Magic Software Reports Second Quarter and First Half 2025 Financial Results

OR YEHUDA, Israel, Aug. 13, 2025 (GLOBE NEWSWIRE) -- Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC) ("the Company"), a global provider of IT consulting services and end-to-end integration and application development platforms solutions, announced today its financial results for the second quarter and first half ended June 30, 2025.

Summary Results for the Second Quarter 2025 (USD in millions, except per share data)

		GAAP									Non-GAAP
		Q2 2025			Q2 2024			% Change			Q2 2025			Q2 2024			% Change
	Revenues	$	151.6		$	136.3		11.3%			$	151.6		$	136.3		11.3%
	Gross profit	$	42.4		$	38.8		9.1%			$	43.6		$	40.1		8.7%
	Gross margin		27.9%			28.5%		(60) bps				28.7%			29.4%		(70) bps
	Operating income	$	15.6		$	15.0		4.0%			$	18.6		$	18.2		1.9%
	Operating margin		10.3%			11.0%		(70) bps				12.2%			13.4%		(120) bps
	Net income (*)	$	9.9		$	9.0		9.8%			$	12.7		$	11.7		8.7%
	Diluted EPS	$	0.20		$	0.18		11.1%			$	0.26		$	0.24		8.3%
	(*) Attributable to Magic Software's shareholders.

Financial Highlights for the Second Quarter Ended June 30, 2025

• Revenues for the second quarter of 2025 increased by 11.3% to $151.6 million, compared to $136.3 million in the same period of the previous year.
• Operating income for the second quarter of 2025 increased by 4.0% to $15.6 million, compared to $15.0 million in the same period of the previous year.
• Non-GAAP operating income for the second quarter of 2025 increased by 1.9% to $18.6 million, compared to $18.2 million in the same period of the previous year.
• Net income attributable to Magic Software's shareholders for the second quarter of 2025 increased by 9.8% to $9.9 million, or $0.20 per fully diluted share, compared to $9.0 million, or $0.18 per fully diluted share, in the same period of the previous year.
• Non-GAAP net income attributable to Magic Software's shareholders for the second quarter of 2025 increased by 8.7% to $12.7 million, or $0.26 per fully diluted share, compared to $11.7 million, or $0.24 per fully diluted share, in the same period of the previous year.

Summary Results for the First Half of 2025 (USD in millions, except per share data) 

		GAAP									Non-GAAP
		H1 2025			H1 2024			% Change			H1 2025			H1 2024			% Change
	Revenues	$	299.0		$	267.0		12.0%			$	299.0		$	267.0		12.0%
	Gross Profit	$	83.0		$	75.5		9.9%			$	85.5		$	78.4		9.1%
	Gross Margin		27.8%			28.3%		(50) bps				28.6%			29.4%		(80) bps
	Operating Income	$	31.4		$	29.5		6.5%			$	37.1		$	36.4		1.9%
	Operating Margin		10.5%			11.0%		(50) bps				12.4%			13.6%		(120) bps
	Net Income (*)	$	19.4		$	17.8		8.8%			$	24.9		$	23.0		8.5%
	Diluted EPS	$	0.40		$	0.36		11.1%			$	0.51		$	0.47		8.5%
	(*) Attributable to Magic Software's shareholders.

Financial Highlights for the First Half Ended June 30, 2025

• Revenues for the first half period ended June 30, 2025 increased by 12.0% to $299.0 million compared to $267.0 million in the same period of the previous year.
• Operating income for the first half ended June 30, 2025 increased by 6.5% to $31.4 million compared to $29.5 million in the same period of the previous year.
• Non-GAAP operating income for the first half ended June 30, 2025, increased by 1.9% to $37.1 million compared to $36.4 million in the same period of the previous year.
• Net income attributable to Magic Software's shareholders for the first half period ended June 30, 2025 increased by 8.8% to $19.4 million, or $0.40 per fully diluted share, compared to $17.8 million, or $0.36 per fully diluted share, in the same period last year.
• Non-GAAP net income attributable to Magic Software's shareholders for the first half period ended June 30, 2025 increased by 8.5% to $24.9 million, or $0.51 per fully diluted share, compared to $23.0 million, or $0.47 per fully diluted share, in the same period last year.
• Cash flow from operating activities for the first half period ended June 30, 2025 amounted to $21.2 million compared to $41.4 million in the same period last year.
• As of June 30, 2025, Magic's cash, cash equivalents and short-term bank deposits amounted to $90.0 million.
• Magic hereby revises its full-year 2025 revenue guidance, increasing the previous estimate of $593 million to $603 million to a revised range of $600 million to $610 million, (based on current currency exchange rates). This updated guidance reflects our sustained operational momentum and favorable outlook for the second half of the fiscal year, representing an anticipated annual revenue growth rate of approximately 8.6% to 10.4% as compared to the prior fiscal year.

