Meitav Trade in 2025: The client engine works, but profit quality still needs proof

Getting To Know The Company

Meitav Trade is not a bank, and it is not an investment house living mainly off asset-management fees. It is a retail brokerage platform whose economics rest on three very clear engines: how many new accounts it can bring in, how much trading and service activity those accounts produce, and how much spread income it can extract from client cash balances and the credit it extends. Anyone who looks only at the top line sees a record year. Anyone who reads a few more pages sees that the core question is no longer whether the acquisition engine works, but whether the larger client base is really turning into high-quality profit and accessible cash.

What is working is fairly obvious. In 2025 revenue rose 19.2% to NIS 223.3 million, operating profit rose 23.4% to NIS 91.4 million, and net profit rose 22.9% to NIS 59.3 million. Client accounts increased to 116.5 thousand from 88.7 thousand a year earlier, client assets rose to NIS 41 billion, and the fourth quarter alone reached a record NIS 60.6 million of revenue and NIS 15.8 million of net profit. This is no longer a company still looking for basic product-market proof. The client engine clearly works.

But the picture is still not clean. Average revenue per client fell to NIS 2,095 from NIS 2,295 in 2024, mainly because average financing revenue per client dropped to NIS 762 from NIS 1,037. At the same time, the company acknowledged that during 2025 it sometimes allowed account opening below the normal minimum threshold, used friend-brings-friend campaigns, gift-stock promotions, and temporary waivers of handling fees, while continuing an aggressive push toward younger clients. That does not mean the onboarding wave is low quality. It does mean that not every newly added account carries the same economic value as a mature account.

There is also a layer that a superficial reading can miss: the cash balance looks fatter than the really deployable cash position. At year-end 2025 the company held NIS 92.3 million of cash and cash equivalents and another NIS 82.3 million of deposits, pledged cash, earmarked balances, and securities. On the surface, that looks like NIS 174.6 million of liquidity. In practice, NIS 72.4 million of the cash balance was surplus cash in trust accounts, NIS 49.9 million was held for the exchange clearinghouse risk fund, and another NIS 31.8 million was pledged for derivatives activity. That is the heart of the story. The company is producing more cash, but a large part of the balance sheet is not available to shareholders in the way the headline suggests.

That also sets the frame for 2026. The coming year looks like a proof year, not an automatic breakout year. The company now has to show that the bigger client base starts producing more service revenue per account, that weaker financing revenue per account does not erode earnings quality, and that the Meitav Brokerage transaction improves the mix instead of simply making the picture harder to read.

Events And Triggers

Client onboarding moved from growth story to scale engine

2025 was a record year for client acquisition. The company added 36.5 thousand new accounts on a gross basis and 27 thousand net, versus 30 thousand and 22.49 thousand respectively in 2024. Churn eased slightly to 10.5% from 11%, and the company states that the newer joiners are younger than the existing client base. In the fourth quarter alone, about 10,000 new accounts were added, another record.

That growth was not driven only by a general market tailwind. Behind the numbers there was a clear acquisition machine: digital campaigns, partnerships with content communities and opinion leaders, friend-brings-friend promotions, gift-stock campaigns, temporary waivers of handling fees, and client education efforts. In addition, an online identification system was embedded in December 2024, making fully digital onboarding possible at scale. 2025 was the first full year in which that infrastructure was live. The positive trigger is obvious: acquisition no longer looks opportunistic. It looks systematic.

The fourth quarter showed that momentum did not fade at year-end

Quarterly numbers matter here as much as the full-year totals. In the fourth quarter, service revenue rose to NIS 39.5 million, net financing revenue stood at NIS 21.1 million, and the company finished the quarter with NIS 24.4 million of operating profit and NIS 15.8 million of net profit. So even after the first nine months, the fee-and-services engine kept accelerating. That matters because the weakness in financing revenue per client did not crush the story. It changed the mix.

The Meitav Brokerage acquisition changes 2026, not 2025

On November 30, 2025 the agreement to acquire 82.47% of Meitav Brokerage was signed, and on February 2, 2026 the transaction was completed in exchange for 2,008,537 shares, equal to about 4.34% of the company’s share capital at completion. According to the transaction documents, Meitav Brokerage’s value at the cut-off date was updated to NIS 51.145 million, and the company frames the deal as one that adds new growth engines, broadens the client profile, and deepens collaboration around clearing and custodian services that were already being provided.

