OR YEHUDA, Israel, Aug. 25, 2026 (GLOBE NEWSWIRE) -- Formula Systems (1985) Ltd. (Nasdaq and TASE: FORTY) ("Formula" or the "Company"), a global information technology group providing a broad range of software, proprietary and non-proprietary technology solutions and professional services through its subsidiaries and affiliates, today announced its results of operations for the second quarter and first half ended June 30, 2026.

Financial Highlights for the Second Quarter Ended June 30, 2026

   -- Revenues for the second quarter ended June 30, 2026 increased by 29.8% 
      year over year, reaching a second quarter record-breaking $782.4 million, 
      compared to $602.7 million in the same period last year. 
 
   -- Operating income for the second quarter ended June 30, 2026 increased by 
      41.3% year over year, reaching $71.6 million compared to $50.7 million in 
      the same period last year. 
 
   -- Net income from continued operations attributable to Formula's 
      shareholders for the second quarter ended June 30, 2026, increased by 
      approximately 163.7% year over year, reaching $23.3 million, or $1.47 per 
      fully diluted share, compared to $8.8 million, or $0.56 per fully diluted 
      share, in the same period last year. 
 
   -- Net income attributable to Formula's shareholders for the second quarter 
      ended June 30, 2026 increased by approximately 54.6% year over year, 
      reaching $23.3 million, or $1.47 per fully diluted share, compared to 
      $15.1 million, or $0.95 per fully diluted share, in the same period last 
      year. 

Financial Highlights for First Half Ended June 30, 2026

   -- Revenues for the six-month period ended June 30, 2026 increased by 24.4% 
      year over year, reaching a first half record-breaking $1.52 billion, 
      compared to $1.22 billion in the same period last year. 
 
   -- Operating income for the six-month period ended June 30, 2026 increased 
      by 53.3% year over year, reaching $153.7 million compared to $100.2 
      million in the same period last year. Operating income for the first half 
      of 2026 included a capital gain of $16.6 million resulting from exercise 
      of employee stock-based compensation and a secondary private placement 
      transaction completed by our affiliate, TSG IT Advanced Systems Ltd. 
      ("TSG"), in January 2026. On January 13, 2026, TSG's Board of Directors 
      approved a capital raise through a private placement to institutional 
      investors, pursuant to which TSG raised approximately NIS 192 million 
      (approximately $58.9 million) through the issuance of 320,374 ordinary 
      shares at a price of NIS 600 per share, together with 128,150 
      non-tradable warrants (allocated at no additional consideration at a 
      ratio of 0.4 warrant per share), each exercisable for one ordinary share 
      at an exercise price of NIS 720 per share through July 22, 2027. The 
      allocated shares and warrants represent approximately 9.23% of TSG's 
      fully diluted share capital. As a result of this transaction and the 
      exercise of TSG's employee stock-based compensation, during the six-month 
      period ended June 30, 2026 Formula's ownership interest in TSG was 
      diluted from 37.33% to 32.87%, resulting with a $16.6 million capital 
      gain. Excluding this capital gain, operating income would have increased 
      by 36.7% year over year, to $137.0 million. 
 
   -- Net income from continued operations attributable to Formula's 
      shareholders for the six-month period ended June 30, 2026 increased by 
      approximately 186.4% year over year, reaching $58.9 million, or $3.72 per 
      fully diluted share, compared to $20.6 million, or $1.31 per fully 
      diluted share, in the same period last year. Excluding the impact of the 
      capital gain resulting from TSG's secondary private placement transaction 
      and the exercise of TSG's employee stock-based compensation, net income 
      from continued operations attributable to Formula's shareholders would 
      have increased by 105.5% year over year, to $42.3 million. 
 
   -- Net income attributable to Formula's shareholders for the six-month 
      period ended June 30, 2026 increased by approximately 71.4% year over 
      year, reaching $58.9 million, or $3.72 per fully diluted share, compared 
      to $34.4 million, or $2.20 per fully diluted share, in the same period 
      last year. Excluding the impact of the capital gain resulting from TSG's 
      secondary private placement transaction and the exercise of TSG's 
      employee stock-based compensation, net income attributable to Formula's 
      shareholders would have increased by 23.0% year over year, to $42.3 
      million. 
 
