The Tel-Aviv Stock Exchange Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to the Tel Aviv Stock Exchange Q3 2024 results conference call. All participants are present in listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded November 20, 2024. The recording will be publicly available on TAZE's website. With us on the line today are Mr. Itay Ben-Zaev, CEO, and Mr. Yudha Ben-Ezra, CFO. Before I turn the call over to Mr. Itay Ben-Zaev, 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 third quarter of 2024, in which full and precise information is presented and may contain inter alia forward-looking statements. in accordance to Section 32A to the Securities Law 1968. 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 a 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 MAIA site and in the investor relations portion of our website at ir.tays.co.il. Mr. Benzaev, would you like to begin, please?

Good evening Israel Time everyone and thank you for joining us today. I'm happy to host you in our earnings call. Despite the ongoing October 7 wall, we concluded Q3 2024 with strong performance and record results. This quarter's revenue grew significantly, up 14% on the same quarter last year, reaching a new high. Also, this quarter, we have seen a 17% increase in adjusted EBITDA, as well as significant growth in the net profit, which was up 43% on the same quarter last year. Yuda Benezra, our CFO, will discuss the financial statements in detail later in this call. The Israeli capital markets have exhibited remarkable resilience and stability through 2024, maintaining strong performance despite the ongoing war. The market's fundamentals remain robust, demonstrating the underlying strengths of Israel's economic infrastructure and its ability to weather complex circumstances. The leading taste indices have continued to rise, with the TA125 up 21% year-to-date versus 15% for the Dow Jones Index, 4.3% for the MSCI Europe Index, and 24% for the S&P 500. By the end of Q3 2024, TASE equity market cap reached 1,184 billion shekels, a 12% increase from year-end 2023. Compared to 2023, trading volumes in taste markets increased significantly in the first nine months of 2024, with equities ADV reaching 2.1 billion shekels, up 5% over the ADV in 2023. In our bond, ADV reached 4.4 billion shekels, up 12% over ADV in 2023. The rise in trading volumes stand mainly from government shekel bonds, where the ADV reached 2.3 billion shekels compared to 1.9 billion shekels in 2023, driven by the steep increase in issuances by the Ministry of Finance. In light of the ongoing war and the increase in the cumulative deficit, the Ministry of Finance continued to raise debt and issued bonds totaling 171 billion shekels in the first nine months of 2024, compared to 57.8 billion shekels in the same period last year. The average daily volume in corporate bonds reached 1.1 billion shekels, a 6% increase compared to 2023. Trading volumes in Israeli government TBIOS were also higher, averaging 1.5 billion shekels daily, 5% more than the average daily volume in 2023. State's corporate bonds market continues to be a major channel for public companies seeking to raise debt. debt raised by the business sector in the period January-September 2024 reached 87.4 billion shekels, up 31% over the amount raised in the same period last year. In our mutual funds market, the daily average turnover of creation and redemption rose to 1.8 billion shekels 29% higher than the average in 2023. The market cap of the mutual funds at the end of the first nine months of 2024 reached 405 billion shekels, 23% higher than the market cap at the end of 2023. We are also seeing a reawakening of interest from foreign investors that since last July has again been buying equities on taste. By the end of the third quarter of 2024, foreign investors had made net purchases of 3 billion shekels. During the first nine months of 2024, five new companies completed an IPO on taste and one new company was added as a dual listed company. We continue to work on implementing our strategic plan to strengthen business activity, as well as continuing to work on promoting our core activities. In the trading field, we launched at the beginning of November, a block trade facility for large scale, prearranged and protected transaction that ensure real time transparency to the market. In addition, at the end of October, we completed the second phase in the development of the new OTC trading system, whereby it will be adopted for foreign investors and will align with international standards, and it joins a series of moves that we have already made and talked about in our previous earning calls, such as the reform of taste indices, the addition of weekly expiration dates on TA35 options, and the launch of the block system that I mentioned earlier. We continue to invest and develop the exclusive indices market. In September, we signed an agreement to launch six new exclusive indices with analyst mutual funds, and to date, we have entered into exclusivity contracts with four leading index creators, which are expected to launch over 20 new indices in the coming months. In early September, we launched for the first time futures contracts on three lending indices, TA35, TA90, and TABanks5. Within this framework, a first market maker has been appointed to ensure liquidity and trade volumes in this market and to enable the public to invest at more competitive prices. In