Parkomat in 2025: Cash Flow Improved, but Profitability Still Has Not Normalized

Introduction to the Company

Parkomat is not a software company and it is not a classic serial manufacturer. It is a project business that sells design, supply, installation, and service for mechanical and robotic parking systems, mainly to real-estate developers, contractors, and municipalities. That is why the key question here is not just how many projects were signed. It is how those projects are priced, when they move into installation, how much cash they bring in upfront, and how much cash is still truly free after guarantees and leases.

What is working now is clear. 2025 looked materially better than 2024 on most core operating lines. Revenue rose to ILS 71.2 million, gross profit increased to ILS 9.0 million, and gross margin improved to 12.7% from 4.9% a year earlier. Operating cash flow turned positive at ILS 6.6 million after negative ILS 7.1 million in 2024. The company also completed the Bograshov project in Tel Aviv, ended the year with backlog of ILS 142.3 million, and by the time the annual report was published backlog had already risen to ILS 151.6 million.

What is still not clean matters just as much. Profitability has not yet returned to normal, and backlog recovery is not the same thing as margin recovery. Gross margin of 12.7% is a major improvement, but it is still well below the 17.4% recorded in 2023. The service and maintenance activity, which can look at first glance like a stabilizing recurring revenue layer, remained gross-loss-making in 2025. At the same time, management continues to present a charging, storage, and microgrid innovation story, but at this stage that story is still built on pilots, memoranda of understanding, and a few hundred thousand shekels of development spend, not on a proven commercial engine.

That is the bottleneck. Parkomat has already shown that it can return to growth after a weak war-affected year. It still has to prove that this recovery can translate into more stable gross margins and into cash generation that does not depend too heavily on receivable release, customer advances, and bank-guarantee mechanics. So 2026 currently looks less like a breakout year and more like an operating proof year. The company has to show that installations continue to flow, that margins move back toward a healthier range, and that the innovation arm advances from demonstrations into measurable commercial revenue.

There is also an actionability constraint worth stating early. On the latest market snapshot the share traded at about 418.2 agorot, implying a market value of roughly ILS 65 million on 15.54 million shares outstanding. Daily trading value that day was only ILS 55 thousand. Short positioning is negligible, so there is no sharp external market signal here. Investors are dealing with a small and not especially liquid company that still has to re-prove earnings quality.

The Economic Map

The company formally reports one operating segment, but economically it has three distinct layers:

At the report date the company had 73 employees, and 75 near publication. It states that it has no dependence on a single employee, no dependence on a single supplier, and no dependence on a single customer. Still, like most project businesses, concentration never fully disappears. It simply changes form. It moves from one oversized customer into a mix of cost estimates, advances, suppliers, subcontractors, and execution timetables.

This chart helps frame the story correctly. Even in 2025 Parkomat was still first and foremost a robotic parking company. Robotic systems generated ILS 60.1 million, about 92.3% of product revenue, while mechanical systems contributed only ILS 5.05 million. Any discussion about charging, storage, or adjacent products has to begin with whether the core robotic business itself is recovering profitability.

Events and Triggers

Trigger one: 2025 closed out the Bograshov project, and that matters for more than one reason. Ahuzot Hahof, the customer behind the public project in Tel Aviv, fell from 27.5% of company revenue in 2023 to 5.1% in 2024 and only 1.2% in 2025. On the positive side, that reduces exposure to one exceptional project and one oversized customer. On the negative side, it also removes an unusual revenue and profit anchor from the comparison base. So 2025 has to stand on a broader portfolio rather than on one outsized win.

Trigger two: year-end backlog dipped slightly, but that does not tell the full story. At the end of 2024 backlog stood at ILS 149.2 million. At the end of 2025 it stood at ILS 142.3 million, down 4.6%. On the surface that can look like moderation. But near the publication date backlog had already recovered to ILS 151.6 million, above the 2024 year-end level. Anyone looking only at the formal year-end figure risks missing that new project intake had already resumed by the time the report was signed.

Backlog matters here for two reasons. First, it is about 2 times 2025 revenue, so the work base exists. Second, its recognition profile is reasonably balanced across 2025, 2026, and a growing 2027 layer. That means the business is not living only off the next few months. It also means that margin quality and execution discipline now matter across a wider time horizon.

