Q2 2024 Ituran Location and Control Ltd Earnings Call

August 19, 2024

Speaker Change: Ladies and gentlemen, thank you for standing by. Welcome to the ITERON second quarter of 2024 results conference call.

Operator: to run second quarter of 2024 results conference call. All participants are present in listen-only mode.

Operator: 2nd quarter of 2024 results conference call. All participants are present in listen-only mode.

Operator: 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.

Operator: 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.

Speaker Change: All participants are present in listen-only mode following management's formal presentation.

Speaker Change: 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.

Operator: As a reminder, this conference is being recorded. You should have all received by now the company's press release.

Operator: As a reminder, this conference is being recorded. You should have all received by now the company's press. If you have not received it, please contact Ituran's Investor Relations team at EKGlobalInvestorRelations 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 the call over to Mr. Kenny Green of EK Global Investor Relations. Mr. Green, would you like to begin?

Operator: 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.

Speaker Change: If you have not received it, please contact EITURON's Investor Relations Team at EKGlobalInvestorRelations at 1-212-378-8040 or view it in the news section of the company's website www.eituron.co.il.

Kenny Green: I will now hand the call over to Mr. Kenny Green of EK Global Investor Relations.

Speaker Change: I will now hand the call over to Mr. Kenny Green of EK Global Investor Relations. Mr. Green, would you like to begin?

Kenny Green: Mr. Green, would you like to begin?

Kenny Green: Thank you.

Kenny Green: Thank you. Good day to all of you and welcome to Ituran's conference call to discuss the second quarter 2024 results. I would like to thank Ituran's management for hosting this conference call. With me today on the line are Mr. Eyal Sheratzky, 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.

Kenny Green: Good day to all of you, and welcome to Ituran's conference call to discuss the 2nd quarter of 2024 results. I would like to thank Ituran's management for hosting this conference call.

Speaker Change: Thank you. Good day to all of you and welcome to ITERUN's conference call to discuss the second quarter 2024 results. I would like to thank ITERUN's management for hosting this conference call.

Kenny Green: With me today, on the line, Mr. Eyal Sheratzky, CEO, Mr. Udi Nisrahi, Deputy CEO and VP Finance, and Mr. Eli Kamer, CFO, of Vita. Eyal will begin with a summary of the court's results, followed by Ely with a summary of the financials. We will then open the call to the question-and-answer session. I'd like to remind everyone that the safe harbor statement in today's press release also covers the contents of this conference call.

Speaker Change: With me today, on the line, are Mr. Eyal Sheratzky, CEO, Mr. Udi Mitrahi, Deputy CEO and VP Finance, and Mr. Eli Kamar, CFO, Ovito.

Speaker Change: 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.

Speaker Change: I'd like to remind everyone that the Safe Harbor Statement in today's press release also covers the contents of this conference call.

Kenny Green: We will then open the call for the question and answer session. 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 now, Eyal, would you like to begin, please? Thank you, Kenny.

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

Eyal Sheratzky: I'd like to welcome all of you to our second quarter 2024 call, and I would like to thank you for joining us today. We are pleased with our second quarter results, especially the ongoing growth in revenue across the geographies in which we operate, with continued improvement in process. We are also pleased with the solid level of additional Net Subscribers we brought in the quarter, which came in at the high end of our expectations.

Eyal Sheratzky: Thank you, Kenny. I'd like to welcome all of you to our 2nd quarter 2024 call, and I would like to thank you for joining us today. We are pleased with our 2nd quarter results, especially the ongoing growth in revenue across the geographies in which we operate. With continued improvement in profit, we are also pleased with the solid level of additional Nest subscribers we brought in the quarter, which came in at the high end of our expectations. These achievements come despite the negative impact of the sharp devaluation against the US dollar in the quarter, which lower our local currency, denominated results, presented in US dollars.

Speaker Change: And now Eyal, would you like to begin please? Thank you, Kenny. I'd like to welcome all of you to our second quarter 2024 call. And I would like to thank you for joining us today.

Speaker Change: We are pleased with our second quarter results, especially the ongoing growth in revenue across the geographies in which we operate, with continued improvement in profit.

Speaker Change: We are also pleased with the solid level of additional net subscribers we brought in the quarter, which came in at the high end of our expectations.

Eyal Sheratzky: These achievements come despite the negative impact of the sharp devaluation against the U.S. dollar in the quarter, which lower our local currency denominated results, presented in U.S. In fact, we measured in local currencies, we have seen accelerated growth in most of the geographies in which we operate. Our results reflect ongoing solid demand growth for our broad location-based products and telematic services, and especially increased traction from many of our new initiatives. Our subscriber base added 38,000 subscribers in the quarter, at the high end of our expectations of between 35,000 and 40,000 net new subscribers per quarter.

Speaker Change: These achievements come despite the negative impact of the sharp devaluation against the U.S. dollar in the quarter, which lowered our local currency denominated results presented in U.S. dollars.

Eyal Sheratzky: In fact, we measured in local currencies; we have seen accelerated growth in most of the geographies in which we operate. Our results reflect ongoing solid demand growth for our broad location-based products and telematic services, and especially in free extraction from many of our new initiatives. Our subscriber base added 38,000 subscribers in the quarter, at the high end of our expectations of between 35,000 and 40,000 net new subscribers per quarter. This is due both to our most diverse global footprint, as well as the new services and in the initiative we are continuing to bring to our end markets.

Speaker Change: In fact, we measured in local currencies, we have seen accelerated growth in most of the geographies in which we operate.

Speaker Change: Our results reflect ongoing solid demand growth for our broad location-based products and telematics services, and especially increased traction from many of our new initiatives.

Speaker Change: Our subscriber base added 38,000 subscribers in the quarter, at the high end of our expectations of between 35,000 and 40,000 net new subscribers per quarter.

Eyal Sheratzky: This is due both to our more diverse global footprint as well as the new services and initiatives we are continuing to bring to our end market. Over the past few years, we've launched a number of new initiatives and have seeded growth engines driving accelerated subscriber growth, were actively engaged in new verticals adjustments to our core business of providing telematics. At the same time, we are taking the successful lineages which have been limited to one of our geographies and expanding them to our other geographies.

Speaker Change: This is due both to our more diverse global footprint as well as the new services and initiatives we are continuing to bring to our end markets.

Eyal Sheratzky: Over the past few years, we've launched a number of new initiatives and have seeded growth engines driving accelerated subscriber growth. We are actively engaged in new verticals adjustment to our core business of providing telematic services. At the same time, we are taking the successful initiative, which have been limited to one of our geographies and expanding them to our other job. You may remember that we signed a landmark agreement with Santander Bank a year ago, and we are actively looking to broaden our solution into new markets with existing and other finance customers. Our SaaS technology for all in one vehicle sharing helps fleet owners smartly and flexibly use shared vehicle fleet through efficient matching of unused vehicle with demand.

Speaker Change: Over the past few years, we've launched a number of new initiatives and have seeded growth engines driving accelerated subscriber growth.

Speaker Change: were actively engaged in new verticals adjustments to our core business of providing kinematic services.

Speaker Change: At the same time, we are taking the successful lineage which have been limited to one of our geographies and expanding them to our other geographies.

Eyal Sheratzky: You may remember that we signed a landmark agreement with Santander Bank a year ago and we are actively looking to broaden our solution into new markets, with existing and other finance customers. Our SAS technology for all-in-one vehicle sharing helps fleet owners smartly and flexibly use shared vehicle fleets through efficient matching of unused vehicles with new ones. We have been gaining solid traction and we are now leveraging the technology to other geographies including Israel and the United States.

Speaker Change: You may remember that we signed a landmark agreement with Santander Bank a year ago, and we are actively looking to broaden our solution into new markets.

Speaker Change: with existing and other finance customers.

Speaker Change: Our SAS technology for all-in-one vehicle sharing helps fleet owners smartly and flexibly use shared vehicle fleets through efficient matching of unused vehicles with demand.

Eyal Sheratzky: We have been gaining solid traction, and we are now leveraging the technology to other geographies, including Israel and the United States. We see significant demand for this type of service from car rental businesses, leasing companies, as well as corporate fleets, which are looking to more effectively and efficiently share the use of their fleets of vehicle.

Speaker Change: We have been gaining solid traction and we are now leveraging the technology to other geographies, including Israel and the United States.

Eyal Sheratzky: We see significant demand for this type of service from car rental businesses, leasing companies as well as corporate fleets which are looking to more effectively and efficiently share the use of their fleets of vehicles. Also, as you may have seen, a few days ago, we put out a press release with regard to our collaboration with Porsche and Microsoft for the Porsche Carrera Cup in Brazil. And I encourage all of you to watch the video for Technology in Action.

Speaker Change: We see significant demand for this type of service from car rental businesses, leasing companies, as well as corporate fleets which are looking to more effectively and efficiently share the use of their fleets of vehicles.

Eyal Sheratzky: Also, as you may have seen a few days ago, we put out a press release with regard to our collaboration with Porsche and Microsoft for the fourth Carrera Cup in Brazil, and I encourage all of you to watch the video for our technology in action. We are incredibly proud to be proud of this and associated with such industry leaders. Additionally, the fact that it runs the LeMatic unit is at the heart of the Porsche racing car telemetry system under the most demanding conditions demonstrates our technology leadership. One of our goals in being involved in a project such as this, apart from the owner of being associated with Porsche and Microsoft, is to bring these latest technologies used in motor sports down to it runs subscribers, and we are already looking to leverage the new capabilities developed for this project over the past year.

Speaker Change: Also, as you may have seen, a few days ago, we put out a press release with regard to our collaboration with Porsche and Microsoft for the Porsche Carrera Cup in Brazil. And I encourage all of you to watch the video for our technology in action.