Declaration of Dividend for the First Half of 2025

In accordance with its dividend distribution policy, the Company's board of directors declared a semi-annual cash dividend in an amount of 29.6 cents per share and in an aggregate amount of approximately $14.5 million, reflecting approximately 75% of its distributable profits for the first half 2025.

The dividend is payable on October 22, 2025, to all of the Company's shareholders of record at the close of trading on the NASDAQ Global Select Market on October 6, 2025.

In accordance with Israeli tax law, the dividend is subject to withholding tax at source at the rate of 30% (if the recipient of the dividend is at the time of distribution or was at any time during the preceding 12-month period the holder of 10% or more of the Company's share capital) or 25% (for all other dividend recipients) of the dividend amount payable to each shareholder of record, subject to applicable exemptions.

The dividend will be paid in US dollars on the ordinary shares of Magic Software Enterprises that are traded both on the Tel Aviv Stock Exchange and the NASDAQ Global Select Market.

Guy Bernstein, Chief Executive Officer of Magic Software, said: "As we conclude the first half of fiscal 2025, Magic Software delivers yet another quarter of robust performance, underscoring our business resilience. We achieved consistent growth across key financial metrics, revenues, gross profit, operating income, EBITDA, and net income, while sustaining solid cash flow and surpassing an annualized revenue run-rate of USD 600 million. Demand for our innovative digital, artificial intelligence and cloud transformation solutions remains robust, along with continued strong demand for our services in the defense sector, underscoring the effectiveness of our strategic direction and the dedication of our team in delivering measurable results.

In the United States, our first half results reflected approximately 9% year over year revenue growth, driven by agreements executed in late 2024 and in early 2025. These initiatives, alongside expanding activity with existing customers, position us well for additional U.S. growth through the remainder of the year.

In March, we announced the signing of a memorandum of understanding to enter into negotiations for the contemplated merger of Magic into Matrix I.T., a transformational landmark in Magic's evolution. The process is progressing toward requisite approvals, and we anticipate presenting the transaction for shareholder endorsement in the fourth quarter of 2025.

We remain confident in the strength of our execution, the continuing demand for our solutions, and our ability to generate sustainable long-term value for our shareholders and customers.

Conference Call Details

Magic Software's management will host a conference call on Wednesday, August 13, 2025, at 10:30 am Eastern Daylight Time (17:30 Israel Daylight Time) to review and discuss Magic Software's results.

To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 5 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, call the international dial-in number.

NORTH AMERICA: +1-888-281-1167

UK: 0-800-917-4613

ISRAEL: 03-918-0650

ALL OTHERS: +972-3-918-0650

For those unable to join the live call, a replay of the call will be available in the Investor Relations section of Magic Software's website, www.magicsoftware.com.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP operating income, non-GAAP net income attributable to Magic Software's shareholders and non-GAAP basic and diluted earnings per share.

Magic Software believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Magic Software's financial condition and results of operations. Magic Software's management uses these non-GAAP measures to compare the Company's performance to that of prior periods for trend analyses, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. These measures are used in financial reports prepared for management and in quarterly financial reports presented to the Company's board of directors. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Management of the Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures together with GAAP results. Magic Software urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company's business.

Non-GAAP measures used in this press release are included in the financial tables of this release. These non-GAAP measures exclude the following items:

• Amortization of purchased intangible assets and other related costs;
• In-process research and development capitalization and amortization;
• Cost of share-based payment;
• Costs related to acquisition of new businesses;
• The related tax, non-controlling interests' effects of the above items;
• Change in valuation of contingent consideration related to acquisitions;
• Change in deferred tax assets on carry forward tax losses.

Reconciliation of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included in the financial tables of this release.

About Magic Software Enterprises

Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC) is a global provider of end-to-end integration and application development platforms solutions and IT consulting services.

For more information, visit www.magicsoftware.com.

Forward Looking Statements

Some of the statements in this press release may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934 and the United States Private Securities Litigation Reform Act of 1995. Words such as "will," "look forward", "expect," "believe," "guidance" and similar expressions are used to identify these forward-looking statements (although not all forward-looking statements include such words). These forward-looking statements, which may include, without limitation, projections regarding our future performance and financial condition, are made based on management's current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking statement. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment. New risks emerge from time to time and it is not possible for us to predict all risks that may affect us. For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in our Annual Report on Form 20-F for the year ended December 31, 2024, which filed on May 14, 2025, and subsequent reports and filings made from time to time with the Securities and Exchange Commission.

