Revenue growth remains volatile at 3.1% in 2025Q4, while operating margins have significantly contracted from 10.4% in 2024Q4 to 4.6% due to rising cost pressures.
| Metric | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 | Dec'11 | Dec'10 | Dec'09 | Dec'08 | Dec'07 | Dec'06 | Dec'05 | Dec'04 | Dec'03 | Dec'02 | Dec'01 | Dec'00 | Dec'99 | Dec'98 |
|---|
| Sales/Revenue | 2.65B | 2.76B | 2.62B | 2.57B | 2.41B | 1.93B | 1.7B | 1.49B | 1.36B | 1.11B | 798.8M | 636.42M | 796.67M | 744.73M | 640.62M | 549.69M | 469.39M | 590.81M | 493.35M | 492.74M | 506.37M | 456.61M | 366.83M | 283.31M | 376.92M | 405.74M | 335.49M | 258.8M |
| Revenue Growth % | -3.97% | 5.21% | 1.89% | 6.94% | 24.39% | 13.69% | 13.94% | 10.17% | 22.24% | 38.79% | 25.51% | -20.12% | 6.97% | 16.25% | 16.54% | 17.11% | -20.55% | 19.75% | 0.12% | -2.69% | 10.9% | 24.47% | 29.48% | -24.84% | -7.1% | 20.94% | 29.63% | - |
| Cost of Goods Sold | 2.2B | 2.07B | 1.98B | 1.95B | 1.84B | 1.49B | 1.32B | 1.16B | 1.06B | 849.84M | 630.15M | 530.08M | 603.08M | 564.8M | 492.89M | 412.46M | 352.28M | 452.26M | 369.11M | 340.05M | 333.54M | 284.96M | 230.5M | 186.91M | 253.59M | 244.52M | 178.98M | 155M |
| COGS % of Revenue | 82.95% | 75.19% | 75.44% | 75.8% | 76.56% | 76.86% | 77.31% | 77.67% | 78.1% | 76.66% | 78.89% | 83.29% | 75.7% | 75.84% | 76.94% | 75.03% | 75.05% | 76.55% | 74.82% | 69.01% | 65.87% | 62.41% | 62.84% | 65.97% | 67.28% | 60.27% | 53.35% | 59.89% |
| Gross Profit | 451.39M | 684.03M | 643.71M | 622.47M | 563.86M | 447.43M | 386.05M | 333.31M | 296.82M | 258.78M | 168.65M | 106.33M | 193.59M | 179.93M | 147.73M | 137.23M | 117.11M | 138.54M | 124.24M | 152.69M | 172.84M | 171.65M | 136.33M | 96.4M | 123.33M | 161.21M | 156.52M | 103.8M |
| Gross Margin % | 17.05% | 24.81% | 24.56% | 24.2% | 23.44% | 23.14% | 22.69% | 22.33% | 21.9% | 23.34% | 21.11% | 16.71% | 24.3% | 24.16% | 23.06% | 24.96% | 24.95% | 23.45% | 25.18% | 30.99% | 34.13% | 37.59% | 37.16% | 34.03% | 32.72% | 39.73% | 46.65% | 40.11% |
| Gross Profit Growth % | -34.01% | 6.26% | 3.41% | 10.39% | 26.02% | 15.9% | 15.82% | 12.29% | 14.7% | 53.44% | 58.6% | -45.07% | 7.6% | 21.79% | 7.65% | 17.18% | -15.47% | 11.51% | -18.63% | -11.66% | 0.69% | 25.91% | 41.42% | -21.83% | -23.5% | 3% | 50.79% | - |
| Operating Expenses | 262.75M | 414.16M | 404.34M | 345.82M | 355.84M | 276.79M | 247.56M | 223.69M | 223.15M | 170.28M | 114.14M | 71.3M | 132.06M | 122.93M | 98.49M | 90.24M | 81.75M | 105.17M | 97M | 130.05M | 155.48M | 153.57M | 124.47M | 101.26M | 150.89M | 145.97M | 124.2M | 78.3M |
| OpEx % of Revenue | 9.92% | 15.02% | 15.43% | 13.44% | 14.79% | 14.31% | 14.55% | 14.98% | 16.47% | 15.36% | 14.29% | 11.2% | 16.58% | 16.51% | 15.37% | 16.42% | 17.42% | 17.8% | 19.66% | 26.39% | 30.7% | 33.63% | 33.93% | 35.74% | 40.03% | 35.98% | 37.02% | 30.25% |
| Selling, General & Admin | 209.08M | 335.15M | 326.38M | 317.96M | 289.99M | 224.19M | 200.87M | 182.47M | 183.61M | 147.95M | 103.9M | 70.52M | 117.89M | 110.76M | 93.34M | 84.51M | 77.32M | 98.61M | 90.46M | 113.66M | 133.05M | 128.54M | 107.1M | 85.29M | 129.8M | 127.82M | 92.77M | 57.9M |
