TASE in the first quarter: the profit jump now has a broader base

The first quarter for TASE no longer looks only like a quarter of exceptional trading volumes, even though that was the most visible trigger in the top line. Revenue rose 40% and net profit jumped 116%, while total expenses declined 1%, so the operating leverage was unusually clear. The value in the filing is broader: clearing services rose 69%, revenue from authorization to use TASE indices rose 60%, and the issuance wave increased deferred listing fees. The move to Monday-Friday trading delivered its first operational proof, with average Friday equity turnover of about NIS 4.4 billion versus about NIS 1.6 billion on Sundays in 2025, and a much higher foreign-investor share. Still, effective fees declined in most cash products, derivatives activity fell, and the NIS 144.8 million dividend has already reduced excess liquidity. The next test is not just another profitable quarter. TASE needs to show that trading volumes, index economics and clearing income hold up after the market cools, and that it rebuilds enough cash before another distribution or buyback decision.

The Profit Jump Now Has A Broader Base

TASE runs an infrastructure business with a relatively high fixed-cost base: trading systems, clearing houses, market data, indices and technology infrastructure. That means a strong trading quarter can flow quickly into profit, but only when it also reaches more recurring revenue layers. In the first quarter, that is what happened.

Revenue reached NIS 183.3 million, compared with NIS 131.0 million in the parallel quarter. Operating profit rose to NIS 99.3 million, and net profit reached NIS 77.4 million. Even after a 44% increase in trading and clearing revenue, non-transactional revenue remained 61% of total revenue, meaning most revenue still came from listing fees, clearing services, data, connectivity and indices.

The higher-quality part sits in clearing and indices. Clearing services revenue reached NIS 53.9 million, up 69%, partly on average custody assets of NIS 4.82 trillion and a higher average custody-fee rate. Revenue from authorization to use indices reached NIS 10.6 million, up 60%, and assets tracking TASE indices reached about NIS 157.6 billion at quarter-end.

Listing fees also add forward visibility. There were 76 equity offerings in the quarter, compared with 33 in the parallel quarter, and equity capital raised totaled NIS 10.6 billion. Listing-fee receipts rose 53% to NIS 17.9 million, but net listing-fee revenue recognized in the income statement rose only 11% to NIS 10.3 million, because part of the receipts is deferred and recognized over time. The deferred listing-fee balance rose to NIS 134.9 million, of which NIS 34.5 million is expected to be recognized over the next 12 months. That is a better quality-of-growth signal than an immediate one-time profit spike.

Friday Adds Volume, Not Pricing Power

The move to a Monday-Friday trading week was designed to improve the local market's connection with global markets. The first quarter already provided initial numbers: average Friday equity turnover was about NIS 4.4 billion, compared with an average of about NIS 1.6 billion on Sundays in 2025. Foreign investors accounted for about 40% of Friday activity, compared with about 15% on Sundays in the previous trading week structure.

This matters because it explains why the increase in equity turnover was not only a local volatility effect. Friday trading brought in more foreign activity, while Palo Alto's dual listing added a very large stock to local trading. The number of dual-listed companies reached 50, and their market capitalization at quarter-end was NIS 917.9 billion, about 39% of the local equity market.

But the volume increase did not come with better pricing per unit of activity. Equity trading and clearing revenue rose 84%, while equity turnover rose 92%. In government bonds, turnover rose 45%, but revenue rose 31%, as the lower effective fee reduced part of the benefit. T-bills and mutual funds showed a similar pattern of higher volume against lower effective fees. The quarter proves demand for trading access and international alignment, not pricing power.

Cash Generation Was Strong, But The Dividend Reduced The Cushion

The quarter's profit converted into strong cash flow. Cash flow from operating activities reached NIS 100.2 million, compared with NIS 57.8 million in the parallel quarter. After NIS 27.7 million of investments and NIS 2.4 million of lease-principal payments, free cash flow before distributions and debt repayment was about NIS 70.1 million.

The all-in cash picture is different. The dividend paid in March totaled NIS 144.8 million, including about NIS 90.5 million under the dividend policy and about NIS 54.3 million as a special dividend. Together with NIS 10.8 million of debt repayment, the company ended the quarter with a net cash decrease of NIS 85.6 million.

The distinction matters. In terms of cash generation from the existing business, the quarter was strong. In terms of all-in cash flexibility after actual cash uses, flexibility declined. Excess liquidity fell to NIS 237.7 million, from NIS 309.6 million at the end of 2025, and excess capital fell to NIS 483.8 million, from NIS 550.3 million. Any discussion of another buyback or distribution should therefore be tested against rebuilt cash, not against accounting profit alone. The follow-up analysis on buyback capacity made that the key test, and the quarterly filing confirms that it did not disappear after a strong quarter.

The investment requirement is also not marginal. In the company's liquidity calculation, NIS 118.8 million was deducted for planned technology infrastructure investments, and NIS 24.7 million was invested in such infrastructure during the quarter itself. TASE meets its bank-loan covenants and has an unused NIS 120 million credit facility, so the balance sheet remains comfortable. It simply no longer shows the same cash cushion it had before the dividend.

Conclusion

The first quarter improves the quality of TASE's story because the profit jump did not depend only on a strong trading day or an equity-turnover headline. Clearing services, indices and deferred listing fees add a broader base and improve forward visibility. The move to Monday-Friday trading also received its first proof through higher foreign activity and a much stronger Friday than the Sunday it replaced.

Still, this quarter needs follow-through. Effective fees declined in most cash products, the dividend reduced excess liquidity, and the potential index transaction is not yet a binding agreement. If such a transaction preserves a meaningful share of recurring economics for TASE and adds international distribution, it can improve revenue quality. If most of the value shifts to the counterparty or arrives only as a one-time consideration, the market will need to frame the index business differently.

The infrastructure risk layer should also remain in view. Net exposure from central-counterparty activity was NIS 1.76 billion at quarter-end, and financial resources against a clearing-member default totaled NIS 7.88 billion, compared with NIS 5.42 billion in the parallel quarter. This is not an immediate weakness, but it is a reminder that TASE does not only benefit from a more active market. It also needs capital, collateral and systems suitable for a larger market.

The report gives more weight to the positive side, but the decisive evidence moves to the next few quarters: whether trading and index activity hold up after the market cools, whether costs remain controlled against technology investments and new products, and whether TASE rebuilds cash before another distribution or buyback decision.