Earnings Call: Q4 2025

Mar 19, 2026

Summary

Record 2025 results included 24% revenue growth, 40% operating-profit growth and 46% adjusted net-profit growth. Management reaffirmed 20% profitability growth guidance for 2026, subject to market conditions.

Good day, everyone, and welcome to the Meitav fourth quarter and full year 2025 earnings conference call. I would like to note that today's call is being recorded. With us today on the call are Ilan Raviv, Chief Executive Officer, and Einat Rom, Chief Financial Officer. Please note that certain statements made on this call may be forward-looking and are subject to risks and uncertainties as described in our regulatory filings. All figures are in Israeli shekels and US dollars. After the presentation, we will be glad to take your questions. Please share your questions in the chat, and we will try to address as many as we can. Ilan, please go ahead. Thank you, and welcome, everyone. Today, we will review Meitav's results for the fourth quarter and for the full year of 2025. It was a record year for Meitav, and we delivered robust growth across all key business parameters, with assets under management, revenues, and profitability reaching all-time high levels. Our diversified business model and disciplined execution enabled us to deliver strong revenue growth alongside a significant expansion in operating profitability. While the macro environment has presented its challenges, including the ongoing regional conflict, we continue to see strong client demand for our investment products, supported by growing mandatory pension contributions and consistent client engagement. This reflects both the resilience of our business and the trust our clients have in Meitav. Our business is built on three main pillars: asset management, which includes the long-term savings segment and the short-term savings segment, non-bank credit, and retail brokerage. Each of these segments delivered healthy, meaningful growth during 2025 and continue to perform well in the first two months of 2026. We would like to reaffirm our guidance of 20% growth in profitability in 2026 versus last year, subject to market conditions, of course. This confidence is reinforced by our strong AUM growth in the last quarter of 2025 and early this year, across both long-term savings and short-term products. Moving to our assets under management, our AUM at the end of the year totaled 407 billion shekels and has reached, at the end of February, 430 billion shekels, which is approximately 135 billion US dollars. This reflects a strong start to 2026, with approximately 23 billion shekels, or $7 billion, in incremental AUM in the first two months of the year alone. We continue to see strong inflows into our long-term savings products, with net inflows of over 9 billion shekels, or $2.8 billion, in the fourth quarter. Summarizing 2025 in our long-term savings segment, inflows accounted for 17% of AUM growth, while investment performance contributed an additional 15%. This aligns with the past five years, as annual inflows into the long-term savings segment have consistently averaged in the high double digits. January and February 2026 also showed continued strong inflows, reinforcing the momentum we established last year. Our market share in provident funds and in pension funds continues to grow, and we are excited to report that in December, we became the largest provident fund manager in Israel. Our impressive relative performance, our well-established brand recognition, and our excellent relationships with our distribution channels continue to provide us with pricing power. We are also seeing strong inflows into our mutual funds, led by the high-margin, actively managed equity funds. As a result, we recorded Q4 revenues of ILS 121 million, or approximately $38 million, bringing full-year revenue to ILS 419 million, approximately $130 million. The mutual fund industry in Israel continues to grow rapidly and has reached ILS 800 billion, which is over $250 billion. We continue to see inflows into both the active and the passive products, exceeding our market share, with our mutual funds raising ILS 2.6 billion in the first two months of 2026 alone. On the retail brokerage side, the merger of our retail and institutional operations early this year strengthens our client service capabilities and enhances revenue stability across different market cycles. The rate of onboarding of new clients continues to be strong, with approximately 121,000 existing clients as of the end of February. Our non-bank credit segment consists of three separate credit companies. Our consolidated credit portfolio grew by approximately 22% in 2025, reaching ILS 3.7 billion, which is approximately $1.15 billion. This has led to top-line expansion in the segment, while net earnings growth was more moderate due to increased provisions at our small and medium enterprise credit subsidiary, Peninsula. These provisions reflect prudent risk management in the current environment and going forward into 2026. In alternative investments, under the Meitav Access platform, we launched two new alternative funds focused on infrastructure and real estate. These funds co-invest with our long-term investment platform and leverage their expertise and their experience. In addition, during the last quarter, we began consolidating the revenues and earnings of our newly acquired Trio hedge fund. Its AUM has grown to approximately ILS 700 million, $220 million. Total assets under management in the alternative investments reached ILS 1.4 billion, or approximately $440 million at the end of the year. In December of 2025, we successfully completed a ILS 500 million equity offering, which is approximately $160 million. The transaction was led by Jefferies and welcomed around 30 new international investors, including meaningful participation from U.S.