Participants

Yaffa Cohen-Ifrah; Chief Marketing Officer, Head of Investor Relations; Sapiens International Corporation NV

Roni Al Dor; President, Chief Executive Officer, Director; Sapiens International Corporation NV

Roni Giladi; Chief Financial Officer; Sapiens International Corporation NV

Alex Zukerman; Chief Strategy Officer; Sapiens International Corporation NV

Sam Salvas; Analyst; Needham & Company

Dylan Becker; Analyst; William Blair

Surinder Singh; Analyst; Jefferies LLC

Tavy Rosner; Analyst; Barclays

Presentation

Operator

Welcome to Sapiens International Corporation's 2024 third-quarter financial results call. (Operator Instructions)
It is now my pleasure to introduce your host, Yaffa Cohen-Ifrah, Chief Marketing Officer and Head of Investor Relations. Thank you. Yaffa, you may now begin.

Yaffa Cohen-Ifrah

Thank you operator. I want to welcome you to Sapiens' conference call to review our third-quarter results for 2024, with me on the call today are Mr. Roni Al-Dor, President and CEO; Mr. Roni Giladi, CFO; and Mr. Alex Zuckerman, 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 provision in the press release issued today also apply to the content of the call. They 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 the 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's 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. Roni.

Roni Al Dor

Good morning everyone and thank you for joining us today for Sapiens' third-quarter 2024 earnings call. Our revenue in third quarter was $137 million. A 4.8% increase compared to last year. This quarter continue to showcase solid execution across all of our key regions.
Let's start with North America where we secure new business wins during the quarter. I want to highlight a few, Continental General chose the cloud based Sapiens insurance platform for lacking annuity to improve its capabilities and modernize its platform to future insurance product. These improvements will enhance its ability to scale a new market and streamline implementation of its long term care insurance specialty. While expanding third party administrator TPA services through its affiliate.
Another win in the life space was the leading Canadian Life and health insurance carrier which selected the cloud based Sapiens insurance platform to enhance its operational performance, boost efficiency, elevate the client and adviser, experience and drive digital transformation and growth in the life and health market offer mutual insurance company selected a cloud based Sapiens insurance pool to automate insurance management process, improve efficiencies and profitability and mitigate costly claims leakage settings. Automated solution eliminates complexities within treaties by balancing the appropriate coverage with the rising coverage cost enabling Rockford Mutual to track bill, recover the insurance and capture valuable data.
And lastly society insurance chose Sapiens to automate and transform its reinsurance processes. Our cloud based reinsurance system met society need for an automated out of the box solution. Society can now manage its entire insurance program to centralize data in a consolidated repository that quickly runs queries and access reports.
Sapiens stood out for its broad range of capabilities in reinsurance, accounting and cash management, compliance with auditing and security requirements.
Let me highlight few successful North America go live and upgrade with existing customer in quarter three in July, Pan American Life Insurance Group. Peleg successful went live with Sapiens illustration for such solution on the Microsoft cloud. A longtime seps customer pig wanted to transform its current system to see digital web based solution to integrate across multiple platforms.
Illustration four will enable to consolidate illustrations on a single platform, ensuring fast time to market robust new comparisons, client management and self-sufficient feature will allow them to manage multiple product launches more efficiency while improving the agent experience with scalable flexible solution.
Worker compensation is a market where Sapiens is building a momentum in North America and remains a substantial growth opportunity for Sapiens in the year ahead.
In the third quarter, we completed the worker compensation customer upgrade with our latest functionally reached call suite for worker compensation version.
Also, our North America team continues focusing on three major worker compensation projects which we expected to go live in 2025.