Eyal Sheratzky: We are incredibly proud to be part of this and associated with such industry leaders. Additionally, the fact that Ituran's Telematic Unit is at the heart of the Porsche Racing Car Telemetry System under the most demanding conditions demonstrates our technology leadership. One of our goals in being involved in a project such as this, apart from the honor of being associated with Porsche and Microsoft, is to bring these latest technologies used in motorsports down to Ituran's subscribers, and we are already looking to leverage the new capabilities developed for this project over the past year. Shroud our business and make it more attractive to OEM players. I want to thank our team in Brazil for the exceptional work they are doing for the Prosperera.

Speaker Change: We are incredibly proud to be part of this and associated with such industry leaders. Additionally, the fact that it runs telematic unit is at the heart of the Porsche racing car telemetry system under the most demanding conditions, demonstrates our technology leadership.

Speaker Change: One of our goals in being involved...

Speaker Change: in a project such as this, apart from the honor of being associated with Bosch and Microsoft.

Speaker Change: is to bring these latest technologies used in motorsports down to E-2RUN subscribers and we are already looking to leverage the new capabilities developed for this project over the past year.

Eyal Sheratzky: Throughout our business and make it more attractive to OEM players.

Speaker Change: Shroud our business and make it more attractive to OEM players.

Eyal Sheratzky: I want to thank our team in Brazil for the exceptional work they are doing for the Carrera Cup.

Speaker Change: I want to thank our team in Brazil for the exceptional work they are doing for the post-career account.

Eyal Sheratzky: We recently launched a new motorcycle telematics product with strong potential given a very significant total addressable market throughout South America with a strong motorcycle culture. We are already seeing interest for OEMs and insurance companies, and we are in active discussions. We are also in active discussions with a number of major OEM common effectors in addition to the two major that we already work with. At the same time, we are looking to broaden the scope of services we provide to our existing OEM partners, which are focused on limited geographies, in order to broaden our service to additional countries in South America.

Eyal Sheratzky: We recently launched a new motorcycle telematics product with strong potential, given a very significant total addressable market throughout South America with a strong motorcycle culture. We are already seeing interest for OEMs and insurance companies and we are in active discussion. We are also in active discussions with a number of major OEM car manufacturers in addition to the two major that we already work with. At the same time, we are looking to broaden the scope of services we provide to our existing OEM partners, which are focused on limited geographies, in order to broaden our service to additional countries in South America. The goal is to provide to the OEM manufacturers with a suite of telematics and stolen vehicle recovery services.

Speaker Change: We recently launched a new motorcycle telematics product with strong potential, given a very significant total addressable market throughout South America.

Speaker Change: with a strong motorcycle culture. We are already seeing interest for OEMs and insurance companies and we are in active discussions.

Speaker Change: We are also in active discussions with a number of major OEM car manufacturers, in addition to the two major that we already work with.

Speaker Change: At the same time, we are looking to broaden the scope of services we provide to our existing OEM partners, which are focused on limited geographies, in order to broaden our service to additional countries in South America.

Eyal Sheratzky: The goal is to provide to the OEM manufacturers with a suite of telematics and fallen vehicle recovery services. We seek gross potential to bring in many new subscribers to via the initiative.

Speaker Change: The goal is to provide to the OEM manufacturers with a suite of telematics and stolen vehicle recovery services.

Eyal Sheratzky: We see gross potential to bring in many new subscribers via this initiative. From a financial perspective, looking ahead to the reminder of 2024, earlier this year we provide EBITDA guidance in addition to the guidance on subscriber growth, which we always use. Today, we retweeted that for 2024, our guidance is full-year EBITDA of between $90 and $95 million. Looking further out, our short mid-term milestone is to cross the $100 million EBITDA landmark. We continue to expect subscriber growth at around 35,000 and 40,000 net new subscriber each quarter. Even with the currency headwind in this quarter, we remain on track to meet our targets.

Speaker Change: We see gross potential to bring in many new subscribers via this initiative.

Eyal Sheratzky: From a financial perspective looking ahead to the remainder of 2024. Earlier this year, we provided EBITDA guidance in addition to the guidance on subscriber growth, which we always used to do. Today we retreated that for 2024 our guidance is full EBITDA of between 90 and 95 million dollars. Looking further out, our short midterm milestone is to cross the 100 million dollar EBITDA landmark. in 2025. We continue to expect subscriber growth at around 35,000 and 40,000 net new subscribers each quarter. Even with the currency headwind in this quarter, we remain on track to meet all the targets.

Speaker Change: From a financial perspective, looking ahead to the reminder of 2024, earlier this year we provided EBITDA guidance in addition to the guidance on subscriber growth, which we always used to do.

Speaker Change: Today we retweeted that for 2024 our guidance is full year EBITDA of between 90 and 95 million dollars. Looking further out, our short mid-term milestone is to cross the 100 million dollar EBITDA landmark.

Speaker Change: in 2025. We continue to expect subscriber growth at around 35,000 and 40,000 net new subscribers each quarter.

Speaker Change: Even with the currency headwind in this quarter, we remain on track to meet our targets.

Eyal Sheratzky: Given the strong net cash position of over $63 million, our ongoing cash generation and continued solid profitability, we continue to share a strong quarterly dividend of $8 million with our shareholders. This dividend is in line with our current policy. It is at the same level that we issued last quarter and a 60% increase over that of the year ago quarter. Our dividend yield on an analyzed basis represents a return of over 6%, which is a very solid return from a strong company. We see our ongoing dividend as a reward to our shareholders for the loyalty and long-term support of Ituran.

Eyal Sheratzky: Given the strong net cash position of over $63 million, our ongoing cash generation and continued solid profitability, we continue to share a strong quarterly dividend of $8 million with our shareholders. This dividend is in line with our current policy. It is at the same level that we issued last quarter and 60% increase over that of the year ago quarter. Our dividend yield, on an analyzed basis, represents a return of over 6%, which is a very solid return on a strong compound. We see our ongoing dividend as a reward to our shareholders for their loyalty and long-term support of Ituran.

Speaker Change: Given the strong net cash position of over 63 million dollars, our ongoing cash generation and continued solid profitability, we continue to share a strong quarterly dividend of 8 million dollars with our shareholders.

Speaker Change: This dividend is in line with our current policy.

Speaker Change: It is at the same level that we issued last quarter and 60% increased over that of the year ago quarter.

Speaker Change: Our dividend yield, on an analyzed basis, represents a return of over 6%, which is a very solid return from a strong compound.

Speaker Change: We see our ongoing dividend as a reward to our shareholders for their loyalty and long-term support of e2ra.

Eyal Sheratzky: In summary, the second quarter of 2024 is another quarter of solid performance, which is especially clear when we remove the noise from effects and look at our results in local crisis. We believe that we will continue this trend in 2024. Given the many growth initiatives highlighted, I would expect the growth to accelerate as time passes over the mid to long term. Our constantly growing subscriber growth will ultimately translate into increased revenue, increased growth profit, with faster growing profitability over the long term due to the operating leverage inherent to our business.

Eyal Sheratzky: In summary, the second quarter of 2024 is another quarter of solid performance, which is especially clear when we remove the noise from the FX and look at our results in local time. We believe that we will continue on this trend in 2024 and given the many growth initiatives highlighted I would expect the growth to accelerate as time passes over the mid to long term. Our constantly growing subscriber growth will ultimately translate into increased revenue, increased gross profit.

Speaker Change: In summary, the second quarter of 2024 is another quarter of solid performance, which is especially clear when we remove the noise from FX and look at our results in local currencies.

Speaker Change: We believe that we will continue on this trend in 2024, and given the many growth initiatives highlighted, I would expect the growth to accelerate as time passes over the mid- to long-term.

Speaker Change: Our constantly growing subscriber growth will ultimately translate into increased revenue, increased gross profit, with faster growing profitability over the long term due to the operating leverage inherent to our business.

Eyal Sheratzky: Faster growing profitability over the long term due to the operating leverage inherent to our business. I look forward to updating you further as some of our initiatives mature. And with that, I hand over to Eli. Eli, please go ahead.

Eyal Sheratzky: I look forward to updating you further, or some of our initiative mature, and with that, I end over to Ellie. Please go ahead.

Speaker Change: I look forward to updating you further as some of our initiatives mature.

Eli Kamer: Thank you, Ayado.

Eli Kamer: Thank you, 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 revenue was $84.9 million, a 4% increase compared with revenue of $81.6 million last quarter. Strengthening of the U.S. dollar in the second quarter versus the various local currencies in which Ituran operates. Impeg.

Eli Kamer: I will provide a short summary of the financial results. You can find the more detailed results that we issued in the virtual earlier today. Second quarter revenue was for $84.9 million, a 4 percent increase compared with revenue of $81.6 million last year. The strengthening of the US dollar in the second quarter versus the various local currencies in which it one operates in impact the revenues when translated into US dollar. In local currency, revenue grew by 6 percent year over year. Revenue from subscription fees in the quarter was 60.4 million dollars, an increase of 2 percent year over year, and in local currencies, an increase of 5 percent.

Eli Kamer: The revenues were translated into U.S. dollars. In local currency, revenue grew by 6% year-over-year. Revenue from subscription fees in the quarter were $60.4 million, an increase of 2% year-over-year. In local currencies, an increase of 5%. Product revenues in the quarter were $24.5 million, an increase of 9% year-over-year, and in local currency an increase of $10,000. The subscriber base expanded to 2,003,398 subscribers. 29,000 by the end of the second quarter, an increase of 38,000, from the end of the previous quarter. The geographic breakdown of revenues in the second quarter was as follows. Israel 51%, Brazil 24%, rest of world 25%.

Speaker Change: Thank you, Eyal.

Speaker Change: 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.

