Formula Systems Reports Fourth Quarter and Full Year 2025 Financial Results

Formula Systems Reports Fourth Quarter and Full Year 2025 Financial Results PRESS RELEASE

2025 Full-year revenues increased by 18.4% year over year, reaching $2.63 billion.

Net income attributable to Formula shareholders reached $606.5 million following the completion of Sapiens’ acquisition by Advent.

OR YEHUDA, Israel, March 26, 2026 (GLOBE NEWSWIRE) -- Formula Systems (1985) Ltd. (Nasdaq and TASE: FORTY) (“Formula” or the “Company”), a global information technology group engaged, through its subsidiaries and affiliates, in providing software consulting services and computer-based business solutions and developing proprietary software products, today announced its fourth quarter and full year 2025 results of operations.

Financial Highlights for the Fourth Quarter Ended December 31, 2025

Financial Highlights for the Full Year Ended December 31, 2025

Debentures Covenants

As of December 31, 2025, Formula was in compliance with all of its financial covenants under the debenture series issued by it, based on the following achievements:

Covenant 1

Covenant 2

Covenant 3

Comments of Management

Commenting on the results, Guy Bernstein, CEO of Formula Systems, said: “Formula Systems concludes 2025 with strong operating performance and significant strategic milestones that position the group for continued long-term growth. Our results reflect solid revenue expansion across our core activities, alongside the successful execution of key transactions, most notably the completion of the Sapiens transaction, which contributed significantly to our reported net income. Across the group, we continue to see strong demand for advanced technology solutions, particularly in areas such as cloud, cybersecurity, data, and AI, driving growth across our subsidiaries. At the same time, we remain focused on disciplined execution, operational excellence, and strengthening our global footprint.”

“On February 24, 2026, Matrix and Magic Software, both subsidiaries of Formula Systems, announced the completion of their merger agreement. Under the terms of the merger agreement, Magic Software shareholders received shares in the merged entity at an exchange ratio of 68.875% / 31.125% between Matrix and Magic Software shareholders, respectively, on a fully diluted basis. On a pro forma basis, the combined company reported 2025 revenues of approximately NIS 8.4 billion (approximately $2.4 billion), EBITDA of approximately NIS 1.0 billion (approximately $0.3 billion), and net income attributable to shareholders of approximately NIS 444 million (approximately $129 million), positioning it among the ten largest publicly traded IT services companies in the world. This strategic merger is designed to unlock substantial value for shareholders of both companies by creating a more robust, dynamic, and globally competitive organization. This transaction marks a defining moment in the history of both Matrix and Magic Software, representing a transformative step forward. By uniting two highly complementary organizations, this merger will create a stronger, more diversified company with expanded capabilities to serve clients worldwide, accelerate technological innovation, and drive long-term value creation.”

“Matrix reported its best fourth quarter in history with fourth quarter record-breaking results recorded across all its key financial indices: revenues, gross profit, operating income, net income and EBITDA. Matrix revenues for the fourth quarter grew by 16.4% year over year reaching an all-time fourth quarter high of NIS 1.60 billion (approximately $492.2 million). Matrix revenues for the year grew by 11.8% year over year reaching an all-time high of NIS 6.2 billion (approximately $1.8 billion). Operating income for the fourth quarter grew by 15.0%, reaching NIS 137.9 million (approximately $42.4 million). Operating income for the full year grew by 16.0%, to NIS 522.1 million (approximately $151.8 million). We are pleased with Matrix’s continued recognition as a market leader in Israel in the implementation of fastest-growing technologies, such as cloud, cyber, digital, data, DevOps and AI, which enable the company to create significant value for its customers in managing, streamlining, accelerating and making its businesses thrive. Matrix continues to see strong demand for services and solutions across cybersecurity, cloud, data, and AI, in both the commercial and defense sectors. Matrix’s defense activities, together with the contribution of Commit following the Magic transaction, are generating annual revenues exceeding NIS 1 billion and continue to deliver strong double-digit growth. At the same time, the rapid evolution of AI is expanding the IT services market, driving increased demand for enterprise projects. Matrix is well positioned at the intersection of technological innovation and enterprise implementation, with significant growth potential across its core areas of activity.”

“Michpal Technologies’ concluded 2025, a year in which it became a public company, with strong results and continued growth, reflecting its ability to leverage synergies and expand revenues and profits. With a solid cash position, the Company is advancing its acquisition strategy while strengthening its position in payroll, HR, and financial solutions. At the same time, we see AI as a key driver for enhancing its competitive advantage and supporting future growth, alongside ongoing efforts to expand through additional acquisition opportunities. Michpal concluded the full year of 2025 with record-breaking revenues of NIS 198.4 million (approximately $57.7 million), growing 24.2% year over year. Adjusted EBITDA increased by 43.6% year over year to a record-breaking NIS 76.1 million (approximately $22.1 million). Michpal Technologies offers comprehensive proprietary on-premise and web-based payroll software solutions and related services, as well as integrated specialized management systems in the field of financial accounting, taxation, and compliance for accounting professionals (accountants and tax consultants), bookkeepers, controllers, and CFOs.”