The win this quarter reinforced the value and the trust that insurance plays in Sapiens to innovate and drive business transformation. And we are always working to ensure we can deliver the most value to the market.
In course with property and casualty, several North American project went live this quarter and we are working on several customer upgrades.
We also launch our latest version of Sapiens call suite for property and casualty for North America insurance market. The new release delivers ensures many functionality and performance improvement and enhanced security features.
The release introduce an integrated AI based open platform to strengthen the second insurance platform, digital layer and expanding its core business capabilities, ensure it remains future proof.
We have improved the consistency of our data to help the insurance overcome the challenges of data migration and ensure that data is consistent and AI ready. Moving to system integrator Sapiens is making progress in collaboration with system integrators which has resulted in promising opportunity in our pipeline that would have been otherwise unattainable.
These partnerships have unlocked new avenues for growth and development demonstrating the strategic value and the potential of our [SaaS] in expanding our market reach. We are excited about the opportunity and beneficial outcome. This relationship could deliver, before we move to the rest of the world. I want to share some highlights from our annual North America customer summit.
In September, we held our customer summit in Austin, Texas. Austin is the wildlife music capital was the perfect backdrop for an event focused in innovation, collaboration, and transformative solution in the insurance industry. The themes of our summit compose your future express second mission to lead the future of insurance technology.
This year we hosted 545 participants from 135 insurance companies and partners organization, industry leaders like Microsoft, Deloitte, Celent and data contribute value perspective. We also had 22 partners companies present. The summit provide tremendous value with the opportunity to develop deeper customer relationships, meet prospects and generate leads with our partners, companies and our customers. We identify emerging market trends and gain valuable insight into our customer needs and concern. From this event, we create foundation for growth and success and reinforce our commitment to driving transformative journeys for savings clients.
Moving to the rest of the world. We are progressing with customer upgrades and go live with our edit suite Tia suite insurance master and go suit life solutions. And we have had several successful go live this quarter.
I want to highlight the Hollard Group go live in this quarter. Hollard went live, recipients data and analytics solution. Complementing its cost suite for life and pension DataSuite will accelerate the complex migration of whole of businesses and align its process as the company transformation from its core and legacy system to s call suit for life and pension. This will reduce operational costs and deliver automated seamless user experience for customers. And all our staff integrated data suites significantly reduce the complexity of whole migration process which require the complicated development of tailored reports emerging them across the legacy and [call] suite systems.
Among its many benefits, DataSuite empowers Hollard to manage its data and reporting needs while seamlessly operating its business during the migration, demand for seven product remains solid in email and APAC particularly for our live platform and P&C platform solution. It decent here there is continued demand for platform across all solution lies and tiers we are also experiencing growing demand for AI driven solution. As clients increasingly want to leverage AI to enhance operational efficiency and elevate customer experience.
With regulatory agencies. Starting to issue guidance on AI, Sapiens with its local presence in key markets and deep regulatory knowledge is positioned to enable our clients to stay ahead of industry trends and meet regulatory requirements.
