Is Arbe Robotics (NASDAQ:ARBE) Weighed On By Its Debt Load?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. Importantly, Arbe Robotics Ltd. (NASDAQ:ARBE) does carry debt. But is this debt a concern to shareholders?

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When Is Debt A Problem?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does Arbe Robotics Carry?

The image below, which you can click on for greater detail, shows that at March 2025 Arbe Robotics had debt of US$8.81m, up from none in one year. But on the other hand it also has US$36.4m in cash, leading to a US$27.6m net cash position.

A Look At Arbe Robotics' Liabilities

We can see from the most recent balance sheet that Arbe Robotics had liabilities of US$17.8m falling due within a year, and liabilities of US$1.52m due beyond that. Offsetting these obligations, it had cash of US$36.4m as well as receivables valued at US$60.0k due within 12 months. So it can boast US$17.1m more liquid assets than total liabilities.

This surplus suggests that Arbe Robotics has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, Arbe Robotics boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Arbe Robotics's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Check out our latest analysis for Arbe Robotics

Over 12 months, Arbe Robotics made a loss at the EBIT level, and saw its revenue drop to US$671k, which is a fall of 46%. To be frank that doesn't bode well.

So How Risky Is Arbe Robotics?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And we do note that Arbe Robotics had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through US$31m of cash and made a loss of US$50m. However, it has net cash of US$27.6m, so it has a bit of time before it will need more capital. Even though its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company doesn't produce free cash flow regularly. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 4 warning signs for Arbe Robotics (of which 2 are concerning!) you should know about.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.