Earnings call transcript: TASE Q2 2025 sees significant revenue growth and stock surge

Tel Aviv Stock Exchange (TASE) reported impressive financial results for Q2 2025, with revenues increasing by 29% year-over-year and adjusted EBITDA rising by 56%. The company’s stock price surged by 7.87% following the earnings announcement, reflecting strong investor confidence. Basic EPS reached NIS 0.478, marking an 82% increase from the previous year. With a market capitalization of $1.71 billion and a robust financial health score of "GOOD" according to InvestingPro, TASE’s growth trajectory remains strong. The exchange has maintained impressive momentum, delivering a 133% return over the past year.

Key Takeaways

• TASE’s Q2 2025 revenues increased by 29% year-over-year.
• Adjusted EBITDA rose by 56%, with a record margin of 52.6%.
• The stock price surged by 7.87% following the earnings report.
• Basic EPS saw an 82% increase, reaching NIS 0.478.
• Nine IPOs were completed, raising over NIS 1.5 billion.

Company Performance

TASE demonstrated robust performance in Q2 2025, with significant increases in both revenues and profitability. The company’s strategic initiatives, including the launch of AI-powered software and new trading mechanisms, have contributed to its strong financial results. The Israeli equity market’s growth, with a 21% increase in market cap, has further supported TASE’s performance.

Financial Highlights

• Revenue: NIS 267.1 million (25% increase from H1 2024)
• Earnings per share: NIS 0.478 (82% increase year-over-year)
• Adjusted EBITDA: NIS 71.6 million (56% increase)
• Adjusted net profit: NIS 44.4 million (73% increase)

Market Reaction

Following the earnings announcement, TASE’s stock price increased by 7.87%, reflecting investor optimism. This surge places the stock close to its 52-week high, signaling strong market confidence in the company’s growth prospects and strategic direction. According to InvestingPro analysis, TASE is currently trading above its Fair Value, with a P/E ratio of 49.55x and a Price/Book ratio of 11.67x. For deeper insights into TASE’s valuation metrics and 8 additional exclusive ProTips, explore InvestingPro’s comprehensive analysis tools.

Outlook & Guidance

TASE remains optimistic about its growth trajectory, with plans to explore strategic partnerships and potential inclusion in the MSCI Europe Index. The company anticipates a strong IPO pipeline in H2 2025 and continues to focus on organic growth, with no immediate plans for mergers and acquisitions. The exchange’s revenue has grown at a 5-year CAGR of 11%, while maintaining a healthy dividend yield of 0.86%. InvestingPro subscribers can access the detailed Pro Research Report, offering comprehensive analysis of TASE’s growth metrics, peer comparison, and future prospects among 1,400+ top stocks.

Executive Commentary

CEO Itay Ben Zeev remarked, "Throughout this challenging period for the country, TAFE has continued to operate and run our markets as usual." He also emphasized the company’s openness to strategic changes, stating, "We are very open minded about the process and about the outcome that will be eventually."

Risks and Challenges

• Potential market volatility due to geopolitical factors.
• Increased operational expenses, particularly in computer and communication costs.
• The transition to a Monday-Friday trading week may pose operational challenges.
• Dependence on foreign investor inflows, which may fluctuate.
• Competitive pressures from global financial markets.

Q&A

During the earnings call, analysts inquired about the potential impact of the Monday-Friday trading week and the company’s strategic plans for its index business. TASE confirmed its strong cash position and reiterated its focus on organic growth, with no significant expense surprises anticipated for H2 2025.

Full transcript - Tel Aviv Stock Exchange (TASE) Q2 2025:

Conference Moderator: Ladies and gentlemen, thank you for standing by. Welcome to the Tel Aviv Stock Exchange Q2 twenty twenty five Results Conference Call. All participants are at present in listen only mode. Following management’s formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded 08/05/2025.

The recording will be publicly available on Taze’s website. With us on the line today are Mr. Itay Ben Zeev, CEO and Mr. Yudah Ben Ezra, CFO. Before I turn the call over to Mr.

Itay Ben Zeev, I would like to remind everyone that this conference is not a substitute for reviewing the company’s annual financial statements, quarterly financial statements and interim report for the 2025, in which full and precise information is presented and may contain, inter alia, forward looking statements in accordance to Section 32A to Securities Law nineteen sixty eight. In addition to IFRS reporting, we might mention certain financial measures that do not conform to Generally Accepted Accounting Principles. Such non GAAP measures are not intended in any manner to serve as substitute for our financial results. However, we believe that they provide additional insight for better understanding of our business performance. Reconciliations between these non GAAP measures and the most comparable related GAAP measures are included in tables that can be found in our earnings press release and in the slide presentation accompanying this call.

