Formula Systems Reports Fourth Quarter and Full Year 2024 Financial Results
Rhea-AI Summary
Formula Systems (FORTY) reported strong financial results for Q4 and full year 2024. The company achieved record-breaking annual revenues of $2.76 billion, marking a 5.2% year-over-year increase, while net income grew 24.5% to $79.7 million.
A significant highlight is the announced non-binding MOU between Matrix and Magic Software for a landmark merger transaction. Under the proposed deal, Matrix would acquire Magic Software through a reverse triangular merger, creating a combined entity with an approximate market cap of NIS 7.7 billion ($2.1 billion). The exchange ratio is set at 68.875% / 31.125% between Matrix and Magic Software shareholders.
Key subsidiary performances include:
- Matrix: Record Q4 with 4.1% revenue growth to NIS 1.37 billion
- Magic Software: 13.6% revenue growth to $142.6 million in Q4
- Sapiens: Full-year revenues reached $542.4 million, up 5.4%
- Michpal Technologies: 12% revenue growth to NIS 159 million
- TSG: Q4 revenues up 19.2% to NIS 85.6 million
Positive
- Record annual revenue of $2.76 billion, up 5.2% YoY
- Net income grew 24.5% to $79.7 million
- Proposed merger between Matrix and Magic Software to create a $2.1B market cap entity
- Matrix Q4 operating income increased 18.8% to NIS 120.0 million
- Magic Software Q4 revenue grew 13.6% to $142.6 million
- TSG's EBITDA increased 20.4% to NIS 47.5 million
Negative
- Dividend subject to high withholding tax rates (25-30%)
- Zap Group facing operational challenges due to geopolitical situation since October 2023
News Market Reaction 1 Alert
On the day this news was published, FORTY declined 2.34%, reflecting a moderate negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
2024 Full-year revenues increased by
OR YEHUDA, Israel, March 20, 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 fourth quarter and full year 2024 results of operations.
Financial Highlights for the Fourth Quarter Ended December 31, 2024
| ● | Revenues for the fourth quarter ended December 31, 2024, increased by |
| ● | Operating income for the fourth quarter ended December 31, 2024 increased by |
| ● | Net income attributable to Formula’s shareholders for the fourth quarter ended December 31, 2024 increased by | |
Financial Highlights for the Full Year Ended December 31, 2024
| ● | Revenues for the full year ended December 31, 2024 increased by |
| ● | Operating income for the full year ended December 31, 2024 increased by |
| ● | Net income attributable to Formula’s shareholders for the full year ended December 31, 2024 increased by | |||
| ● | As of December 31, 2024, Formula held |
| ● | Consolidated cash and cash equivalents and short-term bank deposits totaled approximately |
| ● | Total equity as of December 31, 2024 was | |
Declaration of Dividend for the Second Half of 2024
| ● | Based on the Company’s results, the Company’s board of directors approved the distribution of a cash dividend in an amount of NIS 3.45 per share (approximately |
| ● | The dividend is payable on May 14, 2025, to all of the Company’s shareholders of record at the close of trading on the Nasdaq Global Select Market (or the Tel-Aviv Stock Exchange, as appropriate) on April 30, 2025. The dividend will be paid in New Israeli Shekels with respect to the Company's ordinary shares traded on the Tel Aviv Stock Exchange and American Depositary Receipts traded on the Nasdaq Global Select Market. | |
In accordance with Israeli tax law, the dividend is subject to withholding tax at source at the rate of
Debentures Covenants
As of December 31, 2024, Formula was in compliance with all of its financial covenants under the debenture series issued by it, based on the following achievements:
Covenant 1
| ● | Target equity attributable to Formula’s shareholders (excluding non-controlling interests): above |
| ● | Actual equity attributable to Formula’s shareholders as of December 31, 2024 was | |
Covenant 2
| ● | Target ratio of net financial indebtedness to net capitalization (in each case, as defined under the indenture for Formula’s Series C and D Secured Debentures): below |
| ● | Actual ratio of net financial indebtedness to net capitalization, as of December 31, 2024 was ( | |
Covenant 3
| ● | Target ratio of net financial indebtedness to EBITDA (based on the accumulated calculation for the four most recent quarters): below 5. |
| ● | Actual ratio of net financial indebtedness to EBITDA as of December 31, 2024 was ( | |
Comments of Management
Commenting on the results, Guy Bernstein, CEO of Formula Systems, said: “Formula group continues to demonstrate strong and consistent performance, making big strides across multiple fronts, as reflected by our 2024 fourth quarter and full year revenues and operational profits. These results underscore our commitment to driving sustained growth and operational excellence across all segments of our business. 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 by helping them manage, streamline, and accelerate their operations, ultimately contributing to their growth.”
