Press Release – Q4 & Annual 2017

Matrix publishes financial reports for the fourth quarter and for the entire year 2017, showing all-time records in all indices for the quarter and for the entire year

Matrix revenues in 2017 grew by about 12.3%, to approximately NIS 2.85B; annual net profit surged by about 16.3% to an all-time high of approximately NIS 126.7M

In the fourth quarter of 2017, company revenues grew by about 12%, to approximately NIS 766M. Quarterly net profit soared by about 48.7%, to an all-time high of approximately NIS 40M

Today Matrix published the financial statements for 2017 and for the fourth quarter of 2017. In 2017, Matrix recorded double-digit growth in revenues, operating profit, and net profit, both for the fourth quarter and for the entire year. Matrix reached all-time highs for the entire year and for the quarter on all indices: revenues, gross profit, operating profit, net profit, and cash flow from operations.

Revenues and operating and net profit

Matrix revenues in 2017 reached approximately NIS 2.85B, compared with approximately NIS 2.54B in 2016, an increase of about 12.3%. The increase in sales in 2017 derives from an increase in activity in all sectors of operation and from the integration of the results of Aviv and of NIT, in the US, for the first time.

In 2017, the  operating profit of the company increased by about 13.1%, to approximately NIS 198M, compared with approximately NIS 175.2M in 2016 (excluding the one-time capital gain in 2016).

The net profit of Matrix increased by about 16.3% in 2017 compared with 2016 (excluding the one-time capital gain in 2016), and reached approximately NIS 126.6M, compared with approximately NIS 108.9M in 2016.

Revenues for the fourth quarter of 2017 amounted to approximately NIS 766M, an increase of about 12% compared with approximately NIS 685.5M in the corresponding quarter of 2016. Operating profit for the quarter amounted to approximately NIS 56.1M, an increase of about 30.7% (excluding the one-time capital gain), and net profit reached approximately NIS 40M, an increase of about 48.7% (excluding the one-time capital gain). The increase in net profit for the quarter and for the whole year stems from an increase in operating profit, offset by a slight increase in financing expenses and a decrease in tax expenses.

Neutralizing a one-time profit in the fourth quarter and entire 2016
The fourth quarter of 2016 and the entire year include a one-time capital gain from the sale of rights in a real estate property in the amount of approximately NIS 12.1M before tax (approximately NIS 9M net).

Financial status, liquidity, and sources of financing
Cash flow from ongoing operation amounted to approximately NIS 180.7M in 2017, compared with approximately NIS 114.5M in 2016, an increase of about 57.8%. At the end of 2017, the balance of cash and cash equivalents and financial assets stands at approximately NIS 277M, compared with approximately NIS 249.2M at the end of 2016, an increase of 11.2%. Total Matrix shareholders’ equity on 31.12.2017 reached approximately NIS 653.5M. The current ratio at the end of 2017 is about 1.38.

Matrix continues to distribute dividends to its shareholders on a quarterly basis, at a rate of up to 75% of the annual net profit. In 2017, the company distributed dividends of approximately NIS 86.7M total (an all-time record as well). Upon publication of the financial results, the company declared a dividend distribution in the amount of approximately NIS 29.4M (48 agorot per share).

“2017 is a record year by all indicators—revenue, gross profit, operating profit, net profit, and cash flow from operations; our cash flow increased by about 57.8% last year,” said Matrix CEO, Moti Gutman. “Matrix continues to lead as the largest, high-quality technological company in Israel, which maintains a consistent growth rate throughout its years of operation. From company inception to the present, we maintain a strategy of focusing on the areas of technology most in demand, and pursue development both through organic growth and through mergers and acquisitions. In a dynamic world, where technology keeps changing and “disruptive” technologies emerge, we constantly evaluate what is the next thing in the technological world that will serve the needs of our customers, and enter the corresponding field at the right time, either by establishing activity or through mergers and acquisitions. We did this successfully and correctly in the fields of cyber, cloud, mobile, digital, BI, big data and analytics, IoT, and many other fields. In recent years, which have been characterized by high demand for work force in the field of technology, we expand the solutions we offer to our customers in these fields, with emphasis on innovative training tracks for the technology sector, such as a unique and intensive program of the subsidiary company, Infinity, for training the graduates of academic institutions for work in high-tech. These activities naturally complement our activities in this area, carried out by John Bryce Training, which continues to lead the training and deployment market in Israel, and has achieved remarkable growth this year.”

