Tel Aviv Stock Exchange

As a reminder, this conference is being recorded May 13th, 2025. The recording will be publicly available on Taser's website. With us today on the line are Mr. Itai Benzaev, CEO, and Mr. Udap Genezra, CFO. Before I turn the call over to Mr. Itai Benzaev, 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 reports for the first quarter of 2025, in which full and precise information is presented and may contain inter-area forward-looking statements in accordance to Section 32A, 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-GAP measures are not intended in any manner to serve as a substitute for a financial result. However, we believe that they provide additional insight for better understanding of our business performance, the conciliations between these non-GAP measures and the most comparable related GAP 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 the investor relations portion of our website at .IL.EN. Mr. Benzaev, would you like to begin?

Good evening Israel Time everyone, and thank you for joining us today. I'm happy to host you in our earnings call. The report for Q1 2025 shows that the quarter ended with record results in all TACE business lines and core activities. I'm pleased to share with you that during the quarter, our revenues increased 21% from the same quarter last year. Our adjusted EBITDA increased 27%, bringing our adjusted EBITDA margin to a record of .2% and our net income increased 32% compared to the same quarter last year. The results reflect the continued implementation of TACE's strategic plan and the growth potential of the Israeli capital market. Yuda Benzah, our CFO, will discuss the financial statements in detail later in this call. For the whole of the first quarter, the TA35 and TA125 indices recorded a positive return of 1% and .8% respectively, compared to a decline of .9% and .3% in the Dow Jones and S&P 500 indices respectively. At the end of Q1 2025, TACE's equity market cap reached 1.4 trillion shekels, the same as at QN 2024. Equity average daily trading volumes hit an all-time high with a 35% jump and totalled 2.9 billion shekels in Q1 2025 compared to 2.1 billion shekels in the same quarter last year. A 10 billion shekels net inflow of funds invested by foreign and local investors in local indices was one of the factors responsible for this surge in trading volumes. In addition, we have also seen significant growth in Q1 2025 in purchases of ETFs on local equity and bond indices of 2.2 billion shekels and 1.3 billion shekels respectively, while sales of 2.2 billion shekels were recorded in ETFs on international equity indices. Moreover, purchases of mutual funds that invest in equities in Israel amounted to 2.2 billion shekels, while sales of 0.4 billion shekels were recorded in mutual funds that invest in foreign equities. Furthermore, the value of the public holdings in foreign funds traded on TACE reached a total of 15.2 billion shekels, 1.1 billion shekels higher than the value at the end of 2024. Five new companies completed an IPO in Q1 2025 alone, the same number of IPOs that took during the whole of 2024. A total of 3 billion shekels was raised on the equity market compared to 2.5 billion shekels in the same quarter last year and a jump of 50% on the amount raised in Q4 2024. The Ministry of Finance raised 49 billion shekels on TACE in Q1 2025 compared with 52 billion shekels in the previous quarter. During February 2025, the Ministry of Finance also managed to raise $5 billion on international market from a public issuance of bonds, which constitutes a further vote of confidence in the Israeli economy even during a period of global and local challenges. In the corporate bond market, the business sector raised 44.3 billion shekels, which is 103% more than in the same quarter last year and 23% more than in Q4 2024. As part of our continued plan to enhance liquidity in our market, I am pleased to inform you that on May 4th the new market making program was launched, with an investment of several shekels over two years. The key improvements in the program include an increase in the number of market makers, with some of these acting as market makers in equity for the first time. There will also be two market makers per sale, which will open the door to more competition and provide a greater depth of trading. In relation to the TA-90 index, market makers will operate in all the shekels included in the index, with the obligation to quote being significantly improved and margins being considerably reduced. To date, 265 companies have signed on the market making program and we believe that we will see additional companies joining it at a later stage. In addition, in late April we published for the first time a tailor-made market making program for public companies, within the framework of which we will offer companies a unique market making program tailored to the needs of each company that chooses to join the program. I am pleased to update that Bank of Berlin was the first to take part in the tailor-made program and we have already published an RFI to local and foreign market makers for the bank's dedicated program. We attach great importance to increasing liquidity and improving the market ability of the companies in accordance with our strategic plan and especially in creating essential tools that will help companies realize their potential with foreign and local investors. In addition, within the context of the making trading more sophisticated and increasing the market of services and trading orders, we intend to launch TAL Trading at Last at the beginning of July this year in which all trades are executed at the closing price of the closing option. This will be a new trading phase using a premium order which will command a higher commission than the commission on standard transactions. In the data distribution field we have witnessed an increase in retail data consumption which stands from the fact that one of the big banks has chosen to purchase real-time data distribution for all its customers. We are confident that we will see other PACE members following the same path in light of the constant growth pressure from the retail side to operate in the capital market. In conclusion, the Q1 2025 financial statements show that even in this challenging period we are still witnessing the stability and resilience of TACE which rests on the strong foundation of the Israeli economy. We are continuing to invest in developing and enhancing the local capital market and we will continue to walk towards achieving the goals we have set for ourselves in accordance with our strategic plan. And now I'd like to hand over to Mr. Yuda Veleza who will continue with the review of the first quarter results.

