Formula Systems profit surges on record revenue, sets $200M special dividend
Formula Systems (NASDAQ:FORTY) reported record financial results for the first quarter of 2026, driven by double-digit revenue expansion across its global technology portfolio and the finalization of a massive software consolidation merger.
The Israel-based information technology holding group, which trades on both the Nasdaq and the Tel Aviv Stock Exchange, generated consolidated revenue of $738.3 million for the three months ended March 31, representing a 19.2% increase compared to the same period last year.
Operating income climbed 65.6% year-over-year to $82 million.
This operating result includes a $16.8 million capital gain stemming from the exercise of employee stock options and a secondary private placement completed by its affiliate, TSG IT Advanced Systems Ltd.
The accelerated top-line performance fed into strong bottom-line translation.
Net income attributable to shareholders rose 84.5% year-over-year to $35.6 million, or $2.25 per diluted share.
Net income from continuing operations expanded by 203.4% to reach $35.6 million.
When adjusting for the one-time TSG capital gain, underlying net income from continuing operations advanced a healthy 60.5% to $18.9 million, showcasing stable structural demand for digital transformation, cloud computing, and IT consulting services.
The opening quarter of the year marked the structural closing of a major corporate realignment.
Formula Systems officially completed the integration merger between two of its key publicly traded subsidiaries, Matrix IT and Magic Software Enterprises.
Executed via a reverse triangular merger, the deal resulted in Matrix acquiring 100% of the share capital of Magic Software.
Consequently, Magic Software has been delisted from the Nasdaq and Tel Aviv exchanges, forming a streamlined, unified IT services powerhouse spanning enterprise software deployment and managed systems globally.
Formula Systems preserved considerable capital flexibility through the corporate transition.
The holding group concluded the first quarter with $1.18 billion in cash and short-term bank deposits.
Management confirmed that the company remains in full compliance with all outstanding financial debenture covenants on its balance sheet.
Capitalizing on its substantial liquidity position, the board of directors approved a large special cash dividend of approximately $200 million, which equates to $13.045 per ordinary share.
The special cash payout is scheduled to be distributed on June 4, 2026, to all shareholders of record as of the close of business on May 25, 2026.