Gutman added: “All the research companies—STKI, IDC, and BDI—continue to rank us as the leaders in the software services market in Israel, in addition to the highest financial rankings in the industry that we have received over time. We have recently gained the highest rating in the sector, Aa3, with a stable outlook, for the 11th consecutive year.”

According to Gutman, “2017 was a year of impressive achievements for Matrix in the Israeli market, with significant growth in all the indices. This year we won several large and strategic projects: in the course of the year we reported on winning two major strategic tenders in the field of finance and cyber. Matrix won a major strategic deal for the establishment, operation, and maintenance of the Israeli database of the Bank of Israel, in the amount of approximately NIS 133M for the development phase and approximately NIS 38M annually for the operation and maintenance stage. In addition, Matrix won a wide-ranging agreement to execute a project in which it will develop advanced solutions in the field of cyber for a foreign country, in the amount of over USD 25M. Matrix will continue to compete for major strategic projects both in Israel and abroad. We have the human and technological infrastructure needed to integrate into the largest projects in Israel and worldwide.” Gutman noted: “This year, we completed a process of upgrading the companies we acquired in the US, including the concentration of their sales infrastructure, in anticipation of the growth planned for 2018, and including an additional acquisition completed at the beginning of 2018.”

“Our success is based on our employees—true professionals, who execute challenging design, implementation, and deployment projects at the forefront of technology. They make a significant contribution to the processes of transformation that organizations in Israel and abroad are undergoing, from projects in the fields of finances and health to strategic security and cyber projects. Matrix employees enjoy occupational stability and benefits. We continue to expand the company and recruit more employees: today Matrix has more than 250 open positions, as a result of winning new projects and entering new fields.”

“Of no lesser importance is the contribution of the company to the community, of which we are proud. In 2017, the company worked for the community through financial donations, donations of equipment, training courses, etc. In addition, the company continues to invest through the assistance of company volunteers to distressed population and youths at risk. This year Matrix contributed over NIS 1M to the community.”

Sectors of operation

Summary of consolidated profit and loss results by sector of operation for 2017 and in comparison to 2016

Matrix currently operates in five main sectors: software solutions and services, and added value in Israel; software solutions and services in the US, marketing and support of software products; integration and computing infrastructure solutions; and training and deployment. Software solutions and services and added value in Israel, and software services in the US constitute the core of the company operations, and accounted for about 72% of the revenues in 2017.

Software solutions and services, and added value sector in Israel generated revenue in the amount of approximately NIS 1.8B in 2017, compared with approximately NIS 1.6B in 2016, an increase of about 13.5%. The operating profit in the software solutions and services, and the added value sector in Israel reached approximately NIS 96.1M, compared with approximately NIS 77.6M in 2016, an increase of about 23.8%.

Revenues from software solutions and services in the US reached approximately USD 91.1M in 2017, compared with approximately USD 74.6M in 2016, an increase of about 22.1%. The operating profit in this sector reached approximately USD 11.6M, compared with approximately USD 11.9M in 2016.

The integration solutions and computing infrastructure sector produced revenues in the amount of approximately NIS 522.6M in 2017, compared with approximately NIS 434.1M in 2016, an increase of about 20.4%. Operating profit in this sector reached approximately NIS 21.5M in 2017, compared with approximately NIS 18.2M in 2016, an increase of about 18%. The increase in revenues and profit stems mainly from continued growth in cloud computing and storage solutions.

Revenues from marketing and support of software products in 2017 amounted to approximately NIS 141M, compared with approximately NIS 136.8M in 2016, an increase of about 3.3%. Operating profit in this sector reached approximately NIS 20.5M in 2017, compared with approximately NIS 19.5M in 2016, an increase of about 5%.

The training and deployment sector in 2017 produced revenues in the amount of approximately NIS 173.7M, compared with approximately NIS 165.1M in 2016, an increase of about 5.2%. Operating profit amounted to approximately NIS 18.7M, compared with approximately NIS 14.3M in 2016, an  increase of about 31%.

Consolidated financial statements as of December 31, 2017 >>

About Matrix

Matrix, the largest technology company in Israel, is engaged in the execution of some of the largest integration projects in the country, and in the design and development of innovative technologies. It carries out enterprise applications in 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 8,600 IT professionals. For over 13 years, 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 2017 reached NIS 2.85B, and net profit reached approximately NIS 128M.