Magic Software Enterprises reported third‑quarter 2025 revenue of $161.7 million, a 13.1% year‑over‑year increase that set a new company record. Operating income rose to $17.1 million, up 13.6% from the same period last year, while non‑GAAP operating income reached $19.9 million. Net income for the quarter was $9.9 million, or $0.20 per fully diluted share, and non‑GAAP net income was $12.3 million, or $0.25 per share.
Gross margin slipped to 48.5% from 49.2% in the prior year, and operating margin fell to 9.9% from 10.2%. The compression reflects higher costs associated with expanding the low‑code/no‑code and generative‑AI product lines, as well as increased sales and marketing spend to support rapid growth. Despite the margin pressure, the company’s operating income still grew, indicating that revenue gains outpaced the cost impact.
Revenue growth was driven primarily by the company’s low‑code/no‑code platform and generative‑AI services, which saw strong demand in both Israel and the United States. The Israeli market contributed 35% of total revenue, while U.S. operations accounted for 30%, underscoring the company’s geographic diversification. The AI‑driven solutions, in particular, captured a larger share of the enterprise software market, offsetting modest declines in legacy product sales.
Management raised its full‑year 2025 revenue guidance to $610 million–$620 million, up from the previous $600 million–$610 million range, and announced a quarterly cash dividend of $0.151 per share payable December 30, 2025. The company also confirmed its definitive agreement to merge with Matrix I.T., a move expected to broaden its product portfolio and expand its global footprint. The guidance increase signals confidence in sustained demand for the company’s AI and low‑code offerings.
CEO Guy Bernstein said, “Magic Software delivered a record‑breaking third quarter and nine‑month 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.” He added that the merger with Matrix I.T. would “enhance our scale, market reach and technological depth,” positioning the combined entity to capture growing global demand for digital and data‑driven solutions.
The company’s revenue beat analyst consensus by $8.1 million, while adjusted EPS of $0.25 fell short of the $0.27 estimate by $0.02. The revenue outperformance was driven by strong demand for AI and low‑code platforms, whereas the EPS miss reflected higher operating expenses and a shift in product mix toward higher‑cost services. The guidance raise and dividend declaration reinforce the company’s positive outlook, despite the modest margin compression and the ongoing merger integration process.
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