Ladies and gentlemen, thank you for standing by. Welcome to the Tel Aviv Stock Exchange Q3 2023 Results Conference Call. All participants are at present in a 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 21st, 2023 .
The recording will be publicly available on TASE's website. With us on the line today are Mr. Ittai Ben-Zeev, CEO, and Mr. Yehuda Ben-Ezra, CFO. Before I turn the call over to Mr. Ittai 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 third quarter of 2023, 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.tase.co.il/en. Mr. Ben-Zeev, would you like to begin?
Good evening, Israel time, everyone, and thank you for joining us today in our earnings call. TASE concludes another strong quarter, marked by continued and sustained organic growth in both revenue and profit across all core activities. But before I address the quarter, it is impossible not to address the tragic events that happened on October seventh in Israel. On Black Saturday, Hamas terrorists committed horrific acts against civilians on our southern border, murdering over 1,300 women, men, and children, and kidnapping 240 hostages. This represents the most brutal attack on Israel since its establishment. While the entire nation and many friends around the world grieve, Israel is fighting a war that has been imposed on us to rescue the hostages and make sure that such atrocities can never happen again.
Our thoughts are with the fallen, and we pray for the safe return of all hostages. Despite these tragic events and the state of emergency we are facing, TASE continues to support the proper operation and functioning of all of our markets. TASE is well prepared for such circumstances and is able to function well during such extreme events. Following the October 7 attack, we swiftly mobilized to ensure the opening of the market on the 8th, while maintaining the safety and security of our employees. While a number of members of our staff were drafted, the remaining staff are filling the gap and are doing all that is needed to ensure the smooth functioning of the market. We expect this mode of operation to continue throughout this challenging period. And now, I would like to briefly discuss our operational and financial results for the third quarter.
Net profit for the quarter was ILS 18.2 million, up from ILS 8.7 million in the corresponding quarter last year. This represents a 109% increase from the corresponding quarter last year. Revenues for the quarter totaled ILS 95.5 million, up 11% from the corresponding quarter last year. We saw revenue growth across all of our activities, despite having the same number of trading days as in the corresponding quarter of last year. Adjusted EBITDA for the quarter grew by 26% relative to Q3 2022, from ILS 30.5 million- ILS 38.4 million. Our CFO will provide a detailed discussion of the financial statements later. Since the outbreak of the war, the Israeli government has significantly increased its debt issuance in order to fund the wartime expenses.
In view of the high cost of debt issuance on global markets, most of the debt was raised on the Tel Aviv Stock Exchange, with a strong response by Israeli institutional investors. So far, the debt issuance has been very successful, totaling ILS 8.4 billion in October, with another large issuance of ILS 14 billion planned in November, compared to a monthly average of ILS 5.6 billion from January to September 2023. T-bills issuance since the beginning of the war totaled ILS 68 billion, on top of the ILS 304 billion raised since the beginning of the year until the end of September. The average daily trading volume of T-bills reached ILS 1.7 billion since the outset of the war, compared to an average of ILS 1.4 billion from January to September.
In the wake of the war, some foreign investors and retail investors pulled out of our equity market, and we saw a decline in equity indices. However, the decline was nowhere near the level experienced at the beginning of the COVID-19 pandemic. This is a testament of the financial maturity of the Israeli retail investors. Local institutional investors used the opportunity to access local shares at a more attractive valuation and increase their exposure to the Israeli equity market by ILS 2.9 billion. This is on top of the ILS 3.1 billion increase in their holdings in the first nine months of the year. For the first time since the beginning of the year, in November, retail investors renewed their purchases of mutual funds on local shares.
Also, we are seeing in November, a more positive response from the foreign investors, most notable of which is Novo Nordisk's announcement of becoming an interested party in the TASE share within 8.5% holding. Share trading volumes increased to an average of ILS 2.2 billion since the beginning of the war to date, compared to an average of ILS 2 billion in the first nine months of the year. Bond ADV, since October 7, also increased to ILS 4.3 billion, up from ILS 3.7 billion, January to September. As you may recall, in the first nine months of the year, TASE leading equity indices underperformed their international counterparts, likely as a result of the uncertainty surrounding the government-proposed judicial reform.
