Sapiens International Corporation N.V.

Company Overview

Business Model: Sapiens International Corporation N.V. is a global leader in providing intelligent insurance software solutions and professional services. The Company's core value proposition revolves around its future-proof, AI-based, open, modular, and integrated Sapiens Insurance Platform, which supports end-to-end insurance processes across all lines of business. This platform accelerates digital transformation for clients in property & casualty (P&C), reinsurance, life, pension & annuity (L&A), workers’ compensation (WC), medical professional liability (MPL), financial & compliance (F&C), and decision modeling for both insurance and financial markets. Revenue is primarily generated from the sale, maintenance, and support of software products (including subscription, term license, maintenance, application maintenance, and cloud solutions) and from providing implementation and post-production consulting services. Less than 5% of revenue is derived from non-insurance customers.

Market Position: Sapiens International Corporation N.V. operates in a large and transforming global insurance IT market. According to Gartner, global insurance market IT spending is forecasted to grow by 9.3% in 2025 to reach nearly $260 billion, and $336 billion by 2028, representing an 8.9% compound annual growth rate (CAGR) from 2023 through 2028. This growth is expected to be driven by software spending (13.7% CAGR) and IT services spending (9.0% CAGR). Sapiens International Corporation N.V. estimates its total addressable market for core insurance software solutions and related IT services to be approximately $60 billion. The Company serves over 600 customers globally, including major insurance carriers and financial institutions, and is recognized by industry analysts for its technology and functionality. Sapiens Decision is noted as a pioneer in the business decision management market.

Recent Strategic Developments: Sapiens International Corporation N.V. continues to pursue a growth strategy combining organic expansion and strategic mergers and acquisitions. In the first quarter of 2024, the Company acquired the remaining 7% outstanding shares of Sapiens Software Solutions (Decision) Ltd. for $4.1 million. In 2023, it acquired NCDC S.A., a Poland-based company with expertise in Sapiens International Corporation N.V. products in the Nordics, for $11.7 million, and increased its holdings in Tiful Gemel and Neuralmatic to 100%. Subsequent to year-end, in the first quarter of 2025, Sapiens International Corporation N.V. completed the acquisition of a Canadian life insurance company for $6.485 million and acquired 60% of a Spanish life insurance company focused on Europe and Latin America for $10.884 million. The Company is heavily investing in AI, including machine learning, deep learning, smart decisioning, and generative AI, with a "Co-Pilot Everywhere" strategy embedded across its platform. A key pillar of its AI strategy is a strategic partnership with Microsoft. Sapiens International Corporation N.V. is also focused on ongoing investment in cloud transformation and SaaS strategy, leveraging its global footprint, and strengthening partnerships with System Integrators like Cognizant, Coforge, Cap Gemini, Alpha, Deloitte, and LTIMindtree.

Geographic Footprint: Sapiens International Corporation N.V. is a global company with over 600 customers and approximately 4,850 employees located in 22 countries. It maintains five major development, delivery, and support centers in Israel, the United States, India, Poland, and the United Kingdom. In 2024, 96.1% of its revenues originated from customers outside of Israel. Key revenue-generating regions include North America (41.6% of total revenues), Europe (49.7%, including 14.2% from the United Kingdom), and the Rest of the World (8.7%). The Company leases office space in numerous countries, with primary locations in India (approximately 160,641 sq ft), Israel (approximately 79,489 sq ft), the United States (approximately 24,698 sq ft), Poland (approximately 23,451 sq ft), Lithuania (approximately 24,370 sq ft), Latvia (approximately 21,362 sq ft), Germany (approximately 9,086 sq ft), the United Kingdom (approximately 7,374 sq ft), Spain (approximately 6,700 sq ft), China (approximately 5,175 sq ft), and Denmark (approximately 4,355 sq ft).

