Formula Systems 1985 (FORTY) Stock Price, News & Analysis

Formula Systems (1985) Ltd. (traded on Nasdaq and the Tel-Aviv Stock Exchange under the symbol FORTY) is a global information technology holding company. According to the company’s disclosures, it is engaged, through its subsidiaries and affiliates, in providing software consulting services, computer-based business solutions and in developing proprietary software products. Its operations are classified in the information sector, in the data processing, hosting and related services industry.

Formula Systems describes itself as a global information technology group, with activities carried out via a portfolio of controlled and affiliated companies. Over time, the company has held significant stakes in Matrix IT Ltd., Sapiens International Corporation N.V., Magic Software Enterprises Ltd., Michpal Technologies Ltd. (and previously Michpal Micro Computers (1983) Ltd.), TSG IT Advanced Systems Ltd., Insync Staffing Solutions, Inc., Ofek Aerial Photography Ltd., ZAP Group Ltd., Shamrad Electronics (1997) Ltd. and Hashahar Telecom and Electricity Ltd. The company reports its results on a consolidated basis, reflecting the performance of these subsidiaries and affiliates.

Based on repeated descriptions in its public reports, Formula Systems’ business model centers on owning and managing technology companies that deliver software and IT-related services. Through its subsidiaries, it is involved in software consulting, implementation of computer-based business solutions and the development and commercialization of proprietary software products. The company also notes that some of its subsidiaries and affiliates focus on fast-growing technology areas such as cloud, cybersecurity, digital solutions, data, DevOps, InsureTech and AI, which are used to support customers in managing, streamlining, accelerating and scaling their operations.

Formula Systems’ investment portfolio has included companies that serve different segments of the IT market. For example, in its financial communications the company has highlighted:

• Matrix IT Ltd., which the company associates with implementation of technologies such as cloud, cyber, digital, data, DevOps and AI, and with projects for large organizations and public sector entities.
• Sapiens International Corporation N.V., which is described as providing intelligent SaaS-based software solutions for the insurance industry and an insurance platform that supports digital transformation, operational efficiency and AI-driven innovations.
• Magic Software Enterprises Ltd., which the company associates with digital and cloud transformation solutions and a portfolio of software products and services used in customers’ digital initiatives.
• Michpal Technologies and the Michpal Group, which are described as engaging in payroll, recruitment, time and attendance, pension administration, human resources and software solutions for business and financial processes, including human capital management offerings that integrate cloud-based, AI and automation technologies.

Formula Systems’ disclosures emphasize that the group’s activities span software consulting, digital transformation, cloud and cyber-related projects, data and analytics, and other computer-based business solutions. The company repeatedly notes that its subsidiaries and affiliates implement technologies that help customers manage and optimize business processes, often in complex or regulated environments. Through these holdings, Formula Systems participates in markets such as insurance technology, enterprise software and IT services.

The company’s ordinary shares trade on the Tel-Aviv Stock Exchange, and its American Depositary Shares are listed on the Nasdaq Global Select Market. Formula Systems also issues secured debentures in Israel, and has reported that it was in compliance with financial covenants associated with its debenture series at various reporting dates. In a 2024 report, the company described a draft agreement for a potential new series of secured, non-convertible debentures (Series D Debentures) that would be secured by a first lien on certain shares of publicly traded subsidiaries, including Matrix IT Ltd., Sapiens International Corporation N.V. and Magic Software Enterprises Ltd.

Formula Systems’ public communications indicate that it monitors and reports on both consolidated financial performance and stand-alone financial measures at the parent-company level. The company has explained that these stand-alone measures are used internally to evaluate its financial position as the parent of the group, including its investments in subsidiaries and a jointly controlled entity, and that they are prepared on a basis consistent with the accounting principles used in its consolidated financial statements.

In addition to its role as a holding company, Formula Systems regularly reports on significant corporate events involving its subsidiaries. For example, it has furnished reports regarding acquisitions by Sapiens, guidance updates and strategic initiatives at Magic Software, public offerings by portfolio companies such as TSG IT Advanced Systems Ltd. and Michpal Technologies Ltd., and an agreement under which Sapiens entered into a definitive agreement to be acquired by Advent, with Formula Systems retaining a minority ownership stake following the transaction. The company has also reported on a planned merger of Magic Software into Matrix IT, describing that transaction as a major merger in the Israeli IT sector, subject to regulatory and shareholder approvals.

Formula Systems is headquartered in Or Yehuda, Israel, as indicated in its press releases and SEC filings. It files annual reports on Form 20-F with the U.S. Securities and Exchange Commission and periodic current reports on Form 6-K, which include its financial results, information on dividends, debenture covenants, and corporate governance matters such as the election of external directors under Israeli law.

Business segments and portfolio focus

While Formula Systems reports as a group, its communications distinguish between several key business lines operated through subsidiaries and affiliates. These include:

• Software consulting and implementation services, as reflected in the activities of Matrix IT and other IT services companies within the group.
• Insurance software platforms, through Sapiens, which is described as providing intelligent SaaS-based software solutions and a comprehensive insurance platform for property and casualty, life and reinsurance businesses.
• Digital and cloud transformation solutions, through Magic Software, which the company associates with digital, AI-driven and cloud transformation offerings.
• Human capital and business process software, through the Michpal Group, which is described as providing services and software products for payroll, recruitment, time and attendance, pension administration, human resources and business and financial processes.
• Additional technology and service activities, through entities such as TSG IT Advanced Systems Ltd., Insync Staffing Solutions, Ofek Aerial Photography Ltd., ZAP Group Ltd., Shamrad Electronics (1997) Ltd. and Hashahar Telecom and Electricity Ltd., which are identified as part of the group’s consolidated holdings.

Across these holdings, Formula Systems’ disclosures emphasize recurring themes of software development, consulting, implementation of complex IT systems, and proprietary software products that support customers’ operational and digital needs.

Regulatory and capital markets context

Formula Systems is subject to reporting obligations as a foreign private issuer under the U.S. Securities Exchange Act of 1934. It files Form 20-F annual reports, which include audited financial statements and risk factor disclosures, and Form 6-K reports for interim financial results, shareholder meetings, debenture-related matters and significant corporate events. In Israel, the company reports to the Tel Aviv Stock Exchange and the Israel Securities Authority, particularly in connection with its debentures and local regulatory requirements.

The company has highlighted that its debentures are secured and subject to financial covenants, such as minimum equity attributable to Formula Systems’ shareholders and maximum ratios of net financial indebtedness to capitalization and to EBITDA. In multiple periods, the company has stated that it was in compliance with these covenants, and has provided the related calculations in its financial communications.