Trigger three: in December 2025 the company signed a material contract with Pivko Bat Yam, part of the Aura group, for the design, supply, and installation of a 124-space robotic parking system for ILS 7.936 million. Execution is expected to run through the fourth quarter of 2027, and by the time the annual accounts were approved the design phase had already been completed. This matters because it adds signed work and comes from a meaningful urban-renewal developer. Still, it remains one project. It supports the reading that backlog is recovering, but it does not by itself prove margin normalization.

Trigger four: management expanded the logistics layer. In February 2025 the company leased storage space and an adjacent logistics yard in Netzer Sireni for roughly ILS 53.5 thousand per month through January 2028. In parallel, right-of-use assets rose to ILS 4.425 million and lease liabilities rose to ILS 4.526 million. The logic is straightforward: the company wants to handle more projects and improve its logistics chain. But every move like this helps one layer and strains another. It may improve future operating capacity, while also adding fixed commitments and lease-related cash use.

Trigger five: the innovation arm produced several interesting datapoints in 2025, but still not commercial proof. The company took part in an energy-backup pilot for Netivei Israel, installed its first energy-backup product in the One Ha’am 13 project, demonstrated a mobile charging-and-storage solution in September 2025, and kept advancing its cooperation threads with GO EVE and SERAPID. All of that supports the view that management is trying to build a real option. None of it yet proves a second profit engine.

Efficiency, Profitability and Competition

The main insight is that 2025 was a recovery year, but not a normalization year. Revenue rose 7.2% to ILS 71.2 million. Gross profit rose 175% to ILS 9.0 million. Operating loss narrowed sharply to only ILS 1.07 million from ILS 6.19 million in 2024. Management links the improvement to a moderation in war-related disruption, better project execution progress, and lower installation costs versus the previous year. That explanation is plausible. But anyone stopping at the word recovery misses two important points: margins are still below the 2023 level, and selling expenses almost doubled.

The company has not yet returned to a margin level that would justify calling the story clean again. Gross margin was 17.4% in 2023. In 2025 it was far better than 2024, but still 4.7 percentage points below that earlier level. In a small fixed-price project company, that gap is material.

What Really Drove the Improvement

The project layer recovered. Project revenue rose to ILS 65.2 million from ILS 62.2 million, but more importantly, project gross profit jumped to ILS 10.1 million and project gross margin improved to 15.5% from 8.7% a year earlier. That means the recovery was not just top-line. It reached the execution layer itself.

By contrast, service and maintenance continue to look weaker than the recurring-revenue label suggests. Revenue in that line increased to ILS 5.98 million, but service cost reached ILS 7.05 million. That means the activity still generated a gross loss of ILS 1.07 million in 2025. It is better than the ILS 2.12 million gross loss in 2024, but it is still not a profit layer.

That number is crucial for understanding earnings quality. Service does give the company a longer customer relationship and an after-delivery footprint. It still does not act as a gross-profit cushion. So the growth in service revenue should not be read as if the company has already built a recurring-margin layer that stabilizes the business. For now it is better read as a support function that may improve over time, but still does not absorb project volatility.

Operating Expenses Still Signal a Transition Year

Selling and marketing expenses rose to ILS 1.714 million from ILS 895 thousand, almost double. The company ties that to hiring in that department and to the development of new products. General and administrative expenses actually declined slightly, to ILS 8.214 million from ILS 8.516 million. That matters because it means the company did not simply lose cost control at the corporate level. It chose to spend more in the commercial and development layers.

That supports the idea of 2025 as a transition year. Management is trying, at the same time, to re-stabilize the core business, rebuild future backlog, and invest in adjacent growth options. That may work. It also explains why the company still did not fully cross into operating profitability despite the sharp gross-margin recovery.

Competition Is Not Easing

Parkomat presents itself as a one-stop shop for urban-renewal parking solutions, with a broad robotic and mechanical offering. It estimates its overall market share at around 20%, and somewhat higher in robotic systems. That matters, but it also has to be read together with the friction that remains open. The company itself describes a more competitive market, with larger players such as Electra Parking Solutions alongside the Comtal group and Parkomot. In plain terms, margin recovery is happening inside a market where commercial pressure has not disappeared.

This is why 2025 should not be read as a simple return to normal. The new normal still includes more competition, continued dependence on accurate project costing, and the need to keep improving the product in order to defend price.

