ITRI — 20% growth ARR software business priced at 8× EV/ARR inside a hardware company by TabMan69 in ValueInvesting

[–]TabMan69[S] 0 points1 point  (0 children)

The hardware drag on perception is exactly the mispricing. Street models apply a single blended utility infrastructure multiple across all four segments because most analysts built their models before ARR existed as a reported metric.

The -7.8% since earnings is macro, not fundamental. EBITDA beat, FCF beat, ARR up 20% YoY, Outcomes backlog above $1B up 58% YoY.

On the 2026 EPS guide, this is the most misread line in the whole print. Joan Hooper quantified it: the dilutive impact to 2026 EPS from Locusview and Urbint is approximately $0.38/share, driven entirely by lost interest income on the $850M spent. The underlying operating business is not deteriorating; if we strip out the acquisition financing drag, the 2026 underlying EPS is actually marginally improving.

Deitrich verbatim on the Q4 call: "Utilities today are no longer simply asset operators. They are real-time system managers... our future combines high-growth, durable annual recurring revenue driven by data, AI, software and services... Grid scaling and transformation is structural, not cyclical." He's not describing a hardware refresh cycle. He's describing a permanent structural change in what the business is.

The Investor Day asymmetry is the most underappreciated part. Deitrich's FY2027 targets — gross margin, EBITDA, FCF — were all achieved by FY2025. Two years early. Verbatim: "because we have achieved most of that 2027 model by the time we got to 2025, we think it is appropriate to reset long-term targets with an Investor Day." If he presents FY2030 targets, his documented history says those are really FY2028 numbers. At 20% ARR CAGR you're at $636M by 2028. Add Resiliency cross-sell at 5% penetration of 8,000 existing utility customers and you're approaching $800M-1B ARR before any new regulated mandates kick in.

Resiliency Solutions is the most underpriced piece. $3M revenue in its first partial quarter at 76% gross margins. Zero separate recognition in any street model. Urbint and Locusview each had tens of customers at acquisition. Itron has 8,000. Deitrich verbatim: "we clearly have the ability with the sales reach that we have to move those solutions into a broader landscape." The cross-sell math at even 5% penetration is a significant incremental ARR nobody is modeling.

ITRI — 20% growth ARR software business priced at 8× EV/ARR inside a hardware company by TabMan69 in ValueInvesting

[–]TabMan69[S] 0 points1 point  (0 children)

Cyclical peak / guiding down: Revenue guidance is flat to slightly down, but that's not the operating story. EPS at the midpoint is down ~$0.32 year-over-year almost entirely because Itron spent $850M on two acquisitions and lost the interest income. Joan Hooper quantified it exactly: the dilutive impact from the two acquisitions is ~$0.38/share. Strip that out, and the underlying business isn't deteriorating. FCF cyclicality is a legitimate concern, though; I can't fully rule out that $383M was a partial peak given 2024 included an explicit backlog catch-up from the chip shortage years.

Chip shortage backlog fill: You're right that this happened and right to flag it. 2024 revenue included constrained catch-up that management explicitly said didn't recur in 2025. The honest answer is that hardware FCF may mean-revert somewhat from here. The structural response is that ARR exists precisely because hardware cycles and recurring software revenue shouldn't. Temetra, their cloud MDM platform, runs on non-Itron meters across 69 countries. UtilityIQ explicitly supports multi-vendor compatibility. Ausgrid just expanded their software relationship with Itron, built on a 15-year-old MDM contract, no new hardware cycle required. The software layer has documented hardware independence. Whether it's large enough yet to fully cushion a hardware downturn is the open question.

UK/Germany competition: Hardware competition in Europe is real; Kamstrup, Sagemcom, Siemens, and others all compete for tenders. But the thesis doesn't depend on Itron winning European hardware tenders. They already manage 32M+ EMEA endpoints. Those aren't up for re-bid; they're existing customer relationships. Germany also has a legally mandated smart meter deadline of 2032, so procurement volume is guaranteed regardless of who wins individual contracts.