Cross-Border Operations: Sapiens International Corporation N.V. is incorporated in the Cayman Islands and registered as an Israeli company for tax purposes. Its extensive international operations are conducted through numerous subsidiaries globally, including Sapiens International Corporation B.V. (Netherlands), Sapiens North America Inc. (Ontario), Sapiens (UK) Limited (UK), Sapiens Technologies (1982) Ltd. (Israel), Sapiens Germany GmbH (Germany), Sapiens Denmark A/S (Denmark), Sapiens Latam S.A.S. (Colombia), and Sapiens Technologies (1982) India Private Limited (India), among others. The Company is a member of the Asseco Group, with Asseco Poland S.A. being the ultimate controlling shareholder via Formula Systems (1985) Ltd. Most revenues are derived from international operations in local currencies (US dollars, British pound sterling, Euro, NIS, Danish Krone, Swedish Krona), with 44.7% of 2024 revenues in US dollars. Costs of operations in local currency are higher than revenues in Israel, India, and Poland, while revenues exceed costs in the United Kingdom and Europe. International operations expose the Company to foreign currency fluctuations, diverse tax regimes, and the complexities of multi-jurisdictional regulatory compliance, particularly in the highly regulated insurance sector. Approximately 48% of the Company's employees are located in India, presenting unique operational challenges.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 43.9% (2024) vs. 42.7% (2023)
• Operating Margin: 15.8% (2024) vs. 15.3% (2023)
• Net Margin: 13.3% (2024) vs. 12.2% (2023)

Investment in Growth:

• R&D Expenditure: $66,302 (12.2% of revenue) (Net of $7,133 capitalized software development costs)
• Capital Expenditures: $2,879 (purchase of property and equipment)
• Strategic Investments: In 2024, Sapiens International Corporation N.V. acquired the remaining 7% of Sapiens Software Solutions (Decision) Ltd. for $4.1 million. In 2023, it acquired NCDC S.A. for $11.7 million and completed the acquisition of Tiful Gemel (remaining 5% for $161 thousand) and Neuralmatic. Subsequent to year-end, in Q1 2025, the Company acquired a Canadian life insurance company for $6.485 million and 60% of a Spanish life insurance company for $10.884 million.

Currency Impact Analysis: Sapiens International Corporation N.V. conducts business in multiple currencies, including US dollars, British pound sterling, Euro, NIS, Danish Krone, and Swedish Krona. In 2024, 44.7% of revenues were in US dollars. The British pound sterling appreciated by 3% against the US dollar in 2024, positively impacting revenues and results. The US dollar-Euro ratio remained stable. The Company's financial expense (income), net, shifted from an expense of $1.8 million in 2023 to an income of $(4.0) million in 2024, primarily due to the absence of a $3.0 million net loss from hedging transactions in 2023 (no hedging transactions in 2024) and an increase of $1.7 million in finance income from bank deposits. A hypothetical 10% movement in foreign currency exchange rates (primarily NIS, British pound sterling, and Euro) against the US dollar would have resulted in a maximum $30.0 million (5.5% of total revenues) change in 2024 sales revenues. Sapiens International Corporation N.V. monitors foreign currency exposure and may use forward contracts or options for hedging, though no such contracts were outstanding as of December 31, 2024.

Business Segment Analysis

Insurance

Financial Performance:

• Revenue: $520,946 (+5.7% YoY)
• Operating Margin: 17.7%
• Key Growth Drivers: The increase in revenue was primarily attributable to organic growth, mainly in the P&C and L&P core businesses.

Product Portfolio: Sapiens International Corporation N.V. offers a comprehensive suite of intelligent, SaaS-based insurance platforms and solutions, including:

