Follow-up on One Technologies: receivable sales sharpen the cash-conversion test
One Technologies' first quarter looks strong on profit and cash balance, but operating cash flow fell to NIS 86.4 million while derecognized customer receivables rose to about NIS 120 million. This is not a liquidity-stress story, but it is a warning flag on cash-conversion quality.
The first quarter from One Technologies reinforces the issue the main article already marked: the business keeps growing, but the quality test has moved from revenue and profit to the cash that sits underneath those headline numbers. This follow-up isolates one layer only, working-capital quality. On one side, the company ended March with NIS 688.4 million of cash and cash equivalents, or roughly NIS 697.5 million including the short-term deposit. On the other side, operating cash flow fell to NIS 86.4 million from NIS 138.8 million in the comparable quarter, while derecognized customer receivables sold to a non-related entity rose to about NIS 120 million. This is not a liquidity-pressure picture: the balance sheet remains strong, debt is low, and the business is profitable. But after the earlier cash-allocation analysis, the question is no longer just how much money sits in the treasury, but how much of it comes from ordinary collection and how much relies on accelerated cash, suppliers, and working-capital timing. The next proof point is a quarter in which operating cash flow stays strong without another rise in receivable sales and without unusual supplier-balance support.
The cash balance rose, but cash-flow quality is less convincing
The accounting numbers look good. Revenue rose to NIS 1.33 billion, operating profit rose to NIS 95.0 million, and net profit rose to NIS 72.0 million. Operating cash flow of NIS 86.4 million still covered net profit, so there is no basic disconnect between profit and cash.
The issue is the pace of weakening. In the comparable quarter, operating cash flow was NIS 138.8 million against net profit of NIS 63.1 million, or about 220% of profit. In the current quarter, the ratio fell to about 120%. That is still positive conversion, but much less powerful, and it arrives precisely when the company is showing a large cash balance, dividends, an approved buyback that has not yet been executed, and the post-quarter completion of the Strauss Strategy acquisition.
The quarter's all-in cash picture, before the shareholder dividend paid in April, is straightforward: the company started with NIS 641.9 million of cash and cash equivalents, generated NIS 86.4 million from operations, used NIS 7.9 million in investing activity and NIS 31.3 million in financing activity, and ended with NIS 688.4 million. That frame is useful for immediate flexibility, but it is not a post-capital-allocation cash picture. A NIS 42.3 million dividend was paid on April 9, and another NIS 45.5 million dividend was approved on May 17.
Receivable sales bought timing
The most important note here is not the cash line, but the accounting-policy note on derecognition of a financial asset. During the reporting period, the group transferred about NIS 120 million from customer receivables to a non-related entity, versus about NIS 92 million in the comparable quarter. The transaction is treated as derecognition because the company transfers the contractual rights to receive the cash flows and the credit risk related to customer non-payment.
The sale of receivables is not, by itself, a red flag. If the risks and rewards were transferred and the transaction is priced properly, it can be a legitimate working-capital tool and a way to reduce credit risk. But the roughly 30% increase in derecognized balances changes the quality of cash flow: the customer-receivables balance of NIS 1.07 billion at the end of March is already shown after those balances were removed. The large cash balance is therefore not only a product of profitability and regular collection, but also of a tool that accelerates or changes the timing of cash receipt.
The disclosure does not break out the sale price, the cost of accelerating cash, or how recurring these transactions are expected to be. The conclusion is not that cash is weak. It is that cash quality now deserves closer monitoring. If receivable sales keep rising alongside growth, the market will need to read the company's profit less as a standalone accounting result and more through the amount of customer credit needed to support revenue.
Suppliers kept working capital above water
The working-capital lines explain why cash flow still looks reasonable despite the year-on-year drop. Customers, other receivables, and inventory consumed NIS 90.5 million in the first quarter. In contrast, the increase in suppliers and service providers added NIS 106.0 million to cash flow. Without that line, the cash picture would have looked much weaker.
| Working-capital cash-flow item | Q1 2026 | Q1 2025 | Meaning |
|---|---|---|---|
| Increase in customers and contract assets | (47.4) | (42.7) | Customers still consumed cash even after derecognition |
| Increase in other receivables | (16.5) | (27.2) | Less pressure from this item than last year |
| Increase in inventory | (26.6) | (21.5) | Inventory absorbed more cash than in the comparable quarter |
| Increase in suppliers and service providers | 106.0 | 136.0 | Suppliers financed a large part of operating needs |
| Increase or decrease in payables and other credit balances | (31.8) | (0.2) | Payables no longer added cash-flow support |
| Sum of the five lines | (16.3) | 44.4 | Working capital moved from cash support to cash use |
This table matters because it explains quality, not just quantity. In the comparable quarter, the five main working-capital lines contributed about NIS 44.4 million. In the current quarter, they consumed about NIS 16.3 million. The decline in operating cash flow is not random: it reflects a clear move from working-capital support to working-capital use, while suppliers still softened the impact.
That is the specific test for the coming quarters. If the company can keep operating cash flow strong while supplier balances stabilize and receivable sales stop rising, cash quality will look better. If revenue continues to grow but cash flow keeps relying on receivable derecognition and supplier credit, profit will remain real, but its conversion quality will be less comfortable than the cash balance implies.
The next test is more ordinary collection
The balance sheet still gives the company room to maneuver: high cash, net cash of about NIS 536 million, low leverage, and unused credit lines. This is the strongest counter-thesis to the follow-up, and it is valid. One quarter of weaker working-capital behavior is hard to turn into a financial-stress story for a company ending the period with this kind of cash position.
Still, the company's continued growth will not be judged only by revenue, profit, and dividend size. After the board approved an additional NIS 45.5 million dividend, after the acquisition of 70% of Strauss Strategy was completed and paid in full, and after an approved buyback of up to NIS 50 million still has not been executed, the market will test whether new cash is coming from the ordinary business or mainly from balance-sheet management. A second quarter in which operating cash flow only tracks net profit is not a problem. A second quarter in which receivable sales rise again and suppliers remain the main source of support would be a stronger signal that growth quality deserves a cash-flow discount.
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