Sapiens Reports Second Quarter 2025 Financial Results

Sapiens International Corporation, (NASDAQ: SPNS) (TASE: SPNS), a leading global provider of software solutions for the insurance industry, today announced its financial results for the second quarter ended June 30, 2025.

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Summary Results for Second Quarter 2025 (USD in millions, except per share data)

GAAP Non-GAAP Q2 2025 Q2 2024 % Change Q2 2025 Q2 2024 % ChangeRevenue $141.6 $136.8 3.5% $141.6 $136.8 3.5%Gross Profit $61.9 $60.1 3.0% $64.8 $62.5 3.8%Gross Margin 43.7% 43.9% -20 bps 45.8% 45.7% 10 bpsOperating Income $16.8 $21.9 -23.2% $23.1 $24.8 -7.1%Operating Margin 11.9% 16.0% -410 bps 16.3% 18.2% -190 bpsNet Income (*) $14.2 $18.6 -23.6% $19.3 $21.0 -8.2%Diluted EPS $0.25 $0.33 -24.2% $0.34 $0.37 -8.1%

(*) Attributable to Sapiens' shareholders

Roni Al-Dor, President and CEO of Sapiens, stated, “In the second quarter of 2025, we continued to execute on our strategic priorities, securing new deals and strengthening customer relationships across our Life, P&C, and Reinsurance segments. Our insurance platform supports insurers in advancing digital transformation, improving operational efficiency, and adopting AI-driven innovation.”

Mr. Al-Dor continued, “During the quarter, we completed the acquisitions of Advantage Go and Candella, acquisitions that strengthen our P&C and Life growth. We reiterate our priority to continue platform innovation, increase cross-selling, accelerate cloud adoption, and expand the Life & Annuities business globally, all of which will serve as catalysts to accelerated growth in 2026.”

Quarterly Results Conference Call

Following our announcement that Sapiens has entered into a definitive agreement to be acquired by Advent, Sapiens will forgo its Q2 2025 Earnings Call scheduled for today.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: non-GAAP revenue, ARR, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributed to Sapiens shareholders, non-GAAP basic and diluted earnings per share, Adjusted EBITDA and Adjusted Free Cash-Flow.

Sapiens believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Sapiens' financial condition and results of operations. The Company's management uses these non-GAAP measures to compare the Company's performance to that of prior periods for trend analyses, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. These measures are used in financial reports prepared for management and in quarterly financial reports presented to the Company's board of directors. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing the Company's financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of capitalized software development and other intangible assets, capitalization of software development, stock-based compensation, compensation related to acquisition and acquisition-related costs, and tax adjustments related to non-GAAP adjustments.

Management of the Company does not consider these non-GAAP measures in isolation, or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations, as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures.

To compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. Sapiens urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company's business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables of this release.

The Company defines Annual Recurring Revenue (“ARR”) as the annualized value of our revenue from customer subscriptions, term licenses, maintenance, application maintenance, and cloud solutions, which may not be the same as the timing and amount of revenue recognized. The ARR run rate is equal to the product of (i) the sum of these revenues in our most recently completed fiscal quarter, multiplied by (ii) four.

The Company defines Adjusted EBITDA as net profit, adjusted to stock-based compensation expense, depreciation and amortization, capitalization of software development costs, compensation expenses related to acquisition and acquisition-related costs, financial expense (income), provision for income taxes and other income (expenses). These amounts are often excluded by other companies as well, in order to help investors understand the operational performance of their business.

The Company uses Adjusted EBITDA as a measurement of its operating performance, because it assists in comparing the operating performance on a consistent basis by removing the impact of certain non-cash and non-operating items. Adjusted EBITDA reflects an additional way of viewing aspects of the operations that the Company believes, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting its business. The Company uses Adjusted Free Cash-Flow as a measurement of its operating performance, and reconciles cash-flow from operating activities to Adjusted Free Cash-Flow, while reducing the amounts for capitalization of software development costs and capital expenditures. The Company adds back cash payments made for former acquisitions in respect of future performance targets and retention criteria as determined upon acquisition date of the respective acquired company, which were included in the cash-flow from operating activities. We believe that Adjusted Free Cash-Flow is useful in evaluating our business, because Adjusted Free Cash-Flow reflects the cash surplus available to fund the expansion of our business.

