Core Insights - Formula Systems reported a revenue increase of 11.3% year over year for Q2 2025, reaching an all-time high of approximately $743.4 million, driven by growth across its subsidiaries and affiliates [6][7] - Despite revenue growth, net income attributable to shareholders decreased by approximately 20.1% year over year to $15.1 million due to increased financial expenses related to currency exchange rate fluctuations [3][6] - The company declared a cash dividend of NIS 1.69 per share, amounting to approximately NIS 25.9 million, payable on October 28, 2025 [11][12] Financial Performance for Q2 2025 - Revenues for Q2 2025 were approximately $743.4 million, compared to $667.7 million in Q2 2024, marking an 11.3% increase [6] - Operating income for Q2 2025 increased by 4.4% year over year to approximately $67.9 million, with a notable one-time income item in Q2 2024 affecting year-over-year comparisons [6] - Net income attributable to shareholders for Q2 2025 was approximately $15.1 million, or $0.95 per diluted share, down from $18.8 million, or $1.20 per diluted share in Q2 2024 [6] Financial Performance for First Half of 2025 - Revenues for the first half of 2025 reached approximately $1.5 billion, a 9.7% increase from approximately $1.37 billion in the same period last year [7] - Operating income for the first half of 2025 was approximately $138.4 million, up 8.5% from approximately $127.6 million in the first half of 2024 [7] - Net income attributable to shareholders for the first half of 2025 decreased by 4.5% to approximately $34.4 million, or $2.20 per diluted share, compared to $36.0 million, or $2.31 per diluted share in the same period last year [7] Currency Impact - The New Israeli Shekel appreciated by 9.3% against the U.S. dollar during Q2 2025, adversely affecting the U.S. dollar value of the company's monetary assets and contributing to increased financial expenses [4][3] Subsidiary Performance Highlights - Matrix IT Ltd. reported a revenue increase of 8.9% year over year for Q2 2025, reaching an all-time high of NIS 1.45 billion (approximately $405.3 million) [13] - Magic Software achieved a revenue growth of 11.3% year over year, reaching $151.6 million, marking its first quarter crossing $150 million [13] - Sapiens completed acquisitions of AdvantageGo and Candella, enhancing its position in the insurance technology sector [13] Dividend Declaration - The board of directors approved a cash dividend of NIS 1.69 per share, approximately $0.50 per share, totaling around NIS 25.9 million [11][12] Compliance and Financial Health - As of June 30, 2025, Formula Systems was in compliance with all financial covenants under its debenture series, with actual equity attributable to shareholders at $722.9 million, significantly above the required target of $325 million [12][10]

[Executive Summary](index=1&type=section&id=Executive%20Summary) This section summarizes Formula Systems' Q2 and H1 2025 financial performance, key metrics, and strategic developments [Financial Highlights for the Quarter Ended June 30, 2025](index=1&type=section&id=Financial%20Highlights%20for%20Q2%202025) Formula Systems reported strong Q2 2025 with record revenues, but net income attributable to shareholders decreased due to higher financial expenses, primarily from the appreciation of the New Israeli Shekel against the U.S. dollar Q2 2025 Key Financial Highlights (YoY) | Metric | Q2 2025 (approx.) | Q2 2024 (approx.) | Change (%) | | :--------------------------------------- | :---------------- | :---------------- | :--------- | | Revenues | $743.4 million | $667.7 million | +11.3% | | Operating income | $67.9 million | $65.0 million | +4.4% | | Operating income (excl. one-time item) | N/A | N/A | +9.3% | | Net income attributable to shareholders | $15.1 million | $18.8 million | -20.1% | | Diluted EPS | $0.95 | $1.20 | -20.8% | | Financial expenses, net | $10.2 million | $3.8 million | +168.4% | - The **decrease** in net income was primarily driven by an **increase** in Financial expenses, net, totaling **approximately $10.2 million** in Q2 2025, compared to **approximately $3.8 million** in the same period last year. This **increase** mainly reflected adverse exchange rate differences resulting from the **9.3%** appreciation of the New Israeli Shekel (**NIS**) against the U.S. dollar[3](index=3&type=chunk)[4](index=4&type=chunk) [Financial Highlights for the Six-Month Period Ended June 30, 2025](index=2&type=section&id=Financial%20Highlights%20for%20H1%202025) The first half of 2025 also saw record revenues and increased operating income, but net income attributable to shareholders declined due to higher financial expenses, while the company also reported its ownership stakes, cash position, and total equity H1 2025 Key Financial Highlights (YoY) | Metric | H1 2025 (approx.) | H1 2024 (approx.) | Change (%) | | :--------------------------------------- | :---------------- | :---------------- | :--------- | | Revenues | $1.5 billion | $1.37 billion | +9.7% | | Operating income | $138.4 million | $127.6 million | +8.5% | | Net income attributable to shareholders | $34.4 million | $36.0 million | -4.5% | | Diluted EPS | $2.20 | $2.31 | -4.8% | Balance Sheet Highlights (U.S. dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Consolidated cash and cash equivalents and short-term bank deposits | $406.2 million | $563.2 million | | Total equity | $1.46 billion | $1.39 billion | - Formula Systems held **significant ownership stakes** in its key subsidiaries as of June 30, 2025: Matrix IT Ltd. (**48.13%**), Sapiens International Corporation N.V. (**43.50%**), Magic Software Enterprises Ltd. (**46.71%**), Michpal Technologies Ltd. (**100%**), TSG IT Advanced Systems Ltd. (**42.34%**), Insync Staffing Solutions, Inc. (**90.1%**), Ofek Aerial Photography Ltd. (**80%**), ZAP Group Ltd. (**100%**), Shamrad Electronics (1997) Ltd. (**100%**), and Hashahar Telecom and Electricity Ltd. (**51%**)[9](index=9&type=chunk) [Dividend Declaration](index=2&type=section&id=Dividend%20Declaration) This section details the board's approval and specifics of the cash dividend for Q2 2025 [Declaration of Dividend for the Second Quarter of 2025](index=2&type=section&id=Declaration%20of%20Dividend%20for%20the%20Second%20Quarter%20of%202025) Formula Systems' board of directors approved the distribution of a cash dividend for the second quarter of 2025, payable in October 2025, subject to Israeli withholding tax laws Q2 2025 Dividend Details | Metric | Value | | :--------------------------------------- | :--------------------------------------- | | Dividend per share | NIS 1.69 (approx. $0.50) | | Aggregate amount | approx. NIS 25.9 million (approx. $7.7 million) | | Payment Date | October 28, 2025 | | Record Date | October 14, 2025 | | Withholding Tax (Israeli tax law) | 30% (for 10%+ shareholders) or 25% (for others) | - 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[9](index=9&type=chunk) [Comments of Management](index=3&type=section&id=Comments%20of%20Management) This section presents management's perspective on the group's performance and strategic updates from key subsidiaries [Formula Systems Group Overview](index=3&type=section&id=Formula%20Systems%20Group%20Overview) CEO Guy Bernstein highlighted the Formula Systems group's strong and consistent performance, achieving record first-half results across key financial and operational metrics, driven by an ongoing focus on sustainable growth and adoption of fast-growing technologies - The Formula Systems group continues to demonstrate **strong and consistent performance**, achieving **record first-half results** across key financial and operational metrics, including revenues, gross profit, operating income and EBITDA[10](index=10&type=chunk) - The company is implementing and advancing **fast-growing technologies** such as cloud, cyber, digital, data, DevOps, InsureTech and AI to generate **meaningful value** for customers by helping them manage, streamline, accelerate and expand their businesses[10](index=10&type=chunk) [Subsidiary Performance & Strategic Updates](index=3&type=section&id=Subsidiary%20Performance%20%26%20Strategic%20Updates) This section details the individual performance and strategic initiatives of Formula Systems' key subsidiaries, including Matrix IT, Magic Software, Sapiens, Michpal Technologies, TSG IT Advanced Systems, and Zap Group, highlighting their contributions to the overall group's success and resilience in challenging market conditions [Matrix IT Ltd.](index=3&type=section&id=Matrix%20IT%20Ltd.) Matrix reported its best second quarter in history with record results across all key financial indices, driven by its leadership in high-demand technologies