Formula Systems Reports First Quarter Results for 2015 with Net Income of $6.2 Million

OR YEHUDA, Israel, May 12, 2015 /PRNewswire/ -- Formula Systems (1985) Ltd. FORTY a global information technology company principally engaged, through its subsidiaries, in providing software consulting services, developing proprietary software products, and providing computer-based business solutions, today announced its results for the first quarter of 2015.

Financial Highlights for the First Quarter of 2015

• Revenues for the first quarter ended March 31, 2015 increased 12% to $194.4 million, compared to $173.5 million in the same period last year. Revenues for the first quarter increased by approximately $41.0 million due to the consolidation of the results of operations of Sapiens, which were not consolidated during 2014, offset by $27.3 million that were included in the same period last year due to the consolidation of Magic's results of operations in part in the first quarter of 2014, and which were not consolidated in the first quarter of 2015.
• Operating income for the first quarter ended March 31, 2015, increased 90% to $13.3 million compared to $7.0 million in the same period last year. Operating income for the first quarter increased by $5.1 million due to the consolidation of the results of operations of Sapiens, which were not consolidated during 2014, offset by $4.0 million that were consolidated in the same period last year, due to the consolidation of Magic's results of operations in part during the first quarter of 2014, and which were not consolidated in the first quarter of 2015.
• Net income for the first quarter ended March 31, 2015 was $6.2 million, or $0.42 per fully diluted share, compared to $62.9 million, or $4.39 per fully diluted share, in the same period last year. Net income for the first quarter of 2014 was positively impacted by the net gain of $67.2 million recorded in relation to Magic Software's March 2014 public offering pursuant to which Formula's holdings in Magic were reduced below 50%, which in turn resulted in Formula's investment in Magic being accounted from March 2014 under the equity method of accounting and the related re-measurement to fair value of Formula's investment in Magic.
• As of March 31, 2015 Formula held 50.0%, 50.0% and 45.6% of the outstanding ordinary shares of Matrix, Sapiens and Magic, respectively. 
• Consolidated cash and short-term and long-term investments in marketable securities totaled approximately $161.3 million as of March 31, 2015.
• Total equity as of March 31, 2015 was $658.1 million (representing 60% of the total balance sheet).

Comments of Management

Commenting on the results, Guy Bernstein, CEO of Formula Systems, said, "We are pleased with the strong opening of 2015. Business is growing in terms of revenues, profits and margins across our group's portfolio. However, our numbers could have been even stronger had we not been impacted by the erosion of foreign currencies. Matrix had a very strong first quarter with revenues of NIS580.5 million (approximately $147.1 million) and net income of NIS24.3 million (approximately $6.2 million), an increase of 13.3% and 23.4% respectively compared to the first quarter of 2014, when measured in accordance with US GAAP and on a local currency basis. Matrix is reaping the fruits of its investment activity in the US, where sales grew by 54% to NIS63.4 million (approximately $16.0 million dollars) and operating profit grew by 149% to NIS13.1 million (approximately $3.3 million) compared to the first quarter of 2014.  Sapiens had a very strong quarter, bringing in record financial results led by double-digit revenue growth derived from both new and existing customers across all regions. Sapiens also significantly improved its non-GAAP operating income by 58.5% year over year while improving profitability, by leveraging investments in its products and economies of scale. Magic reported another solid quarter with increasing non-GAAP operating income and operating margin, demonstrating strong leverage in its business model. Had it not been for the negative impact of the devaluation of foreign currencies, Magic would have reported record-breaking revenues, operating income and operating margin this quarter."

About Formula

Formula Systems (1985) Ltd. is a global information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products, and providing computer-based business solutions.

For more information, visit www.formulasystems.com.

Press Contact:

Formula Systems (1985) Ltd.
+972-3-5389487
ir@formula.co.il

Except for any historical information contained herein, matters discussed in this press release might include forward-looking statements that involve a number of risks and uncertainties. Regarding any financial statements, actual results might vary significantly based upon a number of factors including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product conditions, both locally and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in Formula's most recent annual report and other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

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SOURCE Formula Systems