ROCHELLE PARK, N.J., May 8, 2025 /PRNewswire/ -- Sapiens International Corporation, (NASDAQ: SPNS) (TASE: SPNS), a leading global provider of software solutions for the insurance industry, today announced its financial results for the first quarter ended March 31, 2025.Sapiens Logo

Summary Results for First Quarter 2025 (USD in millions, except per share data) GAAP  Non-GAAP  Q1 2025 Q1 2024 % Change Q1 2025 Q1 2024 % Change Revenue $136.1 $134.2 1.4 % $136.1 $134.2 1.4 % Gross Profit $60.7 $57.6 5.4 % $63.0 $60.9 3.5 % Gross Margin 44.6 % 42.9 % 170 bps 46.3 % 45.4 % 90 bps Operating Income $21.2 $20.5 3.3 % $24.6 $24.3 1.2 % Operating Margin 15.6 % 15.3 % 30 bps 18.0 % 18.1 % -10 bps Net Income (*) $17.9 $17.4 3.3 % $20.7 $20.4 1.3 % Diluted EPS $0.32 $0.31 3.2 % $0.37 $0.36 2.8 % (*) Attributable to Sapiens' shareholders

Roni Al-Dor, President and CEO of Sapiens, stated, "We delivered a strong start to 2025, advancing our strategic growth priorities, signing deals with new and existing customers, and signing two successful targeted acquisitions.  The addition of Candela and AdvantageGo significantly expands our global footprint and innovative solution breadth, reinforcing our position as a leader in both Life and P&C."

Mr. Al-Dor continued, "We continue to see steady increases in demand for our AI-driven insurance platforms, strong customer adoption of our SaaS model, and are proud of our team's relentless efforts on generating results. Innovation is in our DNA, and with the healthy state of our current pipeline, we remain confident in our ability to drive long-term value creation for our customers and shareholders alike."

"We are well-positioned to continue our positive momentum from the first quarter throughout the remainder of the year," concluded Mr. Al-Dor. "We are raising our 2025 guidance for non-GAAP revenue to the range of $574 million to $578 million from the previous $553 million to $558 million."

"Our non-GAAP operating profit is expected to be in the range of $94 million to $96 million, with an operating margin of 16.5% at the midpoint. This compares to the previous guidance of $98 million to $102 million."

"Our 2025 operating profit guidance reflects favorable currency movements. However, this is expected to be offset by losses associated with AdvantageGo and integration costs related to both the Candela and AdvantageGo acquisitions. The total aggregate negative impact on 2025 operating profit is approximately $5 million at the midpoint."

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Quarterly Results Conference Call

Management will host a conference call and webcast on May 8, 2025, at 9:30 a.m. Eastern Time (4:30 p.m. in Israel) to review and discuss Sapiens' results. Please call the following numbers (at least 10 minutes before the scheduled time) to participate:

North America (toll-free): 1-888-642-5032
International: 972-3-918-0609
UK: 0-800-917-5108

The live webcast of the call can be viewed on Sapiens' website at the following link.  A replay of the call will be available one business day following the completion of the event at the same link for 90 days.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: non-GAAP revenue, ARR, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributed to Sapiens shareholders, non-GAAP basic and diluted earnings per share, Adjusted EBITDA and Adjusted Free Cash-Flow.

Sapiens believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Sapiens' financial condition and results of operations. The Company's management uses these non-GAAP measures to compare the Company's performance to that of prior periods for trend analyses, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. These measures are used in financial reports prepared for management and in quarterly financial reports presented to the Company's board of directors. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing the Company's financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of capitalized software development and other intangible assets, capitalization of software development, stock-based compensation, compensation related to acquisition and acquisition-related costs, and tax adjustments related to non-GAAP adjustments.

Management of the Company does not consider these non-GAAP measures in isolation, or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations, as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures.

To compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. Sapiens urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company's business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables of this release.

The Company defines Annual Recurring Revenue ("ARR") as the annualized value of our revenue from customer subscriptions, term licenses, maintenance, application maintenance, and cloud solutions, which may not be the same as the timing and amount of revenue recognized. The ARR run rate is equal to the product of (i) the sum of these revenues in our most recently completed fiscal quarter, multiplied by (ii) four.

The Company defines Adjusted EBITDA as net profit, adjusted to stock-based compensation expense, depreciation and amortization, capitalization of software development costs, compensation expenses related to acquisition and acquisition-related costs, financial expense (income), provision for income taxes and other income (expenses). These amounts are often excluded by other companies as well, in order to help investors understand the operational performance of their business.

