Razor: Where the cash actually burned in 2025
Razor ended 2025 with a NIS 20.1 million drop in cash, but the real drag did not come from the office lease reset. It came from an operating loss and from consuming older customer advances that had helped fund the prior year.
What This Follow-up Isolates
The main article argued that Razor had already passed the order and backlog test in 2025, but not yet the ARR, cash and diversification test. This follow-up isolates only the cash layer: where cash actually burned in 2025, and how much of that burn came from the business itself versus the office lease reset.
That distinction matters because a fast reading of the report can blur three different numbers together: revenue doubled, lease liability fell from NIS 18.3 million to NIS 6.2 million, and the company booked a NIS 1.37 million gain from reducing right-of-use assets after deciding not to extend part of the office lease. The intuitive read is that the office footprint was both a large source of the problem and a large part of the solution. That is the wrong read.
The real cash decline came first from the operating engine itself. Razor finished 2025 with negative operating cash flow of NIS 16.9 million, after a NIS 16.9 million annual loss, higher inventory, and, just as importantly, a NIS 3.1 million decline in contract liabilities. In plain terms, the company was not only losing money while growing. It was also consuming part of the customer advances from the global customer that had helped finance 2024.
So the right frame here is all-in cash flexibility: how much cash was left after the period's actual cash uses. Within that frame, I treat lease burden through total lease-related cash outflow, which was NIS 3.881 million in 2025, rather than through lease principal alone.
The chart shows what the accounting headline can hide. Cash fell by NIS 20.1 million, and most of that path ran through operating cash flow. The office lease reset changed the liability structure going forward, but it did not explain the core cash outflow of 2025.
The Operating Burn Was Deep Even Before the Lease Story
Before working capital, the business was still burning cash
Negative operating cash flow of NIS 16.9 million did not come only from working capital movements. The annual loss was NIS 16.894 million, while non-cash add-backs contributed only NIS 4.188 million, including NIS 3.652 million of depreciation, NIS 1.091 million of net finance expense and NIS 754 thousand of share-based compensation, partly offset by the NIS 1.37 million gain on the reduction of right-of-use assets. That means that even before inventory, customer advances or receivables, the business itself was still burning roughly NIS 12.7 million.
That is the number to stop on. In 2025 Razor was still far from a point where growth funded itself. Licensing, implementation, hardware and truck-product development were enough to generate revenue, but not yet enough to support an expense base that paid for itself in cash.
| Operating cash flow bridge | 2025 | Why it matters |
|---|---|---|
| Annual loss | NIS 16.894 million negative | The starting point for the year's cash profile was still deeply negative |
| Non-cash items | NIS 4.188 million positive | These only partially offset the loss |
| Working capital movement | NIS 4.891 million negative | Burn deepened further, mainly through contract liabilities and inventory |
| Net interest and tax received | NIS 0.695 million positive | Only a small offset |
| Operating cash flow | NIS 16.902 million negative | This is the core burn of the year |
Customer advances stopped funding the year
The most important line inside working capital is contract liabilities. In 2024 that line increased by NIS 10.596 million and supported cash flow. In 2025 it declined by NIS 3.053 million and hurt cash flow. The move from a NIS 10.6 million inflow to a NIS 3.1 million outflow created a year-over-year swing of about NIS 13.6 million on its own. That explains a large part of the shift from near-breakeven operating cash flow in 2024 to a deep burn in 2025.
The contract note makes the point even sharper. During 2025 the company recognized NIS 19.604 million of revenue from amounts that had already been sitting in contract liabilities. At the same time, total contract liabilities fell to NIS 37.016 million from NIS 40.069 million, even though another advance was received near the end of 2025 for additional licenses and hardware. In other words, even after fresh cash came in late in the year, revenue recognition consumed older advances faster than the company rebuilt them.
That matters because contract liabilities are effectively customer financing. When they rise, the customer is funding part of the rollout before revenue is recognized. When they fall, the company is recognizing revenue against cash that already came in earlier periods. So in 2025 part of the revenue headline also reflected the use of a funding cushion built in the past.
There were other working-capital drags as well, but they were secondary relative to this line. Inventory rose by NIS 1.868 million, trade receivables and accrued income rose by NIS 332 thousand, and other receivables rose by NIS 299 thousand. Suppliers increased by NIS 797 thousand and partly offset the hit. Even without the contract-liability story, though, 2025 was still a year in which the business needed more cash to carry hardware, implementation and delivery.
The Office Lease Reset Helped the Future, Not 2025 Cash
The office decision was real, but it has to be put in the right place. On June 30, 2025 Razor decided not to exercise the extension option on part of the office leases signed in March 2021. As a result, it reduced lease liability by NIS 8.88 million, offset NIS 7.51 million against the right-of-use asset until that asset was fully written down, and recorded NIS 1.37 million in other income. In December 2025 the company also signed a new sublease agreement for 460 square meters, under which NIS 2.227 million was reduced from finance lease receivables and an additional gain of about NIS 37 thousand was recognized.
At the balance-sheet level, this was a meaningful reset. Total lease liability fell to NIS 6.174 million from NIS 18.278 million. In the liquidity table, undiscounted lease commitments fell to NIS 6.505 million from NIS 20.230 million, with NIS 2.35 million due within one year and NIS 4.155 million due over the following two to five years. So Razor did materially shrink its future office burden.
But anyone looking for the explanation behind the 2025 cash burn has to focus on what did not improve. Total lease-related cash outflow was NIS 3.881 million in 2025, versus NIS 3.755 million in 2024. Lease principal repayment was NIS 3.409 million and lease interest was NIS 472 thousand. In other words, the big relief from the office reset showed up first in the balance sheet and in reported profit, and only later, if at all, can it show up as real cash support.
That is the key distinction. The office reset was primarily a move that reduced future fixed obligations and shrank the lease footprint. It was not the main driver of the NIS 20.1 million cash decline in 2025, and it was not the reason operating cash flow deteriorated. If anything, in 2025 it mostly softened the accounting rather than the cash balance.
What Has to Change for the Cash Read to Improve
The less urgent part of the story is that there is no immediate financing wall here. Working capital remained positive at NIS 16.312 million, and in the liquidity note management says that based on the 2026 to 2027 budget and cash flow forecast, together with existing backlog, the company has enough cash for at least the next 12 months. In the financial instruments note, the interest-bearing layer is essentially lease liability rather than bank debt.
But that does not make the story clean. It simply moves the test. The real question is no longer whether Razor can get through the year. It is whether 2026 will start giving back what 2025 burned. Three signs matter most:
- Whether the truck rollout and the ongoing deployments with the global customer generate fresh advances and collections that stop contract liabilities from shrinking.
- Whether operating cash flow improves even without another accounting gain from lease adjustments.
- Whether inventory and implementation stop consuming cash faster than licenses convert into revenue and collections.
Bottom Line
Where did the cash really burn in 2025? First in the business, only then in the office footprint. Razor burned cash because the operating loss remained deep, because inventory and implementation kept using working capital, and above all because the company recognized revenue against advances it had received in the past from the global customer instead of building a new, thicker layer of customer funding in 2025. The office lease reset helped shorten future obligations and improve part of the reported operating picture, but it barely changed the cash reality of the year itself.
That makes the follow-up conclusion sharper than the one in the main article: Razor's 2025 problem was not office real estate. It was conversion economics. Until the company shows that backlog and new rollout are producing fresh advances, real collections and a better operating cash profile, the lease reset remains an important structural fix, not proof that cash burn has actually been contained.
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