Sapiens To Buy German Insurtech Provider To Expand In DACH

Sapiens International (NASDAQ:SPNS) is keeping no stone unturned to expand its international footprint. The Israel-based insurance-software provider recently announced the acquisition of Germany-based insurtech provider, sum.cumo, to expand its presence in the DACH region (Germany, Switzerland and Austria).

Notably, sum.cumo employs more than 150 technology and insurance experts, and serves customers in Germany and Switzerland from offices in Hamburg, Dusseldorf and Zurich. The company is estimated to generate 2019 non-GAAP revenues of €15 million and low single-digit profitability.

Sapiens is acquiring sum.cumo for €28.4 million (€24.4 million in cash and €4 million in shares), including consideration for future retention and performance over the next four years.

The acquisition, expected to be completed by the middle of first-quarter 2020, will be accretive to Sapiens’ earnings, beginning the second half of 2020.

Notably, the Zacks Consensus Estimate for 2020 earnings is currently pegged at 89 cents per share, indicating 15.2% year-over-year growth. The consensus mark for revenues stands at $362.5 million, suggesting year-over-year growth of 11.8%.

Strong Partner Base Aids Prospects

Strength in Sapiens’ partner base is helping it win customers in international markets. The company partnered with the likes of Lightico, Kovvr and FRISS. This enabled it to leverage emerging technologies like machine learning, IoT and blockchain.

For instance, the partnership with Kovrr, which is a predictive cyber-risk modeling firm, helps Sapiens provide real-time, data-driven insight into cyber-risk exposure. It also assists clients in meeting regulatory requirements and avoiding policy losses.

Moreover, Sapiens partnered with FRISS, which is an automated fraud-detection and risk-assessment leader in the P&C insurance sector.

Both partnerships expanded Sapiens’ product offerings and made innovative insurtech solutions easily available to its clients.

Further, the company is benefiting from customer wins, driven by portfolio strength. In the trailing 12 months, the company’s solutions have been selected by the likes of Patriot Life Insurance, Croatia Osiguranje, Hollard Group, Equitable Life of Canada, Hong Kong-based King Wai, MSV Life, The Folksam Group, Gjensidige Group, Montana-based Farmers Union Mutual Insurance Company and Dentists’ Provident, among others.

Customer wins helped Sapiens expand presence in South Africa, Canada, Malta, Thailand, Sweden, Denmark, the United States, the U.K. and Ireland.

Notably, Sapiens raised top-line guidance for 2019, following its impressive third-quarter results. The company now expects revenues of $323-$325 million, up from the higher end of the $318-$323 million range provided earlier.

Zacks Rank

Sapiens currently has a Zacks Rank #3 (Hold).

Synopsis (NASDAQ:SNPS) , Avid Technology (NASDAQ:AVID) and Cadence Design Systems (NASDAQ:CDNS) are better-ranked stocks in the same industry. While Avid and Cadence have a Zacks Rank #2 (Buy), Synopsis sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Synopsis, Avid Technology and Cadence is pegged at 12.8%, 10% and 10.5%, respectively.

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