Sapiens (SPNS) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices. The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system. Sinc ...

Media Contact Yaffa Cohen-Ifrah Chief Marketing Officer and Head of Investor Relations, Sapiens [email protected] Investors Contact Kimberly Rogers Managing Director, Hayden IR [email protected] Logo: http://mma.prnewswire.com/media/585787/Sapiens_Logo.jpg SOURCE Sapiens International Corporation ROCHELLE PARK, N.J., May 21, 2024 /PRNewswire/ -- Sapiens International Corporation, (NASDAQ: SPNS) (TASE: SPNS), a leading global provider of software solutions for the insurance industry, today announced that Ron ...

Financial Data and Key Metrics - Revenue for Q1 2024 totaled $134 million, a 7.6% increase compared to the previous year [21] - Operating profit for Q1 2024 was $24 million, representing 18.1% of total revenue [21] - Net income attributed to shareholders was $20 million, up 18.4% from $17 million in Q1 2023 [31] - Earnings per diluted share was $0.36, up 16.1% from $0.31 in Q1 2023 [31] - Gross margin increased by 20 basis points to 45.4% compared to 45.2% in Q1 2023 [39] - Adjusted free cash flow for Q1 2024 was $17 million, compared to $20 million in Q1 2023 [44] Business Line Data and Key Metrics - The company received 2 Celent Luminary Awards in Q1 2024 for its P&C claim solutions in EMEA, APAC, and North America [1] - The SaaS subscription-based model is designed to increase wallet share, enhance cross-sell potential, and provide strong innovation capabilities [2] - The company is transitioning existing customers to the SaaS model to minimize near-term revenue impact [3] - Generative AI and machine learning models are being integrated into the Sapiens Decision platform, offering predictive analytics for productivity improvement and risk mitigation [4][5] - New generative AI models are set to be released in the coming months, supporting various aspects of the insurance value chain [6] Market Data and Key Metrics - Revenue in North America increased by 9.5% to $55 million compared to $50 million in the previous year [26] - Revenue in Europe grew by 6.4% to $69 million compared to $65 million in the previous year [26] - The company made additional investments in its Canadian operations, aiming to elevate service levels [9] - In APAC, the company successfully launched its IDITSuite for property and casualty insurance in Vietnam, building customer referrals [12] - Demand for P&C platform solutions remains strong in EMEA and APAC, with a growing trend towards SaaS models [13] Company Strategy and Industry Competition - The company is transitioning its solutions to a SaaS model with the Sapiens Insurance Platform, aiming to accelerate innovation and deliver sustained value [21][22] - Strategic partnerships with Microsoft and other InsurTech players are central to the company's AI strategy and SaaS architecture [25][29] - The company is expanding its presence in key trade shows across North America to strengthen its market position [10] - The company is considered a leading player in the P&C market, competing primarily with Guidewire [33] - The company is leveraging its strong technical architecture and cloud maturity to maintain a leading position in the life insurance market in Europe and APAC [33] Management Commentary on Operating Environment and Future Outlook - The company reiterated its 2024 guidance, expecting non-GAAP revenue between $550 million and $555 million and an operating margin between 18.1% and 18.5% [45] - The transition to SaaS is expected to impact organic growth by around 1% and profitability by 50 basis points, which is factored into the guidance [48] - The company is confident that its investments in innovation and partnerships will drive additional growth and generate substantial value for stakeholders [36] Other Important Information - The company declared a cash dividend of $16 million or $0.28 per share for the second half of 2023, paid on April 18, 2024 [45] - The company will participate in several upcoming conferences, including the Needham Technology, Media & Consumer Conference, Jefferies Software Conference, and William Blair Growth Conference [83] Summary of Q&A Session Question: Pace of transition to SaaS and its impact on profitability - The transition to SaaS is expected to impact organic growth by around 1% and profitability by 50 basis points, which is