Ituran (ITRN) Q3 2025 Earnings Call Transcript

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DATE

Tuesday, November 18, 2025 at 9 a.m. ET

CALL PARTICIPANTS

• Co-CEO — Eyal Sheratzky
• Chief Financial Officer — Eli Kamer
• VP Investor Relations — Kenny Green

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TAKEAWAYS

• Revenue -- $92,300,000 in the third quarter, marking an 11% increase year over year.
• Subscription Fees -- $67,600,000 in the third quarter, a 13% annual rise, representing 73% of total revenue.
• Product Revenue -- $24,700,000 in the third quarter, up 4% from the prior year period.
• Subscriber Base -- 2,588,000 at the end of the third quarter, reflecting an increase of 40,000 net additions during the quarter and 219,000 added over twelve months.
• Geographic Revenue Mix -- Israel accounted for 55%, Brazil for 23%, and rest of world for 22% of revenue.
• EBITDA -- $24,600,000, or 26.7% of revenue, up 6% from the prior-year period, though margin declined from 27.9%.
• Net Income -- $14,600,000, with diluted EPS of $0.74, growing 7% from $13,700,000 and $0.69 per share, respectively.
• Operating Cash Flow -- $21,300,000 generated during the quarter.
• Net Cash (including marketable securities) -- $93,100,000 as of September 30, 2025, compared with $77,300,000 at 2024 year-end.
• Dividend -- $10,000,000 declared for the quarter, equaling $0.50 per share, following a policy increase at 2024 year-end to deliver an approximate 5% annualized yield.
• Share Repurchases -- $1,500,000 in shares repurchased in the quarter, with $5,200,000 remaining available under the buyback program.
• Guidance for Subscriber Additions -- Management targets 220,000-240,000 net new subscribers in 2025, which would represent a record level.
• Brazil Motorcycle Market Initiative -- New motorcycle product, supported by a partnership with BMW Motorrad, expanded addressable market in South America.
• US Market Entry (Ituran Mob platform) -- Platform launched with pilot programs in Orlando and New York targeting small and medium car rental companies, capitalizing on "strong demand" for efficient digital solutions.
• OpEx Increase Driver -- CFO Kamer stated, "the big majority of it is coming from the FX. Effect."
• ARPU Movement -- CFO Kamer attributed the ARPU increase to FX benefits this year.

SUMMARY

Management reported double-digit revenue growth with strong expansion in both subscription and product revenues, citing record high quarterly and year-to-date net subscriber additions. Strategies included broadening product offerings for previously untapped segments in Israel and leveraging new OEM relationships to penetrate additional markets. Geographic diversification advanced, with Latin America highlighted as a core growth region, particularly via new motorcycle partnerships, and the US identified as a nascent market through the Ituran Mob launch. The company reinforced shareholder returns via dividend increases and ongoing share buybacks, underpinned by robust operating cash generation and rising net cash. Management also cited currency effects as a positive factor for both ARPU and reported operating expenses, and confirmed guidance for record subscriber growth in 2025.

• Management stated, "We are on track to add between 220,000 and 240,000 net new subscribers in 2025," representing the company's highest expected annual additions.
• Efforts to expand market share in Israel have targeted lower-priced new vehicles and the second-hand market, in response to a persistently high car theft rate.
• The company indicated its e2Run mob platform received "very, very good" pilot feedback in US rental markets and described early adoption in Brazil as "solid traction."
• OEM channel development included signing motorcycle OEM deals in Brazil, notably with Yamaha and BMW Motorrad, positioning the company to address a large, underpenetrated market.
• Potential margin expansion was linked explicitly to increasing subscriber base, according to CFO Kamer, with no additional guidance on margin driven by other factors.

INDUSTRY GLOSSARY

• OEM (Original Equipment Manufacturer): Company that produces parts or products, such as vehicles or telematics hardware, that are purchased by another company and retailed under that purchasing company's brand name.
• ARPU (Average Revenue Per User): Metric indicating the average revenue generated per subscriber during a defined period.
• UBI (Usage-Based Insurance): Insurance underwriting model where policy premiums are based on individual driving behavior and usage data collected via telematics devices.
• SVR (Stolen Vehicle Recovery): Service utilizing technology to remotely track, locate, and assist in the recovery of stolen vehicles.

