Ituran Location & Control Ltd. Aktie

Ladies and gentlemen, thank you for standing by. My name is Kenny Green, and I'm part of the Investor Relations team at Ituran. I would like to welcome all of you to Ituran's results Zoom webinar, and I would like to thank Ituran's management for hosting this conference call.

[Operator Instructions] I would like to remind everyone that this conference call is being recorded, and the recording will be available from the link in the earnings press release and on Ituran's website from tomorrow.

With me today on the call are Mr. Eyal Sheratzky, CEO; Mr. Udi Mizrahi, Deputy CEO and VP Finance; and Mr. Eli Kamer, CFO of Ituran. Eyal will begin with a summary of the quarter's results, followed by Eli with a summary of the financials. We'll then open the call for the question-and-answer session.

You should have all received by now the company's press release. If not, please view it on the company's website. I would like to remind everyone, the safe harbor statement in today's press release also covers the contents of this conference call and the associated presentation.

And now, Eyal, would you like to begin, please?

Thank you, Kenny. I'd like to welcome all of you to our first quarter 2026 results call, and thank you for joining us today. We are very pleased to report a strong start to 2026, with our revenue crossing the $100 million milestone for the first time in our history.

For the quarter, overall revenue grew 19% year-over-year to $102.7 million, a record, with subscription revenue growth of 21% to $75.4 million. Operating income, EBITDA and net income all grew year-over-year by double digit, with EBITDA reaching $26.7 million. During the quarter, we added 40,000 net new subscribers, bringing our total subscriber base to 2,670,000 at the end of March 2026. This is in line with our expected run rate and shows continued healthy organic growth across our core markets. While the pace can derive from quarter-to-quarter for the full year of 2026, we continue to expect to add between 160,000 and 180,000 net subscribers during the year.

Our long-term success in growing our global subscriber base constantly is due to our ongoing efforts in offering new products and services to our existing customers, while at the same time, tapping into new market segments and new geographies. Our OEM relationship remain a key growth driver. During the first quarter, we further expanded our strategic partnership with Stellantis through the launch of Connect Fiat exclusive to the Fiat Strada in South America. This is a fully integrated end-to-end solution from Ituran, covering the embedded hardware, connected vehicle services, the technology back end and the end-user mobile application. This new program, with an initial 3-year term and an option to extend by an additional 2 years, builds on the partnership we announced with Stellantis in early 2025, and reinforces our role as a complete connectivity partner for global OEMs in our region.

Beyond Stellantis, we remain in active discussions with additional OEMs, and this, alongside our existing partnership with Nissan, Renault, General Motors, Yamaha, BMW and others, gives us strong confidence in our long-term OEM growth trajectory.

Beyond our core subscriber-based telematics business, we are advancing the several growth initiatives, which I discussed last quarter in details, that we believe can become meaningful long-term contributor to Ituran. This include Ituranmob, our car rental solution, credit carbon and our big data capabilities, all which significantly grow our addressable market. While these initiatives are still early in their commercial development, we are already involved in active discussions with potential customers and partners, and we are seeing interest across multiple markets and use cases.

As an example of our big data capabilities, we recently signed an agreement with one of the entities of the Ministry of Transportation in Israel to provide transportation data, helping it better understand commuter patterns and support plans for the future. We expect more such projects in Israel to mature during the coming quarters. Together with our other interesting projects in the pipeline, this highlights the significant long-term potential of Ituran's data capabilities to support governments, transport authorities, commercial centers, OEMs and other customers, while creating scalable revenue opportunities beyond our traditional subscription model.

Ituran continues to be strongly cash-generating business, with cash flow from operations of $18.2 million in the first quarter, reflecting our continuing strong profitability, ongoing positive cash flow and stronger balance sheet. The Board of Directors declared a dividend of $10 million for the quarter, which represent $0.50 per share, in line with our standard dividend policy. During the quarter, $0.5 million in shares were purchased under the buyback program. We see our ongoing dividend, alongside our buyback program, as a reward to our shareholders for their loyalty and long-term support of our company.

In summary, we are very pleased with our strong start to 2026, with revenue crossing the $100 million milestone for the first time, double-digit growth in revenue, operating income, EBITDA and net income, and continued healthy subscriber addition, in line with our goal for the year. At the same time, we continue to look for new avenues to drive further growth across all of our regions. The OEM expansion with Stellantis through Connect Fiat, the launch of Ituranmob, our car rental solution in the United States, and our partnership with Griiip, the development of credit carbon and the monetization opportunities around our big data assets are all examples of this. We remain confident in our ability to deliver continued growth and profitability throughout 2026 and in our long-term strategy to transform Ituran into a significantly larger company.

And with that, I hand over to Eli. Eli, please go ahead.

Thanks, Eyal. I will provide a short summary of the financial results. You can find the more detailed results in the press release that we issued earlier today.

First quarter revenues were a record $102.7 million, a 19% increase compared with revenues of $86.5 million in the first quarter of last year. Revenues from subscription fees in the quarter were $75.4 million, an increase of 21% year-over-year, and represented 73% of total revenues. Product revenues in the quarter were $27.3 million, an increase of 12% year-over-year. The subscriber base expanded to 2,670,000 by the end of the first quarter, an increase of 40,000 from the end of the previous quarter. The geographic breakdown of revenues in the first quarter was as follows: Israel, 57%; Brazil, 22%; Rest of World, 21%.

EBITDA for the quarter was $26.7 million or 26% of revenues, an increase of 15% compared with EBITDA of $23.3 million or 26.9% of revenues in the first quarter of last year. Net income for the first quarter was $16.8 million or 16.3% of revenues or diluted earnings per share of $0.85, an increase of 15% compared with $14.6 million or 16.9% of revenues or diluted earnings per share of $0.73 in the first quarter of last year.

Cash flow from operations for the first quarter of 2026 was $18.2 million. As of March 31, 2026, company had net cash, including multiple securities of $108 million. This is compared with net cash, including multiple securities of $107.6 million as of year-end 2025.

During the first quarter, Ituran paid a dividend to shareholders relating to the third quarter of last year, amounting to a total of $10 million. The Board of Directors declared a dividend of $10 million for the first quarter or $0.50 per share. The current dividend take into account the company's continuing strong profitability, ongoing positive cash flow and strong balance sheet.

During the quarter, $0.5 million in shares were purchased under the buyback program. The total remaining authorization is approximately $13 million. Share repurchase will be funded by a valuable cash and will be made in accordance with SEC Rule 10b-18.

And with that, I'd like to open the call for the question-and-answer session. Operator?

[Operator Instructions] Our first question will be from Derek Greenberg of Maxim.

Congrats on the quarter. I wanted to just dig into the growth a bit. You had strong results there. I was wondering if you're seeing stronger growth contributions in any specific area, whether it be geographically or new products or if you're seeing just strong results across the board? I was wondering if you could dig into that a little bit?

Actually, we have no specific geography that grows more than usual. Still from the subscribers movement, there is always some volatility and it can vary between quarters and between ARPUs. Actually, we have a nature edge, sometimes Israel growing faster than Brazil in one quarter, and then there is OEM deal like we did with Stellantis and its contribute. So there was nothing specific.