Our digital transformation capabilities tailor for medium to smaller carriers enable crucial digital strategy over legacy strategies. These tiers of insurers can innovate quickly with our digital front end solution while gradually replacing legacy systems. In the European market demand for second solution remains robust. Despite the delay in signing new deals, these delays are primarily due to the regulatory approval process for S based model extend contract timeline due to compliance and security reviews and protected business case approval factor outside of our control.
As a result, the average contracting period year-to-date has extended. We are confident we will close these deals in the coming quarters.
Our strategic partner with Microsoft has been instrumental in driving innovation, leveraging their cutting edge technology and collaborative support to enhance our market present and deliver exceptional value to our customers.
Before I wrap up, I would like to share our 2024 annual guidance and outlook for 2025, Roni Giladi will provide the full details, but in brief, we are reducing our full year 2024 revenue guidance. This revision reflects trends that impact our results this quarter and which we expect to proceed in the fourth quarter and into 2025. Despite the revenue guidance adjustment, our strong emphasis on expense management enabled us to leave our non-GAAP operating margin guidance unchanged for 2024 let me provide some contents on the external and internal factor influencing revenue.
One of the key contributors is our strategic shift to s based model, position us to future sustainable high margin growth. While we anticipate some impact on 2024 revenue from this transition, the actual impact has been greater this shift to SaaS is also lead extense sale cycle particularly in Europe where many insurance carriers are new to SaaS and carefully evaluate the benefit before committing. As a result, we are experiencing a slightly longer time to close deals in certain regions as they evaluate the SaaS model advantage.
Additionally, our North America course with P&C business is facing headwinds with the sector specific challenges and increased competition.
Let me emphasize that our worker compensation on reinsured business is progressing as planned. And lastly, the border microeconomic involvement is leading insurance carriers to take more time in making investment decisions and finalizing deals.
We expect this factor to continue to influence growth as we enter to 2025. With that in mind, we anticipate next year's growth will be a low single digit. I want to reiterate that our commitment to building a robust pipeline and expanding our client base across all key markets remain unwavering as the business landscape continue to evolve.
Second, stands determined to execute our strategy to empower insurance carriers with small competitive platform to further enhance our competitive position in the P&C North America market. We are directly invest in a few areas, platform innovation and advanced AI capabilities.
We continue to investing in Sapiens intelligent insurance platform for P&C which integrated DataSuite, digital portals and call processing to provide cohesive end to end advanced business experience and streamlined operation building on the success of the approach used with our life and Annuity platform, a few back which is accelerate. Second goal in this market, we are confident and applying a similar strategy to our co-P&C solutions.
We are also refining our go to market strategy and strengthening our certain marketing teams to pursue new opportunities. While addressing challenges in the market.
We are confident that Sapiens focus on innovation and client successful will drive sustainability growth globally and strengthen our position as a trusted partner in the insurance industry. To drive return to higher growth. We'll focus on accelerating the expansion of our gross product with a strong establishment customer base. We also see significant opportunity for our data, digital and decision solution including our AI driven offering.
We also continue transition our existing customer to our cloud offering. Additionally, we will deepen our penetration in the North America market with our live platform where we hold a leading position and we are gaining momentum while continue to reinforce our presence in this key market.
In summary third-quarter, 2024 marked another quarter of growth and operational progress. We are executing our 2024 priorities including accelerating the shift to such model which is better position us for the long term and delivering solid performance across all of our key regions.
Now, I would like to turn the call over to our CFO to provide more detail on our financial performance.

