Technology
Sapiens Reports Third Quarter 2024 Financial Results
Published
2 years agoon
By
ROCHELLE PARK, N.J., Nov. 11, 2024 /PRNewswire/ — Sapiens International Corporation, (NASDAQ: SPNS) (TASE: SPNS), a leading global provider of software solutions for the insurance industry, today announced its financial results for the third quarter ended September 30, 2024.
Summary Results for Third Quarter 2024 (USD in millions, except per share data)
GAAP
Non-GAAP
Q3 2024
Q3 2023
% Change
Q3 2024
Q3 2023
% Change
Revenue
$137.0
$130.7
4.8 %
$137.0
$130.8
4.8 %
Gross Profit
$60.3
$56.0
7.8 %
$62.8
$59.3
6.0 %
Gross Margin
44.0 %
42.8 %
120 bps
45.8 %
45.3 %
50 bps
Operating Income
$21.7
$20.3
7.3 %
$25.1
$24.1
4.3 %
Operating Margin
15.9 %
15.5 %
40 bps
18.3 %
18.4 %
-10 bps
Net Income (*)
$18.3
$15.9
15.5 %
$21.1
$19.1
10.5 %
Diluted EPS
$0.33
$0.28
17.9 %
$0.37
$0.34
8.8 %
(*) Attributable to Sapiens’ shareholders
Roni Al-Dor, President and CEO of Sapiens, stated, “This quarter showcased solid performance in our key regions. We are pleased to report that revenue reached $137 million this quarter, reflecting a 4.8% increase over the same period last year. Revenue growth was driven by 7.1% growth in our European region, 1.7% growth in North America and 6.6% growth in ROW regions. This quarter’s non-GAAP operating profit totaled $25 million, representing 18.3% of total revenue.”
Mr. Al-Dor continued, “Revenue fell short of our targets in the third quarter, and the challenges we encountered are expected to impact revenue in the fourth quarter. Today, we are revising our 2024 non-GAAP revenue guidance to a range of $541 million to $546 million, down from the previous range of $550 million to $555 million – a 1.6% reduction at the midpoint. However, we expect our non-GAAP operating margin to be within our guidance range at 18.2%. Looking into 2025, we anticipate a low single-digit revenue growth.”
Quarterly Results Conference Call
Management will host a conference call and webcast on November 11, 2024, at 9:30 a.m. Eastern Time (4:30 p.m. in Israel) to review and discuss Sapiens’ results. Please call the following numbers (at least 10 minutes before the scheduled time) to participate:
North America (toll-free): 1-888-642-5032
International: 972-3-9180644
UK: 0-800-917-5108
The live webcast of the call can be viewed on Sapiens’ website at: https://veidan.activetrail.biz/sapiensq2-2024. A replay of the call will be available one business day following the completion of the event at the same link for 90 days.
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: non-GAAP revenue, ARR, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributed to Sapiens shareholders, non-GAAP basic and diluted earnings per share, Adjusted EBITDA and Adjusted Free Cash-Flow.
Sapiens believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Sapiens’ financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analyses, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. These measures are used in financial reports prepared for management and in quarterly financial reports presented to the Company’s board of directors. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: Valuation adjustment on acquired deferred revenue, amortization of capitalized software development and other intangible assets, capitalization of software development, stock-based compensation, compensation related to acquisition and acquisition-related costs, restructuring and cost reduction costs, and tax adjustments related to non-GAAP adjustments.
Management of the Company does not consider these non-GAAP measures in isolation, or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations, as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures.
To compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. Sapiens urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables of this release.
The Company defines Annual Recurring Revenue (“ARR”) as the annualized value of our revenue from customer subscriptions, term licenses, maintenance, application maintenance, and cloud solutions, which may not be the same as the timing and amount of revenue recognized. The ARR run rate is equal to the product of (i) the sum of these revenues in our most recently completed fiscal quarter, multiplied by (ii) four.
The Company defines Adjusted EBITDA as net profit, adjusted to eliminate valuation adjustment on acquired deferred revenue, stock-based compensation expense, depreciation and amortization, capitalization of software development costs, compensation expenses related to acquisition and acquisition-related costs, restructuring and cost reduction costs, financial expense (income), provision for income taxes and other income (expenses). These amounts are often excluded by other companies as well, in order to help investors understand the operational performance of their business.
