Ladies and gentlemen, thank you for standing by. Welcome to The Tel-Aviv Stock Exchange Q3 2026 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 10th, 2026. The recording will be publicly available on TASE's website. With us online today are Mr. Ittai Ben-Zeev, CEO, and Mr. Alon Solar, 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 2026, 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, the 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. I am happy to host you in our earnings call. We concluded the third quarter of 2026 with strong results across all of TASE's core business lines and activities, with revenue growth increasing 19% year-on-year. We have seen our adjusted EBITDA jump by 32%, pushing our adjusted EBITDA margin up to 60%. TASE's adjusted net profit was up 39% year-on-year. The results reflect the continued expansion of TASE's operations and the growth potential of the Israeli capital market, despite a very challenging geopolitical situation. Alon Solar, our CFO, will discuss the financial statements in detail later in this call. The third quarter of 2026 was characterized by high volatility against the backdrop of security developments in Israel and the global market trends. Nevertheless, the domestic capital market continued to display resilience.
The TA-35 and TA-125 indices ended the third quarter on a positive trend, and their performance has continued to stand out among the world's leading indices since the beginning of 2026. Overall, the performance of the leading stock indices was positive in the first nine months of 2026, with the TA-35 index and the TA-125 index rising by 15.8% and 11.2% respectively, compared to increases of 7.2% and 12.7% in the Dow Jones and S&P 500 indices respectively. TASE's equity market cap was valued at ILS 3.1 trillion at the end of Q3, compared to ILS 1.8 trillion at the end of the same quarter last year, and ILS 2 trillion at the end of 2025. In addition to the performance of the indices, we continue to see significant growth in the trading activity.
Average daily trading volume in the equities market rose to ILS 5.2 billion in the first nine months of 2026, up from ILS 3.4 billion in 2025, a 52.4% increase. Among the factors that supported the growth in trading volumes was the switch to Monday-to-Friday trading and strengthened activity with foreign investors, which rose from 28% in 2025 to 32% in the first nine months of 2026. The average daily volume on Fridays amounted to ILS 4 billion in the first nine months of 2026, compared to only ILS 1.6 billion on Sundays in 2025, a 150% increase. At the same time, the foreign investors' share of trading increased from 12.5% on Sundays in 2025 to 40% on Fridays at the end of Q3 2026. The IPO market also continues to be robust.
During the third quarter, six new companies performed IPOs, bringing the total for the first nine months of 2026 to 21 new companies that together raised ILS 7.8 billion. Compared to 17 companies in the same period last year that raised ILS 3.8 billion, a 107% increase. In addition, since the beginning of the year, five more companies have dual-listed on TASE. The total raised on the equities market during the first nine months of 2026 amounted to ILS 22 billion, up from ILS 15.2 billion in the same period last year. The bond market also continued to be active, with six new companies joining, with ILS 6.8 billion in bond issuance during the third quarter. This brings the number of new companies joining the bond market since the beginning of the year to 18, while the debt raised by all these companies together totaled ILS 9 billion.
Since the start of the year, the whole business sector of the corporate bond market raised a total amount of ILS 136 billion, compared to ILS 126 billion in the same period last year. At the same time, the Ministry of Finance raised a further ILS 23.2 billion in Israel during the third quarter of 2026, compared to ILS 29.5 billion in the same period last year. Since the beginning of 2026, the Ministry of Finance has raised ILS 112 billion on TASE through government bonds, 2% less than in the same period last year. The bond market trading volumes also increased, and at the end of September, the daily average had risen to ILS 5.7 billion, compared to an average daily trading volume of ILS 4.5 billion in the same period last year, a 26.5% increase.
Activity on the bond market was also impacted by the change of days comprising TASE trading week. The average daily trading volume on Fridays during the first nine months of 2026 was 39% higher than the average daily trading volume recorded for Sundays in 2025. The greatest increase was seen in government bonds, where the average daily trading volume on Fridays was 65% higher than the average daily trading volume on Sundays in 2025. Overall, for the first nine months of 2026, we have seen a continuation of the clear trend of increasing Israeli public involvement in the capital market. During the period, approximately 155,000 new securities accounts were opened by retail investors. This trend is also reflected in the composition of the public's financial assets portfolio. Following the successful implementation of the previous strategic plan, in September, we unveiled the strategic plan for 2027 to 2031.
