Ace On-line: Why Revenue Looks Weaker Than Profitability
Ace on-line reported revenue fell to NIS 118.1 million in 2025, but merchandise turnover barely moved, marketplace and franchise mix rose to 45% of turnover, and segment EBITDA still improved. This is a real economic gap: more activity is being booked net as commission income and less as full gross sales.
What This Follow-Up Isolates
The main article already made the broader point: Multi Retail enters 2026 with a cleaner balance sheet, but the stores still have to prove demand. This follow-up does not revisit the whole company. It isolates one narrower question: why Ace on-line looks as if it is stalling on the revenue line in the very year when its economics improved.
Three numbers organize the story immediately. Ace on-line reported revenue fell in 2025 to NIS 118.1 million from NIS 123.5 million, a decline of 4.4%. Merchandise turnover fell much less, to NIS 179.3 million from NIS 182.4 million, only a 1.7% decline. In the same year, gross margin improved to 48.3% from 47.0%, and segment EBITDA excluding IFRS 16 rose to NIS 15.9 million from NIS 15.2 million.
That is not a contradiction. It is the whole point. A larger share of Ace on-line activity is now running through franchisees and marketplace partners. As that share rises, more of the turnover is recorded net as commission income and less is recorded gross as full product sales. The revenue line therefore looks weaker than the underlying economics.
The same pattern remained visible in the final quarter. Ace on-line turnover fell 3.3% to NIS 50.7 million, yet segment EBITDA excluding IFRS 16 still rose to NIS 3.9 million from NIS 3.8 million. So this is not just a full-year quirk. It is the right way to read the segment.
| Metric | 2024 | 2025 | Why it matters |
|---|---|---|---|
| Reported revenue | NIS 123.5m | NIS 118.1m | This is the line that looks weak at first glance |
| Merchandise turnover | NIS 182.4m | NIS 179.3m | The underlying economic activity barely moved |
| Gap between turnover and revenue | NIS 58.9m | NIS 61.3m | More activity is no longer being booked as gross sales |
| Franchise and marketplace share of turnover | 42.4% | 45.0% | Mix shifted harder toward net-recorded activity |
| Marketplace turnover as share of segment activity | 40.7% | 43.4% | Even inside the segment, the lighter model gained weight |
| Gross margin | 47.0% | 48.3% | Each shekel of revenue became more profitable |
| Segment EBITDA excluding IFRS 16 | NIS 15.2m | NIS 15.9m | Profitability improved despite softer reported revenue |
| Click and collect rate | 55.0% | 55.8% | The site still feeds the stores |
| Add-on purchase rate at pickup | 30.4% | 28.4% | The synergy remains real, but it is not strengthening automatically |
Why The Revenue Line Misleads Here
To understand the gap, start with one accounting rule. When the company acts as an agent or arranger and the promise to the customer is to organize for goods to be supplied by another party, revenue is recorded on a net basis. Only when the company is the principal, carries inventory risk and sets the final customer price, is revenue recorded on a gross basis.
Once that rule is applied to Ace on-line, the picture becomes coherent. In 2025, the franchise and marketplace share of turnover rose to 45.0% from 42.4% in 2024. Marketplace turnover alone rose to NIS 77.6 million, equal to 43.4% of segment activity, from NIS 74.3 million and 40.7% a year earlier. That is exactly the kind of activity that can support turnover without sitting on the revenue line in the same way.
This is why reported revenue fell by NIS 5.4 million while turnover fell by only NIS 3.1 million. It is also why the gap between turnover and revenue widened to NIS 61.3 million from NIS 58.9 million. Anyone reading Ace on-line through revenue alone is increasingly reading recognition mechanics rather than economics.
There is another clue that this is not simply a clean demand problem. The number of transactions rose to 373 thousand from 365 thousand, while average ticket size fell to NIS 481 from NIS 499. In other words, the site processed more orders, only with a slightly smaller basket. That looks much more like a broader assortment and a lighter mix than like a sharp deterioration in activity.
What matters here is that margin improvement did not come only from accounting optics. Management itself explains that the 2024 and 2025 gross-margin improvement came from two engines together: a larger relative share of franchisees and marketplace suppliers, and better commercial terms with suppliers. So this is not just a reporting effect. It is also a shift in the segment’s economic structure.
