Sapiens International Corporation reported third‑quarter 2025 results that surpassed revenue expectations and delivered an adjusted earnings‑per‑share beat, while GAAP operating income slipped under the influence of higher operating expenses and integration costs from recent acquisitions.
Total revenue rose 11.2% to $152.3 million, driven by double‑digit growth in North America and the Rest of the World. The jump reflects strong demand for the company’s cloud‑based insurance platform and the acceleration of its SaaS transition, which has broadened the customer base and increased recurring revenue streams.
GAAP gross profit was $67.3 million, giving a gross margin of 44.2%. Non‑GAAP gross profit was $70.7 million, a 46.4% margin, indicating that the company’s core operating model remains healthy even as it absorbs integration costs. GAAP operating income fell to $17.8 million, a 18.3% decline, but non‑GAAP operating income was $25 million, maintaining a 16.7% operating margin that underscores the resilience of the underlying business.
Net income dropped to $14.3 million, while GAAP diluted earnings per share were $0.25, below the consensus estimate of $0.33. However, adjusted diluted EPS of $0.36 beat the adjusted estimate of $0.35, a $0.01 or 2.9% outperformance that highlights the company’s ability to control costs and generate profit from its recurring revenue model.
Annualized recurring revenue reached $220 million, up 26.7% year‑over‑year, a key metric that signals the company’s successful shift to a subscription‑based model. The growth is largely attributable to increased adoption of AI‑driven features in the platform, which has attracted new customers and expanded upsell opportunities.
CEO Roni Al‑Dor emphasized that the quarter “continues to demonstrate the strength of our strategic priorities, with double‑digit expansion in all core markets and a growing customer base that is increasingly reliant on AI‑powered solutions.” He added that the pending acquisition by Advent International will “accelerate innovation, expand globally, and deliver greater value to customers.”
The results suggest that while integration costs are compressing GAAP operating income, the company’s SaaS and AI initiatives are driving revenue growth and solid non‑GAAP margins, positioning it for continued expansion once the acquisition closes.
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