• Property & Casualty: Sapiens Insurance Platform for Property & Casualty, comprising Sapiens CoreSuite for Property & Casualty (North America) and Sapiens IDITSuite for Property & Casualty (EMEA and APAC). Regional offerings include Diana Solution for Property & Casualty (Spain), SCIP Core (DACH), Tia Enterprise (Nordics), and OASIS for MPL.
• Life, Pension & Annuities: Sapiens Insurance Platform for Life, Pension & Annuities, including Sapiens CoreSuite for Life, Pension & Annuities, Sapiens UnderwritingPro for Life & Annuities, Sapiens ApplicationPro for Life & Annuities, Sapiens IllustrationPro for Life & Annuities, and Sapiens ConsolidationMaster for Life & Pension.
• Digital: Sapiens DigitalSuite, offering end-to-end digital engagement through portals (AgentConnect, EmployerConnect, CustomerConnect), chatbots (BotConnect), live chat (LiveConnect), and an advanced API layer.
• Data and Analytics: Sapiens DataSuite, providing insightful dashboards, reporting, and predictive analytics utilizing AI and machine learning.
• Reinsurance: Market-leading solutions like ReinsuranceMaster (EMEA, APAC, global), ReinsurancePro (North America), and Reinsurance GO (North America).
• Workers’ Compensation: Sapiens Platform for Workers’ Compensation, including Sapiens CoreSuite for Workers’ Compensation and Sapiens GO for Workers’ Compensation.
• Medical Professional Liability (MPL): OASIS, an integrated platform for underwriting, policy, claims, and financial management.
• Financial & Compliance: Sapiens FinancialPro, Sapiens Financial GO, Sapiens StatementPro, and Sapiens CheckPro.
• Decision Management: Sapiens Decision, a platform for business domain users to model, validate, test, and simulate business logic, with added AI and Generative AI capabilities.

Market Dynamics: The insurance market is large, complex, highly regulated, and undergoing rapid evolution driven by customer demands, digital distribution, and new business models. Key trends include the need for innovation, digitalization, cloud-based solutions (SaaS), and increased usage of data, AI, and machine learning for decision-making and operational efficiency. The market is highly competitive, with consolidation among smaller vendors and a high barrier to entry for new players. Regulatory changes, such as Solvency II and GDPR, necessitate continuous adaptation of IT systems.

Geographic Revenue Distribution:

• North America: $225,584 (41.6% of total revenue)
• United Kingdom: $76,800 (14.2% of total revenue)
• Rest of Europe: $192,904 (35.5% of total revenue)
• Rest of World: $47,091 (8.7% of total revenue)
• Growth Markets: Sapiens International Corporation N.V. sees considerable opportunity to grow P&C and L&A platforms worldwide and plans to market solutions in untapped countries including the DACH region, Spain, LatAm, and expand its business decision management platform into Europe and Asia Pacific.

All Other

Financial Performance:

• Revenue: $21,433 (-2.8% YoY)
• Operating Margin: 29.8%
• Key Growth Drivers: This segment primarily includes products sold to non-insurance customers.

Product Portfolio:

• Sapiens eMerge: A rules-based, model-driven architecture for creating tailor-made enterprise applications with minimal coding, used for proxy porting and complex, unique requirements.
• Sapiens Decision: While primarily focused on insurance and financial services, the platform is also marketed for government applications to automate manual processes and ensure policy compliance.

Market Dynamics: The business decision management market, where Sapiens Decision operates, is characterized by increasing competition, regulatory burden, and the need for digital and product innovation. Organizations across verticals require efficient ways to define, modify, standardize, and reuse business logic to bridge the gap between business and IT.

Geographic Revenue Distribution: Not specifically disaggregated for this segment.

International Operations & Geographic Analysis

Revenue by Geography:

| Region/Country | Revenue (2024) | % of Total | Growth Rate (YoY) | Key Drivers | |---|---|---|---| | North America | $225,584 | 41.6% | +6.3% | Organic growth, mainly in P&C business. | | Europe | $269,704 | 49.7% | +4.9% | Organic growth of core P&C and L&P businesses. | | Rest of the world | $47,091 | 8.7% | +4.3% | General business expansion. |

International Business Structure:

• Subsidiaries: Sapiens International Corporation N.V. (Cayman Islands) is the parent company. Key subsidiaries include Sapiens International Corporation B.V. (Netherlands), Sapiens North America Inc. (Ontario), Sapiens (UK) Limited (UK), Sapiens India (India), Sapiens Japan Co. (Japan), Sapiens Americas Corporation (New York), Sapiens Technologies (1982) Ltd. (Israel), Sapiens Germany GmbH (Germany), Sapiens Denmark A/S (Denmark), Sapiens Latam S.A.S. (Colombia), and Sapiens Software Solutions (Poland) Sp. Z o.o. (Poland), among others across 22 countries. The Company is part of the Asseco Group, with Asseco Poland S.A. being the ultimate controlling shareholder through Formula Systems (1985) Ltd.
• Joint Ventures: Not explicitly detailed as joint ventures, but the Company has increased its holdings in previously partially-owned entities like Tiful Gemel and Neuralmatic to 100%.
• Licensing Agreements: Sapiens International Corporation N.V. distributes its products under software license agreements that grant customers non-transferable licenses and prohibit unauthorized reproduction or misuse. The Company also relies on technology and intellectual property licensed from unaffiliated third parties.