Magic^® is a registered trademark of Magic Software Enterprises Ltd. All other product and company names mentioned herein are for identification purposes only and are the property of, and might be trademarks of, their respective owners.

Press Contact:

Ronen Platkevitz

Magic Software Enterprises

[email protected] 

	MAGIC SOFTWARE ENTERPRISES LTD.
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	U.S. Dollars in thousands (except per share data)
		Three months ended								Six months ended
		June 30,								June 30,
		2025				2024				2025				2024
		Unaudited								Unaudited
	Revenues	$	151,642			$	136,250			$	298,978			$	266,970
	Cost of Revenues		109,268				97,407				215,973				191,428
	Gross profit		42,374				38,843				83,005				75,542
	Research and development, net		3,425				2,847				6,672				5,640
	Selling, marketing and general and administrative expenses		23,305				20,956				44,946				40,436
	Total operating expenses		26,730				23,803				51,618				46,076
	Operating income		15,644				15,040				31,387				29,466
	Financial expenses, net		(725	)			(1,235	)			(1,790	)			(2,879	)
	Income before taxes on income		14,919				13,805				29,597				26,587
	Taxes on income		3,324				3,040				6,236				5,769
	Net income	$	11,595			$	10,765			$	23,361			$	20,818
	Share of profit of companies accounted for at equity, net		(166	)			(85	)			(292	)			(149	)
	Net income attributable to non-controlling interests		(1,511	)			(1,647	)			(3,673	)			(2,839	)
	Net income attributable to Magic's shareholders	$	9,918			$	9,033			$	19,396			$	17,830
			22.28%				22.02%				21.07%				21.70%
	Weighted average number of shares used in
	computing net earnings per share
	Basic		49,099				49,099				49,099				49,099
	Diluted		49,099				49,099				49,099				49,099
	Basic and diluted earnings per share attributable
	to Magic's shareholders	$	0.20			$	0.18			$	0.40			$	0.36

 

MAGIC SOFTWARE ENTERPRISES LTD.
RECONCILIATION OF GAAP AND NON-GAAP RESULTS
U.S. Dollars in thousands (except per share data)
	Three months ended								Six months ended
	June 30,								June 30,
	2025				2024				2025				2024
	Unaudited								Unaudited
GAAP gross profit	$	42,374			$	38,843			$	83,005			$	75,542
Amortization of capitalized software and acquired technology		879				1,127				1,863				2,234
Amortization of other intangible assets		326				121				649				624
Non-GAAP gross profit	$	43,579			$	40,091			$	85,517			$	78,400
GAAP operating income	$	15,644			$	15,040			$	31,387			$	29,466
Gross profit adjustments		1,205				1,248				2,512				2,858
Amortization of other intangible assets		1,991				2,083				3,968				3,597
Increase (decrease) in valuation of contingent consideration related to acquisitions		-				121				-				427
Capitalization of software development		(490	)			(735	)			(986	)			(1,483	)
Costs related to acquisitions		121				158				147				302
Cost of share-based payment		102				304				37				1,195
Non-GAAP operating income	$	18,573			$	18,219			$	37,065			$	36,362
GAAP net income attributable to Magic's shareholders	$	9,918			$	9,033			$	19,396			$	17,830
Operating income adjustments		2,929				3,179				5,678				6,896
Amortization expenses attributed to non-controlling interests and redeemable non-controlling interests		(295	)			(396	)			(519	)			(848	)
Changes in unsettled fair value of contingent consideration related to acquisitions		34				52				539				166
Deferred taxes on the above items		130				(166	)			(166	)			(1,065	)
Non-GAAP net income attributable to Magic's shareholders	$	12,716			$	11,702			$	24,928			$	22,979
Non-GAAP basic and diluted net earnings per share	$	0.26			$	0.24			$	0.51			$	0.47
Weighted average number of shares used in computing basic
net earnings per share		49,099				49,099				49,099				49,099
Weighted average number of shares used in computing diluted
net earnings per share		49,099				49,099				49,099				49,099

 

Summary of Non-GAAP Financial Information
U.S. Dollars in thousands (except per share data)
	Three months ended													Six months ended
	June 30,													June 30,
	2025						2024							2025						2024
	Unaudited						Unaudited							Unaudited						Unaudited
Revenues	$	151,642		100	%		$	136,250		100	%			$	298,978		100	%		$	266,970		100	%
Gross profit		43,579		28.7	%			40,091		29.4	%				85,517		28.6	%			78,400		29.4	%
Operating income		18,573		12.2	%			18,219		13.4	%				37,065		12.4	%			36,362		13.6	%
Net income attributable to
Magic's shareholders		12,716		8.4	%			11,702		8.6	%				24,928		8.3	%			22,979		8.6	%
Basic and diluted earnings per share	$	0.26					$	0.24						$	0.51					$	0.47