   -- As of June 30, 2026, Formula held 47.68%, 18.68%, 69.09%, 32.87%, 90.09%, 
      80%, 100%, 100%, 51% and 100% of the outstanding ordinary shares of 
      Matrix IT Ltd., SI Swan UK Topco Limited., Michpal Technologies Ltd., TSG 
      IT Advanced Systems Ltd., Insync Staffing, Inc., Ofek Aerial Photography 
      Ltd., ZAP Group Ltd., Shamrad Electronic (1997) Ltd., Hashahar Telecom 
      And Electricity Ltd., and Formula Infrastructure Ltd., respectively. 
 
   -- Consolidated cash and cash equivalents and short-term bank deposits 
      totaled approximately $864.5 million as of June 30, 2026, compared to 
      $1,280 million as of December 31, 2025. 
 
   -- Total equity as of June 30, 2026 was $1.66 billion (representing 47.2% of 
      the total consolidated statements of financial position), compared to 
      $1.78 billion (representing 49.6% of the total consolidated statements of 
      financial position) as of December 31, 2025. 
 
   -- The above comparative figures for the second quarter and first half ended 
      June 30, 2025 reflect the reclassification of the results of Sapiens (of 
      which Formula sold its controlling interest in December 2025), as 
      discontinued operations, in accordance with IFRS 5. Similarly, the 
      Company's record-breaking consolidated results for the second quarter and 
      first half ended June 30, 2026 (as described above) are relative to the 
      Company's historical consolidated results in prior years that exclude 
      Sapiens. 

Debentures Covenants

As of June 30, 2026, Formula was in compliance with all of its financial covenants under the debenture series issued by it, based on the following achievements:

Covenant 1

   -- Target equity attributable to Formula's shareholders (excluding 
      non-controlling interests): above $325 million. 
 
   -- Actual equity attributable to Formula's shareholders as of June 30, 2026 
      was $1.21 billion. 

Covenant 2

   -- Target ratio of net financial indebtedness to net capitalization (in each 
      case, as defined under the indenture for Formula's Series C and D Secured 
      Debentures): below 65%. 
 
   -- Actual ratio of net financial indebtedness to net capitalization, as of 
      June 30, 2026 was (27.08%). 

Covenant 3

   -- Target ratio of net financial indebtedness to EBITDA (based on the 
      accumulated calculation for the four most recent quarters): below 5. 
 
   -- Actual ratio of net financial indebtedness to EBITDA as of June 30, 2026 
      was (2.07). 

Declaration of Dividend

   -- Based on the Company's strong cash position, primarily resulting from the 
      net proceeds received in connection with Advent's acquisition of Sapiens 
      in December 2025, the Company's board of directors approved the 
      distribution of a cash dividend in an amount of $1.63 per share and in an 
      aggregate amount of approximately $25.0 million. In reaching its decision 
      to declare the dividend, the Board of Directors evaluated such factors as 
      the current and foreseeable liquidity and capital needs of Formula and 
      felt comfortable declaring the dividend and rewarding our longstanding 
      shareholder. 
 
   -- The dividend will be paid on October 6, 2026 to all of the Company's 
      shareholders of record at the close of trading on the Nasdaq Global 
      Select Market (or the Tel-Aviv Stock Exchange, as appropriate) on 
      September 22, 2026. The dividend will be paid in U.S dollars both with 
      respect to the Company's ordinary shares traded on the Tel Aviv Stock 
      Exchange and its American Depositary Receipts traded on the Nasdaq Global 
      Select Market. 
 
   -- In accordance with Israeli tax law, the dividend is subject to 
      withholding tax at source at the rate of 30% (if the recipient of the 
      dividend is at the time of distribution or was at any time during the 
      preceding 12-month period the holder of 10% or more of the Company's 
      share capital) or 25% (for all other dividend recipients) of the dividend 
      amount payable to each shareholder of record, subject to applicable 
      exemptions. 

Comments of Management

Commenting on the results, Guy Bernstein, CEO of Formula Systems, said: "We continue to demonstrate strong and consistent performance, delivering record-breaking results in the second quarter and first half of 2026 across all key financial metrics: revenues, gross profit, operating income, net income and EBITDA. These results reflect the breadth of our portfolio and our teams' commitment to operational excellence. With solid execution across all business segments, we remain confident in our ability to drive sustained, profitable growth throughout the second half of 2026."