Cross-Border Trade:

• Export Markets: In 2024, 96.1% of Sapiens International Corporation N.V.'s revenues originated from customers located outside of Israel. Primary target regions for sales and marketing include North America, the UK, Europe, APAC, EMEA, and South Africa.
• Import Dependencies: Not explicitly detailed in the filing.
• Transfer Pricing: As a multinational corporation, Sapiens International Corporation N.V. is subject to transfer pricing rules and regulations, including those relating to the flow of funds between the Company and its affiliates, designed to ensure appropriate income reporting in each jurisdiction.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: As of December 31, 2024, Sapiens International Corporation N.V. held 2,328,296 Common Shares in treasury. No specific share repurchase program for 2024 was detailed.
• Dividend Payments: In 2024, Sapiens International Corporation N.V. distributed $31.823 million in cash dividends.
• Dividend Yield: Not explicitly stated.
• Future Capital Return Commitments: On March 25, 2025, the Board approved a cash dividend of $0.30 per common share ($16.8 million total) and a special cash dividend of $0.36 per common share ($20.1 million total), for an aggregate of $0.66 per common share ($36.9 million total), to be paid in April 2025. This aligns with the Company's policy of distributing up to 40% of its annual non-GAAP net profit semi-annually.

Balance Sheet Position:

• Cash and Equivalents: $163,690 as of December 31, 2024.
• Total Debt: $39,588 as of December 31, 2024, consisting of $19,796 in current maturities and $19,792 in long-term Series B Debentures.
• Net Cash Position: $176,602 (calculated as cash and cash equivalents + short-term bank deposit - total debt) as of December 31, 2024.
• Credit Rating: S&P Maalot affirmed the rating of the Series B Debentures as ilAA-, with a stable outlook, in July 2024.
• Debt Maturity Profile: The principal of the Series B Debentures is payable in equal annual payments on January 1 of each year, concluding on January 1, 2026. Interest is fixed at 3.37% per annum, payable semi-annually on January 1 and July 1, concluding on January 1, 2026. Sapiens International Corporation N.V. was in compliance with all financial covenants as of December 31, 2024, including maintaining shareholders’ equity above $120 million, a net financial indebtedness to net capitalization ratio below 65%, and a net financial indebtedness to EBITDA ratio below 5.5.

Cash Flow Generation:

• Operating Cash Flow: $82,225 in 2024, an increase from $79,425 in 2023.
• Free Cash Flow: Approximately $72,213 in 2024 (Operating Cash Flow less capital expenditures and capitalized software development costs).
• Cash Conversion Metrics: Not explicitly detailed.

Currency Management: Sapiens International Corporation N.V. primarily invests its cash and cash equivalents in US dollar-denominated bank deposits. The Company monitors foreign currency exposure and may use financial hedging instruments like forward contracts or put/call currency options to manage balance sheet exposure and anticipated foreign currency costs. However, as of December 31, 2024, the Company had no outstanding options or forward contracts.

Operational Excellence

Production & Service Model: Sapiens International Corporation N.V. employs a SaaS-based, end-to-end software delivery model for its intelligent insurance platform. This platform manages the full insurance lifecycle, integrating digital engagement, core processing, data management, AI-driven logic, and ecosystem partner management, all built on a cloud-first strategy. The Company's services modernize and automate processes for insurance providers and financial institutions globally, aiming for greater organizational efficiencies, cost reduction, and enhanced user experience. Delivery methodologies typically follow an Agile or hybrid agile-waterfall approach. Cloud deployments include full infrastructure for operations and optional cloud-related services provided by Sapiens International Corporation N.V.'s professional services team.

