delays in some project deployments.
Product mix improvements: Structural changes, such as the closure of a lower-margin electric factory in France and a strategic shift towards water solutions, boosted margins in the Device Solutions segment, as highlighted by CFO Joan Hooper.
Resilient recurring revenue: The Outcomes segment posted 9% year-over-year growth, powered by recurring software licenses, reflecting the increasing importance of SaaS (Software-as-a-Service) offerings to Itron’s profitability.
Project and regulatory delays: Management pointed out that customers are stretching project timelines due to labor constraints, sequencing needs, and annual capital budget limits—delaying revenue recognition but not causing project cancellations.
International wins: New contracts in Europe (notably Greece’s HEDNO) and U.S. municipal water markets (Tucson) demonstrate Itron’s ability to secure business with forward-looking clients, positioning the company for future growth as infrastructure modernization trends continue.

Drivers of Future Performance

Management expects near-term headwinds from slower utility spending and regulatory approval cycles but remains focused on margin expansion and software growth.

Utility customer caution: Management observed that utilities are prioritizing essential, margin-accretive projects in grid efficiency and resilience, while deferring discretionary projects due to constrained annual capital budgets and regulatory scrutiny over ratepayer costs.
Operational efficiency and mix: Margin expansion is expected to continue, driven by ongoing portfolio pruning—favoring higher-margin water and software solutions over legacy hardware—and benefits from prior factory closures and segment divestitures.
Software and services focus: Itron is actively pursuing acquisitions to accelerate the growth of its Outcomes segment and recurring revenue, with management reiterating discipline in capital allocation and a preference for software- and services-oriented targets.

Catalysts in Upcoming Quarters

Going forward, the StockStory team will be monitoring (1) utility project booking trends and whether deferred revenue returns as customers finalize budgets, (2) margin sustainability as Itron shifts further toward software and high-value solutions, and (3) regulatory approval pacing for key contracts, especially in international and municipal markets. Additional attention will be paid to progress on M&A activity and the scaling of recurring revenue streams.

Itron currently trades at $128.60, down from $138.42 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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