and extensive U.S. operations, demonstrating resilience even during challenging periods Matrix Q2 Performance (YoY, in NIS) | Metric | Q2 (NIS) | Change (%) | | :--------------------------------------- | :------------- | :--------- | | Revenues | 1.45 billion | +8.9% | | Operating income | 126.7 million | +13.9% | - Matrix is recognized as a **market leader** in Israel in the implementation of **fast-growing technologies** such as cloud, cyber, digital, data, DevOps and AI, and maintains its **vitality and leadership** even during challenging political and security periods[10](index=10&type=chunk) [Magic Software Enterprises Ltd.](index=3&type=section&id=Magic%20Software%20Enterprises%20Ltd.) Magic Software achieved strong Q2 growth, crossing $150 million in quarterly revenues for the first time, reflecting success in digital and cloud transformation solutions, and revised its full-year 2025 revenue guidance upwards Magic Software Q2 Performance & Guidance | Metric | Value | | :--------------------------------------- | :--------------------------------------- | | Q2 Revenues | $151.6 million (+11.3% YoY) | | Full-Year 2025 Revenue Guidance (Revised) | $600 million - $610 million (from $593 million - $603 million) | | Anticipated Annual Revenue Growth Rate | 8.6% to 10.4% (compared to prior fiscal year) | - Magic Software's performance reflects its **strategic focus** on delivering value to customers through innovative digital and cloud transformation solutions, enabling **consistent growth** despite challenging political and security periods[10](index=10&type=chunk) [Sapiens International Corporation N.V.](index=5&type=section&id=Sapiens%20International%20Corporation%20N.V.) Sapiens completed two strategic acquisitions to strengthen its market position, and a significant agreement was announced for Advent to acquire a majority stake, with Formula Systems selling 72% of its interest while retaining 18%, expecting a substantial capital gain - Sapiens completed the **acquisitions** of AdvantageGo and Candella in Q2 2025, expected to **strengthen its position** in the Property & Casualty (P&C) and Life segments and support 2025 strategic priorities[13](index=13&type=chunk) - Advent will acquire a **majority stake** in Sapiens for **$43.50** per common share, representing a premium of **approximately 64%** over Sapiens' undisturbed closing share price on August 8, 2025[13](index=13&type=chunk) Formula Systems' Sapiens Transaction Details | Metric | Value | | :--------------------------------------- | :--------------------------------------- | | Formula Systems' interest sold | Approximately 72% | | Formula Systems' retained ownership | Approximately 18% | | Expected Capital Gain (before costs) | Approximately $775 million | | Expected Closing | Q4 2025 or Q1 2026 | [Michpal Technologies Ltd.](index=5&type=section&id=Michpal%20Technologies%20Ltd.) Michpal Technologies is in advanced stages of IPO preparation, subject to market and regulatory conditions, and reported record first-half revenues of NIS 97.2 million (approx. $27 million), reflecting 29.1% year-over-year growth, driven by comprehensive human capital management solutions - Michpal Technologies is currently in **advanced stages of preparation** for an initial public offering (IPO), subject to prevailing market conditions and regulatory approvals[14](index=14&type=chunk) Michpal Technologies H1 2025 Revenues | Metric | H1 2025 (approx.) | Change (%) | | :--------------------------------------- | :---------------- | :--------- | | Revenues | NIS 97.2 million ($27 million) | +29.1% YoY | - The Michpal Group engages in payroll, recruitment, time and attendance, pension administration, and human resources, offering a broad suite of services and software products integrating cloud-based, artificial intelligence, and automation technologies[14](index=14&type=chunk)[15](index=15&type=chunk) [TSG IT Advanced Systems Ltd.](index=6&type=section&id=TSG%20IT%20Advanced%20Systems%20Ltd.) TSG concluded H1 2025 with record-breaking results, demonstrating significant growth in revenue and profits, driven by expansion, enhanced marketing, product development, and active M&A initiatives TSG H1 2025 Performance (YoY, in NIS) | Metric | H1 2025 (approx.) | H1 2024 (approx.) | Change (%) | | :--------------------------------------- | :---------------- | :---------------- | :--------- | | Revenues | NIS 205.6 million ($57.2 million) | N/A | +35% | | Operating income | NIS 18.5 million ($5.1 million) | NIS 12.4 million ($3.4 million) | +49.8% | - TSG continues to advance the **expansion and enhancement** of its operations, **strengthen marketing and sales capabilities**, **expand product development**, and pursue **mergers and acquisitions initiatives**[16](index=16&type=chunk) [Zap Group Ltd.](index=6&type=section&id=Zap%20Group%20Ltd.) Zap Group launched a groundbreaking E-Commerce Marketplace platform, transforming its business model and driving strong results with tens of thousands of transactions and millions in NIS revenues, hosting over 400 active stores and 100,000 products - Zap Group launched its **groundbreaking E-Commerce Marketplace platform**, marking a **pivotal transformation** in its business model by integrating cutting-edge technology and service-driven solutions[16](index=16&type=chunk) - The Marketplace platform is delivering **strong and consistent results**, with tens of thousands of transactions and revenues in the tens of millions of **NIS**, hosting over **400 active stores** offering more than **100,000 products**[16](index=16&type=chunk) - In response to broader economic challenges, Zap Group has adopted a **prudent approach** to investments and operations, prioritizing **operational efficiency** and **cost optimization** while remaining committed to growth[16](index=16&type=chunk) [Debentures Covenants](index=3&type=section&id=Debentures%20Covenants) This section confirms Formula Systems' compliance with all financial covenants under its debenture series as of June 30, 2025 [Compliance with Financial Covenants](index=3&type=section&id=Compliance%20with%20Financial%20Covenants) As of June 30, 2025, Formula Systems was in full compliance with all its financial covenants under the debenture series, significantly exceeding target equity and maintaining low ratios for net financial indebtedness - As of June 30, 2025, Formula Systems was in **compliance** with all of its financial covenants under the debenture series issued by it[10](index=10&type=chunk) Debentures Covenants Compliance as of June 30, 2025 | Covenant | Target | Actual | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Equity attributable to Formula Systems' shareholders | Above $325 million | $722.9 million | | Ratio of net financial indebtedness to net capitalization | Below 65% | 6.13% | | Ratio of net financial indebtedness to EBITDA (four most recent quarters) | Below 5 | 0.23 | [Stand-Alone Financial Measures](index=6&type=section&id=Stand-Alone%20Financial%20Measures) This section explains the purpose and application of Formula Systems' stand-alone financial measures for parent company insights [Purpose and Application of Stand-Alone Financial Measures](index=6&type=section&id=Purpose%20and%20Application%20of%20Stand-Alone%20Financial%20Measures) Formula Systems presents stand-alone financial measures to provide additional insight into its parent company financial position, measured consistently with consolidated accounting principles, used by management for trend analysis but not as an alternative to GAAP consolidated statements - These financial measures provide **useful information** to management and investors regarding Formula Systems' **stand-alone financial position** and are used to compare performance and for internal financial reports[18](index=18&type=chunk) - Investments in subsidiaries and a jointly controlled entity are measured at cost adjusted by Formula Systems' share in the investees' accumulated undistributed earnings and other comprehensive income or loss[17](index=17&type=chunk) - Management does **not consider** these stand-alone measures in isolation or as an alternative to financial measures determined in accordance with GAAP, urging investors to review consolidated financial statements[19](index=19&type=chunk) [Important Notes & Company Information](index=6&type=section&id=Important%20Notes%20%26%20Company%20Information) This section includes disclaimers regarding Michpal Technologies' IPO, company background, and forward-looking statements [Important Note re: Potential Initial Public Offering of Michpal Technologies](index=6&type=section&id=Important%20Note%20re%3A%20Potential%20Initial%20Public%20Offering%20of%20Michpal%20Technologies) This press