In our previous calls, I mentioned the upcoming TASE indices reform, and now I'm pleased to announce its successful launch in early November. On the index rebalancing date, trading volumes were strong, and we are confident that the reform will improve the indices and boost their AUM, significantly enhancing liquidity for both the companies and the capital market. The reform in the bond market is also gaining traction. Starting December third, the minimum order size will be reduced for government bonds, corporate bonds, and T-bills, following the successful reduction of the minimum order size for shares last year. We have also improved the public access to CoCo bonds by reducing the minimum order size and by allowing credit card companies to issue CoCo bonds alongside the banks and insurance companies.
These moves are aligned with international standards, and we are intended to increase the public's involvement and enhance liquidity to help boost the trading volumes. I'm also pleased to announce that as part of our strategy to increase foreign investors' activity and increase the number of TASE members, today, we approved Clearstream Banking S.A. as a CSD custodial member of the TASE Clearing House. This is another important step in TASE efforts to enhance diversification, competition, and global access to trading in Israeli securities. Finally, I would like to update you on the status of TASE buyback plans. Since the initiation of the buyback in May 2022, TASE purchased a total of 10.2 million shares at an average price per share of ILS 18.25, about ILS 186 million in total, representing 9.9% of the company's issued share capital.
This concludes our approved buyback plans. TASE has surplus liquidity of ILS 195 million, strong financial performance, organic growth, and a steady cash inflow, as also demonstrated this quarter. We believe that these provide a solid foundation for additional buybacks. Accordingly, the board of directors has instructed the management to present a buyback by way of a tender offer of ILS 50 million. It will be presented to the board of directors for approval in the coming weeks. In conclusion, the stability and continuity of TASE constitute a strong anchor for Israel capital markets during times of calm, as well as in times of challenges. We continue to pursue our strategy, identifying new growth opportunities and carefully managing risk. And now, I'd like to hand over to Mr. Yehuda Ben-Ezra, our CFO, who will provide a detailed review of the Q3 results.
Thank you, Ittai. In the current quarter, we continued to achieve strong financial results, with total revenues of ILS 95.5 million. Our revenues increased by 11% compared to the corresponding quarter last year. The Adjusted EBITDA totaled to ILS 38.4 million, marking a significant 26% rise compared to the corresponding quarter last year. Our adjusted net profit experienced substantial growth, reaching ILS 20.1 million, an impressive 127% increase compared to the ILS 8.8 million in the corresponding quarter last year. In the first nine months of 2023, we continue with the strong financial results. Total revenue amounted to ILS 288.4 million, an increase of 5%. Excluding the non-recurring effects in the corresponding period last year, the increase in the revenue totaled 7%.
The Adjusted EBITDA in the first nine months of 2023 reached a record high of ILS 170.5 million, representing a 14% increase compared to the corresponding period last year. The adjusted EBITDA margin significantly improved, rising to 40.7%, compared to 37.5% in the corresponding period last year. The adjusted profit in the first nine months of 2023 totaled ILS 66.6 million, compared to ILS 38 million in the corresponding period last year. Significant increase of 75%. I will begin with Slide number 5, which shows some of the key highlights from our results of the third quarter. Revenues from services totaled to ILS 95.5 million, compared to revenue of ILS 86 million in the corresponding quarter last year, an increase of 11%.
The increase in revenue is across all operations, with 7% of the increase from non-transactional services and 4% from the increase in transactional services. Our income from non-transactional services are 61% from our total revenue, similar to the corresponding quarter last year. Adjusted expenses totaled ILS 70.2 million, compared to ILS 68.7 million in the corresponding quarter last year, an increase of 2%. The increase in the cost is due mainly from employee benefit expenses and computer and communication expenses, which was partly offset by a decrease in the marketing expenses. The Adjusted EBITDA totaled ILS 38.4 million, compared to ILS 30.5 million in the corresponding quarter last year, an increase of 26%. The increase is due to an increase in revenue.
The adjusted EBITDA margin increased to 40.2%, compared to 35.5% in the corresponding quarter last year. Financing incomes totaled ILS 2 million, compared to financing expenses of ILS 4.1 million in the corresponding quarter last year. The increase is a result of the positive return on the company investment in market-based securities, as well as from the rising interest on the company deposits. The adjusted net profit increased significantly, and amounted to ILS 21 million, compared to ILS 8.8 million in the corresponding quarter last year, an increase of 127%. The increase is due mainly to an increase in revenue and the transition to financing income. After going over the highlights of our financial results, let's take a deeper look at the composition of our revenues. Let's go to Slide number 7.