factored into the guidance [47][48] Question: Cloud migration activity and its impact on revenue recognition - The company is transitioning existing customers to the SaaS model gradually, with minimal impact on revenue recognition, anticipating only a 1% impact for the year [54][55] Question: Drivers of momentum in North America - The momentum in North America is driven by platform maturity, go-to-market capacity, and strong partnerships with system integrators [58] Question: Partnership with Microsoft and generative AI capabilities - The partnership with Microsoft is central to the company's AI strategy, with generative AI capabilities being deployed to enhance operational efficiency and customer service [60][61] Question: Competitive positioning in the SaaS model - The company is on par with leading competitors in the SaaS model, with a strong position in both P&C and life insurance markets [70][71] Question: Challenges in transitioning legacy customers to SaaS - The transition for existing customers is a multi-year journey, driven by customer investment and the company's efforts to minimize revenue impact [73] Question: Revenue trajectory and margin expectations for 2024 - Revenue and profitability are expected to grow linearly over the next three quarters, with the company reiterating its 2024 guidance [78] Question: Cash conversion in Q1 2024 - Cash conversion in Q1 2024 was within the expected range of 80% to 85% of non-GAAP net income, with Q4 2023 showing higher cash collection due to a different approach [68][84]

Acquisitions and Investments - In Q4 2023, the company acquired NCDC S.A. for $11.7 million and plans to complete the acquisition of Sapiens Software Solutions (Decision) Ltd. by the end of Q1 2024[39] - The company increased its holdings in Tiful Gemel and Neuralmatic to 100%, making them wholly-owned subsidiaries[39] - In December 2023, the company acquired the remaining 5% of Tiful Gemel Ltd. for $161 thousand, making it a wholly-owned subsidiary[153] - The company increased its holdings in Neuralmatic to 100% in Q1 2023, also transforming it into a wholly-owned subsidiary[154] - In May 2022, the company acquired I.T Cognitive Ltd. for $3.5 million, enhancing its digital offerings[155] Market Challenges - Macroeconomic headwinds, including inflation and high interest rates, have adversely impacted revenues, profitability, and cash flows, leading to slower growth rates in 2022[43] - The sales cycle for new customers typically ranges from one to two years, which can extend even longer, requiring significant time and resources before generating revenues[42] - The company faces challenges in retaining key talent due to competitive labor markets, which may affect its ability to develop and enhance solutions[46] - Increased competition for skilled technology professionals may lead to wage inflation, impacting profitability[48] - The company’s ability to expand into new markets may be hampered by the need for skilled personnel familiar with local regulations, which may not be available at reasonable costs[50] Operational Risks - The company’s international operations expose it to risks associated with fluctuations in foreign currency exchange rates, which have adversely affected results in the past[43] - The company has experienced cancellations of projects during implementation, which negatively impacts future revenue potential[70] - The company is exposed to litigation risks as it expands operations, which could divert management's attention and resources[51] - The company faces ongoing challenges in maintaining software security due to evolving cyber threats and complexities in technology[84] - The company must attract and train a significant number of additional qualified personnel to manage anticipated growth[51] Financial Performance - Five of the company's largest customers accounted for 12.9% and 15.5% of revenues in 2023 and 2022, respectively[66] - The company relies heavily on repeat product and service revenues from existing customers, making customer satisfaction critical[66] - The company has $39.5 million principal amount outstanding in Series B Debentures as of March 1, 2024, with potential risks of increased interest rates if covenants are breached[94] - The company has significant tax benefits from Israeli programs, requiring consolidated group revenue of at least NIS 10 billion to maintain eligibility[128] Cybersecurity