Image source: The Motley Fool.
DATE
Tuesday, Aug. 19, 2025 at 9 a.m. ET
CALL PARTICIPANTS
Co-Chief Executive Officer — Eyal Sheratzky
Chief Financial Officer — Eli Kamer
Need a quote from a Motley Fool analyst? Email [email protected]
RISKS
Product Revenues Impact— The war between Israel and Iran caused a two-week suspension of economic activities in Israel, resulting in a 6% decrease in product revenues for Q2 2025, driven by delayed new car sales and a halt in new product sales during this period.
Currency Headwinds— CFO Kamer stated, "The overall strengthening of the US dollar in the second quarter versus some of the various local currencies in whichIturan Location and Control(ITRN -7.19%) operates impacted the revenues when translated into US dollars."
Finance Expense Driven by FX Movements— CFO Kamer noted, "Finance expenses were $1.3 million, compared with finance income of $100,000 in Q2 2024. The expenses this quarter were due to the strongly increased level of the Israeli shekel compared to the US dollar at the end of the quarter, which led to a lowering in value of US dollar-linked deposits."
TAKEAWAYS
Revenue-- $86.8 million in revenue for Q2 2025, up 2% compared to Q2 2024, with local currency revenue growth of 4% year over year.
Subscription Revenue-- $63.8 million in subscription fee revenues for Q2 2025, a 6% year-over-year increase in subscription fee revenues, or 7% year over year in local currency.
Product Revenue-- $23 million in product revenues for Q2 2025, down 6% year over year, directly linked to the halt in new sales during the twelve-day war between Israel and Iran.
EBITDA-- $22.9 million (26.4% margin) in Q2 2025, down 1% year over year compared to Q2 2024; in local currency, EBITDA grew 2% year over year.
Net Income-- $13.5 million in net income for Q2 2025, up 2% in Q2 2025 compared to Q2 2024; Diluted EPS was 68¢, compared to 66¢ in Q2 2024. Local currency net income rose 6% year over year.
Subscriber Growth-- Net additions totaled 40,000 in Q2 2025, bringing total subscribers to 2,548,000 as of quarter-end.
Subscriber Growth Guidance-- Management reiterated guidance of 220,000-240,000 net subscriber additions for 2025.
Geographic Revenue Mix-- Israel contributed 54% of revenues. Brazil accounted for 23% of revenues, with the rest of the world at 23%.
Operating Cash Flow-- $22.4 million in operating cash flow generated in Q2 2025.
Net Cash Position-- $88.7 million as of June 30, 2025, up from $77.3 million at year-end 2024.
Dividend-- $10 million declared for the quarter, representing 50¢ per share for the quarter and an annualized dividend yield of approximately 5%.
Share Buyback-- $6 million remains authorized for future repurchases as of quarter-end.
BWM Motorrad Partnership-- Management cited a new OEM deal with BMW Motorrad in Brazil with expectations for "tens of thousands of new subscribers every year."
Motorcycle Market Expansion-- Noted traction across South America, with intentions to enter additional high-growth motorcycle markets via local OEMs and aftermarket channels.
New Product Launches-- Introduction of products aimed at motorcycle owners in existing and new markets, contributing to incremental subscriber growth.
One-Time Operating Expense-- CFO Kamer reported a temporary cost increase due to the company's thirtieth-anniversary celebrations in the quarter.
Usage-Based Insurance Traction-- Subscriber growth benefited from continued momentum in the Israeli usage-based insurance segment.
SUMMARY
Management attributed a 6% decline in product revenues and an elevated non-cash finance expense to sharp currency movements. The company maintained its full-year 2025 subscriber growth guidance, highlighting resilience despite operational headwinds. New partnerships in Brazil and expanded offerings for the motorcycle market were positioned as potential multi-year growth drivers. Brazil's revenue share was 23%, with Israel remaining the primary contributor to group revenue.
Driving a net cash increase of $11.4 million from year-end 2024 to June 30, 2025.
The ongoing share repurchase program had approximately $6 million still available for deployment as of quarter-end.
The quarterly dividend was maintained at $10 million following last year's 25% policy increase, signaling stable shareholder returns.
Management emphasized exposure to FX volatility in its cash and revenue profile, with guidance for financial expenses remaining uncertain due to unpredictable currency moves.
INDUSTRY GLOSSARY
OEM: Original Equipment Manufacturer; in this context, an automaker or motorcycle manufacturer that installs Ituran's telematics solutions directly into vehicles at the factory or distribution level.