Roni Giladi

Thank you, Roni. I will begin my commentary by reviewing the third-quarter of 2024 non-GAAP results followed by comments on the balance sheet and cash flow. I will wrap up with our guidance for 2024 revenue in the third quarter of 2024 was $137 million. An increase of 4.8% compared to $131 million in the third quarter of 2023.
Currency impact on revenue was minimal. This quarter. As Roni mentioned in his remarks, we are experiencing delay in closing new deals which resulted in low revenue compared to our internal expectations for Q3 of 2024 our annually recurring revenue. ARL reached $173 million reflecting 10% increase from Q3 of 2023, higher than the reported revenue growth during the same period of 4.8%.
Looking at the revenue mix revenue from recurring software product and reoccurring post production services increased year over year by 15.3% to $101 million compared to $87 million in Q3 of 2023.
We are pleased with the double digit goal. Revenue from preproduction implementation services totaled $36 million compared to $43 million last year.
The decline in preproduction implementation revenue was mainly due to delay in signing new deals and the shift to SaaS as I mentioned in the previous quarter, switching now to get graphic breakdown revenue in North America was $56 million compared to $55 million in the year ago quarter. An increase of 1.7% revenue in Europe was $69 million a year of the increase of 7.1% revenue in the rest of the world which includes South Africa and APAC was $12 million in case of 6.6% compared to pioneer quarter.
Moving to profitability gross profit. This quarter was $63 million compared to $59 million in Q3 of 2023. Gross margin, this quarter was 45.8% compared to 45.3%. An increase of 50 basis points compared to Q3 of 2023.
This increase is mainly due to higher ratio of recurring revenue versus onetime revenue from implementation, operating profit and margin. In the third quarter of 2024 was $25 million and 18.3% of total revenue compared to $24 million and 18.4%. In the third quarter of 2023 operating profit in Q3 grew by 4.3% or by $1 million.
We maintained an operating margin within our target range of 18.3% despite the increased investment in sales and marketing in the third quarter, net income attributed to SAPIEN shareholder was $21 million or 10% increase from $19 million of Q3 of 2023, earnings per diluted share was $0.37 up 8.8% from 34% in Q3 of 2023.
Turning to our balance sheet as of September 30, 2024, we had cash and cash equivalents and short term deposit totaling $186 million and debt of $40 million.
During the quarter, we distributed dividend in the amount of $16.2 million or $0.29 per share to our shareholders. The dividend represents 39% of net income for the first half of 2024.
Turning to our adjusted free cash flow in the third quarter of 2024 we generated $10 million in free cash flow compared to $2 million in Q3 of 2023 for the first nine months of 2024. We generated a just a free cash flow of $33 million loan similar to the first nine months of 2023.
In the third quarter. Maalot S&P global. A part of the global rating firm standard on the pool's financial services confirmed the long term issue rating for SES is AA minus with stable outlook while also confirming the rating for Sapiens Series [] venture is AA minus.
Let me switch gears to discuss our guidance for the remainder of 2024. In our preliminary look at 2025.
Today, we are revising our 2024 annual non-GAAP revenue guidance to $541 million to $546 million from a previous range of $550 million to $555 million.
A reduction of about 1.6% while it's too early to discuss our 2025 expectation in detail, we expect revenue growth to be in the low single digits. The reason for the 2024 reduced guidance and the low growth rate for 2025 compared to previous year are similar and are as follows.
One, at the beginning of the year, we took a strategic decision to transition to SaaS all our product across all territories.
Initially, we estimated this transition would have revenue cognition impact of approximately 1% headwind on our revenue. However, the actual has been greater totaling between 2% to 3%. We anticipate this trend we see in 2024 will carry over into 2025.
Additionally, another factor of this transition to SASS is the extended decision making process among insurance car mainly in Europe.
This delay has affected new deal signing and therefore our revenue two, our North American coast property and casualty business is facing headwinds with the sector specific challenges and heightened competition as a result, revenue from new deals has decreased. In addition, following the go live of certain projects, we are experiencing overall decline in revenue.
Three, we are witnessing the same macroeconomic uncertainty that impacted many global enterprise software companies in our market. This is materializing as longer decision cycle or in some cases, delayed decision by our insurance carrier.
As a result, fewer new deals were signed in 2024 which negatively impact our 2024 revenues. This effect is expected to be more pronounced in 2025. When this new deal that we anticipated to be signed in 2024 we are supposed to generate higher revenue in 2025 particularly due to the full year of implementation and recurring revenue.
On a positive note, we expect an annual 2025 non-GAAP operating margin of 18.2% which is within our range.
While these challenges will impact the next several quarters, the market opportunity ahead of us continue to remain strong as we are still in the mindset of multidecade replacement cycle across the P&C and life markets.
Looking at the past 10 years, Sapiens organic growth has high single digits growing globally, both in P&C and life and together with M&A we reported double digit growth also in the past two years. Revenue from recurrence of the product and reoccurring post production services represented between 65% to 73% of total revenue, highlighting the stability, visibility and stickiness of revenue from existing customers.
Sapiens has a solid foundation of 600 customers, any comprehensive sort of product including call business application data and digital solution, both for P&C and Life.
With the broad geographic reach across North America, Europe and APAC, we believe in our ability to return to similar growth level as we continue executing our long term growth strategy, keeping investing in our solution and offer competitive platform to insurance carrier.
I will now turn the call back to Roni Al-Dor. Roni.

