NASDAQ:SPNS Sapiens International Q4 2024 Earnings Report $27.89 +0.23 (+0.83%) Closing price 04/25/2025 04:00 PM EasternExtended Trading$27.88 -0.01 (-0.04%) As of 04/25/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Sapiens International EPS ResultsActual EPS$0.36Consensus EPS $0.37Beat/MissMissed by -$0.01One Year Ago EPSN/ASapiens International Revenue ResultsActual Revenue$134.31 millionExpected Revenue$135.89 millionBeat/MissMissed by -$1.58 millionYoY Revenue GrowthN/ASapiens International Announcement DetailsQuarterQ4 2024Date2/18/2025TimeBefore Market OpensConference Call DateTuesday, February 18, 2025Conference Call Time9:30AM ETUpcoming EarningsSapiens International's Q1 2025 earnings is scheduled for Thursday, May 8, 2025, with a conference call scheduled at 9:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (6-K)Annual Report (20-F)Earnings HistoryCompany ProfilePowered by Sapiens International Q4 2024 Earnings Call TranscriptProvided by QuartrFebruary 18, 2025 ShareLink copied to clipboard.PresentationSkip to Participants Operator00:00:00Welcome to Sapiens International Corporation's twenty twenty four Fourth Quarter Financial Results Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. It is now my pleasure to introduce your host, Yafa Koim Efrach, Chief Marketing Officer and Head of Investor Relations. Thank you, Yafa. Operator00:00:23You may now begin. Yaffa Cohen-IfrahChief Marketing Officer & Head of Investor Relations at Sapiens International00:00:25Thank you, operator. I want to welcome you to the Sapiens conference call to review our fourth quarter and full year results for 2024. With me on the call today are Mr. Roni Aldor, President and CEO Mr. Roni Giladi, CFO and Mr. Yaffa Cohen-IfrahChief Marketing Officer & Head of Investor Relations at Sapiens International00:00:41Alex Zukerman, Chief Strategy Officer. Following the summary of the results, we will be available to answer any questions. Before we start, I would like to remind everyone that this conference call may contain projections or other forward looking statements. The Safe Harbor provisions in the press release issued today also apply to the content of this call. Sapiens expressly disclaim any obligation to update or revise any of these forward looking statements, whether because of future events, new information, a change in its views or expectations or otherwise. Yaffa Cohen-IfrahChief Marketing Officer & Head of Investor Relations at Sapiens International00:01:20On today's call, we will refer to the non GAAP financial measures. A reconciliation of GAAP to non GAAP results has been provided in our press release, which was issued before the market opened this morning. A replay of this call will be available after the call on our Investor Relations section of the company website or via the website link, which is available in the earnings release we published today. I will now turn the call over Yaffa Cohen-IfrahChief Marketing Officer & Head of Investor Relations at Sapiens International00:01:49to Roni Aldor, President and CEO of Sapiens. Roni? Roni Al-DorPresident and CEO at Sapiens International00:01:54Good morning, everyone, and thank you for joining us today for Sapiens' fourth quarter twenty twenty four earnings call. Our revenue in Q4 was $134,000,000 a 2.6% increase compared to last year. This quarter showcased solid execution across our key regions and continued expansion of our core life businesses. Roni Al-DorPresident and CEO at Sapiens International00:02:21In quarter four, we signed over 15 deals with new and existing customers across life and P and C. Since the launch of our insurance platform in June 2024, we successfully closed three platform deals globally, reflecting the positive impact of our insurance platform. Overall, in 2024, we signed 36 deals with new and existing customer. We continue to transition existing customer to the cloud, ending the year with total of 169 customers on the second cloud and we see a great potential to accelerate the cloud transition. Let's drill down into our regional performance. Roni Al-DorPresident and CEO at Sapiens International00:03:12First, as promised, our North America businesses deliver robust growth in 2024. During Q4, we closed five wins with new and existing customers. These wins reinforce insurance, trust in Sapiens to innovate and drive business transformation, enabling them to remain competitive. Our life and annuity businesses continue to expand in quarter after a few successful North America go live and upgrade for our business application. We also continue to grow with new logos. Roni Al-DorPresident and CEO at Sapiens International00:03:56The pipeline for North America live businesses is robust, reaching historical levels. Recognizing our commitment to product innovation, one of our key investment areas and growth driver, Sapiens has been honored for the third consecutive time by Celent. We received the 2024 excellent award for customer base and support for our underwriting pro for life and annuities in North America, reinforcing our leadership in life underwriting solutions. These awards recognize Sapiens exceptional solution that empower insurers to streamline their processes and achieve superior customer outcomes. Let me switch to discuss our core suite P and C in North America for 2024. Roni Al-DorPresident and CEO at Sapiens International00:04:51In Q4 of twenty twenty four, a leading property and casualty underwriting agency, a provider of solution for specialty insurance needs, including flood and fine art went live on billing pro, complementing their core solution of policy pro and claims pro already in production. This go live with additional application is an example of how our insurance platform enables customer upselling. Overall, the P and C team in North America completed over 10 upgrades project this year, we've seen customers upgrading the entire policy suite, billing and claims. Additionally, we execute a cloud transformation for Tier two insurance carriers that provide specialty risk solution across North America. This project includes upgrading to our latest policy port release, which will be completed in early twenty twenty five. Roni Al-DorPresident and CEO at Sapiens International00:05:57In quarter four, we released version 12.1 of core suite of P and C, which include a technology upgrade, significant improvement to operational monitoring, functional enhancement and integration to second digital suite for both the agent and the consumer and several insured partners. These enhancements provide our customer with additional capabilities and improvements that enable businesses growth and enhance platform's efficiency, easy to use distribution and automation. Sapiens continue to invest in North America PNC platform with data suite integration set for 2025, which enables AI automation and advanced analytics. The launch of our P and C platform with the product upgrades will help to enhance our competitive position in North America market and aligns with our go to market strategy of driving increased connection to our data and digital platform offering. Moving to Europe and to the rest of the world. Roni Al-DorPresident and CEO at Sapiens International00:07:09In Q4, we signed 10 deals across Life and P and C with new logos, as well as existing customer in Europe and the rest of the world. We have had several successful Go Live project for customers with our CoreSuite Life solution, EtidSuite, TierSuite and Reinsurance Master. In the European market and the rest of the world, which includes APAC in South Africa, demand for Sapient solution remains robust, as evidenced by our growing pipeline. There is a continued demand for SaaS platform across all solution lines and tiers. We are also experiencing increasing demand for AI driven solution as client increasingly wants to leverage AI to enhance operational efficiency and elevate customer experience. Roni Al-DorPresident and CEO at Sapiens International00:08:04In P and C, the demand for second solution remains strong despite the extended sales cycle as evidenced by improved deal close momentum at year end. In the fourth quarter, we signed new P and C deals with both new and existing customer in Europe and rest of the world. I want to highlight a few new wins this quarter, including a leading Sapiens customer in the Nordic region, who migrated to the second cloud with a significant SaaS agreement, leveraging our Microsoft Cloud strategy and investments. In APAC, we continue our market expansion and strong momentum and close an important P and C platform deal with the leading insurer in The Philippines. This is our first win in this country. Roni Al-DorPresident and CEO at Sapiens International00:08:56Another highlight is go live with Sapiens Data Suite for a long standing customer base in Africa. Having been with Sapiens for nearly two decades, this Tier one customer migrated its data platform to the cloud in a consolidated enterprise wide view to improve performance and productivity, while enhancing security and the overall user experience. A few comments on life and pension. This quarter, we signed a new platform deal in Europe. We also completed several goal lives in the region. Roni Al-DorPresident and CEO at Sapiens International00:09:32The demand for certain slide platform remains strong as demonstrated by our growing pipeline. We see significant uplift in RFPs coming to the market and to Sapiens, indicating strong market demand across Europe and South Africa. Although, sales cycle in the life tend to be more extended than P and C as then offset deal size are much larger. Moving to reinsurance. We continue to expand in North America, Europe and APAC with our reinsurance master and reinsurance pro solution. Roni Al-DorPresident and CEO at Sapiens International00:10:12And in this quarter, we closed new deals with new and existing customer. Let me highlight a couple. In North America, an existing customer, the leading global insurance and investment provider for commercial P and C insurance selects Sapiens Insurance Master. A major European London market insurer selects Sapiens Rensurance Master to modernize its highly specialized London market operations. This is the first London market insurer to utilize Sapiens' innovative London market operational reporting services and underwriting supporting messages feature for reinsurance master. Roni Al-DorPresident and CEO at Sapiens International00:10:55Lastly, we closed the reinsurance master bill in Philippine. On the product front, in the third quarter, we rolled out the Sapiens Decision Underwriting Accelerator, a cutting edge solution designed to enhance underwriting efficiency and significantly improve straight through processing for property and casualty insurers. As I