Formula Systems (1985) Ltd. (Nasdaq and TASE: FORTY) reported second quarter FY26 earnings per share of $1.47, a 54.74% increase from $0.95 in the same period last year. The global IT group posted record quarterly revenue of $782.4 million, up 29.8% year over year.

The company declared a cash dividend of $1.63 per share, totaling approximately $25.0 million, reflecting its strong cash position following the acquisition of Sapiens by Advent in December 2025.

Financial Performance Overview

Consolidated revenues for the first half of FY26 reached a record $1.52 billion, a 24.4% increase from $1.22 billion in the same period last year. Operating income for the six-month period grew 53.3% to $153.7 million.

This operating income figure included a non-recurring capital gain of $16.6 million resulting from the dilution of Formula’s ownership interest in affiliate TSG IT Advanced Systems Ltd. (TSG) following a private placement and employee stock exercises in January 2026. Excluding this gain, operating income increased 36.7% year over year to $137.0 million.

Net income from continued operations attributable to Formula’s shareholders rose approximately 163.7% to $23.3 million ($1.47 per fully diluted share) in Q2FY26, compared to $8.8 million ($0.56 per share) in Q2FY25. For the first half, this metric increased 186.4% to $58.9 million ($3.72 per share), compared to $20.6 million ($1.31 per share) previously.

Segment Highlights

Matrix IT Ltd., Formula’s largest subsidiary, reported record-breaking results across all key financial indices. Matrix revenues for the second quarter grew 6.3% year over year to NIS 2.1 billion (approximately $718.3 million). Operating income increased 10.6% to NIS 202.2 million (approximately $68.5 million).

Michpal Technologies reported Q2FY26 revenues of approximately NIS 63.6 million ($21.6 million), growing 31.2% year over year. Adjusted EBITDA increased approximately 36% to NIS 25.2 million ($8.5 million).

TSG concluded the quarter with record-breaking results, with revenues increasing approximately 22% year over year to NIS 127.6 million ($43.2 million). Operating income rose 22.7% to NIS 12.0 million ($4.0 million). TSG completed acquisitions of Mabat 3D and Production Floor in March and May 2026, respectively, strengthening its defense technology portfolio.

What the Numbers Show

A significant portion of Formula’s consolidated net income is attributable to non-controlling interests. In Q2FY26, net income attributable to non-controlling interests stood at $28.3 million, while net income attributable to Formula’s shareholders was $23.3 million. This indicates that roughly 55% of the total net income from continued operations flows to minority stakeholders, primarily within subsidiaries like Matrix IT Ltd., where Formula holds a 47.68% stake.

Balance Sheet and Covenants

Consolidated cash and cash equivalents totaled approximately $864.5 million as of June 30, 2026, down from $1.28 billion at December 31, 2025. Total equity was $1.66 billion, representing 47.2% of the total consolidated statements of financial position.

Formula remained in compliance with all debenture covenants. The ratio of net financial indebtedness to net capitalization was (27.08%), well below the 65% target. The ratio of net financial indebtedness to EBITDA was (2.07), against a target below 5. Equity attributable to Formula’s shareholders was $1.21 billion, exceeding the $325 million target.

The dividend will be paid on October 6, 2026, to shareholders of record as of September 22, 2026.