Roni Al Dor

Thank you, Roni. We delivered a solid third quarter, reflecting continued progress across our key markets. Our continued investment in our insurance platform remains a critical delivery for growth. Most importantly, we are committed to delivering long term growth across all of our key territories and reinforce our position as a trusted provider for the intelligent insurance solution.
I want to thank our global team for their commitment to excellence and goals and our investor for their ongoing support of Sapiens. I will now ask the operator to please open the call for questions.

Question and Answer Session

Operator

(Operator Instructions)
Sam Salvas, Needham & Company.

Sam Salvas

Great, thanks. Hey guys, thanks for taking the questions today. I'm just hopping on for my first off, I wanted to touch more on the competitive pressures you guys called out. Could you talk more about what exactly you're seeing which market products these are in and maybe the steps you guys are taking to mitigate some of these impacts.

Alex Zukerman

Yes, sure. This is Alex speaking. So when we look at the competitive landscape, I think we feel that the highest pressure on the competitive side is on the P&C operation in North America. This is where we feel the strongest pressure. This is a, this is not new in terms of the, the crowds of the market. You know, it's a very, very competitive landscape for a few years now on the P&C side.
But the combination of that together with a bit of the point market conditions we see in the North America market on the P&C side, which is a combination, the geographical catastrophes that happened in '24 the reinsurance rates that are spiking high the inflation.
So the combination of those specifically for this year, economic situation plus the high competition over the deals, the combination of them creates a very competitive landscape for us. Now, our plan and to, you know, to mitigate this and our offering to the market is the ins it is based on our platform proposition. We talked about it in our previous boards, we launched in the middle of this year.
In '24. our platform proposition, we see a great feedback from the market and this is both for P&C and Life. And but when we started to focus our efforts of the platform and launched it substantially. It's more on the life side and on the European side, our plan to launch the platform for North America, of course, with P&C is planned for 2025 and this will provide us very strong capabilities and differentiation to cope with competition. And that's our plan for the market.

Roni Giladi

This is the only year just I would like to emphasize when Alex talk about P&C, North America, you say only to the coast system, not including the insurance or work compensation there, we feel strong.

Sam Salvas

Got it. Okay. That's helpful. Makes sense. And then just a quick follow up just on the preliminary '25 guide you guys gave. Could you guys talk about some of the macro assumptions you have as you, you know, got to that revenue target.

Roni Giladi

Hi Sam, this is Roni. Basically the assumption or the reason for this is coming from M&A in 2024 and continue with us into 2023 to 2025. I will not repeat what Alex mentioned about the macroeconomics that we feel right now and continue to 2025. By the way, we see the demand but the market is cautious. So this is important to say we do not see this is for long term but the specific period.
The second item is transition to s early in the year. We took a strategic decision to move all Sapiens products. A globally North America annual pay-pal to the cloud. We did it before the year before only North America specific product.
What we see is the transition have impact on two level. The first one is the delay of decision making from the insurance carrier mainly in the European side. The reason for that the deal became longer and embedded into an additional factor that wasn't in the past. Therefore, the decision process and the approval taken us more time and obviously delay on the revenue. So this is one factor.
The second factor is the implication on the revenue recognition earlier we mentioned or estimated this to be a 1% impact on the revenue growth. And now as we revisit this, we see this as two items on top or different. One is [estimate] in the first year and the second one is the transition of existing customer post production to the cloud. Also take some hit on the revenue cognition because it's further spread the revenue for longer period.
So all of the items here implication have revenue impact of between 2% to 3% versus the 1% that we mentioned earlier. And the P&C cost with North America Alex mentioned, I will just emphasize only on the insurance and not in the insurance and over compensation have also impact into 2025. One factor to take in when we see the new deals in 2024. Slowing down, there is impact into 2025 because the revenue recognized in 2024 is only partial of the year in 2025 is full year.
So we are basically fill the less revenue in 2025. It fall into 2025. All of this came as to conclusion that based on what we see today and the of the revenue will come at low single digit growth.

