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Segment Information
 9 Months Ended
Sep. 30, 2023
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. 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 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.

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. The Industrial Internet of Things (IIoT) solutions supported by this segment include automated meter reading (AMR), advanced metering infrastructure (AMI),
distributed energy resource management (DERMs), 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 these utility 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 raw, anonymized and aggregated data to improve decision making, maximize operational profitability, drive 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, operations management, 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 capitalize on the power of networks and devices, empower their workforce, maximize their operations, and enhance the customer experience. 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.

Revenues, gross profit, and operating income (loss) associated with our operating segments were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
In thousands2023202220232022
Product revenues
Device Solutions$110,138 $92,893 $340,098 $334,212 
Networked Solutions352,771 240,498 964,909 731,358 
Outcomes17,446 14,400 56,475 41,929 
Total Company$480,355 $347,791 $1,361,482 $1,107,499 
Service revenues
Device Solutions$631 $1,110 $2,085 $4,166 
Networked Solutions32,200 29,374 94,460 86,796 
Outcomes47,586 42,585 138,433 129,612 
Total Company$80,417 $73,069 $234,978 $220,574 
Total revenues
Device Solutions$110,769 $94,003 $342,183 $338,378 
Networked Solutions384,971 269,872 1,059,369 818,154 
Outcomes65,032 56,985 194,908 171,541 
Total Company$560,772 $420,860 $1,596,460 $1,328,073 
Gross profit
Device Solutions$26,919 $14,805 $75,351 $50,489 
Networked Solutions135,203 81,895 362,852 263,155 
Outcomes25,081 23,362 79,315 67,747 
Total Company$187,203 $120,062 $517,518 $381,391 
Operating income (loss)
Device Solutions$17,675 $7,066 $45,837 $24,103 
Networked Solutions102,503 54,640 266,052 177,929 
Outcomes10,280 11,339 35,867 28,789 
Corporate unallocated(75,568)(66,157)(268,159)(250,641)
Total Company54,890 6,888 79,597 (19,820)
Total other income (expense)843 (1,943)(1,673)(6,704)
Income (loss) before income taxes$55,733 $4,945 $77,924 $(26,524)
For the three and nine months ended September 30, 2023 and 2022, no single customer represented more than 10% of total company revenue.

Revenues by region were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
In thousands2023202220232022
United States and Canada$452,583 $317,960 $1,256,042 $947,684 
Europe, Middle East, and Africa81,394 80,735 265,814 306,962 
Asia Pacific26,795 22,165 74,604 73,427 
Total Company$560,772 $420,860 $1,596,460 $1,328,073 

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 thousands2023202220232022
Device Solutions$2,976 $3,566 $9,467 $11,049 
Networked Solutions4,074 4,401 12,273 13,126 
Outcomes1,270 2,057 3,748 4,184 
Corporate unallocated5,325 7,337 16,525 22,253 
Total Company$13,645 $17,361 $42,013 $50,612