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Segment Information
 9 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
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. 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 that do not have communications capability embedded for use with our broader Itron systems, i.e., hardware-based products not part of a complete end-to-end solution. 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 such as Smart Spec meters and the implementation and installation of non-communicating devices, such as gas regulators.

Networked Solutions – This segment primarily includes a combination of communicating devices (e.g., smart meters, modules, endpoints, and sensors), network infrastructure, and associated 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. Examples from the Networked
Solutions portfolio include: communicating measurement, control, or sensing endpoints such as our Itron® OpenWay® Centron and Riva meters, Itron traditional ERT® technology, Intelis smart gas meters, 500G gas communication modules, 500W water communication modules; GenX networking infrastructure products and network interface cards (NICs); Smart City control and management software; Distribution Automation bridge devices, and specific network control and management software applications. The Industrial Internet of Things (IIoT) solutions supported by this segment include automated meter reading (AMR), advanced metering infrastructure (AMI), smart grid and distribution automation, smart street lighting and an ever-growing set of smart city applications such as traffic management, smart parking, air quality monitoring, electric vehicle charging, customer engagement, digital signage, acoustic (e.g., gunshot) detection, and leak detection and mitigation for both gas and water systems. Our IIoT platform allows all of these industry and smart city applications to be run and managed on a single, multi-purpose network.

Outcomes – This segment primarily includes our value-added, enhanced software and services in which we manage, organize, analyze, and interpret data to improve decision making, maximize operational profitability, drive resource efficiency, and deliver results for consumers, utilities, and smart cities. Outcomes places an emphasis on delivering to Itron customers high-value, turn-key, digital experiences by leveraging the footprint of our Device Solutions and Networked Solutions segments. The revenues from these offerings are primarily recurring in nature and would include any direct management of Device Solutions, Networked Solutions, and other products on behalf of our end customers. Examples from the Outcomes portfolio include: our meter data management and analytics offerings; our managed service solutions including Network-as-a-Service (NaaS) and Platform-as-a-Service (PaaS), forecasting software and services; our Distributed Intelligence suite of applications and services; and any consulting-based engagement. Within the Outcomes segment, we also identify new business models, including performance-based contracting, to drive broader portfolio offerings across utilities and cities.
Revenues, gross profit, and operating income associated with our operating segments were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
In thousands2021202020212020
Product revenues
Device Solutions$149,830 $174,039 $480,808 $501,157 
Networked Solutions242,527 282,677 736,397 898,465 
Outcomes18,590 13,942 48,265 38,158 
Total Company$410,947 $470,658 $1,265,470 $1,437,780 
Service revenues
Device Solutions$2,404 $2,089 $7,174 $6,415 
Networked Solutions31,971 23,982 91,473 73,519 
Outcomes41,627 43,455 131,818 130,479 
Total Company$76,002 $69,526 $230,465 $210,413 
Total revenues
Device Solutions$152,234 $176,128 $487,982 $507,572 
Networked Solutions274,498 306,659 827,870 971,984 
Outcomes60,217 57,397 180,083 168,637 
Total Company$486,949 $540,184 $1,495,935 $1,648,193 
Gross profit
Device Solutions$22,480 $20,528 $85,228 $64,843 
Networked Solutions89,915 102,295 298,627 332,368 
Outcomes22,568 20,428 68,027 56,123 
Total Company$134,963 $143,251 $451,882 $453,334 
Operating income (loss)
Device Solutions$12,095 $11,017 $53,784 $28,095 
Networked Solutions61,150 71,404 205,071 237,466 
Outcomes11,774 12,044 34,647 29,468 
Corporate unallocated(80,856)(118,445)(265,331)(338,026)
Total Company4,163 (23,980)28,171 (42,997)
Total other income (expense)(4,037)(13,063)(42,465)(35,020)
Income (loss) before income taxes$126 $(37,043)$(14,294)$(78,017)

For the three and nine months ended September 30, 2021 and the three months ended September 30, 2020, no customer represented more than 10% of total company revenue. During the nine months ended September 30, 2020, one customer represented 11% of total company revenues.
Revenues by region were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
In thousands2021202020212020
United States and Canada$323,784 $354,841 $957,993 $1,110,028 
Europe, Middle East, and Africa126,548 156,810 437,768 431,593 
Asia Pacific and Latin America(1)
36,617 28,533 100,174 106,572 
Total Company$486,949 $540,184 $1,495,935 $1,648,193 
(1) On June 25, 2020, we sold our Latin American operations. We continue to sell into the region through an exclusive distributor.

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 September 30,Nine Months Ended September 30,
In thousands2021202020212020
Device Solutions$5,911 $5,926 $17,708 $18,423 
Networked Solutions4,274 4,377 12,801 12,447 
Outcomes1,068 1,327 3,431 4,132 
Corporate unallocated10,080 12,446 30,312 37,304 
Total Company$21,333 $24,076 $64,252 $72,306