Sapiens Reports Second Quarter 2025 Financial Results

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ROCHELLE PARK, N.J., Aug. 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 second quarter ended June 30, 2025.
Summary Results for Second Quarter 2025 (USD in millions, except per share data)GAAPNon-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.
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 ContactYaffa Cohen-IfrahChief Marketing Officer and Head of Investor Relations, SapiensMobile: [phone]Email: [e-mail]
Investor ContactKimberly RogersManaging Director, Hayden IRPhone: [phone]Email: [e-mail]
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.
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
202420252024
(unaudited)
(unaudited) (unaudited) (unaudited)
Revenue 141,602
136,800277,707271,049
Cost of revenue 79,711
76,696155,156153,385
Gross profit 61,891
60,104122,551117,664
Operating expenses: Research and development, net 18,833
16,80935,10933,330
Selling, marketing, general and administrative 26,261
21,41249,44941,929
Total operating expenses 45,094
38,22184,55875,259
Operating income16,797
21,88337,99342,405
Financial and other (income) expenses, net (1,270)
(1,109)(2,600)(2,201)
Taxes on income 3,681
4,3758,1738,488
Net income14,386
18,61732,42036,118
Attributable to non-controlling interest
154
-252141
Net income attributable to Sapiens' shareholders
14,232
18,61732,16835,977
Basic earnings per share 0.25
0.330.580.65
Diluted earnings per share 0.25
0.330.570.64
Weighted average number of shares outstanding used to
compute basic earnings per share (in thousands)55,897
55,79755,89255,771
Weighted average number of shares outstanding used to
compute diluted earnings per share (in thousands)56,070
56,16356,04256,072
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 endedSix months ended
June 30,June 30,
2025202420252024
(unaudited)(unaudited)(unaudited)(unaudited)GAAP revenue141,602136,800277,707271,049
Valuation adjustment on acquired deferred revenue----
Non-GAAP revenue141,602136,800277,707271,049GAAP gross profit61,89160,104122,551117,664
Amortization of capitalized software1,6751,5693,1863,114
Amortization of other intangible assets1,2728082,0962,587
Non-GAAP gross profit64,83862,481127,833123,365GAAP operating income16,79721,88337,99342,405
Gross profit adjustments2,9472,3775,2825,701
Capitalization of software development(1,788)(1,823)(3,730)(3,540)
Amortization of other intangible assets2,0941,2233,6542,456
Stock-based compensation8458111,6921,583
Acquisition-related costs *)2,1823652,743494
Non-GAAP operating income23,07724,83647,63449,099 GAAP net income attributable to Sapiens'
shareholders
14,23218,617
32,16835,977
Operating income adjustments6,2802,9539,6416,694
Taxes on income(1,207)(529)(1,825)(1,209)
Non-GAAP net income attributable to
Sapiens' shareholders19,30521,04139,98441,462
(*) 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.
