Ladies and gentlemen, thank you for standing by. The conference will begin shortly. Welcome to Sapiens International Corporation's 2024 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, Yaffa Cohen-Ifrah, Chief Marketing Officer and Head of Investor Relations. You may now begin..

Thank you, operator. I want to welcome you to the Sapiens International Corporation N.V. conference call to review our fourth quarter and full-year results. With me on the call today are Mr. Roni Al-Dor, President and CEO, Mr. Roni Giladi, CFO, and Mr. Alex 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.

Statements 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. On today's call, we will refer to 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 to Roni Al-Dor, President and CEO of Sapiens. .

Platform innovation and advanced AI capabilities. We will continue to invest in Sapiens' intelligent insurance platform, focusing on innovation and client success, aimed at driving sustainable growth globally and improving our competitive position.

We will continue to actively integrate AI into our offerings to enhance various aspects of our customers' operations. In addition, we are integrating AI tools into our implementation and delivery processes to reduce implementation costs. Increasing cross-sell to expand with existing customers.

Cross-selling to existing customers presents a significant opportunity for growth, especially considering that most of our customers currently only have one Sapiens product. We have done extensive analysis to validate the cross-selling opportunity for our core business applications, data, digital, AI, and decision solutions.

By identifying and targeting the specific needs of our customers, we can introduce them to additional solutions that complement their existing solutions. We are also increasing our investment in client management and relationship building by expanding our client partners team and our account management team across our divisions.

This effort extends across our entire customer base to drive deeper relationships, maximize customer value, and unlock new growth opportunities. Cross-selling has a shorter sales cycle compared to acquiring new customers, allowing us to achieve faster revenue growth.

Accelerating cloud adoption for existing customers 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 an opportunity to accelerate cloud adoption as our new SaaS solutions offer exclusive benefits, such as AI-driven capabilities that are not available in older versions. We aim to enhance our growth in our life and pension and annuities businesses globally.

The demand for life systems continues to grow as insurers seek to modernize legacy infrastructures. This market shift presents a significant opportunity for our life offerings. Sapiens' Life solutions feature market-leading components seamlessly integrated into a powerful platform, providing a strong competitive advantage and differentiation.

This positions us as a market leader, and we are already gaining significant momentum. Our objective is to capitalize on our momentum, building a pipeline, which currently is the highest among all Sapiens’ products. Lastly, we continue building out our system integrator partnership globally.

In 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 this strategy. There will be an increased focus on maturing the model in North America to support our growth plans in the region.

In summary, Q4 2024 marked another quarter of growth and operational progress. We remain committed to delivering long-term growth across all of our key territories. I will turn the call over to our CFO to provide more details on our financial performance..

in 2024, revenue from recurrent software products and recurrent post-production services totaled $390 million compared to $342 million in 2023, a $48 million increase or 14.1% growth. This recurring and reoccurring revenue represent 72% of our total revenue in 2024..

Revenue in North America represents 42% of total revenue. Our European revenue represents 50%, and the rest of the world represents 8% of total revenue. In 2024, we drove growth of 6.3% in North America, 4.9% in Europe, and 3.7% in other regions.

We do not have customer concentration, as evidenced by the fact that our top ten customers represent 21.5% of revenue, with no customer representing more than 5% of total revenue. Gross profit increased by $16 million in 2024, while the gross profit margin increased by sixty basis points to 45.9%.

The main reasons for the gross margin improvement are a better ratio of recurring and reoccurring revenue than last year and improvements in our services ratio. Our operating profit increased by $5 million or 4.8%. The operating margin was 18.2%, which is in line with our guidance.

Despite the increase in gross margin of sixty basis points, our operating margin declined by ten basis points versus 2023 due to our strategic decision at the beginning of the year to increase investment in sales and marketing in absolute dollars and as a percentage of total revenue.

Net income attributable to Sapiens shareholders for 2024 was $83 million, up 10.5% from $75 million in 2023. Earnings per diluted share were $1.48, a 9.6% increase from $1.35 in 2023..

As of December 31, 2024, we had cash and cash equivalents and short-term deposits totaling $216 million, with net debt of $40 million. In January 2025, we paid the annual debenture coupon of $20 million. The last and final payment of $20 million is scheduled for January 2026..

We anticipate a similar impact on growth in 2025. As we mentioned in the earnings call of Q3, with the transition of existing customers and the signing of new SaaS contracts expected to create an estimated 2% to 3% revenue headwind..

In 2023, we successfully migrated seven customers to the cloud, followed by an additional ten cloud migrations in 2024. The total number of cloud customers at the end of 2024 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 customers within the next five years, reinforcing our commitment to long-term growth and higher ARR ratio.

Before handing the call back to Roni Al-Dor, I want to reiterate that we remain focused on the successful execution of our strategy, prioritizing sustainable growth and profitability. I will now turn the call back to Roni Al-Dor..

Thank you, Roni. 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 delivering long-term growth across all of our key territories and reinforcing our position as a trusted provider of intelligent insurance solutions. I want to thank our global team for their commitment to excellence and growth, and our investors for their ongoing support of Sapiens..