Full Conference Call Transcript

Eyal Sheratzky: Thank you, Kenny. I'd like to welcome all of you to our third quarter 2025 results call and thank you for joining us today. We are very happy with the results of the third quarter, which was strong across all key parameters. In particular, we are very pleased with the revenue growth. And we continue to grow, driven by our long-term efforts success in bringing existing as well as new customer value adding telematics and connected car product and services. In addition, we are also constantly bringing additional OEM partners to our growing roster an example of which was Stellantis last quarter, and we are in active discussions with others.

Our results show an ongoing expansion across our target geographies, in our large subscriber base of over 2,500,000 subscribers. In the third quarter, we added 40,000 net subscribers. We are on track to add between 220,000 and 240,000 net new subscribers in 2025. Which will represent a very strong year of subscriber growth. We had a good third quarter. And I want to summarize some of our activities, which contribute to our growth and success. Continue to see solid demand for allocation based products and telematics services in all our regions. As well as traction from our new initiative and services.

In Israel, the high car theft rate in Israel continued to provide strong demand for our services in the country, and we are reaching additional new subscribers from parts of the market that were previously untapped by us. Such as lower priced new vehicles or the second-hand car market. Our usage-based insurance business in Israel is also seeing good traction and bringing continued strong subscriber growth. In Latin America, we continue to expand our reach. Our new product targeting the motorcycle market, is gaining strong traction across South America especially on the back of our partnership with BMW Motorrad in Brazil. Motorcycles are significant market opportunity. Being the top mode of transportation in many parts of the world.

It significantly increased our total addressable market. With Brazil as our starting point we plan to scale into other high growth motorcycle markets, through partnerships with local OEMs as well as sales to the aftermarket. Our e2Run mob smart mobility platform is a unique technology and solution enabling remote vehicle access real-time telematics, and efficient fleet management for shared mobility and rental fleet applications. Ituranmob was launched first in Brazil, has been gaining solid traction here. Where it is being adopted by a growing number of fleet operators and rental companies. Based on the strong market interest and success we've seen in Brazil, we are now introducing It The United States market.

We recently established operation for Ituan Mob in The United States. We have identified a strong need in The US for our solution, particularly among the thousands of small to medium car rental companies, which include hundreds of thousands of cars. These companies could benefit from this type of technological solution. Making the rental process more user-friendly and efficient. This creates a new long-term avenue of growth alongside our core telematics and subscriber-based businesses. Ituran Location and Control Ltd. generated a high level of cash in the quarter amounting to $21,300,000 in operating cash flow during the quarter. Due to our continued profitability and strong cash generation, we declared a dividend of $10,000,000 to shareholders for the quarter.

I remind you, at the end of last year, we increased our dividend policy by 25%. From issuing $8,000,000 per quarter to $10,000,000 per quarter. This represents $0.50 per share. Our dividend yield on an annualized basis represents a return of around 5%, which is a very solid return from a strong and stable company. During the quarter, we purchased $1,500,000 in shares under our buyback program. As of the end of the quarter, we had around $5,200,000 still available under this program. We see our ongoing dividend and buyback as a reward to our shareholders, their loyalty and long-term support of our company.

And in summary, we remain very pleased with Ituran Location and Control Ltd.'s performance in the third quarter and more generally, Ituran Location and Control Ltd.'s long-term and ongoing performance. At the same time, we look for more avenues to bring further growth to our business across all our regions, and the recent launch of Itoan Mob an example for this. We constantly aim to bring new products and services to both existing customers and new customers well as partnership with new OEMs. New financing companies, and other leading companies. 2025 marks twenty years as a public company and thirty years as a company.

We look forward to opening the nascent market on Tuesday next week, November 25, and we think both the Nasdaq as well as our shareholders for the long-term support of our business. And with that, I hand over to Eli.

