EX-99.1 2 ea025222801ex99-1_sapiens.htm PRESS RELEASE

Exhibit 99.1

 

 

Sapiens Reports Second Quarter 2025 Financial Results

 

Rochelle Park, NJ, August 13, 2025 – Sapiens International Corporation, (NASDAQ and TASE: SPNS), a leading global provider of software solutions for the insurance industry, today announced its financial results for the second quarter ended June 30, 2025.

 

Summary Results for Second Quarter 2025 (USD in millions, except per share data)

 

   GAAP       Non-GAAP     
   Q2 2025   Q2 2024   % Change   Q2 2025   Q2 2024   % Change 
Revenue  $141.6   $136.8    3.5%  $141.6   $136.8    3.5%
Gross Profit  $61.9   $60.1    3.0%  $64.8   $62.5    3.8%
Gross Margin   43.7%   43.9%   -20 bps    45.8%   45.7%   10 bps  
Operating Income  $16.8   $21.9    -23.2%  $23.1   $24.8    -7.1%
Operating Margin   11.9%   16.0%   -410 bps    16.3%   18.2%   -190 bps 
Net Income (*)  $14.2   $18.6    -23.6%  $19.3   $21.0    -8.2%
Diluted EPS  $0.25   $0.33    -24.2%  $0.34   $0.37    -8.1%

 

(*) Attributable to Sapiens’ shareholders

 

Roni Al-Dor, President and CEO of Sapiens, stated, “In the second quarter of 2025, we continued to execute on our strategic priorities, securing new deals and strengthening customer relationships across our Life, P&C, and Reinsurance segments. Our insurance platform supports insurers in advancing digital transformation, improving operational efficiency, and adopting AI-driven innovation.”

 

Mr. Al-Dor continued, “During the quarter, we completed the acquisitions of Advantage Go and Candella, acquisitions that strengthen our P&C and Life growth. We reiterate our priority to continue platform innovation, increase cross-selling, accelerate cloud adoption, and expand the Life & Annuities business globally, all of which will serve as catalysts to accelerated growth in 2026.”

 

 

 

 

Quarterly Results Conference Call

 

Following our announcement that Sapiens has entered into a definitive agreement to be acquired by Advent, Sapiens will forgo its Q2 2025 Earnings Call scheduled for today.

 

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.

 

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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: Yaffa.cohen-ifrah@sapiens.com

 

Investor Contact
Kimberly Rogers
Managing Director, Hayden IR
Phone: +1 541-904-5075
Email: kim@HaydenIR.com

 

Forward Looking Statements

 

Certain matters discussed in this press release 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, and 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, which we filled with the SEC on March 31, 2022, 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.

 

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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   Six months ended 
   June 30,   June 30, 
   2025   2024   2025   2024 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
                 
Revenue   141,602    136,800    277,707    271,049 
Cost of revenue   79,711    76,696    155,156    153,385 
                     
Gross profit   61,891    60,104    122,551    117,664 
                     
Operating expenses:                    
Research and development, net   18,833    16,809    35,109    33,330 
Selling, marketing, general and administrative   26,261    21,412    49,449    41,929 
Total operating expenses   45,094    38,221    84,558    75,259 
                     
Operating income   16,797    21,883    37,993    42,405 
                     
Financial and other (income) expenses, net   (1,270)   (1,109)   (2,600)   (2,201)
Taxes on income   3,681    4,375    8,173    8,488 
                     
Net income   14,386    18,617    32,420    36,118 
                     
Attributable to non-controlling interest   154    -    252    141 
                     
Net income attributable to Sapiens’ shareholders   14,232    18,617    32,168    35,977 
                     
Basic earnings per share   0.25    0.33    0.58    0.65 
                     
Diluted earnings per share   0.25    0.33    0.57    0.64 
                     
Weighted average number of shares outstanding used to compute basic earnings per share (in thousands)   55,897    55,797    55,892    55,771 
                     
Weighted average number of shares outstanding used to compute diluted earnings per share (in thousands)   56,070    56,163    56,042    56,072 

 

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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   Six months ended 
   June 30,   June 30, 
   2025   2024   2025   2024 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
                 
GAAP revenue   141,602    136,800    277,707    271,049 
Valuation adjustment on acquired deferred revenue   -    -    -    - 
Non-GAAP revenue   141,602    136,800    277,707    271,049 
                     
GAAP gross profit   61,891    60,104    122,551    117,664 
Amortization of capitalized software   1,675    1,569    3,186    3,114 
Amortization of other intangible assets   1,272    808    2,096    2,587 
Non-GAAP gross profit   64,838    62,481    127,833    123,365 
                     
