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 PlatkevitzMagic Software
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