About Sapiens

Sapiens International Corporation (NASDAQ and TASE: SPNS) is a global leader in intelligent insurance SaaS-based software solutions. With Sapiens' robust platform, customer-driven partnerships, and rich ecosystem, insurers are empowered to future-proof their organizations with operational excellence in a rapidly changing marketplace. Our SaaS-based Solutions help insurers harness the power of AI and advanced automation to support core solutions for property and casualty, workers' compensation, and life insurance, including reinsurance, financial & compliance, data & analytics, digital, and decision management. Sapiens boasts a longtime global presence, serving over 600 customers in more than 30 countries with its innovative offerings. Recognized by industry experts and selected for the Microsoft Top 100 Partner program, Sapiens is committed to partnering with our customers for their entire transformation journey and is continuously innovating to ensure their success. For more informationvisitsapiensor follow us onLinkedIn

Investor and Media Contact Yaffa Cohen-Ifrah Chief Marketing Officer and Head of Investor Relations, Sapiens Mobile: +1 917-533-4782 Email: Yaffa.cohen-ifrah@sapiens.com

Investor Contact Kimberly Rogers Managing Director, Hayden IR Phone: +1 541-904-5075 Email: kim@HaydenIR.com

Forward Looking Statements

Certain matters discussed in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, and are based on our beliefs, assumptions and expectations, as well as information currently available to us. Such forward-looking statements may be identified by the use of the words “anticipate,” “believe,” “estimate,” “expect,” “may,” “will,” “plan” and similar expressions. Such statements reflect our current views with respect to future events and are subject to certain risks and uncertainties. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: the degree of our success in our plans to leverage our global footprint to grow our salesÍ¾ the degree of our success in integrating the companies that we have acquired through the implementation of our M&A growth strategyÍ¾ the lengthy development cycles for our solutions, which may frustrate our ability to realize revenues and/or profits from our potential new solutionsÍ¾ our lengthy and complex sales cycles, which do not always result in the realization of revenuesÍ¾ the degree of our success in retaining our existing customers or competing effectively for greater market shareÍ¾ difficulties in successfully planning and managing changes in the size of our operationsÍ¾ the frequency of the long-term, large, complex projects that we perform that involve complex estimates of project costs and profit margins, which sometimes change mid-streamÍ¾ the challenges and potential liability that heightened privacy laws and regulations pose to our businessÍ¾ occasional disputes with clients, which may adversely impact our results of operations and our reputationÍ¾ various intellectual property issues related to our businessÍ¾ potential unanticipated product vulnerabilities or cybersecurity breaches of our or our customers' systemsÍ¾ risks related to the insurance industry in which our clients operateÍ¾ risks associated with our global sales and operations, such as changes in regulatory requirements, wide-spread viruses and epidemics like the recent novel coronavirus pandemic, which adversely affected our results of operations, or fluctuations in currency exchange ratesÍ¾ and risks related to our principal location in Israel and our status as a Cayman Islands company. While we believe such forward-looking statements are based on reasonable assumptions, should one or more of the underlying assumptions prove incorrect, or these risks or uncertainties materialize, our actual results may differ materially from those expressed or implied by the forward-looking statements. Please read the risks discussed under the heading “Risk Factors” in our most recent Annual Report on Form 20-F, which we filled with the SEC on March 31, 2022, in order to review conditions that we believe could cause actual results to differ materially from those contemplated by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason, to conform these statements to actual results or to changes in our expectations.

SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF INCOMEU.S. dollars in thousands (except per share amounts) Three months ended Six months ended June 30, June 30, 2025 2024 2025 2024 (unaudited) (unaudited) (unaudited) (unaudited)Revenue 141,602 136,800 277,707 271,049Cost of revenue 79,711 76,696 155,156 153,385Gross profit 61,891 60,104 122,551 117,664Operating expenses:Research and development, net 18,833 16,809 35,109 33,330Selling, marketing, general and administrative 26,261 21,412 49,449 41,929Total operating expenses 45,094 38,221 84,558 75,259Operating income 16,797 21,883 37,993 42,405Financial and other (income) expenses, net (1,270) (1,109) (2,600) (2,201)Taxes on income 3,681 4,375 8,173 8,488Net income 14,386 18,617 32,420 36,118Attributable to non-controlling interest 154 – 252 141Net income attributable to Sapiens' shareholders 14,232 18,617 32,168 35,977Basic earnings per share 0.25 0.33 0.58 0.65Diluted earnings per share 0.25 0.33 0.57 0.64Weighted average number of shares outstanding used to 55,897 55,797 55,892 55,771compute basic earnings per share (in thousands)Weighted average number of shares outstanding used to 56,070 56,163 56,042 56,072compute diluted earnings per share (in thousands)