Cash Flow, Debt and Capital Structure

The most important insight here is sharper than the bottom line. Parkomat ended 2025 with a small net loss of ILS 275 thousand, but operating cash flow of ILS 6.642 million. That did not happen because the company suddenly became a strong cash machine. It happened mainly because customers and contract receivables fell by ILS 12.684 million, faster than contract liabilities declined, which reduced operating liabilities by ILS 6.723 million. In other words, 2025 benefited from working-capital release.

That needs to be read carefully. The positive operating cash flow is real, but it does not come only from structurally stronger profitability. It also comes from collection timing and project progression that released receivables and contract assets. If 2026 brings another round of backlog expansion and deeper entry into early execution phases, the same working-capital mechanics can easily run the other way.

The Right Cash Picture

In all-in cash flexibility terms, the picture is more constrained than the headline cash number suggests. At the end of 2025 the company held ILS 21.946 million in cash and cash equivalents. That looks comfortable. But it also had ILS 27.659 million of pledged deposits securing customer guarantees, and outstanding customer guarantees of ILS 46.832 million. In other words, a meaningful part of Parkomat’s operating model depends on customer advances that are effectively recycled through bank guarantees backed by restricted deposits.

That is the core financing story. Parkomat is barely bank-levered. At year-end 2025 it had only a tiny bank loan of ILS 97 thousand. Instead of a classic debt-heavy story, this is a project-working-capital model built on advances, guarantees, pledged deposits, and milestone collections. That can be a healthy structure. It also means not every shekel that looks like liquidity is really fully flexible cash.

Finance Expense Is Not the Main Problem, but Leases Still Matter

Finance income in 2025 was ILS 1.9 million, mainly interest on bank deposits. Finance expense was ILS 972 thousand. This is not a debt story. Still, lease obligations create a fixed layer that matters. In 2025 the company repaid ILS 1.289 million of lease liabilities, and lease liabilities rose to ILS 4.526 million because of new agreements, mainly the warehouse and vehicles.

Another nuance is important. The company says it purchased roughly EUR 6 million from overseas suppliers in 2025, with a lag of 5 to 12 months between ordering and payment. So economically it is clearly exposed to the euro. Yet the year-end currency-sensitivity table shows essentially no impact from a 10% euro move on profit or equity in 2025. That is not a contradiction. It simply means the open balance-sheet exposure at December 31, 2025 was minimal, even while the business remained exposed to foreign-currency procurement economics and shipping costs.

Outlook and What Comes Next

Four non-obvious points should shape the 2026 read:

• Profitability recovered, but most of the improvement came from the project layer, not from service.
• Operating cash flow turned positive, but it was helped by receivable release rather than by clean earnings power alone.
• The charging and energy threads moved forward in development, but have not yet crossed into real commercialization.
• The financing model still depends on customer advances and guarantee machinery, not on a large pool of genuinely free cash.

2026 Looks Like an Operating Proof Year

Parkomat does not need to prove demand exists. It needs to prove that demand can be turned into more normal margins again. Near the report date, backlog had already recovered to ILS 151.6 million, with ILS 62.75 million expected to be recognized in 2026 and ILS 27.646 million in 2027. That is enough to support cautious optimism. It is not enough to assume margins will normalize automatically.

The reason is simple. Management explicitly highlights exposure to raw-material inflation, component shortages, project-cost estimation risk, and fluctuations in the pace of new orders and execution. The market is also more competitive. So even if work volume stays healthy, the real 2026 test is not revenue alone. It is the quality of that revenue.

The Innovation Story Is Still Far from the Core Economics

This is where the market can easily get ahead of the evidence. The company speaks about fast charging, storage, energy backup, and microgrids. It established a dedicated subsidiary, Jupiter EV, but that subsidiary had not yet started operations by the report date, and early-stage development is still being carried out inside the parent company. During 2025 the company spent ILS 429 thousand on smart-charging solutions and the PowerUp system, and it expects to spend about ILS 1 million more over the next 12 months, possibly more through a capital raise.

That is exactly the point that needs discipline. What is being built here is a potentially interesting strategic option, not a mature second profit engine. If these efforts turn into contracts, the company may broaden itself from parking systems into a wider urban-infrastructure platform. If they do not, this will remain a layer of development cost and complexity.

What Has to Happen in Practice

The company has to prove three things in parallel.

