Sapiens Reports Third Quarter 2025 Financial Results

ROCHELLE PARK, N.J., Nov. 13, 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 third quarter ended September 30, 2025.

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

GAAP

Non-GAAP

Q3 2025

Q3 2024

% Change

Q3 2025

Q3 2024

% Change

Revenue

152.3

137.0

11.2

152.3

137.0

11.2

Gross Profit

67.3

60.3

11.6

70.7

62.8

12.5

Gross Margin

44.2

44.0

20 bps

46.4

45.8

60 bps

Operating Income

17.8

21.7

-18.3

25.5

25.1

1.5

Operating Margin

11.7

15.9

-420 bps

16.7

18.3

-160 bps

Net Income (*)

14.3

18.3

-22.0

20.5

21.1

-2.7

Diluted EPS

0.25

0.33

-24.2

0.36

0.37

-2.7

(*)

Attributable to Sapiens' shareholders

Roni Al-Dor, President and CEO of Sapiens, stated, "In the third quarter of 2025, we continued to execute on our strategic priorities, securing new deals and strengthening customer relationships globally. Revenue increased by 11.2% year-over-year, reaching $152 million for the quarter. All our top geographic markets grew in the quarter, led by double digit expansion in North America and Rest of the World, reflecting broad-based demand and the successful execution of our strategic initiatives. Our annualized recurring revenue (ARR) totaled $220 million, reflecting a 26.7% year-over-year increase, of which 17.5% is organic and 9.2% contributed from the recent acquisitions. Sapiens's non-GAAP operating profit totaled $25 million in the quarter, reflecting a 16.7% operating margin.

Our insurance platform empowers insurers to accelerate digital transformation, achieve sustainable growth, and operational efficiency, fueled by the continued adoption of AI-driven innovation. We remain committed to advancing our platform, accelerating cloud adoption, and expanding our global footprint, all of which will serve as catalysts for continued success. Our continued success in both new customer acquisition and account expansion across North America and EMEA underscores the strategic value of our platform for insurers accelerating digital transformation."

Following Sapiens' announcement on August 12, 2025, that the company has entered into a definitive agreement to be acquired by Advent, a leading global private equity investor, for $43.50 per common share in cash, valuing Sapiens at approximately $2.5 billion, Sapiens will forgo a Q3 2025 Earnings Call.

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: Valuation adjustment on acquired deferred revenue, amortization of capitalized software development and other intangible assets, capitalization of software development, stock-based compensation, compensation related to acquisition and acquisition-related costs, restructuring and cost reduction 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 eliminate valuation adjustment on acquired deferred revenue, stock-based compensation expense, depreciation and amortization, capitalization of software development costs, compensation expenses related to acquisition and acquisition-related costs, restructuring and cost reduction 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: SPNS) (TASE: SPNS) is a global leader in intelligent insurance 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. We 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 SaaS 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.

Investor and Media Contact

Yaffa Cohen-Ifrah

Chief Marketing Officer and Head of

Investor Relations, Sapiens

Yaffa.cohen-ifrah@sapiens.com

+1 917-533-4782

Investor Contacts

Brett Maas

Managing Partner, Hayden IR

+1 646-536-7331

Brett.Maas@HaydenIR.com

Kimberly Rogers

Managing Director, Hayden IR

+1 541-904-5075

kim@HaydenIR.com

Forward Looking Statements

Certain matters discussed in this press release that are incorporated herein and therein 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; the global macroeconomic environment, including headwinds caused by inflation, relatively high interest rates, potentially unfavorable currency exchange rate movements, and uncertain economic conditions, and their impact on our revenues, profitability and cash flows; 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 coronavirus epidemic, and 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 Annual Report on Form 20-F for the year ended December 31, 2024, to be filed in the near future, 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

Nine months ended

September 30,

2025

2024

2025

2024

(unaudited)

Revenue

152,319

137,025

430,026

408,074

Cost of revenue

85,010

76,729

240,166

230,114

Gross profit

67,309

60,296

189,860

177,960

Operating expenses:

Research and development, net

21,182

16,449

56,291

49,779

Selling, marketing, general and administrative

28,367

22,101

77,816

64,030

Total operating expenses

49,549

38,550

134,107

113,809

Operating income

17,760

21,746

55,753

64,151

Financial and other (income) expenses, net

(239)

(913

(2,839)

(3,114)

