[Management View]
Ituran's management emphasized the strong local currency growth in Q1 2025, despite currency headwinds affecting U.S. dollar-reported metrics. The company highlighted the strategic importance of the Stellantis agreement, which significantly boosted subscriber numbers and is expected to drive long-term growth. Management is focused on expanding OEM relationships and sees potential in the usage-based insurance market, particularly in South America.

[Outlook]
The company raised its 2025 net new subscriber forecast to 220,000–240,000, driven by the Stellantis contract and ongoing regional growth. Ituran plans to expand its OEM relationships and broaden the scope of services offered. The company expects continued strong demand for its telematics services and products.

[Financial Performance]
Total revenue for Q1 2025 was $86.5 million, up 2% YoY, with 7% growth in local currencies. Subscription revenue increased by 2% YoY to $62.2 million, and product revenue rose by 1% YoY to $24.3 million. EBITDA grew 4% YoY to $23.3 million, representing 26.9% of revenue. Net income increased by 12% YoY to $14.6 million, with a diluted EPS of $0.73.

[Q&A Highlights]
Question 1: Does the new agreement with Stellantis imply equipment setup for each car in Latin America?
Answer: The current agreement provides services based on existing technology in Stellantis cars. Ituran sees this as an opportunity to expand the relationship and potentially add services and hardware in the future.

Question 2: What primarily affected the ramp-up of the subscription base?
Answer: The initial agreement with Stellantis included a bulk addition of subscribers, which is not typical. Future quarters are expected to see a return to historical growth rates of around 40,000 subscribers per quarter.

Question 3: What steps have been taken to improve product gross margins?
Answer: Gross margins improved due to operating leverage and cost savings. Future margins are expected to benefit from continued subscriber growth and product mix volatility.

Question 4: What are the expectations for CapEx in 2025?
Answer: CapEx was higher in Q1 due to concentrated purchases. It is expected to decrease in Q2 and beyond.

Question 5: What are the perspectives on the LatAm insurance market and UBI?
Answer: Despite high demand for car theft solutions, Brazil and Mexico are not expected to adopt UBI soon due to insurers' reluctance to change actuary methods. Argentina shows potential for UBI deals.

Question 6: How do attrition rates and ARPU affect new customer contracts?
Answer: Customers receive free trials through OEM deals, with higher renewal rates post-trial. ARPU is lower initially but increases with direct-to-consumer renewals.

Question 7: How is the product revenue pipeline evolving?
Answer: The pipeline is stable, with sufficient inventory to meet demand. Gross margins are expected to remain volatile, depending on product mix.

[Sentiment Analysis]
Analysts expressed interest in the strategic OEM partnerships and subscriber growth. Management maintained a positive tone, emphasizing long-term growth potential and strategic initiatives.

[Quarterly Comparison]
| Metric | Q1 2025 | Q1 2024 |
|-------------------------|---------|---------|
| Total Revenue | $86.5M | $85M |
| Subscription Revenue | $62.2M | N/A |
| Product Revenue | $24.3M | N/A |
| EBITDA | $23.3M | $22M |
| Net Income | $14.6M | $13M |
| Diluted EPS | $0.73 | $0.66 |
| Subscriber Base | 2.508M | N/A |

[Risks and Concerns]
Currency fluctuations continue to impact U.S. dollar-reported results. The initial bulk intake of Stellantis subscribers may not recur, potentially affecting future growth rates. The reluctance of insurers in Brazil and Mexico to adopt UBI poses a challenge to market expansion.

[Final Takeaway]
Ituran's Q1 2025 results demonstrate solid growth in local currencies, driven by strategic OEM partnerships and subscriber base expansion. The Stellantis agreement is a key growth driver, with potential for expanded services and increased ARPU over time. While currency headwinds and market challenges persist, Ituran's focus on strategic initiatives and long-term growth opportunities positions it well for future success.