The new plan is based on strengthening core operations and focuses on accelerating growth, upgrading technological capabilities, diversifying revenue sources, and strengthening TASE's access to international markets. The growth in trading volumes and liquidity, and the broadening of the investor base, provide a solid foundation for the next growth phase. Some of the key measures in the plan are the improvement of trading and the strengthening of liquidity in equities and bonds, expanding access for international investors, including examining the possibility of dual-currency trading and extending trading hours, expanding foreign exchange clearing and upgrading the trading and clearing infrastructures, and enlarging the data connectivity and digital services operations, alongside developing new products and growing the customer base. Another prong of the plan is the expansion of strategic collaborations in Israel and abroad.
As part of this, we intend to adapt our corporate structure to what is commonly adopted by the world's leading exchanges. We are doing this with the aim of creating a more flexible and efficient structure, which will allow us to develop new activities, establish partnership, and explore additional growth opportunities while maintaining the required separation from TASE's regulated activities. We believe that implementation of the plan will allow us to accelerate the pace of growth, and we are aiming for an organic CAGR in revenues of 15%-18% over the five years of the plan. Along with the strategic plan, we are continuing to promote a series of measures that support the directions of growth we have set for ourselves. We continue to work on enlarging the number of TASE members and on strengthening competition on the Israeli capital market.
In July, as I mentioned in our last call, we received a new request for TASE membership from a local applicant. In October, yet another new application was received. There are currently 25 active TASE members, and we are in regular contact with several international entities that are considering becoming TASE members. Expanding the TASE membership base with new Israeli and international members is part of our strategy for strengthening competition, expanding access to the Israeli capital market, and supporting our continued activity growth. At the same time, we are continuing to work on enhancing the liquidity of TASE-listed equities. During the third quarter, three more companies joined our tailor-made program. Recently, Bank Leumi and Bank Mizrahi joined Bank Hapoalim in opting to extend its participation in the program for a further year.
The program's continued expansion reflects the demand from companies for solutions that support the liquidity and marketability of their securities. Additionally, and for the first time, we have engaged two market makers to trade in two series of government bonds linked to the dollar and euro, which are issued by the State of Israel abroad and are also traded simultaneously on TASE. In light of the success of this measure, the Ministry of Finance has listed four additional series for dual trading. From our perspective, this is a further step in expanding TASE's product range, in bolstering liquidity and Israeli public access to international government bonds at low cost and in local currency.
Further to the update I provided in our last conference call regarding the ILS 150 million buyback program that was approved by the board, I am pleased to inform you that in September, we closed out the program, having bought 1.2 million company shares for a total of ILS 150 million. In conclusion, we are ending the quarter with strong results, market activity that is growing, and a strategic plan that clearly defines TASE's continuing growth. We have a strong foundation, distinct growth engines, and significant potential to continue generating value for our shareholders and for the entire Israeli capital market. Now, I'd like to hand over to Mr. Alon Solar, our CFO, who will continue with a review of the third quarter results.
Thank you, Ittai. As Ittai has already mentioned, TASE's third quarter results continue to reflect the positive momentum in the company's business activity and its ongoing growth. The first nine months of 2026 were marked by record results, with revenues reaching new highs across all lines of business. Throughout this period, including the third quarter, TASE has demonstrated resilience even as Israel faced an extended multi-front conflict. I will continue with slide six, which shows some of the key highlights from our results for the third quarter of 2026. Our revenues totaled ILS 175.3 million, increasing by 19% compared to the same quarter last year. Adjusted EBITDA improved significantly by 32% to ILS 105.4 million, while the adjusted EBITDA margin also improved from 54.1% to 60.1%. Adjusted net profit displayed substantial growth of 39% and totaled ILS 70.3 million.
Our basic EPS reached ILS 0.73, increasing by 33% compared to the same quarter last year. Some of the key highlights from our results for the first nine months of 2026. Our revenues reached a new high of ILS 544 million, increasing by 31% compared to the same period last year. Adjusted EBITDA improved significantly by 58% to record ILS 335.5 million, while the adjusted EBITDA margin also improved from 51.4% to 61.7%. Our adjusted net profit displayed substantial growth of 74%, increasing to a new record of ILS 229.2 million. Let's move on to slide seven, which shows some of the key highlights from our results for the third quarter. Revenues amounted to ILS 175.3 million compared to ILS 147.1 million in the same quarter last year, an increase of 19%.
Costs totaled ILS 87.6 million compared to ILS 84.5 million in the same quarter last year, an increase of 4%. The increase was due mainly to the increase in employee benefit expenses and share-based payment expenses. Adjusted EBITDA totaled ILS 105.4 million compared to ILS 79.5 million in the same quarter last year, an increase of 32%. The increase is due mainly to the higher revenues. Net profit amounted to ILS 70.3 million compared to ILS 50.7 million in the same quarter last year, an increase of 39%. The increase is due mainly to the increase in revenue from services, which was partially offset by the increase in costs and tax expenses. Moving on to slide nine, we can take a deeper look into our third-quarter revenues. Revenues from trading and clearing commission increased by 13% compared to the same quarter last year and totaled ILS 61 million.