The Company uses Adjusted EBITDA as a measurement of its operating performance, because it assists in comparing the operating performance on a consistent basis by removing the impact of certain non-cash and non-operating items. Adjusted EBITDA reflects an additional way of viewing aspects of the operations that the Company believes, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting its business. The Company uses Adjusted Free Cash-Flow as a measurement of its operating performance, and reconciles cash-flow from operating activities to Adjusted Free Cash-Flow, while reducing the amounts for capitalization of software development costs and capital expenditures. The Company adds back cash payments made for former acquisitions in respect of future performance targets and retention criteria as determined upon acquisition date of the respective acquired company, which were included in the cash-flow from operating activities. We believe that Adjusted Free Cash-Flow is useful in evaluating our business, because Adjusted Free Cash-Flow reflects the cash surplus available to fund the expansion of our business.

About Sapiens

Sapiens International Corporation (NASDAQ and TASE: SPNS) is a global leader in intelligent insurance SaaS-based software solutions. With Sapiens' robust platform, customer-driven partnerships, and rich ecosystem, insurers are empowered to future-proof their organizations with operational excellence in a rapidly changing marketplace. Our SaaS-based Solutions help insurers harness the power of AI and advanced automation to support core solutions for property and casualty, workers' compensation, and life insurance, including reinsurance, financial & compliance, data & analytics, digital, and decision management. Sapiens boasts a longtime global presence, serving over 600 customers in more than 30 countries with its innovative offerings. Recognized by industry experts and selected for the Microsoft Top 100 Partner program, Sapiens is committed to partnering with our customers for their entire transformation journey and is continuously innovating to ensure their success. For more information visit sapiens or follow us on LinkedIn

Investor and Media Contact Yaffa Cohen-Ifrah
Chief Marketing Officer and Head of Investor Relations, Sapiens
Mobile: +1 917-533-4782
Email: [email protected]

Investor Contact
Kimberly Rogers
Managing Director, Hayden IR
Phone: +1 541-904-5075
Email: [email protected]

Forward Looking Statements

Certain matters discussed in this press release that are incorporated herein by reference are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, that are based on our beliefs, assumptions and expectations, as well as information currently available to us. Such forward-looking statements may be identified by the use of the words "anticipate," "believe," "estimate," "expect," "may," "will," "plan" and similar expressions. Such statements reflect our current views with respect to future events and are subject to certain risks and uncertainties. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: the degree of our success in our plans to leverage our global footprint to grow our sales; the degree of our success in integrating the companies that we have acquired through the implementation of our M&A growth strategy; the lengthy development cycles for our solutions, which may frustrate our ability to realize revenues and/or profits from our potential new solutions; our lengthy and complex sales cycles, which do not always result in the realization of revenues; the degree of our success in retaining our existing customers or competing effectively for greater market share; difficulties in successfully planning and managing changes in the size of our operations; the frequency of the long-term, large, complex projects that we perform that involve complex estimates of project costs and profit margins, which sometimes change mid-stream; the challenges and potential liability that heightened privacy laws and regulations pose to our business; occasional disputes with clients, which may adversely impact our results of operations and our reputation; various intellectual property issues related to our business; potential unanticipated product vulnerabilities or cybersecurity breaches of our or our customers' systems; risks related to the insurance industry in which our clients operate; risks associated with our global sales and operations, such as changes in regulatory requirements, wide-spread viruses and epidemics like the recent novel coronavirus pandemic, which adversely affected our results of operations, or fluctuations in currency exchange rates; and risks related to our principal location in Israel and our status as a Cayman Islands company. While we believe such forward-looking statements are based on reasonable assumptions, should one or more of the underlying assumptions prove incorrect, or these risks or uncertainties materialize, our actual results may differ materially from those expressed or implied by the forward-looking statements. Please read the risks discussed under the heading "Risk Factors" in our most recent Annual Report on Form 20-F, in order to review conditions that we believe could cause actual results to differ materially from those contemplated by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason, to conform these statements to actual results or to changes in our expectations.

SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENT OF INCOME  U.S. dollars in thousands (except per share amounts)  Three months ended  March 31,  2025  2024  (unaudited)   (unaudited)   Revenue   136,105  134,249  Cost of revenue   75,445  76,689   Gross profit   60,660  57,560   Operating expenses:  Research and development, net   16,276  16,521  Selling, marketing, general and 
administrative   23,188  20,517  Total operating expenses   39,464  37,038   Operating income  21,196  20,522   Financial and other income, net   (1,330)  (1,092)  Taxes on income   4,492  4,113    Net income  18,034  17,501   Attributable to non-controlling interest   -  141  Attributable to redeemable non-controlling 
interest   98  -   Net income attributable to Sapiens' 
shareholders   17,936  17,360    Basic earnings per share   0.32  0.31   Diluted earnings per share   0.32  0.31    Weighted average number of shares outstanding 
used to compute basic earnings per share (in 
thousands)  55,888  55,744   Weighted average number of shares outstanding 
used to compute diluted earnings per share (in 
thousands)  56,020  55,981