But I think that it's fair to mention that when we see Q1 2026 compared to Q1 of 2025, this is the first time that we enjoyed from straightening of the currencies in the geographies that we work, and this is support to, I would say, to a much stronger differences and growth numbers compared maybe to a typical quarter. This is something that we are not counting on. And after almost a decade that it always was in front wind, still we grow, of course, when it's a backwind, we are happy. But in terms of operation, we will continue our growth as we always do. And of course, we work on -- extend it, as I declared and said, regard new businesses and new OEM deals, but this is not something that still we faced in Q1 2026, I think that this will be more material in our growth toward the next years.

That's super helpful. Is there a way to think about maybe what the FX-neutral growth rate was this year versus last year? And maybe what the impact of FX headwinds were in the prior quarter?

In our EBIT, it was about $1 million. Again, it's not material for the overall, but when you compare it quarter-to-quarter, it's something which is fair to mention. And when you -- I will not analyze now each one of the currencies, but this is the total amount raised from the average FX of the currencies.

Got it. And then just in terms of potential lumpiness in the quarter, did you see any lumpiness in the like product revenue segment in terms of like maybe an inflated number there? Or anything else to call out? And then on the subscribers, was there any price increases factored into the quarter as well?

No, since we talked about, more than -- almost 2.7 million subscribers, even if there is a change in the one geography net new subscribers, the influence is very close to 0. This is general, I'll say, but to be more concrete, there was nothing, and I think that one of the, I think, things which are very typical way to run, there is not many lumping situation. I think that the feasibility is very high, the strain -- our market situation in each geography, I think, allow a very stable and constant growth as long as, of course, we will continue with our efforts.

Yes. Great. I have one last question, and then I'll pass it along. I was wondering just on the big data initiative you guys are working on and you had called out that you signed an agreement with a ministry in Israel, the transportation industry. I was wondering maybe if you could talk a little bit about how we should think about the sales cycle in terms of engagements for that or maybe other useful color in terms of the pipeline and potential contract sizes per engagement?

First of all, we are -- as you should know, as I said in our last quarter call, this is only in the beginning. But still, the big data engine that we launched currently in Israel is something that having a lot of traction. And the deal of the contract that we signed, and I just mentioned about it, which is a few hundred -- more than a few hundred thousand of dollars, this model is a little bit different than the subscribers recurring revenues. This is typically a B2B deal, and this is a measure data sizes, data, what is the information and the measurements. And in that case, it's a deal with a onetime -- not onetime payment, but sometimes the project that we have, for example, now in negotiation can go for 4 or 5 years with an annual payment, but this is not based on a specific customer or specific car. So in that case, it's not something that I can disclose.

But overall, when I look in more strategic wise, I think that all this information will allow us to, in the future, to increase revenues and create more and more deals of selling data that in one day, that for example, in 3 or 4 years from now, when the Israeli subscriber base will be more cash cow because in Israel, as you know, we have something like 90% market share. We grow very, very aggressive among the new car sales. So in one day, we will have to find another growth engine, and this will be this data and the rental car application, et cetera.

Now I don't know how to give you what can be your model, how you model it with the subscriber base today, but it's something that we have to create some -- some model, some expectation and add it first to the revenues, et cetera. We don't -- I don't know how to tell you exactly what will be the numbers or how you model it.

Yes. Got it. That was very helpful. Well, congrats again.

Our next question will be from Sergey Glinyanov from Freedom Capital Markets.

Yes. Good day. And first of all, I would like to congratulate with the significant milestone of $100 million in revenue and [ 1 billion ] in market capitalization breaking through.

So the first question is assuming a stable FX rate, does it mean that we should expect strong Q2 as well?

I can't tell you about Q2, but again, some assumption that you can learn from Q1 can be relevant for Q2. I think that you can look backward and try to illustrate it to your model, that's how I would say it.

Okay. Okay. And regarding new agreements, do you have any new substantial OEM agreement on the table? Or were you under discussion now?

We are -- again, we are always under discussion. If you look again backward, you will see that every year, we provide 1 or 2 new agreements. And we do and put all our efforts in order to continue and make it. And I believe that it will be. And of course, we are in discussions. When it's happened, we will report. And of course, we will publish it.

Okay. Good. And I guess last one for me. What's the goal in terms of subscribers, revenue or market share? I have pursued in the U.S., deploying Ituranmob and how is it progressing at all?

This specific solution that we are now start to provide, it's a premature. It's something that we saw it -- we didn't expect that it will be so premature. There are other players with a very, very limited market share, not something that can even be called a market and industry. And as being the first or part of the first comers to this solution, of course, we are -- put a very, very high goal to lead this market.

But as I said, it just started. We have to educate market. We just finished a very large conference of rental companies and rental car services that we were speakers as well as demonstrators. And I'm very optimistic after the after the leads and the discussion and that traction that we saw from all the players in this industry, but it's too premature to say what will be our market share, but we aim to be the leaders of this industry in the U.S. in the future.

And that ends our question-and-answer session. Before I hand back to Eyal for the closing statements. So I just want to let everyone know that this call will be available from Ituran's websites in the coming hours as well as from the original Zoom link.

And with that, I'm going to hand back to Eyal for his closing statements. Eyal, please go ahead.

On behalf of the management of Ituran, 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 coming years.

If you are interested in meeting or speaking with us, please feel free to reach out our Investor Relations team. And with that, we end our call. Have a good day. Bye.

Ladies and gentlemen, thank you for standing by. My name is Kenny Green, and I'm part of the Investor Relations team at Ituran. I would like to welcome all of you to Ituran's results Zoom webinar, and I would like to thank Ituran's management for hosting this call.

[Operator Instructions] I would like to remind everyone that this conference call is being recorded, and the recording will be available from the link in the earnings press release and on Ituran's website from tomorrow.

With me today on the call are Mr. Eyal Sheratzky, CEO; Mr. Udi Mizrahi, Deputy CEO and VP Finance; and Mr. Eli Kamer, CFO of Ituran. Eyal will begin with a summary of the quarter's results, followed by Eli with a summary of the financials. We will then open the call for the question-and-answer session.

You should have all by now received the company's press release. If not, please view it on the company's website. I'd like to remind everyone that the safe harbor statement in today's press release also covers the contents of this conference call and the associated presentation.

And now Eyal, would you like to begin, please?

Thank you, Kenny. I'd like to welcome all of you to our fourth quarter and full year 2025 results call, and thank you for joining us today.

Before I begin, I'd first like to acknowledge the war between Israel and the United States against Iran. We honor the braver balls of the Israeli defense forces and U.S. military personnel and their Air Forces, and we sincerely wish for their swift and safe return home. We hope the war will draw to a quick resolution and lead to lasting peace for all countries in the Middle East.

And now to the results. We are very happy with the results of the fourth quarter as well as the full year of 2025, our best ever and record across all key parameters. For the quarter, overall revenue growth was 13% to almost $94 million, a record, with subscriber revenue growth at 15%, EBITDA growth to over $25 million, a record for us and puts our yearly EBITDA run rate in excess of the $100 million milestones for the first time.