Why This Helps Profitability, Working Capital And Store Traffic
The mix shift does two things at once. First, it improves margins. In 2025, Ace on-line gross profit was almost flat at NIS 57.1 million versus NIS 58.0 million in 2024, despite a revenue decline of more than NIS 5 million. Operating profit before other expenses rose to NIS 12.8 million from NIS 12.3 million. That is what happens when more of the activity runs through commission-like economics and better supplier terms.
Second, and this matters just as much, the segment likely becomes lighter on working capital. When the company acts as agent rather than principal, it does not need to carry the same sale as full inventory and full cost of goods in the same way. The filings do not provide a standalone working-capital bridge for Ace on-line, so this cannot be quantified precisely at segment level. But the direction is clear: more turnover recorded on a net basis points to a segment that can look leaner on revenue while also looking better on margin and capital intensity.
This is also where many readers miss the store link. Ace on-line is not a standalone website sitting next to the store base. In 2025, 55.8% of customers in the segment, excluding marketplace transactions, chose click and collect from the physical stores. Of those pickup customers, 28.4% bought additional items in the store when they came in. The website is not just selling. It is also feeding store traffic.
There is still an important nuance. Click and collect edged up, but the add-on purchase rate fell from 30.4% to 28.4%. So the online-to-store synergy remained real, but it did not strengthen. Anyone building a thesis that Ace on-line will automatically become a stronger traffic engine every year gets a small but meaningful yellow flag here.
The broader message is that Ace on-line already accounts for almost 19% of group turnover, yet it does not need to look like a classic top-line growth engine to create value. It can hold or modestly grow turnover, look flatter on reported revenue, and still add more value to group profitability.
What The 2026 Budget Already Tells You
The 2026 budget says the Ace on-line story is about revenue quality first and revenue quantity second. Budgeted revenue rises to NIS 122.4 million, only 3.7% above 2025. That is not a breakout top-line plan. But in the same budget, gross margin improves to 49.4% from 48.3%.
Management’s own reasons for that improvement are very specific: better supplier trade agreements, a lower dollar versus the shekel, lower sea freight costs, and lower logistics cost after closing one of three warehouses. At the same time, selling and marketing expense stays almost unchanged as a share of revenue at 30.3% versus 30.2%, while G&A rises slightly to 6.4% of revenue from 6.0%.
That means Ace on-line does not need a large revenue jump in 2026 to improve. It needs to preserve mix, supplier terms and the leaner logistics structure. That reinforces the continuation thesis, but it also sharpens the best counter-thesis: part of the improvement depends on commercial conditions and a more favorable operating backdrop, not only on a permanently superior model.
| Metric | 2025 actual | 2026 budget | What it says |
|---|---|---|---|
| Revenue | NIS 118.1m | NIS 122.4m | Modest growth, not a breakout top-line year |
| Gross margin | 48.3% | 49.4% | Management is building first on cleaner revenue quality |
| Selling and marketing expense | 30.2% of revenue | 30.3% of revenue | No unusual efficiency assumption in marketing |
| G&A expense | 6.0% of revenue | 6.4% of revenue | The improvement is expected to come mainly from gross profit, not from overhead cuts |
Bottom Line
Ace on-line in 2025 looks too weak if you read only the revenue line, and stronger if you read the economics underneath it. Revenue fell 4.4%. Turnover fell only 1.7%. Franchise and marketplace mix rose to 45% of turnover. Gross margin improved to 48.3%. Segment EBITDA rose to NIS 15.9 million. This is not weakness. It is a move toward a lighter model that recognizes more activity net and less activity gross.
That means the dashboard for Ace on-line has changed. It matters less whether reported revenue grows quickly. It matters more whether turnover holds up, whether franchise and marketplace mix keeps supporting margins, whether gross margin remains high, and whether click and collect continues to push customers back into the stores for additional purchases.
The counter-thesis is not weak. If trade terms reverse, if the dollar strengthens again, if shipping costs rise, or if click and collect keeps generating fewer add-on purchases, then the gap between turnover and revenue will stop looking like smart optics and start looking like a ceiling. That is why 2026 will not be judged only on how much the site sold. It will be judged on whether this model can keep producing better profitability without losing commercial power on the way.
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