and Compliance - The company has implemented advanced detection and prevention systems to reduce cyber risks, aligning with industry standards[82] - Significant disruptions to IT systems or data breaches could negatively impact business operations and reputation[79] - The company has experienced cyber-attacks in the past, including a ransom payment incident in April 2020, but these did not materially affect operations[79] - Compliance with privacy regulations such as GDPR and CCPA imposes additional costs and liabilities, with potential fines for non-compliance[76] - The company relies on third-party vendors, which increases exposure to cyber incidents and potential data breaches[81] Strategic Focus - The company plans to continue investing in cloud transformation and AI innovation, focusing on enhancing its software solutions and cloud services capabilities[169] - The company aims to expand its market reach in Europe and Asia Pacific, targeting previously untapped countries and enhancing its presence in existing markets[170] - The company is focused on strengthening its strategic partnership with Microsoft to enhance its data, AI, and cloud solutions[175] - The company plans to increase collaboration with third-party system integrators to penetrate various market segments more effectively[176] - The company intends to leverage its existing customer base for cross- and up-selling opportunities, enhancing its footprint within established customers[174] Product Offerings - Sapiens serves over 600 customers globally, with revenue distribution of 41.2% from North America, 15% from the UK, 35% from the rest of Europe, and 8.8% from other regions for the year ended December 31, 2023[183] - Sapiens has invested significantly in research and development to enhance its product offerings, ensuring compatibility with client needs and maintaining a leadership position recognized by industry analysts[179] - The Sapiens DigitalSuite enables insurers to rapidly go to market with new propositions, enhancing customer engagement through various connectivity tools[188] - The Sapiens analytics platform utilizes AI and machine learning to generate actionable insights across the insurance value chain, enhancing decision-making capabilities[224] - Sapiens offers a comprehensive suite of solutions for property & casualty (P&C) insurance, including PolicyPro, BillingPro, and ClaimsPro, which manage the entire policy lifecycle from quote to claims settlement[198][199][200]

Sapiens International Corporation N.V. (NASDAQ:SPNS) Q4 2023 Results Conference Call February 20, 2024 9:30 AM ET Company Participants Yaffa Cohen-Ifrah - Chief Marketing Officer and Head of IR Roni Al-Dor - President and CEO Roni Giladi - CFO Alex Zukerman - Chief Strategy Officer Conference Call Participants Dylan Becker - William Blair Kevin Kumar - Goldman Sachs Alexei Gogolev - JP Morgan Chris Reimer - Barclays Operator Ladies and gentlemen, thank you for standing by. Welcome to the Sapiens Internation ...

Exhibit 99.1 Sapiens Reports Fourth Quarter 2023 Financial Results February 20, 2024 – 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 fourth quarter ended December 31, 2023. Summary Results for Fourth Quarter 2023 (USD in millions, except per share data) | | GAAP | | | | | | | Non-GAAP | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Q4 2023 | | ...

GLOBAL RI Master Policy Admin Report (CELENT, July 2023) GLOBAL RI Master Policy Admin Report (CELENT, July 2023) . SAPIENS 19 Sapiens Proprietary & Confidential 2020 - $ 7M (COVID-19) 2021 - $ 20M 2022 - $ 39M 2023 - $ $28.1M Sapiens Proprietary & Confidential Acquire New Customers New Logos 11 North America P&C Policy Admin Report (CELENT, Feb 2023) EMEA P&C Policy Admin Report (CELENT, Feb 2023) services Pre-production implementation services (**) 43,404 44,069 132,133 132,802 Strong Cash and Cash Equiva ...

Sapiens International Corporation N.V. (NASDAQ:SPNS) Q3 2023 Earnings Conference Call November 8, 2023 9:30 AM ET Company Participants Yaffa Cohen-Ifrah – Chief Marketing Officer and Head-Investor Relations Roni Al-Dor – President and Chief Executive Officer Roni Giladi – Chief Financial Officer Alex Zukerman – Chief Strategy Officer Conference Call Participants Dylan Becker – William Blair Kevin Kumar – Goldman Sachs Chris Reimer – Barclays Omri Lapidot – Leumi Partners Operator Welcome to Sapiens Internat ...

