Sapiens looks to rebound from missed M&A in 2024
Sapiens hosted its Q4 2024 earnings call on February 18, reporting $542.38 million in full-year revenue, falling slightly below expectations. The company posted $134 million in Q4 revenue, a 2.6% year-over-year increase, driven by expansion in Life and P&C.
- Gross profit: $63 million in Q4, up from $59 million in Q4 2023.
- Gross margin: 46.7%, improving by 130 basis points, fueled by higher recurring revenue.
- Regional revenue breakdown:
- North America: 42% of total revenue, growing 6.3% in 2024.
- Europe: 50% of total revenue, growing 4.9% in 2024.
- Rest of the world: 8% of total revenue, growing 3.7% in 2024.
Sapiens continues to push cloud adoption, ending 2024 with 169 customers on Sapiens Cloud and highlighting its potential to accelerate cloud transitions.
The company signed 15 new deals in Q4, with five wins in North America. While North America showed strong performance, prolonged sales cycles in P&C and European markets remain a concern.
Sapiens is actively exploring M&A opportunities after failing to close deals in recent years due to high valuations. The company aims to complete at least one acquisition in 2025, focusing on mid-to-small companies in North America and Europe. “We are focusing on mid to small companies. Potentially sometimes when there is opportunity, we are looking also for big organization,” said Sapiens CFO Roni Giladi. “I can emphasize that during 2024, we had a good opportunity in the European market, both on P&C and Life. We compete with several competitors to do this acquisition at the end came to the final 2. And we lost, again, based on valuation, the price at the last point was unreasonable to us. I’m mentioning 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&A until the end of the year. So, fully engaged in this opportunity to execute. We have the cash and we are ready to do so.”
Sapiens provided 2025 revenue guidance of $553M–$558M, reflecting ~2.4% growth at the midpoint. The company acknowledges macroeconomic uncertainty and sales cycle delays, particularly in North America P&C and Europe.
Bottom Line: As of December 31, 2024, Sapiens had $216 million in cash and short-term deposits, with $40 million in debt.