MAGIC SOFTWARE ENTERPRISES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in thousands
	June 30,			December 31,
	2025			2024
	Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	89,957		$	112,779
Short-term bank deposits		-			51
Trade receivables, net		152,939			139,816
Other accounts receivable and prepaid expenses		22,856			23,553
Total current assets		265,752			276,199
LONG-TERM ASSETS:
Deferred tax assets		5,735			4,895
Right-of-use assets		25,490			24,707
Other long-term receivables and Investments in
companies accounted for at equity		10,179			9,261
Property and equipment, net		8,303			7,467
Intangible assets and goodwill, net		226,193			217,802
Total long term assets		275,900			264,132
TOTAL ASSETS	$	541,652		$	540,331
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term debt	$	28,531		$	23,187
Trade payables		25,358			28,753
Dividend payable to Magic Software shareholders		-			11,587
Accrued expenses and other accounts payable		55,973			58,209
Current maturities of lease liabilities		4,537			4,818
Liability in respect of business combinations		4,249			2,654
Put options for non-controlling interests		22,846			20,066
Deferred revenues and customer advances		23,802			21,031
Total current liabilities		165,296			170,305
LONG TERM LIABILITIES:
Long-term debt		41,573			36,107
Deferred tax liability		7,847			7,848
Long-term lease liabilities		23,326			22,040
Long-term liability in respect of business combinations		-			1,781
Employee benefit liabilities		1,313			1,181
Total long term liabilities		74,059			68,957
EQUITY:
Magic Software Enterprises shareholders' equity		278,837			277,190
Non-controlling interests		23,460			23,879
Total equity		302,297			301,069
TOTAL LIABILITIES AND EQUITY	$	541,652		$	540,331

 

	MAGIC SOFTWARE ENTERPRISES LTD.
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	U.S. Dollars in thousands
		Six months ended June 30,
		2025				2024
		Unaudited				Unaudited
	Cash flows from operating activities:
	Net income	$	23,180			$	20,669
	Adjustments to reconcile net income to net cash provided
	by operating activities:
	Depreciation and amortization		10,996				10,106
	Cost of share-based payment		37				1,195
	Change in deferred taxes, net		(1,429	)			(1,559	)
	Capital gain on sale of fixed assets		19				-
	Change in value of financial assets measured
	at fair value through profit or loss		67				-
	Effect of exchange rate on of cash and cash equivalents held
	in currencies other than the functional currency		(1,318	)			389
	Changes in value of short-term and long-term loans from banks
	and others and deposits, net		(591	)			(1,089	)
	Working capital adjustments:
	Trade receivables		(3,980	)			100
	Other current and long-term accounts receivable		1,368				(2,071	)
	Trade payables		(4,961	)			1,941
	Accrued expenses and other accounts payable		(3,505	)			3,794
	Deferred revenues		1,300				7,904
	Net cash provided by operating activities		21,183				41,379
	Cash flows from investing activities:
	Capitalized software development costs		(987	)			(1,483	)
	Purchase of property and equipment		(827	)			(618	)
	Cash paid in conjunction with deferred payments and contingent
	liabilities related to business combinations		(3,614	)			(10,248	)
	Payments for business acquisitions, net of cash acquired		(1,828	)			(7,238	)
	Proceeds from sale of property and equipment		47				-
	Proceeds from sale (purchase) of financial assets, net		(532	)			968
	Change in short-term and long-term deposits		44				521
	Investment in a company accounted for at equity		-				(123	)
	Net cash used in investing activities		(7,697	)			(18,221	)
	Cash flows from financing activities:
	Proceeds from sale of non-controlling interest		-				174
	Dividend paid to Magic's shareholders		(27,645	)			-
	Dividend paid to non-controlling interests		(5,232	)			(2,210	)
	Repayment of lease liabilities		(3,109	)			(2,956	)
	Purchase of non-controlling interest		(13,853	)			(314	)
	Receipt of short-term and long-term loans from banks and others		26,376				10,707
	Repayment of short-term and long-term loans		(18,624	)			(25,018	)
	Net cash (used in) provided by financing activities		(42,087	)			(19,617	)
	Effect of exchange rate changes on cash and cash equivalents		5,779				(1,842	)
	Increase (decrease) in cash and cash equivalents		(22,822	)			1,699
	Cash and cash equivalents at the beginning of the period		112,779				105,943
	Cash and cash equivalents at end of the period	$	89,957			$	107,642