Taxes on income

3,621

4,324

11,794

12,812

Net income

14,378

18,335

46,798

54,453

Attributable to non-controlling interest

330

141

Net income attributable to Sapiens' shareholders

14,300

18,335

46,468

54,312

Basic earnings per share

0.26

0.33

0.83

0.97

Diluted earnings per share

0.25

0.33

0.83

0.97

Weighted average number of shares outstanding used to

compute basic earnings per share (in thousands)

55,927

55,854

55,954

55,799

Weighted average number of shares outstanding used to

compute diluted earnings per share (in thousands)

56,432

56,308

56,222

56,151

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

Nine months ended

September 30,

2025

2024

2025

2024

(unaudited)

GAAP revenue

152,319

137,025

430,026

408,074

Non-GAAP revenue

152,319

137,025

430,026

408,074

GAAP gross profit

67,309

60,296

189,860

177,960

Amortization of capitalized software

1,728

1,470

4,914

4,584

Amortization of other intangible assets

1,651

1,043

3,747

3,630

Non-GAAP gross profit

70,688

62,809

198,521

186,174

GAAP operating income

17,760

21,746

55,753

64,151

Gross profit adjustments

3,379

2,513

8,661

8,214

Capitalization of software development

(1,715)

(1,834)

(5,445)

(5,374)

Amortization of other intangible assets

2,412

1,276

6,066

3,732

Stock-based compensation

861

646

2,553

2,229

Costs related to Sapiens acquisition by Advent

2,324

Acquisition-related costs *)

453

754

3,196

1,248

Non-GAAP operating income

25,474

25,101

73,108

74,200

GAAP net income attributable to Sapiens' shareholders

14,300

18,335

46,468

54,312

Operating income adjustments

7,714

3,355

17,355

10,049

Taxes on income

(1,494)

(599)

(3,319)

(1,808)

Non-GAAP net income attributable to Sapiens' shareholders

20,520

21,091

60,504

62,553

(*)

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

Nine months ended

September 30,

2025

2024

2025

2024

GAAP operating profit

17,760

21,746

55,753

64,151

Non-GAAP adjustments:

Amortization of capitalized software

1,728

1,470

4,914

4,584

Amortization of other intangible assets

4,063

2,319

9,813

7,362

Capitalization of software development

(1,715)

(1,834)

(5,445)

(5,374)

Stock-based compensation

861

646

2,553

2,229

Costs related to Sapiens acquisition by Advent

2,324

Compensation related to acquisition and acquisition-related

costs

453

754

3,196

1,248

Non-GAAP operating profit

25,474

25,101

73,108

74,200

Depreciation

1,059

1,288

3,088

3,480

Adjusted EBITDA

26,533

26,389

76,196

77,680

Summary of NON-GAAP Financial Information

U.S. dollars in thousands (except per share amounts)

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Q3 2024

Revenues

152,319

141,602

136,105

134,305

137,025

Gross profit

70,688

64,838

62,995

62,692

62,809

Operating income

25,474

23,077

24,557

24,468

25,101

Adjusted EBITDA

26,533

24,141

25,529

25,359

26,389

Net income to Sapiens' shareholders

20,520

19,305

20,679

20,710

21,091

Diluted earnings per share

0.36

0.34

0.37

Annual Recurring Revenue ("ARR")

U.S. dollars in thousands

Three months ended

September 30,

2025

2024

Annual Recurring Revenue

219,715

173,414

Non-GAAP Revenues by Geographic Breakdown

U.S. dollars in thousands

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Q3 2024

North America

64,291

59,782

56,871

56,753

55,755

Europe

71,817

70,095

67,480

65,624

69,281

Rest of the World

16,211

11,725

11,754

11,928

11,989

Total

152,319

141,602

136,105

134,305

137,025

Non-GAAP Revenue breakdown

U.S. dollars in thousands

Three months ended

Nine months ended

September 30,

2025

2024

2025

2024

Software products and re-occurring post-production services (*)

119,799

100,707

337,715

292,992

Pre-production implementation services (**)

32,520

36,318

92,311

115,082

Total Revenues

152,319

137,025

430,026

408,074

Three months ended

Nine months ended

September 30,

2025

2024

2025

2024

Software products and re-occurring post-production services (*)

64,303

53,809

182,234

156,386

Pre-production implementation services (**)