Both can be accessed on the English Maya site and in the Investor Relations portion of our website at ir.case.co.ilen. Mr. Benzeev, would you like to begin?

Itay Ben Zeev, CEO, Tel Aviv Stock Exchange (TAFE): Good evening, Israel time, everyone, and thank you for joining us today. I’m happy to host you in our earnings call. I’m pleased to share with you that Q2 was another record quarter for TAFE across all of our business lines and core activities. Our revenues saw a significant increase of 29% from the same quarter last year, and our adjusted EBITDA increased 56%, bringing our adjusted EBITDA margin to 52.6. Our adjusted net profit soared by 73% compared to the same quarter last year.

The results reflect the continued implementation of TAFE’s strategic plan and the ongoing growth potential of the Israeli capital market. Yudah Ben Ezra, our CFO, will discuss the financial statements in detail later in this call. During H1 twenty twenty five, Israel continued to display social and economic resilience through the ongoing October seven war and became even stronger during the recent twelve day war with Iran. Throughout this challenging period for the country, TAFE has continued to operate and run our markets as usual. The cumulative return of our equity market of 8% throughout this period is truly impressive.

The leading indices produced record breaking returns in H1 twenty twenty five with the TA-thirty five and TA90 indices topping the global return table with gains of twenty three point five percent and twenty five point five percent, respectively, compared to gains of 4.56.2% in the Dow Jones and S and P five hundred indices, respectively. This positive and exceptional trend was also evident in the sectoral indices with the financial sector indices leading the charge, the TA Bank’s five index rose by 45% and the TA Insurance Index climbed 77%. This strong performance continues the positive trend we witnessed in H2 twenty twenty four. At the end of Q2 twenty twenty five, TAFE’s equity market cap reached 1,700,000,000,000.0, 21% higher than the market cap at year end twenty twenty four. Equity average daily trading volumes hit a new all time high with a 40% jump and totaled NIS 3,000,000,000 at the end of H1 twenty twenty five compared to NIS 2,100,000,000.0 in H2 twenty twenty four.

This major increase was driven by significant net inflows of funds from foreign investors of 9,500,000,000.0 and an increase in activity by domestic institutional and retail investors in our equity market. The foreign net inflows were more than double the amount of net inflows from foreign investors in the same period of 2024 of about 3,900,000,000.0. We continue seeing the Israeli retail segment showing increased interest in the local capital market and following on from the strong growth in 2024, there was a further increase in the opening of new trading accounts in H1 twenty twenty five. The growth in the number of new accounts led to the retail segment injecting 8,400,000,000.0 into the equity market during H1 twenty twenty five, more than twice as much as in H2 twenty twenty four when the inflow of funds amounted to 3,500,000,000.0. The retail segment’s participation in the Israeli capital market is still relatively low compared to the part it plays in most other leading countries’ capital markets.

We continue to identify this segment as having a significant growth potential, the realization of which will make a major contribution to the future growth of the Israeli capital market. There was a resurgence in the IPO market in H1 twenty twenty five with nine new companies completing an IPO that together raised over 1,500,000,000.0. This was almost twice the number of companies that completed an IPO in the whole of 2024. The IPOs continued in July and we believe that we will see more new companies making issuances on TAFE in the coming months. In the corporate bond market, corporate issuance totaled billion compared to NIS57 billion raised in H2 twenty twenty four.

Government issuance in the first half totaled billion compared with NIS90.4 billion in H2 twenty twenty four. We continue to implement our strategic plan, which includes, among other things, enhancing the liquidity of the companies listed on TAFE. On the last earnings call, we announced that Bank of Poland has joined our tailor made market making program. Since then, two leading market makers have been selected for Bank of Poland’s program, which began operating on June 10. We are already working with additional companies that are expected to join the tailor made market making program in the near future.

In addition, I’m pleased to report that on August 10, we will commence the new order type trading at last TAL in which orders are to be executed at the closing price. In line with leading global exchanges, this will allow trades to take place at the securities closing price for several minutes after the closing auction phase. I’m pleased to share that earlier today, the Minister of Finance approved the regulation for moving to a Monday to Friday trading week, which will officially take effect on 01/05/2026. Also, we launched at the July as part of our preparation towards transitioning to Monday to Friday trading, a better version of the AI powered software that translates company reports into English. Initially, the reports of companies included in the TA 125 index will be translated, which will enable global investors to receive company information in English at the same time as their Israeli counterparts.