“Last week, Matrix and Magic Software announced the execution of a Non-Binding Memorandum of Understanding for a landmark transaction in which Matrix intends to acquire Magic Software through a merger transaction. Subject to the consummation of this transaction, to the extent completed, Matrix will acquire all outstanding shares of Magic Software through a reverse triangular merger. Upon completion, Magic Software will become a privately held, wholly owned subsidiary of Matrix, and its shares will be delisted from Nasdaq and TASE.”
“Under the terms of the proposed transaction, Magic Software shareholders will receive shares in the merged entity at an exchange ratio of
“To the extent completed, this transaction will mark a defining moment in the history of both Matrix and Magic Software, representing a transformative step forward. By uniting two highly complementary organizations, this merger will create a stronger, more diversified company with expanded capabilities to serve clients worldwide, accelerate technological innovation, and drive long-term value creation. The synergies arising from this combination—across business, technology, and operations—will generate a powerful multiplier effect, enhancing efficiency, broadening market reach, and fostering sustained growth.”
“I have every confidence that the combined entity will be exceptionally well-positioned to capitalize on new opportunities in an evolving digital landscape. This merger is not merely a consolidation, it is a strategic leap forward, enabling us to build a more agile, innovative, and resilient company that delivers exceptional value to all stakeholders, including shareholders, customers, employees, and the broader global market.”
“Matrix reported its best fourth quarter in history with record-breaking results recorded across all its key financial indices: revenues, gross profit, operating income, net income and EBITDA. Matrix revenues for the fourth quarter grew by
“Magic Software reported another strong quarter of growth and resilience, with a
“Sapiens’ revenues for the full year 2024 reached record-breaking
“Michpal Technologies’ revenues for the full year 2024 reached a record-breaking NIS 159 million (approximately
“TSG concluded the fourth quarter and full year of 2024 with record-breaking results, demonstrating significant growth in revenue and profits. Revenues for the fourth quarter increased by approximately
“Over the past year, Zap Group, Israel's leading consumer websites company, has demonstrated agility in adapting to evolving market dynamics. The launch of its groundbreaking E-Commerce Marketplace platform marks a pivotal transformation in its business model. By integrating cutting-edge technology and service-driven solutions, Zap Group has enhanced its relationships with small and medium-sized businesses, driving higher sales volumes, while deepening connections with end consumers through a 360-degree, holistic experience. In its first year of operation, the Marketplace platform has delivered remarkable results, with tens of thousands of transactions generating tens of millions of NIS. Currently, over 400 stores feature more than 100,000 products, reflecting strong adoption and success. The platform enables businesses to engage directly with consumers, fostering personalized relationships, leveraging data-driven insights, and effectively managing customer journeys. This innovation positions Zap Group at the forefront of Israel’s digital economy. In response to broader economic challenges, including the geopolitical situation in Israel since October 2023, Zap Group has adopted a prudent approach to investments and operations. While prioritizing operational efficiency and cost optimization, Zap Group remains committed to growth. As it continues to expand its digital platforms, enhance customer engagement, and optimize data management, Zap Group is well-positioned to deliver seamless and value-driven e-commerce experiences.”
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.