addition, following the measure we took at the beginning of the year to reduce the multipliers in the derivatives market on the option on the TA35, TA Bank 5, and TA125 and foreign currency indices, we have seen average daily trading turnovers on these options grow by 7% compared to 2023. The weekly options turnover has also risen by 9% over the 2023 average, increasing to 52,000 units a day the highest since their launch. At the same time, the monthly options turnover rose by 6% over the 2023 average, increasing to 65,000 units. In September, the ISA approved an update of custody fees within the framework of benchmarking to international standards. Using the same framework, the ISA also allowed us further flexibility in the future years with regard to some of the fees for TACE products and services, including data distribution and connectivity. This is a major development for TACE as it provides us with flexibility in the company's business management thereby enabling TAFE to continue investing and developing the Israeli capital market. Last August, the ISA also approved for the first time for non-bank TAFE members to trade in cryptocurrencies for their customers. This is a major development, enabling investors to be exposed to a broader variety of products, and we believe that the brokerage firms will seize the opportunity to operate in this field. Regarding the transition to a Monday to Friday trading week, we continue to work with the regulators, the ISA, and the Bank of Israel on various aspects of the implementation of this change with the aim of reaching the most fitting solution for international investors and for the Israeli domestic participants. We are continuing our efforts to make more information accessible to the public. And in October, we initiated a television and digital campaign to launch the Taste Plus system, which includes an AI-based analysis of investments and the tracking of equities in Israel and abroad that allows the public to experiment with virtual portfolio management in an accessible and friendly manner and is available free in Hebrew and English. This initiative is part of TAFE's strategic goals to make the capital market more accessible to the public, to remove trading barriers, and to expand the knowledge available to the public. more than 30,000 existing and potential investors have opened an account. In conclusion, the Israeli economy continues to show exceptional resilience, and we continue serving as a robust platform for both corporate capital raising and government debt issuing. TAFE's Q3 results validate our strategic plan, reflecting our investments in innovative financial products and cutting-edge technological developments. These achievements reinforce our commitment to executing our long-term vision and position us strongly to meet our goals in the coming years. And now, I'd like to hand over to Mr. Yuda Benezra, who will continue to with a review of the Q3 results.

Thank you, Itay. As Itay has already mentioned, test is once again posted strong financial results for Q3 2024, demonstrating resilience despite the ongoing war. These results serve as a testament to the economic strength of Israel and the robustness of its capital market. Some of the main financial metrics are shown in slide number four. Our revenue for the quarter amounted to a new high of 109 million shekels, increasing by a record 14% compared to the corresponding quarter last year. This is the highest revenue in a quarter since test IPO. Adjusted EBITDA improved significantly by 17% to a total of 45.1 million shekels, while the adjusted EBITDA margin also improved from 40.2% to 41.4%. Our net profit experienced substantial growth of 43% and increased to 26 million shekels. This is the highest net profit in a quarter since test IPO. I will continue with slide number 10, which shows some of the key highlights from our results for the first nine months of 2024, during which we continue to pause for financial results. Total revenue month to two. 322.4 million shekels, a 12% increase compared to the corresponding period last year. Adjusted EBITDA totaled 139.5 million shekels, representing a 19% increase over the corresponding period last year. The adjusted EBITDA margin improved significantly to 43.3% compared to 40.7% in the corresponding period last year. Adjusted net profit totaled 80.7 million shekels, compared to 66.6 million shekels in the corresponding period last year, significant decrease of 21%. I will continue with slide number six, which shows some of the key highlights from our results for the third quarter. Revenue amounted to 109 million shekels compared to 95.5 million shekels in the corresponding quarter last year, a 14% increase, which was evident across all operations. Our revenue from non-transactional services increased by 2% to 62% of total revenues. Adjusted expenses totaled 79.1 million shekels compared to 72.1 million shekels in the corresponding quarter last year, a 10% increase. The increase in the expenses due mainly to employee benefit expenses, computer and communication expenses, and marketing expenses. Adjusted EBITDA totaled 45.1 million shekels compared to 38.4 million shekels in the corresponding quarter last year, an increase of 17%. The increase is due to higher revenues. Adjusted net profit amounted to 27.2 million shekels compared to 20.1 million shekels in the corresponding quarter last year, 35% increase. The increase is due mainly to higher revenue from services, although this was partially offset by the increase in cost and in tax expenses. Let's go now to slide number seven. We can take a deeper look into the composition of our revenue in Q3 2024. Revenue from trading and clearing commission increased by 13% compared to the corresponding quarter last year. It totals 41.8 million shekels. The increase is mainly due to the increase in the trading volumes and to there having been four more trading days this quarter. The increase was partially offset by the reduction in the effective commission rate. Revenues from listing fees and annual levies increased by 9% compared to the corresponding quarter last year, a total of 22.4 billion shekels. 