Eli Kamer: Thanks, Eyal. I will provide a short summary of the financial results. You can find the more detailed result that we issue the press release earlier today. Third quarter revenues were $92,300,000, an 11% increase compared with $83,500,000 in Q3 of last year. Subscription fees were $67,600,000, up 13% year over year. And representing 73% of total revenues. Product revenues were $24,700,000 up 4% year over year. Our subscriber base reached 2,588,000 at quarter end. An increase of 40,000 in the quarter. Year over year, the subscriber base grew by 219,000. The geographic breakdown of revenues in the third quarter was as follow. Israel 55% Brazil, 23%, rest of world, 22%.

EBITDA was $24,600,000, 26.7% of revenues, up 6% year over year compared with EBITDA of $23,300,000 27.9% of revenues in the third quarter of last year. Net income for the third quarter was $14,600,000 or diluted earnings per share of 74¢. An increase of 7% compared to $13,700,000 or diluted earnings per share of 69¢ in the third quarter of last year. Cash flow from operations for the 2025 was $21,300,000. Of 09/30/2025, the company had net cash including marketable securities of $93,100,000. This is compared with net cash including marketable securities of $77,300,000 as of year end 2024. The board of directors declared a dividend of $10,000,000 for the quarter.

The current dividend takes into account the company's continuing strong profitability, ongoing positive cash flow, and strong balance sheet. During the quarter, we purchased $1,500,000 in shares under our buyback program. As of the end of the quarter, we had around $5,200,000 available under this program. And with that, I'd like to open the call for the question and answer session. Operator?

Kenny Green: Thank you. At this time, we will begin the question and answer session. If you have a question, please raise your hand via the Zoom platform. I will introduce you and ask you to unmute after which you may ask your question. Take a few moments to poll for your questions. Our first question will be from Chris Reimer of Barclays. Chris, you may go ahead and ask your question.

Chris Reimer: Oh, hi. Thanks for taking my question. And, congratulations on the strong results. I was wondering if you could give a little more color on the launch in The U. S. What's the target market Do you have any idea of the how big it is, and when might you expect it to bear fruit

Eyal Sheratzky: Okay. Absolutely. Thank you. Before we decide, to go from Brazil directly to The US market, which is I think the most luxury market for this kind of solutions. We did a survey, and we get information that in The United States, there are tens of thousands of rental companies. It's true that about five of them are representing more than 60% of the market, and these are the big names. At the first in the beginning, we are not aiming them as our segment, but the other represent hundreds of thousand of rental cars.

We are talking about small and medium rental companies from a one family that hold 10 or 15 cars that they are rented or some meat companies with 100, 200, 300 cars. All of them are local. All of them are or most of them are not nationwide. And they have a very strong demand for a solution that, first of all, will allow them to save their cost, and I will explain. In order today for a business that has 20, 30 cars to meet the customers they have to go and meet each customer, give him the key of the car, then bring it back. It's required drivers It's required service.

Or in the worst case, they have to open a office put a deck, put the people, put softwares, etcetera. And when you have 20, 30 cars, it's a dramatically high expense, and it's dramatically lowering the chance to make money from your rental company. What we provide is that you don't have to do almost anything except having the cars.

Because everything done on the streets everything done that you have a dashboard as a as a rental company owner, small rental company owner, So and you can know every minute what is with the cars, who is driving the car, how much money this car will provide you, and that's done by having a smart key in the car having the system that we developed through Ituran mob our small subsidiary for this technology and innovation. And in Brazil, by the way, we do it for almost three years. It's a very success solution.

Add to this that even in Israel, the largest leasing and rental company in Israel, Shlomo, Shlomo lease car, change a technology that he found in the world because we didn't have it in the past. To our technology is through to the garbage about 2,000 hardwares that he paid and installed in his rental cars, and now we are the partners in our units and services are also in Israel. I'm not I'm talking about The US because Israel, by definition, it's a small market. It's it's maybe attractive, but it's not having a major influence on our future results. But The US market and it's important to mention we are, I think, the first.