Eli Kamer: EBITDA for the quarter was $23.1 million or 27.2% of revenue, an increase of 6% compared with EBITDA of $21.8 million or 26.7% of revenue in the second quarter of last year. Local currencies EBITDA grew 9% year-over-year. Net income for the second quarter was $13.1 million of diluted earnings per share of $0.66, an increase of 7% compared with $12.2 million of diluted earnings per share of $0.61 in the second quarter of last year, and Local Currency, Net Income Group, 10% COVE.

Speaker Change: Second quarter revenue was $84.9 million, a 4% increase compared with revenue of $81.6 million last year.

Speaker Change: The strengthening of the U.S. dollar in the second quarter versus the various local currencies in which it operates in impact

Speaker Change: The revenues were translated into U.S. dollars. In local currency, revenue grew by 6% year-over-year.

Speaker Change: Revenue from subscription fees in the quarter were $60.4 million, an increase of 2% year over year, and in local currencies an increase of 5%.

Eli Kamer: Further revenues in the quarter were $24.5 million dollars, an increase of 9 percent year over year, and in local currency, an increase of 10 percent. The subscriber base expanded to 2 million 3,390, a 29,000 by the end of the second quarter, an increase of 39,38,000. from the end of the previous quarter.

Speaker Change: Product revenues in the quarter were $24.5 million, an increase of 9% year-over-year, and in local currency, an increase of 10%.

Speaker Change: The subscriber base expanded to 2,329,000 by the end of the second quarter, an increase of 38,000.

Eli Kamer: The geographic breakdown of revenues in the second quarter was as follows. Israel's 51 percent, Brazil's 24 percent, rest of the world's 25 percent. Evida's 40 percent was 23.1 million dollars or 27.2 percent of revenues, an increase of 26 percent compared with Evida of 21.8 million dollars or 26.7 percent of revenues in the second quarter of last year. In local currencies, Evida grew 9 percent year over year. Net income for the second quarter was 13.1 million dollars or the Lucid earning per share of 66 cents, an increase of 7 percent compared with 12.2 million dollars or Lucid earning per share of 61 cents in the second quarter of last year.

Speaker Change: from the end of the previous quarter.

Speaker Change: The geographic breakdown of revenues in the second quarter was as follows. Israel 51%, Brazil 24%, rest of world 25%.

Speaker Change: EBITDA for the quarter was $23.1 million or 27.2% of revenues, an increase of 6% compared with EBITDA of $21.8 million or 26.7% of revenues in the second quarter of last year.

Speaker Change: In local currencies, EBITDA grew 9% year-over-year.

Speaker Change: Net income for the second quarter was $13.1 million or diluted earnings per share of $0.66.

Speaker Change: an increase of 7% compared with $12.2 million of diluted earnings per share of 61 cents in the second quarter of last year.

Eli Kamer: In local currency, net income grew 10 percent year over year. Cash flow from operations for the second quarter of 2024 was 22.9 million dollars. As of June 30, 2024, the company had cash, including marketable securities, of 63.3 million dollars and a debt of 0.2 million dollars, amounting to a net cash position of 63.1 million dollars. This is compared with the cash, including marketable securities, of 53.6 million dollars and a debt of 0.6 million dollars, amounting to a net cash position of 53 million dollars as of year end 2023.

Speaker Change: In local currency, net income grew 10% year-over-year.

Eli Kamer: Cash flow from operations for the second quarter of 2024 was $22.9 million. As of June 30, 2024, the company had cash including multiple securities of $63.3 million and a debt of $0.2 million, amounting to a net cash position of $63.1 million. This is compared with the cash including multiple securities of... $53.6M and a debt of $0.6M amounting to a net cash position of $53M as of year-end 2020. The Board of Directors declared a dividend for the quarter of $8 million.

Speaker Change: Cash flow from operations for the second quarter of 2024 was $22.9 million.

Speaker Change: As of June 30, 2024, the company had cash including multiple securities of $63.3 million and a debt of $0.2 million, amounting to a net cash position of $63.1 million.

Speaker Change: This is compared with the cache including multiple securities of...

Speaker Change: $53.6 million and a debt of $0.6 million, amounting to a net cash position of $53 million, heads off.

Eli Kamer: The both of directors declared a dividends for the quarter of 8 million dollars. The current dividend takes into account the company's continued strong profitability, ongoing positive cash flow, and strong balance sheets.

Speaker Change: Year-end 2023

Speaker Change: The Board of Directors declared a dividend for the quarter of $8 million. The current dividend takes into account the company's continuing strong profitability, ongoing positive cash flow, and strong balance sheet.

Operator: The current dividend takes into account the company's continuing strong profitability, ongoing positive cash flow, and strong balance sheet. Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star one. If you wish to cancel your request, please press star two. If you are using speaker equipment, kindly lift the handset before pressing the numbers.

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

Speaker Change: And with that, I'd like to open the call for the question and answer session. Operator? Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session.

Operator: Your questions will be pulled in the order they are in the order they are in the order they are in the order. Please stand by while we poll for your question. The first question is from Chris Reimer of Barclays. Please go ahead. Thanks for taking my questions and congratulations on the solid quarter. I was wondering if you could talk about some of what contributed to the stronger product growth this quarter. Ta-Da!

Operator: Thank you.

Operator: Ladies and gentlemen, at this time, we will begin the question-and-answer session. If you have a question, please press star one. If you wish to cancel your request, please press star two. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be pulled in the order they are received. Please send by while we pull for your questions.

Speaker Change: If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be polled in the order they are received. Please stand by while we poll for your questions.

Chris Reimer: The first question is from Chris Rimer of Barclays.

Speaker Change: The first question is from Chris Reimer of Barclays. Please go ahead.

Chris Reimer: Please go ahead. To take my question and congratulations on the solid quarter, I was wondering if you could talk about some of what contributed to the stronger product growth in this quarter. Mainly, if I remind you that we have a subsidiary which is a focus company called DRM, which is, first of all, our main supplier, but also has many third-party customers, which there are many focus on hardware. And they had a Strong Quater.

Chris Reimer: Thanks for taking my questions and congratulations on the solid quarter. I was wondering if you could talk about some of what contributed to the stronger product growth this quarter.

Eli Kamer: Mainly, if I remind you that we have a subsidiary, which is a company called ERM, which is first of all our main supplier, but also has many third-party customers, which they are mainly focused on hardware and they had.., a very strong strong plotter. Since they are selling a almost only hardware. We have to remember they have some volatility among among water because it's really depend on on different customers from around the world. And on pricing, I was wondering if in this macro environment you're seeing any pricing pressures or changes in the pricing environment in any of your geographies? No, the answer is no.

Chris Reimer: yeah

Chris Reimer: Eyal Helft

Speaker Change: Mainly, if I remind you that we have a subsidiary, which is a company called ERM, which is first of all our main supplier, but also has many third-party customers.

Speaker Change: which they are mainly focused on hardware and they had

Eyal Sheratzky: Since they are selling almost only hardware, we have to remember that they have some volatility among quarters because it's really depend on different customers from around the world. Got it.

Speaker Change: Thank you very much.

Eyal Sheratzky: And on pricing, I was wondering if, in this macro environment, you're seeing any pricing pressures or changes in the pricing environment and any of your job trophies. No. The answer is not. We have to, again, remember that it runs the main revenue source is the subfiber fees. We have to understand that the average output is about $10, so the sensitivity among the end user, as much as I can say, is quite low. We got the halberd itself. If you look on our historical numbers, the margin that we are sell are very low in order to get more and more subscribers.

Speaker Change: and

Speaker Change: Got it. And on pricing, I was wondering if in this macro environment you're seeing any pricing pressures or changes in the pricing environment in any of your geographies?

Eli Kamer: We have to, again, to remember that Ituran, the main revenue source is the subscriber fees. We have to understand that the average ARPU is about $10. So the sensitivity among the end user, as much as I can say, is quite low.

Speaker Change: No, the answer is no, we have to again remember that it runs

Speaker Change: The main revenue source is the...

Speaker Change: The subscriber fees, we have to understand that the average ARPU is about $10, so the sensitivity among the end user, as much as I can say, is quite low. Regardless, the hardware itself...

Eli Kamer: Regarding the hardware itself, if you look on our historical numbers, the margins that we sell are very low in order to get more and more subscribers. And in that case, our prices are quite low by definition, and we don't see pressure in this field as well. And just one more housekeeping bit, and I apologize if I missed this on the first release, but you previously had been giving the aftermarket and OEM breakout for subscribers, so I didn't see it this quarter.

Speaker Change: If you look on our historical numbers, the margins that we sell are very low in order to get more and more subscribers. And in that case, our prices are quite low by definition, and we don't see...

Eyal Sheratzky: And in that case, our prices are quite low by definition, and we don't see a pressure in this field as well. Got it.

Speaker Change: pressure in this field as well.

Eli Kamer: Is that a change in reporting? Actually, I'm not sure that we did it constantly, but if yes, we will try to do it. I think because the differences, when the differences are very high, we are divided.

Eyal Sheratzky: And just one more housekeeping bit, and I apologize if I missed this on the first release, but you previously had been giving the aftermarket and OEM breakout for subscribers. So I didn't see it this quarter. Is that a change in reporting? Actually, I'm not sure that we did it constantly, but if yes, we will try to do it. I think because the differences, when the differences are very high, we are divided. I think that was more balanced, discolored, probably.

Speaker Change: I apologize if I missed this on the first release, but you previously had been giving the aftermarket and OEM breakout for subscribers, so I didn't see it this quarter. Is that a change in reporting?

Operator: 2nd Quarter of 2024 Results Conference Call All participants are present in listen only mode.

Operator: 2nd Quarter of 2024 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.

Speaker Change: Actually, I'm not sure that we did it constantly.

Operator: Following management's formal presentation, instructions will be given for the question and answer session.

Speaker Change: But, yes, we will try to do it. I think because the differences, when the differences are very high, we are divided.