mentioned earlier, we launched our AI based Sapiens insurance platform in June 2024. The platform specialize in meeting the unique requirement of each business vertical or domain. We are integrating AI across our core data and digital solution to enhance automation, improve decision making and drive greater efficiency for insurers. Roni Al-DorPresident and CEO at Sapiens International00:11:45We enable smarter underwriting, more accurate risk assessment and streamline claims processing by embedding AI driven capabilities into our core system. Our AI powered solution leverage advanced data analytics and machine learning to provide actionable insight, optimize workflows and enhance operational agility. Second, the intelligent SaaS solution will help insurance modernize their operational improvement, customer experience and state ahead in digital and data driven industry. We are focused on connecting the power of generative AI within our comprehensive vision of using AI to drive business operations. Our latest platform release demonstrates this focus, incorporating powerful AI capabilities that enable both efficiency and decision making. Roni Al-DorPresident and CEO at Sapiens International00:12:47For agent and broker, our platform delivers a digital portal offering a three sixty degree view of customer and prospects, combining GenAI for summarize QA, know your customer and a suite of machine learning models for strong risk assessment and predictions. Claim handlers and underwriters benefit from our CoPilot Gen AI capabilities, which exponentially amplify their ability to manage tasks. Additionally, we have streamlined business rules configuration, enabling the creation of decision trees and rules via GenAI and automated data mapping for documents and letter using AI. Looking ahead, we have reached a roadmap to create holistic and GenAI co pilot experience across the entire platform, further enhancing the value we deliver to our users. Our strategic partnership with Microsoft is instrumental in driving our product innovation, which is cutting edge AI technology that differentiates our platform's digital transformation capabilities in the insurance industry. Roni Al-DorPresident and CEO at Sapiens International00:14:10In January 2025, we announced the availability of Sapiens SaaS solution in the Microsoft Azure marketplace. Microsoft Azure customers can purchase Sapiens SaaS solution, enabling them to leverage Azure's scalability, reliability and agility to drive their application development and shape their business strategic. Moving to system integrators. Sapiens continued to make progress this quarter in its collaboration with system integrators. This emerging channel is open doors to insurers that were previously beyond our reach, expanding our market opportunity and our pipeline. Roni Al-DorPresident and CEO at Sapiens International00:14:55In 2024, Sapiens formalized a commitment and internal process to support an SI alignment model for our go to market and delivery. As a result, in 2024, we closed a significant live platform deals in North America with the SI partner. Also SI were involved with a meaningful number of opportunities. Sapiens continued to strengthen its existing partnership with Deloitte globally with LTI Mindtree in North America. We also developed new partnership with Crawford, Norimaa, Cognizant and other regional SI. Roni Al-DorPresident and CEO at Sapiens International00:15:39We are excited about the outcomes our growing SI relationship deliver and will continue to develop this valuable channel as a top strategic initiative in 2025. Before I wrap up, I would like to share our focus for 2025. Our commitment to building a robust pipeline and expanding our client base across all key markets remain solid. To support this commitment and achieve our goals in 2025 and beyond, we have identified the following areas of focus for our teams and our resources. First, platform innovation and advanced AI capabilities. Roni Al-DorPresident and CEO at Sapiens International00:16:24We will continue to invest in second intelligent insurance platform focusing on innovation and client success aims to drive sustainable growth globally and improve our competitive position. We will continue to actively integrated AI into our offering to enhance various aspects of our customer operation. In addition, we are integrating AI tools into our implementation and delivery process to reduce implementational costs. Second, increasing cross sell to expand with existing customer. Cross selling to existing customer presents a significant opportunity for growth, especially considering that most of our customer current only have one Sapiens product. Roni Al-DorPresident and CEO at Sapiens International00:17:17We have done extensive analysis to validate the cross selling opportunity for our core business application, data, digital, AI and decision solution. By identifying and targeting the specific need of our customer, we can introduce them to additional solution that complement their existing solution. We are also increasing our investment in the client management and the relationship building by expanding our client partners team and our account management team within our divisions. This effort extends across our entire customer base to drive deeper relationship, maximize customer value and unlock new growth opportunities. Cross selling as a shorter sales cycle compared to acquiring new customers allow us to achieve faster revenue growth. Roni Al-DorPresident and CEO at Sapiens International00:18:17Third, accelerating cloud adoption for our existing customer through a scalable and efficient SaaS model. This transition supports our long term customer relationship and will drive sustained growth and value creation. We now have a unique opportunity to accelerate cloud adoption as our new SaaS solution offer exclusive benefit such as AI driven capability that are not available in older versions. So we aim to enhance our growth in our life and pension and annuities businesses globally. The demand for life system transformation is strong as insurers seek to modernize legacy infrastructure. Roni Al-DorPresident and CEO at Sapiens International00:19:03This market shift presents a significant opportunity for our life offerings. Second Life solution featuring market leading components seamlessly integrated into a powerful platform provide a strong competitive advantage in differentiation. This position us as a market leader and we are already gaining significant momentum. Our objective is to capitalize our momentous pipeline, which currently is the highest among all Sapiens products. And lastly, we continue building out our system integrator partnership globally. Roni Al-DorPresident and CEO at Sapiens International00:19:46In 2025, there will be a focus on developing a new pipeline with SI partners by formalizing enablement, training, certification and joint delivery models to continue to support the strategy. There will be an increased focus on maturing the model in North America to support the growth plan in the region. In summary, Q4 twenty twenty four marked another quarter of growth and operational progress. And we remain committed to delivering long term growth across all of our key territories. Roni GiladiChief Financial Officer at Sapiens International00:20:26I will turn the call over to our CFO to provide more details on our financial performance. Thank you, Roni. I will begin my commentary by reviewing the fourth quarter and full year 2024 non GAAP results, followed by comments on the balance sheet and cash flow. I will wrap up with our guidance for 2025. Revenue in fourth quarter of twenty twenty four totaled $134,000,000 an increase of 2.6% compared to $131,000,000 in the fourth quarter of twenty twenty three. Roni GiladiChief Financial Officer at Sapiens International00:21:03In Q4 twenty twenty four, we had currency headwind compared to Q3 of twenty twenty four. On a constant currency basis, our Q4 revenue were $2,000,000 higher than the reported Q4 revenue. Reported revenues for Q4 and the full year were in line with the update guidance we provided last quarter despite the currency headwind in Q4. For Q4 twenty twenty four, our annualized recurring revenue ARR reached $175,000,000 reflecting 6.5% decrease from Q4 of last year, higher than the total reported revenue growth during the same period. Our revenue mix show that revenue from recurring software product and reoccurring post production services increased year over year by 7.7% to $97,000,000 compared to $90,000,000 in Q4 twenty twenty three. Roni GiladiChief Financial Officer at Sapiens International00:22:02Growth of this segment was higher than the overall reported growth in line with our strategy to increase recurring and reoccurring revenues. I want to emphasize that recurring and reoccurring revenues in Q4 twenty twenty four represent 72.5% of total revenue, reflecting 3.4% increase compared to Q4 of last year. Moving on to profitability. Gross profit in the quarter was $63,000,000 compared to $59,000,000 in Q4 of twenty twenty three. The gross margin in the quarter was 46.7% compared to 45.4% in Q4 twenty twenty three, representing an increase of 130 basis points. Roni GiladiChief Financial Officer at Sapiens International00:22:54This increase in gross margin was primarily due to higher recurring and reoccurring revenue ratio of total revenue with higher gross margin than gross margin from one time implementation. Operating profit in the fourth quarter of twenty twenty four was $24,000,000 similar to Q4 twenty twenty three. Net income attributable to Sapan's shareholders for the fourth quarter of twenty twenty four was $21,000,000 up 3.1% from $20,000,000 in Q4 of twenty twenty three. Earnings per share was Roni GiladiChief Financial Officer at Sapiens International00:23:35$0.37 Roni GiladiChief Financial Officer at Sapiens International00:23:35for the fourth quarter of twenty twenty four, up from $0.36 of the fourth quarter of last year. Turning now to full year results, For the twelve months ended 12/31/2024, '20 '20 '4 revenues totaled $542,000,000 up 5.4% compared to $515,000,000 in 2023. We met our full year updated revenue guidance, which we provided in Q3, despite the currency headwind happened in Q4. Turning to revenue mix. In 2024, revenue from recurring software products and reoccurring production services totaled $390,000,000 compared to $342,000,000 in 2023, a $48,000,000 increase or 14.1% growth. Roni GiladiChief Financial Officer at Sapiens International00:24:36This recurring and reoccurring revenue represent 72% of our total revenue in 2024. Moving to geographic breakdown. Revenue in North America represents 42% of total revenue. Our European revenue represents 50 percent and