In addition, we generated a significant amount of cash in the quarter at $29.4 million, our highest ever. And as I will discuss later, given our very strong balance sheet, we have decided to share all the rewards of our success in 2025 with our shareholders through a special dividend and increased buyback in addition to the regular dividend.

Our growth and success in 2025 continue to be driven by our long-term efforts in bringing new value-adding telematics and connected car products and services to both existing as well as new customers globally. Throughout the year, we were particularly successful at bringing additional new OEM partners to our growing roster.

Examples during 2025 were Stellantis, Renault, Yamaha and BMW. We are in active discussions with others. Beyond our new partnership with Fiat that we announced last week, we hope to bring additional ones in future.

Our results show an ongoing expansion in our large subscriber base, reaching at year-end year over 2.6 million subscribers. In the fourth quarter, we added 42,000 net subscribers, adding 221,000 net new subscribers in 2025, a record year for subscriber growth for Ituran.

I remind you that in Q1, our new OEM agreement with Stellantis brought the subscribers into Ituran, which gave us a bump in net new subscriber adds in that quarter.

Our net adds in recent years has tended to be in the 40,000 plus per quarter range. Looking ahead, while the rate can vary between quarters, we expect to maintain this overall current net subscribers at run rate, which means for 2026, we would expect to add between 160,000 to 180,000 net during the year.

I want to summarize some of our new activities, which we believe will contribute to our growth and success in the midterm over the coming years. This all have the potential to completely transform the company.

First, our Ituranmob smart mobility platform is differentiated solution enabling remote vehicle access, real-time telematics and efficient management for shared mobility, rental fleet and specialized vehicle application. Ituranmob was first launched in Brazil and Israel, where it has gained solid traction among fleet operators and rental companies. Building on this success, we recently introduced the platform to the U.S. market and recently established dedicated Ituranmob operations there.

We see a clear opportunity among small and midsized car rental companies seeking to improve operational efficiency and the end-user rental experience. This is the first time we are coming to the U.S. market, the largest rental market in the world with over 17,000 small to midsized car rental companies with a solution that is unique with a real need in the market and therefore, has the potential to gain significant market share.

In addition, Ituranmob is expanding into new verticals. In the past few weeks, we announced a partnership with leading Israel-based motorsport data analytics company, Griiip. Under this agreement, Ituranmob becomes Griiip official IoT technology provider, combining Ituran's real-time telemetry with Griiip, AI-powered analytics platform for racing drivers.

Based on industry estimates, there are over 60,000 racing events each year with closer to 1 million participants, representing a large addressable market for our technology. Our goal is that this partnership will already connect thousands of new vehicles in 2026.

As you may have seen in the video we published together with the press release, the technology is deployed in some of the most demanding operating environments, professional racing and truck day driving, demonstrating the robustness, per session and scalability of our solution.

The higher complexity of this technology allows us to generate a high ARPU for these type of services. Ituranmob represents another new long-term growth avenue alongside our core telematics and subscriber-based businesses.

Credit carbon is a new and unique initiative being developed by Ituran that enable drivers of electric and other zero-emission vehicles to participate economically in the global transition to low-carbon transportation, something that has not previously been accessible to individual drivers.

Today, while companies that emit carbon dioxide can purchase carbon credits to offset their emissions, there has been no efficient scalable mechanism for individuals who actively reduce emissions such as electric vehicle drivers to generate and monetize verified carbon savings.

This solution will create a new incentive for EV adoption while opening an additional revenue stream for Ituran by providing the platform that connects carbon emitters with carbon savers. It leverages our existing technology, subscriber base and infrastructure with minimal incremental cost.

This initiative has been developed internally over years, leveraging our regulatory, technological and data expertise. The solution is highly differentiated and is currently undergoing testing and validation.

We are in advanced stages and have received encouraging early feedback. We expect initial commercial deployment toward the year-end 2026. The timing is favorable right now as global awareness and regulatory pressure to reduce carbon emissions around the world continue to accelerate, expanding the addressable market.

Another new initiative is leveraging our big data capabilities. Over many years, Ituran has built one of the largest and richest vehicle telematics data sets in our markets. I'm compassing decades of driving behavior, usage patterns, location data and vehicle performance across millions of connected vehicles.

Anonymized and aggregate insight derived from our extensive road use, driver behavior and transportation data set with decades of data can support governments, transport, ministries and local authorities in optimizing traffic flow, improving road safety and informing infrastructure planning.

Our data can also support leading vehicle OEMs in advancing driver assistance and autonomous driving capabilities, providing deep understanding of actual road usage and training systems to better reflect real-world driving behavior. We are actively exploring multiple avenues to monetize this significant asset.

Overall, our big data capabilities strengthen customer retention, support margin expansion and provide a highly scalable platform for future growth beyond traditional subscription revenues.

And finally, as I discussed earlier, 2025 was the most successful year in Ituran's history. As such, given our strong profitability, very strong cash generation and balance sheet with well over $100 million in cash and no debt, the Board declared a total dividend of $30 million for the fourth quarter, consisting of our regular $10 million quarterly dividend and an additional $20 million special dividend.

Therefore, for the full year, we will have shared a total of $60 million in dividends, representing approximately 100% of our net income, which amounts to dividend yield of around 7% based on our year-end share price. This is an excellent dividend yield for a strong, stable and continually growing company, demonstrating record results year in, year out.

Beyond all this and in line with the feedback we hear from many of our investors, we also declared an addition to our buyback of up to $10 million. During 2025, we bought back $3.1 million in shares for a total of 85,000 Ituran shares.

We believe, all this reflects our commitment to creating value and generating capital for our shareholders, while at the same time, continuing to develop new products and services and invest in long-term growth at Ituran. We see our ongoing dividend and share buyback as a reward to our shareholders for their loyalty and long-term support of our company.

In summary, we remain very pleased with Ituran performance in the fourth quarter and more generally, Ituran's long-term and ongoing performance in 2025. At the same time, we look for more avenues to bring further growth to our business across all our regions. And the recent product launches I spoke about earlier are examples for this.

Additionally, we will continue to partner with the new OEMs as we have successfully done throughout 2025 as well as new financing companies and other lending companies. 2025 marked 20 years as a public company and 30 years as a company. We look forward to continued success over the next decades, and I thank our shareholders for their long-term support of our business.

And with that, I hand over to Eli. Eli, please go ahead.

Thanks, Eyal. I will provide a short summary of the financial results. You can find the more detailed results that we issued in the press release earlier today.

Fourth quarter revenues were $93.5 million, a 13% increase year-over-year. Subscription revenues were $71.1 million, up 15% and representing 76% of total revenues. Product revenues were $22.4 million, up 5% year-over-year. Our subscriber base reached 2,630,000 at the end of 2025, an increase of 42,000 in the fourth quarter and 221,000 year-over-year.

The geographic breakdown of revenues in the fourth quarter was as follows: Israel, 55%; Brazil, 23%; Rest of World, 22%. EBITDA in the fourth quarter was $25.3 million representing 27.1% of revenues and a 12% increase year-over-year.

Net income for the fourth quarter was $15.3 million or diluted earnings per share of $0.77, an increase of 10% year-over-year and compared to $13.8 million or diluted earnings per share of $0.70 in the fourth quarter of last year. Cash flow from operations for the fourth quarter of 2025 was $29.4 million.

