Ladies and gentlemen, thank you for standing by. Welcome to the Tel Aviv Stock Exchange Q2 2024 Results Conference Call. All participants are at present in a listen-only mode. Following management's 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 seventh, twenty twenty-four. 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 the interim report of the second 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 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 the 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. I'm happy to host you in our earnings call. We conclude Q2 2024 with strong performance in all TASE core activities and further organic growth, with this all being against the backdrop of the October 7 war. We have witnessed significant growth in our quarterly revenues, which are up 13% on the same quarter last year, and a 29% increase in adjusted EBITDA. Our EBITDA margin rose to 44%, and adjusted net profit also increased. Yehuda Ben-Ezra, our CFO, will discuss the financial statements in detail later in this call.
Despite the country still being in the midst of the war, the TA-125 index rose by 3.5% in H1 2024, similar to the 3.8% increase in the Dow Jones index and compared to the 14.5% jump in the S&P 500. A rise in prices was also evident in most sectoral indices, particularly the TA-Retail Index, that rose by 13%, and the high tech company indices, the TA-Technology Index and the TA-Global BlueTech Index, which rose by 10% and 9%, respectively, compared to the NASDAQ 100 index, which rose by 17% during the same period.
The equity market cap at the end of the H1 2024 was 1,087 billion ILS, 3% higher than the market cap at the end of 2023, with this resulting from the rise in the TASE equities indices. Compared to 2023, H1 2024 trading volumes in the main trading channels increased significantly. Trading volumes in equities were 8% higher than the average daily trading volume for all of 2023, an average 2.1 billion ILS a day. Trading on the bond market averaged a daily volume of 4.5 billion ILS, 15% more than in 2023. The rise in trading volumes stemmed mainly from government shekel bonds, where the average trading volume amounted to 2.3 billion ILS, compared to an average of 1.9 billion ILS in 2023.
The average daily volume in corporate bonds reached ILS 1.2 billion shekels, a 14% increase compared to 2023. CPI-linked government bonds also recorded greater trading volume, with a daily average of ILS 1 billion shekels, 1% higher than the average daily volume in 2023. The average daily volume in corporate bonds reached ILS 1.1 billion shekels, a 12% increase compared to 2023. Trading volumes in Israel government T-bills were also higher, averaging ILS 1.7 billion shekels daily, 19% more than the average daily volume in 2023. In the mutual fund market, the average daily turnover of creation and redemption rose to ILS 1.8 billion shekels, 28% higher than the average turnover in 2023.
The market cap of the mutual fund at the end of H1 2024 was ILS 375 billion, 14% higher than the market cap at the end of 2023, with this resulting from acquisition of mutual funds and an increase in the value of the fund's assets on TASE. During H1 2024, 3 companies completed an IPO on TASE, compared to just one IPO in all of 2023. In light of the ongoing October 7 war and the increase in the cumulative deficit, the Ministry of Finance continued to raise debt in Q2 2024 too, and issued bonds totaling ILS 124.4 billion in the whole of the first half of 2024, compared to ILS 76.7 billion in the second half of 2023. ILS 95.7 billion of the total issuance were raised on TASE.
We continue to work on implementing the strategic plan to strengthen international activity. As I noted in our last conference call, we published for the first time, in cooperation with the Israel Securities Authority and the Bank of Israel, a call for public comments in relation to the transition to trading on Friday, as are the standards throughout the world. We received very positive feedback from investors in Israel and abroad, and we are currently re-examining all the responses received in order to reach the most fitting solution, both for international investors and for the Israeli capital market. We believe that aligning our trading days with the rest of the world will help to increase accessibility for international investors and to increase their presence in the Israeli capital market.
It is worth noting here, the fruitful cooperation we have with the regulators, who are working with us to promote the Israeli capital market, particularly at this time and under the current circumstances. I'm pleased to be able to report that the Ministerial Committee for Legislation approved the Securitization Law in mid-July, which will allow Securitization Transactions to be conducted in Israel for the first time, similar to the customary global standards. The measure is still expected to be passed by the Knesset, and we hope to be able to see this market's development during 2025. What's more, the Israel Securities Authority recently approved the launch of new fixed date money market funds that will guarantee the public a return in advance, with this being in parallel with the already existing money market funds. This development will enlarge the range of investment products intended for the Israeli public.
In addition, we continue working to introduce the number of new brokerage members in the Israeli capital market, and in this context, I would like to note that at the end of May, Altshuler Shaham Trade began to operate as a member of TASE and as a member of the TASE Clearing House. We are continuing to invest and develop the exclusive indices market, and in June, we launched new indices for the first time with Kesem, the largest ETF company in Israel. We continue to develop new indices so as to increase the range of products intended for the general public, and in mid-July, we announced an additional launch of six new equity and bond indices, some of which are intended to further TASE cooperation with the various manufacturers.
