Formula Systems Reports First Quarter 2026 Financial Results
Formula Systems (FORTY) reported first-quarter 2026 results for the period ended March 31, 2026. Revenues rose 19.2% year over year to $738.3 million, while operating income increased 65.6% to $82.0 million. Net income attributable to shareholders climbed 84.5% to $35.6 million ($2.25/share). The company also said Matrix completed its merger with Magic Software, making Magic a wholly owned subsidiary of Matrix.
How this was made
The 30-second read
Why it matters
The release combines (1) record-breaking Q1 financial performance, (2) a special cash dividend approved May 14 with a defined record date and payment date, and (3) subsidiary/affiliate activity (Matrix–Magic merger completion; TSG private placement) that contributed a specific capital gain affecting operating and net income.
Market read
Traders get a concrete earnings print plus a time-specific shareholder return event (special dividend) and an earnings-quality bridge (TSG capital gain).
What to watch
Cash balance is slightly down QoQ (from $1.28B to $1.18B) and net financial indebtedness/EBITDA covenant shows a very high ratio, which could matter if leverage metrics tighten further.
Background
Formula Systems (FORTY) released Q1’26 results for the quarter ended March 31, 2026, in the context of prior portfolio moves including the sale of controlling interest in Sapiens (reclassified as discontinued operations).
Ticker impact
Formula Systems reports Q1’26 record revenue and net income, plus a special dividend and details on a subsidiary merger and TSG capital-gain impact.
Bias modestly positive for the next few sessions around the dividend/earnings digestion, with attention to whether investors adjust for the TSG capital gain.
The article provides concrete Q1 financial datapoints, a board-approved special dividend with a June 4 payment date, and explains that operating/net income includes a $16.8M capital gain tied to TSG’s private placement/executive stock-based compensation.
Market effects
Reinforces demand/earnings momentum for IT services/software consulting groups with active M&A and portfolio restructuring.
May support sentiment for Israeli/EMEA-listed IT names via read-across from Formula’s strong quarter and dividend action.
Limited beyond the company; mostly affects investors tracking IT services/software consulting exposure and dividend/earnings quality.
Counterpoint
Because operating and net income include a $16.8M capital gain from TSG’s financing/stock-based compensation, underlying earnings power may be less strong than headline growth suggests.
Key entities
- public_companyFormula Systems (1985) Ltd.
Subject of the earnings release; reported record Q1’26 results and approved a special cash dividend.
- subsidiaryMatrix IT Ltd.
Subsidiary that completed a reverse triangular merger to acquire Magic Software; Magic became wholly owned and delisted.
- subsidiaryMagic Software Enterprises Ltd.
Merged into Matrix; became a wholly owned subsidiary and ceased trading as a public company.
- affiliate_subsidiaryTSG IT Advanced Systems Ltd.
TSG’s private placement and employee stock-based compensation drove a $16.8M capital gain included in Formula’s Q1 operating income.
- acquirerAdvent
Acquired Formula’s former subsidiary Sapiens; referenced as part of the 2025 results underpinning the special dividend.