the rest of the world represents 8% of total revenue. Growth in 2024 will drive from growth of 6.3% in North America, 4 Point 9 Percent in Europe and 3.7% in rest of worlds. Roni GiladiChief Financial Officer at Sapiens International00:25:16We do not have customer concentration as evident by the fact that our top 10 customer represent 21.5% of revenue with no customer representing more than 5% of total revenue. Gross profit increased by $16,000,000 in 2024, while gross profit margin increased by 60 basis points to 45.9%. The main reason for the gross margin improvement are a better ratio of recurring and reoccurring revenue than last year and improve in offshore ratio. Our operating profit increased by $5,000,000 or 4.8%. The operating margin was 18.2, which is in line with our guidance. Roni GiladiChief Financial Officer at Sapiens International00:26:10Despite the increase in gross margin of 60 basis points, our operating margin declined by 10 basis points versus twenty twenty three. Due to our strategic decision at the beginning of the year to increase investment in sales and marketing in absolute dollar and as a percentage from total revenue. Net income attributable to Sapiens shareholder for 2024 was $83,000,000 up 10.5% from $75,000,000 in 2023. Earnings per diluted share was $1.48 up 9.6 from $1.35 in 2023. Turning now to our balance sheet. Roni GiladiChief Financial Officer at Sapiens International00:26:59As of 12/31/2024, we had cash and cash equivalents and short term deposits totaling $216,000,000 and debt of $40,000,000 In January 2025, we paid the annual debenture coupon of $20,000,000 The last and final payment of $20,000,000 is scheduled for January 2026. Turning to adjusted free cash flow. In Q4 twenty twenty four, we generated an adjusted free cash flow of $41,000,000 compared to $37,000,000 in Q4 of twenty twenty three. During 2024, we generated adjusted free cash flow of $75,000,000 compared to $71,000,000 in 2023. Our adjusted free cash flow represent 89.5% of our non GAAP net income, proving our business model of converting net profit to free cash flow. Roni GiladiChief Financial Officer at Sapiens International00:28:02Let me now introduce our guidance for 2025. Revenues. Non GAAP revenue in the range of $553,000,000 to $558,000,000 representing growth of 2.4 at the midpoint. This growth assume a currency headwind on revenue mainly to the euro and pound, which have weakened by 42% respectively versus the USA dollar. On a constant currency basis, our growth rate would be 3.4%. Roni GiladiChief Financial Officer at Sapiens International00:28:38Profit, non GAAP operating profit in the range of 98,000,000 to 102,000,000 with operating margin of 18% at the midpoint. On a constant exchange rate, our operating profit would be higher and implies an operating margin of 18.7%. The negative currency impact on operating profit is mainly due to the euro and pound weakening versus the USA dollar and the strengthening of the Israeli shekel versus the USA dollar. Let me elaborate on the factors impacting our 2025 guidance. In Q3 twenty twenty four earning calls, we discussed the factor impacting 2024 and 2025 growth, transition to SaaS, core P and C North America and macroeconomic uncertainty. Roni GiladiChief Financial Officer at Sapiens International00:29:36We will now provide an update on these variables as they relate to our growth outlook. The transition to SaaS, we anticipate a similar impact on growth in 2025, as we mentioned in the earning call of Q3. With the transition of existing customer and the signing of new SaaS contracts expected to create an estimated 2% to 3% revenue headwind. Core P and C in North America. Ron Ildorf mentioned in his remarks that we are making a strategic investment in our P and C platform and are already seeing early positive indicators. Roni GiladiChief Financial Officer at Sapiens International00:30:16We expect this effort to provide contribution starting in 2026 and beyond. Macroeconomic uncertainty continue to persist across global markets, including North America, The Middle East and other regions. We do not control these factors and cannot predict when they will stabilize. Those macroeconomic factors can lead to delay in signing new deals, which can in turn impact our revenue growth. As mentioned, those three factors that emerge in 2024 will impact our growth in 2025. Roni GiladiChief Financial Officer at Sapiens International00:30:59In late Q4 of twenty twenty four, we had a strong deal closing momentum. Even with this strong deal closing momentum, the timing of this closing affects the pace of revenue realization in 2025 and as a result our overall growth. I want to reiterate that we remain focused on accelerating our growth trajectory. To accelerate our growth beyond 2025, we are taking the following steps: One, expanding new logo acquisition globally. We are strengthening our sales team, introducing our comprehensive insurance platform and deepening our relationship with system integrator. Roni GiladiChief Financial Officer at Sapiens International00:31:46Since we started our initiative to work with SI, we we signed two new logos in North America through SI partnership, driving cross sell opportunity with existing customer. We are expanding our team and leveraging our pre integrated insurance platform as a key enabler to cross sell additional application and maximize customer value. In 2024, cross selling grew by 18% compared to last year. Three, advancing the transition of existing customer to cloud and subscription. In 2023, we successfully migrated seven customers to the cloud, followed by additional 10 cloud migration in 2024. Roni GiladiChief Financial Officer at Sapiens International00:32:41The total number of cloud customer at the end of twenty twenty four was 169 and we are focused on accelerating this momentum in the coming years. Currently, 28% of our customers are on the cloud and our goal is to reach over 60% of our total customer within the next five years, reinforcing our commitment to long term growth and higher ARR ratio. Before handing the call back to Oneldor, I want to reiterate that we remain focused on successful execution of our strategy, prioritizing sustainable growth and profitability. I will now turn the call back to O'Neill Do. O'Neill? Roni Al-DorPresident and CEO at Sapiens International00:33:28Thank you, O'Neill. We delivered a solid fourth quarter reflecting the progress across our key markets. Our continued investment in our insurance platform remains a critical driver for growth. Most importantly, we are committed to deliver long term growth across all of our key territories and reinforce our position as a trusted provider of intelligent insurance solution. I want to thank our global team for their commitment to excellence and growth and our investor for their ongoing support of Sapiens. Roni Al-DorPresident and CEO at Sapiens International00:34:06I will now ask the operator to please open the call for questions. Operator00:34:12Thank you. The first question is from Dylan Becker of William Blair. Please go ahead. Analyst00:34:53Hey guys, it's Rob here. Maybe, Marty, sticking with some of the 2025 initiatives, you called out kind of cross selling and obviously accelerating the migration framework. You touched on a lot of the cloud customers landing more wall to wall, having that kind of full suite adoption approach due to the integration of the platform. I wonder how that kind of fuels your confidence in those two initiatives given you do have a vast ecosystem of customers to migrate and it seems that their propensity to kind of spend more and adopt more of the core platform continues to grow in the cloud as well. Roni Al-DorPresident and CEO at Sapiens International00:35:28Yes. Hi, this is Roni Hay. As to answer your question about the cloud and the platform, in both areas, we feel very comfortable. We are migrate many, as we said, but we have a huge potential for both of them. And this is also now core platform, core system also the business application as well. Roni Al-DorPresident and CEO at Sapiens International00:35:54For the new clients, we are this is almost standard. So it's 99% are going with these two solutions from the leasing. There is still many opportunity ahead of us. At this moment, we are more try to convince the customer to evolve, but we are not pushing this is our plan for the future for in the upgrade situation that they will have to push them to the cloud. So that's from my side, maybe Alex want to add. Alex ZukermanChief Strategy Officer at Sapiens International00:36:31So then just to add to what Roni said, this is Alex. When it comes to the existing customers, so again reiterate what Roni said, we increased the pace of transferring existing customers from on prem to cloud, a place to continue and focus on that to reach the 60% level within the next five years. This is one clear target. The second one is the modular notion of the platform allows us to come back to our customer to the existing customer base and find their missing solutions that we can provide. So we see a large white space within our customer base and the connectivity of the platform it means for them that there is a stronger economy of scale and usability by taking those models from us and not from someone else and this is part of our offerings. Alex ZukermanChief Strategy Officer at Sapiens International00:37:26Also there we see lots of interest and the plan is to continue in that. In order also to facilitate that or not on the product side, but on the sales side, we increased the team at Sapiens that looks after existing accounts. And we are encouraging them to go stronger after this customer base. Roni GiladiChief Financial Officer at Sapiens International00:37:49Maybe one Roni GiladiChief Financial Officer at Sapiens International00:37:50more sentence into that. This year we've been able to transfer 10 existing customer to the cloud. We see also increasing momentum on this opportunity. We also been able to transfer big accounts that give a confidence that we are being able to do this with many customer of us going forward. And this give us the notion of reaching 60% in five Roni GiladiChief Financial Officer at Sapiens International00:38:18years. Analyst00:38:18Got it. Okay. Thank you all. That was really helpful. Analyst00:38:21Maybe to the Life side seems to be another area of notable strength. Can you kind of give us a sense maybe the dynamics obviously on that space that are pushing for faster modernization now? And maybe how we can kind of reconcile that or look back as some of the trends you've seen play out or you're seeing play out maybe on the life side relative to how the P and C opportunity has played out over the last several years too. That sounds really