We will carry on investing and working to enlarge a product range as part of our strategic plan to enhance and develop the Israeli capital market, as well as to expand our cooperation in developing and marketing unique indices for specific customers. In conclusion, the Q2 financial statements show that even during this time of war, we are witnessing the importance and resilience of TASE within the Israeli economy. We intend to continue working toward growing TASE and making it more accessible to the world, to keep on investing in infrastructure and technological developments for new products, and to carry on striving to work to achieve the goals we have set for ourselves in accordance with our strategic plan for the coming years. Now, I would like to hand over to Mr. Yehuda Ben-Ezra, who will continue with a review of the Q2 results.
Thank you, Ittai. As Ittai mentioned earlier, despite the complex situation in Israel, TASE has again posted strong financial results for Q2 2024. Some of the main financial metrics are shown in Slide 4. Our revenues for the quarter amounted to ILS 105.1 million, increasing by a record 7% compared to the corresponding quarter last year. Adjusted EBITDA surged by 29% to a total of ILS 45.8 million, while the Adjusted EBITDA margin also improved significantly from 38.3% to 42.6%. Our adjusted net profit experienced substantial growth of 26% and increased to ILS 25.7 million. I will continue with Slide 10, which shows some of the key highlights for our results for the first half of 2024.
In the first half of 2024, we continued to post strong financial results. Total revenue amounted to ILS 213.4 million, an 11% increase compared to the corresponding period last year. Adjusted EBITDA, total ILS 29.4 million, representing a 19% increase over the corresponding period last year. The adjusted EBITDA margin significantly improved to 44.2%, compared to 41% in the corresponding period last year. Adjusted net profit totaled ILS 53.5 million, compared to ILS 46.5 million, the corresponding period last year, significant increase of 15%. I will continue with Slide number 6, which shows some of the key highlights from our results for the second quarter.
Revenue amounted to ILS 105.1 million, compared to ILS 92.9 million, the corresponding quarter last year, a 30% increase, which was evident across all operations. Our revenue from non-production services increased by 1% to 63% of the total revenues. Adjusted expenses totaled ILS 73.4 million, compared to ILS 70.9 million in the corresponding quarter last year, a 3% increase. The increase in expenses is due mainly to employee benefit expenses and to computer and communication expenses. Adjusted EBITDA totaled ILS 45.8 million, compared to ILS 35.6 million in the corresponding quarter last year, an increase of 29%. The increase is due to higher revenues. The adjusted EBITDA margin improved and rose to 42.6%, compared to 38.2%, the corresponding quarter last year.
Financing income totaled ILS 2 million, compared to financing income of ILS 3.6 million in the corresponding quarter last year, a 50%, 45% decrease. The decrease is due mainly to financing expenses in connection with the bank loan taken in the end of 2023. Adjusted net profit amounted to ILS 25.7 million, compared to ILS 20.4 million in the corresponding quarter last year, 26% increase. The increase is due mainly to higher revenue from services, less the increase in cost and in tax expenses. Now, let's go to Slide number 7, where we can take a deeper look at the composition of our revenue in Q2 2024. Revenues from trading and clearing commissions increased by 9% compared to the corresponding quarter last year and totaled ILS 38.8 million.
The increase is mainly due to an increase in the volume of mutual fund units and an increase in the trading volume of T-bills, which were offset by the lower number of trading days in the quarter and reduction in effective commission rates. Revenue from listing fees and annual levies increased by 8% compared to the corresponding quarter last year, and totaled ILS 21.7 million shekels. 5% of the increase arose from annual levies, while additional 3% is for higher listing fees revenues. Revenues from clearinghouse services increased by 13% compared to the corresponding quarter last year, and totaled ILS 21.5 million shekels. 6% of the increase is due to an increase in revenue from clearing services to companies and funds, while a further 4% of the increase is due to clearing services to members.
The remaining 3% of the increase is due to the rise in the value of the assets held in the custodianship . Revenue from data distribution and connectivity services increased by 27% compared to the corresponding quarter last year, and totaled ILS 22.1 million. 19% of the increase was due to updated the index usage price list, while a further 5% of the increase resulted from higher revenues from data distribution, business, and private customers. The remaining 2% of the increase is due to higher revenues from connectivity services. I would like now to discuss our Q2 2024 expenses, so please refer to Slide number 9. Employee benefit expenses increased by 6% compared to the corresponding quarter last year, and totaled ILS 39.3 million.
