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Segment Information
 9 Months Ended
Sep. 30, 2022
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. Refer to Note 5: Goodwill for discussion of goodwill impairment recognized during the second quarter of 2022. 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. 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 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 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 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 Energy Management suite of products 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 thousands2022202120222021
Product revenues
Device Solutions$92,893 $149,830 $334,212 $480,808 
Networked Solutions240,498 242,527 731,358 736,397 
Outcomes14,400 18,590 41,929 48,265 
Total Company$347,791 $410,947 $1,107,499 $1,265,470 
Service revenues
Device Solutions$1,110 $2,404 $4,166 $7,174 
Networked Solutions29,374 31,971 86,796 91,473 
Outcomes42,585 41,627 129,612 131,818 
Total Company$73,069 $76,002 $220,574 $230,465 
Total revenues
Device Solutions$94,003 $152,234 $338,378 $487,982 
Networked Solutions269,872 274,498 818,154 827,870 
Outcomes56,985 60,217 171,541 180,083 
Total Company$420,860 $486,949 $1,328,073 $1,495,935 
Gross profit
Device Solutions$14,805 $22,480 $50,489 $85,228 
Networked Solutions81,895 89,915 263,155 298,627 
Outcomes23,362 22,568 67,747 68,027 
Total Company$120,062 $134,963 $381,391 $451,882 
Operating income (loss)
Device Solutions$7,066 $12,095 $24,103 $53,784 
Networked Solutions54,640 61,150 177,929 205,071 
Outcomes11,339 11,774 28,789 34,647 
Corporate unallocated(66,157)(80,856)(250,641)(265,331)
Total Company6,888 4,163 (19,820)28,171 
Total other income (expense)(1,943)(4,037)(6,704)(42,465)
Income (loss) before income taxes$4,945 $126 $(26,524)$(14,294)

For the three and nine months ended September 30, 2022 and 2021, no 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 thousands2022202120222021
United States and Canada$317,960 $323,784 $947,684 $957,993 
Europe, Middle East, and Africa80,735 126,548 306,962 437,768 
Asia Pacific22,165 36,617 73,427 100,174 
Total Company$420,860 $486,949 $1,328,073 $1,495,935 

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 thousands2022202120222021
Device Solutions$3,566 $5,911 $11,049 $17,708 
Networked Solutions4,401 4,274 13,126 12,801 
Outcomes2,057 1,068 4,184 3,431 
Corporate unallocated7,337 10,080 22,253 30,312 
Total Company$17,361 $21,333 $50,612 $64,252