I mean, we heard we know about companies that tried they have a very not the same technology. Let me I don't wanna be arrogant. And when they tried, the technology didn't work. They tried to do it in small city, one small city, but they are not really big technology or communication player that develop or represent it to The US market So we are in the beginning of this industry, I would say, in The States. There are companies deals with remote renters, but not the renting the car itself. There are companies that provide services to rental companies. Like an integrators software companies, That's good. This is, by the way, it's it's an advantage for us.

Because we can partnering with them. Before we do it, we have a solution which we can go independently by ourselves. We already have pilots in the area of Orlando and New York. With some small rental companies that are very satisfied there. Response that we get is very, very good. I'm saying it's not something that will happen tomorrow. We are opening a new, I think, a new niche, a new segment, a new market. It also required adaptations. But I think that the, let's say, the dream here is huge.

Chris Reimer: Got it. Got it. Thanks. That's really great color. Maybe just touching on, OpEx. What was driving the increase in operating expenses this quarter? And how we be looking at margin expansion into next year?

Eli Kamer: If we are talking about the increase in the OpEx, the big majority of it is coming from the FX. Effect. As, and that, of course, increased the absolute numbers of the OpEx. And if we are talking about the margins, again, I don't see any reason that as long as we continue to increase our subscriber base, and this is exactly according to the guideline and I'm a assuming next year, the same, that the margins will increase as well.

Chris Reimer: Got it. Thank you. And maybe if I could just one more. How do you feel the subscriber momentum is performing versus your original guidance for the year? And can you give any color on where you're seeing the most traction?

Eyal Sheratzky: As I said in my speech is that we provide kind of guidance of 200,000 220 to 248,000. And according to the nine months, and add the current the current data that we have is that we will meet this range. Is the highest, I think, ever in the thirty years of it run. And drivers are absolutely across all the regions, and it's include also from the OEM It's include the aftermarket that we do in Brazil which is including the insurance companies, and it's also including the financial solution that we provide to banks. And also, with a very major influence on the subscribers that we add during 2025 is Israel.

And this is thanks to the requirement by insurance companies relatively to the cost of rate is very high, So more and more new cars, but more important is secondhand cars that in the past didn't require for the policy security system, now they required and it run the first choice in Israel by far of any other security solution, this allow us to grow in 2025 dramatically as well Israel. And I will add that the UBI also has some volatility at 2023, we did a very high growth in subscribers. 2024, we had to expand the customers that we are approaching.

And in 2025, we had another large insurance company that we developed for them a solution and they also during the sale 2025, start using our UBI solution in a in a in a high numbers. So overall, this is the drivers.

Chris Reimer: Great. Great. Thanks. That's it for me, guys.

Kenny Green: Thank you. Thanks, Chris. Our next question is gonna be from Allen Klee of Maxim Group. Allen, you may go ahead and ask.

Allen Klee: Yes. Hi. Can you hear me?

Eyal Sheratzky: Yes. Yes.

Allen Klee: Oh, great. You talked about how motorcycles is important in South America and your partnership with BMW. How where are you could you talk about kind of how you're looking at increasing the uptake in this market?

Eyal Sheratzky: Yes. Brazil and especially, but also the rest of Latin America, is a very motorcycles, I'm talking about mid to heavy engine motorcycles, which is quiet expensive, expensive vehicle, is a very popular. The ratio between four wheel drive and a two wheel drive it's a it's a it's a very different than, for example, in other country in the Western world, many people using motorcycles. Ituran Location and Control Ltd. always has a solution, but our solution was a little bit I would say, not reliable enough to provide insurance companies with a low premium to motorcycles. This is first. Second, even the motorcycles themselves, was in a situation that they didn't want to add cost to their motorcycles.

But in the last two years, we develop thanks to our against innovative teams, a unit, which is a state of the art for security system and application for the driver on a motorbike. And what we did first we use our OEM capabilities and teams we start negotiate. As you remember, maybe first one was with Yamaha. Yamaha is our first customer for almost two years, eighteen months. And then now as we publish, we sign an OEM deal with BMW Motorrad in Brazil. The idea is that this is an untapped market for a telematic solutions.

