Ituran Location and Control Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to the Ituron First Quarter 2023 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 EK Global Investor Relations at 1-212-378-8040 or view it in the news section of the company's website www.ituran.co.il. I will now hand over the call to Mr. Kenny Green of EK Global Investor Relations. Mr. Green, please begin.

Thank you. Good day to all of you and welcome to Ito Ran's conference call to discuss the first quarter 2023 results. I would like to thank Ito Ran'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 Ito Ran. 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, please go ahead.

Thank you, Kenny. I'd like to welcome all of you to our first quarter 2023 call, and I would like to thank you for joining us today. We are clearly very pleased with our achievements in the first quarter. The year has kicked off with a robust start, and the solid subscriber growth we saw throughout 2022 and now in the first quarter is clearly having a positive impact on our financial performance. In this quarter, we experienced record subscriber revenues with record subscriber growth margins and also saw our highest quarterly net income and EBITDA in over four years. From a strategic perspective, we experienced strong growth in subscribers, adding a net total of 49,000 subscribers, of which 44,000 were from the aftermarket and 5,000 were OEM additions. As we shared with you last quarter, our expectations for the growth rate in our subscriber base stand at between 180,000 to 200,000. Net new subscribers as annually, and we are on track. As our results show, the strong subscriber growth we have experienced now for a few quarters is being increasingly reflected in the subscription revenue growth, even despite the currency headwinds due to the dollar strength compared with last year. Q1 subscription revenues grew at 11% year-over-year or 16% growth when calculated in local currencies, which naturalized the effect of the exchange rate on our growth. We have every reason to expect that this growth trend will continue well into 2023 and beyond. The growth margin on subscription fees continue to improve and we have seen sequential improvements throughout each quarter last year and now a record subscriber growth margin of 58.1% in Q1. It demonstrates that the operating leverage in our model is becoming increasingly apparent, whereby we can add each new subscriber without a corresponding significant increase in cost and it will continue to benefit us in the coming quarters. As you remember, we've recently entered a few new verticals which are performing well, such as the finance segments and the UBI. This is helping us to get traction and continue to increase our overall subscriber base. As far as the Israeli market goes, It is worthwhile noting that after many years in this market, we've seen a recent increase in the theft rates and a dramatic increase. With thanks to our good performance in this vertical of stolen vehicle recovery, it increases the need of the insurance companies to use our services. In summary, we are very pleased with our performance in the first quarter and it represents a great start to 2023. Both ongoing solid performance in our traditional aftermarket business, a good recovery in the OEM business, and especially the growth engines we have seeded in the past years are all driving this subscriber growth. While we are aware of a global economic slowdown ahead, our 2 million plus subscriber base paying us on an ongoing monthly basis give us significant resilience. Furthermore, our recent accelerated subscriber growth will continue to translate into increased subscriber revenue growth throughout the coming year, with faster growing profitability as the operating leverage continues working in our favor. We have already seen the yearly fruits of our recent success in the current quarter. Looking ahead, we are confident the improvements we have made to our business over the past few years, leading to today's robust subscriber growth, are here to stay for the possible future. We are excited for the year ahead and anticipate a positive trend will continue through our 2023 environment. And with that, I hand over to Eli. Eli, please go ahead.