release explicitly states it is not an offer for sale of Michpal Technologies securities, and any potential IPO will only occur pursuant to an effective registration statement filed under the U.S. Securities Act of 1933 - This press release is **not an offer for sale** of securities of Michpal Technologies[20](index=20&type=chunk) - Any potential initial public offering of securities of Michpal Technologies will only occur pursuant to an effective registration statement filed under the U.S. Securities Act of 1933, as amended, and a prospectus forming a part thereof[20](index=20&type=chunk) [About Formula Systems](index=6&type=section&id=About%20Formula%20Systems) Formula Systems is a global information technology holding company, traded on Nasdaq and TASE, engaged in providing software consulting services, computer-based business solutions, and developing proprietary software products through its subsidiaries and affiliates - Formula Systems is a **global information technology holding company**, whose ordinary shares are traded on the Tel-Aviv Stock Exchange and ADSs are traded on the Nasdaq Global Select Market[21](index=21&type=chunk) - The company is engaged, through its subsidiaries and affiliates, in providing software consulting services and computer-based business solutions and developing proprietary software products[21](index=21&type=chunk) [Forward Looking Statements](index=8&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements based on beliefs, assumptions, and expectations, subject to risks and uncertainties that could cause actual results to differ materially, cautioning investors not to rely on these statements - The press release contains **forward-looking statements** based on Formula Systems' beliefs, assumptions, and expectations, subject to certain **risks and uncertainties**[25](index=25&type=chunk) - Important factors that could cause actual results to **differ materially** include adverse macro-economic trends, M&A integration success, new technology development, lengthy sales cycles, customer retention, privacy laws, cybersecurity breaches, industry-specific risks, global operations risks (e.g., currency fluctuations), and risks related to its principal location in Israel[25](index=25&type=chunk) - Investors should **not rely** upon **forward-looking statements** as predictions of future events and are urged to read the **risks discussed** under 'Item 3.D Risk Factors' in the company's most recent Annual Report on Form 20-F[26](index=26&type=chunk) [Financial Statements](index=9&type=section&id=Financial%20Statements) This section presents Formula Systems' consolidated and stand-alone financial statements for the reported periods [Consolidated Condensed Statements of Profit or Loss](index=9&type=section&id=Consolidated%20Condensed%20Statements%20of%20Profit%20or%20Loss) The consolidated profit or loss statement provides a detailed breakdown of revenues, expenses, and net income for the three and six months ended June 30, 2025, compared to the same periods in 2024, highlighting key financial performance metrics Consolidated Condensed Statements of Profit or Loss (U.S. dollars in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | 743,369 | 667,680 | 1,498,051 | 1,366,081 | | Cost of revenues | 557,874 | 501,234 | 1,131,848 | 1,035,420 | | Gross profit | 185,495 | 166,446 | 366,203 | 330,661 | | Research and development costs, net | 23,821 | 20,432 | 44,909 | 40,649 | | Selling, marketing and general and administrative expenses | 93,785 | 80,975 | 182,861 | 162,388 | | Operating income | 67,889 | 65,039 | 138,433 | 127,624 | | Financial expenses, net | 10,226 | 3,829 | 15,764 | 9,431 | | Income before taxes on income | 57,663 | 61,210 | 122,669 | 118,193 | | Taxes on income | 14,428 | 13,650 | 29,880 | 27,108 | | Income after taxes | 43,235 | 47,560 | 92,789 | 91,085 | | Share of profit (loss) of companies accounted for at equity, net | 211 | (135) | 1,039 | (32) | | Net income | 43,446 | 47,425 | 93,828 | 91,053 | | Net income attributable to non-controlling interests | 28,393 | 28,586 | 59,459 | 55,055 | | Net income attributable to Formula Systems shareholders | 15,053 | 18,839 | 34,369 | 35,998 | | Earnings per share (basic) | 0.98 | 1.23 | 2.26 | 2.36 | | Earnings per share (diluted) | 0.95 | 1.20 | 2.20 | 2.31 | [Consolidated Statements of Financial Position](index=10&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) The consolidated balance sheet presents a comprehensive view of Formula Systems' assets, liabilities, and equity as of June 30, 2025, compared to December 31, 2024, detailing changes in current and non-current accounts Consolidated Statements of Financial Position (U.S. dollars in thousands) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--------------------------------------- | :------------------------ | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | 393,190 | 507,799 | | Short-term deposits | 12,975 | 55,401 | | Trade receivables, net | 883,206 | 803,235 | | Prepaid expenses and other accounts receivable | 109,612 | 89,882 | | Inventories | 48,100 | 30,728 | | Total current assets | 1,447,083 | 1,487,045 | | Long-term investments and receivables | 65,344 | 54,629 | | Deferred taxes (non-current) | 39,572 | 33,850 | | Investments in companies accounted for at equity | 35,673 | 39,196 | | Property, plants and equipment, net | 55,985 | 51,795 | | Right-of-use assets | 170,188 | 156,225 | | Intangible assets, net and goodwill | 1,382,824 | 1,192,156 | | Total non-current assets | 1,749,586 | 1,527,851 | | **Total assets** | **3,196,669** | **3,014,896** | | **LIABILITIES AND EQUITY** | | | | Loans from banks and others (current) | 158,385 | 141,782 | | Debentures (current) | 93,410 | 86,782 | | Current maturities of lease liabilities | 49,649 | 45,240 | | Trade payables | 287,712 | 296,211 | | Deferred revenues (current) | 205,175 | 173,959 | | Employees and payroll accrual | 239,596 | 234,845 | | Other accounts payable | 93,116 | 98,046 | | Dividend payable | 7,139 | - | | Liabilities in respect of business combinations (current) | 8,348 | 9,191 | | Put options of non-controlling interests (current) | 50,715 | 52,420 | | Total current liabilities | 1,193,245 | 1,138,476 | | Loans from banks and others (long-term) | 79,319 | 62,733 | | Debentures (long-term) | 170,561 | 188,090 | | Lease liabilities (long-term) | 132,549 | 119,586 | | Other long-term liabilities | 12,615 | 11,708 | | Deferred taxes (long-term) | 51,421 | 42,894 | | Deferred revenues (long-term) | 16,672 | 12,522 | | Liabilities in respect of business combinations (long-term) | 8,074 | 8,751 | | Put options of non-controlling interests (long-term) | 56,882 | 30,553 | | Employees benefit liabilities | 12,801 | 10,238 | | Total long-term liabilities | 540,894 | 487,075 | | Total equity attributable to Formula Systems (1985) Ltd. shareholders | 722,920 | 679,338 | | Non-controlling interests | 739,610 | 710,007 | | **Total equity** | **1,462,530** | **1,389,345** | | **Total liabilities and equity** | **3,196,669** | **3,014,896** | [Stand-Alone Statements of Financial Position](index=12&type=section&id=Stand-Alone%20Statements%20of%20Financial%20Position) The stand-alone balance sheet for Formula Systems (parent company) as of June 30, 2025, and December 31, 2024, details its cash, investments in subsidiaries, and equity, providing a specific view of the parent company's financial structure Stand-Alone Statements of Financial Position (U.S. dollars in thousands) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--------------------------------------- | :------------------------ | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | 56,603 | 25,599 | | Dividend receivable | 9,438 | 12,013 | | Other accounts receivable and prepaid expenses | 5,220 | 4,798 | | Total current assets | 71,261 | 42,410 | | Investment in subsidiaries and a jointly controlled entity | 788,775 | 752,962 | | Other investments and Long term receivables | 23,408 | 24,860 | | Property, plants and equipment, net | 10 | 10 | | Total non-current assets | 812,193 | 777,832 | | **Total assets** | **883,454** | **820,242** | | **LIABILITIES AND EQUITY** | | | | Loans from banks and others (current) | 2,478 | 2,294 | | Debentures (current) | 49,562 | 45,807 | | Trade payables | 1,268 | 1,146 | | Other accounts payable | 4,189 | 2,109 | | Put options of non-controlling interests | 1,185 | 1,005 | | Dividends payable | 7,139 | - | | Total current liabilities | 65,821 | 52,361 | | Loans from banks and others (long-term) | 2,059 | 3,047 | | Debentures (long-term) | 92,654 | 85,496 | | Total long-term liabilities | 94,713 | 88,543 | | **Equity** | **722,920** | **679,338** | | **TOTAL LIABILITIES AND EQUITY** | **883,454** | **820,242** |

