Ituran Location and Control Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to the Ituran third quarter 2022 results conference call. All participants are present in listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded. You should have all received by now the company's press release. If you have not received it, please contact Ituran's investor relations team at I will now hand the call over to Mr. Kenny Green of EK Global Investor Relations. Mr. Green, would you like to begin?

Thank you. Good day to all of you and welcome to Ituran's conference call to discuss the third quarter 2002 results. I would like to thank Ituran's management for hosting this conference call. With me today on the call are Mr. Eyal Sharatsky, CEO, Mr. Udi Mizrahi, Deputy CEO and VP Finance, and Mr. Eli Kamar, 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. I would like to remind everyone that the Safe Harbor statement in today's press release also covers the contents of this conference call. And now, Eyal, would you like to begin, please?

Thank you, Kenny. I'd like to welcome all of you, and thank you for joining us today. We are very pleased with the achievement during the third quarter. Apart from our excellent results, we surpassed the goal we have had for many years at E2One, that is surpassing a subscriber base of 2 million globally. Given our continued strong subscriber growth, adding a net of 48,000 new subscribers in each of the past two quarters, we achieved this goal earlier than expected. This is because it is quite clear that the aftermarket subscriber growth rate has accelerated in recent quarters. In the second half of 2019, prior to the corona era, and even over the past two years, apart from the shutdown of Q2 2020, our aftermarket growth run rate was approximately 20,000 net new subscribers per quarter. Today, we have shared with you our new aftermarket growth expectation going forward. Based on the recent run rate, we increased our expectations for the growth rate of our global aftermarket subscriber base ahead, expecting 180,000 to 200,000 net new subscribers as annually. I want to add that we are not making any predictions on the OEM subscriber base growth rate, as this doesn't depend on us. can vary quite a lot and is harder to forecast. The recent strong subscriber growth is starting to be reflected in the current quarter's subscription revenues, which continued to grow despite currency headwinds due to the dollar's strength. Revenue grew at 10% year-over-year and 13% when calculating in local currencies, and with all the reasons to believe that this trend will continue well in 2023. The gross margin on the subscription fee also grow and demonstrate some of the operating leverage in our model, becoming more apparent. We recorded gross margin of 57.2% up from 56.5% in Q3 last year and 56.8% last quarter. This increase in subscribers came from the growth in our traditional aftermarket business and was also boosted by the various growth engines that we have seeded over the past few quarters across all our geographies. One growth engine I would like to highlight this quarter is our service to financial firms active in the second-hand car market in Latin America. Because of the shortage of components and ultimately new cars, the second-hand car market has grown stronger everywhere. New fintech startups, as well as major banks, have come in to provide financing to this growing market. However, they all need a way to track the collateral on the loans they provide, which is the car. And D2One provides the perfect solution with its location-based and connected car technology. We've already started working with financing customers in Latin America, and we are also talking to some major financial institutions in those markets which we hope to close in the near future. We are constantly looking to bring in new financing customers and broaden the service to additional geographies. We are excited about this business and see great potential for additional growth in the coming years. In summary, we are very pleased with our performance in the quarter. That is both the financial performance and in particular the continued strong subscriber growth which has led to the milestones we announced to do of servicing 2 million subscribers. Both ongoing solid performance in our traditional aftermarket business and especially our growth engines are driving this subscriber growth. The subscriber growth will ultimately translate into increased subscriber revenue growth and faster growing profitability in the years ahead. And we can already see the initial fruits of that in the current quarter. It is clear that our subscriber growth rate has accelerated, and today we increase the expectation going forward. We now expect the aftermarket subscriber annual growth rate at between 180,000 to 200,000 net. All in all, I'm more excited now than ever with our long-term potential and look forward to a strong Q4 in 2023 ahead. And with that, I hand over to Eli. Eli, please go ahead.