Formula Systems Reports Second Quarter and First Half 2024 Financial Results

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].