Core Insights - Formula Systems reported a record high revenue of $754.7 million for the first quarter of 2025, marking an 8.1% increase year over year [1][7] - The net income for the same period reached $19.3 million, reflecting a 12.6% year-over-year growth [1][7] - The company’s operating income also saw a significant rise of 12.7%, totaling $70.5 million [7] Financial Performance - Revenues for Q1 2025 were $754.7 million, compared to $698.4 million in Q1 2024 [7] - Operating income increased to $70.5 million from $62.6 million year over year [7] - Net income attributable to shareholders rose to $19.3 million, or $1.23 per diluted share, up from $17.2 million, or $1.10 per diluted share in the previous year [7] Dividend Declaration - The board approved a cash dividend of NIS 1.57 per share, approximately $0.44 per share, totaling around NIS 24.1 million (approximately $6.8 million) [7] - The dividend is scheduled for payment on July 22, 2025, to shareholders of record as of July 7, 2025 [7] Financial Position - As of March 31, 2025, consolidated cash and cash equivalents totaled approximately $526.8 million, down from $563.2 million as of December 31, 2024 [7] - Total equity was reported at $1.38 billion, a slight decrease from $1.39 billion at the end of 2024 [7] Management Commentary - The CEO highlighted the company's strong performance across all key financial metrics, emphasizing growth in areas such as cloud, cyber, digital, data, DevOps, Insure-Tech, and AI [9] - The management reiterated their commitment to innovation and operational excellence, which they believe contributes to sustained growth and value creation for customers [9]

[Formula Systems First Quarter 2025 Financial Results](index=1&type=section&id=Formula_Systems_First_Quarter_2025_Financial_Results) Formula Systems reported strong Q1 2025 financial results, with significant growth in revenue, operating income, and net income, and declared a dividend [Financial Highlights](index=1&type=section&id=Financial_Highlights) Formula Systems achieved record Q1 2025 results, with revenue up 8.1% to $754.7 million and operating income up 12.7% to $70.5 million Financial Performance Overview | Metric | Q1 2025 ($) | Q1 2024 ($) | % Change YoY | | :--- | :--- | :--- | :--- | | Revenues | $754.7 M | $698.4 M | +8.1% | | Operating Income | $70.5 M | $62.6 M | +12.7% | | Net Income Attributable to Shareholders | $19.3 M | $17.2 M | +12.6% | | Diluted EPS | $1.23 | $1.10 | +11.8% | - As of March 31, 2025, the company holds significant stakes in several subsidiaries, including **48.14% in Matrix IT Ltd.**, **43.50% in Sapiens International Corporation N.V.**, and **46.71% in Magic Software Enterprises Ltd.**[2](index=2&type=chunk) - Consolidated cash, cash equivalents, and short-term bank deposits totaled approximately **$526.8 million** as of March 31, 2025, down from **$563.2 million** at the end of 2024[2](index=2&type=chunk) [Dividend Declaration and Debentures Covenants](index=2&type=section&id=Dividend_Declaration_and_Debentures_Covenants) The Board approved a Q1 2025 cash dividend of NIS 1.57 per share, totaling $6.8 million, and confirmed compliance with all debenture covenants Q1 2025 Dividend Details | Dividend Detail | Value (NIS/$) | | :--- | :--- | | Amount per Share | NIS 1.57 (~$0.44) | | Total Amount | ~NIS 24.1 million (~$6.8 million) | | Record Date | July 7, 2025 | | Payment Date | July 22, 2025 | Debenture Covenant Compliance | Covenant | Target | Actual (as of Mar 31, 2025) ($/%) | | :--- | :--- | :--- | | Equity Attributable to Shareholders | > $325 M | $681.0 M | | Net Financial Indebtedness to Net Capitalization | < 65% | (4.72)% | | Net Financial Indebtedness to EBITDA (LTM) | < 5 | (0.16) | [Management Commentary](index=2&type=section&id=Management_Commentary) CEO Guy Bernstein highlighted record-breaking Q1 results, attributing success to growth, operational excellence, and leadership in fast-growing technologies - The CEO emphasized that the first quarter saw **record-breaking results** across all key operational financial indices: revenues, gross profit, operating income, net income, and EBITDA[5](index=5&type=chunk) - The company's success is driven by its expertise in fast-growing technologies, including **cloud, cyber, digital, data, DevOps, Insure-Tech, and AI**[5](index=5&type=chunk) - Core values of innovation, professionalism, agility, and transparency are credited with enabling the company to create significant value for its customers and contribute to their growth[5](index=5&type=chunk) [Financial Statements](index=5&type=section&id=Financial_Statements) This section presents the unaudited consolidated and stand-alone financial statements for the period ended March 31, 2025 [Consolidated Condensed Statements of Profit or Loss](index=5&type=section&id=Consolidated_Condensed_Statements_of_Profit_or_Loss) Formula Systems reported Q1 2025 revenues of $754.7 million and net income attributable to shareholders of $19.3 million Consolidated Condensed Statements of Profit or Loss (U.S. dollars in thousands) | (U.S. dollars in thousands) | Q1 2025 (Unaudited) | Q1 2024 | | :--- | :--- | :--- | | Revenues | 754,682 | 698,401 | | Gross profit | 180,708 | 164,215 | | Operating income | 70,544 | 62,585 | | Net income | 50,382 | 43,628 | | Net income attributable to Formula Systems shareholders | 19,316 | 17,159 | | Earnings per share (diluted) | $1.23 | $1.10 | [Consolidated Statements of Financial Position](index=6&type=section&id=Consolidated_Statements_of_Financial_Position) As of March 31, 2025, total assets reached $3.05 billion, with total equity at $1.38 billion Consolidated Statements of Financial Position (U.S. dollars in thousands) | (U.S. dollars in thousands) | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | 1,482,564 | 1,487,045 | | Total non-current assets | 1,562,939 | 1,527,851 | | **Total assets** | **3,045,503** | **3,014,896** | | Total current liabilities | 1,180,063 | 1,138,476 | | Total long-term liabilities | 488,185 | 487,075 | | **Total equity** | **1,377,255** | **1,389,345** | | **Total liabilities and equity** | **3,045,503** | **3,014,896** | [Stand-Alone Statements of Financial Position](index=8&type=section&id=Stand-Alone_Statements_of_Financial_Position) The parent company's stand-alone financial statement shows total assets of $835.0 million, with total equity at $681.0 million - This statement reflects the financial position of Formula Systems as the parent company, with investments in subsidiaries measured at cost adjusted for accumulated undistributed earnings[8](index=8&type=chunk)[20](index=20&type=chunk) Stand-Alone Statements of Financial Position (U.S. dollars in thousands) | (U.S. dollars in thousands) | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | 69,987 | 42,410 | | Total investment in subsidiaries | 744,439 | 752,962 | | **Total assets** | **834,993** | **820,242** | | Total liabilities | 153,973 | 140,904 | | **Total equity** | **681,020** | **679,338** | | **Total liabilities and equity** | **834,993** | **820,242** | [Company Overview and Forward-Looking Statements](index=3&type=section&id=Company_Overview_and_Forward-Looking_Statements) Formula Systems is a global IT holding company, with forward-looking statements cautioning on risks including macroeconomic trends and geopolitical factors - Formula Systems is a global information technology holding company engaged in providing **software consulting services, computer-based business solutions, and developing proprietary software products**[11](index=11&type=chunk) - The company identifies several risk factors that could impact future performance, including **adverse macroeconomic trends (inflation, high interest rates), challenges in M&A integration, lengthy sales cycles, cybersecurity breaches, and geopolitical risks** associated with its principal location in Israel[14](index=14&type=chunk)[15](index=15&type=chunk)

Company Overview - Formula Systems (1985) Ltd. is a global information technology group that provides software consulting services and computer-based business solutions, as well as developing proprietary software products [3]. Financial Reporting - The company filed its annual report on Form 20-F for the fiscal year ended December 31, 2024, with the U.S. Securities and Exchange Commission (SEC) on May 14, 2025 [1]. - The annual report includes audited financial statements for 2024 and is accessible on the SEC's website and the company's investor relations website [1]. Shareholder Information - Formula will provide a hard copy of its 2024 annual report on Form 20-F, including complete audited financial statements, free of charge to shareholders upon request [2].