Global Supply Chain Architecture: Key Suppliers & Partners: Sapiens International Corporation N.V. prioritizes working with local vendors in its operating countries to support local economies and reduce environmental impact. The Company requires all suppliers and business partners to adhere to a code of ethics; in 2023, 50% of suppliers signed this code. Surveys indicate approximately 70% of major suppliers have environmental policies, with another 25% developing them, and 40% are ISO 1400001 compliant (13% in process).

• Manufacturing Partners: Not explicitly detailed as manufacturing partners, but the Company has development, delivery, and support centers in Israel, the U.S., India, Poland, and the UK.
• Technology Partners: Sapiens International Corporation N.V. has a strategic partnership with Microsoft for Generative AI adoption and development, Cloud and SaaS transformation, and Power BI technology. It also formalizes partnerships with leading System Integrators such as Cognizant, Coforge, Cap Gemini, Alpha, Deloitte, and LTIMindtree to support project implementation, program delivery, and market penetration.

Facility Network:

• Manufacturing: The Company's five major development, delivery, and support centers are located in Israel, the U.S., India, Poland, and the UK.
• Research & Development: R&D activities are primarily housed in Israel, which also serves as the corporate headquarters. A significant portion of R&D personnel (48% of total employees) are located in India.
• Distribution: The Company's global presence and "think global, act local" approach ensure experts are in close proximity to customers for support and relationship management. Specific warehousing and logistics infrastructure are not detailed.

Operational Metrics:

• Employee Count: 4,850 as of December 31, 2024, a 3.0% decrease from 2023.
• Gender Diversity: 35% of employees are female, with women holding 85% of tech positions and 21% of management positions.
• Sustainability Rating: Achieved an EcoVadis overall score of 49 out of 100 (39th percentile) in September 2024, an improvement from 40 out of 100 (26th percentile).

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: The primary sales channel, with sales teams spread across regional offices in North America, the United Kingdom, Israel, India, Poland, the Nordics, Spain, Singapore, South Africa, Canada, Latvia, and Germany. The direct sales force targets large organizations in the insurance and financial services industry.
• Channel Partners: Sapiens International Corporation N.V. aims to expand its distribution model to include more channel partners and system integrators. Formalized partnerships exist with Cognizant, Coforge, Cap Gemini, Alpha, Deloitte, and LTIMindtree.
• Digital Platforms: The Company invests in its web presence and digital marketing activities, including a blog channel, podcast, and vlog, to generate leads and enhance brand recognition.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Sapiens International Corporation N.V. serves over 600 customers globally, including some of the world’s largest global insurance carriers and financial institutions. Many customer relationships have been in place for over a decade, providing revenue stability.
• Strategic Partnerships: A strategic and global partnership with Microsoft focuses on Generative AI adoption, Cloud and SaaS transformation, and Power BI technology.
• Customer Concentration: Five of the largest customers accounted for 13.2% of total revenues in 2024 (12.9% in 2023). The largest single customer accounted for 4.1% of consolidated revenues in 2024 (3.3% in 2023).

Regional Market Penetration:

• North America: 41.6% of total revenue.
• United Kingdom: 14.2% of total revenue.
• Rest of Europe: 35.5% of total revenue.
• Growth Markets: Sapiens International Corporation N.V. intends to broaden its offerings in existing geographies and market its solutions in previously untapped countries, including the DACH region, Spain, and LatAm. The Company also plans to expand the market reach of its business decision management platform into Europe and the Asia Pacific region.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: The market for software solutions and related services, particularly for the insurance and financial services industry, is highly competitive, dynamic, and characterized by rapidly changing technologies, evolving industry standards, and frequent innovation. The global insurance IT market is projected to grow significantly, with IT spending expected to reach $260 billion in 2025 and $336 billion by 2028, driven by software and IT services. The complex requirements of this market create a high barrier to entry for new players and have led to increased M&A transactions among existing vendors. Key trends include the shift towards cloud-based solutions, increasing usage of data for decision-making, and rapidly growing interest in AI, predictive models, and Generative AI.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Sapiens International Corporation N.V. faces competition from:

• Global software providers with their own intellectual property.
• Local/domestic software vendors with their own intellectual property.
• Business Process Outsourcing (BPO) providers offering end-to-end outsourcing services.
• Internal IT departments of insurance carriers.
• New insurtech companies with niche solutions.

