OR YEHUDA, Israel, May 22, 2025 (GLOBE NEWSWIRE) — Formula Systems (1985) Ltd. (Nasdaq and TASE: FORTY) (“Formula” or the “Company”), a global information technology group engaged, through its subsidiaries and affiliates, in providing software consulting services and computer-based business solutions and developing proprietary software products, today announced its first quarter ended March 31, 2025 results of operations. Financial Highlights for the First Quarter Ended March 31, 2025 Declaration of Dividend for the First Quarter of 2025 In accordance with Israeli tax law, the dividend is subject to withholding tax at source at the rate of 30% (if the recipient of the dividend is at the time of distribution or was at any time during the preceding 12-month period the holder of 10% or more of the Company's share capital) or 25% (for all other dividend recipients) of the dividend amount payable to each shareholder of record, subject to applicable exemptions. Debentures Covenants As of March 31, 2025, Formula was in compliance with all of its financial covenants under the debenture series issued by it, based on the following achievements: Covenant 1 Covenant 2 Covenant 3 Comments of Management Commenting on the results, Guy Bernstein, CEO of Formula Systems, said: “Formula Systems group continues to demonstrate strong and consistent performance, making big strides across multiple fronts, as reflected by our first quarter record-breaking results recorded across all key operational financial indices: revenues, gross profit, operating income, net income and EBITDA. These results underscore our commitment to driving sustained growth and operational excellence across all segments of our business. We are pleased with the continued recognition as leaders in our areas of expertise, implementing fast-growing technologies, such as cloud, cyber, digital, data, DevOps, Insure-Tech and AI, which enable us to create significant value for our customers in managing, streamlining, accelerating and making their businesses thrive. We continue to uphold our core values of innovation, professionalism, agility, and transparency across our entire group. These principles enable us to consistently create significant value for our customers, ultimately contributing to their growth”. Stand-Alone Financial Measures This press release presents, further below, certain stand-alone financial measures to reflect Formula's stand-alone financial position in reference to its assets and liabilities as the parent company of the group. These financial measures are prepared consistent with the accounting principles applied in the consolidated financial statements of the group. Such measures include investments in subsidiaries and a jointly controlled entity measured at cost adjusted by Formula's share in the investees' accumulated undistributed earnings and other comprehensive income or loss. Formula believes that these financial measures provide useful information to management and investors regarding Formula's stand-alone financial position. Formula's management uses these measures to compare the Company's performance in the current period to that of prior periods for trend analyses. These measures are also used in financial reports prepared for management and in quarterly financial reports presented to the Company's board of directors. The Company believes that the use of these stand-alone financial measures provides an additional tool for investors to use in evaluating Formula's financial position. Management of the Company does not consider these stand-alone measures in isolation or as an alternative to financial measures determined in accordance with GAAP. Formula urges investors to review the consolidated financial statements which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company's business or financial position. About Formula Formula Systems, whose ordinary shares are traded on the Tel-Aviv Stock Exchange and ADSs are traded on the Nasdaq Global Select Market, is a global information technology holding company engaged, through its subsidiaries and affiliates, in providing software consulting services and computer-based business solutions and developing proprietary software products. For more information, visit www.formulasystems.com. Press Contact: Formula Systems (1985) Ltd. Forward Looking Statements Certain matters discussed in this press release that are incorporated herein and therein by reference are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, that are based on our beliefs, assumptions and expectations, as well as information currently available to us. Such forward-looking statements may be identified by the use of the words “anticipate,” “believe,” “estimate,” “expect,” “may,” “will,” “plan” and similar expressions. Such statements reflect our current views with respect to future events and are subject to certain risks and uncertainties. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: adverse macro-economic trends and their duration, including inflation, relatively high interest rates, and supply chain delays, which trends may last for a significant period and materially adversely affect our results of operations; the degree of our success in our plans to leverage our global footprint to grow our sales; the degree of our success in integrating the companies that we have acquired through the implementation of our M&A growth strategy; the degree of our success in developing and deploying new technologies for software solutions that address the updated needs of our customers and serve as the basis for our revenues; the lengthy development cycles for our solutions, which may frustrate our ability to realize revenues and/or profits from our potential new solutions; our lengthy and complex sales cycles, which do not always result in the realization of revenues; the degree of our success in retaining our existing customers or competing effectively for greater market share; difficulties in successfully planning and managing changes in the size of our operations; the frequency of the long-term, large, complex projects that we perform that involve complex estimates of project costs and profit margins, which sometimes change mid-stream; the challenges and potential liability that heightened privacy laws and regulations pose to our business; occasional disputes with clients, which may adversely impact our results of operations and our reputation; various intellectual property issues related to our business; potential unanticipated product vulnerabilities or cybersecurity breaches of our or our customers' systems particularly in the current hybrid office/work-from-home environment; risks related to industries, such as the insurance, healthcare, defense and the telecom, in which certain of our clients operate; risks posed by our global sales and operations, such as changes in regulatory requirements, supply chain disruptions, geopolitical, wide-spread viruses and epidemics or fluctuations in currency exchange rates; and risks related to our and our subsidiaries' principal location in Israel. While we believe such forward-looking statements are based on reasonable assumptions, should one or more of the underlying assumptions prove incorrect, or these risks or uncertainties materialize, our actual results may differ materially from those expressed or implied by the forward-looking statements. Please read the risks discussed under the heading “Item 3.D Risk Factors” in our most recent Annual Report on Form 20-F for the year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission on May 14, 2025, in order to review conditions that we believe could cause actual results to differ materially from those contemplated by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason, or to conform those statements to actual results or to changes in our expectations.
+972-3-5389487
ir@formula.co.il
| FORMULA SYSTEMS (1985) LTD. | |||
| CONSOLIDATED CONDENSED STATEMENTS OF PROFIT OR LOSS | |||
| U.S. dollars in thousands (except per share data) | |||
| Three months ended | |||
| March 31, | |||
| 2025 | 2024 | ||
| Unaudited | |||
| Revenues | 754,682 | 698,401 | |
| Cost of revenues | 573,974 | 534,186 | |
| Gross profit | 180,708 | 164,215 | |
| Research and development costs, net | 21,088 | 20,217 | |
| Selling, marketing and general and administrative expenses | 89,076 | 81,413 | |
| Operating income | 70,544 | 62,585 | |
| Financial expenses, net | 5,538 | 5,602 | |
| Income before taxes on income | 65,006 | 56,983 | |
| Taxes on income | 15,452 | 13,458 | |
| Income after taxes | 49,554 | 43,525 | |
| Share of profit of companies accounted for at equity, net | 828 | 103 | |
| Net income | 50,382 | 43,628 | |
| Net income attributable to non-controlling interests | 31,066 | 26,469 | |
| Net income attributable to Formula Systems shareholders | 19,316 | 17,159 | |
| Earnings per share (basic) | 1.26 | 1.12 | |
| Earnings per share (diluted) | 1.23 | 1.10 | |
| Number of shares used in computing earnings per share (basic) | 15,311,924 | 15,303,267 | |
| Number of shares used in computing earnings per share (diluted) | 15,729,173 | 15,570,761 | |
| FORMULA SYSTEMS (1985) LTD. | ||||