[Part I](index=12&type=section&id=PART%20I) This section details the company's key risks, business operations, financial performance, governance, and market risk exposures [Key Information](index=12&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section outlines the principal risks of investing in the company, including business, intellectual property, international operations, and investment factors [Risks Related to Our Business, Our Industry and Our Financial Condition](index=12&type=section&id=Risks%20Related%20to%20Our%20Business%2C%20Our%20Industry%20and%20Our%20Financial%20Condition) The company faces risks from its M&A strategy, technology development, macroeconomic factors, talent retention, and customer concentration - The company's M&A growth strategy involves **significant integration risks** due to numerous acquisitions across its subsidiaries in 2024 and 2025[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) - Macroeconomic headwinds, including inflation and high interest rates, have **adversely affected customer capital budgets**, potentially impacting revenues, profitability, and cash flows[53](index=53&type=chunk)[54](index=54&type=chunk) - The company faces **intense competition for skilled technology professionals**, potentially leading to talent shortages and **increased wage expenses** affecting profitability[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk) - A **significant portion of revenue** comes from a few large customers, with **13.2%** of Sapiens' and Magic Software's 2024 revenue from their largest clients, posing a risk if business is lost[79](index=79&type=chunk) - The company is pursuing a **potential merger** between Matrix and Magic Software, which involves **integration risks** and requires shareholder and regulatory approvals[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) [Risks Related to Intellectual Property](index=33&type=section&id=Risks%20Related%20to%20Intellectual%20Property) The company faces significant intellectual property risks, including potential infringement claims, insufficient protection of its own IP, and risks from open-source software use - The company may face **costly litigation** from third-party infringement claims on patents, copyrights, or trademarks, potentially resulting in significant damages or unfavorable royalty agreements[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) - Protection of the company's own intellectual property relies on contractual provisions and trade secret law, which may not be fully effective, potentially leading to **unauthorized use of its products**[127](index=127&type=chunk) - The use of open-source software poses a risk that the company might be required to **release the source code of its proprietary software**, potentially diminishing its value[130](index=130&type=chunk)[131](index=131&type=chunk) [Risks Relating to Our International Operations](index=35&type=section&id=Risks%20Relating%20to%20Our%20International%20Operations) The company's international operations expose it to foreign currency fluctuations, regulatory complexities, and geopolitical risks, particularly in Israel and India - Approximately **37% of revenues in 2024** were derived from outside Israel, exposing the company to risks from foreign currency fluctuations, varying regulatory requirements, and geopolitical instability[135](index=135&type=chunk) - Fluctuations in exchange rates between the USD, NIS, GBP, and Euro can significantly impact reported revenues and profitability, with NIS depreciation negatively affecting 2023 revenues[133](index=133&type=chunk) - The ongoing war between Israel and terrorist groups poses a **material risk to operations**, potentially affecting workforce availability, supply chains, and business continuity[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) - The company's significant presence in India (**48% of Sapiens' employees**) exposes it to challenges such as volatile economic conditions, poor IP protection, and compliance with anti-corruption laws[169](index=169&type=chunk)[170](index=170&type=chunk) [Risks Related to an Investment in Our Traded Securities and to Our Consolidated Holdings](index=37&type=section&id=Risks%20Related%20to%20an%20Investment%20in%20Our%20Traded%20Securities%20and%20to%20Our%20Consolidated%20Holdings) Investing in the company's securities involves risks such as limited trading volume, influence from the largest shareholder, and potential adverse tax consequences - There is **limited trading volume** for the company's ADSs on Nasdaq and ordinary shares on the TASE, which can reduce liquidity and increase price volatility for investors[140](index=140&type=chunk) - Asseco Poland S.A., the largest shareholder with approximately **25.82% ownership** as of May 1, 2025, can significantly influence shareholder votes and major corporate transactions[146](index=146&type=chunk) - A **material weakness in internal control over financial reporting** was identified at the subsidiary Magic Software as of December 31, 2024, related to revenue cycle documentation[148](index=148&type=chunk) - As a foreign private issuer, the company follows certain Israeli corporate governance practices instead of Nasdaq requirements, potentially resulting in **less information and protection for shareholders**[176](index=176&type=chunk)[177](index=177&type=chunk) [Information on the Company](index=48&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) Formula Systems is a global IT company operating through its investees, detailing its history, M&A strategy, and subsidiary operations [A. History and Development of the Company](index=48&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) This section details the company's M&A-driven growth strategy and recent acquisition activities by Formula and its subsidiaries since 2022 - Formula's growth strategy is centered on **M&A** to expand its customer base, geographic footprint, and service offerings[191](index=191&type=chunk) Recent M&A Activity (2024-2025) | Acquiring Entity | Target Company | Date | Deal Value / Details | | :--- | :--- | :--- | :--- | | Sapiens | AdvantageGo | April 2025 (Announced) | GBP 43.0 million (approx. $55.9 million) enterprise value | | Sapiens | Candela Labs | April 2025 (Announced) | $22.0 million cash | | Matrix | Gav Systems Ltd. & Gav Expert Ltd. | Feb 2025 | Acquired 70% for approx. $12.5 million | | Matrix | Alacer Group | Nov 2024 | Acquired 51% for approx. $1.95 million cash + contingent consideration | | Matrix | Moshe Ort Holdings Ltd. (Ortec) | Dec 2024 | Approx. $5.4 million cash + contingent consideration | | Magic Software | Theoris Group Inc. | April 2024 | $13.1 million (including deferred payments) | | Magic Software | Executive Life Ltd. | Oct 2024 | $1.5 million (including deferred payment) | | Michpal | Formally Smart Form System Ltd. | March 2025 | Acquired remaining shares for approx. $7.7 million | | Michpal | Meida Computers Software Solutions | July 2024 | Acquired 60% for approx. $12.49 million + contingent consideration | | Michpal | Y-IT Ltd. | Oct 2024 | Acquired 60% for approx. $22.2 million + contingent consideration | | Michpal | Paperless Ltd. | Dec 2024 | Acquired 70% for approx. $2.3 million + contingent consideration | | Formula | Hashahar Telecom and Electricity Ltd. | Oct 2024 | Acquired 51% for $1.3 million | - A non-binding Memorandum of Understanding (MOU) was signed in March 2025 for a **potential merger** between subsidiaries Matrix and Magic Software[196](index=196&type=chunk) [B. Business Overview](index=56&type=section&id=B.%20Business%20Overview) Formula Systems is a global IT company providing software consulting, proprietary software solutions, and IT services through its group of investees - The company operates through a group of subsidiaries and affiliates, with the largest being Matrix, Sapiens, and Magic Software, where Formula directs overall strategy[233](index=233&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk) - The business is divided into two main activities: **IT Services** (custom software development, implementation, outsourcing) and **Proprietary Software Solutions** (design, development, and marketing of niche software)[233](index=233&type=chunk)[235](index=235&type=chunk) Geographical Revenue Distribution (2023-2024) | Region | 2024 Revenue (in thousands) | 2023 Revenue (in thousands) | | :--- | :--- | :--- | | Israel | $1,745,132 | $1,600,763 | | United States | $612,196 | $644,918 | | Europe | $336,285 | $315,081 | | Africa | $26,935 | $26,035 | | Japan | $13,678 | $11,881 | | Other (mainly Asia pacific) | $23,285 | $22,225 | | **Total** | **$2,757,511** | **$2,620,903** | - The global economic environment in 2024 was marked by moderate growth, reduced inflation, and stabilized interest rates, with the Israeli economy growing by **1%** despite the ongoing war[238](index=238&type=chunk)[241](index=241&type=chunk) [C. Organizational Structure](index=124&type=section&id=C.