Sam Salvas

Yeah. Okay. Alright. Thanks guys. I'll jump back in the queue.

Operator

Dylan Becker, William Blair.

Dylan Becker

Hey guys, I appreciate the question. Maybe Ronnie G, with you sticking on that last point because you could argue that that accelerated head went from the, the SaaS transition is a net positive and maybe some, some partner components within that. But if you talk about elongation, I guess, can you give us a general sense in, in your confidence around that? It's more kind of timing in nature versus anything falling out of the pipeline. I'd assume a lot of these customers are already having a Sapiens' relationship and it's just kind of a matter of contract timing and getting the resources allocated, but a general sense and kind of the confidence here and what you're seeing from a pipeline perspective.

Roni Giladi

Hi, Dylan, thank you. So, first of all, this is on top in the right spot. We took the decision in the beginning of the strategic decision because we see the long term value of it and not one time hit. So for sure, we see the impact in the long term where we see more repeatable business coming and much more visibility ARR revenue going forward the European market, as I mentioned, they came a little bit behind the North America. Therefore, we see the delay in the revenue.
We do not see any avoiding doing deal just prolongation of time in the macroeconomic as we mentioned, Alex earlier, this is one time period that will disappear in, let's say in the year form or something like that. But this is not something which will stay because we see the demand. So moving to the SaaS for sure, will give us a upside year number 23 and going forward from the recurring revenue after the implementation.

Dylan Becker

Okay, great. And then maybe kind of a segue with that to the initial '25 outlook of low single digits. Maybe give us a sense kind of breaking down if we look at obviously the post production piece and some of the ARR components still growing nicely kind of in that double digit clip. Assuming that moving to the cloud has some services impact as well too.
So maybe if we could kind of dissect within those components, given the fact that again, you called out some incremental visibility on the on the subscription front. Once those customers are implemented in live, thanks.

Roni Giladi

I will try to answer this from a different but very similar angle. If we look at the revenue reported between two sector, the first one is the revenue which is recurring and reoccurring versus the one time we see the ratio of the recurring, recurring growing today is more than 70% of the revenue of the company. We see the growth margin which is significantly higher than the implementation.
All of this is the good trend. We saw the growth rate which is much higher than the revenue growth of the company. This quarter was 15% versus [five]. So I'm not sure that will be the exact number for sure that this type of nature will continue with us going forward into 2025.

Roni Al Dor

Okay. Thanks, Roni.

Operator

Surinder Singh, Jefferies.

Surinder Singh

Thank you. Just another follow up on the on the transition of clients to this model here is the idea that most of these headwinds should be done through 2025 or are we talking about an extended time frame to get everybody into the cloud at this point?

Roni Giladi

Not sure I got the question clearly, the impact of transition to SaaS is not only for 2024 and 2025 remember that we are doing two steps. First of all, we are any new deal is on the SaaS and usually the implication of the new deals is between two to three years, the period of the implementation.
And there is another factor which is transferring existing customer that we sold several years ago. Also the a and this time period is around five years because it takes time to convert existing customer that we sold several years ago to the cloud. So it's between two to five years. This is the time frame of the impact again with different percentage of impact, but this is the time frame.

Surinder Singh

So understood on the time. So I guess my question to clarify that is, is the actual revenue headwind impact? Is that going to be consuming for the next two to five years. That was the question.

Roni Giladi

Yes, but not at the same ratio. Meaning is that we see more impact in 2025 and potentially '26 but lower in going forward.

Surinder Singh

Understood. And then in terms of just it sounds like the margins are going to be relatively intact at this point. In light of the lighter revenues, has there been an adjustment in terms of your spend, your willingness to spend and maybe some of the projects that you're working on or how should we think about that?

Roni Giladi

Can you please repeat the question in terms of --

Surinder Singh

Internal investment.