Thank you, Itai. Texas once again processed from the national results for the first quarter. Its record results in all other business list lines and core activities. This result underscores the solid foundation of the Israeli economy and reflects 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 number four. Our revenues displayed substantial growth of 21 percent for the quarter and hit a new record totalling 131 million shekels. Our adjusted EBITDA at 61.8 million shekels also set a new record while our adjusted EBITDA margin hit a record 47.2 percent. Our net profit increased to a new record of 35.8 million shekels. I will continue with slide number six to show some of the key highlights from our results for the first quarter. Revenues, totalled 131 million shekels compared to 108.2 million shekels in the first quarter last year. An increase of 21 percent which was evident across all activities. Our revenues from non-productionary services increased to 62 percent of total revenues an increase of 2 percent. Expenses, totalled 84.8 million shekels compared to 75.2 million shekels in the first quarter last year. An increase of 14 percent. An increase in expenses is viewed mainly to include benefit expenses and computer and communication expenses. Exhausted EBITDA totalled 61.8 million shekels compared to 48.6 million shekels in the second quarter last year. An increase of 27 percent. An increase of mainly to the higher revenues. Exhausted net profit amounted to 36.9 million shekels compared to 27.8 million shekels in the second quarter last year. An increase of 32 percent. The increase is viewed mainly to an increase in revenue from services, tax of the increase in costs and tax expenses. Our basic EPS reached a new high of 0.39 shekels increasing by a record 40 percent compared to the second quarter last year. Let's now go to slide seven where we can take a deeper look into other revenues in Q1 2025. Revenues from trading and selling commissions increased by 15 percent compared to the second quarter last year and totalled 49.5 million shekels. An increase of mainly due to higher trading volumes, mainly in equities and neutral funds units. This increase was partially offset by a reduction in the effective commission rate. Revenues from listing fees and annual levies increased by 21 percent compared to the second quarter last year and totalled 24.2 million shekels. The increases mainly due to higher revenues from annual levies mainly as a result of the affiliation and the value of the listed securities. Revenues from listing fees were also higher and it is being mainly as a result of more companies applying for listing and offerings. Revenues from clearing out services increased by 60 percent compared to the second quarter last year and totalled 31.9 million shekels. The increase is made to higher revenues from clearing out services to members, especially following the completion of regulation measures in relation to those certain actions. 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 custodianship and up to the custodian fees price list. Revenues from distribution connectivity services increased by 8 percent compared to the second quarter last year and totalled 24.5 million shekels. The increase is mainly due to higher data distribution revenues from business and private customers in Israel. I will continue with slide 10 which shows how the Q1 2025 expenses. The free benefit expenses increased by 14 percent compared to the second quarter last year, totalling 46 million shekels. The increase is mainly due to higher salaries, increased very compensation, driven by higher profitability and lower usage for vacation days. The available compensation has reached the maximum level set in the collective agreement. Computer and communication expenses increased by 16 percent and totalled 0.6 million shekels. The increase results mainly from an increase in the maintenance cost of the computer system and license and from an increase in manpower and projects. Marketing expenses increased by 32 percent compared to the second quarter last year and totalled 1.8 million shekels. Most of the increase is attributed to the timing of campaigns. Depreciation and monetization expenses increased by 8 percent compared to the second quarter last year and totalled 14.6 million shekels. The increase is due mainly to new projects and to an increase in software and license. The net financing income totalled 0.9 million shekels compared to financing income of 1.4 million shekels in the second quarter last

year.

The decrease is due mainly to a decrease in the balance of deposits to reduction in gains for -to-gain securities. I would like now to review our financial position highlights again in Q1 2025 as shown in slide 11. Our rate with a total of 505 million shekels of adjusted equity includes deferred income for listing fees and accounts for 71 percent of the adjusted balance sheet excluding water derivatives position balances. We have 337 million shekels in investment in financial assets. In January 2025, despite having sufficient equity, we signed two years 130 million shekels loan to the approved terms which was used to repay the 100 million shekels bank loan that existed at the end of 2024. The 30 million shekels differences between the two loans increases space liquidity funds. The green accounts include the 1 year 120 million shekels credit line. The balance of the new bank loan totalled 123 million shekels. The surplus equity, other regulatory requirements totalled 409 million shekels compared to 627 million shekels at the end of 2024. The surplus equity, other regulatory requirements totalled 111 million shekels compared to 172 million shekels at the end of 2024. The decrease in the surplus equity and liquidity is mainly due to the 202.4 million shekels used for the buyback of the company's shares in the first quarter. Let's now go to slide 12 where we can review our cash flow highlights in Q1. Cash flows from investing activities resulted in negative cash flows of 20 million shekels compared to negative cash flows of 12.5 million shekels in the same quarter last

year.