Operator: For operator assistance during the conference, please press star zero.

Operator: As a reminder, this conference is being recorded.

Operator: You should have all received by now the company's press release.

Eli Kamer: Oh, okay. Mhm. Got it. It was more, uh... More balance this quarter.

Operator: 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 new section of the company's website www.ituran.co.io.

Speaker Change: It was more balanced this quarter, probably.

Chris Reimer: Okay, that's it for me. Thank you.

Operator: Okay, that's it for me. Thank you. The next question is from Sergei Glininov of Freedom Capital Markets. Please go ahead. Hello, everyone.

Speaker Change: Okay, that's it for me. Thank you.

Sergey Glyninov: The next question is from Sergey Glyninov of Freedom Capital Markets.

Speaker Change: The next question is from Sergei Glininov of Freedom Capital Markets. Please go ahead.

Sergey Glyninov: Please go ahead.

Kenny Green: I will now hand the call over to Mr. Kenny Green of EK Global Investor Relations.

Kenny Green: 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.

Operator: Pretty good results. Yeah. Maybe, would you provide your outlook for product sales growth, growth rate for the foreseeable future? Again, I would like to remind that our product sales mainly done all by our subsidiary that I mentioned or by the Israeli company in the rest of the world, which is more than 50 percent of our revenues. We almost, I can say, lease and we sell it as a program with the monthly fees.

Eyal Sheratzky: Hello, everyone. Pretty good results.

Kenny Green: Mr. Green, would you like to begin?

Speaker Change: Hello, everyone. Pretty good results.

Kenny Green: Thank you.

Kenny Green: Good day to all of you, and welcome to Ituran's conference call to discuss the 2nd quarter of 2024 Results. I would like to thank Ituran's management for hosting this conference call. With me today, on the line, Mr. Eyal Sheratzky, CEO, Mr. Udi Nisrahi, Deputy CEO and VP Finance, and Mr. Eli Kamer, CFO, or Vita.

Eyal Sheratzky: Maybe would you provide your outlook for products sales growth rate for the foreseeable future? Again, I would like to remind that our product sales mainly done all the time. All by our subsidiary that I mentioned, or by the Israeli company in the rest of the world, which is more than 50 percent of our revenues, we almost, I can say, lease, and we sell it as a program with the monthly fees. And when I talk about our subsidiary and about selling hardware to our distributors, it's something that always had some volatility between quarters because it's mainly depend on their inventory, pressure, inventory.

Speaker Change: Maybe would you provide your outlook for product sales growth rate for the foreseeable future?

Speaker Change: Again, I would like to remind that our product sales mainly done all by our subsidiary that I mentioned or by the Israeli company in the rest of the world.

Kenny Green: Eyal will begin with a summary of the court's results, followed by Ely with a summary of the financials. We will then open the call to the question and answer session. I'd like to remind everyone that the safe harbor statement in today's press release also covers the contents of this conference call.

Speaker Change: which is more than 50% of our revenues, we almost, I can say,

Kenny Green: And now Eyal, would you like to begin, please? Thank you, Kenny.

Speaker Change: and we sell it as a program with their monthly fees.

Operator: And when I talk about our subsidiary and about the selling hardware to our, let's say, to our distributors, it's something that always had some volatility between quarters because it's mainly depend on their inventory pressure, inventory, Decision, etc. So...

Kenny Green: Good day to all of you, and welcome to Ituran's conference call to discuss the 2nd quarter of 2024 Results.

Eyal Sheratzky: I'd like to welcome all of you to our 2nd quarter 2024 call, and I would like to thank you for joining us today. We are pleased with our 2nd quarter results, especially the ongoing growth in revenue across the geographies, in which we operate. With continued improvement in profit, we are also pleased with the solid level of additional nest subscribers we brought in the quarter, which came in at the high end of our expectations.

Speaker Change: And when I talk about our subsidiary and about selling hardware to our, let's say, to our distributors

Kenny Green: I would like to thank Ituran's management for hosting this conference call.

Kenny Green: With me today, on the line, Mr. Eyal Sheratzky, CEO, Mr. Udi Nisrahi, Deputy CEO and VP Finance, and Mr. Eli Kamer, CFO, or Vita.

Kenny Green: Eyal will begin with a summary of the court's results, followed by Ely with a summary of the financials.

Eyal Sheratzky: These achievements come despite the negative impact of the sharp devaluation against the US dollar in the quarter, which lower our local currency, denominated results, presented in US dollars. In fact, we measured in local currencies we have seen accelerated growth in most of the geographies, in which we operate. Our results reflect ongoing solid demand growth for our broad location-based products and telematic services, and especially in free extraction from many of our new initiatives.

Eyal Sheratzky: I think that we are not expecting any specific growth. I think that the average number is on an annual basis. You have to judge it on an annual basis.

Eli Kamer: I think that we are not expecting any specific growth. I think that the average number is on an annual basis, you have to judge it on an annual basis. Okay, is it related to all the markets when or where you have presence? No, because what you see in our P&L is that it's divided to services and products. More than 50% of the geography of our revenues is... The hardware is integrated to our service fees, we lease it, so what you see is you see it in one hand in the CAPEX. Okay, in the CAPEX, in the cash flow report, and here it's part of the service revenues.

Speaker Change: decision etc so

Speaker Change: I think that we are not expecting any specific growth. I think that the average number is an annual basis. You have to judge it on an annual basis.

Kenny Green: We will then open the call to the question and answer session.

Eyal Sheratzky: Okay. It is related to all the markets when or where you have presence. No, because what you see in our PNL is that it's divided services and products. More than 50% of the geography of our revenues is the hardware is integrated to our service fees. We lease it. So what you see is you see it in one hand in the capex. Okay, in the capex in the cash flow report. And here it's part of the service revenues. So you don't see the sales in more than 50% of our total revenues. What you see is only in Israel and our subsidiary, which is a supplier of hardware.

Speaker Change: Okay, is this related to all the markets where you have presence?

Kenny Green: I'd like to remind everyone that the safe harbor statement in today's press release also covers the contents of this conference call.

Speaker Change: No, because what you see in our P&L is that it's divided to services and products. More than 50% of the geography of our revenues is

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

Eyal Sheratzky: Our subscriber base added 38,000 subscribers in the quarter, at the high end of our expectations of between 35,000 and 40,000 net new subscribers per quarter. This is due both to our most diverse global footprint, as well as the new services and in the initiative we are continuing to bring to our end markets. Over the past few years, we've launched a number of new initiatives and have seeded growth engines driving accelerated subscriber growth.

Speaker Change: The hardware is integrated to our service fees. We lease it. So what you see is you see it in one hand in the CAPEX.

Eyal Sheratzky: Thank you, Kenny.

Speaker Change: Okay, in the CAPEX, in the cash flow report, and here it's part of the service revenues. So you don't see the sales in more than 50% of our total revenues.

Eyal Sheratzky: I'd like to welcome all of you to our 2nd quarter 2024 call, and I would like to thank you for joining us today.

Operator: So, you don't see the sales in more than 50% of our total revenues. But you see it's only in Israel and our subsidiary, which is a supplier of hardware, rather things. The next question is from Ellie Goldberg of Oppenheimer. Please go ahead.

Eyal Sheratzky: We are pleased with our 2nd quarter results, especially the ongoing growth in revenue across the geographies, in which we operate. With continued improvement in profit, we are also pleased with the solid level of additional nest subscribers we brought in the quarter, which came in at the high end of our expectations. These achievements come despite the negative impact of the sharp devaluation against the US dollar in the quarter, which lower our local currency, denominated results, presented in US dollars. In fact, we measured in local currencies we have seen accelerated growth in most of the geographies, in which we operate.

Eyal Sheratzky: We are actively engaged in new verticals adjustment to our core business of providing telematic services. At the same time, we are taking the successful initiative, which have been limited to one of our geographies and expanding them to our other job. You may remember that we signed a landmark agreement with Santander Bank a year ago and we are actively looking to broaden our solution into new markets with existing and other finance customers.

Speaker Change: What you see is only in Israel and our subsidiary, which is a supplier of hardware.

Eyal Sheratzky: Okay. Got it.

Eyal Sheratzky: Our results reflect ongoing solid demand growth for our broad location-based products and telematic services, and especially in free extraction from many of our new initiatives.

Speaker Change: my that

Eyal Sheratzky: Thanks.

Ali Goldberg: The next question is from Ali Goldberg of Oppenheimer.

Speaker Change: The next question is from Ellie Goldberg of Oppenheimer. Please go ahead.

Ali Goldberg: Please go ahead. Hi. I want to know if you guys provide some more insights about the motorcycle product you guys said you just launched. And how should we think about it going forward?

Eli Kamer: Hi, I wanted to know if you guys could provide some more insight, about the motorcycle product you guys said you just launched. And how should we think about it going forward? I think that I mentioned it also in our call in the Q1, but I will, of course, do it again. We just started a few months ago to launch our solution in, I would say, two main channels. One is insurance companies in Brazil.

Speaker Change: Bye!

Speaker Change: Hi Eyal, I wanted to know if you guys could provide some more insight.

Eyal Sheratzky: Our SaaS technology for all in one vehicle sharing helps fleet owners smartly and flexibly use shared vehicle fleet through efficient matching of unused vehicle with demand. We have been gaining solid traction and we are now leveraging the technology to other geographies including Israel and United States. We see significant demand for this type of service from car rental businesses, leasing companies, as well as corporate fleets which are looking to more effectively and efficiently share the use of their fleets of vehicle.

Speaker Change: about the motorcycle product you guys said you just launched.

Speaker Change: and how should we think about it going forward.