The increase is mainly due to the higher trading volume, mainly in shares and in the volume of creations and redemptions of mutual funds units. Revenues from listing fees and annual levies increased by 9% compared to the same quarter last year and totaled ILS 27.8 million. The increase is due to revenues from annual levies, mainly as a result of the increase in the number of companies and funds. In addition, revenues from listing fees were also higher. Revenues from clearing house services increased by 41% compared to the same quarter last year and totaled ILS 55.6 million.
The increase is due to higher revenues from services to members, mainly as a result of the higher volumes of activity, and also due to an increase in revenue from custodian fees as a result of an increase in the value of the assets that are held in custodianship, and to an increase in the average commission rates. Revenues from data distribution and connectivity services increased by 11% compared to the same quarter last year and totaled ILS 30.6 million. The increase is mainly due to higher revenues from TASE index licenses. I will continue with slide 12, which relates to some of our third-quarter expenses. Employee benefit expenses increased by 5% compared to the same quarter last year and totaled ILS 44 million. The increase is mainly due to an increase in payroll expenses and overtime. Fee to the Israel Securities Authority increased by 15% to ILS 3.1 million.
The increase is due mainly to the linkage of the fee to the CPI and to a discount provided in the same period last year. Other operating expenses increased by 11% to ILS 2.7 million. Most of the increase is due to expenses related to international clearing. Net financing income totaled ILS 1.7 million compared to net financing income of ILS 2.6 million in the same quarter last year. The decrease is due mainly to lower returns on marketable securities and lower interest income from deposits. This was partially offset by lower interest expenses on the loan and higher income resulting from NIS/USD exchange rate fluctuations. Let's now go to slide 19, where we can review our financial position as of September 30, 2026. Our equity totaled ILS 587 million.
Our adjusted equity, which includes deferred income from listing fees, represents 75% of the adjusted balance sheet, excluding open derivatives position balances. We held ILS 394 million in cash and marketable securities. The balance of the bank loan totaled ILS 58 million. Our surplus equity over regulatory requirements totaled ILS 481 million compared to ILS 550 million at the end of 2025. The decrease in the surplus equity is mainly due to the share buyback completed in September 2026 in an amount of ILS 150 million, as well as dividend payment of ILS 144.8 million in March 2026. This decrease was partially offset by the profit recognized in the period. The surplus liquidity over regulatory requirements totaled ILS 236 million compared to ILS 310 million at the end of 2025. Lastly, let's look at slide 20, where we can review our third-quarter cash flow highlights.
Cash flow for investing activities resulted in negative cash flows of ILS 20.1 million compared to negative cash flows of ILS 12.9 million in the same quarter last year. The increase is due mainly to large investment in equipment and intangible assets. Cash flow from financing activities resulted in negative cash flows of ILS 163.5 million, compared to negative cash flows of ILS 13.1 million in the same quarter last year. The increase is due mainly to the share buyback executed in the third quarter of 2026 in an amount of ILS 150 million. TASE's free cash flow decreased by ILS 1.4 million compared to the same quarter last year, and totaled ILS 60.4 million. The decrease was mainly due to larger investments in equipment and intangible assets.
In conclusion, TASE's strong performance in the first nine months and the third quarter of 2026 demonstrates its solid foundations, as well as the fundamental resilience and growth potential of the Israeli economy. 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 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 Fannon of Jefferies. Please go ahead.
Thanks. Good evening, gentlemen. Wanted to start with the strategic plan, Ittai. If you could just break down or just talk about what the building blocks of that growth from a revenue perspective is over the next couple of years, and what gives you confidence in your ability to achieve that after what has been obviously a very strong kind of growth in revenues the last several years?
Yeah. Hi, Dan. As we put the slides when we issued our strategic plan, we showed that basically in the past decade, a significant amount of money was being invested through the exchange in equities, bonds, government, and corporate bonds. We have a high saving rate in Israel. The Israeli institutions have a lot of money that they need to invest in Israel and overseas. We have also a growing hedge fund community, which created a lot of AUM in the past few years. And of course, the retail. If you look at the amount of cash that is just being in cash accounts within the Israeli bank not being invested, and you compare it to the GDP of the country, there is a very significant portion of money that can be deployed.
Once you have a functioning exchange and the ingredients of the market and our economy the way it is, by definition, this growth will be deployed within the exchange. We believe that probably 8%, 9%, 10% of the growth will be actually part of the growing market that we have. On top of it, we have made and issued plenty of services and products that, by definition, it takes time for them to fully be exercised throughout the whole market. If you look, for example, at the Trading at Last premium order that we issued, traders use this order on a daily basis, equities, bonds, and T-bills. But as time passes by, more and more people, more and more players and traders use this order premium. The same applies for futures, and the same applies for data products.