[Q3 2023 Financial Results Overview](index=1&type=section&id=Q3%202023%20Financial%20Results%20Overview) Sapiens reported strong Q3 2023 financial results, highlighted by significant growth, positive management commentary, and reaffirmed full-year guidance [Summary Results for Third Quarter 2023](index=1&type=section&id=Summary%20Results%20for%20Third%20Quarter%202023) Sapiens reported strong financial results for Q3 2023, with significant year-over-year growth in both GAAP and Non-GAAP metrics. Revenue increased by approximately 10%, gross profit by over 10%, and operating income saw substantial growth, leading to improved margins and diluted EPS Metric (USD in millions, except per share data) | Metric (USD in millions, except per share data) | Q3 2023 (GAAP) | Q3 2022 (GAAP) | % Change (GAAP) | Q3 2023 (Non-GAAP) | Q3 2022 (Non-GAAP) | % Change (Non-GAAP) | | :--------------------------------------------- | :------------- | :------------- | :-------------- | :----------------- | :----------------- | :------------------ | | Revenue | $130.7 | $119.0 | 9.8% | $130.8 | $119.0 | 9.9% | | Gross Profit | $56.0 | $50.3 | 11.3% | $59.3 | $53.5 | 10.7% | | Gross Margin | 42.8% | 42.2% | 60 bps | 45.3% | 45.0% | 30 bps | | Operating Income | $20.3 | $16.6 | 22.4% | $24.1 | $20.9 | 15.1% | | Operating Margin | 15.5% | 13.9% | 160 bps | 18.4% | 17.6% | 80 bps | | Net Income (*) | $15.9 | $13.4 | 18.5% | $19.1 | $16.9 | 13.1% | | Diluted EPS | $0.28 | $0.24 | 16.7% | $0.34 | $0.30 | 13.3% | [Management Commentary](index=1&type=section&id=Management%20Commentary) Sapiens' President and CEO, Roni Al-Dor, highlighted strong Q3 revenue growth, particularly in Europe and North America, driven by new customer wins and existing customer product expansion. The company also achieved further operating margin expansion, reinforcing its commitment to a growth strategy across diverse regions and product categories. Despite recent tragic events in Israel, global business operations continued smoothly - Strong revenue growth of **10%** to **$130.8 million**, primarily driven by growth in European and North American regions[4](index=4&type=chunk) - Operating margin expanded to **18.4%**, resulting in an operating profit of **$24.1 million**[6](index=6&type=chunk) - New logo win momentum and existing customer product expansion were healthy throughout the year[5](index=5&type=chunk) - Sapiens is strategically positioned for future growth and profitability through regional and product diversification[6](index=6&type=chunk) - Despite the war in Israel, global business operations continued smoothly due to a dedicated global employee base and support from customers, prospects, and partners[6](index=6&type=chunk) [Full-Year 2023 Guidance](index=2&type=section&id=Full-Year%202023%20Guidance) Sapiens reiterated its full-year 2023 Non-GAAP revenue guidance and increased its Non-GAAP operating margin guidance, reflecting confidence in continued performance - Reiterated **2023** full-year Non-GAAP revenue guidance of **$511 – $516 million**[7](index=7&type=chunk) - Increased full-year **2023** Non-GAAP operating margin guidance from **18.0% – 18.2%** to a range of **18.2% - 18.3%**[7](index=7&type=chunk) [Non-GAAP Financial Measures Explanation](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) This section explains Sapiens' Non-GAAP financial measures, detailing their purpose, adjustments, and definitions for Adjusted EBITDA and Free Cash-Flow [Purpose and Rationale](index=2&type=section&id=Purpose%20and%20Rationale) Sapiens uses Non-GAAP financial measures to provide management and investors with useful information regarding financial and business trends, aiding in performance comparison, incentive compensation, budgeting, and evaluation against other software companies - Non-GAAP measures provide useful information to management and investors for understanding financial and business trends[10](index=10&type=chunk) - Management uses these measures for trend analyses, executive compensation, budgeting, and planning[10](index=10&type=chunk) - Non-GAAP measures offer an additional tool for investors to evaluate ongoing operating results and compare Sapiens' performance with other software