The Company uses Adjusted EBITDA as a measurement of its operating performance, because it assists in comparing the operating performance on a consistent basis by removing the impact of certain non-cash and non-operating items. Adjusted EBITDA reflects an additional way of viewing aspects of the operations that the Company believes, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting its business. The Company uses Adjusted Free Cash-Flow as a measurement of its operating performance, and reconciles cash-flow from operating activities to Adjusted Free Cash-Flow, while reducing the amounts for capitalization of software development costs and capital expenditures. The Company adds back cash payments made for former acquisitions in respect of future performance targets and retention criteria as determined upon acquisition date of the respective acquired company, which were included in the cash-flow from operating activities. We believe that Adjusted Free Cash-Flow is useful in evaluating our business, because Adjusted Free Cash-Flow reflects the cash surplus available to fund the expansion of our business.
About Sapiens
Sapiens International Corporation (NASDAQ and TASE: SPNS) is a global leader in intelligent insurance software solutions. With Sapiens’ robust platform, customer-driven partnerships, and rich ecosystem, insurers are empowered to future-proof their organizations with operational excellence in a rapidly changing marketplace. We help insurers harness the power of AI and advanced automation to support core solutions for property and casualty, workers’ compensation, and life insurance, including reinsurance, financial & compliance, data & analytics, digital, and decision management. Sapiens boasts a longtime global presence, serving over 600 customers in more than 30 countries with its innovative SaaS offerings. Recognized by industry experts and selected for the Microsoft Top 100 Partner program, Sapiens is committed to partnering with our customers for their entire transformation journey and is continuously innovating to ensure their success.
Investor and Media Contact
Yaffa Cohen-Ifrah
Chief Marketing Officer and Head of
Investor Relations, Sapiens
+1 917-533-4782
Investor Contacts
Brett Maas
Managing Partner, Hayden IR
+1 646-536-7331
Kimberly Rogers
Managing Director, Hayden IR
+1 541-904-5075
Forward Looking Statements
Certain matters discussed in this press release that are incorporated herein and therein by reference 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; 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 or 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 epidemic, and fluctuations in currency exchange rates; and risks related to our principal location in Israel and our status as a Cayman Islands company.
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 under the heading “Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2023, to be filed in the near future, 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. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason, to conform these statements to actual results or to changes in our expectations.
SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
U.S. dollars in thousands (except per share amounts)
Three months ended
Nine months ended
September 30,
September 30,
2024
2023
2024
2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenue
137,025
130,705
408,074
383,725
Cost of revenue
76,729
74,753
230,114
220,080
Gross profit
60,296
55,952
177,960
163,645
Operating expenses:
Research and development, net
16,449
16,028
49,779
47,391
Selling, marketing, general and administrative
22,101
19,659
64,030
57,475
Total operating expenses
38,550
35,687
113,809
104,866
Operating income
21,746
20,265
64,151
58,779
Financial and other (income) expenses, net
(913)
551
(3,114)
2,310
Taxes on income
4,324
3,710
12,812
10,627
Net income
18,335
16,004
54,453
45,842
Attributable to non-controlling interest
–
132
141
371
Net income attributable to Sapiens’ shareholders
18,335
15,872
54,312
45,471
Basic earnings per share
0.33
0.29
0.97
0.82
Diluted earnings per share
0.33
0.28
0.97
0.82
Weighted average number of shares outstanding used to
compute basic earnings per share (in thousands)
55,854
55,397
55,799
55,251
Weighted average number of shares outstanding used to
compute diluted earnings per share (in thousands)
56,308
55,813
56,151
55,657
SAPIENS INTERNATIONAL CORPORATION N.V. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
U.S. dollars in thousands (except per share amounts)
Three months ended
Nine months ended
September 30,
September 30,
2024
2023
2024
2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
GAAP revenue
137,025
130,705
408,074
383,725
Valuation adjustment on acquired deferred
revenue
–
55
–
165
Non-GAAP revenue
137,025
130,760
408,074
383,890
GAAP gross profit
60,296
55,952
177,960
163,645
Revenue adjustment
–
55
–
165
Amortization of capitalized software
1,470
1,418
4,584
4,274
Amortization of other intangible assets
1,043
1,835
3,630
5,531
Non-GAAP gross profit
62,809
59,260
186,174
173,615
GAAP operating income
21,746
20,265
64,151
58,779
Gross profit adjustments
2,513
3,308
8,214
9,970
Capitalization of software development
(1,834)
(1,638)
(5,374)
(4,975)
Amortization of other intangible assets
1,276
1,074
3,732
3,234
Stock-based compensation
646
1,038
2,229
2,960
Acquisition-related costs *)
754
11
1,248
21
Non-GAAP operating income
25,101
24,058
74,200
69,989
GAAP net income attributable to Sapiens’
shareholders
18,335
15,872
54,312
45,471
Operating income adjustments
3,355
3,793
10,049
11,210
Taxes on income
(599)
(585)
(1,808)
(1,738)
Non-GAAP net income attributable to Sapiens’
shareholders
21,091
19,080
62,553
54,943
(*) Acquisition-related costs pertain to charges on behalf of M&A agreements related to future performance targets and retention criteria, as well as completed or prospective third-party services, such as tax, accounting and legal rendered.
