Matrix IT (MTRX) Q2 2023 earnings summary

Executive summary

• Q2 revenue rose 10.4% to NIS 1,286.7M; organic growth was 6.8%. H1 revenue increased 10.9% to NIS 2,577.9M, with 9.2% organic growth.

• Operating profit before the prior-year investment-sale gain rose 16% in Q2 to NIS 97.7M and 13% in H1 to NIS 199.1M; H1 revenue and operating profit reached records.

• Growth was supported by Israeli activity, US and Canada operations, and demand in digital, data, modernization, defense cyber, AI, cloud and computing infrastructure.

Financial highlights

• Gross profit rose 15.9% in Q2 to NIS 185.0M and 14.1% in H1 to NIS 373.7M.

• Reported net income was NIS 62.8M in Q2 and NIS 128.2M in H1; excluding the prior-year Infinity gain, shareholder net profit increased 2.3% and 2.5%, respectively.

• EBITDA was NIS 147.8M in Q2, up 22.9%, and NIS 296.6M in H1, up 19.7%; adjusted EBITDA, excluding capital-gain and IFRS 16 lease effects, rose 15.6% in Q2 to NIS 114.8M.

• Net financial expenses increased to NIS 15.4M in Q2 from NIS 4.1M and NIS 32.3M in H1 from NIS 11.1M, largely reflecting higher interest rates.

• Operating cash flow was NIS 95.6M in Q2 and NIS 46.1M in H1, versus negative NIS 2.9M and positive NIS 21.3M in the prior-year periods.

Outlook and guidance

• Financial strength, cash and operating cash flow are expected to support operations, growth investment including M&A, and obligations.

• Inflation is not expected to have a material operating impact; higher rates may raise costs on variable-rate and replacement borrowings.

• GRC demand may rise with digital payments growth and increased cyber-fraud exposure; cloud migration and GenAI are expanding technology opportunities.