Revenue from trading and clearing commission increased by 11%, despite having the same number of trading days as in the corresponding quarter of last year, and totaled ILS 36.9 million shekels. The increase is due to the 4% increase in revenue from T-bills inter alia, as a result of higher trading volumes, the increase in T-bills issuance, and the cancellation of the maximum commission on OTC transactions, and 4% increase in revenue from mutual funds, and to the 2% increase from trading volume of derivatives. Revenue from listing fees and annual levies increased by 3% compared to the corresponding quarter last year, a total of ILS 20.5 million shekels. The increase is due to increase in revenue from the annual levies at a rate of 2%, and to an increase in revenue from listing fees at a rate of 1%.
Revenue from clearing house services increased by 10% compared to the corresponding quarter last year, totaling ILS 19.2 million. The increase is due to a 6% rise in clearing house services to members, with close to half of this rise is from the expansion of the services in relation to information on OTC transactions. Another 3% increase is due to an increase in clearing house services to the companies. Revenue from distribution of data and connectivity services increased by 26% compared to the corresponding quarter last year, and total ILS 18.1 million. 12% of the increase is due to the updating of the index usage price list, and 5% of the increase is due to revenue from data terminals for customers outside Israel. I will now discuss our expenses in the third quarter of 2023.
Please go to Slide number 9. The expenses related to employee benefits increased by 11% and total ILS 38.1 million. The increase in expenses mainly result from increase in variable compensation and salaries. Computer and communication expenses increased by 39% compared to the corresponding quarter last year, and total ILS 10.2 million. The increase resulted mainly from increase in the maintenance cost of new computer systems, manpower costs, and project costs. Marketing expenses decreased by 81% compared to the corresponding quarter last year, and total ILS 0.8 million. The expenses are affected mainly by the timing of the performance of the group marketing activities. No campaigns were launched this quarter. Fee to the Israel Securities Authority decreased by 48% compared to the corresponding quarter last year, and totaled ILS 1.2 million.
The decrease reflects the effect of the approval by the Knesset Finance Committee in July 2023, of the reduction of fee by an additional 15%, with retroactive effect from the beginning of the year. Financing incomes totaled ILS 2 million compared to financing expenses of ILS 4.1 million in the corresponding quarters last year. The increase is due mainly to the transition to financing income as a result of the positive return on the company's investment in market-based securities, as well as from the rising of the Bank of Israel interest rate, which increased the interest on the company deposits. Now, I will move to the balance sheet. Please go to Slide number 11.
As of September 30th, 2023, our equity totals ILS 615.6 million, and comprises 88% of the balance sheet, excluding open derivatives position balance from our clearinghouse activity in the total deferred income of listing fees. In addition, we have ILS 390 million in cash and investment financial assets. We don't have any financial debt. The excess capital as of September 30th, 2023, totals ILS 537 million compared to ILS 630 million at the end of 2022. The excess liquidity as of September 30th, 2023, is ILS 195 million, compared to ILS 257 million at the end of 2022.
The decrease in the access capital and access liquidity is a result of the buyback where shares, bought shares in amount of ILS 154 million. The board of directors also approved the safety caution, which serve as an additional layer for handling stress analysis and intensification of the board of directors. Now, I would like to review our cash flow highlights. Please go to Slide number 12. Tax-free cash flow increased by ILS 7.9 million compared to the corresponding quarter last year, and totaled ILS 17.5 million.
The increase is mainly from operation performance that increased in ILS 9.2 million. Cash flow from investing activities totaled to ILS 98.3 million, compared to negative cash flow of ILS 10 million in the corresponding quarter last year. The increase is mainly from the realization of the company's investment in government bonds, totaled to ILS 107 million. With that, I will turn the call back to 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 one. If you wish to cancel your request, please press star two. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be polled in the order they are received. Please stand by while we poll for your questions. The first question is from Dan Shannon of Jefferies. Please go ahead.
Thanks. Good evening, gentlemen. To start, I just want to say our thoughts are with you and all the TASE employees during this period. For my first question, was hoping to discuss how maybe your growth priorities and then your kind of investment dollars around that are, have changed, or as you think about the current environment, or you think, you know, some of the demand trends might evolve given the current backdrop.