Adjusted EBITDA Calculation
U.S. dollars in thousands
Three months ended
Nine months ended
September 30,
September 30,
2024
2023
2024
2023
GAAP operating profit
21,746
20,265
64,151
58,779
Non-GAAP adjustments:
Valuation adjustment on acquired deferred revenue
–
55
–
165
Amortization of capitalized software
1,470
1,418
4,584
4,274
Amortization of other intangible assets
2,319
2,909
7,362
8,765
Capitalization of software development
(1,834)
(1,638)
(5,374)
(4,975)
Stock-based compensation
646
1,038
2,229
2,960
Compensation related to acquisition and acquisition-related costs
754
11
1,248
21
Non-GAAP operating profit
25,101
24,058
74,200
69,989
Depreciation
1,288
719
3,480
2,750
Adjusted EBITDA
26,389
24,777
77,680
72,739
Summary of NON-GAAP Financial Information
U.S. dollars in thousands (except per share amounts)
Q3 2024
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Revenues
137,025
136,800
134,249
130,914
130,760
Gross profit
62,809
62,481
60,884
59,370
59,260
Operating income
25,101
24,836
24,263
24,152
24,058
Adjusted EBITDA
26,389
25,931
25,360
25,267
24,777
Net income to Sapiens’ shareholders
21,091
21,041
20,421
20,081
19,080
Diluted earnings per share
0.37
0.37
0.36
0.36
0.34
Annual Recurring Revenue (“ARR”)
U.S. dollars in thousands
Three months ended
September 30,
2024
2023
Annual Recurring Revenue
173,414
157,589
Non-GAAP Revenues by Geographic Breakdown
U.S. dollars in thousands
Q3 2024
Q2 2024
Q1 2024
Q4 2023
Q3 2023
North America
55,755
57,918
55,158
54,882
54,848
Europe
69,281
66,072
68,727
65,239
64,662
Rest of the World
11,989
12,810
10,364
10,793
11,250
Total
137,025
136,800
134,249
130,914
130,760
Non-GAAP Revenue breakdown
U.S. dollars in thousands
Three months ended
Nine months ended
September 30,
September 30,
2024
2023
2024
2023
Software products and re-occurring post-production services (*)
100,707
87,356
292,992
251,757
Pre-production implementation services (**)
36,318
43,404
115,082
132,133
Total Revenues
137,025
130,760
408,074
383,890
Three months ended
Nine months ended
September 30,
September 30,
2024
2023
2024
2023
Software products and re-occurring post-production services (*)
53,809
46,053
156,386
133,339
Pre-production implementation services (**)
9,000
13,207
29,788
40,276
Total Gross profit
62,809
59,260
186,174
173,615
Three months ended
Nine months ended
September 30,
September 30,
2024
2023
2024
2023
Software products and re-occurring post-production services (*)
53.4 %
52.7 %
53.4 %
53.0 %
Pre-production implementation services (**)
24.8 %
30.4 %
25.9 %
30.5 %
Gross Margin
45.8 %
45.3 %
45.6 %
45.2 %
(*) Software products and re-occurring post-production services include mainly subscription, term license, maintenance, application maintenance, cloud solutions and post-production services. This revenue stream is a mix of recurring and re-occurring in nature.
(**) Pre-production implementation services include mainly implementation services before go-live, which are one-time in nature.
