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Sapiens International Corporation (SPNS)
:SPNS
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Sapiens
(NASDAQ:SPNS)
Rating:76Outperform
Price Target:
$32.00
▲(11.30%Upside)
Positive Factors
Financial Performance
Strong growth in the ongoing shift to high margin SaaS revenue is driving better margins.
Market Opportunity
The acquisition aligns with Sapiens’ strategic focus as a core system vendor to the global P&C insurance economy, enhancing its offerings for the London specialty market and supporting expansion into APAC and North America.
Revenue Growth
Recent acquisitions of Candela and AdvantageGo are expected to contribute to growth.
Negative Factors
Currency Impact
FX headwinds weighed on the top line, impacting growth.
Growth Impact
Platform investments for future growth are expected to weigh on growth by 300-400 bps.
Profitability
Acquisitions will cause a -170bps margin impact in FY25.
Sapiens (SPNS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.61B
Dividend Yield2.02%
Average Volume (3M)131.94K
Price to Earnings (P/E)22.2
Beta (1Y)0.95
Revenue Growth3.84%
EPS Growth10.25%
CountryUS
Employees4,850
SectorTechnology
Sector Strength86
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.37
Shares Outstanding55,887,226
10 Day Avg. Volume150,565
30 Day Avg. Volume131,945
Financial Highlights & Ratios
PEG Ratio1.85
Price to Book (P/B)2.53
Price to Sales (P/S)0.00
P/FCF Ratio29.33
Enterprise Value/Market Cap0.61
Enterprise Value/Revenue0.46
Enterprise Value/Gross Profit4.04
Enterprise Value/Ebitda2.44
Forecast
1Y Price Target
$30.67Price Target Upside6.68% Upside
Rating ConsensusHold
Number of Analyst Covering4
Sapiens Business Overview & Revenue Model
Company DescriptionSapiens International Corporation (SPNS) is a global provider of software solutions for the insurance industry, offering a comprehensive suite of software and services for property and casualty, life and pension, and reinsurance companies. The company specializes in digital insurance platforms, providing core systems for policy administration, claims management, underwriting, and billing, as well as data and analytics solutions. Sapiens serves a diverse range of insurance businesses worldwide, helping them to enhance operational efficiency, improve customer engagement, and drive digital transformation.
How the Company Makes MoneySapiens generates revenue primarily through the sale of software licenses and related services to insurance companies. Their business model includes recurring revenue from long-term contracts for software maintenance, support services, and cloud-based subscription offerings. Additionally, Sapiens earns income through professional services such as implementation, consulting, and training, which help clients integrate and optimize their software solutions. The company's strategic partnerships with technology and consulting firms further expand their market reach and enhance their service offerings, contributing significantly to their revenue streams.
Sapiens Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: -1.07%|
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.Sapiens Financial Statement Overview
Summary
Sapiens demonstrates strong financial health with consistent revenue growth and robust profitability margins. The company maintains a low leverage profile, contributing to financial stability, and exhibits solid cash flow generation, underscoring its capacity to sustain growth.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.85
Very Positive
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.80
Positive
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.78
Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
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 |
| EBITDA | 105.92M | 94.86M | 83.52M | 84.12M | 63.62M |
| Net Income | 72.18M | 62.44M | 52.59M | 47.17M | 33.77M |
Balance Sheet | |||||
| Total Assets | 691.71M | 689.62M | 666.75M | 714.99M | 714.16M |
| Cash, Cash Equivalents and Short-Term Investments | 216.19M | 202.12M | 180.28M | 210.24M | 182.56M |
| Total Debt | 63.75M | 87.05M | 116.57M | 148.36M | 177.17M |
| 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 | 13.41M | -72.78M | -12.44M | 125.00K | -114.60M |
| Financing Cash Flow | -56.28M | -43.34M | -58.38M | -39.96M | 143.32M |
Sapiens Technical Analysis
Positive
28.75
Price Trends
28.24
Positive
27.37
Positive
28.96
Negative
Market Momentum
0.14
Positive
51.46
Neutral
50.85
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 28.75 is below the 20-day moving average (MA) of 28.91, above the 50-day MA of 28.24, and below the 200-day MA of 28.96, indicating a neutral trend. The MACD of 0.14 indicates Positive momentum. The RSI at 51.46 is Neutral, neither overbought nor oversold. The STOCH value of 50.85 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 (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $1.61B | 22.19 | 16.09% | 2.02% | 3.84% | 10.25% | |
66 Neutral | $1.18B | ― | -36.95% | ― | 17.79% | 16.49% | |
63 Neutral | $1.32B | 191.83 | 2.81% | ― | 22.75% | -47.45% | |
63 Neutral | $1.25B | ― | -6.49% | ― | 5.15% | 28.27% | |
63 Neutral | $1.61B | ― | -32.87% | ― | 8.56% | -4.21% | |
63 Neutral | $33.22B | 5.99 | -11.76% | 1.91% | 5.54% | -19.87% |
* Technology Sector Average
Performance Comparison
SPNS
Sapiens
28.75
-4.26
-12.91%
SPT
Sprout Social
20.35
-16.92
-45.40%
SEMR
SEMrush Holdings
8.92
-4.69
-34.46%
MLNK
MeridianLink
16.25
-5.09
-23.85%
AMPL
Amplitude
12.33
3.75
43.71%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.