Hi, Dan, and thank you very, thank you very much for your warm words. Actually, we don't see any change in our growth prospect. In a way, I even think that, you know, as part of what the country is going through, once things will be a little bit more stable, people will have a better understanding how much is important to have a solid capital market and to strengthen our economy.
So I believe that maybe on some initiatives that we want to do, you know, with the government and regulators, it will be easier. But when you view everything that we are dealing with, everything is in place, and we believe that we will continue to grow our business in all of our segments in the next few years. So we don't anticipate, at the moment, to see any changes because of the situation.
Great. And I was hoping you could expand. You mentioned a couple of different things around activity, both from the retail as well as the international participants since November. I was hoping you could expand upon that or even reiterate some of those comments, to think about what the health of the market and maybe what is slightly different in terms of the day-to-day activity.
Sure. So if you look at March 2020, when the COVID actually came to our market, there was ILS 43 billion that was pulled away from our market by the Israeli retail investors. ILS 43 billion. And obviously, the Israeli institutions and some foreign institutions came in and took advantage of the situation. Right now, you know, no one in Israel expected, you know, the brutal attack that took place, and we see. We did see some mutual funds, some Israeli retail investors pulled away, but it was, you know, on a very, very low scale. So when you look at it, and you know, the COVID was something which was global. The Hamas attack is only against Israel, at least at the moment.
So we see the maturity and the understanding of the Israeli public that it's not wise to do changes when extreme market condition is. We are also aware that the Israeli public understands that because of the proposed judicial reform, our indices underperform, so we actually enter this situation when our markets are relatively low. So there is a much broader and deeper understanding of the public, and this is part of, you know, the marketing, the education, everything that we are doing in place. You also see that we have more brokers coming in, so we have more competition. On the international investors, we did see some of them selling. Again, not big numbers, but we did see at the beginning, some of them selling.
But in the past two weeks, we are seeing that on net basis, the international institutions are buying equities. And if you compare the general PEs on many of our public companies relatively to other markets, we are still relatively cheap. So I think overall, you know, from the macro perspective, as long as this war doesn't expand to the north border and having other players involved, and let the economics play, there's plenty of room to grow in our market.
Thank you. That's very helpful. And then just on spending and expenses, as you think about 2024, is there much change in terms of how you're allocating dollars? Marketing spend continues to be... I guess I should say, this quarter was below what we were modeling, but as you think about the budget for next year and, and the outlook for that, is that something where you would see that, you, you think there's growth or, we should, we can see that more at, at lower levels?
Well, I would say that, you know, given the current situation, obviously it has effect on the marketing. So also in the fourth quarter, there won't be any substantial expense of marketing. So clearly, 2023, marketing expense will be far below what we did in 2022. I mean, we haven't started budgeting 2024, and still there's many things happening in Israel that can make changes. But, I don't see the marketing in 2024 being a higher number than what we did in 2022, but we still haven't started to work on the budget of 2024.
Okay. And then on, I heard you on the buyback authorization or the proposal that you'll be bringing to the board, will there be a term or a duration to the ILS 50 million, or is that something that will be open-ended?
Because it will be as a tender offer, according to regulation, it will be a certain period, a certain time that every shareholder has the possibility to access the plan and sell his shares in the price that we will decide together with the board of management, and we plan to do it in the next few weeks.
Understood. And then a follow-up question on just Clearstream, will they be a remote member? Are they a full member of the exchange? Just curious as to what that relationship looks like versus some of the other international ones that you've done in the past.
So they are a custodian member, the same way that Euroclear became a custodian member a few years ago. By the way, what happened with Clearstream, and we discussed it in the past, that, you know, because of the COVID, some of our business development initiatives were put on hold because the COVID made a lot of changes in many organizations. And basically, once the COVID ended, we resumed a lot of our talks with various institutions around the world, and I believe that over time, we'll see more international institutions that will be members one way or another. For us, it's very important because to have Euroclear and now Clearstream, I think, you know, it's a great thing for our exchange.
Great. Thank you for taking all my questions.
Thank you very much, Dan.
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 poll for more questions. There are no further questions at this time. Thank you. This concludes the Tel Aviv Stock Exchange Q3 2023 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.