Regional Competitive Dynamics: Competitors vary by size, geography, and lines of business, with some offering full suites and others specialized modules. Delivery models also differ, including in-house, IT outsourcing, or BPO. Consolidation in the insurance industry further intensifies competition by reducing the number of potential clients.

Risk Assessment Framework

Strategic & Market Risks

• Global Market Dynamics: Sapiens International Corporation N.V.'s performance is sensitive to global macroeconomic conditions, including inflation, interest rates, and currency exchange rate fluctuations, which can impact customer capital budgets and sales cycles. The insurance industry is also vulnerable to catastrophic losses (e.g., natural disasters, pandemics) and capital market downturns, which could delay or reduce customer investments. Consolidation within the insurance market may reduce the number of potential clients.
• Technology Disruption: The Company faces risks from its ability to successfully develop and deploy new technologies to meet evolving customer needs and market trends (e.g., cloud, AI, digital engagement). Security vulnerabilities, errors, or defects in its complex software solutions could lead to reduced revenue, liability claims, and reputational damage. The increasing use of AI Technologies introduces risks related to model design, oversight, unforeseen impacts, and reliance on third-party AI components.
• Customer Concentration: While diversified, the top five customers accounted for 13.2% of revenues in 2024, and the largest customer for 4.1%, posing a risk if these relationships are impaired or agreements terminated.

Operational & Execution Risks

• Global Supply Chain Vulnerabilities: Reliance on third-party vendors and their employees for solution implementation heightens exposure to cyber incidents and data security risks.
• Regional Disruptions: Operations are exposed to geopolitical and security risks, particularly due to its principal location in Israel, which has experienced ongoing conflicts. Such events could disrupt operations, damage facilities, or cause employee absences.
• Trade Restrictions: The Company is exposed to risks from increased and reciprocal tariffs imposed by the United States and other countries, which could adversely affect sales in various regions.

Financial & Regulatory Risks

• Currency & Financial Risks: Fluctuations in foreign currency exchange rates (NIS, British pound sterling, Euro against the US dollar) can negatively impact revenue and profitability. The Company's Series B Debentures contain financial covenants (e.g., minimum shareholders’ equity, maximum debt-to-equity ratio) and restrictive provisions, which if breached, could lead to an increased interest rate or acceleration of repayment obligations.
• Regulatory & Compliance Risks: Sapiens International Corporation N.V. operates in a highly regulated global financial services industry, subject to multi-jurisdictional compliance requirements (e.g., Sarbanes-Oxley Act, Solvency II, RDR, Dodd-Frank Act, GDPR, CCPA, Israeli Privacy Protection Law). Changes in these regulations can impose additional costs, limit information use, and expose the Company to fines or litigation.
• Tax Regulations: The Company benefits from Israeli government tax incentives (e.g., Special Preferred Technology Enterprise program) which require meeting specific conditions and could be terminated or reduced. Israeli R&D grants impose restrictions on transferring know-how or manufacturing rights outside of Israel. The Company is also subject to complex international tax planning, transfer pricing rules, and the evolving global minimum tax (Pillar Two) regulations, which could impact its effective tax rate and cash liabilities.

Geopolitical & External Risks

• Country-Specific Risks: Operations in Israel are exposed to political and economic instability, including ongoing conflicts, which could disrupt business. Expanding international operations, particularly in emerging markets like India (where 48% of employees are located), presents challenges related to political instability, terrorism, intellectual property protection, and compliance with anti-corruption laws.
• Economic Risk: Global macroeconomic factors, including inflation and interest rates, can adversely impact customer purchasing power and demand for software solutions and services.

Innovation & Technology Leadership

Research & Development Focus: Global R&D Network: Sapiens International Corporation N.V. maintains five major development, delivery, and support centers globally, including core R&D activities in Israel and a significant R&D presence in India (48% of employees).

