Earnings release
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Exhibit 99.1 PRESS RELEASE 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, November 18, 2025 – 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. Summary Results for the Third quarter 2025 (USD in millions, except per share data) GAAP Non-GAAP Q3 2025 Q3 2024 % Change Q3 2025 Q3 2024 % Change Revenues $ 161.7 $ 143.0 13.1% $ 161.7 $ 143.0 13.1% Gross profit $ 44.2 $ 39.7 11.4% $ 45.5 $ 41.0 10.8% Gross margin 27.3% 27.8% (50) bps 28.1% 28.7% (60) bps Operating income $ 17.1 $ 15.1 13.6% $ 19.9 $ 18.5 8.1% Operating margin 10.6% 10.5% 10 bps 12.3% 12.9% (60) bps Net income (*) $ 9.9 $ 8.4 17.0% $ 12.3 $ 11.1 10.2% Diluted EPS $ 0.20 $ 0.17 17.6% $ 0.25 $ 0.23 8.7% (*) 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.
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Summary Results for the Nine Months of 2025 (USD in millions, except per share data) GAAP Non-GAAP Nine months ended September 30, Nine months ended September 30, 2025 2024 % Change 2025 2024 % Change Revenues $ 460.6 $ 409.9 12.4% $ 460.6 $ 409.9 12.4% Gross Profit $ 127.2 $ 115.2 10.4% $ 131.0 $ 119.4 9.7% Gross Margin 27.6% 28.1% (50) bps 28.4% 29.1% (70) bps Operating Income $ 48.5 $ 44.5 8.9% $ 57.0 $ 54.8 4.0% Operating Margin 10.5% 10.9% (40) bps 12.4% 13.4% (100) bps Net Income (*) $ 29.3 $ 26.3 11.4% $ 37.2 $ 34.1 9.1% Diluted EPS $ 0.60 $ 0.53 13.2% $ 0.76 $ 0.69 9.1% (*) 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. 2
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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
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to evaluate the Company’ s business. 3 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:
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Ronen Platkevitz Magic Software Enterprises ir@magicsoftware.com 4 MAGIC SOFTWARE ENTERPRISES LTD. CONDENSED CONSOLIDATED STATEMENTS OF INCOME U.S. Dollars in thousands (except per share data) Three months ended Nine months ended September 30, September 30, 2025 2024 2025 2024 Unaudited Unaudited Revenues $ 161,656 $ 142,968 $ 460,634 $ 409,938 Cost of Revenues 117,449 103,287 333,422 294,715 Gross profit 44,207 39,681 127,212 115,223 Research and development, net 3,172 3,033 9,844 8,673 Selling, marketing and general and administrative expenses 23,920 21,577 68,866 62,013 Total operating expenses 27,092 24,610 78,710 70,686 Operating income 17,115 15,071 48,502 44,537 Financial expenses, net (1,698) (1,364) (3,488) (4,243) Income before taxes on income 15,417 13,707 45,014 40,294 Taxes on income 3,464 3,273 9,700 9,042 Net income $ 11,953 $ 10,434 $ 35,314 $ 31,252 Share of loss of companies accounted for at equity, net - (119) (292) (268) Net income attributable to non-controlling interests (2,090) (1,884) (5,763) (4,723) Net income attributable to Magic’s shareholders $ 9,863 $ 8,431 $ 29,259 $ 26,261 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 $ 0.17 $ 0.60 $ 0.53 5 MAGIC SOFTWARE ENTERPRISES LTD. RECONCILIATION OF GAAP AND NON-GAAP RESULTS U.S. Dollars in thousands (except per share data)
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Three months ended Nine months ended September 30, September 30, 2025 2024 2025 2024 Unaudited Unaudited GAAP gross profit $ 44,207 $ 39,681 $ 127,212 $ 115,223 Amortization of capitalized software and acquired technology 908 1,031 2,771 3,265 Amortization of other intangible assets 341 311 990 935 Non-GAAP gross profit $ 45,456 $ 41,023 $ 130,973 $ 119,423 GAAP operating income $ 17,115 $ 15,071 $ 48,502 $ 44,537 Gross profit adjustments 1,249 1,342 3,761 4,200 Amortization of other intangible assets 2,059 1,994 6,027 5,591 Increase in valuation of contingent consideration related to acquisitions - 221 - 648 Capitalization of software development (707) (724) (1,693) (2,207) Costs related to acquisitions 177 32 324 334 Cost of share-based payment 53 521 90 1,716 Non-GAAP operating income $ 19,946 $ 18,457 $ 57,011 $ 54,819 GAAP net income attributable to Magic’s shareholders $ 9,863 $ 8,431 $ 29,259 $ 26,261 Operating income adjustments 2,831 3,386 8,509 10,282 Amortization expenses attributed to non-controlling interests and redeemable non-controlling interests (304) (466) (823) (1,314) Changes in unsettled fair value of contingent consideration related to acquisitions 38 66 577 232 Deferred taxes on the above items (159) (286) (325) (1,351) Non-GAAP net income attributable to Magic’s shareholders $ 12,269 $ 11,131 $ 37,197 $ 34,110 Non-GAAP basic and diluted net earnings per share $ 0.25 $ 0.23 $ 0.76 $ 0.69 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 6 Summary of Non-GAAP Financial Information U.S. Dollars in thousands (except per share data) Three months ended Nine months ended September 30, September 30, 2025 2024 2025 2024 Unaudited Unaudited Unaudited Unaudited Revenues $ 161,656 100% $ 142,968 100% $ 460,634 100% $ 409,938 100% Gross profit 45,456 28.1% 41,023 28.7% 130,973 28.4% 119,423 29.1% Operating income 19,946 12.3% 18,457 12.9% 57,011 12.4% 54,819 13.4%
