Ituran Location and Control Ltd. Q2 FY2026 earnings call

• Overall Financial & Subscriber Growth

  • The company achieved record revenue and profitability in Q2 2026, with all profit metrics growing faster than total revenue, demonstrating built-in operating leverage in the business model
  • 41,000 net new subscribers were added in the quarter, bringing the total global subscriber base to 2,711,000 at the end of June 2026, in line with the expected run rate
  • The business generated record operating cash flow of $32.2 million in the quarter, and holds $103.7 million in net cash with zero outstanding debt on its balance sheet
  • A $10 million dividend ($0.50 per share) was declared, and $3 million in shares were repurchased under the existing buyback program, with $10 million of authorization remaining

• Core Growth Initiatives

  • OEM partnerships remain the primary long-term growth driver; the company is ramping existing OEM programs across South America, including the newly launched Connect Fiat program with Stellantis for the Fiat Strada
  • The company is in active discussions with additional undisclosed OEMs, and is working to expand existing partnerships with Nissan, Renault, General Motors, Yamaha, and BMW

• New Growth Lines

  • Ituran Mob, the company's US-launched car rental solution, is seeing growing market interest, with an expanding number of pilots and customers across more US cities; the company is rolling out the service at a measured pace to test the market before increasing investment
  • Credit Carbon, the platform for electric/zero-emission vehicle drivers to sell verified carbon savings to offsetting companies, expands the company's addressable market
  • Big data monetization is being advanced; the first small transaction with Israel's Ministry of Transportation was completed in Q1 2026, and the company is currently in advanced discussions and running pilot projects with multiple potential customers, with management expecting to announce additional larger deals in the near term

Total revenue for Q2 2026 was $104.8 million, a 21% year-over-year increase. Recurring subscription revenue was $79.8 million, growing 25% year-over-year and contributing 76% of total revenue. Product revenue was $25 million, growing 8% year-over-year and contributing 24% of total revenue. By geography: Israel contributed 56% of total revenue, Brazil contributed 22%, and the rest of the world contributed 22%. Adjusted EBITDA was $28.5 million, up 24% year-over-year, representing 27.2% of revenue. Net income was $17.3 million, up 29% year-over-year, representing 16.5% of revenue.

Management maintained confidence in the company's ability to deliver continued growth and profitability across all regions through full-year 2026. No changes to prior long-term growth targets were announced. Ituran Mob is framed as a mid-term growth project that is not expected to deliver material revenue contributions in 2026 or 2027, with formal financial updates planned once the business ramps to meaningful scale. Big data monetization is expected to deliver larger, more valuable deals after the company gains market experience in Israel, with expansion planned to Brazil and Mexico in the longer term.

• Foreign exchange: A $1 million negative impact on EBIT was recorded in Q2 2026, driven by the strengthening of the Israeli shekel against the US dollar reducing the value of US dollar-denominated deposits held in Israel
• New business adoption: New growth lines including big data monetization and usage-based insurance (UBI) serve slow-moving traditional industries (government, insurance) that may take longer than expected to adopt new data-driven solutions
• International big data expansion: Ituran's lower market penetration of total vehicles in Brazil compared to Israel will limit the depth of available data for initial international big data offerings

Q: Can you update on the completed big data deal with Israel's Ministry of Transportation, and discuss the geographic split of your current big data pipeline? / A: The small multi-million shekel deal, completed in Q1 2026, involved selling historical driving data to help identify optimal locations for new truck rest areas to reduce accident risk from driver fatigue. The company started big data efforts in Israel to leverage its 33% market penetration of all cars on Israeli roads, which provides a large, robust dataset to build experience and confidence with government and public sector clients. After establishing traction in Israel, the company plans to expand big data offerings to Brazil and Mexico, leveraging its existing subscriber base in those markets.

Q: How is the US launch of Ituran Mob progressing to date? / A: Ituran Mob has seen growing interest and attraction from the US car rental market, and the company has expanded pilot programs to more US cities, with a growing base of test customers. Management is intentionally rolling out the service in a low-investment, measured phase to validate product-market fit before increasing spending on business development and sales. Revenue is still at very low levels, so no formal material contribution is expected in 2026 or 2027, and updates will be provided once the business ramps to meaningful scale.

Q: How are the motorcycle and usage-based insurance (UBI) segments performing, and can big data be leveraged to grow UBI? / A: OEM motorcycle deals with Yamaha and BMW in Brazil are ramping very well, with high customer satisfaction, and are already contributing to subscriber growth in Brazil; management is in discussions to expand to additional motorcycle brands. UBI is growing gradually in the small Israeli and Argentine markets, but has low ARPU and remains a niche segment, with no plans for international expansion in the near term. Big data can absolutely support UBI growth by providing additional driving pattern and location data to help insurance companies price policies more accurately; the company is in early discussions with Israeli insurers, but insurance is a very traditional, slow-moving industry that is expected to adopt new data practices gradually.