• Innovation Pipeline: The Company continuously invests in R&D to enhance its software platforms and maintain leadership in functionality and technology. It has launched a next-generation Sapiens Insurance Platform, which is under continuous development, and is heavily focused on integrating AI, machine learning, deep learning, smart decisioning, and generative AI into its solutions, exemplified by its "Co-Pilot Everywhere" strategy. This includes rapidly introducing cutting-edge innovations to the market.

Intellectual Property Portfolio:

• Patent Strategy: Sapiens International Corporation N.V. relies on a combination of contractual provisions and intellectual property law to protect its proprietary technology. It seeks to protect its source code as trade secret information and unpublished copyright works, and uses security and copy protection features. The Company holds trademark registrations for "Sapiens" in multiple jurisdictions (US, UK, Benelux, Germany, France, Italy, Switzerland, Israel, South Africa, and the European Union) and for many of its products.
• Licensing Programs: Products are distributed under software license agreements that grant customers personal, non-transferable licenses. The Company also licenses technology and intellectual property from third parties.
• IP Litigation: The software industry is prone to intellectual property claims and litigation. Third parties may assert infringement or misappropriation claims, which could result in significant costs, costly litigation, or the need for royalty/license agreements.

Technology Partnerships:

• Strategic Alliances: Sapiens International Corporation N.V. has a strategic partnership with Microsoft, leveraging its labs, expertise, and innovation centers for joint research and development in AI, Generative AI adoption, Cloud and SaaS transformation, and Power BI technology.
• Research Collaborations: The Company also collaborates with academic institutions and other partners, though specific details are not provided.

Leadership & Governance

Executive Leadership Team

International Management Structure: Sapiens International Corporation N.V. emphasizes a "think global, act local" approach, positioning experts close to customers to build strong relationships and provide fast support. This strategy combines global experience with local expertise in regulations, standards, and processes.

Board Composition: The Board of Directors consists of a minimum of three and a maximum of 24 directors, elected annually. The Audit Committee comprises three independent directors: Yacov Elinav (Chairman and Audit Committee Financial Expert), Uzi Netanel, and Eyal Ben Chlouche. The Compensation Committee comprises Uzi Netanel, Naamit Salomon, and Guy Bernstein (Chairman). As a foreign private issuer, Sapiens International Corporation N.V. follows Cayman Islands home country corporate governance practices, which differ from Nasdaq Listing Rules regarding board independence, director nomination, executive compensation approval, and shareholder approval for certain dilutive events.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework: Primary Regulatory Environments: Sapiens International Corporation N.V. operates within a highly regulated global financial services industry, subject to constant changes. Key regulations include:

• Home Country (Israel): Subject to the Israeli Privacy Protection Law, 1981 (PPL), and its regulations, including the Israeli Privacy Protection Regulations (Data Security) 2017. Amendment 13 to the PPL, effective August 14, 2025, expands the Privacy Protection Authority's (PPA) investigative and monetary sanction powers. The EU Regulations (Provisions Regarding Information Transferred to Israel from the European Economic Area), 2023, also apply to personal data of Israeli individuals as of January 2025.
• Major Market 1 (Europe): Subject to the European Union General Data Protection Regulation (GDPR), which imposes stringent rules on data collection, use, storage, transmission, disclosure, and breach reporting. The United Kingdom has its own U.K. GDPR.
• Major Market 2 (United States): Subject to privacy regulations from the Federal Trade Commission and state regulators. This includes the California Consumer Privacy Act (CCPA), as amended by the California Privacy Rights Act, and similar laws enacted in Colorado, Virginia, Utah, Texas, Florida, Montana, and Connecticut. Cross-Border Compliance:
• Export Controls: The Company's international operations are subject to import and export license requirements, customs duties, tariffs, and other trade barriers.
• Sanctions Compliance: Not explicitly detailed.
• Anti-Corruption: Sapiens International Corporation N.V. is subject to anti-corruption and anti-bribery laws and regulations, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. Local business practices in some regions may require careful monitoring to ensure compliance.