The increase in these expenses is due mainly to an increase in variable compensation and the non-utilization of vacation days. Computer communication expenses increased by 17%, and totaled ILS 10.5 million shekels. The increase is due mainly to additional expenses with respect to the license and maintenance of new systems, and to an increase in manpower and projects. Marketing expenses decreased by 73% compared to the corresponding quarter last year, and totaled ILS 0.7 million shekels. The expenses in the quarter include the cost of new campaign launched at the end of the quarter as compared to the campaign launched in the corresponding quarter last year, depreciation and amortization expenses increased by 8% compared to the corresponding quarter last year, a total of ILS 14.1 million shekels. The increase is due mainly to the upgrading of infrastructure and the launch of new products.
Financing income totaled ILS 2 million compared to financing income of ILS 3.6 million in the corresponding quarter last year. Although our financing income for Q2 2024 increased due to interest income on deposits, our financing expenses increased as a result of bank loan taken at the end of 2023. Taken together, this resulted in decrease in the net financing income. I would like now to review our financial position highlights at the end of Q2 2024, as shown in Slide number 14. Our equity totaled ILS 659 million, and comprised 77% of the balance sheet, including open derivatives, position, balance, and total deferred income from listing fees. We had ILS 479 million in cash and investment financial assets. The balance of bank loans totaled ILS 124.9 million.
The surplus equity of regulatory requirement at the end of Q2 2024 totaled ILS 569 million shekels, compared to ILS 318 million shekels at the end of 2023. The increase in surplus equity is almost entirely due to the ILS 242 million shekels in the proceeds received from the sale of the arrangement shares. The consideration received by TASE was carried directly to equity and is being invested in TASE technological infrastructure. The surplus liquidity of the regulatory requirement at the end of Q2 2024 totaled ILS 115 million shekels, compared to ILS 145 million shekels at the end of 2023. I would like now to go Slide number 15, to review our cash flow highlights in Q2 2024.
Cash flow for financing activities resulted in negative cash flow of ILS 14.8 million, compared to negative cash flow of ILS 104.4 million in the corresponding quarter last year. The decrease in negative cash flow is due mainly to payment of, for the acquisition of treasury shares in the corresponding quarter last year. Cash flow from investing activities resulted in negative cash flow of ILS 9.5 million, compared to negative cash flow of ILS 12 million in the corresponding quarter last year. The decrease is due mainly to the lower investment in property and equipment. TASE free cash flow in the second quarter were similar to those in the corresponding quarter last year, and totaled ILS 17.9 million. And with that, I will return the call 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're 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 Daniel Fannon of Jefferies. Please go ahead.
Yeah. Good evening, gentlemen. This is actually Rick Roy on for Dan, and congratulations on another great quarter.
Thank you, Rick.
With that, of course, yeah, and just with that, wanted to start off with the Clearing House. Saw the notice on the updating of the pricing list and, you know, the incremental, sort of revenue addition, based off the 630 AUM levels. I was wondering if you could provide some additional context on how you and/or the consultants kind of came up with these new pricing levels, and, you know, to what extent is it in line with the global peer set?
Well, we took a global consultant who had a lot of data of plenty of clearing houses and exchanges worldwide, and they did a very thorough analysis in what they think is the right benchmark, because as you know, most markets are different from one another. What we've come, you know, after internal discussion and what we publish, will still be lower than the benchmark in the world. But we thought that giving the players that we have in the Israeli market, and giving all of the circumstances, this will be the right balance, so to speak. And as we disclosed on July eighteenth, we basically open it up for comments.
We will conclude all of the comments in the next few days, and then we'll come back to our board, and we'll see how, you know, how we can progress. I think that overall, being a mutual for many years, it is very typical that in certain areas the fee schedule is below what is common knowledge in other markets. We have invested in the past few years on services, on products, to make the Israeli capital market more resilient and more deep. And part of this progress is we want to make sure that we are receiving the revenues that we should receive.
Could you maybe? Oh, sorry, continue.
Yeah, go ahead, Rick.
I was gonna say, if, if you could maybe comment on, in terms of the gap between the global peer set, are you able to comment whether or not, you closed maybe half that length, to where your pricing list is versus, maybe the global peer average or any sort of estimation around that?
It's very difficult to say, you know, after this change is concluded, what will be the gap? There will be still a gap, but, you know, it's like valuation of a company when it's still private, right? You go to 10 different people, and you get 10 different answers, and you have the range. So I can tell you in terms of the range, still it will be lower than global benchmark, but the way we see it, you know, at least we are narrowing the gap between us and the global benchmark. So, this is the way we see it. So I don't have an exact number, what will be the gap, you know, after this process is over.
Understood. Okay, then maybe moving on to the launch of the futures market, which should be on September first, if I'm not mistaken.
Yeah.