exciting as well. Alex ZukermanChief Strategy Officer at Sapiens International00:38:51So this is Alex again. So what we've seen on the life insurance space globally strong focus on North America, but also in the rest other parts of the world, strong emphasis of carriers to replace systems and to drive modernization on the life side. What we've seen in the past five to seven years in the P and C market is happening now on the life side. The P and C went a bit before the life into this replacement and into this modernization process in general. Now we see strong tendency on the life side. Alex ZukermanChief Strategy Officer at Sapiens International00:39:23Digital combination of factors. One is the overall digitalization of the world, the strong competition that requires them to be tech savvy. The second part is the macroeconomics, the volatile stock market, the interest rate, the inflation, they all drive to stronger adoption of life insurance, especially on the individual side as it comes as solution to the individual market. This is a great momentum for us also from timing perspective coming into the North America market with the platform approach that on this case provides a strong differentiation because we managed to combine several leading products and capabilities as a standalone basis to combine them into an holistic combined offering that really ticked the boxes for the majority of needs of our customers and we see great adoption on the platform notion with the customers. It's a strong differentiation compared to our competition in the market. Alex ZukermanChief Strategy Officer at Sapiens International00:40:29So we feel very, very strong on the combination of we have the right offering to the market, powerful platform approach together with the macroeconomics that drives adoption to their life. We feel we have a strong opportunity here. Analyst00:40:44Okay, great. Thanks Alex. Really helpful there. Maybe one last clarification one for Roni G here. You guys gave out the constant currency revenue number and impact in the 2024. Analyst00:40:54But any sense on constant currency from an ARR perspective in the quarter and how to think about 2025 given the post production strength we continue to see in the business? Thanks guys. Roni GiladiChief Financial Officer at Sapiens International00:41:04Thank you. We grew this quarter 6.4% on the ARR versus a lower number 2% or 2.4% in the quarter in total revenue. Obviously, the ARR is going faster. The contract exchange rate obviously impact the ARR. We need to add additional 1%. Roni GiladiChief Financial Officer at Sapiens International00:41:29So we are 7.4% ARR growth in the company today. We are looking to increase this ratio going forward, going to 02/2005, '2 thousand and '6 and going onwards. And as we mentioned, we'd like to do a transition to the cloud, which will support this ARR, what we discussed a minute ago. And obviously, all the new customer are automatically on the cloud on subscription base. So both of these factor will impact the ARR growth and increase the growth rate to 10% and onwards. Analyst00:42:04Great. Thank you guys. Appreciate it. Operator00:42:08The next question is from Chris Reimer of Barclays. Please go ahead. Tavy RosnerAnalyst at Barclays Capital00:42:15Yes. Hi. Thanks for taking my question. I was wondering if you had been thinking about M and A in the pipeline and if there's anything new around that seeing as it's been a while since there's been any acquisitions by you guys. Just wondering what's your thinking on that right now given the environment you're in? Roni GiladiChief Financial Officer at Sapiens International00:42:42I will start and maybe on Alex will continue. Obviously, M and A is part of our growth hands and therefore we are pursuing for this opportunity. You are right, in the last three two to three years we didn't complete any M and A. The main reason two years ago was the valuation and opportunities across the globe, North America and Europe. And We are focusing on mid to small K companies, potentially sometimes when there is opportunity, we are looking also for big organization. Roni GiladiChief Financial Officer at Sapiens International00:43:28I can emphasize that here in 2024, we had good opportunity in the European market, both on P and C and Life. We compete with several competitors to do this acquisition, at the end came to the final two and we lost again based on valuation the price at the last point was unreasonable to us and we drove. I mentioned in this to show the confidence that we are really engaged in this opportunity and we are looking in 2025 to complete at least one M and A in the next until the end of the year. So full engage in this opportunity to execute with the cash and we are ready to do so. Tavy RosnerAnalyst at Barclays Capital00:44:11Great. Thanks for that. That's great color. That's it for me. Operator00:44:16The next question is from Alexei Gogolov of JPMorgan. Please go ahead. Alexei GogolevExecutive Director at JPMorgan Chase00:44:23Hello, everyone. Ronny Chi, I was wondering if you can elaborate on the comment you made about customer concentration. I've noticed that top 10 now represent 21.5% versus 18.8% in 2023. And same with the largest customer, which used to be just over 3% of sales. So can you maybe talk about what was the dynamic there maybe reveal those large customer trends? Roni GiladiChief Financial Officer at Sapiens International00:45:00Hi, Alexei. This is Roni. Obviously, I think we have amazing metrics in terms of customer concentration and there isn't any one dependent on the customer. As I mentioned, the biggest customer is only 4%. Yes, slightly higher than last year of 3%, but this is not material in terms of the total volume of sapiens. Roni GiladiChief Financial Officer at Sapiens International00:45:24Going forward, we are looking to keep this momentum of the same level 21%, twenty % of the top 10 and less than 5% from the overall. We do not see any risk from this customer and obviously no tricks for Sapiens overall revenue. Alexei GogolevExecutive Director at JPMorgan Chase00:45:43Okay. Thank you. And then a follow-up on Dylan's question about cloud. So as I understood, you've added 10 customers to Sapiens Cloud in 2024. It sounds like you're looking to add another 200 over the next five years. Alexei GogolevExecutive Director at JPMorgan Chase00:46:04Can you talk about the pace that you were hoping to accelerate per year? And what sort of carrots and sticks you have in mind in order to persuade these customers to migrate to that cloud? Roni GiladiChief Financial Officer at Sapiens International00:46:22Yes. Obviously, the growth from 28% to 60% looks a lot. But if you dive in into the figures, we basically came from two verticals. The first one that is ongoing all the time. As Henry and Alex mentioned, all new deals that we are signing are on the cloud subscription. Roni GiladiChief Financial Officer at Sapiens International00:46:42So this is by itself going to contribute significant amount of percentage to the 60% total volume. The second vertical is that we have almost four fifty customers or slightly less customer that we sold several years ago. And we are approaching them in order to push them to move to the subscriptioncloud over the years. Last year, we did 10. We are looking to increase these factors even to fifteen, twenty and thirty going forward as the adoption for subscriptioncloud is growing bigger and bigger as we speak. Roni GiladiChief Financial Officer at Sapiens International00:47:20So coming from two vertical, new customer and shifting existing one to a cloud. Alexei GogolevExecutive Director at JPMorgan Chase00:47:30And Roni, just to clarify a comment you made earlier on the call. So 36 deals total in 2024, similar number to 2023. But could you may the Roni GiladiChief Financial Officer at Sapiens International00:47:55contribution to the ARR is slightly smaller than has been the contribution to the ARR is slightly smaller than as we continue. The contribution from the ARR is increasing as we signing them. I think we had a higher number of deals that we signed from cross sell and sometimes cross sell is already in the cloud, but every deal that we are signing new logo contributed there again in the early years less than as we continue going forward. Alexei GogolevExecutive Director at JPMorgan Chase00:48:32And are those deals mostly in P and C or in life or broadly equal? Roni GiladiChief Financial Officer at Sapiens International00:48:38Across the board. Alexei GogolevExecutive Director at JPMorgan Chase00:48:40Okay, perfect. Thank you, Roni. Operator00:48:53Roni. There are no further questions at this time. Before I ask Ms. Yafa Koinifrah to go ahead with her closing statement, I would like to remind participants that a replay of this call is scheduled to begin in two hours. In The U. Operator00:49:17S, please call 8060 In Israel, please call Ms. Cohen Ifrah, please go ahead. Yaffa Cohen-IfrahChief Marketing Officer & Head of Investor Relations at Sapiens International00:49:36Thank you for joining our call today. We look forward to discussing our first quarter results on the next earning call. We welcome you to contact us if you have any further questions. Thank you. Operator00:49:48Thank you. This concludes the Sapiens International Corporation fourth quarter twenty twenty four results conference call. Thank you for your participation. You may go ahead and disconnect.Read moreParticipantsExecutivesYaffa Cohen-IfrahChief Marketing Officer & Head of Investor RelationsRoni Al-DorPresident and CEORoni GiladiChief Financial OfficerAlex ZukermanChief Strategy OfficerAnalystsAnalystTavy RosnerAnalyst at Barclays CapitalAlexei GogolevExecutive Director at JPMorgan ChasePowered by Conference Call Audio Live Call not available Earnings Conference CallSapiens International Q4 202400:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipants Earnings DocumentsPress Release(6-K)Annual report(20-F) Sapiens International Earnings HeadlinesWilliam Blair Sticks to Their Hold Rating for Sapiens (SPNS)April 24 at 6:52 PM | markets.businessinsider.comSapiens International Co. (NASDAQ:SPNS) Given Consensus Recommendation of "Hold" by BrokeragesApril 24 at 2:05 AM | americanbankingnews.com$2 Trillion Disappears Because of Fed's Secretive New Move$2 trillion has disappeared from the US government's books. The reason why is a new, secretive move being carried out by the Fed that has nothing to do with lowering or raising interest rates... but could soon have an enormous impact on your wealth.April 27, 2025 | Stansberry Research (Ad)Sapiens International Corporation: Sapiens Acquires Candela to Expand its Footprint in APAC and Enhance its Life Product PortfolioApril 22, 2025 | finanznachrichten.deSapiens Acquires Candela to Expand its Footprint in APAC and Enhance its Life Product PortfolioApril 22, 2025 | prnewswire.comSAPIENS TO ANNOUNCE FIRST QUARTER 2025 FINANCIAL RESULTS ON MAY 8, 2025April 17, 2025 | prnewswire.comSee More Sapiens International Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Sapiens International? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Sapiens International and other key companies, straight to your email. Email Address About Sapiens InternationalSapiens International (NASDAQ:SPNS) N.V. provides software solutions for the insurance industry in North America, the United Kingdom, Europe, the Middle East, Africa, the Asia Pacific, and internationally. The company provides various solutions for property and casualty commercial and personal lines, life and pensions, and reinsurance fields. It offers IDITSuite, an AI powered, end-to-end insurance software; DigitalSuite, a cloud-native, future-proof digital engagement platform; IDITGo, a pre-configured, data-enriched insurance launch and accelerator platform solutions; consultancy services for property and casualty commercial lines; and Tia Enterprise solution for customer engagement. The company also provides CoreSuite, an end-to-end cloud and digital PAS for individual and group products across life, health, wealth, and pensions; CustomerConnect, a dynamic self-service and persona-based portal to engage with insureds; AgentConnect, a portal for agents and brokers to focus on sales enablement, customer retention, and increasing customer value; and ReinsuranceMaster, a reinsurance automation software that provides insurers full financial control and flexibility over their entire reinsurance process. The company was founded in 1982 and is headquartered in Holon, Israel.View Sapiens International ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Markets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Starbucks (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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PresentationSkip to Participants Operator00:00:00Welcome to Sapiens International Corporation's twenty twenty four Fourth Quarter Financial Results Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. It is now my pleasure to introduce your host, Yafa Koim Efrach, Chief Marketing Officer and Head of Investor Relations. Thank you, Yafa. Operator00:00:23You may now begin. Yaffa Cohen-IfrahChief Marketing Officer & Head of Investor Relations at Sapiens International00:00:25Thank you, operator. I want to welcome you to the Sapiens conference call to review our fourth quarter and full year results for 2024. With me on the call today are Mr. Roni Aldor, President and CEO Mr. Roni Giladi, CFO and Mr. Yaffa Cohen-IfrahChief Marketing Officer & Head of Investor Relations at Sapiens International00:00:41Alex Zukerman, Chief Strategy Officer. Following the summary of the results, we will be available to answer any questions. Before we start, I would like to remind everyone that this conference call may contain projections or other forward looking statements. The Safe Harbor provisions in the press release issued today also apply to the content of this call. Sapiens expressly disclaim any obligation to update or revise any of these forward looking statements, whether because of future events, new information, a change in its views or expectations or otherwise. Yaffa Cohen-IfrahChief Marketing Officer & Head of Investor Relations at Sapiens International00:01:20On today's call, we will refer to the non GAAP financial measures. A reconciliation of GAAP to non GAAP results has been provided in our press release, which was issued before the market opened this morning. A replay of this call will be available after the call on our Investor Relations section of the company website or via the website link, which is available in the earnings release we published today. I will now turn the call over Yaffa Cohen-IfrahChief Marketing Officer & Head of Investor Relations at Sapiens International00:01:49to Roni Aldor, President and CEO of Sapiens. Roni? Roni Al-DorPresident and CEO at Sapiens International00:01:54Good morning, everyone, and thank you for joining us today for Sapiens' fourth quarter twenty twenty four earnings call. Our revenue in Q4 was $134,000,000 a 2.6% increase compared to last year. This quarter showcased solid execution across our key regions and continued expansion of our core life businesses. Roni Al-DorPresident and CEO at Sapiens International00:02:21In quarter four, we signed over 15 deals with new and existing customers across life and P and C. Since the launch of our insurance platform in June 2024, we successfully closed three platform deals globally, reflecting the positive impact of our insurance platform. Overall, in 2024, we signed 36 deals with new and existing customer. We continue to transition existing customer to the cloud, ending the year with total of 169 customers on the second cloud and we see a great potential to accelerate the cloud transition. Let's drill down into our regional performance. Roni Al-DorPresident and CEO at Sapiens International00:03:12First, as promised, our North America businesses deliver robust growth in 2024. During Q4, we closed five wins with new and existing customers. These wins reinforce insurance, trust in Sapiens to innovate and drive business transformation, enabling them to remain competitive. Our life and annuity businesses continue to expand in quarter after a few successful North America go live and upgrade for our business application. We also continue to grow with new logos. Roni Al-DorPresident and CEO at Sapiens International00:03:56The pipeline for North America live businesses is robust, reaching historical levels. Recognizing our commitment to product innovation, one of our key investment areas and growth driver, Sapiens has been honored for the third consecutive time by Celent. We received the 2024 excellent award for customer base and support for our underwriting pro for life and annuities in North America, reinforcing our leadership in life underwriting solutions. These awards recognize Sapiens exceptional solution that empower insurers to streamline their processes and achieve superior customer outcomes. Let me switch to discuss our core suite P and C in North America for 2024. Roni Al-DorPresident and CEO at Sapiens International00:04:51In Q4 of twenty twenty four, a leading property and casualty underwriting agency, a provider of solution for specialty insurance needs, including flood and fine art went live on billing pro, complementing their core solution of policy pro and claims pro already in production. This go live with additional application is an example of how our insurance platform enables customer upselling. Overall, the P and C team in North America completed over 10 upgrades project this year, we've seen customers upgrading the entire policy suite, billing and claims. Additionally, we execute a cloud transformation for Tier two insurance carriers that provide specialty risk solution across North America. This project includes upgrading to our latest policy port release, which will be completed in early twenty twenty five. Roni Al-DorPresident and CEO at Sapiens International00:05:57In quarter four, we released version 12.1 of core suite of P and C, which include a technology upgrade, significant improvement to operational monitoring, functional enhancement and integration to second digital suite for both the agent and the consumer and several insured partners. These enhancements provide our customer with additional capabilities and improvements that enable businesses growth and enhance platform's efficiency, easy to use distribution and automation. Sapiens continue to invest in North America PNC platform with data suite integration set for 2025, which enables AI automation and advanced analytics. The launch of our P and C platform with the product upgrades will help to enhance our competitive position in North America market and aligns with our go to market strategy of driving increased connection to our data and digital platform offering. Moving to Europe and to the rest of the world. Roni Al-DorPresident and CEO at Sapiens International00:07:09In Q4, we signed 10 deals across Life and P and C with new logos, as well as existing customer in Europe and the rest of the world. We have had several successful Go Live project for customers with our CoreSuite Life solution, EtidSuite, TierSuite and Reinsurance Master. In the European market and the rest of the world, which includes APAC in South Africa, demand for Sapient solution remains robust, as evidenced by our growing pipeline. There is a continued demand for SaaS platform across all solution lines and tiers. We are also experiencing increasing demand for AI driven solution as client increasingly wants to leverage AI to enhance operational efficiency and elevate customer experience. Roni Al-DorPresident and CEO at Sapiens International00:08:04In P and C, the demand for second solution remains strong despite the extended sales cycle as evidenced by improved deal close momentum at year end. In the fourth quarter, we signed new P and C deals with both new and existing customer in Europe and rest of the world. I want to highlight a few new wins this quarter, including a leading Sapiens customer in the Nordic region, who migrated to the second cloud with a significant SaaS agreement, leveraging our Microsoft Cloud strategy and investments. In APAC, we continue our market expansion and strong momentum and close an important P and C platform deal with the leading insurer in The Philippines. This is our first win in this country. Roni Al-DorPresident and CEO at Sapiens International00:08:56Another highlight is go live with Sapiens Data Suite for a long standing customer base in Africa. Having been with Sapiens for nearly two decades, this Tier one customer migrated its data platform to the cloud in a consolidated enterprise wide view to improve performance and productivity, while enhancing security and the overall user experience. A few comments on life and pension. This quarter, we signed a new platform deal in Europe. We also completed several goal lives in the region. Roni Al-DorPresident and CEO at Sapiens International00:09:32The demand for certain slide platform remains strong as demonstrated by our growing pipeline. We see significant uplift in RFPs coming to the market and to Sapiens, indicating strong market demand across Europe and South Africa. Although, sales cycle in the life tend to be more extended than P and C as then offset deal size are much larger. Moving to reinsurance. We continue to expand in North America, Europe and APAC with our reinsurance master and reinsurance pro solution. Roni