Ituran Location and Control Ltd.

Ladies and gentlemen, thank you for standing by. My name is Kenny Green, I am part of the Investor Relations team at Eteron. I would like to welcome all of you to Eteron's Results Zoom webinar and I would like to thank Eteron's management for hosting this call. All participants other than the presenters are currently muted and following the formal presentation I'll provide some instructions for participating in the live Q&A session. 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 Ituron's website from tomorrow. With me today on the call are Mr. Eyal Sharatsky, CEO, Mr. Udi Mizrahi, Deputy CEO and VP Finance, and Mr. Eli Kammer, CFO of Ituron. 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 harbour 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 products 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 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 rate in Israel continues to provide strong demand for our services in the country, and we are reaching additional new subscribers from parts of the market that were previously untapped by us, such as lower-priced new vehicles or the second-hand car market. Our usage-based insurance business in Israel is also seeing good traction and bringing continued strong subscriber growth. In Latin America, we continue to expand our reach. Our new product targeting the motorcycle market is gaining strong traction across South America, especially on the back of our partnership with BMW Motorrad in Brazil. Motorcycles are significant market opportunity. being the top mode of transportation in many parts of the world. It significantly increased our total addressable market. With Brazil as our starting point, we plan to scale into other high-growth motorcycle markets through partnerships with local OEMs as well as sales to the aftermarket. Our e2Run Mob smart mobility platform is a unique technology and solution enabling remote vehicle access, real-time telematics, and efficient fleet management for shared mobility and rental fleet applications. e2Run Mob 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 421 Mob in the United States. We have identified a strong need in the US for our solution, particularly among the thousands of small to medium car rental companies, which include hundreds of thousands of cars. These companies could benefit from this type of technological solution, making the rental process more user-friendly and efficient. This creates a new long-term avenue of growth alongside our core telematics and subscriber-based businesses. Ituran 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 50 cents per share. Our dividend yield on an analyzed 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 e2run's performance in the third quarter, and more generally, e2run'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 e2run Mob 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 Nasdaq market on Tuesday next week, November 25th, and we thank 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 result 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 and increased 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. 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 EPS of $0.74, an increase of 7% compared to $13.7 million or diluted EPS 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?

Thank you. At this time, we'll begin the question and answer session. If you have a question, please raise your hand via the Zoom platform. I will introduce you and ask you to unmute, after which you may ask your question. We'll take a few moments to poll for your questions.

Our first question will be from Chris Ramer of Barclays. Chris, you may go ahead and ask your question.

Hi, thanks for taking my question and congratulations on the strong results. I was wondering if you could give a little more color on the launch in the US. What's the target market? Do you have any idea of how big it is and when might you expect it to bear fruit?

Okay, absolutely. Thank you. 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 of thousands of rental companies. It's true that about five of them are representing more than 60% of the market, and these are the big names. At the first and the beginning, we are not aiming them as our segment, but the others represent hundreds of thousands of rental cars. We are talking about small and medium rental companies from one family that hold 10 or 15 cars that they are rented, or some mid-companies with 100, 200, 300 cars. All of them are local. Most of them are not nationwide. And they have a very strong demand for a solution that, first of all, will allow them to save their cost. And I will explain. In order today for a business that have 20, 30 cars, to meet the customers, they have to go and meet each customer, give him the key of the car, then bring it back. It's required drivers, it's required service, or In the worst case, they have to open an office, put a deck, put the people, put softwares, etc. 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 owner, small rental company owner, and you can know every minute what is with the cars, who is driving the car, how much money this car will provide you. And that's done by having a smart key in the car, having the system that we developed through e2run Mob, our small subsidiary for this technology and innovation. And in Brazil, by the way, we do it for almost three years. It's a very success solution. Add to this that even in Israel, the largest leasing and rental company in Israel, Shlomo, Shlomo Lease Car, changed a technology that he found in the world because we didn't have it in the past to our technology. He threw to the garbage about 2,000 cars. hardwares that he paid and installed in his rental cars. And now we are the partners and our units and services are also in Israel. I'm talking about the US because Israel, by definition, it's a small market. It's maybe attractive, but it's not having a major influence on our future 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's be, I don't want to be arrogant. And when they tried, the technology didn't work. They tried to do it in small city, one small city, but they are not really a big technology or communication player. that develop or are represented to the US market. So we are in the beginning of this industry, I would say, in the States. There are companies deals with remote 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 it's an advantage for us because we can uh partnering with them but before we do it we have a solution which we can go independently by yourself we already have pilots in the area of orlando and new york with some small rental companies that very satisfied the response that we get is a 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, uh, I think that, uh, let's say the dream here is huge.

Got it. Got it. Thanks. That's really great color. Um, maybe just touching on, uh, 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're 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. Thank you. And maybe if I could just one more. How do you feel the subscriber momentum is performing versus your original guidance for the year? And can you give any color on where you're seeing the most traction?

As I said in my speech is that we provide kind of guidance of 220,000 to 240,000 and according to the nine months and add 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 it run. And the drivers are absolutely across all the regions. And it's included also from the OEM. It includes 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 in Israel and this is thanks to the requirement by insurance companies relatively to the cars of rate is very high so more and more new cars but more important is second-hand cars that in the past didn't require for the policy Security system now they required and it ran 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 developed 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 drivers.

Great, great. Thanks. That's it for me, guys.

Thank you.

Thanks, Chris. Our next question is going to be from Alan Clee of Maxim Group. Alan, you may go ahead and ask.