| SG&A % of Revenue | 7.9% | 12.15% | 12.45% | 12.36% | 12.05% | 11.59% | 11.81% | 12.22% | 13.55% | 13.35% | 13.01% | 11.08% | 14.8% | 14.87% | 14.57% | 15.37% | 16.47% | 16.69% | 18.34% | 23.07% | 26.27% | 28.15% | 29.2% | 30.11% | 34.44% | 31.5% | 27.65% | 22.37% |
| Research & Development | 20.18M | 83.73M | 77.97M | 72.13M | 65.86M | 52.6M | 46.69M | 41.22M | 39.85M | 22.33M | 10.23M | 787K | 14.17M | 12.35M | 5.15M | 5.5M | 4.43M | 6.56M | 6.55M | 16.39M | 22.43M | 25.04M | 17.37M | 15.97M | 21.09M | 18.15M | 12.94M | 8.4M |
| R&D % of Revenue | 0.76% | 3.04% | 2.97% | 2.8% | 2.74% | 2.72% | 2.74% | 2.76% | 2.94% | 2.01% | 1.28% | 0.12% | 1.78% | 1.66% | 0.8% | 1% | 0.94% | 1.11% | 1.33% | 3.33% | 4.43% | 5.48% | 4.73% | 5.64% | 5.59% | 4.47% | 3.86% | 3.25% |
| Other Operating Expenses | 33.49M | -4.72M | 0 | -44.26M | 1K | 0 | 0 | 0 | -308K | 0 | 0 | 0 | 14K | -152K | -207K | 231K | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 18.49M | 12M |
| Operating Income | 188.64M | 270.52M | 239.37M | 276.64M | 208.02M | 170.64M | 51.56M | 109.62M | 73.67M | 88.5M | 54.51M | 35.03M | 61.53M | 56.99M | 49.24M | 46.99M | 35.35M | 33.37M | 27.23M | 19.48M | 15.9M | 18.08M | 11.86M | -6.69M | -38.43M | 12.78M | 32.31M | 25.5M |
| Operating Margin % | 7.12% | 9.81% | 9.13% | 10.75% | 8.65% | 8.82% | 3.03% | 7.34% | 5.44% | 7.98% | 6.82% | 5.5% | 7.72% | 7.65% | 7.69% | 8.55% | 7.53% | 5.65% | 5.52% | 3.95% | 3.14% | 3.96% | 3.23% | -2.36% | -10.2% | 3.15% | 9.63% | 9.85% |
| Operating Income Growth % | -30.27% | 13.01% | -13.47% | 32.99% | 21.9% | 230.98% | -52.97% | 48.79% | -16.76% | 62.34% | 55.6% | -43.06% | 7.97% | 15.74% | 4.8% | 32.9% | 5.94% | 22.54% | 39.78% | 22.53% | -12.03% | 52.42% | 277.37% | 82.6% | -400.82% | -60.46% | 26.72% | - |
| EBITDA | 342.36M | 386.02M | 361.2M | 391.95M | 330.2M | 266.15M | 138.49M | 158.35M | 117.32M | 120.87M | 72.08M | 44M | 85.88M | 82.64M | 63.61M | 64.17M | 49.96M | 46.45M | 43.04M | 64.43M | 41.17M | 38.87M | 30.86M | 6.65M | 29.95M | 15.24M | 50.8M | 37.5M |
| EBITDA Margin % | 12.93% | 14% | 13.78% | 15.24% | 13.73% | 13.76% | 8.14% | 10.61% | 8.66% | 10.9% | 9.02% | 6.91% | 10.78% | 11.1% | 9.93% | 11.67% | 10.64% | 7.86% | 8.72% | 13.08% | 8.13% | 8.51% | 8.41% | 2.35% | 7.95% | 3.76% | 15.14% | 14.49% |
| EBITDA Growth % | -11.31% | 6.87% | -7.84% | 18.7% | 24.07% | 92.18% | -12.54% | 34.98% | -2.94% | 67.7% | 63.82% | -48.77% | 3.92% | 29.93% | -0.87% | 28.43% | 7.54% | 7.93% | -33.2% | 56.51% | 5.92% | 25.94% | 364.09% | -77.8% | 96.52% | -70% | 35.47% | - |
| D&A (Non-Cash Add-back) | 153.72M | 115.5M | 121.83M | 115.31M | 122.18M | 95.51M | 86.93M | 48.73M | 43.65M | 32.37M | 17.56M | 8.96M | 24.35M | 25.65M | 14.36M | 17.18M | 14.61M | 13.08M | 15.81M | 44.95M | 25.26M | 20.79M | 19M | 13.34M | 68.38M | 0 | 18.49M | 12M |
| EBIT | 188.64M | 270.52M | 249.4M | 281.65M | 210.47M | 170.64M | 138.49M | 113.7M | 62.22M | 84.93M | 75.87M | 35.03M | 62.71M | 56.55M | 49.57M | 50.17M | 45.36M | 39.01M | 27.23M | 22.64M | 12.18M | 31.77M | 11.86M | -4.86M | -46.3M | 15.24M | 32.31M | 25.5M |