SAPIENS INTERNATIONAL CORPORATIONN.V. AND SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP RESULTSU.S. dollars in thousands (except per share amounts) Three months ended Six months ended June 30, June 30, 2025 2024 2025 2024 (unaudited) (unaudited) (unaudited) (unaudited)GAAP revenue 141,602 136,800 277,707 271,049Valuation adjustment on acquired deferred revenue – – – -Non-GAAP revenue 141,602 136,800 277,707 271,049GAAP gross profit 61,891 60,104 122,551 117,664Amortization of capitalized software 1,675 1,569 3,186 3,114Amortization of other intangible assets 1,272 808 2,096 2,587Non-GAAP gross profit 64,838 62,481 127,833 123,365GAAP operating income 16,797 21,883 37,993 42,405Gross profit adjustments 2,947 2,377 5,282 5,701Capitalization of software development (1,788) (1,823) (3,730) (3,540)Amortization of other intangible assets 2,094 1,223 3,654 2,456Stock-based compensation 845 811 1,692 1,583Acquisition-related costs *) 2,182 365 2,743 494Non-GAAP operating income 23,077 24,836 47,634 49,099GAAP net income attributable to Sapiens' 14,232 18,617 32,168 35,977shareholdersOperating income adjustments 6,280 2,953 9,641 6,694Taxes on income (1,207) (529) (1,825) (1,209)Non-GAAP net income attributable to 19,305 21,041 39,984 41,462Sapiens' shareholders

(*)Acquisition-related costs pertain to charges on behalf of M&A agreements related to future performance targets and retention criteria, as well as third-party services, such as tax, accounting and legal rendered until the acquisition date.

Adjusted EBITDA CalculationU.S. dollars in thousands Three months ended Six months ended June 30, June 30, 2025 2024 2025 2024GAAP operating profit 16,797 21,883 37,993 42,405Non-GAAP adjustments:Amortization of capitalized software 1,675 1,569 3,186 3,114Amortization of other intangible assets 3,366 2,031 5,750 5,043Capitalization of software development (1,788) (1,823) (3,730) (3,540)Stock-based compensation 845 811 1,692 1,583Compensation related to acquisition and 2,182 365 2,743 494acquisition-related costsNon-GAAP operating profit 23,077 24,836 47,634 49,099Depreciation 1,064 1,095 2,036 2,192Adjusted EBITDA 24,141 25,931 49,670 51,291

Summary of NON-GAAP Financial InformationU.S. dollars in thousands (except per share amounts) Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024Revenues 141,602 136,105 134,305 137,025 136,800Gross profit 64,838 62,995 62,692 62,809 62,481Operating income 23,077 24,557 24,468 25,101 24,836Adjusted EBITDA 24,141 25,529 25,359 26,389 25,931Net income to Sapiens' shareholders 19,305 20,679 20,710 21,091 21,041Diluted earnings per share 0.34 0.37 0.37 0.37 0.37

Annual Recurring Revenue (“ARR”)U.S. dollars in thousands Three months ended June 30, 2025 2024Annual Recurring Revenue 199,646 168,593

Non-GAAP Revenues by Geographic BreakdownU.S. dollars in thousands Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024North America 59,782 56,871 56,753 55,755 57,918Europe 70,095 67,480 65,624 69,281 66,072Rest of the World 11,725 11,754 11,928 11,989 12,810Total 141,602 136,105 134,305 137,025 136,800

Non-GAAP Revenue breakdownU.S. dollars in thousands Three months ended Six months ended June 30, June 30, 2025 2024 2025 2024Software products and re-occurring post-production services (*) 109,859 98,044 217,916 192,285Pre-production implementation services (**) 31,743 38,756 59,791 78,764Total Revenues 141,602 136,800 277,707 271,049

Three months ended Six months ended June 30, June 30, 2025 2024 2025 2024Software products and re-occurring post-production services (*) 58,439 52,237 117,931 102,577Pre-production implementation services (**) 6,399 10,244 9,902 20,788Total Gross profit 64,838 62,481 127,833 123,365

Three months ended Six months ended June 30, June 30, 2025 2024 2025 2024Software products and re-occurring post-production services (*) 53.2% 53.3% 54.1% 53.3%Pre-production implementation services (**) 20.2% 26.4% 16.6% 26.4%Gross Margin 45.8% 45.7% 46.0% 45.5%

(*)Software products and re-occurring post-production services include mainly subscription, term license, maintenance, application maintenance,cloud solutions and post-production services. This revenue stream is a mix of recurring and re-occurring in nature.

(**) Pre-production implementation services include mainly implementation services before go-live, which are one-time in nature.

Adjusted Free Cash-FlowU.S. dollars in thousands Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024Cash-flow from operating activities 1,873 25,353 42,109 13,083 8,545Increase in capitalized software development costs (1,788) (1,942) (1,759) (1,834) (1,823)Capital expenditures (1,003) (366) (419) (1,125) (666)Free cash-flow (918) 23,045 39,931 10,124 6,056Cash payments attributed to acquisition-related 626 – 1,238 124 134costs(*) (**)Adjusted free cash-flow (292) 23,045 41,169 10,248 6,190

(*)Included in cash-flow from operating activities

(**) Acquisition-related payments pertain to charges on behalf of M&A agreements related to future performance targetsand retention criteria, as well as completed or prospective third-party services, such as tax, accounting and legal rendered.

SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETU.S. dollars in thousands June 30, December 31, 2025 2024 (unaudited) (unaudited)ASSETSCURRENT ASSETS Cash and cash equivalents 64,541 163,690 Short-term bank deposit 10,000 52,500 Trade receivables, net and unbilled receivables 134,949 99,603 Other receivables and prepaid expenses 30,334 19,350 Total current assets 239,824 335,143LONG-TERM ASSETS Property and equipment, net 11,195 10,656 Severance pay fund 3,065 3,208 Goodwill and intangible assets, net 439,166 302,472 Operating lease right-of-use assets 22,766 20,746 Other long-term assets 23,628 19,486 Total long-term assets 499,820 356,568TOTAL ASSETS 739,644 691,711LIABILITIES AND EQUITYCURRENT LIABILITIES Trade payables 11,615 8,414 Current maturities of Series B Debentures 19,804 19,796 Accrued expenses and other liabilities 91,286 77,390 Current maturities of operating lease liabilities 7,284 6,440 Deferred revenue 44,697 37,543 Total current liabilities 174,686 149,583LONG-TERM LIABILITIES Series B Debentures, net of current maturities – 19,792 Deferred tax liabilities 13,710 6,899 Other long-term liabilities 11,260 10,331 Long-term operating lease liabilities 18,289 17,719 Accrued severance pay 9,580 7,758 Total long-term liabilities 52,839 62,499REDEEMABLE NON-CONTROLLING INTEREST 13,809 -EQUITY 498,310 479,629TOTAL LIABILITIES AND EQUITY 739,644 691,711

SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIESCONSOLIDATED STATEMENT OF CASH FLOWU.S. dollars in thousands For the six months ended June 30, 2025 2024 (unaudited) (unaudited)Cash flows from operating activities:Net income 32,420 36,118Reconciliation of net income to net cash provided by operating activities:Depreciation of property and equipment 2,036 2,192Amortization of intangible assets and capitalized software 8,936 8,157Accretion of discount on Series B Debentures 12 22Capital (gain) loss from sale of property and equipment 1 (9)Stock-based compensation related to options issued to employees 1,692 1,583Net changes in operating assets and liabilities, net of amount acquired:Increase in trade receivables, net and unbilled receivables (13,047) (12,723)Decrease in deferred tax liabilities, net (1,874) (1,428)Decrease in other operating assets 1,011 3,445Increase in trade payables 1,504 4,446Decrease in other operating liabilities (8,290) (8,354)Increase (decrease) in deferred revenues 1,966 (6,587)Increase in accrued severance pay, net 859 171Net cash provided by operating activities 27,226 27,033Cash flows from investing activities:Purchase of property and equipment (1,399) (1,146)Proceeds from deposits 42,390 12,136Proceeds from sale of property and equipment 27 14Payments for business acquisitions, net of cash acquired (106,189) (375)Capitalized software development costs (3,730) (3,540)Net cash provided by (used in) investing activities (68,901) 7,089Cash flows from financing activities:Proceeds from employee stock options exercised – 98Distribution of dividend (37,037) (15,635)Repayment of Series B Debenture (19,796) (19,796)Acquisition deferred payment (455) -Acquisition of non-controlling interest – (4,131)Net cash used in financing activities (57,288) (39,464)Effect of exchange rate changes on cash and cash equivalents (186) 1,272Decrease in cash and cash equivalents (99,149) (4,070)Cash and cash equivalents at the beginning of period 163,690 126,716Cash and cash equivalents at the end of period 64,541 122,646

Debentures Covenants

As of June 30, 2025, Sapiens was in compliance with all of its financial covenants under the indenture for the Series B Debentures, based on having achieved the following in its consolidated financial results:

Covenant 1

— Target shareholders' equity (excluding non-controlling interest): above $120 million.

— Actual shareholders' equity (excluding non-controlling interest) equal to $498.3 million.

Covenant 2

— Target ratio of net financial indebtedness to net capitalization (in each case, as defined under the indenture for the Company's Series B Debentures) below 65%.

— Actual ratio of net financial indebtedness to net capitalization equal to (12.25)%.

Covenant 3

— Target ratio of net financial indebtedness to EBITDA (accumulated calculation for the four last quarters) is below 5.5.

— Actual ratio of net financial indebtedness to EBITDA (accumulated calculation for the four last quarters) is equal to (0.54).

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