Pomvom: Can the new contracts really replace Merlin in gross profit
In 2025 Merlin was almost a business inside the business: about NIS 90.7 million of revenue and about 40% of Pomvom's gross profit. This follow-up shows that the replacement can come through a better mix, but not at the same speed and not on the same revenue frame that the headlines may suggest.
This is a gross-profit question, not a revenue question
The main article already pointed to the right issue: the hole left by Merlin should not be measured only through revenue. This follow-up isolates that question more tightly: can the new contracts replace Merlin in gross profit, even if they look nothing like Merlin in revenue, timing and cost structure.
The starting point is blunt. In 2025 Merlin generated about NIS 90.7 million of revenue for Pomvom, roughly 41% of total sales, and at the same time about 40% of total gross profit. Against total 2025 gross profit of NIS 37.2 million, that implies a gross-profit contribution of about NIS 14.9 million. That is the real hurdle. Not NIS 90.7 million of revenue, but almost NIS 15 million of gross profit.
That also says something important about the quality of the activity that is being lost. Merlin was not a weak tail that could be cut lightly. Its share of gross profit was almost the same as its share of revenue, so it is hard to argue that this was inflated volume with little economic value behind it. Any easy reading that the company is simply moving to "better contracts" still has to answer whether those better contracts can really rebuild that gross-profit layer quickly enough.
At the same time, it would also be wrong to demand a one-for-one revenue replacement. The filing itself explains that in the non staffed model Pomvom keeps a smaller share of site revenue, but usually earns a higher gross margin. So there is a real scenario in which the company does not close Merlin's revenue gap and still closes a more meaningful part of the gross-profit gap. That is the constructive case. The problem is that the proof is not there yet.
This chart does not settle the issue, but it sharpens the starting point. The company estimates expected annual revenue from the four newly disclosed agreements at NIS 14 million to NIS 20 million in a full year of activity, on a gross basis and before revenue sharing with partners. Even if one assumes the model quality is better, the story here is clearly not a simple revenue replacement story. It depends on mix, on rollout timing, and on how quickly non staffed sites actually translate into gross profit.
Why non staffed can replace more gross profit than revenue
This is where Pomvom's economics really sit. In 2025 the company operated 31 staffed sites and 14 non staffed sites. In its revenue-sharing table it shows that at staffed sites the partner typically receives 39% to 63% of revenue, while at non staffed sites the partner typically receives 70% to 83%. In other words, under the non staffed model Pomvom keeps a smaller slice of gross site revenue.
But the next section adds the crucial detail: at staffed sites, the added labor burden equals 20% to 30% of revenue, and management says the non staffed model is generally characterized by higher gross profitability. That is exactly why a simple top-line comparison is misleading. Pomvom records less revenue per site, but it also does not carry the labor layer at the point of sale.
| Model | Sites in 2025 | Partner share of revenue | Pomvom labor on site | Economic meaning |
|---|---|---|---|---|
| Staffed | 31 | 39% to 63% | Yes | Pomvom keeps a larger share of revenue, but also carries labor equal to 20% to 30% of revenue |
| Non staffed | 14 | 70% to 83% | No | Pomvom records less revenue per site, but management describes the model as higher gross margin |
The more interesting point is that the filing also admits the disclosure limit of this shift. The KPI set the company presents, average transaction value, conversion rate and spend per head, is measured only at staffed sites. For non staffed sites the company says explicitly that it does not have consistent visitor-count data. The implication is straightforward: the model that is supposed to replace Merlin more profitably comes with less operating transparency at exactly the stage when the market needs proof.
So the bullish argument is real, but it is still not proven. Yes, replacing staffed Merlin sites with non staffed sites could allow Pomvom to recover a larger share of gross profit than headline revenue would suggest. But as of year-end 2025, the reader still does not get a parallel operating dashboard for the new model. The proof will have to show up in reported numbers, not in an advance KPI bridge.
What is already inside the 2025 base, and what has not really started yet
One of the easiest mistakes in reading Pomvom is to count every contract announcement from 2025 and early 2026 as if it were still fully ahead. That is not the case. Some of the moves are already included in the 2025 base, so they are not fresh upside for 2026. Some are temporary. And another meaningful part only comes in gradually after Merlin is already gone.