Al-DorPresident and CEO at Sapiens International00:10:12And in this quarter, we closed new deals with new and existing customer. Let me highlight a couple. In North America, an existing customer, the leading global insurance and investment provider for commercial P and C insurance selects Sapiens Insurance Master. A major European London market insurer selects Sapiens Rensurance Master to modernize its highly specialized London market operations. This is the first London market insurer to utilize Sapiens' innovative London market operational reporting services and underwriting supporting messages feature for reinsurance master. Roni Al-DorPresident and CEO at Sapiens International00:10:55Lastly, we closed the reinsurance master bill in Philippine. On the product front, in the third quarter, we rolled out the Sapiens Decision Underwriting Accelerator, a cutting edge solution designed to enhance underwriting efficiency and significantly improve straight through processing for property and casualty insurers. As I mentioned earlier, we launched our AI based Sapiens insurance platform in June 2024. The platform specialize in meeting the unique requirement of each business vertical or domain. We are integrating AI across our core data and digital solution to enhance automation, improve decision making and drive greater efficiency for insurers. Roni Al-DorPresident and CEO at Sapiens International00:11:45We enable smarter underwriting, more accurate risk assessment and streamline claims processing by embedding AI driven capabilities into our core system. Our AI powered solution leverage advanced data analytics and machine learning to provide actionable insight, optimize workflows and enhance operational agility. Second, the intelligent SaaS solution will help insurance modernize their operational improvement, customer experience and state ahead in digital and data driven industry. We are focused on connecting the power of generative AI within our comprehensive vision of using AI to drive business operations. Our latest platform release demonstrates this focus, incorporating powerful AI capabilities that enable both efficiency and decision making. Roni Al-DorPresident and CEO at Sapiens International00:12:47For agent and broker, our platform delivers a digital portal offering a three sixty degree view of customer and prospects, combining GenAI for summarize QA, know your customer and a suite of machine learning models for strong risk assessment and predictions. Claim handlers and underwriters benefit from our CoPilot Gen AI capabilities, which exponentially amplify their ability to manage tasks. Additionally, we have streamlined business rules configuration, enabling the creation of decision trees and rules via GenAI and automated data mapping for documents and letter using AI. Looking ahead, we have reached a roadmap to create holistic and GenAI co pilot experience across the entire platform, further enhancing the value we deliver to our users. Our strategic partnership with Microsoft is instrumental in driving our product innovation, which is cutting edge AI technology that differentiates our platform's digital transformation capabilities in the insurance industry. Roni Al-DorPresident and CEO at Sapiens International00:14:10In January 2025, we announced the availability of Sapiens SaaS solution in the Microsoft Azure marketplace. Microsoft Azure customers can purchase Sapiens SaaS solution, enabling them to leverage Azure's scalability, reliability and agility to drive their application development and shape their business strategic. Moving to system integrators. Sapiens continued to make progress this quarter in its collaboration with system integrators. This emerging channel is open doors to insurers that were previously beyond our reach, expanding our market opportunity and our pipeline. Roni Al-DorPresident and CEO at Sapiens International00:14:55In 2024, Sapiens formalized a commitment and internal process to support an SI alignment model for our go to market and delivery. As a result, in 2024, we closed a significant live platform deals in North America with the SI partner. Also SI were involved with a meaningful number of opportunities. Sapiens continued to strengthen its existing partnership with Deloitte globally with LTI Mindtree in North America. We also developed new partnership with Crawford, Norimaa, Cognizant and other regional SI. Roni Al-DorPresident and CEO at Sapiens International00:15:39We are excited about the outcomes our growing SI relationship deliver and will continue to develop this valuable channel as a top strategic initiative in 2025. Before I wrap up, I would like to share our focus for 2025. Our commitment to building a robust pipeline and expanding our client base across all key markets remain solid. To support this commitment and achieve our goals in 2025 and beyond, we have identified the following areas of focus for our teams and our resources. First, platform innovation and advanced AI capabilities. Roni Al-DorPresident and CEO at Sapiens International00:16:24We will continue to invest in second intelligent insurance platform focusing on innovation and client success aims to drive sustainable growth globally and improve our competitive position. We will continue to actively integrated AI into our offering to enhance various aspects of our customer operation. In addition, we are integrating AI tools into our implementation and delivery process to reduce implementational costs. Second, increasing cross sell to expand with existing customer. Cross selling to existing customer presents a significant opportunity for growth, especially considering that most of our customer current only have one Sapiens product. Roni Al-DorPresident and CEO at Sapiens International00:17:17We have done extensive analysis to validate the cross selling opportunity for our core business application, data, digital, AI and decision solution. By identifying and targeting the specific need of our customer, we can introduce them to additional solution that complement their existing solution. We are also increasing our investment in the client management and the relationship building by expanding our client partners team and our account management team within our divisions. This effort extends across our entire customer base to drive deeper relationship, maximize customer value and unlock new growth opportunities. Cross selling as a shorter sales cycle compared to acquiring new customers allow us to achieve faster revenue growth. Roni Al-DorPresident and CEO at Sapiens International00:18:17Third, accelerating cloud adoption for our existing customer through a scalable and efficient SaaS model. This transition supports our long term customer relationship and will drive sustained growth and value creation. We now have a unique opportunity to accelerate cloud adoption as our new SaaS solution offer exclusive benefit such as AI driven capability that are not available in older versions. So we aim to enhance our growth in our life and pension and annuities businesses globally. The demand for life system transformation is strong as insurers seek to modernize legacy infrastructure. Roni Al-DorPresident and CEO at Sapiens International00:19:03This market shift presents a significant opportunity for our life offerings. Second Life solution featuring market leading components seamlessly integrated into a powerful platform provide a strong competitive advantage in differentiation. This position us as a market leader and we are already gaining significant momentum. Our objective is to capitalize our momentous pipeline, which currently is the highest among all Sapiens products. And lastly, we continue building out our system integrator partnership globally. Roni Al-DorPresident and CEO at Sapiens International00:19:46In 2025, there will be a focus on developing a new pipeline with SI partners by formalizing enablement, training, certification and joint delivery models to continue to support the strategy. There will be an increased focus on maturing the model in North America to support the growth plan in the region. In summary, Q4 twenty twenty four marked another quarter of growth and operational progress. And we remain committed to delivering long term growth across all of our key territories. Roni GiladiChief Financial Officer at Sapiens International00:20:26I will turn the call over to our CFO to provide more details on our financial performance. Thank you, Roni. I will begin my commentary by reviewing the fourth quarter and full year 2024 non GAAP results, followed by comments on the balance sheet and cash flow. I will wrap up with our guidance for 2025. Revenue in fourth quarter of twenty twenty four totaled $134,000,000 an increase of 2.6% compared to $131,000,000 in the fourth quarter of twenty twenty three. Roni GiladiChief Financial Officer at Sapiens International00:21:03In Q4 twenty twenty four, we had currency headwind compared to Q3 of twenty twenty four. On a constant currency basis, our Q4 revenue were $2,000,000 higher than the reported Q4 revenue. Reported revenues for Q4 and the full year were in line with the update guidance we provided last quarter despite the currency headwind in Q4. For Q4 twenty twenty four, our annualized recurring revenue ARR reached $175,000,000 reflecting 6.5% decrease from Q4 of last year, higher than the total reported revenue growth during the same period. Our revenue mix show that revenue from recurring software product and reoccurring post production services increased year over year by 7.7% to $97,000,000 compared to $90,000,000 in Q4 twenty twenty three. Roni GiladiChief Financial Officer at Sapiens International00:22:02Growth of this segment was higher than the overall reported growth in line with our strategy to increase recurring and reoccurring revenues. I want to emphasize that recurring and reoccurring revenues in Q4 twenty twenty four represent 72.5% of total revenue, reflecting 3.4% increase compared to Q4 of last year. Moving on to profitability. Gross profit in the quarter was $63,000,000 compared to $59,000,000 in Q4 of twenty twenty three. The gross margin in the quarter was 46.7% compared to 45.4% in Q4 twenty twenty three, representing an increase of 130 basis points. Roni GiladiChief Financial Officer at Sapiens International00:22:54This increase in gross margin was primarily due to higher recurring and reoccurring revenue ratio of total revenue with higher gross margin than gross margin from one time implementation. Operating profit in the fourth quarter of twenty twenty four was $24,000,000 similar to Q4 twenty twenty three. Net income attributable to Sapan's shareholders for the fourth quarter of twenty twenty four was $21,000,000 up 3.1% from $20,000,000 in Q4 of twenty twenty three. Earnings