Adjusted Free Cash-Flow
U.S. dollars in thousands
Q3 2024
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Cash-flow from operating activities
13,083
8,545
18,488
38,646
3,988
Increase in capitalized software development costs
(1,834)
(1,823)
(1,717)
(1,543)
(1,638)
Capital expenditures
(1,125)
(666)
(466)
(421)
(696)
Free cash-flow
10,124
6,056
16,305
36,682
1,654
Cash payments attributed to acquisition-related costs(*) (**)
124
134
751
221
–
Adjusted free cash-flow
10,248
6,190
17,056
36,903
1,654
(*) Included in cash-flow from operating activities
(**) Acquisition-related payments pertain to charges on behalf of M&A agreements related to future performance targets and retention criteria, as well as completed or prospective third-party services, such as tax, accounting and legal rendered.
SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
U.S. dollars in thousands
September 30,
December 31,
2024
2023
(unaudited)
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
146,152
126,716
Short-term bank deposit
39,800
75,400
Trade receivables, net and unbilled receivables
109,670
90,273
Other receivables and prepaid expenses
25,769
22,514
Total current assets
321,391
314,903
LONG-TERM ASSETS
Property and equipment, net
11,431
12,661
Severance pay fund
3,446
3,605
Goodwill and intangible assets, net
310,533
317,352
Operating lease right-of-use assets
20,502
23,557
Other long-term assets
15,993
17,546
Total long-term assets
361,905
374,721
TOTAL ASSETS
683,296
689,624
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade payables
8,224
6,291
Current maturities of Series B Debentures
19,796
19,796
Accrued expenses and other liabilities
80,610
77,873
Current maturities of operating lease liabilities
5,861
6,623
Deferred revenue
32,810
38,541
Total current liabilities
147,301
149,124
LONG-TERM LIABILITIES
Series B Debentures, net of current maturities
19,778
39,543
Deferred tax liabilities
7,938
10,820
Other long-term liabilities
11,399
11,538
Long-term operating lease liabilities
17,532
21,084
Accrued severance pay
8,039
7,568
Total long-term liabilities
64,686
90,553
EQUITY
471,309
449,947
TOTAL LIABILITIES AND EQUITY
683,296
689,624
SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOW
U.S. dollars in thousands
For the nine months ended
September 30,
2024
2023
(unaudited)
(unaudited)
Cash flows from operating activities:
Net income
54,453
45,842
Reconciliation of net income to net cash provided by operating activities:
Depreciation
3,480
2,750
Amortization of capitalized software and other intangible assets
11,946
13,039
Accretion of discount on Series B Debentures
32
47
Capital loss from sale of property and equipment
13
83
Stock-based compensation related to options issued to employees
2,229
2,960
Net changes in operating assets and liabilities, net of amount acquired:
Increase in trade receivables, net and unbilled receivables
(20,640)
(8,698)
Decrease in deferred tax liabilities, net
(2,280)
(1,410)
Increase in other operating assets
(908)
(4,107)
Increase (decrease) in trade payables
1,989
(616)
Decrease in other operating liabilities
(5,154)
(10,110)
Increase (decrease) in deferred revenues
(5,684)
363
Increase in accrued severance pay, net
640
636
Net cash provided by operating activities
40,116
40,779
Cash flows from investing activities:
Purchase of property and equipment
(2,306)
(2,145)
Proceeds from (investment in) deposits
36,360
(55,379)
Proceeds from sale of property and equipment
49
40
Payments for business acquisitions, net of cash acquired
(375)
–
Capitalized software development costs
(5,374)
(4,975)
Acquisition of intellectual property
–
(177)
Net cash provided by (used in) investing activities
28,354
(62,636)
Cash flows from financing activities:
Proceeds from employee stock options exercised
98
4,755
Distribution of dividend
(29,789)
(28,144)
Repayment of Series B Debenture
(19,796)
(19,796)
Acquisition of non-controlling interest
(4,131)
–
Dividend to non-controlling interest
–
(47)
Net cash used in financing activities
(53,618)
(43,232)
Effect of exchange rate changes on cash and cash equivalents
4,584
1,865
Increase (decrease) in cash and cash equivalents
19,436
(63,224)
Cash and cash equivalents at the beginning of period
126,716
160,285
Cash and cash equivalents at the end of period
146,152
97,061
Debentures Covenants
As of September 30, 2024, Sapiens was in compliance with all of its financial covenants under the indenture for the Series B Debentures, based on having achieved the following in its consolidated financial results:
Covenant 1
Target shareholders’ equity (excluding non-controlling interest): above $120 million.Actual shareholders’ equity (excluding non-controlling interest) equal to $471.3 million.