-based investors. This transaction reflects a strong vote of confidence in Meitav's strategy and execution, and provides additional flexibility for both organic and inorganic growth. It also reduces financing costs and strengthens shareholders' equity as of the end of 2025. Before I conclude, I'd like to highlight the strong momentum we are experiencing across our businesses. Our diversified platform, spanning long and short-term savings in asset management, non-bank credit, and retail brokerage, continues to operate in close alignment and at full strength. As we approach the end of the first quarter of 2026, we see continued growth in inflows. I remain optimistic about the resilience of the Israeli markets and of the broader economy. Additionally, as an innovation-driven company, we are actively advancing AI integration across our operations, which we believe will enhance efficiency and further support sustainable, profitable growth. We are still in the early stages of this exciting journey, and the pace of technological advancement is exceeding our initial expectations. I am personally involved in accelerating these efforts, and we are committed to remaining at the forefront of our market in this area as well. With that, let me now turn the call over to Einat Rom, our Chief Financial Officer. Thank you, Ilan. I would like to review our key financial results. Our financials are presented in shekels, and we have converted the majority of the financial results into USD using the end-of-the-year exchange rate. I would like to remind you that in the previous quarter, we recorded significant income due to the implementation of a settlement in a class action lawsuit that has now concluded. The figures I present here today are adjusted to exclude the impact of this settlement in order for us to compare apples to apples. We delivered a strong and broad-based profitability growth across all of our operation parameters and segments compared with 2024. Revenues in 2025 increased by approximately 24% compared with 2024. We successfully managed our G&A expenses, which rose by only 7%. As a result, our operating profit in 2025 grew by 40% compared to 2024, from ILS 486 million, which is $150 million in 2024, to ILS 682 million, which is $215 million in 2025. Thanks to the increase in our operating profit and the reduction in financing expenses, which is expected to continue going forward, as Ilan mentioned, due to our successful equity raise at the end of the year, we achieved a 46% increase in net profit. EPS increased from ILS 3.76 in 2024 to ILS 5.51 in 2025. In the fourth quarter alone, revenues amounted to ILS 567 million, or roughly $178 million, representing a 29% increase year-over-year, and an annualized rate of approximately ILS 2.3 billion, which is around $720 million. Adjusted EBITDA also grew significantly, totaling ILS 818 million, which is around $256 million, an increase of about 45% compared to 2024. Over the last few years, we have consistently improved our adjusted EBITDA margin, rising from 26.7% in 2022 to 40.7% in 2025. These results also reflect our continued investment in AI and automation-driven capabilities, which have enhanced operation efficiency, improved the client's experience, and supported margin expansion across our core businesses. We currently support over 1.6 million clients across all segments. These initiatives contributed to record performance in 2025, demonstrating our ability to attract and retain clients, expand our product offering, and maintain strong cost discipline. We believe these factors position us well for continued growth in 2026 and beyond. The long-term savings segments posted an impressive increase of over 50% in segment profit in the fourth quarter compared with the same period in 2024, and continues to gain market share in both provident funds and pension funds markets. We believe that the profitability and margins of this segment can increase further by revenue growth and cost efficiencies. The short-term savings segment recorded a 28% increase in segment profit, and in the fourth quarter, showed an annualized revenue rate based on the fourth quarter data of about ILS 540 million, which is $169 million. We see our strong inflows in this segment continuing since our rating in the bank's advisory system, which is our main distribution channel in this segment, remain excellent. The credit segment continues to grow. We ended 2025 with segment profit of ILS 149 million, which is $47 million, an increase of 31% compared with 2024. Our credit portfolio of ILS 3.7 billion can grow