The implication for investors is straightforward. The 2025 report still reflects almost entirely the legacy retail platform. 2026 will be the first year in which the institutional brokerage layer really enters the numbers. That is both positive and risky. Positive, because it may diversify revenue sources. Risky, because it adds dilution, sharpens the related-party angle, and forces the market to separate organic growth from growth purchased in a controlling-shareholder transaction.

Profit distribution remained aggressive

The company’s dividend policy commits it to distributing at least 75% of net profit. During 2025 it declared and paid cumulative dividends of 110 agorot per share, equal to about NIS 46.8 million net. After the balance-sheet date, on March 16, 2026, it approved another dividend of about NIS 13.9 million. That signals confidence, but it also reminds investors that the company does not retain most of its profits at the top layer.

Efficiency, Profitability, And Competition

The main insight is that profitability improved for real, but not as cleanly as the headline suggests. Operating profit rose by NIS 17.3 million to NIS 91.4 million, while cost of services and operations rose by only NIS 18.8 million against an added NIS 35.9 million of revenue. That is clear operating leverage. But to understand what really improved, the move has to be broken into price, volume, and mix.

Volume was up sharply, but money per client did not rise with it

The company increased revenue from exchange and trading services by NIS 39.7 million, or 39.4%, and that bucket now represents 61% of total revenue versus 52% in 2024. That is healthy because it means more of the economics comes from execution fees, market activity, and ancillary services rather than simply from the rate environment.

But the picture looks less celebratory at the client level. Service revenue per client increased to NIS 1,333 from NIS 1,258, which is a solid gain. On the other hand, financing revenue per client dropped to NIS 762 from NIS 1,037. The result is that total average revenue per client fell to NIS 2,095 from NIS 2,295. So the company is bringing in more clients, but it is not yet proving that each new cohort carries the same economic value as the older base.

That decline is not random. The company itself explains that financing revenue weakened because of lower rates and lower interest-bearing assets per client. Average interest-bearing assets fell to NIS 2.43 billion from about NIS 2.5 billion in 2024, and average net interest spread fell to 2.89% from 2.98%. That means the business is less singularly rate-driven than before, but it also means the new growth wave is coming with a monetization base that still has to mature.

Profitability also got help from accounting timing, not only from operations

This is one of the least obvious points in the report. In the fourth quarter of 2024 the company began capitalizing deferred acquisition costs relating to client recruitment through distributors and internal marketers. In 2025 it added NIS 8.806 million to that asset and amortized only NIS 1.05 million. The deferred acquisition-cost balance reached NIS 9.54 million net at year-end, versus NIS 1.784 million at the end of 2024.

That does not mean the profit is fake. It means part of the acquisition cost left the cash line today without hitting the 2025 expense line with the same force. The cash-flow statement supports that reading: the change in deferred acquisition costs reduced operating cash flow by NIS 7.756 million. This matters. If you look only at operating profit, you see clean operating leverage. If you also look at the balance sheet and cash flow, you see that part of the improvement also comes from delayed expense recognition.

This is a listed company, but the operating platform still runs through the group

Another point that is easy to miss is that Meitav Trade is not running as a fully independent operating unit. As of the report date, neither the company nor Meitav Trade employed workers directly. The parent company provides the full services required for operations, including management, operations, HR, finance, legal, risk, and internal audit. For those services, the company paid NIS 76.4 million of management fees to the parent in 2025, versus NIS 66.2 million in 2024, under a cost-plus-4.3% structure.

That is not a technical footnote. It means a large part of the cost base, operational flexibility, and future synergy story with Meitav Brokerage sits inside relationships with the controlling shareholder. That is exactly why every “value-creating” narrative around expansion needs to be tested at the public-company layer, not only at the business-unit layer.

Competition is still very much alive, and banks got more aggressive in 2025

The company states explicitly that competition from banks intensified in 2025, partly through lower fees for private clients and more focused marketing toward target segments, especially younger investors. Meitav Trade tries to offset that through competitive fees, attractive FX pricing, more complex trading capabilities, leverage, options, futures, and a strong digital offering. The app already passed 244 thousand downloads, and in 2026 the company plans to complete a new Web trading site, add fractional trading, standing orders, immediate deposits, and more AI-based tools.