+972-3-5389487
ir@formula.co.il
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 instability, 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, 2023, filed with the U.S. Securities and Exchange Commission on May 15, 2024, 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.
| FORMULA SYSTEMS (1985) LTD. | ||||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF PROFIT OR LOSS | ||||||||||
| U.S. dollars in thousands (except per share data) | ||||||||||
| Three months ended | Year ended | |||||||||
| December 31, | December 31, | |||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||
| Unaudited | Unaudited | |||||||||
| Revenues | 691,499 | 640,291 | 2,757,511 | 2,620,903 | ||||||
| Cost of revenues | 511,024 | 479,066 | 2,073,477 | 1,977,192 | ||||||
| Gross profit | 180,475 | 161,225 | 684,034 | 643,711 | ||||||
| Research and development costs, net | 22,105 | 19,748 | 83,731 | 77,968 | ||||||
| Selling, marketing and general and administrative expenses | 84,665 | 81,133 | 335,151 | 326,375 | ||||||
| Other income (expenses), net | (1,838 | ) | - | 5,369 | - | |||||
| Operating income | 71,867 | 60,344 | 270,521 | 239,368 | ||||||
| Financial expenses, net | 6,903 | 9,215 | 22,143 | 28,334 | ||||||
| Income before taxes on income | 64,964 | 51,129 | 248,378 | 211,034 | ||||||
| Taxes on income | 15,695 | 10,719 | 56,665 | 46,075 | ||||||
| Income after taxes | 49,269 | 40,410 | 191,713 | 164,959 | ||||||
| Share of profit of companies accounted for at equity, net | 1,784 | 172 | 2,077 | 773 | ||||||
| Net income | 51,053 | 40,582 | 193,790 | 165,732 | ||||||
| Net income attributable to non-controlling interests | 30,999 | 24,869 | 114,120 | 101,718 | ||||||
| Net income attributable to Formula Systems shareholders | 20,054 | 15,713 | 79,670 | 64,014 | ||||||
| Earnings per share (basic) | 1.31 | 1.03 | 5.22 | 4.19 | ||||||
| Earnings per share (diluted) | 1.28 | 1.01 | 5.09 | 4.12 | ||||||
| Number of shares used in computing earnings per share (basic) | 15,306,203 | 15,302,517 | 15,304,610 | 15,301,392 | ||||||
| Number of shares used in computing earnings per share (diluted) | 15,697,976 | 15,505,761 | 15,636,664 | 15,498,101 | ||||||
| FORMULA SYSTEMS (1985) LTD. | ||||||
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||
| U.S. dollars in thousands | ||||||
| December 31, | December 31, | |||||
| 2024 | 2023 | |||||
| (Unaudited) | ||||||
| ASSETS | ||||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents | 507,799 | 451,946 | ||||
| Short-term deposits | 55,401 | 76,224 | ||||
| Trade receivables, net | 802,988 | 721,008 | ||||
| Prepaid expenses and other accounts receivable | 89,601 | 84,670 | ||||
| Inventories | 30,728 | 42,008 | ||||
| Total current assets | 1,486,517 | 1,375,856 | ||||
| NON-CURRENT ASSETS: | ||||||
| Long-term investments and receivables | 54,895 | 52,002 | ||||
| Deferred taxes | 33,850 | 33,361 | (*) | |||
| Investments in companies accounted for at equity | 39,196 | 20,796 | ||||
| Property, plants and equipment, net | 51,942 | 52,931 | ||||
| Right-of-use assets | 156,225 | 120,651 | ||||
| Intangible assets, net and goodwill | 1,192,009 | 1,143,509 | ||||
| Total non-current assets | 1,528,117 | 1,423,250 | ||||
| Total assets | 3,014,634 | 2,799,106 | ||||
| LIABILITIES AND EQUITY | ||||||
| CURRENT LIABILITIES: | ||||||
| Credit from banks and others | 141,764 | 145,973 | ||||
| Debentures | 88,578 | 72,885 | ||||
| Current maturities of lease liabilities | 45,240 | 44,064 | ||||
| Trade payables | 292,066 | 258,649 | ||||