companies[10](index=10&type=chunk) [Definition of Non-GAAP Adjustments](index=3&type=section&id=Definition%20of%20Non-GAAP%20Adjustments) Non-GAAP financial measures are derived from GAAP measures by excluding specific items such as valuation adjustments on acquired deferred revenue, amortization of capitalized software and other intangible assets, stock-based compensation, acquisition-related costs, restructuring costs, and related tax adjustments. These exclusions aim to present a clearer view of core operational performance, though they do not replace GAAP results - Non-GAAP financial measures 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[12](index=12&type=chunk) - Management does not consider these non-GAAP measures in isolation or as an alternative to GAAP financial measures, acknowledging their inherent limitations[13](index=13&type=chunk) - Investors are urged to review the reconciliation of non-GAAP to comparable GAAP financial measures[14](index=14&type=chunk) [Adjusted EBITDA and Adjusted Free Cash-Flow Definitions](index=3&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20Free%20Cash-Flow%20Definitions) Adjusted EBITDA is defined as net profit adjusted for various non-cash and non-operating items to provide a consistent view of operational performance. Adjusted Free Cash-Flow measures the cash surplus available for business expansion by adjusting operating cash flow for capitalized software development costs, capital expenditures, and certain acquisition-related payments - Adjusted EBITDA is defined 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)[16](index=16&type=chunk) - Adjusted Free Cash-Flow is calculated by reconciling cash-flow from operating activities, reducing amounts for capitalization of software development costs and capital expenditures, and adding back cash payments for former acquisitions related to future performance targets and retention criteria[17](index=17&type=chunk) - Adjusted Free Cash-Flow is useful for evaluating the cash surplus available to fund business expansion[17](index=17&type=chunk) [About Sapiens](index=4&type=section&id=About%20Sapiens) Sapiens is a global cloud-based SaaS provider for the insurance industry, with details on its profile and investor contacts [Company Profile](index=4&type=section&id=Company%20Profile) Sapiens International Corporation is a global provider of cloud-based SaaS software solutions for the insurance industry, with over 40 years of expertise. It serves over 600 customers in more than 30 countries, offering comprehensive solutions across property and casualty, workers' compensation, and life insurance markets - Sapiens is a leading global provider of cloud-based SaaS software solutions for the insurance industry[18](index=18&type=chunk) - The company has over **40** years of industry expertise and serves over **600** customers in more than **30** countries[18](index=18&type=chunk) - Sapiens offers comprehensive solutions for property and casualty, workers' compensation, and life insurance markets, including Reinsurance, Financial & Compliance, Data & Analytics, Digital, and Decision Management[18](index=18&type=chunk) [Investor and Media Contact](index=4&type=section&id=Investor%20and%20Media%20Contact) Contact information for Sapiens' Chief Marketing Officer and Head of Investor Relations, Yaffa Cohen-Ifrah, and Investor Contacts Kimberly Rogers from Hayden IR, is provided for investor and media inquiries - Yaffa Cohen-Ifrah serves as Chief Marketing Officer and Head of Investor Relations for Sapiens[19](index=19&type=chunk) - Kimberly Rogers, Managing Director at Hayden IR, is also listed as an investor contact[19](index=19&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section outlines the nature of forward-looking statements within the press release, emphasizing that they are based on beliefs, assumptions, and expectations subject to various risks and uncertainties. It advises against undue reliance on these statements and refers readers to the company's Annual Report on Form 20-F for a detailed discussion of risk factors - Forward-looking statements are based on current beliefs, assumptions, and expectations, and are subject to certain risks and