Formula’s revenues for the first half increased 15% year over year to $736.9 million and operating income for the first half increased 63% year over year to $50.6 million
Or Yehuda, Israel, August 16, 2018 – Formula Systems (1985) Ltd. (NASDAQ: FORTY), 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, today announced its results for the second quarter and first half ended June 30, 2018, in accordance with International Financial Reporting Standards (IFRS).
Financial Highlights for the Second Quarter Ended June 30, 2018
- Consolidated revenues for the second quarter increased by 10.4% to $363.5 million, compared to $329.1 million in the same period last year.
- Consolidated operating income for the second quarter increased by 66.5% to $24.8 million, compared to $14.9 million in the same period last year.
- Consolidated net income attributable to Formula’s shareholders for the second quarter was $7.6 million, or $0.51 per fully diluted share, compared to $0.3 million, or $0.01 per fully diluted share, in the same period last year.
Financial Highlights for the Six-Month Period Ended June 30, 2018
- Consolidated revenues for the first half of 2018 increased by 15.1% to $736.9 million, compared to $640.0 million in the same period last year.
- Consolidated operating income for the first half of 2018 increased by 62.6% to $50.6 million, compared to $31.1 million in the same period last year.
- Consolidated net income attributable to Formula’s shareholders for the first half of 2018 was $14.9 million, or $0.99 per fully diluted share, compared to $0.8 million, or $0.06 per fully diluted share, in the same period last year.
- As of June 30, 2018, Formula held 49.18%, 48.25%, 47.12%, 100%, 50% and 90.09% of the outstanding ordinary shares of Matrix IT Ltd., Sapiens International Corporation N.V, Magic Software Enterprises Ltd., Michpal Micro Computers (1983) Ltd., TSG IT Advanced Systems Ltd. and Insync Staffing Solutions, Inc., respectively.
- Consolidated cash, short-term investments in marketable securities and bank deposits totaled to approximately $251.8 million as of June 30, 2018.
- Total consolidated equity as of June 30, 2018, was $772.9 million (representing 49.3% of the total balance sheet).
- As of June 30, 2018, Formula was in compliance with all of its financial covenants under the debentures issued by Formula and under loans granted from other financial institutions.
Comments of Management
Commenting on the results, Guy Bernstein, CEO of Formula Systems, said, “We are very pleased to report significant growth in all major financial indices across our entire portfolio.
"In the second quarter and first half of 2018, Matrix achieved double-digit growth across all its key financial indicators. Matrix reported revenues of NIS 762.2 million in the second quarter of 2018, operating income of NIS 50.1 million, and net income attributable to Matrix shareholders of NIS 32.7 million, reflecting an increase of 14%, 22.1% and 43.3% respectively, year over year.
“The increase in Matrix's revenues can be credited to the strategic deals that it won over the past year, including establishing a credit database for the Bank of Israel, significant deals in the field of cyber and other successful business initiatives. In the US, Matrix is beginning to reap the benefits of its acquisitions and continues to see the US market as a strategic market for its continued growth.
“Matrix also continued to focus on high-profit activities and on developing new models in the field of employee training and placement well as in the integration and infrastructure solutions sector, which continues to expand and enjoy increased demand.
“Sapiens’ improved margins and profitability in the second quarter and first half of 2018 reflect its success in making significant strides to getting back on track, including cost-cutting programs and the effective leveraging of its global assets. In the second quarter, Sapiens’ revenues totaled $72.2 million up 4.5% compared to last year, its operating margin improved to 6.8% and its non-GAAP operating margin was 13.2% up from (4.3%) and 4.7% respectively, year over year.
“Sapiens updated its guidance and forecasts that its non-GAAP revenues will be in the range of $285 to $290 million up from $280 to 285 million and the non-GAAP full year operating margins will be in the range of 13.0% and 13.2% up from 12.0% to 13.0%.
“Sapiens continues to advance towards its key objectives of expanding its P&C business in EMEA, and North America, while improving profitability. Sapiens’ enhanced digital insurance offering along with its proven products and personnel are winning new business, particularly with its P&C platforms, and is expanding its business with new and existing clients and building its pipeline for future growth. This quarter’s results demonstrate Sapiens’ ability to expand market leadership, particularly in the areas with the greatest client demand in the insurance market: digitalization, data analytics, and legacy transformation.
“Magic’s record-breaking financial results for the second quarter and first half of 2018 demonstrate that Magic is continuing its impressive forward momentum across all of its markets and regions, confirming that its strategic business initiatives are paying off. The results for the second quarter were at all-time highs with revenues of $70.2 million, operating income of $8.0 million and non-GAAP operating income of $9.8 million, up 7%, 26% and 9% respectively, year over year, driven exclusively by organic growth.
“TSG is expanding its partnerships to execute additional strategic projects in Israel and around the world.
“Lastly, we are excited by Michpal's continuing growth, with revenues for the first half of 2018 increasing by more than 25% year over year, mainly as a result of the successful January 2018 official launch of its new product and new service line – "Michpal Pension" and "Michpal PensionPlus”. Over 1,500 existing Michpal customers have already adopted this new business line, which is the first step in our business strategy to expand Michpal’s offerings. We expect that Michpal’s strong financial position, coupled with its activities towards promoting and growing its business organically and through M&As, will continue the company's momentum through 2018 and beyond.”
Formula Systems (1985) Ltd. is a global information technology 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.
Formula Systems (1985) Ltd.
Except for any historical information contained herein, matters discussed in this press release might include forward-looking statements that involve a number of risks and uncertainties. Regarding any financial statements, actual results might vary significantly based upon a number of factors including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product conditions, both locally and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in Formula's most recent annual report and other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.