OR YEHUDA, Israel, May 22, 2025 (GLOBE NEWSWIRE) -- Formula Systems (1985) Ltd. (Nasdaq and TASE: FORTY) ("Formula" or the "Company"), a global information technology group engaged, through its subsidiaries and affiliates, in providing software consulting services and computer-based business solutions and developing proprietary software products, today announced its first quarter ended March 31, 2025 results of operations.
Financial Highlights for the First Quarter Ended March 31, 2025
-- Revenues for the first quarter ended March 31, 2025 increased by 8.1%
year over year, reaching a first quarter all-time high of $754.7 million,
compared to $698.4 million in the same period last year.
-- Operating income for the first quarter ended March 31, 2025 increased by
12.7% year over year, reaching a first quarter all-time high of $70.5
million, compared to $62.6 million in the same period last year.
-- Net income attributable to Formula's shareholders for the first quarter
ended March 31, 2025 increased by 12.6% year over year, reaching a first
quarter all-time high of $19.3 million, or $1.23 per fully diluted share,
compared to $17.2 million, or $1.10 per fully diluted share, in the same
period last year.
-- As of March 31, 2025, Formula held 48.14%, 43.50%, 46.71%, 100%, 42.34%,
90.1%, 80%, 100%, 100% and 51% of the outstanding ordinary shares of
Matrix IT Ltd., Sapiens International Corporation N.V., Magic Software
Enterprises Ltd., Michpal Technologies Ltd., TSG IT Advanced Systems
Ltd., Insync Staffing Solutions, Inc., Ofek Aerial Photography Ltd., ZAP
Group Ltd., Shamrad Electronic (1997) Ltd., and Hashahar Telecom And
Electricity Ltd., respectively.
-- Consolidated cash and cash equivalents and short-term bank deposits
totaled approximately $526.8 million as of March 31, 2025, compared to
$$563.2 million as of December 31, 2024.
-- Total equity as of March 31, 2025, was $1.38 billion (representing 45.2%
of the total consolidated statements of financial position), compared to
$1.39 billion (representing 46.1% of the total consolidated statements of
financial position) as of December 31, 2024.
Declaration of Dividend for the First Quarter of 2025
-- Based on the Company's results, the Company's board of directors approved
the distribution of a cash dividend in an amount of NIS 1.57 per share
(approximately $0.44 per share) and in an aggregate amount of
approximately NIS 24.1 million (approximately $6.8 million).
-- The dividend is payable on July 22, 2025, to all of the Company's
shareholders of record at the close of trading on the Nasdaq Global
Select Market (or the Tel-Aviv Stock Exchange, as appropriate) on July 7,
2025. The dividend will be paid in New Israeli Shekels with respect to
the Company's ordinary shares traded on the Tel Aviv Stock Exchange and
American Depositary Receipts traded on the Nasdaq Global Select Market.
In accordance with Israeli tax law, the dividend is subject to withholding tax at source at the rate of 30% (if the recipient of the dividend is at the time of distribution or was at any time during the preceding 12-month period the holder of 10% or more of the Company's share capital) or 25% (for all other dividend recipients) of the dividend amount payable to each shareholder of record, subject to applicable exemptions.
Debentures Covenants
As of March 31, 2025, Formula was in compliance with all of its financial covenants under the debenture series issued by it, based on the following achievements:
Covenant 1
-- Target equity attributable to Formula's shareholders (excluding
non-controlling interests): above $325 million.
-- Actual equity attributable to Formula's shareholders as of March 31, 2025
was $681.0 million.
Covenant 2
-- Target ratio of net financial indebtedness to net capitalization (in each
case, as defined under the indenture for Formula's Series C and D Secured
Debentures): below 65%.
-- Actual ratio of net financial indebtedness to net capitalization, as of
March 31, 2025 was (4.72%).
Covenant 3
-- Target ratio of net financial indebtedness to EBITDA (based on the
accumulated calculation for the four most recent quarters): below 5.
-- Actual ratio of net financial indebtedness to EBITDA as of March 31, 2025
was (0.16).
Comments of Management
Commenting on the results, Guy Bernstein, CEO of Formula Systems, said: "Formula Systems group continues to demonstrate strong and consistent performance, making big strides across multiple fronts, as reflected by our first quarter record-breaking results recorded across all key operational financial indices: revenues, gross profit, operating income, net income and EBITDA. These results underscore our commitment to driving sustained growth and operational excellence across all segments of our business. We are pleased with the continued recognition as leaders in our areas of expertise, implementing fast-growing technologies, such as cloud, cyber, digital, data, DevOps, Insure-Tech and AI, which enable us to create significant value for our customers in managing, streamlining, accelerating and making their businesses thrive. We continue to uphold our core values of innovation, professionalism, agility, and transparency across our entire group. These principles enable us to consistently create significant value for our customers, ultimately contributing to their growth".
