IBI 2025: The Platform Is Built, Now Comes the Repeatable-Profit Test

Getting to Know the Company

IBI is no longer just an investment house in the old sense of the term. In 2025 it looks more like a broad financial distribution platform with two large legs. One is financial services: brokerage membership, self-directed trading, institutional brokerage, Capital, pension agencies and business financial services. The other is financial products: mutual funds, portfolio management, alternative investments and part of underwriting. This is now a group with more than ₪ 1.5 billion of revenue, 1,078 employees, a retail app with more than 200,000 registered users, ₪ 141.1 billion of assets under management in funds and portfolio management, and ₪ 10.5 billion of asset value in alternatives.

What is working now is very clear. Brokerage and custody keep growing, mutual funds benefited from the Psagot integration and stronger fund-raising, Capital became a meaningful growth engine into the tech ecosystem, and the pension agencies effectively doubled after absorbing Neto. The local capital-markets backdrop was also more supportive in 2025, which helped underwriting, distribution and trading activity.

But a surface reading of the top line can mislead. This is not a clean year of simple organic growth. Part of the jump came from acquisitions, one-off gains, performance fees and a stronger market backdrop. The real number to focus on is not only that revenue rose 42% to ₪ 1.50 billion and EBITDA rose to ₪ 469.8 million, but that profit attributable to shareholders actually slipped to ₪ 174.6 million from ₪ 178.2 million in 2024. In other words, part of the improvement was absorbed by non-controlling interests, financing costs and amortization.

That is the core issue. IBI built a much broader platform in 2024 and 2025, but 2026 now has to prove that this platform can generate repeatable, high-quality earnings at the common-shareholder layer, not just accounting growth on a consolidated basis. That is why next year looks less like an automatic breakout year and more like a proof year.

The Economic Map

Events and Triggers

What Built 2025

The first move: Psagot. The mutual-fund acquisition closed in 2024, but 2025 was the year it really flowed through the numbers. Revenue in funds and portfolio management rose to ₪ 326.9 million, with ₪ 97.2 million attributed to the Psagot deal. By year-end, the group managed 231 mutual funds with ₪ 87 billion in assets, versus 211 funds and ₪ 65.4 billion a year earlier. For IBI this is not only more AUM, but a deeper distribution moat.

The second move: Nextage. Capital is no longer just an employee-equity and valuation business. The Nextage acquisition pushed Capital deeper into outsourced finance services for tech companies and widened the product set. The result looks strong at the top line, with ₪ 276.1 million of revenue in 2025, but not yet mature at the bottom line. Segment profit fell to ₪ 78.1 million from ₪ 80.5 million in 2024.

The third move: Neto. This is probably the most visible structural change outside the funds business. Four Seasons bought Neto’s activity for ₪ 43.5 million plus VAT, the deal closed in February 2025, and the pension platform got a new scale layer. In 2025 the agencies segment posted ₪ 186.1 million of revenue and ₪ 40.9 million of segment profit, versus ₪ 88.7 million and ₪ 9.7 million in 2024. But part of that jump also included a ₪ 13.6 million one-off purchase-price-allocation gain.

The fourth move: technology. In the second quarter of 2025 the group unified its technology teams under a dedicated technology company and doubled the headcount directly involved in technology development. This is spending now in order to try to create operating leverage later. Some of the cost increase therefore needs to be read as infrastructure build-out rather than simple expense inflation.

The fifth move: IBI SMART. The app is no longer presented as a marketing accessory but as the center of the retail platform. As of the report date it had more than 200,000 registered users, and self-directed trading clients stood at roughly 77,000. The company is aiming for 100,000 self-directed trading clients in 2026.

What the Market Will Measure Now

The nearest trigger: Capital’s signed M&A backlog. The company says that during 2025 and the first quarter of 2026 it signed an M&A transaction backlog that is expected to materially affect segment profitability. That is a meaningful promise, but it is not cash until deals actually close.

The second trigger: the transition of Neto agents into new agreements. Starting in the fourth quarter of 2025, Four Seasons began signing the transferred agents onto new agreements under which they will receive commissions directly from manufacturers. The company is already warning that this will reduce revenue, but also reduce agent-commission expense, with no expected EBITDA effect. It looks technical, but it is a real integration test.

The third trigger: the shift of IBI SMART from a trading gateway into a multi-product platform. In 2026 the company wants to add deeper pension, insurance and provident integration, alongside a digital wallet. If that happens, the IBI story moves from selling products toward managing a daily customer relationship.

Efficiency, Profitability and Competition

The most important point in 2025 is that growth was broad, but its quality was not uniform. This was not a year in which every segment grew in the same way, under the same terms, or with the same level of repeatability.

Where Profit Looks Cleaner

Trading and custody show real activity growth. Revenue rose 25.5% to ₪ 398.2 million, as the company ties the increase to higher trading volumes, stronger self-directed trading, wider business activity, interest margins and FX differences. Even if profit did not rise at the same pace, this is still a business driven by real customer activity.

