Sarine Technologies Ltd. FY2025 Financial Results: Navigating Industry Headwinds

Sarine Technologies Ltd., a leader in precision technology for the diamond and gemstone industry, released its financial results for the year ended December 31, 2025. The company’s performance reflects significant challenges in its core markets, alongside strategic initiatives aimed at future growth and diversification.

Key Financial Metrics and Comparative Analysis

Historical Performance and Trends

• Revenue: FY2025 revenue fell 24.5% YoY to US\$29.6 million, reflecting persistent weakness in the natural diamond industry, especially in the U.S. and China, and significant pressure from lab-grown diamonds (LGD).
• Profitability: The company swung from a net profit of US\$1.1 million in FY2024 to a net loss of US\$3.9 million in FY2025, with H2 2025 showing an even sharper decline. The loss was aggravated by one-off, non-cash tax expenses of US\$1.4 million relating to prior years, and the inability to capitalize further R&D expenses after new product commercialization.
• Margins: Gross margins declined from 59% in FY2024 to 55% in FY2025, impacted by the fall in sales, though partially offset by cost reductions and manufacturing relocation to India.
• Operating Expenses: R&D and sales/marketing expenses were trimmed via cost-saving initiatives. General and administrative expenses notably fell 29% YoY, due in part to a one-off goodwill write-off in the prior year and ongoing cost control.
• Cash Flow and Balance Sheet: Cash and equivalents plus short-term investments totaled US\$22.0 million at year-end 2025, down from US\$26.3 million, mainly due to a US\$6.7 million investment and loan to Kitov.ai, partially offset by US\$4.5 million in positive operating cash flow.
• Dividend: No dividend was declared for FY2025, compared to a US\$2.57 million payout in FY2024.

Exceptional Items and Corporate Actions

• Kitov.ai Investment: In August 2025, Sarine acquired 33.02% of Kitov.ai for US\$4.1 million (plus a US\$2.6 million convertible loan), aiming to diversify beyond diamonds into industrial AI-based quality inspection. The transaction included a substantial allocation to technology and goodwill.
• Share Buybacks: The company continued buying back its shares, acquiring 1,455,900 shares during FY2025, increasing dormant shares to 16.16 million (from 14.7 million at end-2024), with no share placements or dilution.
• Lease Termination Gain: A one-off gain of US\$0.6 million was realized from an early lease termination.
• No Related-Party Transactions or Divestments: No interested party transactions, divestments, or asset sales were reported.

Chairman’s Statement and Tone

“The natural diamond polishing industry, from which the Group still derives most of its revenues, has been negatively impacted by the loss of significant market share, primarily in the key U.S. market, to lab-grown diamonds (LGD). Weak consumer demand in China also persists. The LGD segment is itself experiencing destabilising issues, stemming from oversupply driving an ongoing decline in wholesale prices. This, coupled with intensifying competition among retailers, has driven down retail LGD prices. The ‘devaluation’ of LGD jewellery has led some consumers to reassess their perception of this product and has also driven retailers to seek means by which to differentiate their offerings from others’, especially for those retailers selling very high-end LGD jewellery.

The Group has made progress in executing its strategic initiatives, albeit not to the point of compensating for the slowdown in the Group’s traditional business, driven by the ongoing industry challenges. The expansion of our Most Valuable Plan™ (MVP)… and the opening of a GCAL by Sarine lab in India have expanded our portfolio, attracting new customers and generating new recurring revenue streams. These initiatives also bolster our strategic position for future growth…

The Group reported revenues of US\$ 14.3 million in H2 2025, a loss from operations of US\$ 2.0 million and a net loss of US\$ 3.7 million, as compared to revenues of US\$ 17.3 million, a loss from operations of US\$ 1.5 million and a net profit of US\$ 0.1 million in H2 2024… The Group recorded negative EBITDA for H2 2025 in the amount of US\$ 0.4 million, as compared to a positive EBITDA of US\$ 0.8 million in H2 2024.

…the Group’s business continues to pivot to deriving mostly recurring revenues from its proprietary services, including the Gal3D inclusion mapping software… These service-based revenues now constitute most of the Group’s revenues.”

Tone: The Chairman’s statement is realistic and sober, with acknowledgement of industry headwinds and short-term difficulties, but highlights efforts to diversify and build recurring, service-based income streams.

Outlook and Market Trends

• Industry headwinds are expected to persist, with weak demand for natural diamonds and continued price declines for LGD, though at a slower rate.
• The company expects growth in its MVP solution and premium grading services, especially as new U.S.-India trade agreements may eventually benefit natural diamond flows.
• GCAL’s high-end grading reports are well-positioned as the market differentiates between premium and commoditized LGD.
• Sarine is actively exploring further diversification, including industrial applications for LGD and potential fintech partnerships.

Conclusion and Recommendations

Overall, Sarine Technologies Ltd.’s financial performance in 2025 was weak. Revenue, profitability, and EPS declined sharply due to industry-specific pressures, and the company swung to a net loss. Strategic initiatives and cost control are in place but have yet to offset the traditional business decline. The company’s financial position remains solid, with a strong cash buffer, no debt issues, and ongoing investment in future growth, but the outlook depends on industry recovery and successful execution of new initiatives. No dividend for FY2025 signals a defensive capital posture.

Investor Recommendations

• If you currently hold the stock: Consider maintaining your position if you believe in the company’s long-term vision and ability to execute its diversification strategy. However, be prepared for continued volatility and potentially slow recovery. Monitor execution of the Kitov.ai investment and the growth of recurring service revenues closely in 2026.
• If you are not currently holding the stock: It may be prudent to wait on the sidelines until there are clearer signs of industry stabilization, a return to profitability, or tangible results from new growth initiatives. The company’s fundamentals are not in crisis, but near-term earnings visibility is low and sector headwinds remain significant.

Disclaimer: This analysis is based solely on the attached financial report. It does not constitute investment advice. Please consult your financial advisor and consider your own risk tolerance before making investment decisions.

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