Formula Systems Reports Third Quarter and Nine-Months Period Ended September 30, 2025 Financial Results

Core Insights - Formula Systems reported a revenue increase of approximately 23.6% year over year for Q3 2025, reaching approximately $696.6 million compared to $563.6 million in Q3 2024 [4][23] - The company experienced a decrease in net income from continued operations attributable to shareholders by approximately 26.4% year over year, amounting to approximately $11.6 million or $0.73 per fully diluted share [4][5] - The company declared a cash dividend of NIS 1.64 per share (approximately $0.50 per share), totaling approximately NIS 25.2 million (approximately $7.7 million), payable on January 13, 2026 [9][11] Financial Highlights for Q3 2025 - Operating income for Q3 2025 increased by approximately 10.8% year over year to approximately $54.6 million, compared to $49.2 million in Q3 2024 [4][23] - Excluding a capital gain from the IPO of TSG IT Advanced Systems, operating income would have increased by approximately 27.7% year over year [4] - Net income attributable to Formula Systems' shareholders for Q3 2025 decreased by approximately 26.6% year over year to approximately $17.3 million, or $1.08 per fully diluted share [4][5] Financial Highlights for Nine-Months Period Ended September 30, 2025 - Revenues for the nine-month period increased by approximately 15.6% to approximately $1.92 billion compared to $1.66 billion in the same period last year [4][5] - Operating income for the nine-month period increased by approximately 14.4% to approximately $154.8 million compared to $135.3 million in the same period last year [4][5] - Net income attributable to Formula Systems' shareholders for the nine-month period decreased by approximately 13.3% year over year to approximately $51.7 million, or $3.24 per fully diluted share [5][9] Management Comments - The CEO of Formula Systems expressed satisfaction with the company's strong momentum and commitment to growth and operational excellence across its business lines [11] - Matrix IT reported record-breaking results for Q3 2025, with revenues growing by approximately 15.7% year over year, reaching an all-time high of NIS 1.64 billion (approximately $488.0 million) [11] - Magic Software also reported strong growth, revising its full-year 2025 revenue guidance to a range of $610 million to $620 million, reflecting an anticipated annual growth rate of approximately 10.4% to 12.2% [11] Other Notable Developments - The merger between Matrix IT and Magic Software is in its final phase, expected to create one of the largest publicly traded IT services companies globally, with a projected valuation exceeding NIS 11 billion (approximately $3.4 billion) [11] - As of September 30, 2025, Formula Systems held significant stakes in various companies, including 48.12% in Matrix IT and 43.42% in Sapiens International Corporation [9][10]