per share was Roni GiladiChief Financial Officer at Sapiens International00:23:35$0.37 Roni GiladiChief Financial Officer at Sapiens International00:23:35for the fourth quarter of twenty twenty four, up from $0.36 of the fourth quarter of last year. Turning now to full year results, For the twelve months ended 12/31/2024, '20 '20 '4 revenues totaled $542,000,000 up 5.4% compared to $515,000,000 in 2023. We met our full year updated revenue guidance, which we provided in Q3, despite the currency headwind happened in Q4. Turning to revenue mix. In 2024, revenue from recurring software products and reoccurring production services totaled $390,000,000 compared to $342,000,000 in 2023, a $48,000,000 increase or 14.1% growth. Roni GiladiChief Financial Officer at Sapiens International00:24:36This recurring and reoccurring revenue represent 72% of our total revenue in 2024. Moving to geographic breakdown. Revenue in North America represents 42% of total revenue. Our European revenue represents 50 percent and the rest of the world represents 8% of total revenue. Growth in 2024 will drive from growth of 6.3% in North America, 4 Point 9 Percent in Europe and 3.7% in rest of worlds. Roni GiladiChief Financial Officer at Sapiens International00:25:16We do not have customer concentration as evident by the fact that our top 10 customer represent 21.5% of revenue with no customer representing more than 5% of total revenue. Gross profit increased by $16,000,000 in 2024, while gross profit margin increased by 60 basis points to 45.9%. The main reason for the gross margin improvement are a better ratio of recurring and reoccurring revenue than last year and improve in offshore ratio. Our operating profit increased by $5,000,000 or 4.8%. The operating margin was 18.2, which is in line with our guidance. Roni GiladiChief Financial Officer at Sapiens International00:26:10Despite the increase in gross margin of 60 basis points, our operating margin declined by 10 basis points versus twenty twenty three. Due to our strategic decision at the beginning of the year to increase investment in sales and marketing in absolute dollar and as a percentage from total revenue. Net income attributable to Sapiens shareholder for 2024 was $83,000,000 up 10.5% from $75,000,000 in 2023. Earnings per diluted share was $1.48 up 9.6 from $1.35 in 2023. Turning now to our balance sheet. Roni GiladiChief Financial Officer at Sapiens International00:26:59As of 12/31/2024, we had cash and cash equivalents and short term deposits totaling $216,000,000 and debt of $40,000,000 In January 2025, we paid the annual debenture coupon of $20,000,000 The last and final payment of $20,000,000 is scheduled for January 2026. Turning to adjusted free cash flow. In Q4 twenty twenty four, we generated an adjusted free cash flow of $41,000,000 compared to $37,000,000 in Q4 of twenty twenty three. During 2024, we generated adjusted free cash flow of $75,000,000 compared to $71,000,000 in 2023. Our adjusted free cash flow represent 89.5% of our non GAAP net income, proving our business model of converting net profit to free cash flow. Roni GiladiChief Financial Officer at Sapiens International00:28:02Let me now introduce our guidance for 2025. Revenues. Non GAAP revenue in the range of $553,000,000 to $558,000,000 representing growth of 2.4 at the midpoint. This growth assume a currency headwind on revenue mainly to the euro and pound, which have weakened by 42% respectively versus the USA dollar. On a constant currency basis, our growth rate would be 3.4%. Roni GiladiChief Financial Officer at Sapiens International00:28:38Profit, non GAAP operating profit in the range of 98,000,000 to 102,000,000 with operating margin of 18% at the midpoint. On a constant exchange rate, our operating profit would be higher and implies an operating margin of 18.7%. The negative currency impact on operating profit is mainly due to the euro and pound weakening versus the USA dollar and the strengthening of the Israeli shekel versus the USA dollar. Let me elaborate on the factors impacting our 2025 guidance. In Q3 twenty twenty four earning calls, we discussed the factor impacting 2024 and 2025 growth, transition to SaaS, core P and C North America and macroeconomic uncertainty. Roni GiladiChief Financial Officer at Sapiens International00:29:36We will now provide an update on these variables as they relate to our growth outlook. The transition to SaaS, we anticipate a similar impact on growth in 2025, as we mentioned in the earning call of Q3. With the transition of existing customer and the signing of new SaaS contracts expected to create an estimated 2% to 3% revenue headwind. Core P and C in North America. Ron Ildorf mentioned in his remarks that we are making a strategic investment in our P and C platform and are already seeing early positive indicators. Roni GiladiChief Financial Officer at Sapiens International00:30:16We expect this effort to provide contribution starting in 2026 and beyond. Macroeconomic uncertainty continue to persist across global markets, including North America, The Middle East and other regions. We do not control these factors and cannot predict when they will stabilize. Those macroeconomic factors can lead to delay in signing new deals, which can in turn impact our revenue growth. As mentioned, those three factors that emerge in 2024 will impact our growth in 2025. Roni GiladiChief Financial Officer at Sapiens International00:30:59In late Q4 of twenty twenty four, we had a strong deal closing momentum. Even with this strong deal closing momentum, the timing of this closing affects the pace of revenue realization in 2025 and as a result our overall growth. I want to reiterate that we remain focused on accelerating our growth trajectory. To accelerate our growth beyond 2025, we are taking the following steps: One, expanding new logo acquisition globally. We are strengthening our sales team, introducing our comprehensive insurance platform and deepening our relationship with system integrator. Roni GiladiChief Financial Officer at Sapiens International00:31:46Since we started our initiative to work with SI, we we signed two new logos in North America through SI partnership, driving cross sell opportunity with existing customer. We are expanding our team and leveraging our pre integrated insurance platform as a key enabler to cross sell additional application and maximize customer value. In 2024, cross selling grew by 18% compared to last year. Three, advancing the transition of existing customer to cloud and subscription. In 2023, we successfully migrated seven customers to the cloud, followed by additional 10 cloud migration in 2024. Roni GiladiChief Financial Officer at Sapiens International00:32:41The total number of cloud customer at the end of twenty twenty four was 169 and we are focused on accelerating this momentum in the coming years. Currently, 28% of our customers are on the cloud and our goal is to reach over 60% of our total customer within the next five years, reinforcing our commitment to long term growth and higher ARR ratio. Before handing the call back to Oneldor, I want to reiterate that we remain focused on successful execution of our strategy, prioritizing sustainable growth and profitability. I will now turn the call back to O'Neill Do. O'Neill? Roni Al-DorPresident and CEO at Sapiens International00:33:28Thank you, O'Neill. We delivered a solid fourth quarter reflecting the progress across our key markets. Our continued investment in our insurance platform remains a critical driver for growth. Most importantly, we are committed to deliver long term growth across all of our key territories and reinforce our position as a trusted provider of intelligent insurance solution. I want to thank our global team for their commitment to excellence and growth and our investor for their ongoing support of Sapiens. Roni Al-DorPresident and CEO at Sapiens International00:34:06I will now ask the operator to please open the call for questions. Operator00:34:12Thank you. The first question is from Dylan Becker of William Blair. Please go ahead. Analyst00:34:53Hey guys, it's Rob here. Maybe, Marty, sticking with some of the 2025 initiatives, you called out kind of cross selling and obviously accelerating the migration framework. You touched on a lot of the cloud customers landing more wall to wall, having that kind of full suite adoption approach due to the integration of the platform. I wonder how that kind of fuels your confidence in those two initiatives given you do have a vast ecosystem of customers to migrate and it seems that their propensity to kind of spend more and adopt more of the core platform continues to grow in the cloud as well. Roni Al-DorPresident and CEO at Sapiens International00:35:28Yes. Hi, this is Roni Hay. As to answer your question about the cloud and the platform, in both areas, we feel very comfortable. We are migrate many, as we said, but we have a huge potential for both of them. And this is also now core platform, core system also the business application as well. Roni Al-DorPresident and CEO at Sapiens International00:35:54For the new clients, we are this is almost standard. So it's 99% are going with these two solutions from the leasing. There is still many opportunity ahead of us. At this moment, we are more try to convince the customer to evolve, but we are not pushing this is our plan for the future for in the upgrade situation that they will have to push them to the cloud. So that's from my side, maybe Alex want to add. Alex ZukermanChief Strategy Officer at Sapiens International00:36:31So then just to add to what Roni said, this is Alex. When it comes to the existing customers, so again reiterate what Roni said, we increased the pace of transferring existing customers from on prem to cloud, a place to continue and focus on that to reach the 60% level within the next five years. This is one clear target. The second one is the modular notion of the platform allows us to come back to our customer to the existing customer base and find their missing solutions that we can provide. So we see a large white space within our customer base and the connectivity of the platform it means for them that there is a stronger economy of scale and usability by taking those models from us and not from someone else and this is part of our offerings. Alex ZukermanChief Strategy Officer at Sapiens International00:37:26Also there we see lots of interest and the plan is to continue in that. In order also to facilitate that or not on the product side, but on the sales side, we increased the team at Sapiens that looks after existing accounts. And we are encouraging them to go stronger after this customer base. Roni GiladiChief Financial Officer at Sapiens International00:37:49Maybe