Finally, I would like to inform you that in June, the TACE Board of Directors authorized us to examine strategic measures with regard to our index business, including a partial or full sale or a strategic partnership with a leading international index operator or other global financial institution. The index’s AUM at the end of Q2 twenty twenty five

Yudah Ben Ezra, CFO, Tel Aviv Stock Exchange (TAFE): amounted to

Itay Ben Zeev, CEO, Tel Aviv Stock Exchange (TAFE): billion, and revenues in H1 twenty twenty five amounted to 14,400,000.0. We have chosen the leading investment bank Jefferies to accompany us through the examination process and to assist us in identifying international entities suitable for such a transaction. In conclusion, our financial and operating performance in Q2 twenty twenty five point to the resilience of TAFE, which rests on the strong foundation of the Israeli economy even during this challenging period. We continue to develop and enhance the local capital market and remain focused on achieving the goals outlined in our strategic plan.

Yudah Ben Ezra, CFO, Tel Aviv Stock Exchange (TAFE): And now I’d like to hand over to Mr. Yura Benneza, who will continue with a review of the second quarter results. Thank you, Uttar. Test posted strong financial results for Q2 twenty twenty five and 2025. These record results once again in all our business lines and core activities.

This results underscore the solid foundation of the Israeli economy and reflect the continued confidence of both local and global investors in Israel’s economy and capital market. Some of the main financial metrics are shown in Slide four. Our revenues displayed substantial growth of 29% for the quarter and hit a new record totaling million. Our adjusted EBITDA at NIS71.6 million also set a new record, bringing our adjusted EBITDA margin to record 52.6%. Our adjusted net profit increased to a new record of NIS 44,400,000.0, a 73% record increase over the same quarter last year.

I will continue with Slide 11, which shows some of the key highlights from our results for the 2025. Our total revenues amounted to 267,100,000.0, a 25% increase compared to the same period last year. Our adjusted EBITDA totaled 133,500,000.0, representing a 41% increase over the same period last year. Our adjusted EBITDA margin significantly improved to 50% compared to 44.2% in the same period last year. Our adjusted net profit totaled 81,200,000.0 compared to ILS 53,500,000.0 in the same period last year, a significant 52% increase.

I will continue with Slide six, which shows some of the key highlights from our results for the second quarter. Revenue totaled million compared to ILS105.1 million in the same quarter last year, an increase of 29%. This growth evident across all activities. Our revenues from the non production and services were up 1% to reach 64% of total revenues. Expenses totaled ILS 80,700,000.0 compared to ILS 74,800,000.0 in the same quarter last year, an increase of 8%.

The increase in expenses is due mainly to higher computer and communication expenses and depreciation and amortization expenses. Adjusted EBITDA totaled million compared to ILS45.8 million in the same quarter last year, an increase of 56%. The increase is due mainly to the higher revenues. Net profit amounted to 43,600,000.0 compared to ILS 24,300,000.0 in the same quarter last year, an increase of 80%. The increase is due mainly to an increase in revenue from services, net of the increase in cost and tax expenses.

Our basic EPS reached a new high of NIS0.478, increasing by a record 82% compared to the same quarter last year. I will continue with Slide seven. We can take a deeper look into our revenues in Q2 twenty twenty five. Revenue from trading and clearing commissions increased by 26% compared to the same quarter last year and totaled million. The increase is due mainly to higher trading volumes, mainly in equities, derivatives and mutual fund units.

The increase was partially offset by a reduction in the effective commission rate mainly on equities and mutual fund units. Revenues from listing fees and annual levies increased by 16% compared to the same quarter last year and totaled 25,100,000.0. The increase is due mainly to revenue from annual levies as a result of the increase in the number of companies and funds paying at annual levies. In addition, revenues from listing fees were also higher due to the increase in the volume raised. Revenue from clearing out services increased by 62% compared to the same quarter last year and totaled million.

The increase is mainly due to higher revenues from clearing out services to members, especially following the completion of regulation measures in relation to the OTC transaction. Other factors resulting in the increase were the higher custodian fees as a result of the increase in the value of the assets that are held in the custodianship and the updating of the custodian fees price list. Revenue from data distribution and connectivity services increased by 19% compared to the same quarter last year and totaled million. The increase is due to an increase in revenue from our authorization to use the test indices and from higher data distribution revenues from business and private customers and Israel and abroad. I will continue with Slide 10, which shows some of our Q2 twenty twenty five expenses.