uncertainties[20](index=20&type=chunk) - Important factors could cause actual results to differ materially from those expressed or implied, including success in global expansion, M&A integration, lengthy development and sales cycles, customer retention, operational management, project complexities, privacy laws, intellectual property issues, cybersecurity risks, insurance industry risks, global operations risks (e.g., currency fluctuations, epidemics), and risks related to Israel operations[20](index=20&type=chunk) - Readers should not rely upon forward-looking statements as predictions of future events and are advised to review the 'Risk Factors' in the most recent Annual Report on Form **20-F**[20](index=20&type=chunk) [Detailed Financial Statements and Reconciliations](index=6&type=section&id=Detailed%20Financial%20Statements%20and%20Reconciliations) This section presents detailed GAAP and Non-GAAP financial statements, including income, balance sheet, cash flow, EBITDA, and free cash flow reconciliations [Condensed Consolidated Statement of Income (GAAP)](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Income%20(GAAP)) The GAAP Condensed Consolidated Statement of Income shows Sapiens' financial performance for the three and nine months ended September 30, 2023, compared to the same periods in 2022. Key figures include revenue, gross profit, operating expenses, operating income, net income, and diluted earnings per share Condensed Consolidated Statement of Income (GAAP) - Key Figures (USD in thousands, except per share amounts) | Metric | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :--------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue | 130,705 | 118,996 | 383,725 | 355,273 | | Gross profit | 55,952 | 50,275 | 163,645 | 149,858 | | Operating income | 20,265 | 16,552 | 58,779 | 50,010 | | Net income attributable to Sapiens' shareholders | 15,872 | 13,393 | 45,471 | 39,229 | | Diluted earnings per share | 0.28 | 0.24 | 0.82 | 0.71 | [Reconciliation of GAAP to Non-GAAP Results](index=7&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Results) This section provides a detailed reconciliation between GAAP and Non-GAAP financial measures for revenue, gross profit, operating income, and net income attributable to Sapiens' shareholders. It itemizes the specific adjustments made, such as valuation adjustments on acquired deferred revenue, amortization of capitalized software and other intangible assets, capitalization of software development, stock-based compensation, and acquisition-related costs Reconciliation of GAAP to Non-GAAP Results (USD in thousands, except per share amounts) | Metric | Three months ended Sep 30, 2023 (GAAP) | Three months ended Sep 30, 2023 (Non-GAAP) | Nine months ended Sep 30, 2023 (GAAP) | Nine months ended Sep 30, 2023 (Non-GAAP) | | :--------------------------------------- | :------------------------------------- | :--------------------------------------- | :------------------------------------ | :-------------------------------------- | | Revenue | 130,705 | 130,760 | 383,725 | 383,890 | | Gross profit | 55,952 | 59,260 | 163,645 | 173,615 | | Operating income | 20,265 | 24,058 | 58,779 | 69,989 | | Net income attributable to Sapiens' shareholders | 15,872 | 19,080 | 45,471 | 54,943 | - Key adjustments include valuation adjustment on acquired deferred revenue, amortization of capitalized software and other intangible assets, capitalization of software development, stock-based compensation, and acquisition-related costs[23](index=23&type=chunk) [Adjusted EBITDA Calculation](index=8&type=section&id=Adjusted%20EBITDA%20Calculation) This section details the calculation of Adjusted EBITDA, starting from GAAP operating profit and adding back various non-GAAP adjustments and depreciation. It provides figures for both the three and nine months ended September 30, 2023 and 2022 Adjusted EBITDA (USD in thousands) | Metric | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | GAAP operating profit | 20,265 | 16,552 | 58,779 | 50,010 | | Non-GAAP adjustments | 3,793 | 4,350 | 11,210 | 12,408 | | Depreciation | 719 | 1,134 | 2,750 | 3,208 | | **Adjusted EBITDA** | **24,777** | **22,036** | **72,739** | **65,627** | [Summary of NON-GAAP