one Roni GiladiChief Financial Officer at Sapiens International00:37:50more sentence into that. This year we've been able to transfer 10 existing customer to the cloud. We see also increasing momentum on this opportunity. We also been able to transfer big accounts that give a confidence that we are being able to do this with many customer of us going forward. And this give us the notion of reaching 60% in five Roni GiladiChief Financial Officer at Sapiens International00:38:18years. Analyst00:38:18Got it. Okay. Thank you all. That was really helpful. Analyst00:38:21Maybe to the Life side seems to be another area of notable strength. Can you kind of give us a sense maybe the dynamics obviously on that space that are pushing for faster modernization now? And maybe how we can kind of reconcile that or look back as some of the trends you've seen play out or you're seeing play out maybe on the life side relative to how the P and C opportunity has played out over the last several years too. That sounds really exciting as well. Alex ZukermanChief Strategy Officer at Sapiens International00:38:51So this is Alex again. So what we've seen on the life insurance space globally strong focus on North America, but also in the rest other parts of the world, strong emphasis of carriers to replace systems and to drive modernization on the life side. What we've seen in the past five to seven years in the P and C market is happening now on the life side. The P and C went a bit before the life into this replacement and into this modernization process in general. Now we see strong tendency on the life side. Alex ZukermanChief Strategy Officer at Sapiens International00:39:23Digital combination of factors. One is the overall digitalization of the world, the strong competition that requires them to be tech savvy. The second part is the macroeconomics, the volatile stock market, the interest rate, the inflation, they all drive to stronger adoption of life insurance, especially on the individual side as it comes as solution to the individual market. This is a great momentum for us also from timing perspective coming into the North America market with the platform approach that on this case provides a strong differentiation because we managed to combine several leading products and capabilities as a standalone basis to combine them into an holistic combined offering that really ticked the boxes for the majority of needs of our customers and we see great adoption on the platform notion with the customers. It's a strong differentiation compared to our competition in the market. Alex ZukermanChief Strategy Officer at Sapiens International00:40:29So we feel very, very strong on the combination of we have the right offering to the market, powerful platform approach together with the macroeconomics that drives adoption to their life. We feel we have a strong opportunity here. Analyst00:40:44Okay, great. Thanks Alex. Really helpful there. Maybe one last clarification one for Roni G here. You guys gave out the constant currency revenue number and impact in the 2024. Analyst00:40:54But any sense on constant currency from an ARR perspective in the quarter and how to think about 2025 given the post production strength we continue to see in the business? Thanks guys. Roni GiladiChief Financial Officer at Sapiens International00:41:04Thank you. We grew this quarter 6.4% on the ARR versus a lower number 2% or 2.4% in the quarter in total revenue. Obviously, the ARR is going faster. The contract exchange rate obviously impact the ARR. We need to add additional 1%. Roni GiladiChief Financial Officer at Sapiens International00:41:29So we are 7.4% ARR growth in the company today. We are looking to increase this ratio going forward, going to 02/2005, '2 thousand and '6 and going onwards. And as we mentioned, we'd like to do a transition to the cloud, which will support this ARR, what we discussed a minute ago. And obviously, all the new customer are automatically on the cloud on subscription base. So both of these factor will impact the ARR growth and increase the growth rate to 10% and onwards. Analyst00:42:04Great. Thank you guys. Appreciate it. Operator00:42:08The next question is from Chris Reimer of Barclays. Please go ahead. Tavy RosnerAnalyst at Barclays Capital00:42:15Yes. Hi. Thanks for taking my question. I was wondering if you had been thinking about M and A in the pipeline and if there's anything new around that seeing as it's been a while since there's been any acquisitions by you guys. Just wondering what's your thinking on that right now given the environment you're in? Roni GiladiChief Financial Officer at Sapiens International00:42:42I will start and maybe on Alex will continue. Obviously, M and A is part of our growth hands and therefore we are pursuing for this opportunity. You are right, in the last three two to three years we didn't complete any M and A. The main reason two years ago was the valuation and opportunities across the globe, North America and Europe. And We are focusing on mid to small K companies, potentially sometimes when there is opportunity, we are looking also for big organization. Roni GiladiChief Financial Officer at Sapiens International00:43:28I can emphasize that here in 2024, we had good opportunity in the European market, both on P and C and Life. We compete with several competitors to do this acquisition, at the end came to the final two and we lost again based on valuation the price at the last point was unreasonable to us and we drove. I mentioned in this to show the confidence that we are really engaged in this opportunity and we are looking in 2025 to complete at least one M and A in the next until the end of the year. So full engage in this opportunity to execute with the cash and we are ready to do so. Tavy RosnerAnalyst at Barclays Capital00:44:11Great. Thanks for that. That's great color. That's it for me. Operator00:44:16The next question is from Alexei Gogolov of JPMorgan. Please go ahead. Alexei GogolevExecutive Director at JPMorgan Chase00:44:23Hello, everyone. Ronny Chi, I was wondering if you can elaborate on the comment you made about customer concentration. I've noticed that top 10 now represent 21.5% versus 18.8% in 2023. And same with the largest customer, which used to be just over 3% of sales. So can you maybe talk about what was the dynamic there maybe reveal those large customer trends? Roni GiladiChief Financial Officer at Sapiens International00:45:00Hi, Alexei. This is Roni. Obviously, I think we have amazing metrics in terms of customer concentration and there isn't any one dependent on the customer. As I mentioned, the biggest customer is only 4%. Yes, slightly higher than last year of 3%, but this is not material in terms of the total volume of sapiens. Roni GiladiChief Financial Officer at Sapiens International00:45:24Going forward, we are looking to keep this momentum of the same level 21%, twenty % of the top 10 and less than 5% from the overall. We do not see any risk from this customer and obviously no tricks for Sapiens overall revenue. Alexei GogolevExecutive Director at JPMorgan Chase00:45:43Okay. Thank you. And then a follow-up on Dylan's question about cloud. So as I understood, you've added 10 customers to Sapiens Cloud in 2024. It sounds like you're looking to add another 200 over the next five years. Alexei GogolevExecutive Director at JPMorgan Chase00:46:04Can you talk about the pace that you were hoping to accelerate per year? And what sort of carrots and sticks you have in mind in order to persuade these customers to migrate to that cloud? Roni GiladiChief Financial Officer at Sapiens International00:46:22Yes. Obviously, the growth from 28% to 60% looks a lot. But if you dive in into the figures, we basically came from two verticals. The first one that is ongoing all the time. As Henry and Alex mentioned, all new deals that we are signing are on the cloud subscription. Roni GiladiChief Financial Officer at Sapiens International00:46:42So this is by itself going to contribute significant amount of percentage to the 60% total volume. The second vertical is that we have almost four fifty customers or slightly less customer that we sold several years ago. And we are approaching them in order to push them to move to the subscriptioncloud over the years. Last year, we did 10. We are looking to increase these factors even to fifteen, twenty and thirty going forward as the adoption for subscriptioncloud is growing bigger and bigger as we speak. Roni GiladiChief Financial Officer at Sapiens International00:47:20So coming from two vertical, new customer and shifting existing one to a cloud. Alexei GogolevExecutive Director at JPMorgan Chase00:47:30And Roni, just to clarify a comment you made earlier on the call. So 36 deals total in 2024, similar number to 2023. But could you may the Roni GiladiChief Financial Officer at Sapiens International00:47:55contribution to the ARR is slightly smaller than has been the contribution to the ARR is slightly smaller than as we continue. The contribution from the ARR is increasing as we signing them. I think we had a higher number of deals that we signed from cross sell and sometimes cross sell is already in the cloud, but every deal that we are signing new logo contributed there again in the early years less than as we continue going forward. Alexei GogolevExecutive Director at JPMorgan Chase00:48:32And are those deals mostly in P and C or in life or broadly equal? Roni GiladiChief Financial Officer at Sapiens International00:48:38Across the board. Alexei GogolevExecutive Director at JPMorgan Chase00:48:40Okay, perfect. Thank you, Roni. Operator00:48:53Roni. There are no further questions at this time. Before I ask Ms. Yafa Koinifrah to go ahead with her closing statement, I would like to remind participants that a replay of this call is scheduled to begin in two hours. In The U. Operator00:49:17S, please call 8060 In Israel, please call Ms. Cohen Ifrah, please go ahead. Yaffa Cohen-IfrahChief Marketing Officer & Head of Investor Relations at Sapiens International00:49:36Thank you for joining our call today. We look forward to discussing our first quarter results on the next earning call. We welcome you to contact us if you have any further questions. Thank you. Operator00:49:48Thank you. This concludes the Sapiens International Corporation fourth quarter twenty twenty four results conference call. Thank you for your participation. You may go ahead and disconnect.Read moreParticipantsExecutivesYaffa Cohen-IfrahChief Marketing Officer & Head of Investor RelationsRoni Al-DorPresident and CEORoni GiladiChief Financial OfficerAlex ZukermanChief Strategy OfficerAnalystsAnalystTavy RosnerAnalyst at Barclays CapitalAlexei GogolevExecutive Director at JPMorgan ChasePowered by