Improved value set expenses increased by 2% compared to the same quarter last year, totaling NIS40.1 million. The increase is mainly due to higher salaries and an increase in variable compensation, which has reached the maximum level set in the collective agreement. Computer and communication expenses increased by 19% and totaled million. The increase results mainly from an increase in the maintenance cost of new computer system and license. Marketing expenses increased by 25% compared to the same quarter last year and totaled million.

Most of the increase is mainly due to the timing of campaigns. Other operating expenses increased by 56% and totaled 1,600,000.0. Most of the increase is due to higher clearing expenses and expenses with respect to a market making program. Depreciation and amortization expenses increased by 8% compared to the same quarter last year and totaled million. The increase is due mainly to new projects and new investments in software and license.

Net financing income totaled million compared to financing income of ILS2 million in the same quarter last year. The decrease is due mainly to a decrease in the balance of deposits and the volatility of the shekel U. Dollar exchange rate and was partially offset by gains for marketable securities. Let’s go now to Slide 16, where we can review our financial position at the end of Q2 twenty twenty five. Our equity totaled 584,400,000.0.

Our adjusted equity includes deferred income from listing fees and represented 74% of the adjusted balance sheet, excluding corporate derivatives or position balances, where 377,100,000.0 in cash and investment financial assets. The balance of bank loan totaled 112,300,000.0. The surplus equity of the regulatory requirements totaled ILS $449,000,000 compared to ILS $627,000,000 at the 2024. The surplus liquidity of regulatory requirements totaled NIS 157,000,000 compared to NIS 172,000,000 at the 2024. Dedicated surplus equity and liquidity is mainly due to the million used for the buyback of the company’s shares in the first quarter.

I will continue with Slide 17 where we can review our Q2 cash flow highlights. Cash flow from investing activities resulted negative cash flow of ILS11.9 million compared to negative cash flow of ILS9.5 million in the same quarter last year. The increase is due mainly to an increase in investment in property and equipment. Cash flow for financing activities resulted negative cash flow of NIS 13,100,000,000.0 compared to negative cash flow of NIS 14,800,000.0 in the same quarter last year. This change is due to the repayment of a bank loan in an amount of NIS 1,700,000.0.

Debt free cash flows increased by NIS 42,000,000 compared to the same quarter last year and totaled 50,200,000.0. The increase was due mainly to the increase in the EBITDA. And with that, I will return the call to our moderator to conduct the Q and A.

Conference Moderator: Thank The first question is from Dan Fannon of Jefferies. Please go ahead.

Dan Fannon, Analyst, Jefferies: Hi. Thanks. Good evening, gentlemen. I guess to start, the index announcement in terms of exploring potential options. Just for some background and context, I guess, now?

Obviously, this is a business that’s been growing a few, has potential to grow. But curious as to the partnership and the things you mentioned in terms of exploring the timing and, as I said, kind of why now?

Itay Ben Zeev, CEO, Tel Aviv Stock Exchange (TAFE): Hi, Dan. With respect to the timing, clearly, the index has been growing. And as you mentioned, we see a huge potential ahead of us. But we also see that with respect to global participation, there are plenty of people that want to invest in our indices. But being a company from Israel, we don’t have a global distribution platform.

So I’m very positive that if we can come up with a structure in which, let’s say, that every investor in The US using his mobile for trading can buy, you know, TA one twenty five index, we can get massive inflows into our market. We have been seeing, especially throughout the past year, year and a half, that because of the strong economic data of the state of Israel and the fact that we started late with respect to the AUM that we have in our indices and the resilience of the people, etcetera, there are more and more people that want to get exposure, that want to invest in TACE equities. So I would say that we know that there are global players that have in their systems a proper distribution channels that by definition, we can get much broader distribution. On top of it, I think we did many positive things in building our business, and we continue to do so. But scaling up, we know that there are certain ways in which you should continue to scale up the business.

For example, is a BMR regulation, a regulation that is specific to running index. And once you comply with the BMR, you can also get more institution investing in your indices. So I think as part of growing the business, by the way, not only in the index, but also in the index, this mechanism and exercise, by definition, will give us a very positive look at what are the best alternative for us to continue to grow the business. And as I pointed out, we may come up with a transaction, we may do a strategic collaboration. And maybe also, eventually, after doing the whole process, we can decide not to do anything and to continue with what we do internally.