SAPIENS INTERNATIONAL CORPORATION N.V. AND SUBSIDIARIES  RECONCILIATION OF GAAP TO NON-GAAP RESULTS U.S. dollars in thousands (except per share amounts) Three months ended  March 31,  2025  2024  (unaudited)  (unaudited)   GAAP revenue  136,105  134,249  Non-GAAP revenue  136,105  134,249   GAAP gross profit  60,660  57,560  Amortization of capitalized software  1,511  1,545  Amortization of other intangible assets  824  1,779  Non-GAAP gross profit  62,995  60,884   GAAP operating income  21,196  20,522  Gross profit adjustments  2,335  3,324  Capitalization of software development  (1,942)  (1,717)  Amortization of other intangible assets  1,560  1,233  Stock-based compensation  847  772  Acquisition-related costs (*)  561  129  Non-GAAP operating income  24,557  24,263   GAAP net income attributable to Sapiens' 
shareholders  17,936  17,360  Operating income adjustments  3,361  3,741  Taxes on income  (618)  (680)  Non-GAAP net income attributable to Sapiens' 
shareholders  20,679  20,421  (*) Acquisition-related costs pertain to charges on behalf of M&A agreements related to future performance targets and 
retention criteria, as well as completed or prospective third-party services, such as tax, accounting and legal rendered.

Adjusted EBITDA Calculation U.S. dollars in thousands Three months ended  March 31,  2025  2024   GAAP operating profit   21,196  20,522   Non-GAAP adjustments:  Amortization of capitalized software  1,511  1,545  Amortization of other intangible assets  2,384  3,012  Capitalization of software development  (1,942)  (1,717)  Stock-based compensation  847  772  Compensation related to acquisition and acquisition-related costs  561  129   Non-GAAP operating profit  24,557  24,263   Depreciation  972  1,097   Adjusted EBITDA  25,529  25,360

Summary of NON-GAAP Financial Information  U.S. dollars in thousands (except per share amounts) Q1 2025  Q4 2024  Q3 2024  Q2 2024  Q1 2024  Revenues 136,105  134,305  137,025  136,800  134,249 Gross profit 62,995  62,692  62,809  62,481  60,884 Operating income 24,557  24,468  25,101  24,836  24,263 Adjusted EBITDA 25,529  25,359  26,389  25,931  25,360 Net income to Sapiens' shareholders 20,679  20,710  21,091  21,041  20,421  Diluted earnings per share 0.37  0.37  0.37  0.37  0.36

Annual Recurring Revenue ("ARR") U.S. dollars in thousands  Three months ended March 31, 2025   2024 Annual Recurring Revenue   187,386    167,646

Non-GAAP Revenues by Geographic Breakdown U.S. dollars in thousands Q1 2025  Q4 2024  Q3 2024  Q2 2024  Q1 2024  North America 56,871  56,753  55,755  57,918  55,158 Europe 67,480  65,624  69,281  66,072  68,727 Rest of the World 11,754  11,928  11,989  12,810  10,364  Total 136,105  134,305  137,025  136,800  134,249

Non-GAAP Revenue breakdown U.S. dollars in thousands Q1 2025  %  Q1 2024  %  Software products and re-occurring post-production services (*) 108,057  79.4 %  94,242  70.2 % Pre-production implementation services (**) 28,048  20.6 %  40,007  29.8 %  Total Revenues 136,105  100 %  134,249  100 %

Q1 2025  Q1 2024  Software products and re-occurring post-production services (*) 55,492  50,340 Pre-production implementation services (**) 3,503  10,544  Total Gross profit 62,995  60,884

Q1 2025  Q1 2024  Software products and re-occurring post-production services (*) 55.1 %  53.4 % Pre-production implementation services (**) 12.5 %  26.4 %  Gross margin 46.3 %  45.4 %  (*) Software products and re-occurring post-production services include mainly subscription,
term license, maintenance, application maintenance, cloud solutions and post-production services. 
This revenue stream is a mix of recurring and re-occurring in nature. (**) Pre-production implementation services include mainly implementation services before go-live, 
which are one-time in nature.

