Matrix IT (MTRX) Q1 2023 earnings summary

Executive summary

• Revenue rose 11.5% YoY to NIS 1,291.2 million; operating profit increased 10.2% to NIS 101.5 million, while net income declined 3.9% to NIS 65.3 million.

• Revenue, gross profit, operating profit, EBITDA and shareholder net profit reached quarterly records; operating profit exceeded NIS 100 million for the first time.

• Organic revenue growth was 11.8%, excluding Infinity’s deconsolidation and the consolidation of RDT and Zebra.

Financial highlights

• Gross profit rose 12.4% to NIS 188.6 million; gross margin was 14.6% versus 14.5% YoY.

• Operating profit rose 10.2% to NIS 101.5 million; operating margin was 7.9% versus 8.0% YoY.

• Net income was NIS 65.3 million, down 3.9%; income attributable to shareholders rose 2.7% to NIS 60.7 million.

• EBITDA was NIS 148.8 million, up 16.6%, with an 11.5% margin; excluding IFRS 16, EBITDA was NIS 115.9 million, up 8.79%, with a 9.0% margin.

• Net financing expenses rose to NIS 16.9 million from NIS 7.0 million, mainly due to higher interest rates and remeasurement of lease liabilities and NCI put options.

Outlook and guidance

• Nimbus public-sector cloud projects are expected to accelerate cloud adoption in Israel; work has begun on initial projects.

• Continued demand is expected in cloud, digital payments, cyber, data and AI; US GRC wins included banking-system and healthcare deals.

• Management expects inflation’s impact on operating results to be limited, while rising rates may increase financing costs on variable-rate debt and replacement borrowing.

• Financial strength, cash and operating cash generation are expected to support operations, growth investment and potential M&A while meeting obligations.