“TSG concluded the fourth quarter and full year of 2025 with record-breaking results, demonstrating significant growth in revenue and profits across all its business segments. Revenues for the fourth quarter increased by approximately 34.1% year over year to a record-breaking NIS 114.8 million (approximately $35.3 million). Revenues for the full year 2025 increased by approximately 34% year over year to a record-breaking NIS 430 million (approximately $124.6 million). Adjusted EBITDA for the fourth quarter of 2025 increased by 33.9% year-over-year to a record-breaking NIS 17.8 million (approximately $5.5 million), compared to NIS 13.3 million (approximately $3.6 million) in the same period last year. Adjusted EBITDA for the full year 2025 increased by 31% year-over-year to record-breaking NIS 63.8 million (approximately $18.5 million), compared to NIS 48.7 million (approximately $13.1 million) in the same period last year. TSG announced several potential strategic business combination transactions that are expected to enhance its capabilities across the entire value chain of counter-UAV solutions - from detection and precise mapping, through autonomous interception platforms, to manufacturing and integration of operational systems. The integration of these capabilities with TSG’s command and control systems, which incorporate artificial intelligence, would enable TSG to offer end-to-end solutions and support real-time decision-making and interception capabilities to address low-altitude threats.”

“Over the past year, Zap Group, Israel's leading consumer websites company, has demonstrated agility in adapting to evolving market dynamics. The launch of its groundbreaking E-Commerce Marketplace platform marks a pivotal transformation in its business model. By integrating cutting-edge technology and service-driven solutions, Zap Group has enhanced its relationships with small and medium-sized businesses, driving higher sales volumes, while deepening connections with end consumers through a 360-degree, holistic experience. In its first year of operation, the Marketplace platform has delivered remarkable results, with tens of thousands of transactions generating tens of millions of NIS. Currently, over 400 stores feature more than 100,000 products, reflecting strong adoption and success. The platform enables businesses to engage directly with consumers, fostering personalized relationships, leveraging data-driven insights, and effectively managing customer journeys. This innovation positions Zap Group at the forefront of Israel’s digital economy. In response to broader economic challenges, including the geopolitical situation in Israel since October 2023, Zap Group has adopted a prudent approach to investments and operations. While prioritizing operational efficiency and cost optimization, Zap Group remains committed to growth. As it continues to expand its digital platforms, enhance customer engagement, and optimize data management, Zap Group is well-positioned to deliver seamless and value-driven e-commerce experiences.”

Stand-Alone Financial Measures

This press release presents, further below, certain stand-alone financial measures to reflect Formula Systems’ stand-alone financial position in reference to its assets and liabilities as the parent company of its group of companies. These financial measures are prepared consistently with the accounting principles applied in the consolidated financial statements of the group. Such measures include investments in subsidiaries and a jointly controlled entity measured at cost adjusted by Formula Systems’ share in the investees’ accumulated undistributed earnings and other comprehensive income or loss.

Formula Systems believes that these financial measures provide useful information to management and investors regarding Formula Systems’ stand-alone financial position. Formula Systems’ management uses these measures to compare the Company’s performance in the current period to that of prior periods for trend analysis. These measures are also used in financial reports prepared for management and in quarterly financial reports presented to the Company’s board of directors. The Company believes that the use of these stand-alone financial measures provides an additional tool for investors to use in evaluating Formula Systems’ financial position.

Management of the Company does not consider these stand-alone measures in isolation or as an alternative to financial measures determined in accordance with GAAP. Formula Systems urges investors to review the consolidated financial statements which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business or financial position.

About Formula

Formula Systems, whose ordinary shares are traded on the Tel-Aviv Stock Exchange and ADSs are traded on the Nasdaq Global Select Market, is 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.

For more information, visit www.formulasystems.com.

Press Contact:

Formula Systems (1985) Ltd.

+972-3-5389305

ir@formula.co.il

Forward Looking Statements

Certain matters discussed in this press release that are incorporated herein and therein by reference are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, that are based on Formula Systems’ (“we,” “us” or “our”) beliefs, assumptions and expectations, as well as information currently available to us. Such forward-looking statements may be identified by the use of the words “anticipate,” “believe,” “estimate,” “expect,” “may,” “will,” “plan” and similar expressions. Such statements reflect our current views with respect to future events and are subject to certain risks and uncertainties. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: adverse macro-economic trends and their duration, including persistent inflation, relatively high interest rates, and supply chain delays, which trends may last for a significant period and materially adversely affect our results of operations; the degree of our success in our plans to leverage our global footprint to grow our sales; the degree of our success in integrating the companies that we have acquired through the implementation of our M&A growth strategy; the degree of our success in developing and deploying new technologies for software solutions that address the updated needs of our customers and serve as the basis for our revenues; the lengthy development cycles for our solutions, which may frustrate our ability to realize revenues and/or profits from our potential new solutions; our lengthy and complex sales cycles, which do not always result in the realization of revenues; the degree of our success in retaining our existing customers or competing effectively for greater market share; difficulties in successfully planning and managing changes in the size of our operations; the frequency of the long-term, large, complex projects that we perform that involve complex estimates of project costs and profit margins, which sometimes change mid-stream; the challenges and potential liability that heightened privacy laws and regulations pose to our business; occasional disputes with clients, which may adversely impact our results of operations and our reputation; various intellectual property issues related to our business; potential unanticipated product vulnerabilities or cybersecurity breaches of our or our customers’ systems particularly in the current hybrid office/work-from-home environment; risks related to industries, such as the insurance, healthcare, defense and the telecom, in which certain of our clients operate; risks posed by our global sales and operations, such as changes in regulatory requirements, supply chain disruptions, geopolitical, wide-spread viruses and epidemics or fluctuations in currency exchange rates; and risks related to our and our subsidiaries’ principal location in Israel.

While we believe such forward-looking statements are based on reasonable assumptions, should one or more of the underlying assumptions prove incorrect, or these risks or uncertainties materialize, our actual results may differ materially from those expressed or implied by the forward-looking statements. Please read the risks discussed under the heading “Item 3.D Risk Factors” in our most recent Annual Report on Form 20-F for the year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission on May 14, 2025, in order to review conditions that we believe could cause actual results to differ materially from those contemplated by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance, events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason, or to conform those statements to actual results or to changes in our expectations.