Formula Systems (1985) (FORTY) Q2 2024 earnings summary

Executive summary

• Achieved record second quarter and first half revenues, operating income, and net income, with strong year-over-year growth across key metrics.

• Subsidiaries Matrix, Sapiens, Magic Software, Michpal, and TSG all reported notable operational and financial improvements.

Financial highlights

• Q2 2024 revenues rose 1.9% year-over-year to $667.7M; operating income up 8.4% to $65M; net income attributable to shareholders up 10.7% to $18.8M ($1.20 diluted EPS).

• First half 2024 revenues increased 3.0% to $1.37B; operating income up 5.7% to $127.6M; net income attributable to shareholders up 10.1% to $36M ($2.31 diluted EPS).

• Gross profit for Q2 was $166.4M, up from $160.9M year-over-year; gross profit for H1 was $330.7M, up from $322.9M.

Segment performance

• Matrix Q2 revenues grew 3.6% year-over-year to $357.8M, with operating income up 13.9% to $29.9M; strong demand in Israel and North America for digital, cloud, and cyber services.

• Sapiens Q2 revenues increased 6.6% to $137M; Non-GAAP operating profit was $25M (18.2% margin), driven by growth in North America and Europe.

• Magic Software showed improving operational results despite macroeconomic challenges, with a robust pipeline and continued customer preference for digital/cloud transformation.

• Michpal Q2 revenues grew 10.6% year-over-year on a constant currency basis to $10M, driven by payroll and financial software solutions.

• TSG Q2 EBITDA rose 13.3% year-over-year to $3.5M, benefiting from defense sector demand and municipal projects.