Key insights
- The analysis suggests Itron ($ITRI), primarily viewed as a hardware utility vendor, possesses a high-growth software business (Outcomes & Resiliency Solutions segments) undervalued by the market. The author estimates the software component trades at approximately 8x EV/ARR, significantly lower than comparable companies like Samsara and Veeva. The introduction of ARR as a key metric and the recent creation of the Resiliency Solutions segment are not yet reflected in analyst models. An upcoming Investor Day is expected to be a catalyst for re-rating the stock.
Wrote up a primary source thesis on Itron ($ITRI). Short version:
Itron reports as a hardware utility vendor. Inside that business sits an Outcomes segment generating ~$360M of primarily recurring revenue growing 22% YoY at 41.7% adjusted gross margins, plus a brand new Resiliency Solutions segment at 76% gross margins.
ARR was introduced as a primary key operating metric for the first time in the FY2025 10-K — $368M, up 20% YoY per management verbatim. No prior ARR framework existed for analysts to model against.
The SOTP implies ~8× EV/ARR on the software layer. Samsara trades above 15×. Veeva reached ~35× during its category recognition phase.
Three reasons the gap persists:
- Metric transition lag — models built before ARR existed aren't being rebuilt from scratch * Resiliency Solutions didn't exist until November 2025 — zero recognition in any street model * Analyst career risk — publishing a SOTP 80-100% above consensus requires conviction most won't have until the Investor Day forces it
Catalyst: Deitrich has essentially pre-announced an Investor Day. FY2027 targets were hit two years early. With 1.8M shares of effective float, re-rating happens in a gap, not gradually.
Full write-up with SOTP table, break conditions, and primary sources here: https://substack.com/home/post/p-191420752
Happy to get pushback on the hardware multiple assumption or the ARR quality question.