Stand-Alone Financial Measures
This press release presents, further below, certain stand-alone financial measures to reflect Formula's stand-alone financial position in reference to its assets and liabilities as the parent company of the group. These financial measures are prepared consistent with the accounting principles applied in the consolidated financial statements of the group. Such measures include investments in subsidiaries and a jointly controlled entity measured at cost adjusted by Formula's share in the investees' accumulated undistributed earnings and other comprehensive income or loss.
Formula believes that these financial measures provide useful information to management and investors regarding Formula's stand-alone financial position. Formula's management uses these measures to compare the Company's performance in the current period to that of prior periods for trend analyses. These measures are also used in financial reports prepared for management and in quarterly financial reports presented to the Company's board of directors. The Company believes that the use of these stand-alone financial measures provides an additional tool for investors to use in evaluating Formula's financial position.
Management of the Company does not consider these stand-alone measures in isolation or as an alternative to financial measures determined in accordance with GAAP. Formula urges investors to review the consolidated financial statements which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company's business or financial position.
About Formula
Formula Systems, whose ordinary shares are traded on the Tel-Aviv Stock Exchange and ADSs are traded on the Nasdaq Global Select Market, is a global information technology holding company engaged, through its subsidiaries and affiliates, in providing software consulting services and computer-based business solutions and developing proprietary software products.
For more information, visit www.formulasystems.com.
Press Contact:
Formula Systems (1985) Ltd.
+972-3-5389487
ir@formula.co.il
Forward Looking Statements
Certain matters discussed in this press release that are incorporated herein and therein by reference are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, that are based on our beliefs, assumptions and expectations, as well as information currently available to us. Such forward-looking statements may be identified by the use of the words "anticipate," "believe," "estimate," "expect," "may," "will," "plan" and similar expressions. Such statements reflect our current views with respect to future events and are subject to certain risks and uncertainties. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: adverse macro-economic trends and their duration, including inflation, relatively high interest rates, and supply chain delays, which trends may last for a significant period and materially adversely affect our results of operations; the degree of our success in our plans to leverage our global footprint to grow our sales; the degree of our success in integrating the companies that we have acquired through the implementation of our M&A growth strategy; the degree of our success in developing and deploying new technologies for software solutions that address the updated needs of our customers and serve as the basis for our revenues; the lengthy development cycles for our solutions, which may frustrate our ability to realize revenues and/or profits from our potential new solutions; our lengthy and complex sales cycles, which do not always result in the realization of revenues; the degree of our success in retaining our existing customers or competing effectively for greater market share; difficulties in successfully planning and managing changes in the size of our operations; the frequency of the long-term, large, complex projects
that we perform that involve complex estimates of project costs and profit margins, which sometimes change mid-stream; the challenges and potential liability that heightened privacy laws and regulations pose to our business; occasional disputes with clients, which may adversely impact our results of operations and our reputation; various intellectual property issues related to our business; potential unanticipated product vulnerabilities or cybersecurity breaches of our or our customers' systems particularly in the current hybrid office/work-from-home environment; risks related to industries, such as the insurance, healthcare, defense and the telecom, in which certain of our clients operate; risks posed by our global sales and operations, such as changes in regulatory requirements, supply chain disruptions, geopolitical, wide-spread viruses and epidemics or fluctuations in currency exchange rates; and risks related to our and our subsidiaries' principal location in Israel.
While we believe such forward-looking statements are based on reasonable assumptions, should one or more of the underlying assumptions prove incorrect, or these risks or uncertainties materialize, our actual results may differ materially from those expressed or implied by the forward-looking statements. Please read the risks discussed under the heading "Item 3.D Risk Factors" in our most recent Annual Report on Form 20-F for the year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission on May 14, 2025, in order to review conditions that we believe could cause actual results to differ materially from those contemplated by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason, or to conform those statements to actual results or to changes in our expectations.
FORMULA SYSTEMS (1985) LTD.
