The Tel-Aviv Stock Exchange Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to the Tel Aviv Stock Exchange Q2 2025 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 August 5, 2025. The recording will be publicly available on TAZE's website. With us on the line today are Mr. Itay Benzaev, CEO, and Mr. Yehuda Ben Ezra, CFO. Before I turn the call over to Mr. Itay 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 report for the second quarter of 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 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 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.kz.co.il. Mr. Ben-Zaev, 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. 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. Yehuda Ben Ezra, our CFO, will discuss the financial statements in detail later in this call. During H1 2025, Israel continued to display social and economic resilience through the ongoing October 7 war and became even stronger during the recent 12-day war with Iran. Throughout this challenging period for the country, TAIS 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 2025 with the TA35 and TA90 indices topping the global return table with gains of 23.5% and 25.5%, respectively, compared to gains of 4.5% and 6.2% in the Dow Jones and S&P 500 indices, respectively. This positive and exceptional trend was also evident in the sectoral indices with the financial sector indices leading the charge the TA Banks Five Index rose by 45% and the TA Insurance Index climbed 77%. This strong performance continues the positive trend we witnessed in H2 2024. At the end of Q2 2025, TAFE's equity market cap reached 1.7 trillion shekels, 21% higher than the market cap at year-end 2024. Equity average daily trading volumes hit a new all-time high with a 40% jump and totaled 3 billion shekels at the end of H1 2025, compared to 2.1 billion shekels in H2 2024. This major increase was driven by significant net inflows of funds from foreign investors of 9.5 billion shekels 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 3.9 billion shekels. We continue seeing this very vital 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 2025. The growth in the number of new accounts led to the retail segment injecting 8.4 billion shekels into the equity market during H1 2025, more than twice as much as in H2 2024, when the inflow of funds amounted to 3.5 billion shekels. 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 2025 with nine new companies completing an IPO that together raised over 1.5 billion shekels. 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 totals 74 billion shekels, compared to 57 billion shekels raised in H2 2024. Government issuance in the first half totaled 85.7 billion shekels compared with 90.4 billion shekels in H2 2024. We continue to implement our strategic plan, which includes, among other things, enhancing the liquidity of the companies listed on TAFE. On the last earning call, we announced that Banker Poalim has joined our tailor-made market-making program. Since then, two leading market makers have been selected for Banker Poalim's program, which began operating on June 10th. 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 10th, 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 January 5th, 2026. Also, we launched at the end of July as part of our preparation toward transitioning to Monday to Friday trading a better version of the AI power software that translate company reports into English. Initially, the reports of companies included in the TA125 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 indices AUM at the end of Q2 2025 amounted to 121 billion shekels, and revenues in H1 2025 amounted to 14.4 million shekels. 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 2025 point to the resilience of states 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. And now, I'd like to hand over to Mr. Yehuda Ben Ezra, who will continue with a review of the second quarter results.

Thank you, Yultai. Test poster from financial results for Q2 2025 and first half of 2025. These record results, once again in all our business lines and core activities. These 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 136.1 million shekels. Our adjusted EBITDA at 71.6 million shekels also set a new record, bringing our adjusted EBITDA margin to a record 52.6%. Our adjusted net profit increased to a new record of 44.4 million shekels, a 73% record, increased over the same quarter last year. I will continue with slide 11, which shows some of the key highlights. from our results for the first half of 2025. Our total revenues amounted to 267.1 million shekels, a 25% increase compared to the same period last year. Our adjusted EBITDA totaled 133.5 million shekels, 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 81.2 million shekels compared to 53.5 million shekels 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 totalled 136.1 billion shekels compared to 105.1 billion shekels in the same quarter last year, an increase of 29%, with growth evident across all activities. Our revenues from the non-transactional services were up 1% to reach 64% of total revenues. totaled 80.7 million shekels compared to 74.8 million shekels in the same quarter last year, an increase of 8%. The increase in expenses due mainly to higher computer and communication expenses and depreciation and amortization expenses. Adjusted EBITDA totaled 71.6 million shekels compared to 45.8 million shekels in the same quarter last year, an increase of 56%. The increase is due mainly to the higher revenues. Net profit amounted to 43.6 million shekels compared to 24.3 million shekels 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 0.478 shekels 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 2025. Revenue from trading and clearing commissions increased by 26% compared to the same quarter last year and totaled 49.1 million shekels. 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, a total of 25.1 million shekels. The increase is due mainly to revenue from annual levies as a result of the increase in the number of companies and funds paying an annual levy. 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 35.2 million shekels. 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. A total of 26.3 million shekels. The increase is due to an increase in revenue from 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 2025 expenses. Improved value set expenses increased by 2% compared to the same quarter last year, totaling 40.1 million shekels. 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 total 12.5 million shekels. 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 total 0.8 million shekels. Most of the increases mainly due to the timing of campaigns. Other operating expenses increased by 56% and totaled 1.6 million shekels. 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 15.2 million shekels. The increase is due mainly to new projects and new investments in software and license. Net financing income totaled 1.2 million shekels compared to financing income of two million shekels 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 US dollar exchange rate. And most partially offset by gains for back-to-bill securities. Let's go now to slide 16, where we can review our financial position at the end of Q2 2025. Our equity totaled 584.4 million shekels Our adjusted equity includes deferred income from listing fees and represented 74% of the adjusted balance sheet, excluding upper derivatives or position balances. We had 377.1 million shekels in cash and investment financial assets. The balance of bank loan totaled 112.3 million shekels. The surplus equity of the regulatory requirement totaled 449 million shekels compared to 627 million shekels at the end of 2024. The surplus liquidity of regulatory requirements totaled 157 million shekels compared to 172 million shekels at the end of 2024. The decrease in 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. I will continue with slide 17 where we can review our Q2 cash flow highlights. Cash flow from investing activities resulted in negative cash flow of 11.9 million shekels compared to negative cash flow of 9.5 million shekels 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 13.1 compared to negative cash flow of 14.8 million shekels in the same quarter last year. The change is due to the repayment of a bank loan in an amount of 1.7 million shekels. Debt-free cash flows increased by 42 million shekels compared to the same quarter last year and totaled 50.3 million shekels. The increase was due mainly to the increase in the EBITDA. And with that, I will return the call to our moderator to conduct Thank you.