And we're talking about potential of millions of motorbike that fitting these needs and can pay it compared to the price of the motorbike. So we started with an OEM, This allow us to create reliability This allow us to partnering with brands The guys of motorbike is like sports car. They if somebody is driving a BMW, you will be very loyal. The same Honda, Yamaha, etcetera, specifically in Brazil. So we knew that to partnering with a big brand in the OEM will again provide reliability, what we see is attraction also from the aftermarket.

Because if someone come to a dealer of BMW, to have some treatment to the motorbike or to buy some something now he's asking or you will see that there is a solution by Turan. So we really believe that we just started I am expecting that it will bring us tens of thousand of subscribers of new subscribers starting 2026, and it will grow as we will expand the segment and our customer, whether it will be b to b with other motorbike manufacturers. There are other names that we are start to talk with. I'm not saying whether it will finish with the deal or not, but we see attraction.

And a major portion of this market is the second market, the aftermarket, And this is something, again, that I believe that can be very important with influence again on the results, in two to three years from now.

Allen Klee: Thank you. To I understand that Israel's in a attractive market, but not that large. And you have a large op in Latin America, South America. How do you think about, like, first, the size of the opportunity in South America, and then also is it possible over the next couple of years that there could be other geographies that might make sense

Eyal Sheratzky: First of all, we are not passing any opportunity, but by talking about how we focus. So the Latin America market, whether it's Central Or South America, it's a huge market, which is, by the way, it's kind of emerging market. So there is still growing segment that we couldn't penetrate, whether it's because of price, whether it's because awareness So for us, the first online is to expand and continue expanding our business in Latin America because the synergy that we can create the relationship, the brand, and we still, I think, in the beginning, of tapping this market.

So this is regard how we focus, but on opportunistic way, of course, when we're going to some play when we look on the rest of the world, are more looking of do it by m and a, by acquisition. Because for us, to start a new business from scratch, for example, in UK or in Europe, it's will required high resources we have zero resources now there. Until the moment that we will turn it to a meet you major revenues and major profits, it will take a long time.

At the size of it to run, the way that we are looking on other geographies is by m and a, but, of course, we are looking should be something that meet our DNA, meet our criterias, and our criterias is not too small company. On the other end, the company that has assets that we can leverage such as partners, or customers system of employees, control centers, etcetera. But to make the long story short, we still focus on Latin America, and in The US, as I said.

Allen Klee: Okay. Thank you very much. You're welcome.

Kenny Green: Our next question will be from Sergey Glinyanov from Freedom Capital Markets. Sergey, please go ahead.

Sergey Glinyanov: Good morning, Eyal, Udi, Eli. Can you hear me?

Eyal Sheratzky: Yes.

Sergey Glinyanov: Great. Great. So my first of all, my applause to Ituran Location and Control Ltd. another successful quarter. You guys beat market expectation, wasn't revenue and EPS. But now I'm interested in revenue dynamics. It seems your ARPU is increasing. Is it basically product and service mix or something more fundamental as a core?

Eli Kamer: Hi, Sergey. ARPU is going up due to the fact of the FX. FX has been better in three this year. Therefore, the ARPU went up as well.

Sergey Glinyanov: Okay. And some kind of follow-up about your interim open North America. So do you have any expectation about revenue next year

Eyal Sheratzky: We never provide guidance about revenues. But I must tell you that we do all we can to make more revenues than this year.

Sergey Glinyanov: Yeah. Sounds great. Sounds great. Thank you. Thank you. That's all for welcome.

Kenny Green: You're welcome. Thank you. Thanks, Sergey. Our next question hold on one sec. Our next question will be from Evan Tindell of Byrene Capital. Evan, you may ask your question.

Evan Tindell: Hi, guys. Thanks for taking my call. My question is I've heard that some theft insurance providers in Israel are not requiring test to have your system. And I was just wondering, is that true And then secondarily, like, a follow-up to that is you know, over ten you know, over, like, five to ten, fifteen years, something like that, do you guys worry that more manufacturers will be able to sort of figure out how to do the internal telematics systems and anti theft systems well enough to disintermediate you guys. Thanks so much.

