Formula Systems Reports First Quarter 2024 Financial Results

Core Viewpoint - Formula Systems (1985) Ltd. reported a 4.2% increase in revenues for Q1 2024, reaching $698.4 million, despite challenges in the macroeconomic environment and the impact of military service on its workforce [4][6]. Financial Performance - Revenues for Q1 2024 increased by 4.2% to $698.4 million compared to $670.4 million in Q1 2023. On a constant-currency basis, revenues would have increased by 6.6% to $714.8 million [4]. - Operating income rose by 2.9% to $62.6 million, with a constant-currency increase of approximately 2.1% to $62.1 million [4]. - Net income attributable to shareholders increased by 9.4% to $17.2 million, or $1.10 per fully diluted share, compared to $15.7 million, or $1.01 per share, in the same period last year [4]. Compliance and Financial Health - As of March 31, 2024, Formula was in compliance with all financial covenants under its debenture series, with a net financial indebtedness to net capitalization ratio of 1.0% and a net financial indebtedness to EBITDA ratio of 0.04 [5]. - Consolidated cash and cash equivalents totaled approximately $516.1 million, down from $528.2 million as of December 31, 2023 [4]. Subsidiary Performance - Matrix IT Ltd. reported a 12.6% year-over-year revenue growth, reaching NIS 1.45 billion (approximately $396.9 million) [6]. - Sapiens International Corporation N.V. saw a 7.6% increase in revenues to $134.2 million, with an annual recurring revenue (ARR) growth of 12.7% [6]. - Magic Software's revenues increased by 4.1% to $130.7 million, while operating income rose by 11% to $14.4 million compared to Q4 2023 [6]. Employee Impact - Approximately 1,100 of the 22,000 employees were drafted into military service due to the ongoing conflict, affecting profitability in certain operational areas [6].