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Net income attributable to Magic’ s shareholders 12,269 7.6% 11,131 7.8% 37,197 8.1% 34,110 8.3% Basic and diluted earnings per share $ 0.25 $ 0.23 $ 0.76 $ 0.69 7 MAGIC SOFTWARE ENTERPRISES LTD. CONDENSED CONSOLIDATED BALANCE SHEETS U.S. Dollars in thousands September 30, December 31, 2025 2024 Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 103,303 $ 112,779 Short-term bank deposits 2 51 Trade receivables, net 160,527 139,816 Other accounts receivable and prepaid expenses 21,345 23,553 Total current assets 285,177 276,199 LONG-TERM ASSETS: Deferred tax assets 5,538 4,895 Right-of-use assets 24,255 24,707 Other long-term receivables and Investments in companies accounted for at equity 10,926 9,261 Property and equipment, net 8,213 7,467 Intangible assets and goodwill, net 225,697 217,802 Total long term assets 274,629 264,132 TOTAL ASSETS $ 559,806 $ 540,331 LIABILITIES AND EQUITY CURRENT LIABILITIES: Short-term debt $ 34,866 $ 23,187 Trade payables 34,594 28,753 Dividend payable to Magic Software shareholders 14,533 11,587 Accrued expenses and other accounts payable 59,258 58,209 Current maturities of lease liabilities 4,239 4,818 Liability in respect of business combinations 4,318 2,654 Put options for non-controlling interests 22,837 20,066 Deferred revenues and customer advances 18,120 21,031 Total current liabilities 192,765 170,305 LONG TERM LIABILITIES: Long-term debt 34,339 36,107 Deferred tax liability 8,015 7,848 Long-term lease liabilities 22,441 22,040
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Long-term liability in respect of business combinations - 1,781 Employee benefit liabilities 1,419 1,181 Total long term liabilities 66,214 68,957 EQUITY: Magic Software Enterprises shareholders’ equity 276,037 277,190 Non-controlling interests 24,790 23,879 Total equity 300,827 301,069 TOTAL LIABILITIES AND EQUITY $ 559,806 $ 540,331 8 MAGIC SOFTWARE ENTERPRISES LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. Dollars in thousands Nine months ended September 30, 2025 2024 Unaudited Unaudited Cash flows from operating activities: Net income $ 35,022 $ 30,984 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 15,910 15,370 Cost of share-based payment 90 1,270 Change in deferred taxes, net (265) (1,965) Capital gain on sale of fixed assets (19) (26) Change in value of financial assets measured at fair value through profit or loss 71 - Effect of exchange rate on of cash and cash equivalents held in currencies other than the functional currency (1,499) 81 Changes in value of short-term and long-term loans from banks and others and deposits, net (191) (682) Working capital adjustments: Trade receivables (9,469) (8,746) Other current and long-term accounts receivable 1,578 (24) Trade payables 3,390 (201) Accrued expenses and other accounts payable 350 7,292 Deferred revenues (4,339) 5,767 Net cash provided by operating activities 40,629 49,120 Cash flows from investing activities: Capitalized software development costs (1,694) (2,207) Purchase of property and equipment (1,320) (1,000) Cash paid in conjunction with deferred payments and contingent liabilities related to business combinations (1,828) (11,844) Payments for business acquisitions, net of cash acquired (3,614) (7,553) Proceeds from sale of property and equipment 47 42
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Proceeds from sale (purchase) of financial assets, net 163 1,121 Change in short-term and long-term deposits 70 (276) Investment in a company accounted for at equity - (198) Net cash used in investing activities (8,176) (21,915) Cash flows from financing activities: Proceeds from sale of non-controlling interest - 174 Dividend paid to Magic’ s shareholders (27,642) (10,016) Dividend paid to non-controlling interests (7,429) (4,966) Repayment of lease liabilities (4,813) (4,443) Purchase of non-controlling interest (13,822) (314) Receipt of short-term and long-term loans from banks and others 26,376 12,601 Repayment of short-term and long-term loans (20,854) (26,769) Net cash (used in) provided by financing activities (48,184) (33,733) Effect of exchange rate changes on cash and cash equivalents 6,255 (472) Increase (decrease) in cash and cash equivalents (9,476) (7,001) Cash and cash equivalents at the beginning of the period 112,779 105,943 Cash and cash equivalents at end of the period $ 103,303 $ 98,942 9