Formula Systems (1985) Ltd.

What they do

Formula Systems provides IT services, software solutions, and staffing through its subsidiaries, primarily Matrix IT Ltd., which is a leading IT services company in Israel. The group also includes Michpal Technologies, InSync Staffing Solutions, Zap Group, and other specialized entities. Additionally, Formula holds an approximate 18.68% ownership stake in SI Swan, the parent of its former subsidiary Sapiens, reflecting a shift toward a holding-company model.

Revenue drivers

• Matrix IT Ltd. — Matrix is the largest subsidiary and primary revenue contributor, offering IT services, software development, and integration solutions to Israeli and global clients.
• IT staffing and human resources — InSync Staffing Solutions and Michpal provide IT staffing and outsourcing services, generating recurring revenue based on headcount and contract terms.
• Digital and e-commerce platforms — Zap Group operates digital comparison and e-commerce platforms, monetizing through advertising and lead generation.
• Specialized technology services — Ofek Aerial Photography and Hashahar Telecom contribute niche services in aerial photography and telecom/electrical infrastructure.

Recent performance

The most recent full-year results in the filing are for fiscal year 2025, but specific 2025 revenue and net income figures are not provided in the excerpts. Historical annual revenue grew from $640.6M in 2011 to $795.9M in 2013, then fluctuated, reaching $750.6M in 2015. Net income rose from $73.7M in 2015 to $141.9M in 2021. As of December 31, 2015, total assets were $1.07B, shareholder equity was $451.6M, and cash was $132.6M; no more recent balance sheet data is in the excerpts. The company completed the sale of Sapiens in December 2025, receiving a minority interest instead of cash, which will affect future consolidated results.

Strategy

Formula's strategy centers on operating through subsidiaries that deliver IT services and software solutions, with Matrix as the core asset. In 2025, the company restructured by divesting Sapiens to Advent and retaining an 18.68% minority stake, signaling a focus on its remaining IT services businesses and potential capital allocation decisions. Management has not disclosed explicit forward-looking strategic plans in the provided excerpts beyond the Sapiens transaction. The holding structure allows Formula to manage diverse technology and staffing operations while maintaining listing on both Tel Aviv and Nasdaq exchanges.

Risks

• Revenue concentration in Matrix — Matrix IT is the dominant subsidiary, so any downturn in Israeli IT services demand or client losses could disproportionately impact Formula's overall results.
• Post-divestiture earnings volatility — The sale of Sapiens for a minority stake rather than cash reduces immediate liquidity and removes a significant profit contributor, potentially lowering net income.
• Dependence on Israeli market — Many subsidiaries, including Matrix and Zap, operate primarily in Israel, exposing Formula to local economic, political, and security risks.
• Integration and restructuring risk — Following the Sapiens divestiture, Formula must manage its remaining subsidiaries effectively to maintain margins and growth, with execution risks common to portfolio restructuring.

Outlook

Management's outlook is not explicitly stated in the provided excerpts, but the completion of the Sapiens sale in December 2025 is a major event shaping near-term prospects. The company will now derive value from its remaining subsidiaries, particularly Matrix, and from its minority interest in Sapiens held via SI Swan. Investors should expect reduced consolidated revenue and income compared to periods when Sapiens was fully consolidated. No specific guidance for fiscal 2026 was provided in the filing excerpts.