Shva in the first quarter: the new tariff arrives after another margin-pressure proof
Shva entered 2026 at the exact transition point: debit-card transaction volume rose, but revenue barely moved and operating profit fell by about 31%. The tariff expected to take effect in July is no longer just a strategic idea, but the near-term test of whether critical infrastructure can translate into better profitability.
Shva opened 2026 with a quarter that sharpens the problem more than it solves it: the business works, debit-card transaction volume keeps rising, the company is connecting new participants and expanding services, but the service price still has not absorbed the higher cost of open, secure and highly available payment infrastructure. Revenue was NIS 38.4 million, almost unchanged year over year, while operating expenses rose to NIS 30.0 million and operating profit fell to NIS 8.4 million. This is not a demand collapse. It is another proof that core economics erode when pricing does not move. That is why the board approval of an updated pricing policy and tariff, expected to be published in May and take effect in July 2026, becomes the real test of the year. The balance sheet still buys time: there is no financial debt, cash and trading securities total NIS 162.1 million, and operating cash flow remained positive. Still, the NIS 30 million dividend paid after the balance-sheet date shows that cash flexibility is not as wide as the March 31 cash line suggests. From here, the market needs less proof that the system is necessary and more proof that necessity can be priced.
The business is growing, but price still trails cost
The company operates the payment infrastructure that connects issuers, acquirers, merchants, terminals and the ATM system. In the first quarter it continued to do what a strong infrastructure company should do: process large volumes, maintain continuity during a security event, and bring additional participants and services into the system. But this quarter also shows why strong infrastructure does not automatically mean strong profitability.
Debit transactions in the Ashrait system rose to 642 million from 614 million in the parallel quarter, while credit transactions remained around 6 million. Total debit and credit transaction volume therefore rose by about 4.5%. By contrast, revenue from services to acquirers and issuers was NIS 32.8 million, almost the same as in the parallel quarter. Revenue from other services rose 4.2% to NIS 5.6 million, mainly from existing products and growth engines, but that is still too small to change the overall line.
That gap matters more than the transaction increase itself. If activity volume rises while revenue from the central customers barely changes, the quarter is not mainly about weak demand. It is about a pricing mechanism that has not moved fast enough against the costs of technology, cyber, maintenance and the Masav separation. This continues the point made in the prior analysis on opening the payment systems: opening the system to more participants strengthens the company's importance, but it also raises the cost of operating the rails.
July becomes a pricing test, not a demand test
The important event in the quarter is not only in the income statement. After the balance-sheet date, the board approved an update to the pricing policy and tariff, against the backdrop of broad investments in technology, information security, cyber and infrastructure. The company updated the Bank of Israel on the move and expects to publish the updated tariff in May 2026, with effect from July.
That changes the monitoring axis. Until now, investors could ask whether the 2025 cost pressure was exceptional or structural. The first quarter gives a partial answer: expenses did not cool down. They rose 15.4% year over year, while revenue rose only 0.7%. Depreciation and amortization were NIS 4.1 million versus NIS 3.3 million, and technology reinforcement and maintenance costs kept weighing on the result. EBITDA excluding share-based compensation fell to NIS 12.7 million from NIS 15.9 million.
At the same time, the company is not commercially static. RAPYD completed its connection to the payment system and started operating as the first global acquirer. Grow Payments received Bank of Israel payment-systems approval during the quarter to begin entering the system. The company also developed support for AFT, which is used, among other things, for transferring funds to prepaid cards or digital wallets. These are positive signs for infrastructure relevance, but as long as they arrive together with higher expenses, they are not enough on their own.
The current read therefore leans in a clear direction: 2026 is a pricing proof year. If the new tariff starts lifting revenue per unit of activity in the second half, the first quarter will look like the last quarter before the price repair. If not, it will become another piece of evidence that the company is absorbing more traffic and more complexity without enough compensation.
Cash looks better before the dividend
The balance sheet is still strong, but the quarter shows why liquidity and post-distribution cash flexibility should be separated. Cash and cash equivalents rose to NIS 27.1 million from NIS 15.5 million at the end of 2025, and the trading securities portfolio stayed near NIS 134.9 million. Together, cash and securities totaled NIS 162.1 million, versus NIS 150.9 million at year-end.
But the liabilities already include a NIS 30 million dividend, declared in March and paid on April 27, 2026. So the all-in cash picture should include not only what sat in the account on March 31, but also the cash use that had already been approved and left shortly after the quarter.
| All-in cash picture item | NIS million |
|---|---|
| Operating cash flow in the quarter | 15.8 |
| Purchases and investments in PP&E and intangible assets | (3.5) |
| Lease principal repayment | (0.6) |
| Surplus before dividend and securities trading | 11.7 |
| Dividend paid in April | (30.0) |
| Surplus after the approved dividend | (18.3) |
The table does not argue that the business burns cash in a normal quarter. On the contrary, operating cash flow of NIS 15.8 million is reasonable in a quarter where net profit fell to NIS 6.9 million, partly helped by a decline in customer receivables. But once CAPEX, lease principal and the April dividend enter the picture, it is clear that the dividend rests on the broader liquidity layer, not only on cash generated by the quarter after all uses.
What will decide the next quarters
Two smaller issues should remain on the screen. The first is legal: the claim filed against the company around Shva Insights is still preliminary, the company rejects the allegations, and at this stage the chances cannot be assessed. It does not change the quarterly thesis, but it does show that one of the new growth engines carries privacy and regulatory sensitivity. The second is management continuity: the CFO is retiring at the end of May, and a replacement has been announced subject to approval or non-objection from the payment-systems regulator. In a quarter where pricing, investment and distribution all stand at the center, finance continuity is not a side detail.
The current conclusion is that the company does not need to prove there is demand for its rails. The quarter already proved that again. It needs to prove that the new tariff can change the slope between revenue and expenses without hurting new participant onboarding and new services. The next report should already include part of the July impact, making it a better test than the first quarter: whether revenue starts moving away from the flat line, whether expenses stabilize, and whether cash rebuilds after the April dividend.
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