Roni Giladi

The investment in the -- okay. So until now has been able to grow revenue and profit over the year over year. And if we look at our competitor, the profitability level is lower than us. We took a strategic decision to stop the increase of the percentage but to go on the profit level and with the additional profit, we'd like to increase investment in sales and marketing.
And also in R&D, for example, what Alex mentioned about the platform and you can see from the report, the investment in sales and marketing grew very significantly over the last year, I think $2 million quarter compared to quarter. And we maintain the profit margin. What we mentioned beginning of the year between 18.1% to 18.5% we see right now 18.3% in Q3 of 2025. So we'd like to remain with the same percentage but grow the perfect level.

Operator

Alexei Gogolev, JPMorgan.

Hi, this is (inaudible) on for Alexei Gogolev. Maybe this is in the press release. But what is the constant currency growth or did you break that out this quarter?

Roni Giladi

The impact of the currency exchange was very minimal and we do not see additional impact in terms of positive or downside from this revenue reported.

Okay, great. And then for a follow up, we've talked about some of the initiatives you're undertaking to better compete in P&C in North America. What's the timeline on those investments and could growth potentially accelerate here come 2026 or when do you think that re acceleration could take effect?

Alex Zukerman

So this is Alex here. We look we invest in the in the platform concept globally at Sapiens. So it's an approach and a technology framework that allows us to promote a multiple products and bring value to multiple offerings. As I said, we chose to focus, first of all, the spearhead of this investment in realization is in our life solution that grows very rapidly and on, on our P&C in EMEA and APAC, which also we see the growth there. The second stage of taking this investment and implementing it into the offering it for our call with P&C in North America.
And we intend to do it through the first half of the year in 2025. And we do foresee that this will bring us additional competitive power and differentiation in the market. We already launched this proposition. We got a very strong market feed, positive market feedback from customers and prospects on the ocean. And the plan is to implement it in North America in the first half of '25.

Got it. Thank you very much.

Operator

Tavy Rosner, Barclays.

Tavy Rosner

Hi, good afternoon. Most of my questions have been asked already. I just wanted to follow up on one of your comments for me in the prepared remarks. We talked about investment decisions being delayed due to regulatory impact. And I just wanted to get a little further is that at the company level or the regulatory level, any type of geography, specifically any customer size and any color would be helpful here.

Alex Zukerman

This is again, Alex here. I think the main costs that we see and the maybe the extended effort that our customers are doing on the due diligence and checking in all the details before signature is mainly around. First of all, the cloud in Europe and the main thing is that we provide the SaaS offering and which is very common in the us, it's also common in Europe but not in the same pace. And there is a lot of cautiousness around embracing a full size proposition in Europe because actually the company transfer their full management of the business as usual into a vendor into us.
So for many of them, it's the first time ever that they do it and it takes them higher level of checks, they need to get the confidence. And this is one major thing that we see around the SaaS and this is mainly a European thing. What we see is these companies who already experienced that before. It's much easier. But a lot of them is the first time that they move to SaaS.
And the second part that we see on delays in decision is because we provide now the platform proposition which intends not only call but also digital front end, digital processes, data warehouse reporting AI. So the bundle, the scope of the deals is larger and the complexity is larger.
So it takes a bit more time for the customers to analyse all their due diligence of why contract et cetera. Of course, because this is a substantially different size of the deal. So that would be the two main aspect that we see in delays.

Operator

(Operator Instructions)
There are no further questions at this time. Before I ask Ms. Yaffa Cohen-Ifrah to go ahead with her closing statement. I would like to remind participants that a replay of this call is scheduled to begin in two hours in the US. (Operator Instructions)
Ms. Yaffa, please make your concluding statement.

Yaffa Cohen-Ifrah

Thank you for joining our call today. We look forward to discussing our Q4 results on our next earning call. As always, we welcome you to contact us if you have any further questions. Thank you again.

Operator

Thank you. This concludes the Sapiens International Corporation third-quarter, 2024 results conference call. Thank you for your participation. You may go ahead and disconnect.