| Net Interest Income | -30.67M | -22.14M | -24.57M | -19.12M | -23.8M | -23.15M | -17.59M | -7.18M | -20.35M | -8.98M | -2.37M | -5.77M | -7.22M | 6.93M | -5.59M | -6.49M | -4.41M | -4.43M | -3.81M | -15.33M | -23.12M | -14.04M | -3.68M | 0 | 0 | 0 | 0 | -4.9M |
| Interest Income | 0 | 0 | 13.8M | 5.82M | 2.65M | 2.56M | 3.79M | 7.56M | 8.75M | 6.01M | 0 | 0 | 982.65K | 6.93M | 1.03M | 1.06M | 4.16M | 8.97M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 30.67M | 22.14M | 38.37M | 24.94M | 26.45M | 25.71M | 21.38M | 14.74M | 29.11M | 14.99M | 2.37M | 5.77M | 8.2M | 0 | 6.62M | 7.56M | 8.57M | 13.5M | 3.81M | 15.33M | 23.12M | 14.04M | 3.68M | 0 | 0 | 0 | 0 | 4.9M |
| Other Income/Expense | -37.4M | -20.07M | -27.56M | -21.74M | -23.5M | -25.35M | -18.65M | -8.29M | -20M | -11.59M | -9.53M | -4.87M | -5.44M | -2.93M | -6.5M | -4.37M | 1.44M | -7.75M | -2.52M | -11.43M | -146K | -343K | -1.01M | 6.17M | -52.13M | 41.46M | 33.26M | 5.6M |
| Pretax Income | 151.23M | 250.46M | 211.81M | 254.9M | 184.52M | 145.29M | 119.84M | 101.36M | 50.81M | 76.91M | 46.66M | 30.17M | 55.3M | 50.32M | 42.95M | 42.62M | 36.79M | 26.45M | 24.71M | 14.32M | 9.98M | 17.73M | 10.85M | -513K | -52.02M | 54.24M | 65.58M | 31.1M |
| Pretax Margin % | 5.71% | 9.08% | 8.08% | 9.91% | 7.67% | 7.51% | 7.04% | 6.79% | 3.75% | 6.94% | 5.84% | 4.74% | 6.94% | 6.76% | 6.7% | 7.75% | 7.84% | 4.48% | 5.01% | 2.91% | 1.97% | 3.88% | 2.96% | -0.18% | -13.8% | 13.37% | 19.55% | 12.02% |
| Income Tax | 40.78M | 56.66M | 46.08M | 55.23M | 42.61M | 31.27M | 27.2M | 24.34M | 13.37M | 21.16M | 11.87M | 10.07M | 8.93M | 6.58M | 5.69M | 6.54M | 8.3M | 3.54M | 1.93M | 3.5M | 5.2M | 4.63M | 2.54M | 2.01M | 4.06M | 14.21M | 19.39M | 4.5M |
| Effective Tax Rate % | 26.96% | 22.62% | 21.75% | 21.67% | 23.1% | 21.52% | 22.7% | 24.01% | 26.31% | 27.52% | 25.44% | 33.39% | 16.14% | 13.08% | 13.25% | 15.36% | 22.57% | 13.4% | 7.82% | 24.42% | 52.09% | 26.12% | 23.41% | -392.59% | -7.8% | 26.21% | 29.57% | 14.47% |
| Net Income | 28.39M | 79.67M | 64.01M | 81.39M | 54.59M | 46.78M | 92.64M | 32.2M | 11.18M | 22.45M | 19.32M | 75.06M | 76.89M | 24.03M | 42.96M | 18.38M | 19.08M | 11.87M | 37.26M | 10.02M | 183K | 8.1M | 3.12M | -2.41M | -56.08M | 40.02M | 46.19M | 26.6M |
| Net Margin % | 1.07% | 2.89% | 2.44% | 3.16% | 2.27% | 2.42% | 5.45% | 2.16% | 0.83% | 2.02% | 2.42% | 11.79% | 9.65% | 3.23% | 6.71% | 3.34% | 4.06% | 2.01% | 7.55% | 2.03% | 0.04% | 1.77% | 0.85% | -0.85% | -14.88% | 9.86% | 13.77% | 10.28% |
| Net Income Growth % | -64.37% | 24.46% | -21.35% | 49.11% | 16.69% | -49.51% | 187.64% | 187.96% | -50.17% | 16.19% | -74.26% | -2.38% | 219.98% | -44.07% | 133.76% | -3.65% | 60.72% | -68.14% | 272.03% | 5372.68% | -97.74% | 159.58% | 229.68% | 95.71% | -240.13% | -13.35% | 73.64% | - |
| Net Income (Continuing) | 110.45M | 193.79M | 165.73M | 199.67M | 141.9M | 114.02M | 0 | 77.39M | 39.44M | 56.1M | 50.35M | 94.69M | 106.46M | 46.17M | 37.05M | 35M | 28.49M | 22.9M | 22.78M | 4.29M | 5.38M | 13.1M | 3.12M | -2.41M | -59.86M | 40.02M | 46.19M | 26.6M |
