Magic Software Reports Third quarter 2025 Financial Results with Record-Braking Revenues of $161.7$ million - a 13.1% Year Over Year Increase

Operating income for the third quarter increased 13.6% year over year to a third quarter record-braking result of $17.1 million; Non-GAAP operating income for the third quarter increased by 8.1% year over year to a third quarter record-breaking $19.9 million

OR YEHUDA, Israel, Nov. 18, 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 third quarter and first nine months ended September 30, 2025.

(*) Attributable to Magic Software’s shareholders.

Financial Highlights for the Third Months Ended September 30, 2025

• Revenues for the third quarter of 2025 increased by 13.1% to a record-breaking $161.7 million, compared to $143.0 million in the same period of the previous year. Revenues from our Israeli operations totaled $75.6 million, an increase of 16.8% compared to $64.7 million in the same period last year, overcoming a decrease of approximately 3.9% in working hours compared to the same period of the previous year.
  Revenues from our North American operations totaled $67.1 million, an increase of 13.2% compared to $59.3 million in the same period last year.
  
  
• Operating income for the third quarter of 2025 increased by 13.6% to a record-breaking $17.1 million, with 86% organic, compared to $15.1 million in the same period of the previous year.
  
  
• Non-GAAP operating income for the third quarter of 2025 increased by 8.1% to a record-breaking $19.9 million, compared to $18.5 million in the same period of the previous year.
  
  
• Net income attributable to Magic Software’s shareholders for the third quarter of 2025 increased by 17.0% to $9.9 million, or $0.20 per fully diluted share, compared to $8.4 million, or $0.17 per fully diluted share, in the same period of the previous year.
  
  
• Non-GAAP net income attributable to Magic Software’s shareholders for the third quarter of 2025 increased by 10.2% to $12.3 million, or $0.25 per fully diluted share, compared to $11.1 million, or $0.23 per fully diluted share, in the same period of the previous year.

(*) Attributable to Magic Software’s shareholders.        

Financial Highlights for the Nine Months Ended September 30, 2025

• Revenues for the nine-months period ended September 30, 2025 increased by 12.4% to a record breaking $460.6 million compared to $409.9 million in the same period of the previous year. Revenues from our Israeli operations for the nine-month period ended September 30, 2025 totaled $214.8 million, an increase of 18.1% compared to $181.9 million in the same period last year. Revenues from our North American operations totaled $187.2 million, an increase of 9.8% compared to $170.5 million in the same period last year.
  
  
• Operating income for the nine-months ended September 30, 2025 increased by 8.9% to a record breaking $48.5 million compared to $44.5 million in the same period of the previous year.
  
  
• Non-GAAP operating income for the nine-months ended September 30, 2025 increased by 4.0% to a record breaking $57.0 million compared to $54.8 million in the same period of the previous year.
  
  
• Net income attributable to Magic Software’s shareholders for the nine-month period ended September 30, 2025, increased by 11.4% to $29.3 million, or $0.60 per fully diluted share, compared to $26.3 million, or $0.53 per fully diluted share, in the same period last year.
  
  
• Non-GAAP net income attributable to Magic Software’s shareholders for the nine-months period ended September 30, 2025, increased by 9.1% to $37.2 million, or $0.76 per fully diluted share, compared to $34.1 million, or $0.69 per fully diluted share, in the same period last year.
  
  
• Cash flow from operating activities for the nine-months period ended September 30, 2025 amounted to $40.6 million compared to $49.1 million in the same period last year.
  
  
• As of September 30, 2025, Magic’s cash, cash equivalents and short-term bank deposits amounted to $103.3 million.
  
  
• Magic hereby revises its full-year 2025 revenue guidance, increasing the previous estimate of $600 million to $610 million to a revised range of $610 million to $620 million, (based on current currency exchange rates). This updated guidance reflects our sustained operational momentum and favorable outlook for the fourth quarter of 2025, representing an anticipated annual revenue growth rate of approximately 10.4% to 12.2% as compared to the prior fiscal year.

Declaration of Dividend for the Third Quarter of 2025

In accordance with its dividend distribution policy, the Company’s board of directors declared a quarterly cash dividend in an amount of 15.1 cents per share and in an aggregate amount of approximately $7.4 million, reflecting approximately 75% of its distributable profits for period.

The dividend is payable on December 30, 2025, to all of the Company’s shareholders of record at the close of trading on the NASDAQ Global Select Market on December 15, 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: “Magic Software delivered a record breaking third quarter and nine-months period performance. We achieved all-time highs in revenues, gross profit and operating income, while continuing to strengthen our operational foundations and expand our strategic footprint in key markets, including the United States, where momentum remains robust. Our results of operations demonstrate our strong position in the IT market along with the sustained demand for our digital, AI-driven and cloud transformation solutions, combined with disciplined execution across the organization. With the recently announced definitive agreement and plan of Merger signed with Matrix I.T., we are entering an exciting new phase in Magic’s evolution. This combination brings together two highly complementary companies, enhancing our scale, market reach and technological depth. We believe the merged organization will be even better positioned to capture the growing global demand for innovative digital and data-driven solutions. As we progress toward shareholder approval, we remain focused on delivering consistent performance and creating long-term value for our customers, employees and shareholders.

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]