6,385

9,000

16,287

29,788

Total Gross profit

70,688

62,809

198,521

186,174

Three months ended

Nine months ended

September 30,

2025

2024

2025

2024

Software products and re-occurring post-production services (*)

53.7

53.4

54.0

53.4

Pre-production implementation services (**)

19.6

24.8

17.6

25.9

Gross Margin

46.4

45.8

46.2

45.6

(*)

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

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Q3 2024

Cash-flow from operating activities

10,643

1,873

25,353

42,109

13,083

Increase in capitalized software development

costs

(1,715)

(1,788)

(1,942)

(1,759)

(1,834)

Capital expenditures

(431)

(1,003)

(366)

(419)

(1,125)

Free cash-flow

8,497

(918)

23,045

39,931

10,124

Cash payment related to Sapiens acquisition by

Advent

165

Cash payments attributed to acquisition-

related costs (*) (**)

803

626

1,238

124

Adjusted free cash-flow

9,465

(292)

23,045

41,169

10,248

(*)

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

September 30,

December 31,

2025

2024

(unaudited)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

82,200

163,690

Short-term bank deposit

52,500

Trade receivables, net and unbilled receivables

138,189

99,603

Other receivables and prepaid expenses

31,363

19,350

Total current assets

251,752

335,143

LONG-TERM ASSETS

Property and equipment, net

10,268

10,656

Severance pay fund

2,621

3,208

Goodwill and intangible assets, net

430,900

302,472

Operating lease right-of-use assets

21,201

20,746

Other long-term assets

26,948

19,486

Total long-term assets

491,938

356,568

TOTAL ASSETS

743,690

691,711

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Trade payables

13,218

8,414

Current maturities of Series B Debentures

19,808

19,796

Accrued expenses and other liabilities

91,650

77,390

Current maturities of operating lease liabilities

6,351

6,440

Deferred revenue

34,989

37,543

Total current liabilities

166,016

149,583

LONG-TERM LIABILITIES

Series B Debentures, net of current maturities

19,792

Deferred tax liabilities

12,310

6,899

Other long-term liabilities

11,511

10,331

Long-term operating lease liabilities

17,376

17,719

Accrued severance pay

9,285

7,758

Total long-term liabilities

50,482

62,499

REDEEMABLE NON-CONTROLLING INTEREST

13,724

EQUITY

513,468

479,629

TOTAL LIABILITIES AND EQUITY

743,690

691,711

SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOW

U.S. dollars in thousands

For the nine months

ended September 30,

2025

2024

(unaudited)

Cash flows from operating activities:

Net income

46,797

54,453

Reconciliation of net income to net cash provided by operating activities:

Depreciation

3,088

3,480

Amortization of capitalized software and other intangible assets

14,727

11,946

Accretion of discount on Series B Debentures

Capital loss from sale of property and equipment

Stock-based compensation related to options issued to employees

2,553

2,229

Net changes in operating assets and liabilities, net of amount acquired:

Increase in trade receivables, net and unbilled receivables

(21,034)

(20,640)

Decrease in deferred tax liabilities, net

(3,325)

(2,280)

Increase in other operating assets

(138)

(908)

Increase in trade payables

3,129

1,989

Decrease in other operating liabilities

(1,880)

(5,154)

Decrease in deferred revenues

(7,279)

(5,684)

Increase in accrued severance pay, net

1,213

640

Net cash provided by operating activities

37,869

40,116

Cash flows from investing activities:

Purchase of property and equipment

(1,864)

(2,306)

Proceeds from deposits

52,366

36,360

Proceeds from sale of property and equipment

Payments for business acquisitions, net of cash acquired

(106,683)

(375)

Capitalized software development costs

(5,445)

(5,374)

Net cash provided by (used in) investing activities

(61,562)

28,354

Cash flows from financing activities:

Proceeds from employee stock options exercised

Distribution of dividend

(37,037)

(29,789)

Repayment of Series B Debenture

(19,796)

Acquisition of non-controlling interest

(4,131)

Acquisition deferred payment

(455)

Net cash used in financing activities

(57,288)

(53,618)

Effect of exchange rate changes on cash and cash equivalents

(509)

4,584

Increase (decrease) in cash and cash equivalents

(81,490)

19,436

Cash and cash equivalents at the beginning of period

163,690

126,716

Cash and cash equivalents at the end of period

82,200

146,152

Debentures Covenants

As of September 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

Covenant 2

Covenant 3

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SOURCE Sapiens International Corporation