This is due mainly to an increase in investment in corporate and equipment. Cash flow from financing activities resulted in negative cash flows of 232.7 million shekels compared to negative cash flows of 45.1 million shekels in the same quarter last year. The change is due mainly to the buyback of the company's shares in an amount of 202.4 million shekels and a dividend payment in an amount of 50.7 million shekels. Cash-free cash flows increased by 9 million shekels compared to the same quarter last year and totalled 35.6 million shekels. The increase was mainly due to the increase in the EBITDA. And with that I will ask Scott our moderator to conduct

the

Q

&A. Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question please press star 1. If you wish to cancel your request please press star 2. If you're speaking, if we're using speaker equipment, hand the handset before pressing the numbers. Please stand by while we poll for your questions. The first question is from Dan Fannin of Jefferies. Please go ahead.

Yeah, good evening gentlemen. This is actually Rick Roy on for Dan today. So in light of the positive update that you gave on IPOs with five in the quarter more or equaling the amount of 2024, could you comment on how the pipeline looks going forward?

Yeah, hi Rick. So clearly we see this year a much better pipeline than the previous two years. I think that a key issue is actually the valuation itself because looking at the Israeli market, as you know we have a lot of businesses that the founders are at a certain age that they are thinking, you know, what is the best way to basically test it to the next generation. So being public is a very good solution for them. But sometimes because of the valuation itself people rather to stay and wait and try to get a better timing of the markets. I think that if the global uncertainty after this week's Trump visit in Saudis and Emirates, if things will look better worldwide, it will give a positive push

for

getting more IPOs

later on this year. Thank you, that's helpful. And then if you could remind us

about the previously described pricing changes that are going to occur or that have been occurring in clearinghouse and in index as well and how those might impact your remainder of this year based on more current clearinghouse and AUM balances.

Well we don't have any pricing changes into the index. So that's what we had in 2022 and 2023. And in terms of the custody, as we announced last year, this year 2025 was the first stage. What happened is the AUM that we had this year was significantly higher than what we had at the middle of last year. So that was part of the revenues and we will have two additional price increase at the beginning of 2026 and in the beginning of 2027 with regards to our custody fees.

Understood and with the clearinghouse, when that was initially announced, you were given revenue plans for those price increases but those I believe were based on older asset levels. Are you able to provide any update to those revenue balance numbers?

Well when we made the release, it was based on the AUM that we had at the end of June 30, 2024. So I don't know on top of my head you know what is the positive delta.

It's 20% higher than the

number of those figures. Around 20% higher. You are assuming it's around 20% higher at the moment. Of course it may change according to the future AUM that we'll have.

Understood that's actually extremely helpful. And then you know just on that topic and the general strength with clearinghouse in the quarter, do you have any comments you could provide on the general sustainability of balances in the world? What balances are trending as you just commented on?

Well I think that you know we made a lot of effort in the past few years to bring more services and more products and I think that right now our clearinghouse is working on a global standard. We supply the Israeli market all of the region and a lot of volatile market and as everybody saw all of our clearing went smoothly. It's a vote of the high operational efficiency that we have. I think also that if we look back a few years ago, right now we pretty much have a much better value proposition in what we give all of the custodian levels and I feel very confident that we will continue to operate at the same level and in the right measures.

And maybe for my last question if you could comment on your marketing expense outlook and expenses more broadly for 2025 and appreciate that you commented that the variable bonus cap has been hit in the quarter but just on marketing and the overall expense outlook.

Yes so in marketing as we stated in the previous call, the marketing budget will not be higher than what we had in 2024. So it will be up to the amount that we invested in 2024 and in terms of the variable compensation as you noted we actually right now are at the top in terms of our profitability and the impact on the variable compensation meaning that as long as we will generate additional profit it will not be reflected in additional variable compensation with regards of the employees.

Understood and then if you could comment on

the overall expense budget for the year.

Yeah I think that you know as we noted we also had more exiles in the first quarter giving the vast amount of activity that we had and also what is very typically for the first quarter a lot of employees didn't take any days off so this is another factor that gave more cost. I would put it this way you know looking ahead my belief and estimate is that we'll have a lower rate of expense rate on what we had in the first quarter.

And that you're speaking to your year of year growth? Yes.

Okay well that wraps up my questions and I appreciate the time tonight gentlemen. Thank you

very

much

thank

you. If there are any additional questions please press star one. If you wish to cancel your request please press star two. Please stand by while

we for your questions. There are no further questions at this time.

This concludes the Tel Aviv stock exchange Q1 2025 results conference call. Thank you for your participation you may go ahead and disconnect.