GAAP operating income   16,797    21,883    37,993    42,405 
Gross profit adjustments   2,947    2,377    5,282    5,701 
Capitalization of software development   (1,788)   (1,823)   (3,730)   (3,540)
Amortization of other intangible assets   2,094    1,223    3,654    2,456 
Stock-based compensation   845    811    1,692    1,583 
Acquisition-related costs *)   2,182    365    2,743    494 
Non-GAAP operating income   23,077    24,836    47,634    49,099 
                     
GAAP net income attributable to Sapiens’ shareholders   14,232    18,617    32,168    35,977 
Operating income adjustments   6,280    2,953    9,641    6,694 
Taxes on income   (1,207)   (529)   (1,825)   (1,209)
Non-GAAP net income attributable to Sapiens’ shareholders   19,305    21,041    39,984    41,462 

 

(*)Acquisition-related costs pertain to charges on behalf of M&A agreements related to future performance targets and retention criteria, as well as third-party services, such as tax, accounting and legal rendered until the acquisition date.

 

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Adjusted EBITDA Calculation
U.S. dollars in thousands

 

   Three months ended   Six months ended 
   June 30,   June 30, 
   2025   2024   2025   2024 
                 
GAAP operating profit   16,797    21,883    37,993    42,405 
                     
Non-GAAP adjustments:                    
Amortization of capitalized software   1,675    1,569    3,186    3,114 
Amortization of other intangible assets   3,366    2,031    5,750    5,043 
Capitalization of software development   (1,788)   (1,823)   (3,730)   (3,540)
Stock-based compensation   845    811    1,692    1,583 
Compensation related to acquisition and acquisition-related costs   2,182    365    2,743    494 
                     
Non-GAAP operating profit   23,077    24,836    47,634    49,099 
                     
Depreciation   1,064    1,095    2,036    2,192 
Adjusted EBITDA   24,141    25,931    49,670    51,291 

 

Summary of NON-GAAP Financial Information
U.S. dollars in thousands (except per share amounts)

 

   Q2 2025   Q1 2025   Q4 2024   Q3 2024   Q2 2024 
                     
Revenues   141,602    136,105    134,305    137,025    136,800 
Gross profit   64,838    62,995    62,692    62,809    62,481 
Operating income   23,077    24,557    24,468    25,101    24,836 
Adjusted EBITDA   24,141    25,529    25,359    26,389    25,931 
Net income to Sapiens’ shareholders   19,305    20,679    20,710    21,091    21,041 
                          
Diluted earnings per share   0.34    0.37    0.37    0.37    0.37 

 

Annual Recurring Revenue (“ARR”)

U.S. dollars in thousands 

 

   Three months ended 
   June 30, 
   2025   2024 
Annual Recurring Revenue   199,646    168,593 

 

Non-GAAP Revenues by Geographic Breakdown
U.S. dollars in thousands

 

   Q2 2025   Q1 2025   Q4 2024   Q3 2024   Q2 2024 
                     
North America   59,782    56,871    56,753    55,755    57,918 
Europe   70,095    67,480    65,624    69,281    66,072 
Rest of the World   11,725    11,754    11,928    11,989    12,810 
                          
Total   141,602    136,105    134,305    137,025    136,800 

 

 

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Non-GAAP Revenue breakdown

 

U.S. dollars in thousands

 

   Three months ended   Six months ended 
   June 30,   June 30, 
   2025   2024   2025   2024 
                 
Software products and re-occurring post-production services (*)   109,859    98,044    217,916    192,285 
Pre-production implementation services (**)   31,743    38,756    59,791    78,764 
                     
Total Revenues   141,602    136,800    277,707    271,049 

 

 

   Three months ended   Six months ended 
   June 30,   June 30, 
   2025   2024   2025   2024 
                 
Software products and re-occurring post-production services (*)   58,439    52,237    117,931    102,577 
Pre-production implementation services (**)   6,399    10,244    9,902    20,788 
                     
Total Gross profit   64,838    62,481    127,833    123,365 

 

 

   Three months ended   Six months ended 
   June 30,   June 30, 
   2025   2024   2025   2024 
                 
Software products and re-occurring post-production services (*)  53.2%  53.3%  54.1%  53.3%
Pre-production implementation services (**)   20.2%   26.4%   16.6%   26.4%
                     
Gross Margin   45.8%   45.7%   46.0%   45.5%

 

(*)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

 

   Q2 2025   Q1 2025   Q4 2024   Q3 2024   Q2 2024 
                     
Cash-flow from operating activities   1,873    25,353    42,109    13,083    8,545 
Increase in capitalized software development costs   (1,788)   (1,942)   (1,759)   (1,834)   (1,823)
Capital expenditures   (1,003)   (366)   (419)   (1,125)   (666)
Free cash-flow   (918)   23,045    39,931    10,124    6,056 
                          
Cash payments attributed to acquisition-related costs(*) (**)   626    -    1,238    124    134 
                          
Adjusted free cash-flow   (292)   23,045    41,169    10,248    6,190 

 

(*)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.