Understand that it should be on three indices. Just was wondering if you had more detail on the rollout of future indices and products and product proliferation in general. And then, following that, do you plan or are you offering incentives to members on the exchange to increase utilization of this new market?
Yes. So we have invested in the past few years in our derivatives market, both on the IT and on the marketing side. I have to say that even though the Israeli institutions are active in futures, you know, in the US and other markets, when it comes to the Israeli market, they are active in options, and it's not like they had a demand that we will create a futures market. We thought, you know, this is a very important move also to get global investors active in our derivatives market, and hopefully, along the way, that some of the Israeli players will be active in this market as well. As part of launching this futures market, we do intend to have all kind of programs of market making, volume rebate, and other schemes that are very common in other markets.
It's very difficult for us to estimate what will be the actual traction in the future. We don't know, for example, how many players will switch their activity from the option market to the future market, or maybe they will do more transactions on top of what they do in terms of the option. But as far as we see, we wanna be in a place that everything that you are acquainted with in other global arenas, you will find in the Israeli market, so we will have all of the right value proposition. And we will be launching also a market-making schemes to boost also the liquidity, not only in our derivatives market, but also in our underlying asset in the equity market. This is clearly something that we put a lot of focus currently in our market.
Those rebates on the non-derivatives transactions, those would be incremental to anything you have now? And if so, are you able to quantify maybe an impact to commissions on some of the larger asset classes from that?
Well, everything that we talk about and we plan to do is on top of things that we have, and once we publish a program, we also publish the cost that associated to the program. You know, for example, what we did this year with the derivatives market, after investing in IT and after coming up, you know, with program that is basically incentivize people to do more trade, we also change the multiples. So in a way, you know, some of the future revenues that we are getting by reducing the multiples, we give to the market to boost more liquidity and to get more traction. So in a way, this is, you know, the correlation that we are trying to achieve.
Understood. Yeah, the smaller bite sizes does make sense for expanding the base on that. Then maybe moving on. You mentioned the onboarding of a new member in the quarter. Do you have comments on the outlook for new and/or remote members, you know, prospectively?
Well, we have increased in the past few years the members that we have on the exchange. This particular member is a relatively large investment house, because we have various types in terms of size. So he already has a decent amount of existing clients, so it is up to him to decide, you know, how much he invest in marketing in order to get more traction. But clearly, we are having dialogues with more potential newcomers to our market, both locally and international. We are still far away of being a mature market with respect to all of the players that can be active and can be members.
As I stated in the past, I think that it will take us probably two, three, four years before we'll be in a place that we are mature in terms of having all of the relevant players active in our market.
Understood. But I guess, perhaps, just for the second half of the year, are there any names and/or maybe descriptors whether, you know, a bank member or a non-bank member or a foreign member, that you could disclose or perhaps not?
Not currently, but it cannot be a bank member, because all of the banks are members. So it can be only non-bank.
Understood. Appreciate the correction there. And then, maybe moving on from that onto the financials with spending in general, do you have any changes to your outlook for spending more broadly for the second half of the year? And then maybe taking a step down, more specifically, marketing expenses were light relative to what our expectations were, but also saw the commentary on a new marketing campaign in the quarter. So just wondering, are these dollars, you know, obviously, in an environment where it's probably not as conducive to be marketing, are these being reinvested elsewhere in the organization, or should we expect perhaps an acceleration of marketing and/or other expenses in the second half of the year, or, you know, as the ongoing conflict evolves?
Sure. So, in terms of the marketing, in the second half of 2024, the marketing expense will be higher than what it was in the first six months, but it will be, of course, in line with our budget and what we believe we wanna do. Bear in mind that clearly, you know, what's happening in Israel is causing volatility and causing people to trade in bonds and equity. And we have invested also in our digital platform, and we've come up with a tool, a TASE+, which basically gives people, gives the retail some elements that they cannot get it in other platforms in Israel. So it's important for us to, you know, approach the public in Israel and showing what it can get and utilize from what we have.
And clearly, this is something that we've been hearing in the past couple of years from the public in Israel, saying, "We want you to be more approachable, and you we want your assistance in talking." By the way, it can be with more research, it can be with AI, you know, product solution, it can be across the board. And in terms of a broader aspect, we don't see any change in on the expense side, with respect to what's happening in Israel and regardless of what's happening in Israel. In terms of our business, plan and execution, everything is in line, and there will be no, I would say, bad surprises in that respect.
Okay, understood. Well, I think that's all the questions on my end. Again, good evening, gentlemen, and, you know, I wish you guys to stay safe over there.
Great. 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 poll for more questions. There are no further questions at this time. Thank you for your participation. This concludes the Tel Aviv Stock Exchange Q2 2024 Results Conference Call. You may go ahead and disconnect.