We are very open minded about the process and about the outcome that will be eventually. So it’s a bunch of reasons why we think now it’s a good timing for us to do so.

Dan Fannon, Analyst, Jefferies: Great. That makes sense. So thank you. And then just wanted to get your thoughts around the potential or the pending changes around the days of trading from going to Monday to Friday And what you think that may have as an impact on volumes to start as the transition occurs? Obviously, you’re hoping to get more institutional or foreign flows as a result.

But I guess, do you anticipate any kind of step changes or changes in the kind of near term that might be negative or positive as that happens?

Itay Ben Zeev, CEO, Tel Aviv Stock Exchange (TAFE): Yes. So actually, from today, it’s not pending. It’s formal that we will move to the Monday Friday, and it will start on 01/05/2026. I think that, you know, as part of everything that is going and the continued interest, I believe that next year, once we will be Monday to Friday, we’ll have a better chance of an of entering the MSCI Europe Index. If that happens, clearly, that’s a big potential for our market, both of the passive inflows that will come into our market and also the active funds that, by definition, will will have exposure because there will be the passive inflow.

By the way, this is also has some linkage to the examination that we are doing with respect to our index because if that happens, clearly, the valuation that we’ll have on our index will have a positive impact. So I think that and and, hopefully, also, you know, in terms of the, I would say, the the outlook of the state of Israel, things will be more positive, so to speak. So it will also give us a positive trend in applying and hopefully in being part of MSCI Europe. So we can’t really identify now what will be the impact. Overall, Sunday, you know, has has been, you know, good trading days for us.

But we know that by speaking from global investors, all of them, 100% of them were in favor of doing the change to Friday. I think that even if it’s not in the short term, I believe that in the medium long term, it will have a positive impact of the international flows that will come into our market.

Dan Fannon, Analyst, Jefferies: Understood. And then just wanted to follow-up on your comments around just capital markets activity and if you could talk to the backlog of new listings and the overall kind of outlook as you think about the second half of this year from a new issuance perspective.

Itay Ben Zeev, CEO, Tel Aviv Stock Exchange (TAFE): Yes. So I would say that right now, looking at H2, we remain confident about the fact that we have a strong pipeline. I think that, you know, one of the things that we changed a few years ago was the fact that, basically, companies in Israel understand the value of becoming public. In the past two years, there there was a normal slowdown, you know, because of the inflation, the interest rate, and, you know, what happened at the beginning of the war. But now we are seeing more and more companies getting ready to do an IPO.

And I guess that if, you know, nothing, you know, strange will happen, we will continue to see more and more good companies doing IPO in the market.

Dan Fannon, Analyst, Jefferies: Got it. Then just also just thinking about the second half from an expense perspective, where your budgets are running, I think we from a compensation perspective, I think you’ve kind of hit the accruals for the year, but maybe talk broadly about the other line items and how you’re thinking about the trajectory for the second half.

Itay Ben Zeev, CEO, Tel Aviv Stock Exchange (TAFE): Yes. As you mentioned, we’ve hit the cap on the variable compensation of the employees. But moving forward, you know, we don’t see any changes or any surprises, so to speak. So I would say that overall, all good from our side moving forward.

Dan Fannon, Analyst, Jefferies: Got it. I guess just then just lastly, in terms of capital and excess cash and all the things that you have that is a nice problem or not problem, but a nice nice position to be in. Have you started to think about M and A or other things in terms of uses of that cash in this environment? Obviously, you have a lot of organic growth, and I think that’s the primary focus. But other things in utilization of that cash, if you could talk to that today, that would be helpful.

Itay Ben Zeev, CEO, Tel Aviv Stock Exchange (TAFE): Well, we did the buyback in January. But as time passes by, we are making more and more cash. We don’t actually need to do M and A. As you mentioned, we have a very strong organic growth ahead of us, and we have actually everything that we need in our supply chain. So we don’t see any m and a.

So currently, we don’t have any plans of of what to do in terms of the of the capital. And as you mentioned, you know, the it’s a good problem to have.

Dan Fannon, Analyst, Jefferies: Indeed. Alright. Well, thanks for taking all my questions.

Itay Ben Zeev, CEO, Tel Aviv Stock Exchange (TAFE): Thank you very much then. Keep

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