Funds and portfolio management combine higher assets, fund-raising and acquisition integration. Revenue rose 33.5% to ₪ 326.9 million, and segment profit rose 22.5% to ₪ 56.0 million. The key point here is that the asset base is now large enough to support a broader revenue base even without an extreme market year.

Where the Numbers Are Strong but Need More Care

Capital is the sharpest example. This is a segment with ₪ 276.1 million of revenue, ₪ 101.8 million of EBITDA, more than 160,000 clients and more than 2,500 active plans. Yet segment profit fell 3% despite the revenue jump. That means 2025 was not only a growth year, but also a build year. Management expansion, Nextage integration and new-product investment consumed part of the upside.

The agencies segment tells a similar story. Revenue and EBITDA surged, but not all of the gain is equally repeatable. Beyond the ₪ 13.6 million one-off gain, the company only owns 65% of Four Seasons rather than 100%, so even when the segment improves, not all of the economics flow through to the listed parent’s shareholders.

In alternatives the picture is even more mixed. Segment revenue rose only 6.1% to ₪ 183.7 million, but the fourth quarter alone included ₪ 33.8 million of performance fees, mainly in hedge funds. On top of that, the company discloses another ₪ 57 million of accumulated performance fees that have not yet been recognized. That line can therefore surprise in either direction. It is not a smooth recurring-management-fee base.

Underwriting is even sharper. 2025 was a very good year, with ₪ 100.2 million of revenue and ₪ 52.3 million of segment profit, but ₪ 29.6 million of that profit came from the Manor Evergreen revaluation. That is not the same as recurring operating income.

What This Says About the Moat

What clearly works in IBI’s favor is diversification. Management says no single activity accounts for more than 12% of revenue. That does not erase market cyclicality, but it does mean the group is less dependent on one engine than before. Capital depends on tech, the funds business depends on AUM, the agencies depend on customer flow and commissions, and alternatives depend partly on performance events. The combination creates a broader distribution moat, but also a more complex earnings model.

Cash Flow, Debt and Capital Structure

This is where the distinction between two cash views matters. The normalized picture looks good: cash flow from operating activities was ₪ 227.9 million in 2025. That is a strong level of cash generation, and certainly not the picture of a stressed group.

But the all-in picture is less smooth. After ₪ 87.6 million of investment cash uses, and after ₪ 177.9 million of financing outflow, cash declined by ₪ 37.7 million to ₪ 210 million. Put simply, the business generates healthy cash, but in 2025 a large part of that cash was already committed to dividends, investment and continued platform build-out.

Capital structure also needs a precise reading. In 2025 the company paid ₪ 160 million of dividends, and distributable retained earnings stood at ₪ 728 million as of the report date. That means the group is not behaving defensively. Quite the opposite, it still behaves like a company with confidence.

At the same time, the cost of expansion is now visible in the financial line. Net financing expense rose to ₪ 33 million from only ₪ 5.9 million in 2024. Management attributes the increase to financing for M&A transactions, contingent-consideration revaluation, and the write-down of a loan to the Pillar Houston 2 real-estate partnership. In other words, this is not just a few more interest points. It is the cumulative bill for building the group.

As of the report date, On call loans stood at ₪ 121 million, of which ₪ 20 million were in Capital and the rest mainly supported alternative-investment activity. In addition, Four Seasons carries dedicated financing for the Neto deal, with an outstanding balance of ₪ 73 million. The company also still carries ₪ 105 million of financing connected to the Psagot transaction. Management says it is in compliance with covenants, including a debt-to-EBITDA ratio not above 3 at Four Seasons, and that it does not need additional funding to meet payments. This is not a distress picture. But it is a picture of a group that needs recurring earnings to keep growing so that financing cost does not turn from a noise tax into a structural tax.

Outlook

Before looking at 2026, it is worth pausing on four points that are easy to miss on first read:

• The revenue jump did not become a jump in shareholder earnings. Consolidated revenue rose 42%, but profit attributable to shareholders slipped.
• Capital is a growth engine, but not yet a clean margin engine. The segment grew very fast, yet segment profit fell.
• Pensions look very strong, but 2025 included both a one-off gain and acquisition integration.
• Alternatives carry both upside and noise. ₪ 33.8 million of performance fees were recognized in the fourth quarter, while another ₪ 57 million remained unrecognized.

Why 2026 Looks Like a Proof Year

The 2026 targets management is laying out are not small. In self-directed trading, it wants to cross 100,000 clients. In retail, it wants to turn IBI SMART into a unified front-end for trading, pensions, provident products and insurance, alongside a digital wallet. In alternatives, it targets more than ₪ 2.2 billion of hedge-fund AUM by the first quarter of 2027. In Capital, it is pointing to an M&A backlog already signed in 2025 and the first quarter of 2026.