CONSOLIDATED CONDENSED STATEMENTS OF PROFIT OR LOSS
U.S. dollars in thousands (except per share data)
Three months ended
March 31,
----------------------
2025 2024
---------- ----------
Unaudited
----------------------
Revenues 754,682 698,401
Cost of revenues 573,974 534,186
---------- ----------
Gross profit 180,708 164,215
Research and development costs, net 21,088 20,217
Selling, marketing and general and administrative
expenses 89,076 81,413
Operating income 70,544 62,585
Financial expenses, net 5,538 5,602
---------- ----------
Income before taxes on income 65,006 56,983
Taxes on income 15,452 13,458
---------- ----------
Income after taxes 49,554 43,525
Share of profit of companies accounted for at
equity, net 828 103
---------- ----------
Net income 50,382 43,628
Net income attributable to non-controlling interests 31,066 26,469
---------- ----------
Net income attributable to Formula Systems
shareholders 19,316 17,159
Earnings per share (basic) 1.26 1.12
Earnings per share (diluted) 1.23 1.10
Number of shares used in computing earnings per
share (basic) 15,311,924 15,303,267
========== ==========
Number of shares used in computing earnings per
share (diluted) 15,729,173 15,570,761
========== ==========
FORMULA SYSTEMS (1985) LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
U.S. dollars in thousands
March 31, December 31,
2025 2024
----------- ------------
(Unaudited)
-----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 461,805 507,799
Short-term deposits 64,989 55,401
Trade receivables, net 831,108 803,235
Prepaid expenses and other accounts receivable 96,891 89,882
Inventories 27,771 30,728
Total current assets 1,482,564 1,487,045
----------------------------------------------- ----------- ------------
NON-CURRENT ASSETS:
Long-term investments and receivables 59,229 54,629
Deferred taxes 35,627 33,850
Investments in companies accounted for at
equity 38,572 39,196
Property, plants and equipment, net 51,851 51,795
Right-of-use assets 151,842 156,225
Intangible assets, net and goodwill 1,225,818 1,192,156
Total non-current assets 1,562,939 1,527,851
----------------------------------------------- ----------- ------------
Total assets 3,045,503 3,014,896
----------------------------------------------- =========== ============
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Loans from banks and others 150,474 141,782
Debentures 87,249 86,782
Current maturities of lease liabilities 44,581 45,240
Trade payables 283,893 296,211
Deferred revenues 180,619 173,959
Employees and payroll accrual 243,683 234,845
Other accounts payable 109,979 98,046
Dividend payable 14,227 -
Liabilities in respect of business
combinations 11,505 9,191
Put options of non-controlling interests 53,853 52,420
Total current liabilities 1,180,063 1,138,476
----------------------------------------------- ----------- ------------
LONG-TERM LIABILITIES:
Loans from banks and others 73,153 62,733
Debentures 153,840 188,090
Lease liabilities 117,645 119,586
Other long-term liabilities 12,221 11,708
Deferred taxes 45,334 42,894
Deferred revenues 25,934 12,522
Liabilities in respect of business
combinations 6,707 8,751
Put options of non-controlling interests 42,908 30,553
Employees benefit liabilities 10,443 10,238
Total long-term liabilities 488,185 487,075
----------------------------------------------- ----------- ------------
EQUITY
Total equity attributable to Formula Systems
(1985) Ltd. shareholders 681,020 679,338
Non-controlling interests 696,235 710,007
----------- ------------
Total equity 1,377,255 1,389,345
----------------------------------------------- ----------- ------------
Total liabilities and equity 3,045,503 3,014,896
----------------------------------------------- =========== ============
FORMULA SYSTEMS (1985) LTD.
STAND-ALONE STATEMENTS OF FINANCIAL POSITION
U.S. dollars in thousands
March 31, December 31,
2025 2024
--------- ------------
(Unaudited)
-----------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 33,361 25,599
Dividend receivable 31,086 12,013
Other accounts receivable and prepaid expenses 5,540 4,798 Total current assets 69,987 42,410 ------------------------------------------------- --------- ------------ NON-CURRENT ASSETS: Investment in subsidiaries and a jointly controlled entity (*) ------------------------------------------------ Matrix IT Ltd. 163,384 162,133 Sapiens International Corporation N.V. 257,263 264,349 Magic Software Enterprises Ltd. 130,152 133,786 TSG IT Advanced Systems Ltd. 19,640 20,453 Michpal Technologies Ltd. 73,902 69,127 ZAP Group 51,520 55,392 Other 48,578 47,722 --------- ------------ Total investment in subsidiaries and a jointly controlled entity 744,439 752,962 Other investments and Long term receivables 20,558 24,860 Property, plants and equipment, net 9 10 --------- ------------ Total non-current assets 765,006 777,832 ------------------------------------------------- --------- ------------ Total assets 834,993 820,242 ------------------------------------------------- ========= ============ LIABILITIES AND EQUITY CURRENT LIABILITIES: Loans from banks and others 2,251 2,294 Debentures 46,017 45,807 Trade payables 268 1,146 Other accounts payable 3,763 2,109 Put options of non-controlling interests 1,073 1,005 Dividends payable 14,227 - Total current liabilities 67,599 52,361 ------------------------------------------------- --------- ------------ LONG-TERM LIABILITIES: Loans from banks and others 2,428 3,047 Debentures 83,946 85,496 Total long-term liabilities 86,374 88,543 ------------------------------------------------- --------- ------------ EQUITY 681,020 679,338 --------- ------------ TOTAL LIABILITIES AND EQUITY 834,993 820,242 ------------------------------------------------- ========= ============ (*) The investments' carrying amounts are measured consistent with the accounting principles applied in the consolidated financial statements of the group and representing the investments' cost adjusted by Formula's share in the investees' accumulated undistributed earnings and other comprehensive income or loss.
(END) Dow Jones Newswires
May 22, 2025 09:47 ET (13:47 GMT)
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