Luzon Credit in the First Quarter: New Cash Arrived, but Growth Now Depends on Servicing Nawi
The NIS 102.8 million net equity raise removed the immediate liquidity issue, but the first quarter still showed a shrinking platform, no new Luzon Capital lending deals, and new revenue mainly from servicing Nawi and Luzon. That makes 2026 a proof year: the cash must become quality underwriting, not just a larger balance sheet.
Luzon Credit received in the first quarter what it lacked at the end of 2025: a much larger cash balance after raising NIS 102.8 million net. But the report still does not prove a return to strong credit activity. The legacy platform continued to lose volume, withdrawal requests were roughly three times deposits, and Luzon Capital had not yet signed new financing transactions. The new revenue that did appear came from servicing Nawi and Luzon, an activity that may be a sensible use of the company's technology and operating infrastructure, but for now depends on one related client with the right to terminate the service and move to self-operation. The current read is therefore only half positive: the liquidity problem has weakened, but the quality of growth is still unproven. Over the next quarters, the market is likely to care less about the cash balance itself and more about whether the new capital turns into credit, fees, and operating profit independent of option revaluation or one servicing relationship.
Company Background
Luzon Credit, formerly Tarya Israel, is no longer just a P2P platform. It is trying to move from a shrinking credit-intermediation business into a credit fintech with three layers: a platform that intermediates between borrowers and lenders, a direct-credit arm through Luzon Capital and Nawi and Luzon, and a new servicing and technology activity for loan portfolios.
The right lens is not normal revenue growth, but a transition between models. In the legacy platform, the company earns borrower and lender fees, but volume is still falling. In Luzon Capital, the company is supposed to use the new equity to originate direct credit, but no financing transactions were signed in the first quarter and the proceeds remained in liquid bank deposits. In servicing Nawi and Luzon, the company receives payment for employees, technology, and servicing fees based on the operated loan portfolio. That can be a lighter balance-sheet model, but at this stage it is also more concentrated.
The continuity matters. In the previous annual analysis, the question was whether new equity would be enough to restore underwriting and growth, not merely close the liquidity-pressure chapter. The first quarter gives a partial answer: the equity arrived, but new underwriting has not yet reached the report.
The Platform Is Still Shrinking, and Nawi Servicing Holds Revenue
First-quarter revenue was NIS 5.1 million, down roughly 39% from NIS 8.5 million in the comparable quarter. That decline looks softer than it really is because the quarter included a new layer: NIS 1.6 million of revenue from services provided to Nawi and Luzon. Without that layer, platform and credit revenue would have been about NIS 3.5 million, down roughly 58% year over year.
The most concerning number is borrower fees: they fell from NIS 4.3 million to NIS 1.1 million. Lender fees fell from NIS 4.0 million to NIS 2.4 million. This is not merely an accounting or timing issue. It signals that the platform is still smaller. The managed credit portfolio also declined to about NIS 1.1 billion as of the report publication date, compared with about NIS 1.2 billion at the end of 2025.
Investor behavior on the platform still does not support a recovery story. In the first quarter, deposit requests totaled NIS 36 million while withdrawal requests totaled NIS 111 million. From the beginning of April through the report date, deposits totaled about NIS 10 million versus withdrawal requests of about NIS 27 million. After the company completed in January the handling of all withdrawal requests opened through the end of 2025, the current report shows that the historic pressure was cleared, but not that investors have returned to positive net inflows.
The Equity Raise Changed the Balance Sheet, Not the Underwriting Run Rate
On the balance sheet, the quarter looks like a sharp turn. Cash and equivalents rose to NIS 135.6 million, compared with NIS 36.1 million at the end of 2025. Equity jumped to NIS 127.9 million from NIS 24.4 million at year-end. That mainly reflects the March 5, 2026 issuance of 187.7 million shares at NIS 0.57 per share, for NIS 102.8 million net proceeds. In addition, Leumi Partners' exercise of its option eliminated a NIS 4.1 million liability and added 2.8 million shares, equal to 0.57% of issued share capital.
The other side of the same move is that by quarter-end the money had not yet become new credit activity at Luzon Capital. The company stated that no financing transactions were signed at Luzon Capital during the quarter, and the issuance proceeds were deposited in liquid bank deposits. There is still no evidence that the new equity is translating into credit spread, quality provisioning, or recurring revenue.