%20Organizational%20Structure) Formula Systems operates as the parent company of the Formula Group, holding controlling or significant interests in several publicly traded and private companies Ownership of Directly Held Investments (as of April 30, 2025) | Subsidiary/Affiliate | Country of Incorporation | Percentage of Ownership | | :--- | :--- | :--- | | Matrix IT Ltd. | Israel | 48.14% | | Sapiens International Corporation N.V. | Cayman Islands | 43.50% | | Magic Software Enterprises Ltd. | Israel | 46.71% | | Michpal Micro Computers (1983) Ltd. | Israel | 100.0% | | TSG IT Advanced Systems Ltd. | Israel | 42.34% | | InSync Staffing Solutions, Inc. | Delaware | 90.09% | | Ofek Aerial Photography Ltd | Israel | 80% | | Zap Group Ltd. | Israel | 100% | | Shamrad Electronic (1997) Ltd | Israel | 100% | | Hashahar Telecom and Electricity Ltd | Israel | 51.0% | | Other associated company | Israel | 21.45% | [D. Property, Plants and Equipment](index=126&type=section&id=D.%20Property%2C%20Plants%20and%20Equipment) The company and its subsidiaries lease office spaces globally, with headquarters in Israel and significant operations in India, the US, and Europe 2024 Annual Rent Costs for Major Subsidiaries | Subsidiary | 2024 Rent Cost (USD) | | :--- | :--- | | Matrix | ~$20.1 million | | Sapiens | ~$8.4 million | | Magic Software (incl. Formula) | ~$4.2 million ($0.7 million + $3.5 million) | | Michpal | ~$1.4 million | | Zap Group | ~$1.0 million | - In 2024, Matrix relocated its headquarters to a new, large campus in Kfar Saba, Israel, under a lease expiring in 2032[582](index=582&type=chunk) [Operating and Financial Review and Prospects](index=127&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section analyzes the company's financial performance, liquidity, capital resources, market trends, and critical accounting policies [A. Operating Results](index=129&type=section&id=A.%20Operating%20Results) For 2024, total revenues increased by **5.2%** to **$2.76 billion**, driven by growth in both software services and proprietary software segments, leading to higher operating and net income Consolidated Statement of Profit or Loss (2023 vs. 2024) | (U.S. dollars, in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | **Revenues** | **$2,757,511** | **$2,620,903** | | Gross profit | $684,683 | $643,711 | | Operating income | $270,521 | $239,368 | | Net income | $193,790 | $165,732 | | *Attributable to Equity holders* | *$79,670* | *$64,014* | | *Attributable to Non-controlling interests* | *$114,120* | *$101,718* | Revenue by Category (2023 vs. 2024) | Revenue Category | 2024 Revenue ($ in thousands) | 2023 Revenue ($ in thousands) | % Change | | :--- | :--- | :--- | :--- | | Proprietary software products and related services | 724,900 | 693,426 | +4.5% | | Software services and other | 2,032,611 | 1,927,477 | +5.5% | - The increase in software services revenue was primarily driven by Matrix, whose revenues in this stream grew by **6.4%** (in NIS) due to expansion in its Israeli IT solutions and services segment[610](index=610&type=chunk)[611](index=611&type=chunk) - The increase in proprietary software revenue was led by Sapiens, whose revenues grew by **5.4%** to **$542.4 million**, and Michpal, whose revenues grew by **19.8%** to **$34.2 million**[616](index=616&type=chunk)[617](index=617&type=chunk)[618](index=618&type=chunk) [B. Liquidity and Capital Resources](index=147&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company finances operations through cash from operations, debt, and equity, with cash and short-term investments totaling **$563.2 million** and total debt at **$479.4 million** as of December 31, 2024 Liquidity Position (as of Dec 31) | (U.S. dollars, in millions) | 2024 | 2023 | | :--- | :--- | :--- | | Cash and cash equivalents & short-term investments | $563.2 | $528.2 | | Total Indebtedness (banks and debentures) | $479.4 | $541.3 | Cash Flow Summary (2023 vs. 2024) | (U.S. dollars, in millions) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $324.5 | $295.0 | | Net cash used in investing activities | ($78.2) | ($139.2) | | Net cash used by financing activities | ($185.0) | ($243.2) | - In September 2024, Formula issued **NIS 150.0 million** (approx. **$39.8 million**) of Series D Secured Debentures to finance its operations[693](index=693&type=chunk) - Significant cash outflows for financing in 2024 included **$85.1 million** in dividends (**$66.3 million** to non-controlling interests, **$18.8 million** to Formula shareholders) and net repayment of debt[718](index=718&type=chunk) [D. Trend Information](index=158&type=section&id=D.%20Trend%20Information) The company's performance is influenced by global IT spending recovery, the Israeli high-tech sector slowdown, and increased demand for defense and cybersecurity solutions - Global IT spending is recovering, with Gartner forecasting **7.7% growth in 2024** and **9.8% in 2025**, driven by software, data centers, and cloud services[735](index=735&type=chunk)[737](index=737&type=chunk) - The Israeli high-tech sector faced a slowdown in 2024 due to geopolitical issues, leading to a decline in investments and demand for tech personnel[742](index=742&type=chunk)[743](index=743&type=chunk) - Heightened geopolitical tensions and the "Iron Swords" War are driving **strong demand for defense and cybersecurity solutions**, benefiting the company's subsidiaries[752](index=752&type=chunk)[758](index=758&type=chunk)[760](index=760&type=chunk) - Key trends in the insurance technology market include a focus on application modernization, integration technologies, Generative AI, and a shift to cloud-based SaaS models, aligning with Sapiens' offerings[766](index=766&type=chunk)[773](index=773&type=chunk)[774](index=774&type=chunk) [E. Critical Accounting Policies and Estimates](index=166&type=section&id=E.%20Critical%20Accounting%20Policies%20and%20Estimates) The company's financial statements, prepared under IFRS, require significant judgments and estimates, particularly for 'effective control' over subsidiaries, long-term contract revenue recognition, and goodwill impairment - A key judgment is the determination of **'effective control'** over subsidiaries like Matrix, Sapiens, and Magic Software, where the company holds less than **50%** of voting rights, based on factors like holding size and board influence[793](index=793&type=chunk)[1241](index=1241&type=chunk) - Revenue from long-term, fixed-price contracts is recognized over time using a cost-based input method (percentage of completion), which requires **significant management estimates of total costs** to complete the project[794](index=794&type=chunk)[1272](index=1272&type=chunk) - Goodwill and intangible assets are tested for impairment annually, with recoverable amounts determined using discounted cash flow projections sensitive to assumptions about discount rates and future growth[863](index=863&type=chunk)[1304](index=1304&type=chunk) - Put options granted to non-controlling interests are classified as a financial liability and remeasured at fair value, with changes affecting equity or profit and loss depending on the option's nature[874](index=874&type=chunk)[1311](index=1311&type=chunk) [Directors, Senior Management, and Employees](index=186&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details the company's leadership, compensation, board practices, and employee information, including key management remuneration and workforce 2024 Compensation of Key Management | Name and Position | Salary ($, in thousands) | Benefits & Perquisites ($, in thousands) | Variable Compensation ($, in thousands) | Equity Based Compensation ($, in thousands) | | :--- | :--- | :--- | :--- | :--- | | Guy Bernstein – CEO | 578 | - | 3,641 | 6,438 | | Asaf Berenstin – CFO | - | - | - | 249 | | Tammy Ohana Koll – CTO | 315 | 75 | 108 | - | | Maya Solomon-Ella – COO | 175 | 39 | 68 | 343 | - Total remuneration for directors and executive officers in 2024 was approximately **$12.4 million**, including **$7.0 million** in share-based compensation expenses[922](index=922&type=chunk) Average Number of Employees by Subsidiary (2024) | Subsidiary | 2024 Average Employees | | :--- | :--- | | Matrix | 11,570 | | Sapiens | 4,850 | | Magic Software | 3,787 | | Insync | 949 | | TSG Systems | 784 | | Michpal | 321 | | Zap Group | 277 | | Ofek | 120 | | **Total (incl. others)** | **22,720** | [Major Shareholders and Related Party Transactions](index=206&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details the company's major shareholders and outlines significant related party transactions, including the potential Matrix-Magic Software merger Major Shareholders (as of March 31, 2025) | Name | Percentage of Ownership | | :--- | :--- | | Asseco Poland S.A. | 25.82% | | Guy Bernstein | 11.73% | | Harel Insurance Investments & Financial Services Ltd. | 7.72% | | Menora Mivtachim Holdings Ltd. | 7.10% | | Phoenix Holdings Ltd. | 6.97% | | Yelin Lapidot Holdings Management Ltd. | 6.71% | | Clal Insurance Enterprises Holdings Ltd. | 5.38% | - A non-binding Memorandum of Understanding (MOU) was signed on March 11, 2025, for a **potential merger** between subsidiaries Matrix and Magic Software, where Magic Software would become a private, wholly-owned subsidiary of Matrix[1025](index=1025&type=chunk) - The company maintains a Directors & Officers (D&O) liability insurance policy with a total coverage of **$70 million** for February 2025 to February 2026, with an annual premium of **$1.2 million** for the group[1018](index=1018&type=chunk) [Financial Information](index=211&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section covers other financial information, including ongoing legal proceedings and the company's dividend policy - A derivative action challenging the CEO's RSU grant was dismissed in December 2023, but the plaintiff filed an appeal in January 2024, with a hearing scheduled for March 2026[1035](index=1035&type=chunk)[1036](index=1036&type=chunk) - Subsidiary Zap Group is involved in a class action lawsuit regarding its price comparison website and another claim alleging monopolistic practices, both covered by indemnification from former shareholders[1039](index=1039&type=chunk)[1040](index=1040&type=chunk) - Formula and its publicly traded subsidiaries (Matrix, Sapiens, Magic Software) have active dividend policies and all declared and paid dividends during 2024 and early 2025[1043](index=1043&type=chunk)[1048](index=1048&type=chunk)[1052](index=1052&type=chunk)[1059](index=1059&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=227&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks primarily from foreign currency exchange rate fluctuations, interest rate changes, and subsidiary security price volatility - The company is significantly exposed to foreign currency exchange risk; a hypothetical **10%** devaluation or appreciation of foreign currencies against the US dollar would have impacted 2024 sales revenues by approximately **$197 million** or **$232 million**, respectively[1120](index=1120&type=chunk) - The company is exposed to interest rate risk on its variable-rate loans; a **1%** increase in interest rates would have increased the combined financial expenses of Matrix, Magic Software, Zap Group, and Michpal by approximately **$1.6 million** in 2024[1124](index=1124&type=chunk) - The company holds securities of its publicly traded subsidiaries (Magic Software, Sapiens, Matrix, TSG Systems) and is exposed to fluctuations in their market prices, but typically does not hedge this exposure[1125](index=1125&type=chunk) [Part II](index=230&type=section&id=PART%20II) This section details the company's internal controls, disclosure procedures, and other governance information, including audit committee expertise and cybersecurity [Controls and Procedures](index=230&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2024 - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2024[1136](index=1136&type=chunk) - Based on an evaluation against the COSO 2013 framework, management concluded that the company's **internal control over financial reporting was effective** as of December 31, 2024[1137](index=1137&type=chunk)[1138](index=1138&type=chunk) [Other Information](index=231&type=section&id=ITEM%2016.%20OTHER%20INFORMATION) This section covers governance and compliance, including audit committee expertise, auditor fees, and cybersecurity risk management - The company's board of directors has determined that Mr. Tomer Jacob qualifies as the "**audit committee financial expert**"[1142](index=1142&type=chunk) Principal Accountant Fees (in thousands USD) | Auditor | Year | Audit Fees | Tax and Other Fees | Total | | :--- | :--- | :--- | :--- | :--- | | EY Israel | 2023 | $2,556 | $494 | $3,050 | | EY Israel | 2024 | $835 | $517 | $1,352 | | BDO Israel | 2024 | $1,736 | $182 | $1,918 | - The company follows Israeli home country practice in lieu of certain Nasdaq corporate governance rules, including those related to majority board independence, director nominations, and shareholder approval for certain dilutive events[1159](index=1159&type=chunk)[1163](index=1163&type=chunk) - The company has a cybersecurity risk management program overseen by the board of directors and managed by the CFO, designed to identify and manage material risks from cybersecurity threats[1164](index=1164&type=chunk)[1167](index=1167&type=chunk)[1168](index=1168&type=chunk) [Part III](index=237&type=section&id=PART%20III) This section presents the company's audited consolidated financial statements for 2024, prepared under IFRS, including key financial statements and notes [Financial Statements](index=237&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section contains the company's audited consolidated financial statements for 2024, prepared under IFRS, including auditor reports and detailed financial statements Consolidated Statement of Financial Position (Assets) | (U.S. dollars, in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total current assets** | **$1,487,045** | **$1,375,856** | | Cash and cash equivalents | $507,799 | $451,946 | | Trade receivables, net | $803,235 | $721,008 | | **Total non-current assets** | **$1,527,851** | **$1,436,745** | | Goodwill | $975,080 | $936,581 | | Intangible assets, net | $217,076 | $206,928 | | **Total assets** | **$3,014,896** | **$2,812,601** | Consolidated Statement of Financial Position (Liabilities and Equity) | (U.S. dollars, in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total current liabilities** | **$1,138,476** | **$985,663** | | **Total long-term liabilities** | **$487,075** | **$518,753** | | **Total liabilities** | **$1,625,551** | **$1,504,416** | | **Total equity** | **$1,389,345** | **$1,308,185** | | *Equity attributable to Formula shareholders* | *$679,338* | *$625,762* | | *Non-controlling interests* | *$710,007* | *$682,423* | | **Total liabilities and equity** | **$3,014,896** | **$2,812,601** |

Core Insights - Formula Systems (1985) Ltd. reported a record-breaking revenue of $2.76 billion for the full year 2024, reflecting a year-over-year increase of 5.2%, while net income grew by 24.5% to $79.7 million [1][4][3] Financial Highlights for Q4 2024 - Revenues for Q4 2024 increased by 8.0% year over year, reaching a record-breaking $691.5 million compared to $640.3 million in Q4 2023, with organic growth accounting for approximately 68% of the increase [4] - Operating income for Q4 2024 rose by 19.1% year over year to $71.9 million, with organic growth contributing approximately 61% [4] - Net income attributable to Formula's shareholders for Q4 2024 increased by 27.6% year over year to $20.1 million, or $1.28 per fully diluted share, compared to $15.7 million, or $1.01 per fully diluted share, in the same period last year [4] Financial Highlights for Full Year 2024 - Full year revenues for 2024 reached $2.76 billion, a 5.2% increase from $2.62 billion in 2023, with organic growth accounting for approximately 75% of the increase [4] - Operating income for the full year increased by 13.0% to $270.5 million, compared to $239.4 million in 2023, with organic growth contributing approximately 74% [4] - Net income attributable to Formula's shareholders for the full year was $79.7 million, or $5.09 per fully diluted share, compared to $64.0 million, or $4.12 per fully diluted share, in the previous year [4] Cash and Equity Position - As of December 31, 2024, Formula's consolidated cash and cash equivalents totaled approximately $563.2 million, up from $528.2 million as of December 31, 2023 [4] - Total equity as of December 31, 2024 was $1.39 billion, representing 46.1% of the total consolidated statements of financial position, compared to $1.31 billion (46.7%) as of December 31, 2023 [5] Dividend Declaration - The board of directors approved a cash dividend of NIS 3.45 per share (approximately $0.94 per share), totaling approximately NIS 52.9 million (approximately $14.4 million), payable on May 14, 2025 [11] Strategic Developments - Matrix IT and Magic Software announced a non-binding memorandum of understanding for a merger transaction, which is expected to create a combined entity with a market capitalization of approximately NIS 7.7 billion (approximately $2.1 billion) [13] - Matrix reported record-breaking results for Q4 2024, with revenues growing by 4.1% year over year to NIS 1.37 billion (approximately $371.8 million) [13] - Magic Software achieved a 13.6% year-over-year revenue increase, reaching $142.6 million, reflecting its focus on digital and cloud transformation solutions [14]

Financial Performance - Revenues for the third quarter ended September 30, 2024 increased by 6.9% to a record-breaking $699.9 million, compared to $654.8 million in the same period last year [2] - Operating income for the third quarter increased by 21.9% to $71.0 million, which includes a capital gain of $6.5 million from the IPO of TSG IT Advanced Systems Ltd [3] - Net income attributable to Formula's shareholders for the third quarter increased by 51.4% to $23.6 million, or $1.51 per fully diluted share, compared to $15.6 million, or $1.00 per fully diluted share, in the same period last year [4] Nine-Month Performance - Revenues for the nine-month period ended September 30, 2024 increased by 4.3% to $2.07 billion, compared to $1.98 billion in the same period last year [5] - Operating income for the nine-month period increased by 11% to $198.7 million, compared to $179.0 million in the same period last year [5] - Net income attributable to Formula's shareholders for the nine-month period increased by 23.4% to $59.6 million, or $3.81 per fully diluted share, compared to $48.3 million, or $3.10 per fully diluted share, in the same period last year [6] Financial Position - As of September 30, 2024, consolidated cash and cash equivalents and short-term bank deposits totaled approximately $510.9 million, compared to $528.2 million as of December 31, 2023 [8] - Total equity as of September 30, 2024 was $1.36 billion, representing 47.8% of the total consolidated statements of financial position, compared to $1.31 billion, representing 46.5% as of December 31, 2023 [8] Compliance and Covenants - As of September 30, 2024, Formula was in compliance with all financial covenants under the debenture series issued, including a target equity attributable to shareholders above $325 million, with actual equity at $660.1 million [9][10] - The actual ratio of net financial indebtedness to net capitalization was 0.18%, well below the target of 65% [11] - The actual ratio of net financial indebtedness to EBITDA was 0.006, significantly below the target of 5 [12][13] Management Commentary - The CEO expressed pride in the strong performance, highlighting a 21.9% year-over-year increase in operating income and a commitment to sustained growth and operational excellence [14] - Matrix IT Ltd. reported record-breaking results across all key financial indices, with revenues for the third quarter reaching NIS 1.42 billion (approximately $381.9 million), a 6.4% year-over-year increase [14] - Sapiens International Corporation reported revenues of $137 million for the third quarter, reflecting a 4.8% increase compared to the same period last year [14] - Magic Software achieved a 10.4% year-over-year increase in revenues, reaching $143 million, and revised its annual revenue guidance for 2024 upwards [15]

Core Points - Grupo Aeroportuario del Pacífico successfully completed the issuance of 56,481,343 long-term bond certificates in Mexico, totaling Ps. 5,648,134,300 with a five-year maturity [1][2] - The bond issuance, under the ticker symbol "GAP 24", will pay interest every 28 days at a variable rate of TIIE-28 plus 60 basis points, with principal due on August 30, 2029 [2] - Proceeds from the issuance will be used to pay off previous bond certificates "GAP 15" and to fund committed capital investments under the Master Development Program for 2024 [3] Company Overview - Grupo Aeroportuario del Pacífico operates 12 airports in Mexico's Pacific region, including major cities like Guadalajara and Tijuana, and tourist destinations such as Puerto Vallarta and Los Cabos [4] - The company was listed on the New York Stock Exchange in February 2006 and acquired a majority stake in MBJ Airports Limited in April 2015, which operates Sangster International Airport in Jamaica [4] - GAP entered into a concession agreement for the Norman Manley International Airport in Jamaica in October 2018 and took control of operations in October 2019 [4]

Core Insights - Formula Systems reported record-breaking revenues, operating income, and net income for the second quarter and first half of 2024, indicating strong financial performance and growth potential [2][3][14]. Financial Performance - Revenues for the second quarter ended June 30, 2024, increased by 1.9% to $667.7 million compared to $655.4 million in the same period last year. On a constant-currency basis, revenues would have increased by 3.5% to $678.3 million [2]. - Operating income for the second quarter increased by 8.4% to a record $65.0 million, compared to $60.0 million in the same period last year [3]. - Net income attributable to shareholders for the second quarter rose by 10.7% to $18.8 million, or $1.20 per fully diluted share, compared to $17.0 million, or $1.11 per fully diluted share, in the same period last year [3]. - For the first half of 2024, revenues increased by 3.0% to $1.37 billion, compared to $1.33 billion in the same period last year. On a constant currency basis, revenues would have increased by approximately 5.0% to $1.39 billion [4]. - Operating income for the first half increased by 5.7% to $127.6 million, compared to $120.8 million in the same period last year [5]. - Net income attributable to shareholders for the first half rose by 10.1% to $36.0 million, or $2.31 per fully diluted share, compared to $32.7 million, or $2.11 per fully diluted share, in the same period last year [5]. Cash and Equity Position - As of June 30, 2024, consolidated cash and cash equivalents totaled approximately $472.9 million, down from $528.2 million as of December 31, 2023 [7]. - Total equity as of June 30, 2024, was $1.3 billion, representing 49.1% of the total consolidated statements of financial position [7]. Dividend Declaration - The board of directors approved a cash dividend of NIS 2.32 per share (approximately $0.63 per share), totaling approximately NIS 35.6 million (approximately $9.6 million) [8][9]. Compliance and Financial Covenants - As of June 30, 2024, Formula was in compliance with all financial covenants under its debenture series, with actual equity attributable to shareholders at $644.0 million, exceeding the target of $215 million [11]. - The actual ratio of net financial indebtedness to net capitalization was 0.02%, well below the target of 65% [12]. - The actual ratio of net financial indebtedness to EBITDA was 0.001, significantly below the target of 5 [13]. Management Commentary - The CEO expressed pride in the company's strong performance, highlighting record revenues and operational excellence, and emphasized the commitment to innovation and customer value [14]. - Matrix IT Ltd., a subsidiary, reported its best second quarter in history, with revenues growing by 3.6% year over year to NIS 1.33 billion (approximately $357.8 million) [14]. - Sapiens International Corporation N.V. reported revenues of $137 million for the second quarter, reflecting a 6.6% increase compared to the same period last year [14]. - Magic Software's operational results showed improvement, with a robust pipeline despite challenges in the North American market [15].