We believe that we will have additional 3%, 4%, 5% that the business will grow in the next few years, just by the fact that not everything that we already did is fully matured in what we are doing. And bear in mind that we have all of our assets in our platform, so we are enjoying a compounding effect. Once you have more trading, people will use more clearing, more settlement, more data, and more connectivity. And the third pillar is that we plan to issue, and I gave a list of some of the ideas that we are now examining together with the market, but in the next couple of years, we will come with new products and new services that, by definition, will enlarge our revenue base 2%, 3%, 4%.
The total of those three pillars, we feel comfortable with the organic number of 15%-18% going forward.
Thank you. That's very helpful. Then, you highlighted in your prepared remarks the benefits of the transition to Monday to Friday and what that's meant for volumes. Can you talk about where you think you are, or what is left to potentially benefit from that shift? If you think that as you roll into 2027, there will be incremental, whether it's more international or just more people being more comfortable trading during those times. How to think about what could still be as additive as a result of that change?
Yeah, I think that it was a very important move because it signaled the world that we are part of the world. When you look at the large exchanges, you see all of the relevant players active in those markets. The dialogue that we are having with institutional international investors and also with international market-making and other players, it's very obvious that despite the fact that you cannot compare of the level and diversification of activity that we have today compared to, let's say, five years ago, by all means, we are still far away of capturing all of the relevant players worldwide to be active in our market.
Now, it is true that we are at all-time high of international investors active in our market, and most of them comes from United States, but not all of anybody that can trade from the U.S. is still operate in our market. Also, we've seen in the past few months, we've had the two Israeli public companies delegation that we did with two different investment banks, and we've never seen actually so much interest to invest from Europe through London as we see today. I actually think that it will take us a couple of years before we can fully capture all of the possibilities, and also the Eastern Hemisphere of the world. We have some trading from there, but relatively, it's small figures. We believe that as longer our leading indices will perform well, it will help us to generate more flow.
Of course, we hope at some point to be inclusive in MSCI Europe. A few years ago, when the formal answer that we received was that we are trading Sunday to Thursday, and this is not according to global standards. We hope, when the right time comes, and we approach them, we will get a positive answer, and then we'll be included, and then for sure, it will bring more passive flow to the market and active. I would say that we are still far away from fully maximizing the opportunity of the switch to Monday to Friday.
Understood. You also mentioned you have 25 active members of the exchange, and you're in dialogue, I think, with a handful of others. Can you maybe just talk about the difference between members and non-members, and when we think about the revenue potential of adding new active members, what that means, or how to think about that?
Well, the way to think about it is, if in the old days nobody wanted to be an exchange member because they say, "There's not enough activity," and most of the activity is being conducted in terms of retail on the banks, it took us some time, but now everybody understand that the retail participation grew from 5%, 6% out of the total market to 12%, and we are seeing a lot of retail accounts that are being opened. So more and more potential members understand that there is a lot of business there because the spreads, the fees that the banks are charging from the retail is much higher than what the brokers are charging. By being an exchange member, you can give more services over time to your clients.
So, in a way, it's a revolution that took place in other Western markets 20, 30 years ago, but now we are in the middle of it. The fact that we'll have more exchange members doesn't impact the revenues because it's a very small income for us, but it brings more competition on the retail, it creates more accessibility, and over time, it will compress the spreads that people pay you when they buy equities. This is, by the way, it's a broader phenomena. It's part of the financial education process that a lot of the young generation is going through in Israel. People now have a much better understanding, as opposed to five, 10 years ago, about the importance of having liquid assets and also the fact that they want to have passive income.
With respect to international, there are some internationals that can look at remote membership, which can help in bringing more international flows. As you know, Interactive Brokers is the only American broker that is open digitally for U.S. citizens to trade TASE equities. We hope at some point in the future to have the American brokers open up their platforms and having the American public to invest directly in TASE. So we still have many things that we want to accomplish over the next few years.
Thank you for that. Clearing house revenues have been really strong, grew over 40% year-over-year, but did decline sequentially. I assume that's some average balance dynamics, but anything else underneath that drove the sequential decline?
No, it's mainly the average one. That's mainly the reason.
Okay. Okay. Thank you for taking all my questions.
Thank you very much, Dan. Keep well.
Thank you. This concludes The Tel-Aviv Stock Exchange Q3 2026 results conference call. Thank you for your participation. You may go ahead and disconnect.