Prepared remarks
We will start the call in 1 minute. Ladies and gentlemen, thank you for standing by.
My name is Kenny Green, and I am part of the Investor Relations team at Ituran. I would like to welcome all of you to Ituran's results Zoom webinar, and I would like to thank Ituran's management for hosting this conference call. All participants other than the presenters are currently muted. Following the formal presentation, I will provide some instructions for participating in the live question-and-answer session. I would like to remind everyone that this conference call is being recorded. The recording will be available from the link in the earnings press release and on Ituran's website from tomorrow. With me today on the call are Mr. Eyal Sheratzky, CEO; Mr. Udi Mizrahi, Deputy CEO and VP Finance; and Mr. Eli Kamer, CFO of Ituran. Eyal will begin with a summary of the quarter's results followed by Eli with a summary of the financials. We will then open the call for the question-and-answer session. You should have all received by now the company's press release. If not, please view it on the company's website. I would like to remind everyone the safe harbor statement in today's press release also covers the contents of this conference call and the associated presentation. And now, Eyal, would you like to begin, please?
Thank you, Kenny. I would like to welcome all of you to our first quarter 2026 results call and thank you for joining us today. We are very pleased to report a strong start to 2026, with our revenue crossing the $100 million milestone for the first time in our history. For the quarter, overall revenue grew 19% year over year to $102.7 million, a record, with subscription revenue growth of 21% to $75.4 million. Operating income, EBITDA, and net income all grew year over year by double digits, with EBITDA reaching $26.7 million. During the quarter, we added 40 thousand net new subscribers, bringing our total subscriber base to 2.67 million at the end of March 2026. This is in line with our expected run rate and shows continued healthy organic growth across our core markets. While the pace can vary from quarter to quarter, for the full year 2026 we continue to expect to add between 160 thousand and 180 thousand net subscribers. Our long-term success in growing our global subscriber base consistently is due to our ongoing effort in offering new products and services to our existing customers, while at the same time tapping into new market segments and new geographies. Our OEM relationships remain a key growth driver. During the first quarter, we further expanded our strategic partnership with Stellantis through the launch of Connect Fiat, exclusive to the Fiat Strada in South America. This is a fully integrated end-to-end solution from Ituran, covering the embedded hardware, connected vehicle services, the technology back end, and the end-user mobile application. This new program, with an initial three-year term and an option to extend by an additional two years, builds on the partnership we announced with Stellantis in early 2025 and reinforces our role as a complete connectivity partner for global OEMs in our region. Beyond Stellantis, we remain in active discussions with additional OEMs, and this, alongside our existing partnership with Nissan Renault, General Motors, Yamaha, BMW, and others, gives us strong confidence in our long-term OEM growth trajectory. Beyond our core subscriber-base telematics business, we are advancing with several growth initiatives, which I discussed last quarter in detail, that we believe can become meaningful long-term contributors to Ituran. These include IturanMob, our car rental solution; Credit Carbon; and our big data capabilities, all of which significantly grow our addressable market. While these initiatives are still early in their commercial development, we are already involved in active discussions with potential customers and partners and we are seeing interest across multiple markets and use cases. As an example of our big data capabilities, we recently signed an agreement with one of the entities of the Ministry of Transportation in Israel to provide transportation data to support it, helping it better understand commuter patterns and plan for the future. We expect more such projects in Israel to mature during the coming quarters. Together with our other interesting projects in the pipeline, this highlights the significant long-term potential of Ituran's data capabilities to support government transportation authorities, commercial centers, OEMs, and other customers while creating scalable revenue opportunities beyond our traditional subscription model. Ituran continues to be a strongly cash-generating business, with cash flow from operations of $18.2 million in the first quarter. Reflecting our continuing strong profitability, our ongoing positive cash flow, and strong balance sheet, the Board of Directors declared a dividend of $10 million for the quarter, which represents $0.50 per share, in line with our standard dividend policy. During the quarter, $0.5 million in shares were purchased under the buyback program. We see our ongoing dividend alongside our buyback program as a reward to our shareholders for their loyalty and long-term support of our company. In summary, we are very pleased with our strong start to 2026, with revenue crossing the $100 million milestone for the first time, double-digit growth in revenue, operating income, EBITDA, and net income, and continued healthy subscriber additions in line with our goal for the year. At the same time, we continue to look for new avenues to drive further growth across all of our regions. The OEM expansion with Stellantis through Connect Fiat, the launch of IturanMob, our car rental solution in the United States, our partnership with Griiip, the development of Credit Carbon, and the monetization opportunities around our big data assets are all examples of this. We remain confident in our ability to deliver continued growth and profitability throughout 2026 and in our long-term strategy to transform Ituran into a significantly larger company. And with that, I hand it over to Eli. Please go ahead.