| Discontinued Operations | -8.42M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 4.88M | 0 | -10.32M | -577K | -804K | 1.6M | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 424.54M | 710.01M | 682.42M | 625.17M | 638.83M | 604.77M | 474.69M | 437.77M | 413.73M | 387.45M | 275.02M | 265.91M | 160.22M | 223.45M | 145.01M | 136.77M | 107.27M | 107.43M | 107.92M | 115.14M | 108.68M | 96.58M | 68.25M | 72.13M | 95.72M | 160.39M | 122.2M | 100.3M |
| EPS (Diluted) | 1.80 | 5.09 | 4.12 | 5.21 | 3.50 | 3.01 | 6.04 | 2.07 | 0.74 | 1.49 | 1.31 | 5.19 | 5.38 | 1.72 | 3.11 | 1.36 | 1.40 | 0.88 | 2.79 | 0.73 | 0.01 | 0.65 | 0.24 | -0.24 | -6.01 | 4.27 | 4.93 | 3.12 |
| EPS Growth % | -64.64% | 23.54% | -20.92% | 48.86% | 16.28% | -50.17% | 191.79% | 179.73% | -50.34% | 13.74% | -74.76% | -3.53% | 212.79% | -44.69% | 128.68% | -2.86% | 59.09% | -68.46% | 282.19% | 7200% | -98.46% | 170.83% | 200% | 96.01% | -240.75% | -13.39% | 58.01% | - |
| EPS (Basic) | 1.85 | 5.21 | 4.17 | 5.31 | 3.57 | 3.05 | 6.10 | 2.13 | 0.78 | 1.58 | 1.38 | 5.38 | 5.57 | 1.78 | 3.17 | 1.37 | 1.44 | 0.88 | 2.82 | 0.80 | 0.01 | 0.73 | 0.29 | -0.24 | -6.01 | 4.27 | 4.93 | 3.12 |
| Diluted Shares Outstanding | 15.79M | 15.64M | 15.5M | 15.5M | 15.4M | 15.29M | 15.34M | 15.57M | 14.72M | 15.53M | 14.74M | 14.41M | 14.19M | 13.79M | 13.67M | 13.52M | 13.56M | 13.2M | 13.2M | 13.3M | 12.8M | 10.8M | 10.29M | 10.17M | 9.32M | 9.32M | 9.38M | 8.53M |
| Basic Shares Outstanding | 15.31M | 15.3M | 15.3M | 15.3M | 15.29M | 15.29M | 15.19M | 15.1M | 14.36M | 14.21M | 14.07M | 13.93M | 13.79M | 13.6M | 13.51M | 13.38M | 13.2M | 13.2M | 13.2M | 13.2M | 12.8M | 10.8M | 10.04M | 10.17M | 9.32M | 9.32M | 9.38M | 8.53M |
| Dividend Payout Ratio | 101.74% | 23.61% | 15.51% | 26.76% | 40.45% | 31.94% | 14% | 15.56% | 108.02% | 44.62% | 66.73% | 15.49% | 7.08% | 0.32% | 22.65% | 108.74% | 157.08% | 85.62% | - | - | 27423.5% | 1.09% | - | - | - | 6.18% | 0.02% | - |
Geopolitical and labor volatility
As reported in recent financial statements, Formula Systems experienced a volatile revenue trajectory, culminating in a 3.1% growth rate in 2025Q4 following a period of contraction, which highlights the sensitivity of its IT services and software segments to shifting procurement cycles and regional economic conditions.
The fluctuation in quarterly revenue suggests that the company's reliance on project-based implementation fees creates lumpy top-line performance. Investors should monitor whether the recent return to growth represents a sustainable recovery or merely the timing of large-scale contract recognition within the Matrix and Sapiens subsidiaries.
Based on the provided income statement data, gross margins have trended downward from 26.1% in 2024Q4 to 19.8% by 2025Q4, indicating potential challenges in maintaining pricing power within the labor-intensive IT professional services segment amidst rising technical wage pressures in the Israeli market.