 

 

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SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEET

U.S. dollars in thousands

 

   June 30,   December 31, 
   2025   2024 
   (unaudited)   (unaudited) 
         
ASSETS          
           
CURRENT ASSETS          
Cash and cash equivalents   64,541    163,690 
Short-term bank deposit   10,000    52,500 
Trade receivables, net and unbilled receivables   134,949    99,603 
Other receivables and prepaid expenses   30,334    19,350 
Total current assets   239,824    335,143 
           
LONG-TERM ASSETS          
Property and equipment, net   11,195    10,656 
Severance pay fund   3,065    3,208 
Goodwill and intangible assets, net   439,166    302,472 
Operating lease right-of-use assets   22,766    20,746 
Other long-term assets   23,628    19,486 
           
Total long-term assets   499,820    356,568 
           
TOTAL ASSETS   739,644    691,711 
           
LIABILITIES AND EQUITY          
           
CURRENT LIABILITIES          
Trade payables   11,615    8,414 
Current maturities of Series B Debentures   19,804    19,796 
Accrued expenses and other liabilities   91,286    77,390 
Current maturities of operating lease liabilities   7,284    6,440 
Deferred revenue   44,697    37,543 
Total current liabilities   174,686    149,583 
           
LONG-TERM LIABILITIES          
Series B Debentures, net of current maturities   -    19,792 
Deferred tax liabilities   13,710    6,899 
Other long-term liabilities   11,260    10,331 
Long-term operating lease liabilities   18,289    17,719 
Accrued severance pay   9,580    7,758 
Total long-term liabilities   52,839    62,499 
           
REDEEMABLE NON-CONTROLLING INTEREST   13,809    - 
           
EQUITY   498,310    479,629 
           
TOTAL LIABILITIES AND EQUITY   739,644    691,711 

 

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SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES

 

CONSOLIDATED STATEMENT OF CASH FLOW

U.S. dollars in thousands

 

   For the six months ended
June 30,		 
   2025   2024 
   (unaudited)   (unaudited) 
Cash flows from operating activities:        
Net income   32,420    36,118 
Reconciliation of net income to net cash provided by operating activities:          
Depreciation of property and equipment   2,036    2,192 
Amortization of intangible assets and capitalized software   8,936    8,157 
Accretion of discount on Series B Debentures   12    22 
Capital (gain) loss from sale of property and equipment   1    (9)
Stock-based compensation related to options issued to employees   1,692    1,583 
           
Net changes in operating assets and liabilities, net of amount acquired:          
Increase in trade receivables, net and unbilled receivables   (13,047)   (12,723)
Decrease in deferred tax liabilities, net   (1,874)   (1,428)
Decrease in other operating assets   1,011    3,445 
Increase in trade payables   1,504    4,446 
Decrease in other operating liabilities   (8,290)   (8,354)
Increase (decrease) in deferred revenues   1,966    (6,587)
Increase in accrued severance pay, net   859    171 
           
Net cash provided by operating activities   27,226    27,033 
           
Cash flows from investing activities:          
Purchase of property and equipment   (1,399)   (1,146)
Proceeds from deposits   42,390    12,136 
Proceeds from sale of property and equipment   27    14 
Payments for business acquisitions, net of cash acquired   (106,189)   (375)
Capitalized software development costs   (3,730)   (3,540)
           
Net cash provided by (used in) investing activities   (68,901)   7,089 
           
Cash flows from financing activities:          
Proceeds from employee stock options exercised   -    98 
Distribution of dividend   (37,037)   (15,635)
Repayment of Series B Debenture   (19,796)   (19,796)
Acquisition deferred payment   (455)   - 
Acquisition of non-controlling interest   -    (4,131)
           
Net cash used in financing activities   (57,288)   (39,464)
           
Effect of exchange rate changes on cash and cash equivalents   (186)   1,272 
           
Decrease in cash and cash equivalents   (99,149)   (4,070)
Cash and cash equivalents at the beginning of period   163,690    126,716 
           
Cash and cash equivalents at the end of period   64,541    122,646 

 

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Debentures Covenants

 

As of June 30, 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 $498.3 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 (12.25)%.

 

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 (0.54).

 

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