Those targets say one thing very clearly: the company is no longer just selling a year of performance. It is asking the market to underwrite the machine it built. That is why 2026 is not just another growth year. It is the year in which the system needs to prove it can deliver cross-sell, better productivity and profit that actually reaches common shareholders.

What Could Strengthen the Thesis

If Capital starts converting backlog into revenue and profit, if the Neto transition goes through without activity leakage, and if IBI SMART starts showing that customers do not only trade but also consume more than one product, the read on IBI changes. At that point the market may start seeing it less as a cyclical investment house and more as a broader financial-services platform.

There is also real upside in alternatives. Hedge-fund AUM rose to about ₪ 1.6 billion, and the company is targeting ₪ 2.2 billion. If that growth comes with a wider recurring-management-fee base rather than only performance-fee events, the earnings quality of the segment improves.

What Could Weigh on the Story

The main friction is earnings quality. 2025 also enjoyed a more supportive market regime. Parts of the local market saw money rotate back into Israel, issuance volumes improved, and primary-market activity accelerated. If 2026 is calmer or simply less helpful for issuance, it would be wrong to assume underwriting and distribution can repeat the same contribution.

FX also matters. The company says the shekel appreciated by about 13% against the dollar in annual terms during 2025, and that the negative impact on group revenue in the second quarter was about ₪ 20 million. That is a reminder that the group is broad, but not insulated.

And finally, integration itself. Psagot, Neto, Nextage, Roeto, centralized technology and continued screening of acquisitions and strategic cooperation. All of that creates opportunity. All of it also creates managerial load. A group building several engines at once can enjoy synergy, but it can also end up trying to carry more projects than the bottom line can digest at once.

Risks

The Market Still Sits Deep Inside the Story

Despite the broader mix, IBI still depends on capital markets. Falling markets hurt AUM, issuance, option exercises, trading and investors’ willingness to allocate to alternatives. Diversification softens the blow, but does not remove it.

Capital Depends on the Tech Cycle

The company says this directly. Capital is focused on the tech sector, so slower fund-raising, weaker M&A or fewer equity-compensation plans can directly reduce demand for the segment’s services.

Alternatives Are Sensitive to Both Markets and Liquidity

Management explicitly describes the high-rate environment as having frozen parts of the real-estate market, forcing changes in product mix, while also highlighting liquidity and redemption risk in open-end vehicles. This is not a side note. Part of segment revenue still depends on performance fees, and several funds are already in runoff mode.

FX Already Hurt Results

The roughly ₪ 20 million revenue hit in the second quarter from shekel strength shows that FX exposure is not just an accounting issue. It runs through brokerage, Capital, proprietary investments and alternatives.

Neto Is Not Fully Behind the Group Yet

Operationally the acquisition is already inside the group. Legally the case is not over. The appeal on the court ruling that approved the debt arrangement was pushed into the second quarter of 2026 to allow mediation efforts. That does not mean the deal is in immediate danger, but it does leave a cloud over one of the group’s newer growth engines.

Short Read

The market is still carrying a meaningful layer of skepticism. As of March 27, 2026, short interest stood at 3.1% of float, versus a sector average of 1.29%, and SIR stood at 4.31 days, also above the sector average. That is no longer the November 2025 peak, when short float reached 5.4% and SIR 13.58 days, but it is still not the read of a fully convinced market.

In simple terms, short sellers have partly stepped back, but they have not disappeared. The implied read is that the market is buying the scale increase, but not yet fully buying the quality and durability of the earnings.

Conclusions

IBI ended 2025 stronger, broader and better diversified. Its distribution engines are deeper, technology is more central, and the group now has several growth pipes running at once. That is the part of the thesis working in its favor.

The main bottleneck is still earnings quality. The top line looks excellent, but not all of the improvement reaches shareholders, and part of the result rests on acquisitions, performance fees, a favorable capital-markets year and revaluation gains. The next report therefore will not be judged only on more growth, but on cleaner growth.

The current thesis: IBI has built a broad financial-services platform, and now needs to prove that this platform can generate repeatable earnings that are genuinely accessible to common shareholders.

What changed is that the company is no longer read only through funds, trading or underwriting. 2025 presents a much wider body, with distribution, pensions, tech-facing services, alternatives and technology all inside the same machine. The strongest counter-thesis is that the platform did expand, but clean recurring profit did not expand at the same pace, so 2025 may end up looking like a very good year without being a representative base year.

What could change the market reading in the short to medium term is Capital converting backlog into earnings, Neto integrating quietly, and IBI SMART proving real cross-sell. Why this matters is straightforward: if that happens, IBI could start being read less as a cyclical investment house and more as a platform business.

Over the next 2 to 4 quarters the market will want to see three things: backlog conversion in Capital, quiet Neto integration, and a real improvement in customer economics through IBI SMART. If all three show up together, the read on the company improves. If profit continues to lag behind the top line, the market may stay cautious even in the face of strong reported numbers.