Adjusted EBITDA Calculation U.S. dollars in thousandsThree months endedSix months ended
June 30, June 30,
2025202420252024GAAP operating profit 16,79721,88337,99342,405Non-GAAP adjustments:
Amortization of capitalized software1,6751,5693,1863,114
Amortization of other intangible assets3,3662,0315,7505,043
Capitalization of software development(1,788)(1,823)(3,730)(3,540)
Stock-based compensation8458111,6921,583
Compensation related to acquisition and
acquisition-related costs2,1823652,743494Non-GAAP operating profit23,07724,83647,63449,099Depreciation1,0641,0952,0362,192Adjusted EBITDA24,14125,93149,67051,291
Summary of NON-GAAP Financial Information U.S. dollars in thousands (except per share amounts)
Q2 2025Q1 2025Q4 2024Q3 2024Q2 2024
Revenues
141,602136,105134,305137,025136,800
Gross profit
64,83862,99562,69262,80962,481
Operating income
23,07724,55724,46825,10124,836
Adjusted EBITDA
24,14125,52925,35926,38925,931
Net income to Sapiens' shareholders
19,30520,67920,71021,09121,041
Diluted earnings per share
0.340.370.370.370.37
Annual Recurring Revenue ("ARR")
U.S. dollars in thousands Three months ended
June 30,
2025
2024
Annual Recurring Revenue
199,646168,593
Non-GAAP Revenues by Geographic Breakdown U.S. dollars in thousandsQ2 2025Q1 2025Q4 2024Q3 2024Q2 2024
North America
59,78256,87156,75355,75557,918
Europe
70,09567,48065,62469,28166,072
Rest of the World
11,72511,75411,92811,98912,810
Total
141,602136,105134,305137,025136,800
Non-GAAP Revenue breakdown
U.S. dollars in thousands
Three months endedSix months endedJune 30,June 30,2025202420252024
Software products and re-occurring post-production services (*)
109,85998,044217,916192,285
Pre-production implementation services (**)
31,74338,75659,79178,764
Total Revenues
141,602136,800277,707271,049
Three months endedSix months endedJune 30,June 30,2025202420252024
Software products and re-occurring post-production services (*)
58,43952,237117,931102,577
Pre-production implementation services (**)
6,39910,2449,90220,788
Total Gross profit
64,83862,481127,833123,365
Three months endedSix months endedJune 30,June 30,2025202420252024
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-FlowU.S. dollars in thousands
Q2 2025Q1 2025Q4 2024Q3 2024Q2 2024
Cash-flow from operating activities
1,87325,35342,10913,0838,545
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)23,04539,93110,1246,056
Cash payments attributed to acquisition-related
costs(*) (**)
626-1,238124134
Adjusted free cash-flow
(292)23,04541,16910,2486,190
(*) 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.
SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
U.S. dollars in thousandsJune 30,December 31,20252024 (unaudited) (unaudited)
ASSETS CURRENT ASSETSCash and cash equivalents64,541163,690Short-term bank deposit10,00052,500Trade receivables, net and unbilled receivables134,94999,603Other receivables and prepaid expenses30,33419,350Total current assets239,824335,143
LONG-TERM ASSETSProperty and equipment, net11,19510,656Severance pay fund3,0653,208Goodwill and intangible assets, net439,166302,472Operating lease right-of-use assets22,76620,746Other long-term assets23,62819,486Total long-term assets499,820356,568
TOTAL ASSETS739,644691,711
LIABILITIES AND EQUITY
CURRENT LIABILITIESTrade payables11,6158,414Current maturities of Series B Debentures19,80419,796Accrued expenses and other liabilities91,28677,390Current maturities of operating lease liabilities7,2846,440Deferred revenue44,69737,543Total current liabilities174,686149,583
LONG-TERM LIABILITIESSeries B Debentures, net of current maturities-19,792Deferred tax liabilities13,7106,899Other long-term liabilities11,26010,331Long-term operating lease liabilities18,28917,719Accrued severance pay9,5807,758Total long-term liabilities52,83962,499
REDEEMABLE NON-CONTROLLING INTEREST13,809-
EQUITY
498,310479,629
TOTAL LIABILITIES AND EQUITY739,644691,711
SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWU.S. dollars in thousands
For the six months ended June 30,20252024(unaudited)(unaudited)
Cash flows from operating activities:Net income
32,42036,118
Reconciliation of net income to net cash provided by operating activities:Depreciation of property and equipment
2,0362,192
Amortization of intangible assets and capitalized software
8,9368,157
Accretion of discount on Series B Debentures
1222
Capital (gain) loss from sale of property and equipment
1(9)
Stock-based compensation related to options issued to employees
1,6921,583
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
1,0113,445
Increase in trade payables
1,5044,446
Decrease in other operating liabilities
(8,290)(8,354)
Increase (decrease) in deferred revenues
1,966(6,587)
Increase in accrued severance pay, net
859171
Net cash provided by operating activities
27,22627,033
Cash flows from investing activities:Purchase of property and equipment
(1,399)(1,146)
Proceeds from deposits
42,39012,136
Proceeds from sale of property and equipment
2714
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
163,690126,716
Cash and cash equivalents at the end of period
64,541122,646
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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SOURCE Sapiens International Corporation
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