Eyal Sheratzky: I think that I mentioned it also in our calling the Q1, but I will of course do it again. We just started a few months ago to launch our solution in, I would say, two main channels. One is Insurance companies in Brazil. We realized that Brazilian market and I would say even mentality. Is that motorcycle is very common and there is a high portion of the motorcycle market with a expensive and high end motorcycles by a man and by Honda. And in that case, insurance companies didn't or wasn't happy to provide insurance to those kinds of vehicles because the risk of theft is very high.

Speaker Change: ahhh

Speaker Change: I think that I mentioned it also in our call in the Q1, but I will, of course, do it again.

Speaker Change: We just started a few months ago to launch our solution in, I would say, two main channels. One is insurance companies in Brazil.

Eli Kamer: We realized that Brazilian market, and I would say even mentality, is that motorcycle is very common, and there is a high portion of the motorcycle market with expensive and high-end motorcycles by Yamaha and by Honda. And in that case, insurance companies didn't or wasn't happy to provide insurance to those kind of vehicles, because the risk of theft is very high, thanks to our solution, which, We could show that it reduces the risk. Insurance companies are more interested in selling insurance policies to motorcycle owners.

Speaker Change: We realized that Brazilian market, and I would say even mentality, is that motorcycle is very common. And there is a high portion of the motorcycle market with expensive and high-end motorcycles.

Eyal Sheratzky: Also as you may have seen a few days ago we put out a press release with regard to our collaboration with Porsche and Microsoft for the fourth Carrera Cup in Brazil and I encourage all of you to watch the video for our technology in action. We are incredibly proud to be proud of this and associated with such industry leaders. Additionally the fact that it runs the LeMatic unit is at the heart of the Porsche racing car telemetry system under the most demanding conditions demonstrates our technology leadership.

Speaker Change: by Yamaha and by Honda and in that case insurance companies didn't or wasn't happy to provide insurance.

Speaker Change: to those kind of vehicles, because the risk of theft is very high. Thanks to our solution, which...

Eyal Sheratzky: Thanks to our solution, which we could show that it's reduced the risk. Insurance companies are more interested in selling insurance policies to motorcycle owners. And in that case we are now in discussions or we already start to sell solutions for motorcycles.

Eyal Sheratzky: One of our goals in being involved in a project such as this apart from the owner of being associated with Porsche and Microsoft is to bring these latest technologies used in motor sports down to it runs subscribers and we are already looking to leverage the new capabilities developed for this project over the past year. Throughout our business and make it more attractive to OEM players.

Speaker Change: We could show that it reduces the risk.

Speaker Change: Insurance companies are more interested in selling insurance policies to motorcycle owners.

Eli Kamer: And in that case, we are now in discussions, or we already start to sell solutions for, motorcycle. So, I wouldn't say that it's not the contribution currently is high, but like we started with the ICS, for cars in the past. It starts to ramp up and I believe that in a year or two it can be much more material in the revenue and profit size. The second segment, it's OEM, which I cannot yet report for a final.., contract or a deal, but this segment is something which we are putting also focus in discussions with motorcycles manufacturers in order to convince them and in order to show them what we did with the car connectivity as an OEM and what benefits their customer can get from a telematic solution in a motorcycle.

Speaker Change: And in that case, we are now in discussions, or we already start to sell solutions for

Eyal Sheratzky: So I wouldn't say that it's not the contribution currently is high, but like we started with the ICS for cars in the past, it started to ramp up and I believe that in a year or two it can be much more material in the revenue and profit size. The second segment is a OEM, which I cannot yet report for a final contract or a deal, but this segment is something which we are putting also focus in discussions with motorcycles manufacturers in order to convince them and in order to show them what we did with a car connectivity as an OEM and what benefits their customer can get from a cinematic solution in a motorcycle.

Eyal Sheratzky: I want to thank our team in Brazil for the exceptional work they are doing for the Carrera Cup. We recently launched a new motorcycle telematics product with strong potential given a very significant total addressable market throughout South America with a strong motorcycle culture. We are already seeing interest for OEMs and insurance companies and we are in active discussions. We are also in active discussions with a number of major OEM common effectors in addition to the two major that we already work with.

Speaker Change: motorcycles.

Speaker Change: So, I wouldn't say that it's not the contribution currently is high, but like we started with the ICS for cars in the past.

Speaker Change: It starts to ramp up and I believe that in a year or two it can be much more material in the revenue and profit size. The second segment, it's OEM.

Speaker Change: which I cannot yet report for a final...

Eyal Sheratzky: At the same time we are looking to broaden the scope of services we provide to our existing OEM partners which are focused on limited geographies in order to broaden our service to additional countries in South America. The goal is to provide to the OEM manufacturers with a suit of telematics and fallen vehicle recovery services. We seek gross potential to bring in many new subscribers to via the initiative.

Speaker Change: contract or a deal but

Speaker Change: this

Speaker Change: segment is something which we are

Speaker Change: putting also focus in discussions with motorcycles manufacturers.

Speaker Change: in order to convince them and in order to show them what we did with the car connectivity as an OEM and what benefits their customer can get from a telematic solution in a motorcycle.

Eli Kamer: So this is something else which we now have to offer. I want to add that in Israel, for example, in the last more than a year, And this also contributes to our growth in subscribers. We already have a solution. It's a different solution than... I now offer in Brazil something which is a more simple solution, mainly and only for cars, for a motorcycle thief. Ehud, Ehud, Ehud, Ehud, We already have sales of thousands of motorcycles, and in Israel, by the way, motorcycles do not insure their motorcycles. So instead of having nothing, because they don't insure, the insurance here is very, very expensive.

Eyal Sheratzky: So this is something else which we now have to offer.

Eyal Sheratzky: From a financial perspective looking ahead to the reminder of 2024. Earlier this year we provide EBITDA guidance in addition to the guidance on subscriber growth which we always used to do. Today we retreated that for 2024 our guidance is full EBITDA of between 90 and 95 million dollars. Looking further out our short midterm milestone is to cross the 100 million dollar EBITDA landmark, in 2025. We continue to expect subscriber growth at around 35,000 and 40,000 net new subscriber each quarter.

Speaker Change: So this is something else which we now have to offer. I want to add that in Israel, for example, in the last...

Eyal Sheratzky: I want to add that in Israel, for example, in the last more than a year, and this also contribute to our growth in subscribers. We already have a solution; it's a different solution than I now offering in Brazil, something which is a more simple solution mainly and only for cars for a motorcycle thief. We already have sales of thousands of motorcycles, and in Israel, by the way, motorcycles do not ensure their motorcycles. So instead of having nothing because they don't ensure the insurance here is very, very expensive. So they decide to find a solution which reduce their risk as a motorcycle owner by installing it to run and of course join our customer base.

Speaker Change: more than a year.

Speaker Change: And this also contributes to our growth in subscribers. We already have a solution. It's a different solution than...

Speaker Change: I am now offering in Brazil something which is a more simple solution, mainly and only for cars, for a motorcycle thief.

Eyal Sheratzky: Our subscriber base added 38,000 subscribers in the quarter, at the high end of our expectations of between 35,000 and 40,000 net new subscribers per quarter.

Speaker Change: We already have sales of thousands of motorcycles and in Israel, by the way, motorcycles do not insure their motorcycles. So, instead of having nothing, because they don't insure. The insurance here is very, very expensive.

Eyal Sheratzky: This is due both to our most diverse global footprint, as well as the new services and in the initiative we are continuing to bring to our end markets.

Eyal Sheratzky: Even with the currency headwind in this quarter, we remain on track to meet all the targets. Given the strong net cash position of over $63 million, our ongoing cash generation and continue solid profitability, we continue to share a strong quarterly dividend of $8 million with our shareholders. This dividend is in line with our current policy. It is at the same level that we issued last quarter and 60% increase over that of the year ago quarter.

Eli Kamer: So they decide to find a solution which reduce their risk as a motorcycle owner by installing Ituran and of course join our customer base. Okay, thank you. And another follow-up, how would you say investors should look at the growth going ahead, talking about 25 even, for Ituran? What should we look at?

Speaker Change: So they decide to find a solution which reduces their risk as a motorcycle owner by installing it to run and of course join our customer base.

Eyal Sheratzky: Okay, thank you, and another follow-up. How would you say investor to look at the growth going ahead talking about 25 even for it to run? What should we look at? I'm always considering our growth in the profit side, the EBIT and the EBITDA because you know it's very important when we are kind of a SaaS company and we have a customer base of close to 2.4 million subscribers. Even if we grow 180,000 a year, the influence on the revenue is not so dramatic, but since we have an operating leverage model, it means that we expect to grow, first of all, our profit margin and second our EBITDA. At that point, we already provide kind of guidance for 2024 and also it's not a guidance, but still it's something that we put as a goal. If we put as a goal, I believe that we believe that we will achieve it, is to get EBITDA in 2025 of a 100 million dollar.

Speaker Change: Okay, thank you and another follow-up. How would you say investors should look at the growth going ahead? Talking about 25 even 40 to run what what should we look at?

Eyal Sheratzky: Our dividend yield on an analyzed basis represents a return of over 6%, which is a very solid return from a strong company. We see our ongoing dividend as reward to our shareholders for the loyalty and long-term support of Ituran.

Eli Kamer: I'm always considering our growth in the profit side, the EBIT and the EBITDA because, you know, it's very important when we are kind of a SaaS company and we have a customer base of close to 2.4 million subscribers, even if we grow 100 to 180,000 a year, the influence on the revenue is not so dramatic. But since we have an operating leverage model, it means that we're expecting to grow, first of all, our profit margin and second, our EBIT and EBITDA.

Speaker Change: I am always considering our growth in the profit side, the EBIT and the EBITDA, because

Speaker Change: You know it's very important when we are kind of a SaaS company and we have a customer base.

