Matrix announces the results of the third quarter of 2017

2017-11-13

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Matrix summarizes the results of the third quarter: Growth of about 13% in revenues and of about 14% in net profit

Revenues for the quarter grew to approximately NIS 725.9M.

Net profit for the quarter grew to approximately NIS 34M.

Quarterly revenues and net profit reached an all-time record level.  

Growth of about 21% in revenues abroad and of about 14% in Israel.

Today Matrix published the results of the third quarter of 2017 reflecting continued growth in revenues, operating profit, and net profit, both in the quarter and in the first nine months of 2017 (the period). Matrix records all-time peak net income and profit for the quarter.

In the third quarter of 2017, Matrix revenues reached approximately NIS 725.9M, compared with approximately NIS 641M in the corresponding quarter last year, an increase of about 13.2%. Operating profit reached approximately NIS 52.3M, compared with approximately NIS 47.7M in the corresponding quarter last year, an increase of about 9.7%. Net profit grew to approximately NIS 34M, compared with approximately NIS 29.9M in the corresponding quarter last year, an increase of about 13.7%.

Revenues for the first nine months of 2017 amounted to approximately NIS 2.09B, compared with approximately NIS 1.86B for the corresponding period last year, an increase of about 12.4%. Operating profit for the period amounted to approximately NIS 141.9M, compared with approximately NIS 132.2M in the corresponding period last year, an increase of about 7.3%. Net profit for the period amounted to approximately NIS 86.8M, compared with approximately NIS 80.5M in the corresponding period last year, an increase of about 7.6%.

According to Moti Gutman, Matrix CEO: "Matrix continues its trend of growth in all major indices, while constantly adjusting our areas of activity to growing and profitable sectors and to rapidly changing market conditions. In recent years, we have seen a change in business models in the market, such as the transition from the acquisition of on-prem systems to the cloud model and the introduction of new technologies such as mobile, advanced analytical instruments, big data, IoT, artificial intelligence/machine learning, fraud prevention, regulatory compliance solutions, and more. This happens in parallel with the dramatic growth of the start-up world and the challenges associated with the shortage of technology experts. Our ability to invest, at the right time, in growing technologies and solutions that answer the changing needs of the market, at the same time withdrawing from areas that are not growing or are not profitable, has always characterized Matrix."

Gutman said: "The last quarter, which included the summer months and the holidays, was particularly challenging, and therefore we are particularly proud to see an increase of about 14% in revenues from software and value-added services in Israel, and an increase of about 33.2% in operating profit in this segment."

Gutman continued: "The research organizations—STKI, IDC, and BDI—continue to rank us as the leading and largest technology service company in Israel, and we maintain our Aa3 credit rating, with a stable outlook, for over a decade."

Recruitment of 250 employees

Gutman added: "After winning large and strategic projects and entering areas of growth, last week we announced a comprehensive recruitment campaign. Matrix is ​​currently recruiting around 250 employees to fill positions that were opened in its specialization centers in Israel and abroad. Most of the employees are hired for positions in areas such as cyber and data security, Java, full stack, DevOps, cloud, big data, analytics, and mobile. The company has launched an extensive recruitment campaign on the social networks and has invested in its employee benefits, using the “a friend brings a friend” paradigm. The culmination of the campaign will take place on December 13, at a festive event at Cinema City Glilot, where Matrix will host about 1,000 technology specialists, candidates for employment, for the pre-release premiere Israeli screening of Star Wars: The Last Jedi. For the new projects we have won in Israel and abroad, such as the establishment of the national credit database at the Bank of Israel, the establishment of a cyber network for a foreign country, and projects in the field of fraud prevention, we are required to recruit leading technology experts in their fields. Matrix makes it possible for its employees to integrate into challenging activities at the forefront of technology, providing employment stability and channels for professional development and personal advancement."

Summary of reports on consolidated profit for the three months and nine months ending on September 30, 2017 and 2016 (in NIS Thousands)

Summary of results for the third quarter and for the period

Revenues

The revenues of Matrix in the third quarter reached approximately NIS 725.9M, compared with approximately NIS 641M in the corresponding quarter last year, an increase of about 13.2%. Revenues in the first nine months of 2017 amounted to approximately NIS 2.09B, compared with approximately NIS 1.86B in the corresponding period last year, an increase of about 12.4%. The growth in sales for the quarter and for the period follows an increase in the sector of software solutions and added value services in Israel, in the software solutions and service sector in the US, and in the integration solutions and computer infrastructure sector.

