Sapiens International N : 20F FOR 2023

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report________________

Commission file number 000-20181

SAPIENS INTERNATIONAL CORPORATION N.V.

(Exact name of Registrant as specified in its charter)

Cayman Islands

(Jurisdiction of incorporation or organization)

Azrieli Center

26 Harokmim St. Holon, 5885800 Israel (Address of principal executive offices)

Roni Giladi, Chief Financial Officer

Tel: [phone] Fax[phone]

Azrieli Center

26 Harokmim St. Holon, 5885800 Israel

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Name of each exchange on whichTitle of Class:

Trading Symbol(s)

registered:

Common Shares, par value €0.01 per share

SPNS

Nasdaq Global Select Market

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: NoneIndicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report

As of December 31, 2023, the Registrant had 55,733,234 Common Shares, par value € 0.01 per share, outstanding (which excludes 2,328,296 Common Shares held in treasury).

Indicate by check mark if the registrant is well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☒ No ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐

No ☒

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒

No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T h(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒

No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of "accelerated filer" and "large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer:	☒	Accelerated filer:	☐
Non-accelerated filer:	☐	Emerging growth company	☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the

Exchange Act ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Yes ☐ No ☒

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b)

Yes ☐ No ☒

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

☒ U.S. GAAP

☐ International Financial Reporting Standards as issued by the International Accounting

☐ Other

Standards Board

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐

No ☒

TABLE OF CONTENTS

Page

Introduction

iv

PART I

Item 1

Identity of Directors, Senior Management and Advisers

Item 2

Offer Statistics and Expected Timetable

Item 3

Key Information

1 1 1

A

[Reserved]

B

Capitalization and Indebtedness

C

Reasons for the Offer and Use of Proceeds

Item 4

Information on the Company

D

Risk Factors

1 1 1 1 26

A

History and Development of the Company

B

Business Overview

C

Organizational Structure

D

Property, Plants and Equipment

26 27 50 52

Item 4A

Unresolved Staff Comments

Item 5

Operating and Financial Review and Prospects

53 53

A

Operating Results

B

Liquidity and Capital Resources

C

Research and Development, Patents and Licenses, Etc.

D

Trend Information

E

Critical Accounting Estimates

54 62 65 65 68

i

Item 6

Directors, Senior Management and Employees

A

Directors and Senior Management

B

Compensation

C

Board Practices

E

Share Ownership

D

F

Disclosure of a Registrant's Action to Recover Erroneously Awarded CompensationEmployees

72 72 74 78 80 80 80

Item 7

Major Shareholders and Related Party Transactions

81

A

Major Shareholders

B

Related Party Transactions

C

Interests of Experts and Counsel

81 82 82

Item 8

Financial Information

A

Consolidated Statements and Other Financial Information

B

Significant Changes

83 83 83

Item 9

The Offer and Listing

A

Offer and Listing Details

B

Plan of Distribution

84 84 84

• C Markets

• D Selling Shareholders

F

Expenses of the Issue

E

Dilution

84 84 84

Item 10

Additional Information

84

A

Share Capital

B

Memorandum and Articles of Association

C

Material Contracts

D

Exchange Controls

F

Dividends and Paying Agents

E

G

Statement by ExpertsTaxation

84 84 84 86 86 94 94

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94
94
94
Item 11	Quantitative and Qualitative Disclosures About Market Risk	95
Item 12	Description of Securities Other Than Equity Securities	95
PART II
Item 13	Defaults, Dividend Arrearages and Delinquencies	96
Item 14	Material Modifications to the Rights of Security Holders and Use of Proceeds	96
Item 15	Controls and Procedures	96
Item 16	[Reserved]	97
Item 16A	Audit Committee Financial Expert	97
Item 16B	Code of Ethics	97
Item 16C	Principal Accountant Fees and Services	97
Item 16D	Exemptions from the Listing Standards for Audit Committees	98
Item 16E	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	98
Item 16F	Change in Registrant's Certifying Accountant	98
Item 16G	Corporate Governance	98
Item 16H	Mine Safety Disclosures	99
Item 16I	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	99
Item 16J	Insider Trading Policy	99
Item 16K	Cybersecurity	99
PART III
Item 17	Financial Statements	101
Item 18	Financial Statements	101
Item 19	Exhibits	101
Signature	102

H

Documents on Display

I

Subsidiary Information

J

Annual Report to Security Holders

iii

INTRODUCTION

Definitions

In this annual report, unless the context otherwise requires:

• ● References to "Sapiens," the "Company," the "Registrant," "our company," "us," "we" and "our" refer to Sapiens International Corporation N.V., a Cayman Islands exempted company, and its consolidated subsidiaries

• ● References to "our shares," "Common Shares" and similar expressions refer to Sapiens' Common Shares, par value € 0.01 per share