Eyal Sheratzky: In summary, the second quarter of 2024 is another quarter of solid performance, which is especially clear when we remove the noise from effects and look at our results in local crisis. We believe that we will continue this trend in 2024. Given the many growth initiatives highlighted, I would expect the growth to accelerate a time passes over the mid to long term. Our constantly growing subscriber growth will ultimately translate into increased revenue, increased growth profit, with faster growing profitability over the long term due to the operating leverage inherent to our business.

Speaker Change: Close to 2.4 million subscribers

Speaker Change: Even if we grow 100,000 or 180,000 a year, the influence on the revenue is not so dramatic.

Speaker Change: since we have an operating leverage model.

Speaker Change: It means that we are expecting to grow, first of all, our profit margin, and second, our EBIT and EBITDA.

Eyal Sheratzky: Over the past few years, we've launched a number of new initiatives and have seeded growth engines driving accelerated subscriber growth.

Eli Kamer: And in that point, we already provide kind of guidance for 2024. And also, it's not a guidance, but still it's something that we put as a goal. And if we put as a goal, I believe that we believe that we will achieve it is to get.

Speaker Change: We already provide kind of guidance for 2024 and also it's not a guidance but still it's something that we put as a goal and if we put as a goal, I believe that we believe that we will achieve it is to get...

Eyal Sheratzky: We are actively engaged in new verticals adjustment to our core business of providing telematic services.

Eli Kamer: EBITDA in 2025 of a $100 million. Now, I have to put a note here, since our operation and our revenues come from different, Ctrl Ctrl, Okay, thank you. The next question is from Boris Schneider of Moore Investment House. Please go ahead. Yes, hello. My question is on ARPU, this quarter which declined compared to previous quarters that are obviously there was roughly 12 quarters of growth. So what else is going there besides the depreciation in the currency against the dollar?

Speaker Change: EBITDA in 2025 of 100 million dollars. Now, I have to put a note here, since our operation and our revenues come from different

Eyal Sheratzky: At the same time, we are taking the successful initiative, which have been limited to one of our geographies and expanding them to our other job.

Eli Kamer: I look forward to updating you further or some of our initiative mature, and with that end over to Ellie, please go ahead. Thank you, Ayado. I will provide a short summary of the financial results.

Eyal Sheratzky: Now I have to put a note here since our operation and our revenue comes from different currency types, and most of them are currencies of emerging markets. It's something that we don't have any way to predict or to control the alike happen, by the way, in Q2. So when I say $100 million, of course, is based on the currencies as is now. But in terms of growth profits, I think that it's quite this is a very impressive goal. Okay, thank you.

Eyal Sheratzky: You may remember that we signed a landmark agreement with Santander Bank a year ago and we are actively looking to broaden our solution into new markets with existing and other finance customers.

Eyal Sheratzky: Our SaaS technology for all in one vehicle sharing helps fleet owners smartly and flexibly use shared vehicle fleet through efficient matching of unused vehicle with demand.

Eyal Sheratzky: We have been gaining solid traction and we are now leveraging the technology to other geographies including Israel and United States.

Eli Kamer: You can find the more detailed results that we issued in the virtually earlier today. Second quarter revenue was for $84.9 million, a 4 percent increase compared with revenue of $81.6 million last year. The strengthening of the US dollar in the second quarter versus the various local currencies in which it one operates in impact the revenues when translated into US dollar in local currency revenue grew by 6 percent year over year. Revenue from subscription fees in the quarter where 60.4 million dollars an increase of 2 percent year over year and in local currencies an increase of 5 percent.

Speaker Change: Currencies type and most of them are currencies of emerging market It's something that we don't have any way to predict or to control the like happened by the way in q2

Eyal Sheratzky: We see significant demand for this type of service from car rental businesses, leasing companies, as well as corporate fleets which are looking to more effectively and efficiently share the use of their fleets of vehicle.

Speaker Change: So, when I say 100 million dollars, of course it's based on the currencies as is now, but in terms of growth profits, I think that it's quite, this is a very impressive goal.

Speaker Change: Okay, thank you.

Boris Schneider: The next question is from Boris Schneider of More Investment House.

Speaker Change: The next question is from Boris Schneider of Moore Investment House. Please go ahead.

Boris Schneider: Please go ahead. Yes, hello.

Eli Kamer: Is it because more sales to OEM or are there lower ARPU margin products? I think that if we eliminate the FX, you would see that the output for Q2 is even higher. So, this is the only reason that you see a lower output. In local currencies, we have higher ARPU. Although you're right, the OEM is lower, there's some application that we sell, like a big data solutions for car dealers, it's lower, but still. The variety is still taking our output up in local currency.

Eyal Sheratzky: We are incredibly proud to be proud of this and associated with such industry leaders.

Eyal Sheratzky: My question is on the ARPU; this quarter which declined compared to previous quarters that are obviously there was roughly 12 quarters of growth. So what else is going there besides the depreciation in currency against the dollar? Is it because of more sales to OEM or other lower ARPU margin products? I think that if we eliminate the effects, you would say that the ARPU for Q2 is even higher. So this is the only reason that you see the lower ARPU. In local currencies, we have higher ARPU. Although we write, the OEM is lower. There's some application that we sell like a big data solutions for card dealers; it's lower, but still the variety it's still taking our ARPU app in local currencies.

Boris Schneider: Yes, hello. My question is on ARPU, Disk Water, which declined.

Speaker Change: Compared to previous quarters that are obviously there was the roughly 12 quarters of growth So what else is going there besides the depreciation in the currency against the dollar? Is it because more sales to OEM or are there? lower ARPU margin products

Eli Kamer: Further revenues in the quarter were $24.5 million dollars an increase of 9 percent year over year and in local currency an increase of 10 percent. The subscriber base expanded to 2 million 3,390, a 29,000 by the end of the second quarter an increase of 39,38,000, from the end of the previous quarter.

Speaker Change: I think that if we eliminate the FX, you would see that the output for Q2 is even higher. So, this is the only reason that you see a lower output.

Speaker Change: In local currencies, we have higher ARPU. Although, you're right, the OEM is lower, some applications that we sell, like big data solutions for car dealers, it's lower, but still, the variety, it's still taking our ARPU up in local currencies.

Eli Kamer: The geographic breakdown of revenues in the second quarter was as follows. Israel's 51 percent, Brazil's 24 percent, rest of the world's 25 percent. Evida's 40 percent was 23.1 million dollars or 27.2 percent of revenues, an increase of 26 percent compared with Evida of 21.8 million dollars or 26.7 percent of revenues in the second quarter of last year. In local currencies, Evida grew 9 percent year over year. Net income for the second quarter was 13.1 million dollars or the lucid earning per share of 66 cents, an increase of 7 percent compared with 12.2 million dollars or lucid earning per share of 61 cents in the second quarter of last year.

Eyal Sheratzky: Okay, thank you.

Speaker Change: Okay, thank you.

Operator: If there are any additional questions, please press star one. If you wish to cancel your request, please press star two.

Operator: Okay, thank you. If there are any additional questions, please press star 1. If you wish to cancel your request, please press star 2.

Speaker Change: If there are any additional questions, please press star 1. If you wish to cancel your request, please press star 2. Please stand by while we poll for more questions.

Operator: Please stand by while we poll for more questions. There are no further questions at this time. Before I ask Mr. Sheratzky to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available tomorrow on Ituran's website, www.ituran.co.il. Mr. Sheratzky, would you like to make your concluding statement? 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.

Operator: Please then buy while we pull for more questions.

Operator: There are no further questions at this time.

Kenny Green: Before I ask Mr. Sharatsky to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available tomorrow on Ituran's website www.iturand.co.il.

Speaker Change: i

Speaker Change: There are no further questions at this time. Before I ask Mr. Sheratzky to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available tomorrow on EITURON's website, www.eituron.co.il. Mr. Sheratzky, would you like to make your concluding statement?

Eyal Sheratzky: Mr. Sharatsky, would you like to make your concluding statement? On behalf of the management of Free to Run, I would like to thank you, our shareholders, for your continued interest and long-term support of our business. In the coming months, we will be meeting with investors and presenting at two conferences. LD, micro, and EDAM, and we hope to see some of you there. If you are interested in meeting or speaking with us, feel free to reach out to our Investor Relations team.

Eli Kamer: In local currency, net income grew 10 percent year over year. Cash flow from operations for the second quarter of 2024 was 22.9 million dollars. As of June 30, 2024, the company had cash including marketable securities of 63.3 million dollars and a debt of 0.2 million dollars amounting to a net cash position of 63.1 million dollars. This is compared with the cash including marketable securities of 53.6 million dollars and a debt of 0.6 million dollars amounting to a net cash position of 53 million dollars as of year end 2023.

Mr. Sheratzky: On behalf of the management of Free to Run, I would like to thank you, our shareholders, for your continued interest and long-term support of our business.

Operator: In the coming months, we will be meeting with investors and presenting at two conferences. LD, Mikro and Idam and we hope to see some of you there. If you are interested in meeting or speaking with us, feel free to reach out to our Investor Relations team.

Speaker Change: In the coming months, we will be meeting with investors and presenting at two conferences.

Speaker Change: LD, Mikro and Idam and we hope to see some of you there.

Speaker Change: If you are interested in meeting or speaking with us, feel free to reach out to our investor relations team.

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

Eyal Sheratzky: And with that we end our call. Thank you and have a good day. Thank you. This concludes the Ituran second quarter of 2024 results conference call. Thank you for your participation. You may go ahead and disconnect.

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

Operator: Thank you.

Operator: This concludes the Iturand second quarter of 2024 results conference call. Thank you for your participation. You may go ahead and disconnect.

Speaker Change: Thank you. This concludes the ITURAN second quarter of 2024 results conference call. Thank you for your participation. You may go ahead and disconnect.

Operator: And with that, I'd like to open the call for the question and answer operator. Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star one. If you wish to cancel your request, please press star two. If you are using speaker equipment kindly lift the handset before pressing the numbers. Your questions will be pulled in the order they are received. Please send by while we pull for your questions.

