Ituran Location & Control Ltd. Q1 FY2025 earnings call

• Added 99,000 net new subscribers in Q1, reaching 2.5 million subscribers. - Signed a telematics service agreement with Stellantis, which contributed to subscriber growth. - Increased 2025 subscriber goals to 220,000-240,000 net new subscribers. - Israel's high car theft drove demand, usage-based insurance gaining traction. - Motorcycle product gaining traction in South America. - OEM agreement with Stellantis is a milestone, expecting to broaden services. - Generated $15.5 million in operating cash flow, declared $10 million dividend.

First quarter revenues were a record $86.5 million, a 2% increase year-over-year (7% growth in local currency). Subscription fees revenue was $62.2 million, up 2% year-over-year (9% growth in local currency). Product revenues were $24.3 million, up 1% year-over-year (3% growth in local currency). Geographic breakdown of revenues: Israel 55%, Brazil 23%, rest of world 22%. The subscriber base expanded to 2,508,000, an increase of 99,000 from the previous quarter. EBITDA was $23.3 million (26.9% of revenues), up 4% year-over-year (12% growth in local currency). Net income was $14.6 million, up 12% year-over-year (20% growth in local currency). Cash flow from operations for the first quarter was $15.5 million.

• Increased 2025 subscriber goals to 220,000-240,000 net new subscribers. - Expect Stellantis agreement to ramp up over time, contributing more in future quarters.

• Strengthening of the U.S. dollar vs local currencies impacts financial results when denominated in USD. - Volatility in product gross margins due to mix of products sold.

Q: About new agreements with Stellantis, how does it work?

A: This agreement is currently to provide services based on existing technology in Stellantis cars, with potential to broaden the relationship and add more services/hardware in future.

Q: Regarding subscription base guidance, what's the outlook?

A: Q1 jump was due to initial bulk from Stellantis, expecting future quarters to be around 40k per quarter.

Q: About product gross margin, any insights?

A: Telematics services margin improves with operating leverage; product margin has volatility due to product mix.

Q: On operation expenses, your view?

A: R&D is ~5.5% of revenues, stable.

Q: On CapEx, your perspective?

A: Q1 was higher due to volatility, expecting it to decrease.

Q: On LatAm insurance market and UBI, your thoughts?

A: Demand for car theft solutions in Brazil, but challenges with insurance companies adopting UBI.

Q: About attrition and ARPU with Stellantis, explain?

A: Lower ARPU due to only service, lower churn; potential to increase ARPU on renewals.

Q: On product revenue pipeline, your view?

A: They have stock ready, product margin volatility depends on mix.