| Deferred revenues | 173,958 | 137,643 | ||||
| Employees and payroll accrual | 233,410 | 209,384 | ||||
| Other accounts payable | 103,924 | 73,124 | ||||
| Liabilities in respect of business combinations | 8,365 | 7,954 | ||||
| Put options of non-controlling interests | 52,420 | 35,987 | ||||
| Total current liabilities | 1,139,725 | 985,663 | ||||
| LONG-TERM LIABILITIES: | ||||||
| Loans from banks and others | 62,751 | 90,887 | ||||
| Debentures | 186,294 | 231,541 | ||||
| Lease liabilities | 119,586 | 84,639 | ||||
| Other long-term liabilities | 11,708 | 12,678 | ||||
| Deferred taxes | 42,894 | 45,711 | (*) | |||
| Deferred revenues | 12,522 | 4,873 | ||||
| Liabilities in respect of business combinations | 8,751 | 2,622 | ||||
| Put options of non-controlling interests | 30,553 | 21,880 | ||||
| Employees benefit liabilities, net | 10,505 | 10,427 | ||||
| Total long-term liabilities | 485,564 | 505,258 | ||||
| EQUITY | ||||||
| Equity attributable to Formula Systems shareholders | 679,338 | 625,762 | ||||
| Non-controlling interests | 710,007 | 682,423 | ||||
| Total equity | 1,389,345 | 1,308,185 | ||||
| Total liabilities and equity | 3,014,634 | 2,799,106 | ||||
| (*) Reclassified | ||||||
| FORMULA SYSTEMS (1985) LTD. | ||||||
| STAND-ALONE STATEMENTS OF FINANCIAL POSITION | ||||||
| U.S. dollars in thousands | ||||||
| December 31, | December 31, | |||||
| 2024 | 2023 | |||||
| (Unaudited) | ||||||
| ASSETS | ||||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents | 25,599 | 30,082 | ||||
| Dividend receivable | 12,013 | - | ||||
| Other accounts receivable and prepaid expenses | 4,798 | 5,639 | (*) | |||
| Total current assets | 42,410 | 35,721 | ||||
| NON-CURRENT ASSETS: | ||||||
| Investment in subsidiaries and a jointly controlled entity (**) | ||||||
| Matrix IT Ltd. | 162,133 | 160,056 | ||||
| Sapiens International Corporation N.V. | 264,349 | 251,658 | ||||
| Magic Software Enterprises Ltd. | 133,786 | 128,549 | ||||
| TSG | 20,453 | 18,998 | ||||
| Michpal Group | 69,127 | 47,936 | (*) | |||
| ZAP | 55,392 | 60,844 | (*) | |||
| Other | 47,722 | 24,884 | (*) | |||
| Total investment in subsidiaries and a jointly controlled entity | 752,962 | 692,925 | ||||
| Other investments and Long term receivables | 24,860 | 22,737 | ||||
| Property, plants and equipment, net | 10 | 11 | ||||
| Total non-current assets | 777,832 | 715,673 | ||||
| Total assets | 820,242 | 751,394 | ||||
| LIABILITIES AND EQUITY | ||||||
| CURRENT LIABILITIES: | ||||||
| Loans from banks and others | 2,294 | - | ||||
| Debentures | 45,807 | 32,126 | ||||
| Trade payables | 1,146 | 137 | ||||
| Other accounts payable | 2,109 | 2,697 | ||||
| Liability in respect of a business combination | - | 267 | ||||
| Put options of non-controlling interests | 1,005 | - | ||||
| Total current liabilities | 52,361 | 35,227 | ||||
| LONG-TERM LIABILITIES: | ||||||
| Loans from banks and others | 3,047 | |||||
| Debentures | 85,496 | 90,405 | ||||
| Total long-term liabilities | 88,543 | 90,405 | ||||
| EQUITY | 679,338 | 625,762 | ||||
| TOTAL LIABILITIES AND EQUITY | 820,242 | 751,394 | ||||
| (*) Reclassified | ||||||
| (**) 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. | ||||||
FAQ
What are Formula Systems (FORTY) key financial achievements in 2024?
What is the proposed merger deal between Matrix and Magic Software?
How did Matrix perform in Q4 2024?
What is Magic Software's revenue guidance for 2025?
How did Sapiens perform in North America during 2024?
