Matrix Reports Strong Q2 Growth Despite AI Concerns and Currency Challenges

Matrix released robust financial results for the second quarter, boosting its stock on the Tel Aviv Stock Exchange after a 40% decline this year driven by investor fears over AI's impact on its business. Following its merger with Magic earlier this year, Matrix reported Q2 revenues of 2.1 billion shekels and an operating profit of 202 million shekels, marking a 10.6% increase compared to the same quarter last year. Net profit attributable to shareholders surged 36% to 123 million shekels. For the first half of the year, net profit reached 272.3 million shekels, up 11.3%, and the company announced a dividend payout of approximately 91.6 million shekels.

CEO Moti Gutman addressed investor concerns, dismissing the "apocalyptic" forecasts about AI's effect on integration companies as disconnected from reality. He emphasized that the market's negative outlook on SaaS and product companies does not apply to Matrix and similar integrators. The strengthening of the shekel against the dollar negatively impacted foreign operations, which constitute about 20% of Matrix's revenues, with the dollar weakening roughly 18% year-over-year. Adjusted for currency effects, operating profit rose about 20.6% and net profit increased 32.4%.

Matrix attributed its growth to higher profitability following the Magic merger and expansion in core sectors. In the IT solutions, software products and services, consulting, and systems engineering segment in Israel, revenues grew 10.4% in constant currency and operating profit increased 16.1%. Growth was driven by expanded activities in data, AI, security, and core systems, alongside efficiency improvements and better deal mix. The cloud, computing infrastructure, and systems segment saw the sharpest rise, with revenues up 35.5% and operating profit up 40.8% in constant currency.

However, Matrix recorded a negative cash flow of 23 million shekels in Q2, compared to a positive 146 million shekels in the previous year’s quarter. This was mainly due to a 260 million shekel check discounting transaction at the end of 2025 that had boosted cash flow in the prior period but negatively affected it this quarter.