Now taking a look at the full year 2025 results. Revenues for 2025 were a record $359 million, a 7% increase over the $336.3 million reported in 2024. 74% of revenues were from location-based services subscription fees and 26% were from product revenues. Revenues from subscription fees were $264.6 million, representing an increase of 9% over 2024. Product revenues were $94.5 million, representing an increase of 1% compared with 2024. EBITDA for 2025 were $96.2 million, 26.8% of revenues, an increase of 5% compared year-over-year. Net income in 2025 was $58 million, 16.1% of revenues or fully diluted earnings per share of $2.92, an increase of 8% compared with net income of $53.7 million, 16% of revenues or fully diluted earnings per share of $2.70 in 2024.

Cash flow from operations for the year was $8.6 million. As of December 31, 2025, net cash and marketable securities totaled $107.6 million. This is compared with net cash, including marketable securities of $77.2 million as of year-end 2024.

The Board declared a $30 million dividend for the fourth quarter, including a $20 million special dividend and a $10 million dividend in line with our dividend policy.

In addition, during the quarter, we purchased $1.6 million in shares under our buyback program. As of the end of the year, we had around $3.5 million remaining available under this program. However, the Board today approved a $10 million increase to the existing buyback authorization, which will be funded from available cash and executed in accordance with SEC Rule 10b-18.

This means that as of today, there is $13.5 million available under the buyback program. The current dividend and buyback takes into account the company's continuing strong profitability, ongoing positive cash flow and strong balance sheet.

And with that, I'd like to open the call for the question-and-answer session. Operator?

[Operator Instructions] The question will be from Sergey Glinyanov of Freedom Capital Markets.

Great results. Could you please some color on ARPU and EBITDA dynamics in 2026 and after your initiatives are fully deployed, I mean, carbon credits, et cetera?

Sergey, so first of all, we are not providing any guidance, as you know. But practically and in a general way, we are not -- I think that the ARPU, as of today, should continue more than 2.6 million subscribers. This is a big shift of customer base. So 1 year is not changing the total ARPU.

But looking forward, we really believe that the ARPU is not going to go down because things that I didn't mention today, I said it in the past, we're always having additional service to our current subscribers, which allow us to provide kind of an upsell of services. So this is regard our traditional services, the fleet management, the store and vehicle recovery, the UBI, et cetera.

But regarding new technologies and offers that we have, as I mentioned, it's important to say again, those initiatives are after a few years of putting R&D, development and making all the technological and regulatory infrastructure for us. Commercially, it will be ready, as I said, mid to the end of 2026. So I must say that contribution, the financial contribution in 2026 of those initiatives will be very low.

The idea to put more colors on those items was to show a little bit longer future from '27, '28 and of course, ahead. We will see because we know some negotiations and we know some customer attractions in the carbon -- the credit carbon as well as in the rental solution.

But the main idea is to show it, to expose it. And the majority of the contribution will be in the next years. But I believe that we will show at the second half of 2026, we will be able to talk or discuss about some deals and contribution.

Okay. And the next question about motorcycle...

And by the way, Sergey, regarding EBITDA, I didn't answer. We are not providing guidance, but all these things should leverage our EBITDA margins, of course.

So do you believe that new initiatives could change your margin profile in the long term?

Absolutely. First of all, if you look backwards, you will see that our margins are growing. I mean we show the operating leverage dynamics happened in the margins. I totally believe that it will continue, based on the new services and the upsells that we can do to the current customers.

Okay. Great. And the next question about motorcycle market in Brazil. So how is it going on? And did you gain any additional market share on this market?

Can you repeat? There were some noises here. So can you repeat?

The question about motorcycle market. Did you gain any additional portion of this market in Brazil?

So first of all, this market in Brazil is very, very big. And we didn't touch this segment until about a year ago until the moment that we understood or we developed the right device that can be very productive, and we can go then to motorcycles OEM distributors as well as to insurance companies.

As you remember, we already report about 2 OEM deals, one with Yamaha Brazil, the second one with BMW Brazil. And this year, we will see along the year or we already started thousands of motorcycles or maybe even closer to 10,000 subscribers from this segment in 2026.

We start with the OEM, but now we expand it to the retail market after we get more confidence, and we have more to show to the retail market after Yamaha and BMW. And as always, I also believe that we will add more motorcycle producer, international producers during this year and the next year.

Our next question is from Derek Greenberg of Maxim Group.

I know it's still a little early as you expect commercialization towards the end of the year. But I was wondering if you could help just walk through maybe what you would expect the economics to look like for the new big data and credit carbon products you're rolling out.

Maybe just in terms of on big data, maybe what like deal sizing and contract terms could potentially look like? And then on credit carbon, maybe just the economics for drivers, EV drivers in terms of the additional benefits they gain from the product.

Since we are very optimistic and we see the reaction, I wouldn't come with any guidance because it can be not realistic or not serious that we will do it. It's like new start-ups among our business. But it's a start-up that are done by a very big or the largest telematics company in the world. So we will continue to use our connections, our brand, our infrastructure in every country that we work.

And I must say that it -- for example, the credit carbon, once we start to commercialize it, we are talking about situation where, for example, taxi drivers or truck drivers or truck companies can get with Ituran solution additional revenues.

So they have a totally interest to come and put our solution because just as an example, if I can give a truck driver per truck on an average mileage, something like EUR 200, EUR 250, EUR 300 a month from emitters through a worldwide or European broker, why should they give up for it?

Or if I'm in Brazil, giving kind of Uber type of company, the drivers to get additional income, additional resource of revenue, that without me, they cannot get it while they drive an electric vehicle. So I think that the request is going to be tough.

But there is questions. First of all, it's new to the world. This is the first time, except in some smaller market in the world where people get money for nonaccurate information, not regulatory, the rest of the world required a very, very tough regulatory to approve credit for emitters. So at that case, I think that the request should be tough.

No one, no one up until now didn't show it to the world how EV drivers can get money just for drive. for example, take a taxi driver that doesn't have a client and he just drive from place to place, he get money. So I think that this is something that can be big. But still, it's not yet on a commercialized place.

So I don't want just to come and through numbers. But it can be something with high contribution. But again, it will take time. It will take time to market it, to stabilize it, et cetera.

The same is the rental -- remote rental company in the U.S. U.S. is a huge market, but we are not -- as Ituran, we are conservative. We are not starting with tens of millions of dollars of marketing, et cetera. We go step by step with strategic partners in the U.S. and I believe that we'll do it.

Regarding the big data, we already start to sell data in Israel, mainly to governmental like road operators, like road accident authorities, et cetera. We -- up until now, we charge a few, let's say, hundreds of thousands of dollars for pilot, only one pilot, but I believe that this will continue and will support our results. But again, I don't want anyone to wait for a major contribution in 2026.

Got it. That's really helpful. And then in terms of -- could you maybe just quantify the FX impact you saw this year and maybe what you're expecting for next year?

Yes. I will ask Udi to answer it. It has the pages. Udi?

Yes. Can you repeat the question, please?

Just on the FX impact to the business in '25 and then maybe expectations in '26.