• ● References to "dollars," "U.S. dollars," "U.S. $" and "$" are to United States dollars

• ● References to "Euro" or "€" are to the Euro, the official currency of the Eurozone in the European Union

• ● References to "shekels" and "NIS" are to New Israeli Shekels, the Israeli currency

• ● References to the "Articles" are to our Articles of Association, as currently in effect

• ● References to the "Memorandum" are to our Memorandum of Association, as currently in effect

• ● References to the "Securities Act" are to the Securities Act of 1933, as amended

• ● References to the "Exchange Act" are to the Securities Exchange Act of 1934, as amended

• ● References to "Nasdaq" are to the Nasdaq Stock Market

• ● References to the "TASE" are to the Tel Aviv Stock Exchange

• ● References to the "SEC" are to the United States Securities and Exchange Commission

Cautionary Note Regarding Forward-Looking Statements

Certain matters discussed in this annual report 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, that 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 sales;

• ● the degree of our success in integrating the companies that we have acquired through the implementation of our M&A growth strategy;

iv

• ● the lengthy development cycles for our solutions, which may frustrate our ability to realize revenues and/or profits from our potential new solutions;

• ● our lengthy and complex sales cycles, which do not always result in the realization of revenues;

• ● the degree of our success in retaining our existing customers and competing effectively for greater market share;

• ● the global macroeconomic environment, including headwinds caused by inflation, relatively high interest rates, potentially unfavorable currency exchange rate movements, and uncertain economic conditions, and their impact on our revenues, profitability and cash flows;

• ● difficulties in successfully planning and managing changes in the size of our operations;

• ● 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-stream;

• ● the challenges and potential liability that heightened privacy laws and regulations pose to our business;

• ● occasional disputes with clients, which may adversely impact our results of operations and our reputation;

• ● various intellectual property issues related to our business;

• ● potential unanticipated product vulnerabilities or cybersecurity breaches of our or our customers' systems;

• ● risks related to the insurance industry in which our clients operate;

• ● risks associated with our global sales and operations, such as changes in regulatory requirements, wide-spread viruses and epidemics like the coronavirus pandemic, which adversely affected our results of operations, or fluctuations in currency exchange rates; and

• ● risks related to our principal location in Israel and our status as a Cayman Islands company.

The forward-looking statements made in this annual report relate only to events as of the date on which the statements are made. 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 in Item 3 - "Key Information" under the caption "Risk Factors" and cautionary statements appearing elsewhere in this annual report 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. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this annual report, to conform these statements to actual results or to changes in our expectations.

v

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

• A. [Reserved]

• B. Capitalization and Indebtedness.

  Not applicable.

• C. Reasons for the Offer and Use of Proceeds.

  Not applicable.

• D. Risk Factors.

We operate globally in a dynamic and rapidly changing environment that involves numerous risks and uncertainties. The following section lists some, but not all, of those risks and uncertainties that may have a material adverse effect on our business, financial position, results of operations or cash flows.

Risk Factors Summary

The following is a summary of the principal risks that could materially adversely affect our business, results of operations, and financial condition, all of which are more fully described below. This summary should be read in conjunction with the other information discussed in this Item 3.D, and should not be relied upon as an exhaustive summary of the material risks facing our business. Please carefully consider all of the information discussed in this Item 3.D. "Risk Factors" and elsewhere in this annual report for a more thorough description of these and other risks.

Risks Related to Our Business, Our Industry and Our Financing Activities

• ● Our performance is dependent on the success of our M&A growth strategy, and the integration and continued success of the entities that we acquire.

• ● Our product development and sales cycles are often lengthy, requiring us to expend significant time and resources prior to, and without assurances of, generating associated revenues.

• ● Macroeconomic headwinds caused by inflation, relatively high interest rates, and potentially unfavorable currency exchange rate movements have, in the recent past, adversely impacted, and may once again adversely impact, our revenues, profitability and cash flows.

• ● Retention of key talent is challenging in the current labor markets in the regions in which we operate.

• ● Failure to manage our growth- both organic and non-organic-could effectively harm our business.

• ● We may be unable to successfully develop and deploy new technologies to address the updated needs of our customers.

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• ● The market for software solutions and related services is highly competitive and dynamic, and we may be unable to adapt rapidly enough to changing market conditions and to compete successfully with existing or new competitors.

• ● Long-term, large, complex implementation projects that we work on often involve changes, which could cause disputes between us and our customers.

• ● Security vulnerabilities in our software solutions could lead to reduced revenue or to liability claims.

• ● We are subject to risks that are characteristic of the insurance market, including catastrophes, potential capital markets crashes, and consolidation.

• ● Breaches or significant disruptions of our information technology systems have occurred and may occur again in the future.

• ● We face increased competition from a wide variety of market participants.