significantly, supporting revenues and profitability, as G&A cost in this segment can support substantial growth. The retail brokerage segment closed 2025 with revenues totaling ILS 219 million, which is $68 million, and as of the end of February, has more than 120,000 clients accounts. This segment has a very solid growth model with reasonable client acquisition costs, which are typically recouped within a short time. As previously noted, our effective tax rate has risen due to subsidiaries with higher profitability, whose effective tax rate are about 35%. Therefore, our effective tax rate for this quarter stands at 33%, compared with only 21% last year, and is expected to remain at this level for the foreseeable future. Finally, following the equity raise at the end of the year and our strong financial performance, the company now has excess cash and investment over debt, excluding credit companies, of course, of ILS 213 million, which is $67 million, compared with net debt of ILS 322 million that we had in our last quarter. I will return the call back to the operator. We will now open the questions. Please share your questions in the chat. If your question is not addressed during the live session, please submit it to Meitav's investor relations team, including your full name and firm, and we will follow up with you. I see we already have some questions in the chat. Here's the first question. What is the best way for investors to monitor Meitav's progress over the year, and especially between quarterly financial reports? I'll take that one. Okay, yeah. I will answer that. Thank you. Well, starting this quarter, we will publish in English a full set of the financials, as well as, of course, the presentation. We began publishing at the beginning of the year some KPIs, which provide a monthly snapshot of our AUM, our credit portfolio, and our numbers of clients in our retail brokerage. Starting this quarter, we will also issue immediate reports in English, so we will ensure full continuous information between reporting quarters. Another question submitted is, what are the major growth engines you envisage for 2026? Well, as we described before, Meitav's three main pillars will continue to serve as growth engines in 2026, alongside with our investment, the alternative investment activity. Specifically within our asset management, I would probably point out that the inflows into the mutual funds with their relatively high management fees, I think we could see a nice bounce in the revenues and profits of the short-term savings segment. Moving over to the alternative investment activity, we will be consolidating for a full year the newly acquired Trio Hedge Fund, as opposed to just the last quarter of last year, so that will obviously show growth. As I mentioned before, the two Meitav Access Funds, which we launched just recently, will also kick in in 2026. So, these are the main growth engines I envisage. This next question submitted says, "How can we translate the growth in clients in your retail brokerage company to growth in revenues and profits? Well, customer acquisition cost, as I mentioned before, remain low, so it allow us to recover our investment in a relatively short period. A growing number of clients, when we use the same platform, for example, by leveraging AI capability, making processes more efficient, we can make a substantial contribution to both growth and profitability. Another question submitted, "Your management's fees seems to be stable or slightly moving up. Is this sustainable looking forward to? Thank you. That's a question we get asked quite a lot. First of all, I'll start by saying that we don't feel any significant price pressures across the different segments of our activity. In the long-term savings segment, which is obviously very, very significant, the new funds coming in, our new fundraising is done at the market rates, while our existing pool of assets, our existing AUM, exists at relatively low management fees. You see the average management fees ticking up just as a result of the inflows coming in. In the mutual funds, the average management fee depends obviously on the portfolio mix, equities, fixed income, money market, active and passive. The current inflows, as I mentioned before, which we're seeing coming in, are actually at the higher end of the scale. They're coming into the active funds and specifically into the equity actively managed funds. I'm quite optimistic that we can continue to the trend of the uptick in the average management fees of the whole firm. Moving on to another submitted question. What is your exposure to interest rate movements in both directions? I'll take it. The short answer is, it depends. It depends on the segment. Of course, our non-bank credit segment is negatively affected by interest rate decreases and benefits from interest rate increases. On the other hand, short-term savings, for example, a decrease in interest rate encourage the public to shift their savings from deposits toward asset management, so it's a good influence on us, on the short-term saving segment. Also, in the retail brokerage, it's true that financing income declines as interest rates fall, but on the other hand, the public