So I'll start with the future. I mean it's really hard to say what will be the FX in '26 due to all the parameters that can change or affect the FX. Regarding '25, I would say that about -- if we look at the annual basis, I mean, the FX in the EBIT, for example, was about between $1 billion to $1.5 billion. This is [ more or less ].

Okay. Got it. And then my last question is just with everything that's going on, I was wondering with just geopolitically and the war, if you're expecting any potential disruptions to your business or any maybe supply chain issues or just how you view the situation?

Since we -- unfortunately, for many years, we get used to this situation. So there is -- I think I will divide my answer to two.

First of all, there is a major part of our business revenues and profits comes out of the Middle East. So this is, of course, never was influenced by that. And regard our operation in Israel, which, of course, it's a major operation, it's not nothing; as you may be heard from today, the market in Israel also already -- I mean, not the stock market, I mean, the commercial life in Israel also back to get authorization to work half a day.

But up until now, of course, the last 3 or 4 days, the market was shut down. But those was anyway a holiday, a Jewish holiday that in any case, it was in the diary day offs for car dealers, insurance, et cetera.

So currently, we don't see damage or nothing majority. In the past, in June, for example, of course, there was about 12 days in the last war where car dealers in Israel were shut down. So after those 12 days, we cover the gap or those dealers cover the gap in the next month or 2.

So overall, with our experience in the past, with what's happening in Israel today and with the situation that we get used to, I don't believe there will be any major influence on the 2026 results. It might move 1 month or 2 weeks from month-to-month kind of volatility, but no more than that, as I expect.

Next question is going to come from Eric Gregg of Four Tree Advisory.

Okay. Great. First of all, tremendous results, and we hope you all stay safe through this situation. If you could tease out the big data, initiative sounds very interesting. Can you tease out a little bit more there beyond just some of the use cases in terms of how you think your data could be used for various different initiatives?

I understand the road accident, maybe the road repair maybe for civic uses. But are there other things you think you could be using the big data for? Yes. And I have another.

So I will answer first and then you ask your second question.

So first of all, just to illustrate one deal that we already did in Israel, the road authorities want to know where most of the trucks arriving between specific hours along the evening to create parking lots for nights around the country. So they wanted to get 1 month of movement of trucks in the country and find the most traffic places. And they asked to do it for a month, historically, of course.

So they paid for it. And of course, in less than 1 second, we had this raw data get into customized data for them. And for that only, we charge a few hundreds of thousands of dollars, only for that.

Now we have, for example, now potential fees for entering cities from highways. And this, which is a nationwide project in Israel. And for that, they need a lot of data for those movements, those traffic from highways to the gates of municipal and central of cities.

Like today, if you know in London, local British, they paid money when they get with the car inside London. So for that, there is need for a lot of data. So this is something that we are almost the only one in the country that has so big and so accurate data. And of course, this will lead to, I believe, to much more larger deal with those governmental office. This is from a governmental point of view.

But let's think about approach that we have from commercial malls that want to know, for example, specific hours a day, how many cars valued more than $50,000 are driving in order to customize advertisement and coupon for specific high-end shops? They're willing to pay for that.

Everything should be anonymous, of course, because we are according to the -- all the regulation of anonymous. But the data itself is something that for us, exists almost for 30 years. Up until a year ago, we didn't do anything with that because the market and the technology and our AI capabilities was not enough to customize it, but to customize it with low cost.

Today, that's what we developed and that's what we offer. And really, the potential customers are across all the segments, as I said, governmental, commercial.

Car dealers, they want to know in which area in the country -- because people sell their car to a second and then they buy again. We realized for one of the car dealers in Israel that only 1/3 of the people that sell the car come back to him. He want to issue to all of his client campaign and sales on a specific time that they sell their car and he doesn't know anymore after they sold it once.

So there are many, many aspects. We have a technology. We have today a software that know how to get the raw data in and bring out customized data upon any request, any request. So this is an example for a big data product that we're going to charge for. And we talk with everybody today.

That's tremendous. That's very helpful. Second is on capital allocation. You -- if you take consensus estimates that based on these very strong Q4 results, I think, are going to be going higher. Net of your cash position, you trade at less than 13x forward earnings, which is less than what your growth rate of services was in Q4. And as your growth keeps on accelerating, kind of a peg of less than 1, which is very inexpensive.

So the question is, it's great how generous you've been with shareholders in terms of dividends and the special dividend. But why aren't you emphasizing stock repurchase more versus the dividends here, given how cheap you seem to be?

So practically, when we do only this -- so investors ask why not this? You may be right, but it runs volume will grow in the last 12, 15 months. The volume in the market is low. And we don't want by going with $30 million or $50 million to the market a year to create -- to shrink the volume because one of the interesting for the shareholders is the volume. So this is kind of -- we find a balance between dividend and shares repurchase project.

And as you see in the past and even now, every month, or better to say every quarter when we have a discussion -- board discussion about it; we check it again and we take a new decision. But I totally accept what you say, but we have to balance and this is the current decision of the Board. And as we did in the past, this might grow. We look on the volume. We get advice with some brokers and bankers, how it can influence. And we do as best at the moment that we can.

Next question will go to Evan Tindell of Bireme Capital.

Just a quick comment, if you don't mind, one second on the buyback issue and volume. My personal advice as a shareholder is don't listen to the shareholders or the bankers that tell you that volume is a big problem because I think there's research that shows that actually, if you have a buyback in place, it actually can increase the volume in the stock, even though you're shrinking the float if the price goes up and the valuation is more reasonable, that can actually bring volume and interest into the company.

So I would just say maybe don't listen to those people and go ahead and buy back the stock if that's what you think is the right thing to do based on the valuation. So sorry for that aside. Sorry for that.

No comment, no comment.

I'd say just do based on what you think the value of the stock is in the open market versus the fair value. But okay. Can you talk about competition in both Brazil -- and I know in Israel, there's not much competition, but can you just talk about the state of your competitors in both markets in terms of market share and pricing and kind of competitive positioning and things like that?

Okay. So first of all, as you said regarding shares, I will tell you regarding competition. We have a very strong competition also in Israel, but we win it. And this is totally different than no competition. Pointer is in the market more or before it run, this is the main competitor. And along the years, we succeed to gain more and more market share and then what we do today.

But in order to keep and gain this market share more and more, in Israel, it's a very -- we have to be the best every day. And this is why we develop more and more technology, why we have to have more recovery rates -- better recovery rate, et cetera, because for insurance companies and for car dealer to change is a day because they want better results, they want better solution, they want their customers to be satisfied. So we have an everyday competition. But 30 years, we succeed to win and gain market share. This is regard Israel.

Regard Brazil, I think that it's almost the same. The market is much bigger. The size of Brazil is much bigger. There are specific geographies in Brazil, in the north, in the Amazonas area, where there are some small companies that might have some subscribers. But when you talk about the main commercial area in Brazil, which is Sao Paulo state, Rio de Janeiro, Brasilia and all the main urban areas; we are also, I think, controlling the telematics market, we are the main provider.

And what's happened in the last 2 years, and I believe that we will show it this year and later, we also see in the B2B market, customers like leasing companies, like big fleets that even they try our competitor now they change their supplier to Ituran.