The problem is that price competition does not disappear just because the app is good. It can still eat into the benefit of client growth if the higher-value parts of the business, especially financing income, FX, and more advanced activity, do not keep pace.

Cash Flow, Debt, And Capital Structure

When the business is read through a cash lens, this has to be framed as all-in cash flexibility, not just accounting profit. On that measure, 2025 looks good, but with two important caveats: cash flow benefited from balance-sheet movements as well, and gross liquidity includes layers that are not truly free.

Operating cash flow jumped to NIS 90.6 million from negative NIS 17.8 million in 2024. That is a sharp improvement, driven by higher profit, a modest decline in client credit, changes in exchange-clearing balances, movements with related parties, and partly offset by the increase in deferred acquisition costs. Investing cash flow was also positive, at NIS 13.0 million, mainly from realization of securities and deposits. Against that, financing cash outflow was NIS 33.8 million, mainly reflecting NIS 46.8 million of dividends and NIS 7 million of capital-note repayment, partly offset by a NIS 10 million parent-company loan and NIS 10.0 million of proceeds from option exercises.

The more important point is what should not be inferred from those numbers. Year-end 2025 showed NIS 92.3 million of cash and cash equivalents and NIS 82.3 million of deposits, pledged cash, earmarked balances, and securities. But NIS 72.4 million of the cash balance represented surplus funds in trust accounts, NIS 49.9 million was held for the clearinghouse risk fund, and NIS 31.8 million was pledged to a banking corporation for derivatives activity. So the NIS 174.6 million headline should not be read as fully free corporate cash.

That said, this is still not a near-term funding-pressure story. Working capital rose to NIS 173.8 million from NIS 148.1 million, equity rose to NIS 174.1 million from NIS 151.2 million, and the direct related-party loan stood at only NIS 10 million. The company also states that Meitav Trade meets the exchange’s minimum capital requirements, which stood at about NIS 133 million at the reporting date, and in early 2026 it both issued another NIS 2 million of capital notes to the company and repaid the remaining interest-bearing capital notes to the parent.

The more updated point sits in capital returns. The company distributes at least 75% of net profit and in fact already paid about NIS 46.8 million in 2025, while approving another NIS 13.9 million after the balance-sheet date. So the right read is not “there is huge excess cash.” It is “there is a profitable business with good flexibility, but a large share of the liquidity is operationally or regulatorily tied, and management chooses to distribute a large share of profit.” That is a much more accurate frame.

Forward View

Five non-obvious findings should lead the 2026 read:

• 2025 proved that the company can build scale, but not yet that the scale lifts total revenue per client.
• The weakening engine was not trading, but client monetization through financing revenue per account.
• Profitability improvement also benefited from deferred acquisition-cost capitalization, so cash flow matters here almost more than the income-statement headline.
• The cash balance looks strong, but much of it sits in trust accounts and regulatory collateral, not at the shareholder layer.
• The Meitav Brokerage deal will add a new engine in 2026, but it will also complicate the base of comparison and force the market to separate organic progress from purchased growth.

The company lays out a clear 2026 direction: continued revenue growth from existing and new clients, a broader product set, wider use of online identification, a new trading website, more AI tools, fractional trading, standing orders, immediate deposits, and even exploration of payment-services licensing and adjacent activities. All of that sounds good, but 2026 will not be decided by the feature list. It will be decided by two much harder tests.

The first test is monetization of the larger client base. If 2026 shows service revenue per client continuing to rise while the decline in financing revenue per client stabilizes or is offset by more trading activity, the company can begin to claim that the aggressive client-acquisition push of 2024 to 2025 is turning into higher-quality earnings. If total revenue per client keeps falling, 2025 will look more like purchased volume than like durable profit formation.

The second test is integration of Meitav Brokerage. The transaction is supposed to diversify revenue sources, deepen an already-existing service relationship, and add institutional and qualified clients. But it will also be judged through dilution, valuation, and the ability to show that the institutional brokerage layer improves the mix without weakening the margin profile or obscuring the economics of the legacy retail business.

That is why 2026 looks like a proof year rather than an automatic breakout year. The company no longer has to prove demand. That is already visible. It has to prove that demand is becoming more profitable per client, that rate sensitivity does not re-emerge as the main bottleneck, and that the group transaction really creates accessible value for public shareholders.

