Formula Systems’ Blueprint: Record Profits After a Strategic Pivot

OR YEHUDA, Israel – August 25, 2026 – In a powerful demonstration of strategic agility and operational excellence, global IT holding company Formula Systems (1985) Ltd. today announced record-breaking financial results for the second quarter and first half of 2026. The performance not only shatters previous records but also serves as a resounding affirmation of the company’s refined strategy following its high-profile divestment of Sapiens International Corporation late last year.

Formula reported a staggering 29.8% year-over-year revenue increase for the second quarter, reaching $782.4 million. For the first half of the year, revenues climbed 24.4% to an impressive $1.52 billion. Perhaps more telling is the surge in profitability: net income attributable to shareholders jumped 54.6% for the quarter to $23.3 million. Underscoring this financial vigor, the company’s board declared a cash dividend of $1.63 per share, a move that signals profound confidence in its financial stability and a commitment to rewarding its investors.

These figures are particularly significant because they represent the performance of Formula’s continuing operations. After selling its controlling interest in Sapiens in a multi-billion-dollar deal in December 2025, the company reclassified Sapiens' historical contributions as discontinued operations. This accounting move, required by IFRS 5, strips away the noise and reveals the raw power of Formula’s current portfolio. The resulting growth isn't a statistical anomaly; it's the product of a deliberate and successful strategic recalibration.

A New Chapter of Growth Post-Divestment

The divestment of a major asset like Sapiens could have created a period of uncertainty for many organizations. For Formula Systems, it appears to have unlocked a new phase of focused growth. The net income from continuing operations attributable to shareholders for the first half of 2026 skyrocketed by 186.4% to $58.9 million. Even when excluding a one-time capital gain related to its affiliate TSG, the adjusted growth remains a robust 105.5%. This demonstrates that the company’s remaining collection of subsidiaries is not just surviving but thriving, generating substantial organic and inorganic growth.

"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," said Guy Bernstein, CEO of Formula Systems. "These results reflect the breadth of our portfolio and our teams' commitment to operational excellence."

This performance is built on a foundation of solid financial health. As of June 30, 2026, Formula was in full compliance with all its financial covenants, with metrics far exceeding the required targets. For instance, its equity attributable to shareholders stood at $1.21 billion, nearly four times the required $325 million. This financial discipline provides the stability needed to execute its long-term strategy, proving that its current success is built on a sustainable model rather than short-term gains.

The Power of the Portfolio: Subsidiaries as Engines of Innovation

Formula’s success is not a monolith; it is the aggregate achievement of a diverse and dynamic portfolio of specialized technology companies. The holding company’s model empowers its key subsidiaries—Matrix, Michpal Technologies, and TSG IT Advanced Systems—to lead and innovate within their respective domains. Each subsidiary has become a growth engine, contributing to the parent company’s record-breaking results.

Matrix IT Ltd., in which Formula holds a 47.68% stake, continues its reign as a market leader in Israel. As Bernstein noted, Matrix is excelling in the implementation of high-demand technologies like cloud, AI, cyber, and digital solutions. For the second quarter, Matrix reported revenues of NIS 2.1 billion (approx. $718.3 million) and a 10.6% increase in operating income, demonstrating sustained growth even in a complex macroeconomic environment.

Michpal Technologies Ltd., a provider of payroll and HR solutions, is executing a potent strategy of combining organic growth with strategic acquisitions. The company’s acquisition of Zviran Group in April 2026 significantly strengthened its leadership position. This M&A activity is fueled by a strong cash position and is complemented by investments in AI and cloud technologies to enhance its product offerings. Michpal’s second-quarter revenues grew 31.2% year-over-year, with adjusted net income nearly doubling, showcasing the successful integration of its growth strategies.

TSG IT Advanced Systems Ltd. has emerged as a formidable player in the defense technology sector. Specializing in command and control systems and UAVs, TSG reported a 22% year-over-year revenue increase in the second quarter. The company is aggressively expanding its capabilities through acquisitions like Mabat 3D (spatial detection) and Production Floor (defense manufacturing). This expansion is backed by significant capital raising, including a private placement and a debenture issuance, arming TSG with nearly NIS 500 million in cash to pursue further strategic growth and solidify its position in both Israeli and international defense markets.

Balancing Shareholder Returns with Strategic Investment

The announcement of a $25 million dividend distribution is a clear signal to the market. It follows a massive $200 million special dividend paid in May, which was a direct result of the proceeds from the Sapiens sale. The latest dividend, however, appears rooted in the company's powerful ongoing operational cash flow and profitability. With consolidated cash and equivalents of approximately $864.5 million, the board's decision reflects a comfortable liquidity position and a balanced approach to capital allocation.

What makes this strategy particularly compelling is that the company is rewarding shareholders without sacrificing future growth. While the parent company returns capital, its subsidiaries are actively raising funds and deploying them for strategic acquisitions. This decentralized yet coordinated approach allows Formula to simultaneously invest in long-term value creation through M&A and innovation while delivering immediate returns to its investors. It’s a sophisticated model that addresses the often-competing demands of the market with poise and foresight.

This dual focus on rewarding investors while aggressively pursuing strategic expansion demonstrates a sophisticated model for creating durable value in a perpetually evolving technology landscape.