So the situation in Brazil is that we're also gaining more and more market share. In the telematics business, I think that we are the largest and the situation is very close to Israel.

The competitive landscape is bigger. I mean there are more competitors than in Israel, but the market is also more -- the geography is bigger. But I think that overall, in the ongoing new subscribers in the telematics industry, we are the one that's adding the major portion of those subscribers.

Okay. And I have one more question. On the fleet business, I know you also have a fleet business where you sell to fleets. It seems like the leaders in that business, whether it's Samsara or Geotab, I'm thinking of Geotab mostly; they really have built out their kind of the software suite and the integration with other providers and things like that to go with their telematics platform for fleet owners.

And I'm just wondering, like how much thought and effort you guys put into thinking about trying to match that capability over time to make your product more competitive in the fleet segment? Because it seems like that could be a pretty -- that's going to be a really big market over time.

The main difference, if you mentioned Samsara and Geotab, the main difference is the market that we choose to go to. If I put aside Samsara, was their video solution that we're adding it from a third parties today or in the last 2 years, but Geotab is mainly focused in the European market and other markets. But in Latin America, specifically in Mexico and Brazil, when we consider market share; it run as larger market share in fleet management.

In Israel, totally -- this is totally right. So I think that the most differentiated issue is that Samsara, mainly in the U.S., it ran from beginning, we didn't start to go to lion caves to fight with companies that put billions of dollars in order to penetrate markets, and we went to the market where we are strong, when we have brand, when we have relationship.

So from a technological point of view, and if you will judge our technology as a fleet manager, I'm totally sure that you will see state-of-the-art solution, not one single point under Geotab or Samsara. It's only the markets. We didn't went to Europe, we didn't went to the U.S. We are very focused on Israel and Latin America. And currently, that's what we do. In the future, if we will decide to go to other geographies, probably we will do it based on acquisition. We will not start from scratch.

We'll now try and go back to Chris Reimer from Barclays. Chris, are you able to talk? We can't hear you, Chris.

Maybe you will approach us not in this platform. I can't hear you. Sorry.

Chris, we'll speak to you offline. That ends our question-and-answer session. The call will be available on Ituran's website in the next day for download. Other than that, Eyal, please make your concluding statements.

Thank you, Kenny. On behalf of the management of Ituran, 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 accomplishments over the next decade. If you are interested in meeting or speaking with us, feel free to reach out to our Investor Relations team. And with that, we end our call. Have a good and safe day. Thank you very much.

Ladies and gentlemen, thank you for standing by. My name is Kenny Green. I'm part of the Investor Relations team at Ituran. I would like to welcome all of you to Ituran's results, Zoom webinar, and I would like to thank Ituran's management for hosting this call.

[Operator Instructions] I would like to remind everyone that this conference call is being recorded, and the recording will be available from the link in the earnings press release and on Ituran's website from tomorrow. With me today on the call are Mr. Eyal Sheratzky, CEO; Mr. Udi Mizrahi, Deputy CEO and VP Finance; and Mr. Eli Kamer, CFO of Ituran. Eyal will begin with a summary of the quarter's results, followed by Eli with a summary of the financials. We will then open the call for the question-and-answer session. You should have all by now received the company's press release, if not, please view it on the company's website. I'd like to remind everyone that the safe harbor statement in today's press release also covers the contents of this conference call and the associated presentation.

And now, Eyal, would you like to begin, please?

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 and success in bringing existing as well as new customers, 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 2.5 million 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. We continue to see solid demand for our location-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 trait 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 a secondhand 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 Motored 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 Ituran [indiscernible] 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. Ituran [indiscernible] was launched first in Brazil and 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 to the United States market.

We recently established operation for Ituran [indiscernible] in the United States we have identified a strong need in the U.S. 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 generated a high level of cash in the quarter amounting to $21.3 million in operating cash flow during the quarter. Due to our continued profitability and strong cash generation, we declared a dividend of $10 million to shareholders for the quarter. I remind you that at the end of last year, we increased our dividend policy by 25%, from issuing $8 million per quarter to $10 million 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 $1.5 million in shares under our buyback program. As of the end of the quarter, we had around $5.2 million still available under this program. We see our ongoing dividend and buyback as a reward to our shareholders for their loyalty and long-term support of our company.

And in summary, we remain very pleased with Ituran performance in the third quarter. And more generally, Ituran'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 Ituran [indiscernible] is an example for this. We constantly aim to bring new products and services to both existing customers and new customers as well as partnership with new OEMs, new financing companies and other leading companies. 2025 marks 20 years as a public company and 30 years as a company. We look forward to opening the [indiscernible] 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, please go ahead.

Thanks, Eyal. I will provide a short summary of the financial results. You can find the more detailed results that we issued in the press release earlier today. Third quarter revenues were $92.3 million, an 11% increase compared with $83.5 million in Q3 of last year. Subscription fees were $67.6 million, up 13% year-over-year and representing 73% of total revenues. Product revenues were $24.7 million, 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 follows: Israel 55%, Brazil, 23%, rest of world 22%.

EBITDA was $24.6 million, 26.7% of revenues, up 6% year-over-year compared with EBITDA of $23.3 million, 27.9% of revenues in the third quarter of last year. Net income for the third quarter was $14.6 million or diluted earnings per share of $0.74, an increase of 7% compared to $13.7 million or diluted earnings per share of $0.69 in the third quarter of last year. Cash flow from operations for the third quarter of 2025 was $21.3 million. As of September 30, 2025, the company had net cash, including marketable securities of $93.1 million. This is compared with net cash, including marketable securities, of $77.3 million as of year-end 2024. The Board of Directors declared a dividend of $10 million 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 $1.5 million in shares under our buyback program. As of the end of the quarter, we had around $5.2 million available under this program.

And with that, I'd like to open the call for the question-and-answer session. Operator?

[Operator Instructions] Our first question will be from Chris Reimer of Barclays.

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.

Okay, absolutely. Before we decide to go from Brazil directly to the U.S. 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 5 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 thousands of rental cars. We are talking about small and medium rental companies from one family that holds 10 or 15 cars that they rent it or some mid 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 costs, and I will explain in order today for business that have 20, 30 cars to meet the customers, they have to go and meet each customer, giving 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 an office, put a deck, put the people, put software, et cetera. 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 rental company or a small rental company owner, and you can know every minute, what is with the car, 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 [indiscernible], our small subsidiary for this technology and innovation.

And in Brazil, by the way, we do it for almost 3 years. It's a very success solution. Add to this that even in Israel, the largest leasing and rental company in Israel, Shlomo [indiscernible] car, change a technology that we found in the world because we didn't have it in the past to our technology threw to the garbage about 2,000 hardwares that we paid and installed in his rental cars. And now we are the partners and our units and services are also in Israel. I'm not -- I'm talking about the U.S. because Israel by definition, it's a small market. It's maybe attractive, but it's not having a major influence on our future results. But the U.S. market, and it's important to mention, we are, I think, the first, I mean, we heard or we know about companies that tried, they have a very -- not the same technology, let me -- I don't want to be arrogant. And when they try 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 represented to the U.S. market.

