Formula Systems (1985) .(FORTY) - 2025 Q1 - Quarterly Report

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 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] - 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] 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 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] - The company's success is driven by its expertise in fast-growing technologies, including cloud, cyber, digital, data, DevOps, Insure-Tech, and AI[5] - 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] 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 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 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 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][20] 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 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] - 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][15]