Covenant 2
Target ratio of net financial indebtedness to net capitalization (in each case, as defined under the indenture for the Company’s Series B Debentures) below 65%.Actual ratio of net financial indebtedness to net capitalization equal to (44.90)%.
Covenant 3
Target ratio of net financial indebtedness to EBITDA (accumulated calculation for the four last quarters) is below 5.5.Actual ratio of net financial indebtedness to EBITDA (accumulated calculation for the four last quarters) is equal to (1.42).
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SOURCE Sapiens International Corporation
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Memory supply shortage to persist through 2030
SK hynix analyzed that a virtuous cycle has taken hold in which AI-driven productivity gains and new revenue generation in areas such as software development, customer service, and search lead to greater AI adoption, which in turn drives increased investment in infrastructure. It also projected that, as the drivers of AI investment move beyond the early stage, when a small number of companies accounted for most of it, and broaden to include general enterprises and nation-level initiatives, the global AI data center infrastructure market will continue to grow steadily.
The company likewise expects the memory market to sustain its growth, led in the short term by enterprise and personal AI and, over the mid-to-long term, by physical AI such as autonomous driving and robotics.
The company assessed that supply, on the other hand, is not keeping pace with the growth of the market. Given technical difficulty of leading-edge processes and the long lead time required to build new production facilities, it expects the structure in which demand exceeds supply to persist through 2030.
Expanding production capacity and strengthening product competitiveness to achieve a further step up in growth next year
Building on these favorable conditions, the company plans to accelerate the expansion of production capacity and the strengthening of product competitiveness in order to sustain the current growth momentum, and to scale up revenue and profit one step further next year.
First, the company plans to rapidly increase the portion of its 10nm-class 6th generation (1c) process technology and expand sales of DDR5 and LPDDR5 SOCAMM for AI servers, thereby further strengthening its DRAM portfolio centered on high-value-added products.
To respond to surging HBM demand, the company will ramp up M15X to maximum capacity by the end of the year to increase HBM4 production. Accordingly, the company expects HBM4 to surpass HBM3E in both shipment volume and revenue in the fourth quarter and to establish itself as a mainstream product.
In NAND, the company will raise the ratio of its 321-layer process to more than half of its domestic production capacity in the fourth quarter, and thereby increase the supply of high-performance, high-capacity eSSD. Over the mid-to-long term, the company intends to develop NAND into a core solution that enhances the throughput and economic efficiency of AI services, based on HBF and system optimization technologies.
Long-term agreements secured for more than 50% of 2027~2028 production capacity and the company to drastically expand investment next year
To improve mid-to-long term demand visibility and solidify its growth foundation, SK hynix is expanding long-term agreements (LTAs) with customers. The company has currently signed LTAs with 14 major customers, including leading global cloud service providers (CSPs), and is also proactively discussing with a number of customers the possibility of extending the contract terms, which are typically five years.
The LTA volume secured to date corresponds to more than 50% of total production capacity for 2027 and 2028. In particular, by introducing a mechanism that reflects market conditions within a price range agreed upon with customers, the company has established a structure that secures stable profitability while allowing flexible responses to market changes.
Backed by the demand visibility, the company is also moving to expand its production capabilities. Next year, with the Yongin Phase 1 entering full-scale operation and domestic and overseas infrastructure investment gaining momentum, investment is expected to increase significantly. The company nevertheless plans to adjust the scale and timing of its investment flexibly, after carefully weighing customer demand, product competitiveness, profitability and investment efficiency.
Most of the gains from the Kioxia investment to be shared with shareholders, with approximately 100 trillion won in shareholder returns to be executed this year
As previously indicated in August, SK hynix announced its additional shareholder return plan. For fiscal year 2026, the company will pursue shareholder returns totaling approximately 100 trillion won, comprising cash dividends of 30 trillion won or more and share repurchases and cancellations of 60 trillion won or more in total, including the 40 trillion won announced in August. Through this, the company intends to fulfill its commitment to return 50% or more of free cash flow (FCF). Of this, the 40 trillion won share repurchase announced in August was completed last week, and the shares will be cancelled shortly.
The company also set out its principles: the dividend amount will be determined on the basis of operating results; if significant investment gains arise, they will be returned additionally through special dividends; and share repurchases will continue every quarter.