Adjusted Free Cash-Flow U.S. dollars in thousands Q1 2025  Q4 2024  Q3 2024  Q2 2024  Q1 2024  Cash-flow from operating activities 25,353  42,109  13,083  8,545  18,488 Increase in capitalized software development costs (1,942)  (1,759)  (1,834)  (1,823)  (1,717) Capital expenditures (366)  (419)  (1,125)  (666)  (466) Free cash-flow 23,045  39,931  10,124  6,056  16,305  Cash payments attributed to acquisition-related costs(*) (**) -  1,238  124  134  751  Adjusted free cash-flow 23,045  41,169  10,248  6,190  17,056  (*) Included in cash-flow from operating activities (**) Acquisition-related payments pertain to charges on behalf of M&A agreements related to future performance targets and 
retention criteria, as well as completed or prospective third-party services, such as tax, accounting and legal rendered.

SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET U.S. dollars in thousands March 31,  December 31, 2025  2024 (unaudited)   (unaudited)   ASSETS   CURRENT ASSETS  Cash and cash equivalents  143,364  163,690 Short-term bank deposit  62,500  52,500 Trade receivables, net and unbilled receivables  105,818  99,603 Other receivables and prepaid expenses  15,707  19,350 Total current assets  327,389  335,143  LONG-TERM ASSETS  Property and equipment, net  10,401  10,656 Severance pay fund  3,185  3,208 Goodwill and intangible assets, net  329,819  302,472 Operating lease right-of-use assets  20,581  20,746 Other long-term assets  22,605  19,486 Total long-term assets  386,591  356,568  TOTAL ASSETS  713,980  691,711  LIABILITIES AND EQUITY   CURRENT LIABILITIES  Trade payables  8,485  8,414 Current maturities of Series B Debentures  19,797  19,796 Accrued expenses and other liabilities  117,219  77,390 Current maturities of operating lease liabilities  7,337  6,440 Deferred revenue  42,102  37,543 Total current liabilities  194,940  149,583  LONG-TERM LIABILITIES  Series B Debentures, net of current maturities  -  19,792 Deferred tax liabilities  9,792  6,899 Other long-term liabilities  10,847  10,331 Long-term operating lease liabilities  16,064  17,719 Accrued severance pay  8,000  7,758 Total long-term liabilities  44,703  62,499  REDEEMABLE NON-CONTROLLING INTEREST  13,746  -  EQUITY   460,591  479,629  TOTAL LIABILITIES AND EQUITY  713,980  691,711

SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOW U.S. dollars in thousands For the three months ended March 31, 2025  2024 (unaudited)  (unaudited) Cash flows from operating activities:  Net income 18,034  17,501 Reconciliation of net income to net cash provided by operating activities:  Depreciation of property and equipment  972  1,097 Amortization of intangible assets and capitalized software  3,895  4,557 Accretion of discount on series B debentures 5  9 Capital loss (gain) from sale of property and equipment 1  (1) Stock-based compensation related to options issued to employees 847  772  Net changes in operating assets and liabilities, net of amount acquired:  Increase in trade receivables, net and unbilled receivables (5,058)  (14,703) Decrease in deferred tax liabilities, net (514)  (776) Decrease in other operating assets 5,239  3,737 Increase (decrease) in trade payables (378)  3,547 Increase (decrease) in other operating liabilities (1,878)  721 Increase in deferred revenues 3,975  1,968 Increase in accrued severance pay, net 213  59 Net cash provided by operating activities 25,353  18,488  Cash flows from investing activities:   Purchase of property and equipment (368)  (470) Investment in deposits (10,110)  (3,291) Payments for business acquisitions, net of cash acquired (16,311)  - Proceeds from sale of property and equipment 2  4 Capitalized software development costs (1,942)  (1,717) Net cash used in investing activities (28,729)  (5,474)  Cash flows from financing activities:   Repayment of series B debenture (19,796)  (19,796) Acquisition of minority interests -  (3,098) Net cash used in financing activities (19,796)  (22,894)  Effect of exchange rate changes on cash and cash equivalents 2,846  (147)  Decrease in cash and cash equivalents (20,326)  (10,027) Cash and cash equivalents at the beginning of period 163,690  126,716  Cash and cash equivalents at the end of period 143,364  116,689

Debentures Covenants

As of March 31, 2025, Sapiens was in compliance with all of its financial covenants under the indenture for the Series B Debentures, based on having achieved the following in its consolidated financial results:

Covenant 1

Target shareholders' equity (excluding non-controlling interest): above $120 million. Actual shareholders' equity (excluding non-controlling interest) equal to $460.6 million.

Covenant 2

Target ratio of net financial indebtedness to net capitalization (in each case, as defined under the indenture for the Company's Series B Debentures) below 65%. Actual ratio of net financial indebtedness to net capitalization equal to (67.66)%.

Covenant 3

Target ratio of net financial indebtedness to EBITDA (accumulated calculation for the four last quarters) is below 5.5. Actual ratio of net financial indebtedness to EBITDA (accumulated calculation for the four last quarters) is equal to (1.80).

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