5% of the total increase in revenue arise from listing fees and levies, while a further 4% is due to an increase in revenue from examination and listing fees, mainly as a result of a greater number of companies applying for listing and offerings. Revenues from clearing house services increased by 11% compared to the corresponding quarter last year, in total 21.3 million shekels. 5% of the increase is due to increase in the revenue from clearing house services to companies and funds, while a further 4% is due to an increase in revenue from custodian fees as a result of the increase in the value of the assets that are held in the custodian ship, The remaining 2% of the increase is due to an increase in the revenue from clearinghouse services to members. Revenues from data distribution and connectivity services increased by 27% compared to the corresponding quarter last year, a total of 23 million shekels. 21% of the increase is due to updated index usage fees and increased value and use of test indices, while a further 3% is due to an increase in revenue from data distribution to private customers. The remaining 2% of the increase is due to an increase in revenues from connectivity services. I would like now to discuss our Q3 2024 expenses, so please refer to slide number nine. Employee benefit expenses increased by 10% compared to the corresponding quarter last year, a total of 41.7 million shekels. The increase is due to the increase in wages and variable compensation. Computer and communication expenses increased by 10% and totaled 11.2 million shekels. The increase is due mainly to additional expenses with respect to licensing and maintenance of new systems and to an increase in manpower and projects. Marketing expenses increased by 190% compared to the corresponding quarter last year and totaled 1.8 million shekels. The expenses in the quarter include the cost of a new campaign launched at the end of the quarter, as compared to campaigns launched in the corresponding quarter last year. Depreciation and amortization expenses increased by 7% compared to the corresponding quarter last year. A total of 14 million shekels, the increase in depreciation expenses due mainly to the upgrading of infrastructure and the launch of new products. Net financing income totaled 4 million shekels compared to net financing income of 2 million shekels in the corresponding quarter last year, an increase of 103%. financing income in the court increased due to interest income on deposits and profits for marketable securities, which was partially offset by the increase in financing expenses as a result of a bank loan of 10 at the end of 2023. I would like to review our financial position highlights at the end of Q3 2024, as shown in slide number 14. Our equity totaled 686.7 million shekels and compromised 79% of the balance sheet, excluding open derivatives, position balances, and total deferred income from listing fees. We added 498.3 million shekels in cash and investment in financial assets. The balance of bank loans totaled 112.4 million shekels. The surplus equity of regulatory requirement at the end of Q3 2024 totaled 594 million shekels, compared to 380 million shekels at the end of 2023. The increase in surplus equity is mainly due to the 242 million shekels received from the sale of the arrangement shares. The consideration received by TES was carried directly to the equity and is being invested in TES technological infrastructures. The surplus liquidity of a regulatory requirement at the end of Q3 2024 totaled 138 million shekels compared to 145 million shekels at the end of 2023. I would like now to go to slide 115 to review our cash flow highlights in Q3 2024. Cash flow from financing activities resulted in negative cash flow of 14.8 million shekels compared to negative cash flow of 18.9 million shekels in the corresponding quarter last year. The lower negative cash flow are due mainly to payment for the acquisition of treasury shares in the corresponding quarter last year. Cash flow from investing activities resulted in negative cash flow of 13.7 million shekels compared to positive cash flow of 98.3 million shekels in the corresponding quarter last year. The change in cash is due mainly to the consideration of the realization of marketable securities the corresponding quarter last year. Cash flow amounted to 39.9 million shekels compared to 17.5 million shekels the corresponding quarter last year, the increase is mainly due to an increase in cash flow from operating activities and from the consideration received from the sale of the arrangement share, which has been invested in test technological infrastructure. And with that, I will return the call to our moderator to conduct Q&A.