Eyal Sheratzky: Okay. So just to explain how is the process specifically in Israel, because there is a regulation, In Israel insurance company cannot decide for their insurers or to require in their policy a specific brand, a specific solution. What they allowed to do is, for example, if they want to have a location unit with a real time alert, with a twenty four seven center, that's what they put in the policy. Now as the insurer has to decide what company you choose. So never since the inception of it to run, insurance companies didn't say install it to run or install other name. This is what nice with it to run.

We are not the choosen of the insurance company. We are the choosen of million subscribers in Israel. This is what the story and how we do it with our channels. And the channels at that case, our car dealers, car importers. Just to remind you, in Israel, there is no manufacturers. But in Israel, there is car importers which represent manufacturers. So Ituran Location and Control Ltd. has a very strong partnerships relationship along the years.

And it's this is the reason why twenty years ago, it one was declared as a monopoly in the telematics business in Israel, And this is why I can say and publish that Ituran Location and Control Ltd. has something like 85 to 90% market share. So it's saying that 10% of the industry by other companies. But for us, it's good. We have competition, but we lead the competition very, very strongly. So this is regard this question. Regarding the second question, as we prove in the OEM business in Latin America, And General Motors is a very good example. Historically, we started by selling hardware and services.

But Ituran Location and Control Ltd. always was built on a recurring revenue Always, we were built as a service oriented company. For us, the hardware in the car is a tool is a tool to bring customers. But our, I would say, gold medal is to have a customer many years paying every month. For that, we don't need the hardware, but we need yes. We need a car manufacturer or an Israeli car dealer or a shop to say, okay. I'm selling a car a telematics solution. But the company that can provide the services And for example, when we talk about SVR, this is the market's we are very active. Israel, Latin America, very hostile environments.

No technology will recover the car. The recovery of the car is done by people sitting in a control center provide information to enforcement people on the field, intelligence. We have drones. Those things are aside the technology. So along as long as we can sell and specifically in emerging market, our technology is the state of the art. It's very the companies, for example, that sell cars in Israel, even the Chinese companies. They are not providing communication telematics solution, for example, in Hebrew. They are not providing the data that's relevant, and then don't and they will not immigrate it for those small market.

On the other end, in Brazil, and in Mexico, we are connecting to those manufacturer from the first level. So I think that for us, it's more important to provide the service to have the recurring revenues Today, 95% of our customers which is car dealers, car manufacturers, and any other customers still buy our hardware. But there are few percentage. We choose the their own hardware. We willing it's for us, it's okay. For us, it's okay. So it's maybe grow. This percentage will grow. I agree with you. In the next decade. But still, it's not something that we see as an aiming the business of Ituran Location and Control Ltd.

Evan Tindell: Great. Thank you. Thank you for that. And one other question. Can you update us on your efforts in India?

Eyal Sheratzky: I didn't talk about India today, specifically because there was few quarters that I mentioned this joint venture that we have in India, And since this growing market is a very, very, very slow I didn't find reason to repeat things that they say in the past. But for you, I can say we have a joint venture in India We signed a large contract with Mercedes Benz for commercial cars. But with the low margins. The current problem in India is that the market is premature.

They keep they keep it the financial capabilities of businesses as well as a retail is very low So we have to find very specific deals to make money, but India is for a long term. India has a lot of potential as we see it for the future, and we are the main telematics or one of the main telematics player that they're on the ground. Okay. Thank you.

Kenny Green: You're welcome. Thanks, Evan. So that will end our question and answer session. Eyal, if you would like to go make your concluding statements,

Eyal Sheratzky: On behalf of the management of Ituran Location and Control Ltd., I would like to thank you, our shareholders, for your continued interest and long-term support of our business. We look forward to continuing our accomplishment over the next decade. If you are interest in meeting or speaking with us, feel free to reach out to our investor relations team. With that, we end our call. Thank you, and have a good day.

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