The cash flow makes the distinction sharper. On an all-in cash-flexibility view after operations, investments, leases, and financing, the quarter added NIS 99.5 million to cash, almost entirely from the equity raise. Operating activity used NIS 3.2 million, compared with NIS 1.8 million in the comparable quarter. Capital expenditure was immaterial at NIS 21 thousand, and lease repayments were NIS 102 thousand. Liquidity therefore improved materially, but the source was new equity, not a cash-generating activity.
| Checkpoint | Q1 2026 | What it means |
|---|---|---|
| Cash and equivalents | NIS 135.6 million | The raise filled the balance sheet |
| Operating cash flow | NIS 3.2 million negative | The activity is still consuming cash |
| Platform withdrawals versus deposits | NIS 111 million versus NIS 36 million | The platform still has negative net money flow |
| Luzon Capital financing deals | None signed in the quarter | The equity has not yet become new underwriting |
Nawi and Luzon Becomes a Revenue Source, but Not Yet Fully Accessible Value
The positive point in the quarter is that services to Nawi and Luzon moved from an agreement into revenue. The services segment recorded NIS 1.6 million of revenue and a positive segment result of NIS 739 thousand. Compared with the credit-intermediation segment, which recorded a negative segment result of NIS 3.1 million, it is now part of what holds revenue and softens the decline.
Still, that layer needs to be read carefully. Nawi and Luzon is 45% held by Tarya P2P, alongside 45% held by Nawi Group and 10% by Liad Investments. As discussed in the previous analysis of Nawi and Luzon, Luzon Credit shareholders do not have full exposure to 100% of the mortgage portfolio. In the current quarter, what actually entered the report was service revenue, not material credit profit from the venture.
The agreement itself creates both an advantage and a constraint. Tarya Community provides end-to-end handling of loan origination, administration, borrower contact, collateral, collection, and debt management, and receives payment for employees, technology, and servicing fees based on the operated credit portfolio. But Nawi and Luzon may notify Tarya Community that it wants to stop receiving the servicing and operate the loans itself, in which case Tarya Community must transfer the required information and documents. In addition, as of the report date the service is provided only to Nawi and Luzon. Expansion to third parties is still an intention, not proven revenue.
From a credit-risk perspective, the report mainly provides framework signals rather than enough profit data. Nawi and Luzon complied with the bank covenants: equity to total assets of 22% versus a minimum of 16%, compliance with the LTV limits, and large-client credit above NIS 6 million at 11% of the portfolio versus a 20% ceiling. That is constructive, but it does not yet answer the key question for the next quarters: whether this activity will generate profitability and accessible value at Luzon Credit, not only servicing revenue around a mortgage venture.
Conclusion
The first quarter of 2026 strengthened Luzon Credit's financial position and reduced patience for the operating story. After the equity raise, it makes less sense to analyze the company mainly through immediate cash pressure. The question has moved to capital allocation: whether the NIS 102.8 million net proceeds become a quality credit portfolio, whether the platform returns to net inflows, and whether loan servicing for Nawi and Luzon can evolve from related-party revenue into a broader servicing model.
The counter-thesis is strong: the market may have received a healthier balance sheet, but not yet a healthier business. Revenue fell, operating loss widened to NIS 2.8 million, adjusted EBITDA remained negative at NIS 2.6 million, and operating cash flow was still negative. The auditor's emphasis of matter on contingent lawsuits also keeps Tarya's legal legacy inside the risk profile.
The next phase depends on two clear transitions. The first is underwriting: Luzon Capital needs to show financing transactions with disclosure that allows investors to assess yield, risk, and collateral quality. The second is revenue quality: continued growth in services to Nawi and Luzon, preferably with additional servicing clients, while the legacy platform stops losing volume faster than the new activity can compensate. If those two move together, the first quarter will look like the start of a transition. If not, it will remain mainly a quarter in which the cash arrived, while the business proof was pushed out.
Disclosure: Deep TASE analyses are general informational, research, and commentary content only. They do not constitute investment advice, investment marketing, a recommendation, or an offer to buy, sell, or hold any security, and are not tailored to any reader's personal circumstances.
The author, site owner, or related parties may hold, buy, sell, or otherwise trade securities or financial instruments related to the companies discussed, before or after publication, without prior notice and without any obligation to update the analysis. Publication of an analysis should not be read as a statement that any position does or does not exist.
The analysis may contain errors, omissions, or information that changes after publication. Readers should review official filings and primary sources before making decisions.