Thanks, Eyal. I will provide a short summary of the financial results. You can find the more detailed results in the press release that we issued earlier today. First quarter revenues were a record $102.7 million, a 19% increase compared with revenues of $86.5 million in the first quarter of last year. Revenues from subscription fees in the quarter were $75.4 million, an increase of 21% year over year and represented 73% of total revenues. Product revenues in the quarter were $27.3 million, an increase of 12% year over year. Subscriber base expanded to 2.17 million by the end of the first quarter, an increase of 40 thousand from the end of the previous quarter. The geographic breakdown of revenues in the first quarter was as follows: Israel 57%, Brazil 22%, rest of world 21%. EBITDA for the quarter was $26.7 million, or 26% of revenues, an increase of 15% compared with EBITDA of $23.3 million, or 26.9% of revenues in the first quarter of last year. Net income for the first quarter was $16.8 million, or 16.3% of revenues, or diluted earnings per share of $0.85, an increase of 15% compared with $14.6 million, or 16.9% of revenues, or diluted earnings per share of $0.73 in the first quarter of last year. Cash flow from operations for the first quarter of 2026 was $18.2 million. As of March 31, 2026, the company had net cash including marketable securities of $108 million. This is compared with net cash including marketable securities of $107.6 million as of year-end 2025. During the first quarter, Ituran paid the dividend to shareholders relating to the third quarter of last year amounting to a total of $10 million. The board of directors declared a dividend of $10 million for the first quarter, or $0.50 per share. The current dividend takes into account the company's continuing strong profitability, our ongoing positive cash flow, and strong balance sheet. During the quarter, $500 thousand in shares were purchased under the buyback program. The total remaining authorization is approximately $13 million. Share repurchase will be funded by available cash and will be made in accordance with SEC Rule 10b-18. And with that, I would like to open the call for the question-and-answer session. Operator, okay.
Questions and answers
So we will open the question-and-answer session. If you have a question, please raise your hand in the Zoom platform, and we will poll for questions. Our first question will be from Derek Greenberg of Maxim. Derek, you may unmute yourself and ask your question.
Hey, guys. Congrats on the quarter. I wanted to just dig into the growth a bit. You had strong results there. I was wondering if you are seeing stronger growth contributions in any specific area, whether it be geographically or from new products, or if you are seeing just strong results across the board. I was wondering if you could dig into that a little bit.
Actually, we have no specific geography that grows more than usual. Still, from the subscribers movement, there is always some volatility, and it can vary between quarters and between ARPUs. We have a natural ebb and flow: sometimes Israel grows faster than Brazil in one quarter, and then there is an OEM deal like we did with Stellantis and it contributes. So there was nothing specific, but I think that it is fair to mention that when we see Q1 2026 compared to Q1 2025, this is the first time that we benefited from the strengthening of the currencies in the geographies that we are working in, and this supported much stronger growth numbers compared to a typical quarter. This is something that we are not counting on, and after almost a decade that it was always a headwind, still, we grew. Of course, when it is a tailwind, we are happy. But in terms of operation, we continue our growth as we always do, and, of course, we work on expanding it as I declared and said regarding new businesses and new OEM deals. But this is not something that we still faced in Q1 2026. I think that this will be more material in our growth toward the next years.
That is super helpful. Is there a way to think about maybe what the FX-neutral growth rate was this year versus last year, and maybe what the impact of FX headwinds were in the prior quarter?
In our EBIT, it was about $1 million. Again, it is not material for the overall results, but when you compare it quarter to quarter, it explains some of the differences. I will not analyze now each one of the currencies, but this is the total amount derived from the average FX of the currencies.