First, that new backlog continues to convert into revenue without returning to severe margin pressure. Second, that service and maintenance at least move closer to breakeven rather than remaining a standing loss layer. Third, that the innovation arm moves from pilots and demonstrations into a measurable commercialization path.

The right label for 2026 is therefore an operating proof year. Not a reset year, because 2025 already showed a real improvement. Not a breakout year either, because two critical ingredients are still missing: core margin normalization and commercial proof outside the core.

Risks

Risk one is project-cost estimation. The company prices projects based on expected cost plus target margin, and it explicitly states that estimation errors can hurt profitability and even generate losses. In a small fixed-price project company, that is a core risk rather than a footnote.

Risk two is raw materials and FX. In 2025 the company purchased roughly EUR 6 million from overseas suppliers. At the same time, management directly links higher exchange rates, especially the euro, to higher raw-material and production costs and to pressure on gross margin. Even if year-end balance-sheet FX exposure was limited, contract economics are still exposed between order date and payment date.

Risk three is an external environment that is not simply about demand. The war, reserve-duty mobilization, import delays, and the end of direct trade with Turkey already hurt project deliveries and margin in the past. Management describes some moderation in 2025, but it also says it cannot reliably estimate the full effect of post-balance-sheet security developments.

Risk four is after-delivery execution quality. The company has several legal proceedings related to parking systems. In at least two major cases, the company argues that the underlying damage stemmed mainly from water infiltration and building defects rather than from the parking mechanism itself. In one case the claim was deleted after a compromise around an agreed expert, and in two other cases no provision was recorded because legal advisers assessed dismissal as more likely than acceptance. That is not enough to call this a systemic product-quality problem. It is enough to remember that service, warranty, and post-delivery friction can become a real economic burden in this type of business.

Risk five is the project nature of the business itself. The company explicitly states that a material share of its revenue comes from a limited number of significant, inherently one-off transactions. That means that even without dependence on one named customer, the business remains dependent on the pace and quality of new project wins.

Risk six is capital-markets practicality. A company with a market value of roughly ILS 65 million and daily turnover of only tens of thousands of shekels is not especially liquid. That is part of the thesis, not just a technical side note.

Conclusions

Parkomat exits 2025 in better shape than it entered it. Revenue recovered, gross profit came back, operating cash flow turned positive again, and the backlog near report publication already suggests that activity did not stall. But the story is still not clean: margins have not returned to normal, service is still not working as a profit layer, and the innovation arm is still far from being a proven second revenue engine.

Over the near term, the market is likely to focus less on the broad parking-charging-energy narrative and more on three much simpler questions: whether new projects are being executed without margin erosion, whether the advances-and-guarantees cycle keeps working in the company’s favor, and whether the positive 2025 cash flow was the start of a trend or simply a one-year working-capital release.

Current thesis in one line: Parkomat proved in 2025 that the business can return to growth and positive operating cash flow, but it still has not proved that core profitability has normalized or that the innovation layer has become more than an option.

What changed: after a weak 2024, the company returned to both revenue growth and a more reasonable gross-profit level, while its historical dependence on the Bograshov project and on Ahuzot Hahof almost disappeared.

Counter-thesis: one can argue that this reading is too cautious, because backlog has already started growing again, the company retains a solid competitive position in robotic parking, and the charging-and-energy efforts may yet become an additional growth engine over time. If so, 2025 may prove to be the start of normalization rather than merely a transition year.

What may change the market reading over the short to medium term: new contract wins or faster execution inside the existing backlog would strengthen the case that improvement is holding. On the other hand, if margins deteriorate again, if cash flow goes back to depending on working-capital release, or if the innovation arm requires fresh capital before showing commercial proof, the reading can reverse quickly.

Why this matters: in Parkomat, value is not determined only by how many parking spaces sit inside each project. It is determined by whether engineering know-how and signed backlog can be converted into margin, cash, and a service layer that does not consume the value on the way.

What has to happen over the next 2 to 4 quarters for the thesis to strengthen, and what would weaken it: the thesis improves if project gross margin keeps moving back toward pre-2024 levels, if service approaches breakeven, and if the innovation layer shows a first real commercialization marker. It weakens if backlog stays healthy on paper but continues to come with low margins, if procurement and shipping pressures return, or if new capital is needed for the innovation story before clear revenue evidence appears.