Risks Related to Our International Operations

• ● Fluctuations in foreign currency exchange rates have adversely affected, and could once again adversely affect, our results of operations.

• ● Our expanding international operations are accompanied by costs, operational risks and required regulatory compliance in many jurisdictions.

Risks Related to Intellectual Property

• ● We may be unable to protect our patents and trademarks from infringement and avoid infringing the intellectual property rights of others.

• ● We may be liable to our clients for damages caused by a violation of intellectual property rights.

Risks Related to Our Israeli Operations and Our Status as a Cayman Islands Company

• ● Israeli government tax benefits we receive may be terminated if we cease to qualify for them.

• ● Our Israeli research and development grants impose various limitations on us, including restrictions on our ability to transfer manufacturing operations or technology outside of Israel.

• ● Israel's war against the terrorist organization Hamas and its hostilities with additional regional terrorist groups may adversely affect our operations.

2

Risks Relating to Our Business, Our Industry and Our Financing Activities

The implementation of our M&A growth strategy, which requires the integration of multiple acquired companies and their respective businesses, operations and employees with our own, involves significant risks, and the failure to integrate successfully may adversely affect our future results.

In the past decade we have completed a significant number of important acquisitions. Most recently, in the fourth quarter of 2023, we acquired NCDC S.A., a Poland-based company with a knowledge of Sapiens' products in the Nordics, for a purchase price of $11.7 million. We also signed an agreement for the purchase of the remaining outstanding shares of Sapiens Software Solutions (Decision) Ltd. from its minority shareholders, which is expected to be completed by the end of the first quarter of 2024. During 2023, we also increased our holdings in Tiful Gemel (an Israeli provider of provident fund operation, pension clearinghouse services and other additional software services) and Neuralmatic to 100%, transforming those companies into wholly-owned subsidiaries. All such acquisitions are part of our integrated M&A growth strategy, which is centered on three key factors: growing our customer base, expanding our geographic footprint and adding complementary solutions to our portfolio- all while we seek to ensure our continued high quality of services and product delivery. Any failure to successfully integrate the business, operations and employees of our acquired companies, or to otherwise realize the anticipated benefits of these acquisitions, could harm our results of operations. Our ability to realize these benefits will depend on the timely integration and consolidation of organizations, operations, facilities, procedures, policies and technologies, and the harmonization of differences in the business cultures between these companies and their personnel. Integration of these businesses will be complex and time-consuming, will involve additional expense and could disrupt our business and divert management's attention from ongoing business concerns. The challenges involved in integrating NCDC S.A. and other businesses that we have acquired or may acquire from time to time include:

• ● Preserving customer and other important relationships

• ● Integrating complex, core products and services that we acquire with our existing products and services

• ● Integrating financial forecasting and controls, procedures and reporting cycles

• ● Combining and integrating information technology, or IT, systems

• ● Integrating employees and related HR systems and benefits, maintaining employee morale and retaining key employees

• ● Potential confusion that we may have in our dealings with customers and prospective customers as to the products we are offering to them and potential overlap among those products

• ● Investment of significant management time and attention towards the integration process

The benefits we expect to realize from these acquisitions are, necessarily, based on projections and assumptions about the combined businesses of our company, and assume, among other things, the successful integration of these acquired entities into our business and operations. Our projections and assumptions concerning our acquisitions may be inaccurate, however, and we may not successfully integrate the acquired companies and our operations in a timely manner, or at all. We may also be exposed to unexpected contingencies or liabilities of the acquired companies. Furthermore, if a company that we acquire also conducts operations outside of insurance-related solutions, those operations may pose additional risks to our ability to ensure successful results of operations and may potentially cause us future loss of revenue. If we do not realize the anticipated benefits of these transactions, our growth strategy and future profitability could be adversely affected.

Our development cycles are lengthy, and we may not have the resources available to complete development of new, enhanced or modified solutions.

We may incur significant expenses before we generate revenues, if any, from our solutions.

Because our solutions are complex and require rigorous testing, development cycles can be lengthy, taking us up to two years to develop and introduce new, enhanced or modified solutions. Moreover, development projects can be technically challenging and expensive. The nature of these development cycles may cause us to experience delays between the time we incur expenses associated with research and development and the time we generate revenues, if any, from such expenses. We may not have, in the future, sufficient funds or other resources to make the required investments in product development. Furthermore, we may invest substantial resources in the development of solutions that do not achieve market acceptance or commercial success. Even where we succeed in our sales efforts and obtain new orders from customers, the complexity involved in delivering our solutions to such customers makes it more difficult for us to consummate delivery in a timely manner and to recognize revenue and maximize profitability. Failure to deliver our solutions in a timely manner could result in order cancellations, damage our reputations and require us to indemnify our customers. Any of these risks relating to our lengthy and expensive development cycle could have a material adverse effect on our business, financial conditions and results of operations.

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