v3.24.2.u1
Segment Information
 6 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
Segment Information Segment Information
We operate under the Itron brand worldwide and manage and report under three operating segments: Device Solutions, Networked Solutions, and Outcomes.

We have three GAAP measures of segment performance: revenues, gross profit (gross margin), and operating income (operating margin). Intersegment revenues are minimal. Certain operating expenses are allocated to the operating segments based upon internally established allocation methodologies. Corporate operating expenses, interest income, interest expense, other income (expense), and the income tax provision (benefit) are neither allocated to the segments, nor are they included in the measure of segment performance. Goodwill impairment charges are recognized in Corporate unallocated. In addition, we allocate only certain production assets and intangible assets to our operating segments. We do not manage the performance of the segments on a balance sheet basis.

Segment Products

Device Solutions – This segment primarily includes hardware products used for measurement, control, or sensing. These products generally do not have communications capability or may be designed for use with non-Itron systems. Examples from the Device Solutions portfolio include: standard endpoints that are shipped without Itron communications, such as our standard gas, electricity, and water meters for a variety of global markets and adhering to regulations and standards within those markets, as well as our heat and allocation products; communicating meters that are not a part of an Itron end-to-end solution and designed to meet market requirements; and the implementation and installation of said hardware products.

Networked Solutions – This segment primarily includes a combination of communicating devices (e.g., smart meters, modules, endpoints, and sensors), network infrastructure, and associated head-end management and application software designed and sold as a complete solution for acquiring and transporting robust application-specific data. Networked Solutions includes products and software for the implementation, installation, and management of communicating devices and data networks. The Industrial Internet of Things (IIoT) solutions supported by this segment include automated meter reading (AMR); advanced metering infrastructure (AMI) for electricity, water and gas; distributed energy resource management (DERMs); smart grid and distribution automation; smart street lighting; and leak detection and applications for both gas and water systems. Our IIoT platform allows utility and smart city applications to be run and managed on a flexible multi-purpose network.

Outcomes – This segment primarily includes our value-added, enhanced software and services, artificial intelligence, and machine learning in which we enable grid edge intelligence and manage, organize, analyze, and interpret raw, anonymized data to improve decision making, maximize operational profitability, enhance resource efficiency, improve grid analytics, and deliver results for consumers, utilities, and smart cities. Outcomes supports high-value use cases, such as data management, grid operations, distributed intelligence, AMI operations, gas distribution and safety, water operations management, revenue assurance, DERMs, energy forecasting, consumer engagement, smart payment, and fleet energy resource management. Utilities leverage these outcomes to unlock the capabilities of their networks and devices, improve the productivity of their workforce, increase the reliability of their operations, manage and optimize the proliferation of distributed energy resources (DERs), address grid complexity, and enhance the customer experience. Revenue from these offerings are primarily recurring in nature
and would include any direct management of Device Solutions, Networked Solutions, and other third-parties' products on behalf of our end customers.

Revenues, gross profit, and operating income associated with our operating segments were as follows:
Three Months Ended June 30,Six Months Ended June 30,
In thousands2024202320242023
Product revenues
Device Solutions$117,929 $112,509 $243,837 $229,960 
Networked Solutions387,351 330,668 768,656 612,138 
Outcomes27,627 21,626 48,236 39,029 
Total Company$532,907 $464,803 $1,060,729 $881,127 
Service revenues
Device Solutions$621 $651 $1,465 $1,454 
Networked Solutions25,353 30,262 51,564 62,260 
Outcomes50,188 45,354 98,753 90,847 
Total Company$76,162 $76,267 $151,782 $154,561 
Total revenues
Device Solutions$118,550 $113,160 $245,302 $231,414 
Networked Solutions412,704 360,930 820,220 674,398 
Outcomes77,815 66,980 146,989 129,876 
Total Company$609,069 $541,070 $1,212,511 $1,035,688 
Gross profit
Device Solutions$31,231 $24,719 $61,295 $48,432 
Networked Solutions152,157 121,873 303,182 227,649 
Outcomes27,072 27,355 51,362 54,234 
Total Company$210,460 $173,947 $415,839 $330,315 
Operating income
Device Solutions$23,725 $14,084 $45,428 $28,162 
Networked Solutions117,444 88,593 234,122 163,549 
Outcomes10,651 12,676 19,742 25,587 
Corporate unallocated(87,173)(80,253)(171,845)(192,591)
Total Company64,647 35,100 127,447 24,707 
Total other income (expense)2,393 (802)4,809 (2,516)
Income before income taxes
$67,040 $34,298 $132,256 $22,191 

For the three and six months ended June 30, 2024 and 2023, no single customer represented more than 10% of total company revenue.
Revenues by region were as follows:
Three Months Ended June 30,Six Months Ended June 30,
In thousands2024202320242023
United States and Canada$498,388 $430,617 $980,484 $803,459 
Europe, Middle East, and Africa86,781 85,676 185,437 184,420 
Asia Pacific23,900 24,777 46,590 47,809 
Total Company$609,069 $541,070 $1,212,511 $1,035,688 

Depreciation expense is allocated to the operating segments based upon each segment's use of the assets. All amortization expense is recognized within Corporate unallocated. Depreciation and amortization of intangible assets expense associated with our operating segments was as follows:
Three Months Ended June 30,Six Months Ended June 30,
In thousands2024202320242023
Device Solutions$2,832 $3,229 $5,430 $6,491 
Networked Solutions3,997 4,068 8,015 8,199 
Outcomes1,504 1,224 2,960 2,478 
Corporate unallocated5,186 5,384 9,858 11,200 
Total Company$13,519 $13,905 $26,263 $28,368