Formula Systems Releases Impressive Q2 and First Half Results

Formula Systems Reports Second Quarter and First Half 2025 Financial Results

Formula Systems (1985) Ltd. (NASDAQ: FORTY), a leading global information technology holding company, has recently unveiled its financial results for the second quarter and the first half of 2025. The company continues to showcase resilience and growth through its diverse portfolio of subsidiaries and affiliates, reinforcing its position as a key player in the software and IT consulting space.

Quarterly Financial Highlights

Record Revenues

During the second quarter of 2025, Formula Systems achieved a remarkable revenue of approximately $743.4 million, reflecting an impressive year-over-year increase of 11.3%. This marks the highest quarterly revenue in the company's history, significantly surpassing the $667.7 million recorded in the same period last year. The revenue growth is attributed to strong performances across its various subsidiaries and affiliates, as detailed in management comments.

Operating Income Growth

Operating income for the quarter also showed positive growth, rising by 4.4% to approximately $67.9 million, compared to $65.0 million in the same quarter last year. Notably, the operating income from the second quarter of 2024 was enhanced by a one-time income item of approximately $2.9 million, which underlines the ongoing operational improvements within the company.

Net Income Trends

While revenue and operating income saw increases, net income attributable to Formula Systems' shareholders did decline by approximately 20.1% year-over-year, settling at $15.1 million or $0.95 per fully diluted share. This reduction was primarily due to increased financial expenses driven by adverse exchange rate fluctuations connected to the appreciation of the New Israeli Shekel against the U.S. dollar. Notably, financial expenses spiked to approximately $10.2 million in this quarter from $3.8 million last year, affecting the bottom line.

First Half Financial Performance

Impressive Half-Year Results

For the first six months ending June 30, 2025, Formula Systems generated approximately $1.5 billion in revenue, up 9.7% from the previous year's $1.37 billion. This enhancement reflects consistent revenue growth from its subsidiary companies and affiliates.

Operating and Net Income Overview

During this six-month period, operating income improved by 8.5%, reaching $138.4 million, compared to $127.6 million the year before. However, net income attributable to shareholders also experienced a slight downturn, decreasing by 4.5% to approximately $34.4 million, or $2.20 per share.

Dividend Declaration and Shareholder Information

Special Dividend Announcement

The Board of Directors of Formula Systems declared a cash dividend of NIS 1.69 per share, totaling approximately NIS 25.9 million (around $7.7 million). This dividend is set to be paid on October 28, 2025, to all shareholders of record by October 14, 2025.

Financial Covenants Compliance

As of June 30, 2025, the company remains compliant with all its financial covenants related to debentures. The target equity attributable to shareholders was set above $325 million, with the actual result reaching $722.9 million, signifying strong financial stability.

Management's Comments

CEO Guy Bernstein expressed pride in the performance of Formula Systems, highlighting the group's record results across key financial and operational metrics, accompanied by a commitment to innovation and customer value creation. The management is keen on advancing technologies like cloud, cyber solutions, AI, and more, reflecting a strategic focus on sustainable growth.

Additionally, the company emphasizes its subsidiaries, such as Matrix IT and Sapiens, noting their expansions and current market leadership driven by innovative IT solutions.

Future Prospects

As Formula Systems looks to the future, the management's commitment to bolster their technological advancements and market leadership remains steadfast. By investing in emerging technologies and solutions, they aim to continue generating value for their customers and stakeholders.

Frequently Asked Questions

1. What were the total revenues reported by Formula Systems for Q2 2025?

Formula Systems reported total revenues of approximately $743.4 million for the second quarter of 2025.

2. How did the net income change in Q2 2025 compared to Q2 2024?

The net income for Q2 2025 decreased by approximately 20.1% year-over-year, totaling $15.1 million.

3. What is the declared dividend amount for 2025?

The declared dividend amount is NIS 1.69 per share, approximately $0.50 per share.

4. What is the focus of Formula Systems moving forward?

Formula Systems is focusing on advancing technologies such as AI, cloud solutions, and cyber technologies to drive sustainable growth.

5. Is Formula Systems compliant with its financial covenants?

Yes, Formula Systems remains in compliance with all financial covenants under its issued debentures.

About The Author

Olivia Taylor here, a 26-year-old writer and financial advisor. After earning a degree in finance, I worked in the sector for years. I've always loved numbers and had a talent for simplifying difficult financial ideas so that anyone could understand. I wrote my first book because of this passion; it helps readers take charge of their financial futures by fusing real-life stories with useful financial advice.

Whether they are just beginning their careers, preparing for significant life events, or seeking to invest wisely, my goal with my writing is to enable people to make educated financial decisions. The foundation of my work is the conviction that security and freedom of the individual are largely determined by financial literacy. To further financial education, I run workshops and frequently write for financial blogs in addition to my books.

I like to travel, experience other cultures, and find inspiration in daily life when I'm not writing or examining market trends. My passion is utilizing sound financial practices to help people reach their financial objectives and lead the best lives possible.

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