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||
| U.S. dollars in thousands | ||||
| March 31, | December 31, | |||
| 2025 | 2024 | |||
| (Unaudited) | ||||
| ASSETS | ||||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents | 461,805 | 507,799 | ||
| Short-term deposits | 64,989 | 55,401 | ||
| Trade receivables, net | 831,108 | 803,235 | ||
| Prepaid expenses and other accounts receivable | 96,891 | 89,882 | ||
| Inventories | 27,771 | 30,728 | ||
| Total current assets | 1,482,564 | 1,487,045 | ||
| NON-CURRENT ASSETS: | ||||
| Long-term investments and receivables | 59,229 | 54,629 | ||
| Deferred taxes | 35,627 | 33,850 | ||
| Investments in companies accounted for at equity | 38,572 | 39,196 | ||
| Property, plants and equipment, net | 51,851 | 51,795 | ||
| Right-of-use assets | 151,842 | 156,225 | ||
| Intangible assets, net and goodwill | 1,225,818 | 1,192,156 | ||
| Total non-current assets | 1,562,939 | 1,527,851 | ||
| Total assets | 3,045,503 | 3,014,896 | ||
| LIABILITIES AND EQUITY | ||||
| CURRENT LIABILITIES: | ||||
| Loans from banks and others | 150,474 | 141,782 | ||
| Debentures | 87,249 | 86,782 | ||
| Current maturities of lease liabilities | 44,581 | 45,240 | ||
| Trade payables | 283,893 | 296,211 | ||
| Deferred revenues | 180,619 | 173,959 | ||
| Employees and payroll accrual | 243,683 | 234,845 | ||
| Other accounts payable | 109,979 | 98,046 | ||
| Dividend payable | 14,227 | – | ||
| Liabilities in respect of business combinations | 11,505 | 9,191 | ||
| Put options of non-controlling interests | 53,853 | 52,420 | ||
| Total current liabilities | 1,180,063 | 1,138,476 | ||
| LONG-TERM LIABILITIES: | ||||
| Loans from banks and others | 73,153 | 62,733 | ||
| Debentures | 153,840 | 188,090 | ||
| Lease liabilities | 117,645 | 119,586 | ||
| Other long-term liabilities | 12,221 | 11,708 | ||
| Deferred taxes | 45,334 | 42,894 | ||
| Deferred revenues | 25,934 | 12,522 | ||
| Liabilities in respect of business combinations | 6,707 | 8,751 | ||
| Put options of non-controlling interests | 42,908 | 30,553 | ||
| Employees benefit liabilities | 10,443 | 10,238 | ||
| Total long-term liabilities | 488,185 | 487,075 | ||
| EQUITY | ||||
| Total equity attributable to Formula Systems (1985) Ltd. shareholders | 681,020 | 679,338 | ||
| Non-controlling interests | 696,235 | 710,007 | ||
| Total equity | 1,377,255 | 1,389,345 | ||
| Total liabilities and equity | 3,045,503 | 3,014,896 | ||
| FORMULA SYSTEMS (1985) LTD. | ||||
| STAND-ALONE STATEMENTS OF FINANCIAL POSITION | ||||
| U.S. dollars in thousands | ||||
| March 31, | December 31, | |||
| 2025 | 2024 | |||
| (Unaudited) | ||||
| ASSETS | ||||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents | 33,361 | 25,599 | ||
| Dividend receivable | 31,086 | 12,013 | ||
| Other accounts receivable and prepaid expenses | 5,540 | 4,798 | ||
| Total current assets | 69,987 | 42,410 | ||
| NON-CURRENT ASSETS: | ||||
| Investment in subsidiaries and a jointly controlled entity (*) | ||||
| Matrix IT Ltd. | 163,384 | 162,133 | ||
| Sapiens International Corporation N.V. | 257,263 | 264,349 | ||
| Magic Software Enterprises Ltd. | 130,152 | 133,786 | ||
| TSG IT Advanced Systems Ltd. | 19,640 | 20,453 | ||
| Michpal Technologies Ltd. | 73,902 | 69,127 | ||
| ZAP Group | 51,520 | 55,392 | ||
| Other | 48,578 | 47,722 | ||
| Total investment in subsidiaries and a jointly controlled entity | 744,439 | 752,962 | ||
| Other investments and Long term receivables | 20,558 | 24,860 | ||
| Property, plants and equipment, net | 9 | 10 | ||
| Total non-current assets | 765,006 | 777,832 | ||
| Total assets | 834,993 | 820,242 | ||
| LIABILITIES AND EQUITY | ||||
| CURRENT LIABILITIES: | ||||
| Loans from banks and others | 2,251 | 2,294 | ||
| Debentures | 46,017 | 45,807 | ||
| Trade payables | 268 | 1,146 | ||
| Other accounts payable | 3,763 | 2,109 | ||
| Put options of non-controlling interests | 1,073 | 1,005 | ||
| Dividends payable | 14,227 | – | ||
| Total current liabilities | 67,599 | 52,361 | ||
| LONG-TERM LIABILITIES: | ||||
| Loans from banks and others | 2,428 | 3,047 | ||
| Debentures | 83,946 | 85,496 | ||
| Total long-term liabilities | 86,374 | 88,543 | ||
| EQUITY | 681,020 | 679,338 | ||
| TOTAL LIABILITIES AND EQUITY | 834,993 | 820,242 | ||
| (*) The investments' carrying amounts are measured consistent with the accounting principles applied in the consolidated financial statements of the group and representing the investments' cost adjusted by Formula's share in the investees' accumulated undistributed earnings and other comprehensive income or loss. | ||||