The narrowing gross margin suggests that the company is struggling to pass through cost increases to its clients, likely due to the competitive nature of the IT services industry. This trend warrants further investigation into whether the product mix is shifting toward lower-margin integration work at the expense of higher-margin proprietary software licensing.
According to historical income statement figures, operating margins have failed to scale with revenue, dropping from 10.4% in 2024Q4 to 4.6% in 2025Q4, which implies that the company's fixed cost base is not currently providing the expected efficiency gains during periods of revenue volatility.
The inability to expand operating margins suggests that SG&A expenses remain sticky even when revenue growth decelerates. This lack of operating leverage may indicate that the company is maintaining a high headcount in anticipation of future demand, which could continue to weigh on profitability if revenue growth does not accelerate.
As evidenced by the 2025Q4 net income spike to $558.2M, reported earnings appear heavily influenced by non-operating items or minority interest accounting adjustments, which complicates the assessment of the company's core operational profitability and true earnings power for the parent entity's shareholders.
The significant discrepancy between operating income and net income suggests that investors should focus on normalized earnings rather than headline figures. The presence of non-controlling interests in the consolidated structure makes it difficult to ascertain the actual cash flow available to Formula Systems, necessitating a cautious approach to valuation.
Based on the provided data, the persistent gap between revenue growth and margin expansion suggests that the company's federated model may be creating operational inefficiencies that offset the benefits of its diversified IT service and software portfolio, potentially justifying the market's current valuation discount.
Short-term observers may point to the declining gross margins as a sign that the company's competitive moat is eroding under the pressure of labor inflation. The reliance on a complex, multi-subsidiary structure may also be masking underlying weaknesses in the core business that are not immediately apparent in the consolidated income statement.
Quick answers to the most common questions about buying FORTY stock.
For fiscal year 2025, Formula Systems (1985) Ltd. (FORTY) reported total revenue of $2.65B. This represents a 923.2% increase compared to $258.8M in 1998.
Formula Systems (1985) Ltd. (FORTY) is profitable, generating $28.4M in net income for the fiscal year ending 2025 with a net profit margin of 1.1%.
Formula Systems (1985) Ltd. (FORTY) reported an operating income of $188.6M, resulting in an operating profit margin of 7.1%. This margin reflects the operational efficiency of the business before interest and taxes.
Formula Systems (1985) Ltd. (FORTY) generated $451.4M in gross profit for the year, representing a gross profit margin of 17.0%. This demonstrates the company's core pricing power and production efficiency.