Financial Information](index=8&type=section&id=Summary%20of%20NON-GAAP%20Financial%20Information) This section provides a quarterly summary of key Non-GAAP financial metrics, including revenues, gross profit, operating income, Adjusted EBITDA, net income, and diluted EPS, showing trends over the past five quarters (Q3 2022 to Q3 2023) Summary of NON-GAAP Financial Information (USD in thousands, except per share amounts) | Metric | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | | :-------------------------- | :------ | :------ | :------ | :------ | :------ | | Revenues | 130,760 | 128,354 | 124,776 | 119,486 | 119,019 | | Gross profit | 59,260 | 57,992 | 56,363 | 53,774 | 53,546 | | Operating income | 24,058 | 23,417 | 22,514 | 21,058 | 20,902 | | Adjusted EBITDA | 24,777 | 24,393 | 23,569 | 22,092 | 22,036 | | Net income to Sapiens' shareholders | 19,080 | 18,610 | 17,253 | 18,022 | 16,871 | | Diluted earnings per share | 0.34 | 0.33 | 0.31 | 0.32 | 0.30 | [Non-GAAP Revenues by Geographic Breakdown](index=9&type=section&id=Non-GAAP%20Revenues%20by%20Geographic%20Breakdown) This sub-section presents Sapiens' Non-GAAP revenues broken down by geographic region (North America, Europe, Rest of the World) for the past five quarters, highlighting regional contributions to overall revenue Non-GAAP Revenues by Geographic Breakdown (USD in thousands) | Region | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | | :---------------- | :------ | :------ | :------ | :------ | :------ | | North America | 54,848 | 52,116 | 50,371 | 50,801 | 49,555 | | Europe | 64,662 | 62,960 | 64,572 | 56,910 | 56,887 | | Rest of the World | 11,250 | 13,278 | 9,833 | 11,775 | 12,577 | | Total | 130,760 | 128,354 | 124,776 | 119,486 | 119,019 | [Non-GAAP Revenue Breakdown by Service Type](index=9&type=section&id=Non-GAAP%20Revenue%20Breakdown%20by%20Service%20Type) This sub-section categorizes Non-GAAP revenue and gross profit by service type: 'Software products and re-occurring post-production services' and 'Pre-production implementation services,' along with their respective gross margins for the three and nine months ended September 30, 2023 and 2022 Non-GAAP Revenue Breakdown by Service Type (USD in thousands) | Revenue Type | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :-------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Software products and re-occurring post-production services | 87,356 | 74,950 | 251,757 | 222,539 | | Pre-production implementation services | 43,404 | 44,069 | 132,133 | 132,803 | | Total Revenues | 130,760 | 119,019 | 383,890 | 355,342 | Non-GAAP Gross Profit by Service Type (USD in thousands) | Gross Profit Type | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :-------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Software products and re-occurring post-production services | 46,053 | 41,369 | 133,339 | 119,414 | | Pre-production implementation services | 13,207 | 12,177 | 40,276 | 40,282 | | Total Gross profit | 59,260 | 53,546 | 173,615 | 159,696 | Non-GAAP Gross Margin by Service Type | Gross Margin Type | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :-------------------------------------------------- | :------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | | Software products and re-occurring post-production services | 52.7% | 55.2% | 53.0% | 53.7% | | Pre-production implementation services | 30.4% | 27.6% | 30.5% | 30.3% | | Gross Margin | 45.3% | 45.0% | 45.2% | 44.9% | [Adjusted Free Cash-Flow](index=10&type=section&id=Adjusted%20Free%20Cash-Flow) This section presents the Adjusted Free Cash-Flow for the past five quarters, starting from cash flow from operating activities and adjusting for capitalized software development costs, capital expenditures, and acquisition-related payments Adjusted Free Cash-Flow (USD in thousands) | Metric | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | | :---------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Cash-flow from operating activities | 3,988 | 14,603 | 22,188 | 14,430 | 4,405 | | Increase in capitalized software development costs | (1,638) | (1,679) | (1,658) | (1,238) | (1,492) | | Capital expenditures | (696) | (775) | (634) | (400) | (1,047) | | Free