Formula Systems Surpasses Records in Q2 and First Half 2025

Formula Systems Reports Impressive Second Quarter Results

Formula Systems (1985) Ltd. (Nasdaq and TASE: FORTY), a dynamic player in the global information technology landscape, has recently unveiled its financial performance for the second quarter and first half of 2025. The company, which boasts an array of subsidiaries focused on offering cutting-edge software consulting services, recorded remarkable financial metrics for this period.

Financial Highlights for the Second Quarter

Record Revenues

• For the quarter, revenues soared by 11.3% compared to the previous year, culminating in an impressive $743.4 million. This marked the highest revenue ever recorded for a second quarter, highlighting significant growth across various business sectors under Formula Systems.

Operating Income Growth

• Operating income saw a year-over-year increase of 4.4%, reaching around $67.9 million, up from approximately $65.0 million. When accounting for a one-time reimbursement item from the prior year, this increase indicates a substantial operational success.

Net Income Trends

• However, net income attributable to shareholders declined by 20.1%, totaling $15.1 million, or $0.95 per diluted share. This drop was largely due to increased financial expenses that amounted to approximately $10.2 million, a significant rise from $3.8 million the previous year, attributed to exchange rate shifts.

Six-Month Financial Performance

Continued Revenue Growth

• During the first half of 2025, Formula Systems reported revenues of about $1.5 billion, a 9.7% increase from $1.37 billion in the same period last year. This continuous growth reflects the strength of its subsidiaries.

Operating Income and Net Income

• Operating income for the six-month period reached approximately $138.4 million, reflecting an 8.5% increase year-over-year. Net income attributable to shareholders decreased slightly by 4.5% to around $34.4 million, emphasizing the ongoing impact of increased financial expenses on the income statement.

Dividend Announcement and Financial Ratios

Dividend Declaration

• The Board of Directors has approved a cash dividend of NIS 1.69 per share, approximately $0.50 per share. This reflects the company’s commitment to returning value to shareholders despite the challenges faced this period.

Covenants Compliance

• As of June 30, 2025, Formula Systems remained compliant with all financial covenants under its debenture obligations, positioned favorably with a robust equity base and low debt-to-capitalization ratios.

Management Insights and Strategic Focus

Guy Bernstein, CEO of Formula Systems, expressed pride in the company’s resilient performance and commitment to driving growth through innovation. The adoption of key technologies like cloud computing, cybersecurity, and artificial intelligence has been crucial in delivering exceptional value to its clients.

Matrix IT’s Record Achievements

Matrix IT, a subsidiary of Formula Systems, reported impressive results, achieving record highs in revenues and income. This subsidiary, which emphasizes cutting-edge technological solutions, has leveraged its position to excel in the Israeli market.

Magic Software’s Growth and Future Outlook

Magic Software Enterprises has also shown remarkable growth, with revenue hitting a new high of $151.6 million. This growth is attributed to its strategic focus on digital transformation solutions, with an optimistic revenue forecast for the remainder of the year.

Sapiens’ Acquisitions and Strategic Moves

Sapiens International Corporation's recent acquisitions of AdvantageGo and Candella are expected to fortify its market position while aligning with the company's strategic goals in the insurance sector.

Anticipated IPO for Michpal Technologies

Furthermore, Michpal Technologies is gearing up for a potential IPO, highlighting a strong market presence in payroll and human resources solutions. The anticipated IPO signifies growth opportunities amid an evolving market landscape.

Frequently Asked Questions

What were the key financial highlights for Formula Systems in Q2 2025?

In Q2 2025, Formula Systems reported record revenues of $743.4 million, with a 4.4% increase in operating income, amounting to $67.9 million.

How did net income change for the first half of 2025?

Net income attributable to shareholders for the first six months of 2025 decreased by 4.5%, totaling approximately $34.4 million.

What dividend has Formula Systems declared for Q2 2025?

A cash dividend of NIS 1.69 per share has been declared, approximating $0.50 per share.

What is the outlook for Magic Software?

Magic Software is expected to continue building on its momentum, with revised revenue guidance suggesting substantial growth in the second half of 2025.

What strategic moves is Sapiens International Corporation making?

Sapiens has completed acquisitions that will enhance its offerings in the insurance segment, strengthening its position in the market.

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