International Tax Strategy:

• Transfer Pricing: The Company is subject to transfer pricing rules and regulations, including those governing the flow of funds between Sapiens International Corporation N.V. and its affiliates, to ensure appropriate income reporting in each jurisdiction.
• Tax Treaties: Sapiens International Corporation N.V. benefits from tax treaties, such as the U.S.-Israel Tax Treaty, which can provide exemptions or credits for capital gains and dividends.
• BEPS Compliance: The Company is impacted by the Organization for Economic Co-operation and Development's (OECD) Base Erosion and Profit Shifting (BEPS) action plan, which aims to standardize global corporate tax policy. Israel has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI).
• Global Minimum Tax Pillar Two: The European Council adopted Directive (EU) 2022/2523, implementing Pillar Two rules for multinational enterprise groups with revenues of at least EUR 750 million. These rules will become effective in Israel on January 1, 2026, and in other countries where Sapiens International Corporation N.V. operates, potentially impacting its effective tax rate.

Environmental & Social Impact

Global Sustainability Strategy: Sapiens International Corporation N.V.'s management emphasizes business responsibility, sustainability, and delivering value to stakeholders. The Company's core values and Code of Business Conduct and Ethics promote ethical behavior, full disclosure, whistleblower protection, and compliance. Environmental Commitments: Sapiens International Corporation N.V. is committed to environmentally friendly solutions. Its software and services modernize and automate processes, reducing reliance on manual, paper-based operations and large office spaces, thereby minimizing energy consumption, waste, and CO2 emissions. Cloud services and IT hosting further reduce the need for local infrastructure. Regional Sustainability Initiatives:

• Supply Chain: Sapiens International Corporation N.V. prioritizes working with local vendors and those who share its values, including companies employing underrepresented populations, non-profit organizations, and certified green businesses. In 2023, 50% of suppliers signed a code of ethics, and an estimated 70% have environmental policies (with 25% developing them). Approximately 40% of suppliers are ISO 1400001 compliant.
• Operations: While all Sapiens International Corporation N.V. sites are rented, the Company works with property owners to implement energy-saving schemes (e.g., LED lighting, wastewater recycling) and transitions to greener office practices, including eliminating single-use plastics and promoting paperless environments. Social Impact by Region:
• Community Investment: The Company supports local businesses and economies and partners with non-profit organizations.
• Labor Standards: Sapiens International Corporation N.V. values gender diversity, with 35% female employees (85% in tech positions, 21% in management) as of December 31, 2024. It uses data analytics for fair compensation and benefits, and maintains a zero-tolerance policy for harassment.
• ESG Performance: In September 2024, Sapiens International Corporation N.V. received an EcoVadis score of 49 out of 100 (39th percentile), an improvement from 40 out of 100 (26th percentile), reflecting ongoing ESG efforts.

Currency Management & Financial Strategy

Multi-Currency Operations: Currency Exposure:

| Currency | Revenue Exposure (2024) | Cost Exposure | Net Exposure | Hedging Strategy | |---|---|---|---| | US Dollar | 44.7% | Not explicitly quantified | Not explicitly quantified | Natural hedge through operational diversification; may use financial hedging. | | British Pound Sterling | Not explicitly quantified | Higher than revenues in UK/Europe | Not explicitly quantified | May use financial hedging. | | Euro | Not explicitly quantified | Higher than revenues in UK/Europe | Not explicitly quantified | May use financial hedging. | | NIS | Not explicitly quantified | Higher than revenues in Israel | Not explicitly quantified | May use financial hedging. | | Danish Krone | Not explicitly quantified | Not explicitly quantified | Not explicitly quantified | May use financial hedging. | | Swedish Krona | Not explicitly quantified | Not explicitly quantified | Not explicitly quantified | May use financial hedging. | | Indian Rupee | Not explicitly quantified | Higher than revenues in India | Not explicitly quantified | May use financial hedging. | | Polish Zloty | Not explicitly quantified | Higher than revenues in Poland | Not explicitly quantified | May use financial hedging. |

Hedging Strategies:

• Transaction Hedging: Sapiens International Corporation N.V. monitors foreign currency exposure and may enter into currency forward contracts or put/call currency options to hedge balance sheet exposure and anticipated costs in foreign currencies. However, as of December 31, 2024, the Company had no outstanding options or forward contracts.
• Translation Hedging: Not explicitly detailed.
• Economic Hedging: Not explicitly detailed.