Short-Interest Read

Local short-interest data does not point to an aggressive bear positioning against the stock. On March 27, 2026 the short position stood at 45,964 shares, SIR stood at 1.07, and short float was 0.45%. Even against the sector average, 1.833 SIR and 1.29% short float, this is a moderate setup.

The more interesting point is direction. At the start of 2026 short positioning was higher, and it eased through the first quarter. The sensible reading is that the market sees real questions around earnings quality, accessible cash, and the Meitav Brokerage deal, but is not building a crowded bearish case. That matches the fundamentals: a company with strong growth and several quality layers still waiting for proof, not a company the market reads as being under acute financial stress.

Risks

The first risk is further erosion in revenue per client. If rates fall further, and if new clients remain smaller or less active than older cohorts, the company may keep growing accounts and assets without rebuilding the same level of economics per account.

The second risk is earnings quality versus cash. Deferred acquisition costs already expanded materially in 2025, and the company explicitly states that recoverability of that asset is examined every reporting period. As long as onboarding stays strong, the pressure to keep shifting part of the cost base into the balance sheet will remain part of the story.

The third risk is dependence on infrastructure and related parties. The company has no direct employees, pays NIS 76.4 million of management fees to the parent, and is materially dependent on the technology vendor FMR, to which it paid NIS 29.15 million in 2025. It also depends on foreign brokers and custodians such as ViewTrade and Interactive Brokers for overseas trading. None of this is abnormal for the sector, but it is very much a real dependency layer.

The fourth risk is operational and legal risk. During 2025 class actions were filed around the March 2025 trading outage, and after the balance-sheet date another claim was filed regarding interest charges on overdraft balances. Even if the claimed amounts do not threaten the balance sheet, this is a business built on trust, uptime, and regulatory compliance.

The fifth risk is competition and pricing pressure. The company itself writes that competition from banks intensified in 2025. When banks lower fees, push marketing, and target younger clients, Meitav Trade has to respond through price, promotions, and a broader service bundle.

The sixth risk is integration of a controlling-shareholder transaction. Meitav Brokerage is supposed to improve the revenue mix, but it also sharpens governance questions, group dependence, and the need to prove that value created by the acquisition actually reaches Meitav Trade shareholders rather than only widening the narrative.

Conclusions

Meitav Trade ends 2025 as a much stronger retail brokerage platform than the one that entered the public market. The client engine works, the share of trading and service income increased, and operating profit rose faster than revenue. At the same time, the report also shows that the story is still not clean: total revenue per client fell, part of the acquisition cost migrated into the balance sheet, and a large share of balance-sheet liquidity is not truly free. The market will now measure less the raw account count and more the quality of the money each account produces.

Current thesis: 2025 proved that Meitav Trade can build scale, but 2026 will have to prove that the scale is translating into higher-quality earnings and more accessible value for shareholders.

What changed versus the older read of the company: Meitav Trade is no longer only a story of client acquisition and rate tailwinds. In 2025 the fee-and-services component became more central, and the company enters 2026 with the Meitav Brokerage transaction adding a new engine. What remains unresolved is how much money each new client is really worth, and how much of the balance-sheet cash is actually deployable.

Counter thesis: One can argue that this read is too cautious because the company already delivered record onboarding, record profit, and a record fourth quarter, so even if revenue per client weakened temporarily, the larger client base, product expansion, and Meitav Brokerage addition should be enough to push earnings higher. That is a legitimate view, but it assumes that revenue per client stabilizes and that 2025 earnings did not lean too heavily on deferred costs and a supportive market window.

What could change the market reading in the short to medium term: the first report that includes Meitav Brokerage, the trajectory of service revenue per client, the behavior of financing income in a lower-rate backdrop, and the ability to keep returning capital without shrinking the safety buffer too much.

Why this matters: this is the exact point at which a brokerage platform has to move from a quantity story to an economic-quality story. If that transition works, the company starts to look more like a mature financial platform and less like a business benefiting from a favorable market window.

The next 2 to 4 quarters require three things if the thesis is to strengthen materially. Service revenue per client has to keep rising, financing revenue per client has to stabilize or weaken more slowly, and Meitav Brokerage has to enter the numbers without leaving investors feeling that the company bought growth at the expense of clean economics. If one of those pieces fails, the market will return very quickly to the simpler question: not how many clients were added, but how many of them are really worth something.