So we are in the beginning of this industry, I would say, in the States. There are companies deals with remote rentals, but not 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 an advantage for us because we can partnering with them. But before we do it, we have a solution, which we can go independently by ourself. We already have pilots in the area of Orlando and New York with some small rental companies that are very satisfied. The 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's also required adaptations. But I think that, let's say, the dream here is huge.

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

If we are talking about the increase in the OpEx, the big majority of it is coming from the FX effect, 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 assuming next year, the same that the margins will increase as well.

Got it. 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?

As I said in my speech is that we provide kind of a guidance of 220,000 to 240,000. And according to the 9 months and at the current -- the current data that we have is that we will meet this range which is the highest, I think, ever in the 30 years of Ituran. And the drivers are absolutely across all the regions. And it's included also from 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 had during 2025 is Israel. And this is thanks to the requirement by insurance companies relatively to the [indiscernible] 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 Ituran is the first choice in Israel by far of any other security solution, and this allow us to grow in 2025 dramatically as well in Israel.

And I will add that the UBI also has some volatility. 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 develop for them a solution. And they also -- during the second quarter of 2025, they start using our UBI solution in high numbers. So overall, this is the.

Our next question is going to be from Allen Klee of Maxim Group.

Great. You talked about how motorcycles is important in South America and your partnership with BMW. How -- what are you -- could you talk about kind of how you're looking at increasing the uptake in this market?

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 quite expensive vehicle, is very popular. The ratio between 4-wheel drive and 2-wheel drive it's very different. And for example, in other countries in the Western world, many people using motorcycles. Ituran 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 were in a situation that they didn't want to add cost to their motorcycles. But in the last 2 years, we developed, thanks to our against innovative teams, units, which is state-of-the-art for security system and application for the driver on a motor bike. And what we did first, we use our OEM capabilities and teams. And we start negotiate, as you remember, maybe the first one was with Yamaha. Yamaha is our first customer for almost 2 years, 18 months. And then now as we published, we signed an OEM deal with BMW motorade in Brazil. The idea is that -- this is an untapped market for telematics solutions. And we're talking about potential of millions of motorbike that fitting these needs and can pay compared to the price of the motor bike. So we started with an OEM. This allows us to create reliability. This allow us to partnering with brands, the guys of motorbike is like sports car. If somebody is driving a BMW, he will be very loyal, the same Honda, et cetera, specifically in Brazil. So we knew that to partnering with big brand in the OEM will again provide reliability.

And now what we see is a traction also from the aftermarket because if someone comes to a dealer of BMW to have some treatment to the motorbike to buy something now is asking or you will see that there is a solution by to run. So we really believe that we just started. I am expecting that it will bring us tens of thousands of subscribers -- of new subscribers starting 2026, and it will grow as we will expand the segment and our customer, whether it will be B2B with other motor bike manufacturers. There are other names that we are start to talk with. I'm not saying whether it will finish with a deal or not, but we see a traction. 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 2 to 3 years from now.

Thank you. I understand that Israel is an attractive market, but not that large. And you have a large opportunity in Latin America, South America. How do you think about like first up 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?

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 an 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 an opportunistic way. Of course, when we go into some -- when we look on the rest of the world, we are more looking of do it by M&A, by acquisition because for us to start a new business from scratch, for example, in U.K. or in Europe, it will require high resources because we have 0 resources now there. And until the moment that we will turn it to major revenues and major profits, it will take a long time. At the size of it run, the way that we are looking on other geographies is by M&A, but of course, we are looking. It should be something that meet our DNA, meet our criteria. And our criteria is not a too small company. But on the other hand, the company that has assets that we can leverage such as partners, our customers, system of employees, control centers, et cetera. But to make the long story short, we still focus on Latin America and in the U.S., as I said.

Our next question will be from Sergey Glinyanov from Freedom Capital Markets.

So first of all, my applause to Ituran on another successful quarter. You guys beat market expectation both on 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 from the metal as a core.

Serge, ARPU is going up due to the fact of the FX. FX has been better in Q3 this year. Therefore, the ARPU went up as well.

Okay. And some kind of follow-up about your Ituran [indiscernible] in North America. So do you have any expectation about the revenue next year.

We never provide guidance about revenues, but I must tell you that we do all we can to make more revenues than this year.

Our next question will be from [indiscernible] of Bireme Capital.

My question is, I've heard that some theft insurance providers in Israel are not requiring Teslas to have your system. I was just wondering, is that true. And then secondarily, like a follow-up to that is, over 10 -- over like 5 to 10, 15 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?

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 the 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 24/7 control center, that's what they put in the policy and now U.S. the insurer has to decide what company you choose. So never since the inception of it to run insurance companies didn't say installed to run or install other name. This is what nice with run. We are not the chosen of the insurance company. We are the choosing of million subscribers in Israel. This is what the story and how we do it with our channels and the channels at that case are 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 has a very strong partnerships -- relationship along the years and this is the reason why 20 years ago, Ituran was declared as a monopoly in the telematics business in Israel. And this is why I can say and publish that Ituran 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 proved 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 always was built on a recurring revenue. Always, we will build 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, our 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 in Israeli, a car dealer or a shop to say, okay, I'm selling a car with a telematics solution, but the company that can provide the services. And for example, when we talk about SVR, this is the markets that we are very active, Israel, Latin America, very hostile environment, 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. We have intelligence, we have drones. Those things are aside the technology. So as long as we can sell and specifically in emerging markets, our technology as 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 done, and they will not immigrate it for those small markets.

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 a few percentage which use their own hardware. We're willing -- for us, it's okay. For us, it's okay. So it's maybe growth. This percentage will grow. I agree with you in the next decade. But still, it's not something that we see as aiming the business of Ituran.

Great. And one other question. Could you update us on your efforts in India?

I didn't talk about India today, specifically because there was a few quarters that I mentioned this joint venture that we have in India. And since this growing market is very, very, very slow. I didn't find reason to repeat things that I 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. The financial capabilities of businesses as well as 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 there on the ground.

Thanks, Evan. So that will end our question-and-answer session. Eyal if you would like to go make your concluding statements.

On behalf of the management of Ituran, 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 interested in meeting or speaking with us, feel free to reach out to our Investor Relations team. And with that, we end our call. Thank you, and have a good day.

Ladies and gentlemen, thank you for standing by. My name is Kenny Green. I'm part of the Investor Relations team at Ituran. I would like to welcome all of you to Ituran's results zoom webinar, and I would like to thank Ituran's management for hosting this call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded, and the recording will be available from the link in the earnings press release and on Ituran's website from tomorrow.

With me today on the call are Mr. Eyal Sheratzky, CEO; Mr. Udi Mizrahi, Deputy CEO and VP Finance; and Mr. Eli Kamer, CFO of Ituran. Eyal will begin with a summary of the quarter's results followed by Eli with a summary of our financials. We will then open the call for the question-and-answer session.

You should have all by now received the company's press release, if not, please view it on the company's website. I'd like to remind everyone that the safe harbor statement in today's press release also covers the contents of this conference call and the associated presentation.

And now, Eyal, would you like to begin, please?

Thank you, Kenny. I'd like to welcome all of you to our second quarter 2025 results call, and thank you for joining us today. I'm pleased to report another solid quarter for Ituran. We've continued to execute on our strategic objectives delivering steady growth. This was achieved despite a war between Israel and Iran during the quarter, which led to an approximate 2-week suspension of economic activities in Israel.