Usage-Based Insurance: Insurance model where premiums are calculated based on real-time vehicle usage and driving behavior data collected via telematics devices.
Full Conference Call Transcript
Eyal Sheratzky: 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 am pleased to report another solid quarter for Ituran Location and Control Ltd. 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 two-week suspension of economic activities in Israel. On the positive side, during the quarter, Ituran Location and Control Ltd. celebrated its thirtieth birthday, of which 20 of those have been as a public company, and we hosted a company event for employees, management, and partners.
This is a significant milestone, and I'm proud of 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 two and a half million subscribers. In the second quarter, we added 40,000 net and we remain on track for 2025 subscriber growth to reach between 220,000 to 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 motorcycle 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 US dollars. In local currencies, in each of our regions, I note that we grow slightly ahead of what our US dollar denominated results suggest. We had a good second quarter, and I want to summarize some of our activities. We continue to 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 initiatives and services. As I mentioned earlier, the war with Iran in the second quarter had a short but intensive economic impact in the country as the country came to an economic standstill for about two weeks. This impacted new car sales, which led to a slight delay in product sales.
A 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 parts 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, bringing continued strong subscriber growth in Israel. In Latin America, we continued to expand our reach in the motorcycle market, and we announced a new partnership with BMW Motorrad in Brazil. Motorcycles 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 motorcycles 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 Location and Control Ltd. generated a high level of cash in the quarter, amounting to $22.4 million in operating cash flow during the quarter. Ituran Location and Control Ltd. 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 per quarter to $10 million. This represents 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 Location and Control Ltd.'s ongoing performance.
We believe we will continue to see growth throughout 2025, adding between 220,000 to 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.
Eli Kamer: 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 US dollar in the second quarter versus some of the various local currencies in which Ituran Location and Control Ltd. operates impacted the revenues when translated into US 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 twelve-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 follows: Israel 54%, Brazil 23%, rest of the 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 one-time operating expense in the second quarter related to the company-wide celebration of our thirty-year milestone. In the second quarter, finance expenses were $1.3 million compared with finance income of $100,000 in the second quarter of last year.
The expenses this quarter were due to the strongly increased level of the Israeli shekel compared to the US dollar at the end of the quarter, which led to a lowering in value of US dollar-linked deposits in Israel, causing a non-cash finance expense on those deposits. Net income for the second quarter was $13.5 million or diluted earnings per share of 68¢, an increase of 2% compared to $13.1 million or diluted earnings per share of 66¢ in the second quarter of last year. In local currencies, net income grew 6% year over year. Cash flow from operations for 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. At this time, we'll begin the question and answer session. After which you may ask your question. We'll take a few moments to poll for your questions.
Operator: Our first question will be from Chris Reimer of Barclays. Chris, please go ahead.
Chris Reimer: Yeah. Hi. You can hear me okay?
Operator: Yeah.
Chris Reimer: Well, thanks for taking my questions. First off, I'd like to ask how should we be...
Eli Kamer: Chris, we lost you for a second. Please repeat your question.
Chris Reimer: Hi. Sorry. How should we be looking at growth into the second half? And would you say you've seen a bounce back in Israel?
Eyal Sheratzky: Actually, we are still with our forecast of 220,000 to 240,000 subscribers, so I believe that this will be the growth in subscribers. According to this, we will have the growth in the second half of the year.
Chris Reimer: 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?
Eyal Sheratzky: Actually, BMW motorcycles in Brazil have signed with us a kind of a partnership agreement. They're going to install our motorcycle solution with their motorcycles, 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 rough projections for numbers, but they never commit. But based on the relationship, the negotiation, and the discussions, we are quite confident that we are talking about tens of thousands of new subscribers every year in the coming years.
Chris Reimer: Got it. Thanks. That's helpful. And maybe for Eli, how should we be looking at the financial expenses going forward?
Eli Kamer: Hi, Chris. Financial expenses usually, you know, if you look at the past, our average is around breakeven or a little bit positive, like up until half a million dollars. 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 US dollars here in Israel, which were attributed to the dividend that we are going to pay. And due to the fact that in 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.
Chris Reimer: Got it. Okay. Thanks. That's helpful. That's it for me.
Kenny Green: 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 Sheratzky: Thank you, Kenny. On behalf of the management of Ituran Location and Control Ltd., 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.