Sapiens (SPNS) AI Stock Analysis

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Sapiens

(NASDAQ:SPNS)

76Outperform

Sapiens International Corporation's stock is rated positively due to its strong financial performance characterized by revenue growth, robust profitability, and solid cash flow. The technical indicators suggest upward momentum, and the stock is reasonably valued with a healthy dividend yield. The recent earnings call provided positive guidance despite some challenges, reinforcing confidence in future growth and profitability.

Positive Factors

Acquisition impact

The acquisition of AdvantageGo is expected to be accretive to growth, gross margin, and recurring software revenue mix, with additional synergies expected to drive profitability accretion in the future.

Market opportunity

The APAC region represents a significant market opportunity for Sapiens with increasing adoption of cloud-based solutions by insurers.

Strategic expansion

Sapiens' acquisition of Candela will enhance its global reach and platform differentiation, capitalizing on momentum in the Life side of the business.

Negative Factors

Cloud transition challenges

There are ongoing transitions and progression challenges in Sapiens' cloud and SaaS model.

FX impact

FX headwinds weighed on the top line, impacting growth.

Profitability challenges

The company is currently operating at a reported loss, which creates a slight near-term drag to profitability.

Sapiens (SPNS) vs. S&P 500 (SPY)

Market Cap

$1.60B

Dividend Yield2.03%

Average Volume (3M)151.09K

Price to Earnings (P/E)21.9

Beta (1Y)0.97

Revenue Growth5.40%

EPS Growth14.68%

CountryUS

Employees4,850

SectorTechnology

Sector Strength66

IndustrySoftware - Application

Share Statistics

EPS (TTM)0.37

Shares Outstanding55,887,226

10 Day Avg. Volume154,636

30 Day Avg. Volume151,094

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap0.85

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit5.70

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$29.33

Price Target Upside3.53% Upside

Rating ConsensusHold

Number of Analyst Covering4

Sapiens Business Overview & Revenue Model

Company DescriptionSapiens International Corporation N.V. (SPNS) is a global provider of software solutions for the insurance industry, offering a comprehensive suite of software platforms and services tailored for life, pension, annuity, property and casualty, reinsurance, and financial markets. The company's offerings include core processing software, business intelligence, digital services, and cloud-based solutions, designed to enhance operational efficacy and customer engagement for insurers worldwide.

How the Company Makes MoneySapiens generates revenue primarily through the sale of software licenses, subscription services, and professional services. Software licenses and subscriptions form the core of their revenue model, with clients typically engaging in long-term contracts that provide consistent income streams. The company also earns from implementation and integration services, consulting, and maintenance support offered to its clients. Strategic partnerships with other technology firms and insurance providers also contribute to its revenue, enabling Sapiens to expand its market reach and enhance its product offerings.

Sapiens Financial Statement Overview

Summary

Sapiens demonstrates strong financial health with consistent revenue growth, robust profitability metrics, and a solid balance sheet. The company maintains a low leverage profile, strong cash flow generation, and effective capital management. Overall, Sapiens is well-positioned for growth but must remain attentive to market trends.

Income Statement

―

Sapiens has demonstrated consistent revenue growth, with a 5.40% increase in 2024 over the previous year. The company maintains healthy margins, including a gross profit margin of 43.89% and a net profit margin of 13.31%. The EBIT margin stands at 15.83%, indicating efficient cost management. The EBITDA margin of 20.26% further highlights operational efficiency. Overall, the income statement reflects strong profitability and growth potential.

Balance Sheet

Sapiens exhibits a solid balance sheet with a low debt-to-equity ratio of 0.13, indicating low leverage and reduced financial risk. The return on equity (ROE) is robust at 15.05%, showcasing effective use of equity capital to generate profits. The equity ratio of 69.33% suggests a strong equity base. Overall, the balance sheet highlights financial stability and a conservative approach to debt.

Cash Flow

―

The company has a notable free cash flow growth rate of 13.09%, underscoring its capability to generate cash. The operating cash flow to net income ratio is 1.14, indicating strong cash conversion from operations. The free cash flow to net income ratio is also healthy at 1.10. Overall, Sapiens demonstrates solid cash flow generation and effective capital management.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
542.38M	514.58M	474.74M	461.04M	382.90M
	Gross Profit
238.11M	219.59M	200.16M	187.84M	155.97M
	EBIT
85.85M	78.87M	66.49M	57.49M	45.00M
	EBITDA
109.90M	94.86M	83.52M	84.12M	63.62M
	Net Income Common Stockholders
72.18M	62.44M	52.59M	47.17M	33.77M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
216.19M	202.12M	180.28M	210.24M	182.56M
	Total Assets
691.71M	689.62M	666.75M	714.99M	714.16M
	Total Debt
63.75M	87.05M	116.57M	148.36M	177.17M
	Net Debt
-99.94M	-39.67M	-43.72M	-41.88M	24.61M
	Total Liabilities
212.08M	239.68M	263.90M	306.27M	330.47M
	Stockholders Equity
479.63M	447.27M	402.85M	408.72M	383.69M
Cash Flow		Free Cash Flow
79.35M	70.16M	34.73M	68.69M	47.01M
	Operating Cash Flow
82.22M	79.42M	43.78M	80.54M	58.26M
	Investing Cash Flow
9.28M	-72.78M	-12.44M	125.00K	-114.60M
	Financing Cash Flow
-52.15M	-43.34M	-58.38M	-39.96M	143.32M