Chris Reimer: The first question is from Chris Rimer of Barclays. Please go ahead. To take my question and congratulations on the solid quarter, I was wondering if you could talk about some of what contributed to the stronger product growth in this quarter. Mainly, if I remind you that we have a subsidiary which is a focus company called DRM, which is, first of all, our main supplier, but also as many third-party customers, which there are many focus on hardware. And they had a Strong Quater. Since they are selling almost only hardware, we have to remember that they have some volatility among Quater because it's really depend on different customers from around the world.

Eyal Sheratzky: Additionally the fact that it runs the LeMatic unit is at the heart of the Porsche racing car telemetry system under the most demanding conditions demonstrates our technology leadership.

Eyal Sheratzky: Throughout our business and make it more attractive to OEM players.

Eyal Sheratzky: I want to thank our team in Brazil for the exceptional work they are doing for the Carrera Cup.

Eyal Sheratzky: Got it. And on pricing, I was wondering if in this macro environment you're seeing any pricing pressures or changes in the pricing environment and any of your job trophies. No. The answer is not. We have to, again, to remember that it runs the main revenue source is the subfiber fees. We have to understand that the average output is about $10, so the sensitivity among the end user, as much as I can say, is quite low.

Eyal Sheratzky: We got the halber itself. If you look on our historical numbers, the margin that we are sell are very low in order to get more and more subscribers. And in that case, our prices are quite low by definition, and we don't see a pressure in this field as well. Got it.

Chris Reimer: Okay, that's it for me. Thank you.

Sergey Glyninov: The next question is from Sergey Glyninov of Freedom Capital Markets. Please go ahead. Hello, everyone. Pretty good results.

Eyal Sheratzky: We are also in active discussions with a number of major OEM common effectors in addition to the two major that we already work with.

Eyal Sheratzky: Maybe would you provide your outlook for products sales growth rate for the foreseeable future? Again, I would like to remind that our product sales mainly done all the time. All by our subsidiary that I mentioned, or by the Israeli company in the rest of the world, which is more than 50 percent of our revenues, we almost, I can say, lease, and we sell it as a program with the monthly fees. And when I talk about our subsidiary and about selling hardware to our distributors, it's something that always had some volatility between quarters, because it's mainly depend on their inventory, pressure, inventory.

Eyal Sheratzky: We seek gross potential to bring in many new subscribers to via the initiative.

Eyal Sheratzky: From a financial perspective looking ahead to the reminder of 2024.

Eyal Sheratzky: Earlier this year we provide EBITDA guidance in addition to the guidance on subscriber growth which we always used to do. Today we retreated that for 2024 our guidance is full EBITDA of between 90 and 95 million dollars.

Eyal Sheratzky: Looking further out our short midterm milestone is to cross the 100 million dollar EBITDA landmark, in 2025.

Eyal Sheratzky: I think that we are not expecting any specific growth. I think that the average number is on annual basis. You have to judge it on an annual basis. Okay. It is related to all the markets when or where you have presence. No, because what you see in our PNL is that it's divided services and products. More than 50% of the geography of our revenues is the hardware is integrated to our service fees.

Eyal Sheratzky: We lease it. So what you see is you see it in one hand in the capex. Okay, in the capex in the cash flow report. And here it's part of the service revenues. So you don't see the sales in more than 50% of our total revenues. What you see is only in Israel and our subsidiary which is a supplier of hardware. Okay. Got it.

Eyal Sheratzky: Thanks.

Eyal Sheratzky: We continue to expect subscriber growth at around 35,000 and 40,000 net new subscriber each quarter.

Ali Goldberg: The next question is from Ali Goldberg of Oppenheimer. Please go ahead. Hi. I want to know if you guys provide some more insights about the motorcycle product you guys said you just launched. And how should we think about it going forward?

Eyal Sheratzky: Even with the currency headwind in this quarter, we remain on track to meet all the targets.

Eyal Sheratzky: I think that I mentioned it also in our calling the Q1 but I will of course will do it again. We just started a few months ago to launch our solution in I would say two main channels. One is insurance companies in Brazil. We realized that Brazilian market and I would say even mentality. Is that motorcycle is very common and there is a high portion of the motorcycle market with a expensive and high end motorcycles by a man and by Honda.

Eyal Sheratzky: And in that case insurance companies didn't or wasn't happy to provide insurance to those kinds of vehicles because the risk of theft is very high. Thanks to our solution which we could show that it's reduced the risk. Insurance companies are more interest in selling insurance policies to motorcycle owners. And in that case we are now in discussions or we already start to sell solutions for motorcycles.

Eyal Sheratzky: I want to add that in Israel for example in the last more than a year and this also contribute to our growth in subscribers. We already have a solution, it's a different solution than I now offering in Brazil, something which is more simple solution mainly and only for cars for a motorcycle thief. We already have sales of thousands of motorcycles and in Israel by the way, motorcycles do not ensure their motorcycles.

Eyal Sheratzky: So instead of having nothing because they don't ensure the insurance here is very, very expensive. So they decide to find a solution which reduce their risk as a motorcycle owner by installing it to run and of course join our customer base.

Eyal Sheratzky: Okay, thank you and another follow-up. How would you say investor to look at the growth going ahead talking about 25 even for it to run? What should we look at? I'm always considering our growth in the profit side, the EBIT and the EBITDA because you know it's very important when we are kind of a SaaS company and we have a customer base of close to 2.4 million subscribers even if we grow 180,000 a year the influence on the revenue is not so dramatic but since we have an operating leverage model it's mean that we expect to grow first of all our profit margin and second our EBITDA and in that point we already provide kind of guidance for 2024 and also it's not a guidance but still it's something that we put as a goal and if we put as a goal I believe that we believe that we will achieve it is to get EBITDA in 2025 of a 100 million dollar.

Eyal Sheratzky: Now I have to put a note here since our operation and our revenue comes from different Currency type, and most of them are currencies of emerging markets. It's something that we don't have any way to predict or to control the alike happen, by the way, in Q2. So when I say $100 million of course is based on the currencies as is now. But in terms of growth profits, I think that it's quite this is a very impressive goal.

Ali Goldberg: Okay, thank you.

Boris Schneider: The next question is from Boris Schneider of More Investment House. Please go ahead. Yes, hello. My question is on the ARPU, this quarter which declined compared to previous quarters that are obviously there was roughly 12 quarters of growth. So what else is going there besides the depreciation in currency against the dollar? Is it because of more sales to OEM or other lower ARPU margin products? I think that if we eliminate the effects, you would say that the ARPU for Q2 is even higher.

Boris Schneider: So this is the only reason that you see the lower ARPU. In local currencies we have higher ARPU. Although we write, the OEM is lower. There's some application that we sell like a big data solutions for card dealers, it's lower but still the the variety it's still taking our ARPU app in local currencies.

Eyal Sheratzky: Okay, thank you.

Operator: If there are any additional questions, please press star one. If you wish to cancel your request, please press star two. Please then buy while we pull for more questions. There are no further questions at this time.

Operator: Before I ask Mr. Sharatsky to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available tomorrow on it runs website www.iturand.co.il.

Eyal Sheratzky: Given the strong net cash position of over $63 million, our ongoing cash generation and continue solid profitability, we continue to share a strong quarterly dividend of $8 million with our shareholders. This dividend is in line with our current policy. It is at the same level that we issued last quarter and 60% increase over that of the year ago quarter.

Eyal Sheratzky: Mr. Sharatsky, would you like to make your concluding statement? On behalf of the management of free to run, I would like to thank you, our shareholders, for your continued interest and long term support of our business. In the coming months, we will be meeting with investors and presenting at two conferences. LD, micro and EDAM, and we hope to see some of you there. If you are interested in meeting or speaking with us, feel free to reach out to our investor relations team.

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

Operator: This concludes the Iturand Second Quarter of 2024 Results Conference call. Thank you for your participation. You may go ahead and disconnect.

Eyal Sheratzky: We believe that we will continue this trend in 2024. Given the many growth initiatives highlighted, I would expect the growth to accelerate a time passes over the mid to long term. Our constantly growing subscriber growth will ultimately translate into increased revenue, increased growth profit, with faster growing profitability over the long term due to the operating leverage inherent to our business.

Eli Kamer: I look forward to updating you further or some of our initiative mature, and with that end over to Ellie, please go ahead.

Eli Kamer: Thank you, Ayado.

Eli Kamer: I will provide a short summary of the financial results. You can find the more detailed results that we issued in the virtually earlier today. Second quarter revenue was for $84.9 million, a 4 percent increase compared with revenue of $81.6 million last year. The strengthening of the US dollar in the second quarter versus the various local currencies in which it one operates in impact the revenues when translated into US dollar in local currency revenue grew by 6 percent year over year.

Eli Kamer: Revenue from subscription fees in the quarter where 60.4 million dollars an increase of 2 percent year over year and in local currencies an increase of 5 percent. Further revenues in the quarter were $24.5 million dollars an increase of 9 percent year over year and in local currency an increase of 10 percent.

Eli Kamer: The subscriber base expanded to 2 million 3,390, a 29,000 by the end of the second quarter an increase of 39,38,000, from the end of the previous quarter.

Eli Kamer: In local currencies, Evida grew 9 percent year over year.

Eli Kamer: Net income for the second quarter was 13.1 million dollars or the lucid earning per share of 66 cents, an increase of 7 percent compared with 12.2 million dollars or lucid earning per share of 61 cents in the second quarter of last year.

Eli Kamer: In local currency, net income grew 10 percent year over year.