Yes, hi, can you hear me? Yes. Oh, great. You talked about how motorcycles is important in South America and your partnership with BMW. 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... expensive vehicle is very popular. The ratio between four-wheel drive and two-wheel drive, it's very different than, for example, in other countries in the Western world, many people using motorcycles. eTRAN 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 the motorcycles. But in the last two years, we developed, thanks to our, again, innovative teams, a unit which is a state-of-the-art for security system and application for the driver on a motorbike. And what we did first, we use our OEM capabilities and teams, and we start negotiating. As you remember, maybe the first one was with Yamaha. Yamaha is our first customer for almost two years, 18 months. And then now, as we publish, we sign an OEM deal with BMW Motorrad in Brazil. The idea is that this is an untapped market for telematic solutions. And we're talking about potential of millions of motorbikes that are fitting these needs and can pay it compared to the price of the motorbike. So we started with an OEM. This allow us to create reliability. This allow us to partnering with brands. The guys of motorbike is like sports car. If somebody is driving a BMW, you will be very loyal. The same Honda, Yamaha, et cetera, specifically in Brazil. So we knew that to partnering with a... big brand in the OEM will again provide reliability and now what we see is attraction also from the aftermarket because if someone come to a dealer of BMW to have some treatment to the motorbike or to buy some something now he is asking or you will see that there is a solution buy 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 motorbike manufacturers. There are other names that we are starting to talk with. I'm not saying whether it will finish with the deal or not, but... We see attraction and a major portion of this market is the second market, the aftermarket. And this is something, again, that I believe that can be very important with influence, again, on the results in two to three years from now.

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

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 a growing segment that we couldn't penetrate, whether it's because of price, whether it's because awareness. So for us, the first online is to expand and continue expanding our business in Latin America because the synergy that we can create, the relationship, the brand, and we still, I think, in the beginning of tapping this market. So this is regard how we focus, but on opportunistic way, Of course, when we're going to some 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 UK or in Europe, it will require high resources because we have zero resources now there. And until the moment that we will turn it to a 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 criterias and our criterias is not too small company but on the other end the company that has assets that we can leverage such as partners or customers system of employees control centers, etc. But to make the long story short, we still focus on Latin America and in the US, as I said.

Okay, thank you very much.

You're welcome. Our next question will be from Sergey Glyanov from Freedom Capital Markets. Sergey, please go ahead.

Good morning, Eyal, Udi, Eli. Can you hear me? Yes. Yeah, yeah. Great, great. So first of all, my applause to Iteran and as a successful quarter. You guys beat market expectation, wasn't revenue in EPS, but now I'm interested in revenue dynamics. It seems your ARPU is increasing. Is it basically product and service mix or something more fundamental as a core?

Hi, Sergei. 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 Ethereum MOP in North America. So do you have any expectation about the revenue next year?

we we we never provide guidance about revenues but i must tell you that we do all we can to make more revenues than dc yeah sounds great sounds great thank you thank you this whole welcome you're welcome thank you thanks sergey our next question um

Hold on one sec. Our next question will be from Evan Tindell of Byrim Capital. Evan, you may ask your question.

Hi, guys. Thanks for taking my call. My question is, I've heard that some theft insurance providers in Israel are not requiring Teslas to have your system. I'm just wondering, is that true? And then... Secondarily, a follow-up to that is over five to 10, 15 years, something like that, do you guys worry that more manufacturers will be able to figure out how to do the internal telematic systems and anti-theft systems well enough to disintermediate you guys? Thanks so much.

Okay, so just to explain how is the process specifically in Israel, because there is a regulation. In Israel, insurance company cannot decide for their insurers or to require in their policy a specific brand, a specific solution. What they allow 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. Now, you as the insurer has to decide what company you choose. So never, never, since the inception of it to run, insurance companies didn't say install it to run or install other name. This is what nice with it to run. We are not the chosen of the insurance company. We are the chosen 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 e2run has a very strong partnerships relationship along the years and it's this is the reason why 20 years ago it one was declared as a monopoly in the telematics business in israel and this is why i can say uh and publish that ituran has something like 85 to 90 percent 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 regarding this question. Regarding the second question, as we prove in the OEM business in Latin America, and General Motors is a very good example. Historically, we started by selling hardware and services, but it run always was built on a recurring revenue. Always we were built as a service oriented company. For us, the hardware in the car is a tool, is a tool to bring customers. But 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 Israel, a car dealer or a shop to say, okay, I'm selling a car with a telematic 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 environments, no technology will recover the car. The recovery of the car is done by people sitting in a control center, provide information to enforcement people on the field. We have intelligence. We have drones. Those things are aside the technology. So as long as we can sell, and specifically in emerging market, our technology is the state of the art. The companies, for example, that sell cars in Israel, Even the Chinese companies, they are not providing communication, telematic solution. For example, in Hebrew, they are not providing the data that's relevant and they will not immigrate it for those small markets. On the other hand, in Brazil and in Mexico, we are connecting to those manufacturer from the first level. So I think that for us, it's more important to provide the service, to have the recurring revenues. Today, 95% of our customers which is car dealers, car manufacturers, and any other customers still buy our hardware. But there are few percentage which use their own hardware. We're willing, for us it's okay, for us it's okay. So it's maybe grow, this percentage will grow, I agree with you, in the next decade, but still it's not something that we see as aiming the business of it to one.

Great, thank you for that. And one other question, could you update us on your efforts in India?

I didn't talk about India today specifically because there was few quarters that I mentioned this joint venture that we have in India. And since this growing market is a very, very, very slow market, 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 sign a large contract with Mercedes Benz for commercial cars. but with 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 the the main telematics or one of the main telematics player that they're on the ground okay thank you thanks evan so that will end our question and answer session um

Eyal, if you would like to go make your concluding statement.

On behalf of the management of Vitoran, 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.