Gross profit

Gross profit in the third quarter amounted to approximately NIS 105.8M, compared with approximately NIS 100.5M in the corresponding quarter of the previous year, an increase of about 5.2%. Gross profit for the period amounted to approximately NIS 303M, compared with approximately NIS 287.5M in the corresponding period of the previous year, an increase of about 5.4%.

Operating Profit

Operating profit in the third quarter amounted to approximately NIS 52.3M, compared with approximately NIS 47.7M in the corresponding quarter of the previous year, an increase of about 9.7%. Operating profit for the period amounted to approximately NIS 141.9M, compared with approximately NIS 132.2M in the corresponding period of the previous year, an increase of about 7.3%.

Net profit

Net profit in the third quarter amounted to approximately NIS 34M, compared with approximately NIS 29.9M in the corresponding quarter of the previous year, an increase of about 13.7%. Net profit for the period amounted to approximately NIS 86.6M, compared with approximately NIS 80.5M in the corresponding quarter of the previous year, an increase of about 7.6%. The increase in net profit for the quarter and for the period is due to an increase in operating profit and a decrease in tax expenses (in the period), offset by an increase in financing expenses.

Summary by sectors

Matrix operates in five key sectors: software solutions and value added services in Israel, software solutions and services in the US, marketing and support of software products, integration and IT infrastructure solutions, training and deployment.

Matrix has shown an increase in revenues in the large sectors of its activity: the software services sector in Israel, software services in the US, and the integration and infrastructure solution sector, which are the largest sectors of the company and generate about 90% of the company revenues. In the software solutions and added value service sector in Israel, which accounted for about 61.7% of the company revenues in the period, the revenues of Matrix amounted to approximately NIS 456.9M for the quarter, compared with approximately NIS 400.9M in the corresponding quarter of the previous year, an increase of about 14%. For the period, company revenues reached approximately NIS 1.3B, compared with approximately NIS 1.1B in the corresponding period of the previous year, an increase of about 14.3%. In the software solutions and service sector in the US, the company showed revenues in the amount of approximately NIS 82.2M (approximately $23M) for the third quarter, compared with approximately NIS 68.2M (approximately $18M) in the corresponding quarter of the previous year, an increase of about 28% in USD. Revenues for the period amounted to approximately NIS 245.4M (approximately $67.8M), compared with approximately NIS 203.7M (approximately $53M), an increase of about 28% in USD.

A geographic analysis of the results shows that overseas revenues of Matrix account for about 13% and revenues in Israel for about 87% of total revenues. Operating profit from overseas constitutes 25% of total operating profit for the period.

Equity

Shareholders' equity in Matrix as of September 30, 2017 amounted to approximately NIS 636M, compared with approximately NIS 626M on September 30, 2016 (after the distribution of dividends).

Cash and cash equivalents and financial assets as of September 30, 2017, amounted to approximately NIS 225M, compared with approximately NIS 215.9M of the previous year.

Cash flow from ongoing operation for the period amounted to approximately NIS 85.2M, compared to approximately NIS 94.5M in the corresponding period of the previous year. Cash flow in the quarter was affected by an increase of approximately NIS 42.6M in working capital, compared with an increase of approximately NIS 21.1M during the corresponding period of the previous year.

Dividends

Matrix continues its policy of distributing dividends once per quarter at a rate of up to 75% of the net profit. This morning, the company announced a dividend of approximately NIS 24.5M (40 agorot per share). The dividend yield of the company is about 4.8%. Together with the dividend announced today, the dividends distributed by the company since the beginning of the year amount to approximately NIS 87.7M.

About Matrix

Matrix carries out some of the largest integration projects in the industry. It designs and develops innovative technologies and enterprise applications for the Internet and mobile environments, as well as for legacy systems. It represents software solutions and products, local infrastructure solutions, and cloud solutions. It provides outsourcing and offshore services, and engages in software testing, training, and deployment. Matrix employs approximately 8,300 IT professionals. For more than a decade, it has been ranked by research companies as the leader in the field of software and technology services in Israel. Matrix is traded on the Tel-Aviv Stock Exchange and is part of the TA100 index. Company sales in 2016 reached NIS 2.544B, and net profit reached NIS 114M.

For more information, contact: Oren Basson, Allmedia. Tel. 03-9235383