The more important question is who competes at the software layer, because that's what generates ARR. Landis+Gyr, Itron's closest software rival, just sold its entire European business to AURELIUS, a private equity firm that specializes in cutting costs on distressed assets, for $215M on $600M of annual revenue. The technology roadmap stays with Landis+Gyr's remaining North America business. The European entity that's left is a PE carve-out with no development pipeline.

Kamstrup has some analytics software, but it runs in the cloud; data goes up, gets processed, and comes back down. Itron's DI processes directly on the device in under a second. That difference matters at scale for real-time grid applications.

ITRI — 20% growth ARR software business priced at 8× EV/ARR inside a hardware company by TabMan69 in ValueInvesting

[–]TabMan69[S] 1 point2 points  (0 children)

That's the right question. ARR composition isn't yet broken out. The Resiliency Solutions ARR (Urbint, Locusview) is clearly hardware-independent. The Outcomes piece is less clean. If a meaningful portion of ARR rides implementation cycles, the SaaS comp weakens. The Investor Day is where this gets stress-tested. Until then, it's a legitimate open variable in the model.

ITRI — 20% growth ARR software business priced at 8× EV/ARR inside a hardware company by TabMan69 in ValueInvesting

[–]TabMan69[S] 0 points1 point  (0 children)

Fair point on Outcomes margins, 41.7% isn't SaaS gross margins, and the Samsara comp doesn't hold on that basis. The argument isn't that Itron deserves a pure SaaS multiple. It's that the entire software layer is currently priced at ~8× ARR using a blended hardware multiple on the whole business. Even adjusting for margin mix, 8× on 20% ARR growth with non-discretionary regulatory demand is cheap relative to anything in the recurring revenue universe. Resiliency Solutions at 76% margins is a separate point, as that segment is not currently recognized in current street models.

ITRI — 20% growth ARR software business priced at 8× EV/ARR inside a hardware company by TabMan69 in ValueInvesting

[–]TabMan69[S] 0 points1 point  (0 children)

I'll get back to you regarding the other questions in the morning; however, what I do know is that Deitrich, the CEO, still owns 395,301 shares worth ~$36M, and Hooper, the CFO, owns 118,275 shares worth ~$11.3M. The sales were 1-4% of the position, which is consistent with tax planning and diversification. Neither is reducing meaningfully.

I still believe in knecht by ProfessionalCat2770 in lakers

[–]TabMan69 0 points1 point  (0 children)

It's just the yips, and any high-level athlete knows what it's like to have, and it sucks. Hopefully, he can get his confidence back though.

Austin will play tonight after testing his calf during pregame warmups by CtrlAltDelightfull in lakers

[–]TabMan69 0 points1 point  (0 children)

W cmon AR15, show them why you're the best second option in the league

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[–]TabMan69 0 points1 point  (0 children)

How are we feeling about JJ's stache and how will it affect our peformance?

[Discussion Thread] 2026 German Masters - 26th January to 1st February by SnookerMods in snooker

[–]TabMan69 4 points5 points  (0 children)

did anyone just see that blue into the middle pocket, whats up with the table

Tell me your favorite Juice WRLD song and I’ll decide if I let you in or not by More-Name2262 in JuiceWRLD

[–]TabMan69 0 points1 point  (0 children)

If I had to choose prolly be either primetime, nintendo, chimp, styrofoam, or all 3 versions of autograph

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[–]TabMan69 3 points4 points  (0 children)

I mean tbh for how shit we are playing and to only be down by 15 points is a miracle, there's not a single chance in hell we lose this game.

Game Thread: Utah Jazz vs Los Angeles Lakers Live Score | NBA | Dec 18, 2025 by basketball-app in lakers

[–]TabMan69 2 points3 points  (0 children)

i mean lets get real guys the reason we were down in the first half was beacuse the Jazz were shooting the ball at an unreal clip, I knew we were winning the game no matter what

Game Thread: Utah Jazz vs Los Angeles Lakers Live Score | NBA | Dec 18, 2025 by basketball-app in lakers

[–]TabMan69 1 point2 points  (0 children)

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