On the positive side, during the quarter, Ituran celebrated its 30th birthday, of which 20 of those has been as a public company, and we hosted a company even for employees, management and partners. This is a significant milestone, and I'm proud in what we have been able to accomplish over the years, thanks to our dedicated employees and management. We aim to continue our path of growth and profitability for the decade ahead.

Our results show an ongoing expansion across our target geographies in our large subscriber base of over 2.5 million subscribers. In the second quarter, we added 40,000 net subscribers, and we remain on track for 2025 subscriber growth to reach between 220,000 and 240,000 net subscribers.

In all our geographies, we continue to launch attractive new and advanced telematics products and services adding value to our customer base, including a new product targeted to motorcycles owners, which is seeing solid traction.

The strengthening of the dollar versus many of the local currencies in which we operate compared with the second quarter of last year had a slight deflating impact on our financial results when denominated in U.S. dollars. In local currencies, in each of our regions, I note that we grow slightly ahead of what our U.S. dollar-denominated results suggest.

We had a good second quarter, and I want to summarize some of our activities which will continue to contribute to our growth and success. We continue to see solid demand for our location-based product and telematics services in all our regions as well as traction from our new initiative and services. As I mentioned earlier, the war with Iran in second quarter had a short but intensive economic impact in the country as the country came to economic standstill for about 2 weeks.

This impacted new car sales, which led to a slight delay in product sales. 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 part of the market that were previously untapped by us such as lower-priced new vehicles or the second-hand car market.

Finally, our usage-based insurance business in Israel is seeing good traction and bringing continued strong subscriber growth in Israel. In Latin America, we continue to expand our reach in the motorcycle market, and we announced a new partnership with BMW Motorrad in Brazil. Motorcycle represent a significant market opportunity being the top mode of transportation in many parts of the world.

It significantly increased our total addressable market. Our new product targeting motorcycle continues to gain traction across all our geographies in South America. 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.

Ituran generated a high level of cash in the quarter, amounting to $22.4 million in operating cash flow during the quarter. Ituran is focused on shareholder value creation. And as such, the Board of Directors decided to issue a dividend of $10 million to shareholders. I remind you that at the end of last year, we increased our dividend policy by 25% from issuing $8 million quarter to $10 million. 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.

We see our ongoing dividend as a reward to our shareholders for their loyalty and long-term support of our company. At the same time, as of the end of the quarter, we had around $6 million still available under our buyback program, which we intend to deploy over the coming quarters.

In summary, we remain pleased with Ituran's ongoing performance. We believe we will continue to see growth throughout 2025, adding between 220,000 and 240,000 new subscribers in 2025. At the same time, we look for more avenues for accelerating our business even further across all our regions.

And with that, I hand over to Eli. Eli, please go ahead.

Thanks, Eyal. I will provide a short summary of the financial results. You can find the more detailed results that we issued in the press release earlier today.

Second quarter revenues were a record $86.8 million, a 2% increase compared with revenues of $84.9 million in the second quarter of last year. The overall strengthening of the U.S. dollar in the second quarter versus some of the various local currencies in which Ituran operates in impacted the revenues when translated into U.S. dollars. In local currencies, revenues grew by 4% year-over-year.

Revenues from subscription fees in the quarter were $63.8 million, an increase of 6% year-over-year, and in local currencies, an increase of 7%.

Product revenues in the quarter were $23 million, a decrease of 6% year-over-year. Product sales were impacted due to a cessation of new sales during the 12-day war between Israel and Iran during the quarter.

The subscriber base expanded to 2,548,000 by the end of the second quarter, an increase of 40,000 from the end of the previous quarter.

The geographic breakdown of revenues in the second quarter was as follow: Israel, 54%; Brazil, 23%; Rest of World, 23%.

EBITDA for the quarter was $22.9 million or 26.4% of revenues, a decrease of 1% compared with EBITDA of $23.1 million or 27.2% of revenues in the second quarter of last year. In local currencies, EBITDA grew 2% year-over-year.

Operating expenses in the quarter were slightly higher due to a onetime operating expense in the second quarter related to the company-wide celebration of our 30 years milestone. In the second quarter, finance expenses were $1.3 million compared with finance income of $0.1 million in the second quarter of last year. The expenses this quarter was due to the strongly increased level of the Israeli shekel compared to the U.S. dollar at the end of the quarter which led to a lowering in value of U.S. dollar-linked deposits in Israel, which caused a noncash finance expenses on those deposits.

Net income for the second quarter was $13.5 million or diluted earnings per share of $0.68, an increase of 2% compared to $13.1 million or diluted earnings per share of $0.66 in the second quarter of last year. In local currencies, net income grew 6% year-over-year.

Cash flow from operations for the second quarter of 2025 was $22.4 million. As of June 30, 2025, the company had net cash, including marketable securities of $88.7 million. This is compared with net cash, including marketable securities of $77.3 million as of year-end 2024.

The Board of Directors declared a dividend of $10 million for the quarter. The current dividend takes into account the company's continuing strong profitability, ongoing positive cash flow, and strong balance sheet.

And with that, I'd like to open the call for the question-and-answer session.

[Operator Instructions] Our first question will be from Chris Reimer of Barclays.

You can hear me okay?

Yes.

First off, I'd like to ask how should we be...

Chris, we lost you for a second. Please repeat your question.

Sorry. How should we be looking at growth into the second half? And would you say you've seen a bounce back in Israel?

Actually, we're still on track with our forecast of 220,000 to 240,000 subscribers. So I believe that this will be the growth in subscribers in the second -- according to this, we will have the growth in the second half of the year.

Right. Okay. And can you provide any more color on the BMW deal? What's the potential scope of customers? And when might we see impact?

Actually, BMW motorcycles in Brazil are signed with us the kind of a partnership agreement, and they're going to install our motorcycle solution with their motorcycle, with the BMW motorcycle. It's a very strong brand in Brazil.

In terms of numbers, usually, when we sign OEM contracts, we get kind of roughly projections for numbers, but they never commit. But based on the relationship, the negotiation and the discussions, we are quiet confidence that we are talking about tens of thousands of new subscribers every year in the coming years.

Got it. That's helpful. And maybe for Eli, how should we be looking at the financial expenses going forward?

Chris, financial expenses, usually, if you look at the past, our average is around breakeven or a little bit positive, like up until $0.5 million, but the financial expenses/income is really linked to the FX and our deposits of cash that we have. This quarter, specifically, we had deposits linked to the U.S. dollars here in Ituran Israel, which were attributed to the dividend that we are going to pay. And due to the fact that in the end of June, the shekel got stronger significantly that affected our financial expenses. So basically, it's not in cash flow, but this is. So going forward, it's hard to say.

That looks like that's all the questions we have in the queue. So I'll hand it back to Eyal for the closing statement. Eyal, please go ahead.

Thank you, Kenny. On behalf of the management of Ituran, 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 accomplishments over the next decade. If you are interested in meeting or speaking with us, feel free to reach out to our Investor Relations team.

And with that, we end our call. Thank you, and have a good day.