Got it. And then just in terms of potential lumpiness in the quarter, did you see any lumpiness in the product revenue segment in terms of maybe an inflated number there or anything else to call out? And then on the subscribers, was there any price increases factored into the quarter as well?
No. Since we talk about more than almost 2.7 million subscribers, even if there is a change in one geography's net new subscribers, the influence is very close to zero. This is a general statement, but to be more concrete, there was nothing notable. I think one of the things which is very typical to Ituran is that there are not many lumpy situations. I think that visibility is very high. Ituran's market situation in each geography allows a very stable and constant growth as long as, of course, we continue with our efforts.
Great. I have one last question, and then I will pass it along. I was wondering just on the big data initiative you guys are working on. You called out that you signed an agreement with the Ministry of Transportation in Israel. I was wondering if you could talk a little bit about how we should think about the sales cycle in terms of engagements for that, or maybe other useful color in terms of the pipeline and potential sizes per engagement?
First of all, as I said in our last quarter call, this is only in the beginning, but still, the big data engine that we launched currently in Israel has a lot of traction. The deal or contract that we signed, which I just mentioned, is a few hundred thousand dollars. This model is a little bit different than the subscribers recurring revenues. This is typically a B2B deal. It measures the data sizes and the information and the measurements. In that case, it can be a one-time payment, but sometimes a project that we are, for example, now in negotiation, can go for four or five years with an annual payment, but this is not based on a specific customer or a specific car. So in that case, it is not yet something that I can fully disclose. But overall, when I look more strategically, I think that all this information will allow us in the future to increase revenues and create more deals selling data. In one day, for example, in three or four years from now, when the Israeli subscriber base will be more of a cash cow because Israel, as you know, we have something like 90% market share and we grow very aggressively among the new car sales, we will have to find another growth engine, and this will be the data and the rental car application, etc. Now, I do not know how to give you exactly how you model it with the subscriber base today, but it is something that we have to create expectations for and add it first to the revenues. I cannot tell you exactly what the numbers will be.
Got it. That was very helpful. Well, congrats again. Thank you for taking my question.
Our next question will be from Sergey Glinyanov from Freedom Capital Markets. Sergey, please go ahead.
Yeah. Good day. I would like to congratulate you on the significant milestone, $100 million in revenue and $1 billion in market capitalization breaking through. The first question is, assuming stable FX rate, does it mean that we should expect a strong Q2 as well? And regarding new agreements, do you have any new substantial OEM agreement on the table or are you under discussion now? If you look backward, every year you provide one or two new agreements. Also, what is the goal in terms of subscribers, revenue, or market share per person in the U.S. deploying IturanMob and how is it progressing at all?
I cannot tell you about Q2, but some assumptions you can learn from Q1 can be relevant for Q2. I think that you can look backward and try to illustrate it through your model; that is how I would suggest. Regarding new agreements, we are always under discussion. If you look backward, you will see that every year we provide one or two new agreements. We put all our efforts into continuing and making that happen, and I believe that it will be the case. When it happens, we will report and publish it. As for IturanMob in the U.S., this specific solution that we are now starting to provide is premature; it started earlier than we expected. There are other players with a very, very limited market share—so limited it cannot really be called a market yet. As being one of the first or part of the first-comers to this solution, of course we set a very high goal to lead this market. We have to educate the market. We just finished a very large conference of rental companies where we were speakers and demonstrators, and I am very optimistic after the leads, the discussions, and the traction that we saw from all the players in this industry. But it is too premature to say what our market share will be. We aim to be leaders of this industry in the U.S. in the future.
Okay. Thank you for taking my question. That is all for me.
Thanks, Sergey.
That ends our question-and-answer session.
Before I hand back to Eyal for the closing statements, I just want to let everybody know that this call will be available from Ituran's website in the coming hours as well as from the original Zoom link. And with that, I am going to hand back to Eyal for his closing statement. Eyal, please go ahead.
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. We look forward to continuing our accomplishments over the coming years. If you are interested in meeting or speaking with us, please feel free to reach out to our investor relations team. And with that, we end our call. Have a good day. Bye-bye.