cash-flow | 1,654 | 12,149 | 19,896 | 12,792 | 1,866 | | Cash payments attributed to acquisition-related costs | - | - | 30 | 1,100 | - | | **Adjusted free cash-flow** | **1,654** | **12,149** | **19,926** | **13,892** | **1,866** | [Condensed Consolidated Balance Sheet](index=11&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) The Condensed Consolidated Balance Sheet provides a snapshot of Sapiens' financial position as of September 30, 2023, compared to December 31, 2022, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheet - Key Figures (USD in thousands) | Metric | September 30, 2023 | December 31, 2022 | | :---------------------- | :----------------- | :---------------- | | **ASSETS** | | | | Total current assets | 290,387 | 285,307 | | Total long-term assets | 359,766 | 383,037 | | **TOTAL ASSETS** | **650,153** | **668,344** | | **LIABILITIES AND EQUITY** | | | | Total current liabilities | 139,601 | 145,956 | | Total long-term liabilities | 90,833 | 119,534 | | EQUITY | 419,719 | 402,854 | | **TOTAL LIABILITIES AND EQUITY** | **650,153** | **668,344** | - Cash and cash equivalents decreased from **$160,285 thousand** at December **31, 2022**, to **$97,061 thousand** at September **30, 2023**[32](index=32&type=chunk) - Total assets decreased from **$668,344 thousand** to **$650,153 thousand**, while total equity increased from **$402,854 thousand** to **$419,719 thousand**[32](index=32&type=chunk) [Consolidated Statement of Cash Flow](index=12&type=section&id=Consolidated%20Statement%20of%20Cash%20Flow) The Consolidated Statement of Cash Flow outlines the cash generated and used by Sapiens across operating, investing, and financing activities for the nine months ended September 30, 2023, compared to the same period in 2022 Consolidated Statement of Cash Flow - Key Figures (USD in thousands) | Cash Flow Activity | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | 40,779 | 29,350 | | Net cash used in investing activities | (62,636) | (10,762) | | Net cash used in financing activities | (43,232) | (58,375) | | Decrease in cash and cash equivalents | (63,224) | (43,327) | | Cash and cash equivalents at the end of period | 97,061 | 146,916 | - Net cash provided by operating activities increased significantly from **$29,350 thousand** in **2022** to **$40,779 thousand** in **2023**[33](index=33&type=chunk) - Net cash used in investing activities substantially increased from **$(10,762) thousand** in **2022** to **$(62,636) thousand** in **2023**, primarily due to a large investment in deposits[33](index=33&type=chunk) [Debentures Covenants Compliance](index=13&type=section&id=Debentures%20Covenants%20Compliance) As of September 30, 2023, Sapiens was in compliance with all financial covenants under the indenture for its Series B Debentures, demonstrating strong financial health relative to its debt obligations - Sapiens was in compliance with all financial covenants for its Series B Debentures as of September **30, 2023**[34](index=34&type=chunk) Debentures Covenants Compliance as of September 30, 2023 | Covenant | Target | Actual | | :--------- | :------------------------------------------------------------------ | :------------------------------------------------------------------ | | 1 | Shareholders' equity (excluding non-controlling interest): above $120 million | Shareholders' equity (excluding non-controlling interest): $417.2 million | | 2 | Ratio of net financial indebtedness to net capitalization: below 65% | Ratio of net financial indebtedness to net capitalization: (36.68)% | | 3 | Ratio of net financial indebtedness to EBITDA (accumulated for four last quarters): below 5.5 | Ratio of net financial indebtedness to EBITDA: (1.19) |

Sapiens International Corporation N.V. (NASDAQ:SPNS) Q2 2023 Results Conference Call August 2, 2023 9:30 AM ET Company Participants Yaffa Cohen-Ifrah - Chief Marketing Officer and Head, IR Roni Al-Dor - President and CEO Roni Giladi - CFO Conference Call Participants Mayank Tandon - Needham & Company Dylan Becker - William Blair Surinder Thind - Jefferies Kevin Kumar - Goldman Sachs Chris Reimer - Barclays Operator Welcome to Sapiens International Corporation's 2023 Second Quarter Financial Results Call. At ...