tends to return to trading activity, so that increases our commission income. Here's another great submission. Can you elaborate on the savings you envisage due to the new AI-based solutions being adopted by your firm? Thank you for that question. It's a very topical issue, of course. First of all, I would say we've implemented several AI-based projects within the company already, and they have enabled us to avoid increasing our workforce despite significant growth across the different segments of activity. If I look forward to 2026 and beyond that, we believe these solutions and the regular, I would say, automation and streamlining of our processes will translate into improved profitability and higher margins. Meitav is leading the entry in the Israeli asset management industry into AI-driven solutions to make our business more efficient. Many of these solutions are Israeli-based companies who have developed programs or applications for back office operations and for client service operations. I personally spend a large part of my time in trying to speed up the adoption of these tools within Meitav. Now, this question submitted says, "Do you plan any significant M&A activities in 2026? We do not anticipate any significant M&A activity in 2026 because of our size, of our existing size, and also there are some regulatory constraints on parts of our business. I would say, first of all, we are enjoying organic growth, and the last thing I want is to let our foot off the accelerator pedal in this respect. We can grow via M&A in some of the activities, for instance, in alternative products such as the hedge fund Trio, which I mentioned before, which we acquired recently, and we can grow in the insurance agencies, like the deal we recently announced where we bought control of an insurance agency. So there, I do envisage continued M&A activity. But just so we don't sound too conservative, I would say we're always open to opportunities. If and when they arise, we will know how to take advantage of them. All right. This next question reads, "Do you see any major influence from the current Middle East war on your business? It's been less than a month since the outbreak of the current war, the current conflict. As of today, we have not observed any significant impact on our business results, but we realize that the situation is dynamic, and we're preparing ourselves for all scenarios. I'd say more generally that in Israel here, we are used to operating under these type of circumstances. The resilience that you see in the Israeli stock market, the resilience of the currency, the shekel, can also be seen in-house in Meitav in terms of the resilience. We're doing well, and we will know how to cope with this war, of course, as long as it does not drag out for a much longer period. This next question. Do you see more room for improvement in your EBITDA margins? First of all, in 2025, our margin exceeds 40%, so I think it is quite an impressive margin. Going forward, I think that all segments are expected to maintain the current margins, except for the long-term savings, where they are at 35% EBITDA margin. In the long-term savings, I think there is room to grow, and the long-term savings can reach the group average. I agree. Yes. There has been a lot of submissions, but we have time for one last question. What advantage did you observe in the acquisition of the institutional brokerage by the retail brokerage? Thank you. That was a transaction just completed recently, actually, the beginning of 2026. It is a strategic step aimed at maximizing the operational business potential of both institutional and retail brokerages. I should say that most of our competitors in Israel have already merged the two operations or have grown them together, so it is not something very peculiar for Meitav. The transaction is expected to yield synergy from the economies of scale generated by joint operations of two brokerage companies which cater for different audiences. Yes, I am optimistic that we will see the benefits of this transaction quite quickly. Thank you for the questions. Before handing the call over to Ilan for his closing remarks, please note that today's call and Q&A session will be available on Meitav's investor relations site. Thank you for your questions, and more importantly, thank you for joining us today. 2025 was an exceptional year for Meitav. The strong foundations across our business segments, combined with our reinforced capital base and AI-driven operational enhancements, position us well for the continued progress in 2026 and beyond. We have confidence in the momentum from 2025, combined with the strategic initiatives we have underway, expanding AUM in the long-term and in the short-term products, strengthening our credit portfolio, growing alternative investments, and enhancing our client service across retail and institutional brokerage. These will enable us to deliver sustained value for our shareholders, for our clients, and for our partners. We deeply appreciate the trust of our employees, of our clients, and of you, our investors. We look forward to keeping you updated on our continued progress and sharing continued successes in the year ahead. Thank you very much.