| Move | Model | Timing | What it means for the replacement thesis |
|---|---|---|---|
| Four PRS parks in Sweden | Non staffed | Full commercial activity started in June 2025 | Already inside the 2025 base, so it cannot be counted as full new upside for 2026 |
| Universal Horror in Las Vegas | Staffed | Site opened in August 2025 | 2026 only gets a fuller-year effect, not a true zero-to-one launch |
| Six Flags revenue-share amendment | Staffed | Pomvom's share increased from March 3, 2025 | Supports 2026 economics, but it already improved the 2025 base |
| Harry Potter store revenue-share amendment | Staffed | Effective July 1, 2025 through December 31, 2025 | This was a 2025 benefit that disappears again from January 1, 2026 |
| Five European sites | Non staffed | Gradual commercial ramp in the first half of 2026 | A real Merlin replacement layer, but not one that arrives on day one |
| Three Majaland sites in Poland | Non staffed | Gradual commercial ramp in the second half of 2026 | Helpful for model quality, but too late to fill the early 2026 gap |
| Texas resort site | Staffed | Opening expected in June 2026 | Adds volume, but also reintroduces labor into the replacement mix |
| Port Aventura in Spain | Non staffed | Ended on January 31, 2026 | Generated about NIS 8.4 million in 2025 revenue, but management says the exit is not expected to affect profitability materially |
This chart deliberately ignores the Six Flags and Harry Potter revenue-share amendments, because those are not site launches but changes in the economics of existing locations. That matters because it separates headline flow from real incremental upside. Some of the headline wins were already counted in 2025, one of them reversed at the start of 2026, and the next wave of non staffed sites only arrives gradually.
That leads to a non-obvious conclusion: 2026 does not start from a clean slate. It starts with Merlin exiting during the second quarter, with the temporary Harry Potter uplift already gone, and with the replacement engines maturing only over the course of the year. So even if the final outcome of the shift ends up being good, the path there can be much less clean than the headline sequence suggests.
Where the replacement can work, and where caution is still needed
For gross-profit replacement to work, Pomvom does not need to recreate NIS 90.7 million of revenue. It does need to rebuild something closer to the roughly NIS 14.9 million of gross-profit contribution that is being lost, or at least cover a meaningful part of that gap together with expense adjustment. That distinction is critical.
There are two genuinely positive points here. First, two of the four agreements for which the company gives a revenue range are non staffed, and management itself describes that model as higher gross margin. Second, Port Aventura is a reminder that not every lost revenue line hurts gross profit equally. That site generated about NIS 8.4 million of revenue in 2025, ran without Pomvom labor, relied on print only, and management says the exit is not expected to affect profitability materially. In plain terms, even inside the current revenue base there is some volume that is not worth much in quality terms.
But three yellow flags need to sit next to that. First, the NIS 14 million to NIS 20 million revenue range from the four new agreements is gross, before partner sharing. So even that number is not equivalent to Pomvom-recognized revenue, and certainly not to gross profit. Second, only two of those four agreements are non staffed. So even inside the new replacement basket, half of the count still sits on a staffed model. Third, part of the higher-quality replacement only arrives in the second half of 2026, after the Merlin gap has already opened.
There is also an operating warning inside the staffed model that matters. In the United States, where Six Flags, Universal and the new Texas site sit, company revenue fell in 2025 to NIS 45.3 million from NIS 54.8 million. Over the same period average transaction value rose to $29 from $28, but conversion rate fell to 2.3% from 2.7%, and spend per head fell to $0.70 from $0.80. That is not a collapse, but it is also not a starting point that proves every new staffed agreement comes with an economic tailwind.
Europe looks better at the staffed-site level: revenue slipped only modestly to NIS 156.9 million from NIS 159.3 million, while average transaction value, conversion rate and spend per head all improved. That supports the idea that the company can extract more value per visitor. The problem is that the contracts that are really supposed to upgrade the margin mix in 2026 are mainly non staffed, and there the public KPI trail is still thin.
So the answer to the follow-up question is genuinely two-sided. Yes, the new contracts can theoretically replace Merlin in gross profit more effectively than a simple revenue comparison suggests. No, the filing still does not prove that outcome. In 2026 the market will need to see three things at once: Six Flags retaining better terms, the new non staffed sites ramping on time, and the new staffed sites not absorbing the margin benefit through their labor layer.
Bottom line
The right question for Pomvom after Merlin is not where another NIS 90 million of revenue will come from. The right question is whether the company can rebuild something like NIS 15 million of gross profit through a leaner, more digital and less labor-heavy model. That is possible. But as of year-end 2025, it is still a scenario that needs proof, not a conclusion that can already be claimed.
What supports the thesis is that Pomvom has clearly built itself a higher-quality contract layer, and two of the new agreements it emphasizes are non staffed. What weighs on it is that part of the benefit was already counted inside the 2025 base, the Harry Potter amendment expired, and part of the replacement will only appear gradually after Merlin has already rolled off.
So the 2026 test will be sharp. If gross profit holds up better than revenue, that will be real proof that the new model works. If not, the headline about "better-quality contracts" will turn out to have arrived ahead of the economics.
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