Sapiens Technical Analysis

Technical Analysis Sentiment

Positive

Last Price28.33

Price Trends

50DMA

26.75

Positive

100DMA

26.50

Positive

200DMA

30.07

Negative

Market Momentum

MACD

0.60

Negative

RSI

59.45

Neutral

STOCH

66.68

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPNS, the sentiment is Positive. The current price of 28.33 is above the 20-day moving average (MA) of 27.14, above the 50-day MA of 26.75, and below the 200-day MA of 30.07, indicating a neutral trend. The MACD of 0.60 indicates Negative momentum. The RSI at 59.45 is Neutral, neither overbought nor oversold. The STOCH value of 66.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SPNS.

Sapiens Risk Analysis

Sapiens disclosed 39 risk factors in its most recent earnings report. Sapiens reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Sapiens Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SPNS	76 Outperform	$1.60B	21.94	15.57%	2.03%	5.40%	14.68%
SEMR	72 Outperform	$1.54B	187.88	2.81%	―	22.75%	-47.45%
AMPL	66 Neutral	$1.24B	―	-32.87%	―	8.56%	-4.21%
SPT	65 Neutral	$1.21B	―	-39.88%	―	21.66%	8.66%
Sector *	60 Neutral	$10.83B	10.47	-6.71%	2.99%	7.73%	-12.97%
MLNK	57 Neutral	$1.27B	―	-6.36%	―	4.18%	27.11%

* Technology Sector Average

Performance Comparison

SPNS

Sapiens

28.33

-4.69

-14.20%

SPT

Sprout Social

21.81

-6.68

-23.45%

SEMR

SEMrush Holdings

10.00

-5.29

-34.60%

MLNK

MeridianLink

17.23

0.45

2.68%

AMPL

Amplitude

10.50

1.24

13.39%

Sapiens Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: -2.51%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strategic acquisitions and growth in recurring revenue and gross margin. However, challenges such as currency impacts, a decline in European revenue, and loss-making acquisitions were also noted. The positive aspects slightly outweigh the negative ones, with strategic acquisitions positioning the company for future growth.

Q1-2025 Updates

Positive Updates

Strategic Acquisitions

Sapiens International Corporation announced the acquisition of Candela, a leading intelligent automation company in the APAC market, and Advantage Go, a commercial insurance software provider. These acquisitions enhance Sapiens' capabilities in life and P&C segments, expanding their footprint in key markets like APAC and the London specialty market.

Revenue Growth

Revenue for Q1 2025 totaled $136 million, an increase of 1.4% compared to Q1 2024. On a constant currency basis, revenue would have been $2 million higher.

Increase in Recurring Revenue

Annualized recurring revenue (ARR) for Q1 2025 totaled $187 million, reflecting an 11.8% increase from Q1 2024. Recurring revenue represents 79% of total revenue, up from 70% in Q1 2024.

Improvement in Gross Margin

Gross margin increased to 46.3% in Q1 2025 from 45.4% in Q1 2024, representing an increase of 90 basis points.

Positive Cash Flow and Dividends

Adjusted free cash flow for Q1 2025 was $23 million, up from $17 million in Q1 2024. The company also paid a $16.8 million dividend for the second half of 2024 and declared a special dividend of $20.1 million.

Negative Updates

Currency Impact on Revenue

There was a negative currency impact on revenue for Q1 2025 compared to Q1 2024, which would have been $2 million higher on a constant currency basis.

Decline in European Revenue

Revenue in Europe decreased by 1.8% compared to last year. On a constant currency basis, revenue in Europe would have been 0.6% higher.

Loss-Making Acquisitions

The Advantage Go acquisition is expected to remain loss-making throughout the year, impacting overall profitability despite strategic benefits.

Company Guidance

During the Sapiens International Corporation's 2025 First Quarter Financial Results Call, the company provided updated guidance for the fiscal year. Revenue for Q1 2025 was $136 million, marking a 1.4% increase from Q1 2024, despite a $2 million negative currency impact. North American revenue grew by 3.1% to $57 million, while European revenue decreased by 1.8% to $67 million, with constant currency adjustments indicating a 0.6% increase. The Rest of the World, including South Africa and APAC, saw a 13.4% increase to $12 million. The annualized recurring revenue (ARR) rose 11.8% to $187 million. Sapiens raised its non-GAAP revenue guidance to a range of $574 million to $578 million, representing a 6% growth at the midpoint. The operating profit guidance was adjusted to $94 million to $96 million, with an 18% operating margin target. The company anticipates the acquisitions of Candela and Advantage Go to contribute around $21 million to revenue at the midpoint, with a $5 million negative impact on profit due to integration complexities. Despite these short-term impacts, Sapiens expects robust growth and enhanced profitability in the future, aiming for mid to high single-digit revenue growth in 2026.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.