Eli Kamer: Cash flow from operations for the second quarter of 2024 was 22.9 million dollars. As of June 30, 2024, the company had cash including marketable securities of 63.3 million dollars and a debt of 0.2 million dollars amounting to a net cash position of 63.1 million dollars. This is compared with the cash including marketable securities of 53.6 million dollars and a debt of 0.6 million dollars amounting to a net cash position of 53 million dollars as of year end 2023.

Operator: And with that, I'd like to open the call for the question and answer operator.

Operator: Thank you.

Operator: Ladies and gentlemen, at this time, we will begin the question and answer session.

Operator: If you have a question, please press star one.

Operator: If you wish to cancel your request, please press star two.

Operator: If you are using speaker equipment kindly lift the handset before pressing the numbers.

Operator: Your questions will be pulled in the order they are received.

Operator: Please send by while we pull for your questions.

Chris Reimer: The first question is from Chris Rimer of Barclays.

Chris Reimer: Please go ahead.

Eyal Sheratzky: To take my question and congratulations on the solid quarter, I was wondering if you could talk about some of what contributed to the stronger product growth in this quarter.

Eyal Sheratzky: Mainly, if I remind you that we have a subsidiary which is a focus company called DRM, which is, first of all, our main supplier, but also as many third-party customers, which there are many focus on hardware.

Eyal Sheratzky: And they had a Strong Quater.

Eyal Sheratzky: Since they are selling almost only hardware, we have to remember that they have some volatility among Quater because it's really depend on different customers from around the world.

Eyal Sheratzky: Got it.

Chris Reimer: And on pricing, I was wondering if in this macro environment you're seeing any pricing pressures or changes in the pricing environment and any of your job trophies.

Eyal Sheratzky: No.

Eyal Sheratzky: The answer is not.

Eyal Sheratzky: We have to, again, to remember that it runs the main revenue source is the subfiber fees.

Eyal Sheratzky: We have to understand that the average output is about $10, so the sensitivity among the end user, as much as I can say, is quite low.

Eyal Sheratzky: We got the halber itself.

Eyal Sheratzky: If you look on our historical numbers, the margin that we are sell are very low in order to get more and more subscribers.

Eyal Sheratzky: And in that case, our prices are quite low by definition, and we don't see a pressure in this field as well.

Chris Reimer: Got it.

Chris Reimer: And just one more housekeeping bit, and I apologize if I missed this on the first release, but you previously had been giving the aftermarket and OEM breakout for subscribers.

Chris Reimer: So I didn't see it this quarter.

Eyal Sheratzky: Is that a change in reporting?

Eyal Sheratzky: Actually, I'm not sure that we did it constantly, but if yes, we will try to do it.

Eyal Sheratzky: I think because the differences, when the differences are very high, we are divided.

Eyal Sheratzky: I think that was more balanced, discolored, probably.

Chris Reimer: Okay, that's it for me.

Chris Reimer: Thank you.

Sergey Glyninov: The next question is from Sergey Glyninov of Freedom Capital Markets.

Sergey Glyninov: Please go ahead.

Eyal Sheratzky: Hello, everyone.

Eyal Sheratzky: Pretty good results.

Eyal Sheratzky: Maybe would you provide your outlook for products sales growth rate for the foreseeable future?

Eyal Sheratzky: Again, I would like to remind that our product sales mainly done all the time.

Eyal Sheratzky: All by our subsidiary that I mentioned, or by the Israeli company in the rest of the world, which is more than 50 percent of our revenues, we almost, I can say, lease, and we sell it as a program with the monthly fees.

Eyal Sheratzky: And when I talk about our subsidiary and about selling hardware to our distributors, it's something that always had some volatility between quarters, because it's mainly depend on their inventory, pressure, inventory.

Eyal Sheratzky: I think that we are not expecting any specific growth.

Eyal Sheratzky: I think that the average number is on annual basis.

Eyal Sheratzky: You have to judge it on an annual basis.

Eyal Sheratzky: Okay.

Eyal Sheratzky: It is related to all the markets when or where you have presence.

Eyal Sheratzky: No, because what you see in our PNL is that it's divided services and products.

Eyal Sheratzky: More than 50% of the geography of our revenues is the hardware is integrated to our service fees. We lease it.

Eyal Sheratzky: So what you see is you see it in one hand in the capex.

Eyal Sheratzky: Okay, in the capex in the cash flow report.

Eyal Sheratzky: And here it's part of the service revenues.

Eyal Sheratzky: So you don't see the sales in more than 50% of our total revenues.

Eyal Sheratzky: What you see is only in Israel and our subsidiary which is a supplier of hardware.

Eyal Sheratzky: Okay.

Eyal Sheratzky: Got it.

Eyal Sheratzky: Thanks.

Ali Goldberg: The next question is from Ali Goldberg of Oppenheimer.

Ali Goldberg: Please go ahead.

Eyal Sheratzky: Hi.

Eyal Sheratzky: I want to know if you guys provide some more insights about the motorcycle product you guys said you just launched.

Eyal Sheratzky: And how should we think about it going forward?

Eyal Sheratzky: I think that I mentioned it also in our calling the Q1 but I will of course will do it again.

Eyal Sheratzky: We just started a few months ago to launch our solution in I would say two main channels. One is insurance companies in Brazil.

Eyal Sheratzky: We realized that Brazilian market and I would say even mentality.

Eyal Sheratzky: Is that motorcycle is very common and there is a high portion of the motorcycle market with a expensive and high end motorcycles by a man and by Honda.

Eyal Sheratzky: Insurance companies are more interest in selling insurance policies to motorcycle owners.

Eyal Sheratzky: And in that case we are now in discussions or we already start to sell solutions for motorcycles.

Eyal Sheratzky: The second segment is a OEM, which I cannot yet report for a final contract or a deal, but this segment is something which we are putting also focus in discussions with motorcycles manufacturers in order to convince them and in order to show them what we did with a car connectivity as an OEM and what benefits their customer can get from a cinematic solution in a motorcycle.

Eyal Sheratzky: So this is something else which we now have to offer.

Eyal Sheratzky: I want to add that in Israel for example in the last more than a year and this also contribute to our growth in subscribers.

Eyal Sheratzky: We already have a solution, it's a different solution than I now offering in Brazil, something which is more simple solution mainly and only for cars for a motorcycle thief.

Eyal Sheratzky: We already have sales of thousands of motorcycles and in Israel by the way, motorcycles do not ensure their motorcycles.

Eyal Sheratzky: So instead of having nothing because they don't ensure the insurance here is very, very expensive.

Eyal Sheratzky: So they decide to find a solution which reduce their risk as a motorcycle owner by installing it to run and of course join our customer base.

Ali Goldberg: Okay, thank you and another follow-up.

Ali Goldberg: How would you say investor to look at the growth going ahead talking about 25 even for it to run?

Eyal Sheratzky: What should we look at?

Eyal Sheratzky: I'm always considering our growth in the profit side, the EBIT and the EBITDA because you know it's very important when we are kind of a SaaS company and we have a customer base of close to 2.4 million subscribers even if we grow 180,000 a year the influence on the revenue is not so dramatic but since we have an operating leverage model it's mean that we expect to grow first of all our profit margin and second our EBITDA and in that point we already provide kind of guidance for 2024 and also it's not a guidance but still it's something that we put as a goal and if we put as a goal I believe that we believe that we will achieve it is to get EBITDA in 2025 of a 100 million dollar.

Eyal Sheratzky: Now I have to put a note here since our operation and our revenue comes from different Currency type, and most of them are currencies of emerging markets.

Eyal Sheratzky: It's something that we don't have any way to predict or to control the alike happen, by the way, in Q2.

Eyal Sheratzky: So when I say $100 million of course is based on the currencies as is now.

Eyal Sheratzky: But in terms of growth profits, I think that it's quite this is a very impressive goal.

Eyal Sheratzky: Okay, thank you.

Boris Schneider: The next question is from Boris Schneider of More Investment House.

Boris Schneider: Please go ahead.

Eyal Sheratzky: Yes, hello.

Boris Schneider: My question is on the ARPU, this quarter which declined compared to previous quarters that are obviously there was roughly 12 quarters of growth.

Eyal Sheratzky: So what else is going there besides the depreciation in currency against the dollar?

Eyal Sheratzky: Is it because of more sales to OEM or other lower ARPU margin products?

Eyal Sheratzky: I think that if we eliminate the effects, you would say that the ARPU for Q2 is even higher.

Eyal Sheratzky: So this is the only reason that you see the lower ARPU.

Eyal Sheratzky: In local currencies we have higher ARPU.

Eyal Sheratzky: Although we write, the OEM is lower.

Eyal Sheratzky: There's some application that we sell like a big data solutions for card dealers, it's lower but still the the variety it's still taking our ARPU app in local currencies.

Boris Schneider: Okay, thank you.

Operator: If there are any additional questions, please press star one. If you wish to cancel your request, please press star two.

Operator: Please then buy while we pull for more questions.

Operator: There are no further questions at this time.

Kenny Green: Before I ask Mr. Sharatsky to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available tomorrow on it runs website www.iturand.co.il.

Eyal Sheratzky: Mr. Sharatsky, would you like to make your concluding statement?

Eyal Sheratzky: On behalf of the management of free to run, I would like to thank you, our shareholders, for your continued interest and long term support of our business.

Eyal Sheratzky: In the coming months, we will be meeting with investors and presenting at two conferences.

Eyal Sheratzky: LD, micro and EDAM, and we hope to see some of you there.

Eyal Sheratzky: If you are interested in meeting or speaking with us, feel free to reach out to our investor relations team.

Eyal Sheratzky: And with that, we end our call.

Eyal Sheratzky: Thank you, and have a good day, guys.

Operator: Thank you.

Operator: This concludes the Iturand Second Quarter of 2024 Results Conference call.

Operator: Thank you for your participation.

Operator: You may go ahead and disconnect.

Q2 2024 Ituran Location and Control Ltd Earnings Call

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