At today’s meeting, the Board of Directors resolved on a third-quarter cash dividend of 14 trillion won and a share repurchase of 20 trillion won. Of the shares to be repurchased, 10 trillion won, earmarked for shareholder returns, will be cancelled in full, while the remaining approximately 10 trillion won will be used for employee compensation and is not included in the shareholder return total.
The third-quarter dividend is 20,000 won per share, consisting of a 10,000-won dividend reflecting improved earnings and a 10,000 won special dividend that shares the gains from the Kioxia investment. The company has decided to return to shareholders most of the gains realized from its Kioxia investment this year.
SK hynix emphasized that it will deliver stable results based on robust memory demand growth and technological competitiveness and the company will consistently share financial achievements with our shareholders.
3Q26 Financial Results (K-IFRS)
*Unit: Billion KRW
3Q26
QoQ
YoY
2Q26
Change
3Q25
Change
Revenues
104,615.5
79,318.7
32 %
24,448.9
328 %
Operating Profit
83,333.8
60,542.6
38 %
11,383.4
632 %
Operating Margin
80 %
76 %
3%p
47 %
33%p
Net Income
39,775.6
93,922.6
-58 %
12,597.5
216 %
* Financial information of the earnings is based on K-IFRS
* Please note that the financial results discussed herein are preliminary and speak only as of October 28, 2026. Readers should not assume that this information remains operative at a later time.
* Percentage changes are calculated on the basis of unrounded figures.
Disclaimer
This material has been prepared by the Company for informational purposes only, and the information contained herein has not undergone any separate, independent verification process. No representations or warranties are made regarding the fairness, accuracy, or completeness of the information contained in this material, and such information should not be relied upon. Neither the Company nor its employees bear any civil, criminal, or administrative liability for any damages arising from this material or from its use.
Review of the FY2026 Q3 financial results has not been finalized. Figures in this earnings release are subject to changes during the independent auditing process.
All financial information contained in this document is based on consolidated K-IFRS.
This material contains forward-looking statements, which involve risks and uncertainties. These statements are generally identified words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate” and similar expressions, or the negative of such expressions. Forward-looking statements are not guarantees of future performance and are subject to inherent risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied. Readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date hereof. SK hynix undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect actual outcomes, unless required by law.
This material does not constitute a solicitation for the acquisition or purchase of securities, and no part of this material should serve as the basis for any contract, agreement, or investment decision, nor should it be relied upon in connection therewith.
About SK hynix Inc.
SK hynix Inc., headquartered in Korea, is the world’s top tier semiconductor supplier offering Dynamic Random Access Memory chips (“DRAM”) and flash memory chips (“NAND flash”) for a wide range of distinguished customers globally. The Company’s shares are traded on the Korea Exchange, and the Global Depository shares are listed on the Luxembourg Stock Exchange. Further information about SK hynix is available at www.skhynix.com, news.skhynix.com.
View original content:https://www.prnewswire.com/news-releases/sk-hynix-announces-3q26-financial-results-302921407.html
SOURCE SK hynix Inc.
Technology
DealLabs Builds Travel AI Data Layer with 280,000 Verified Local Records Across Seven Asian Cities
Published
7 minutes agoon
October 28, 2026By
SEOUL, South Korea, Oct. 28, 2026 /PRNewswire/ — Seoul-based travel data company DealLabs announced that it has built a database of verified local travel information for seven Asian cities: Seoul, Busan, Tokyo, Osaka, Bangkok, Taipei, and Singapore. As of October 13, the database contained more than 280,000 records, each accompanied by its source and verification date. It powers more than 23,000 guide pages and is published in formats AI systems can read directly.
It covers what travelers look for after arriving: subway station exits, timetables, first and last trains, fares, restaurants, tourist attractions, hospitals, closing days for Singapore’s hawker centers, and business hours for Taipei’s night markets. In Osaka alone, the database contains more than 114,000 records, including more than 42,000 medical institutions and pharmacies and more than 30,000 restaurant permits. In Taipei, it contains more than 63,000 records, including 7,200 station-to-station fares.
The number of times generative AI search and answer services accessed DealLabs’ data increased from around 600 times per day on a seven-day average in late September to more than 11,000 times per day in mid-October, nearly 20-fold in less than a month.
Travel information changes rapidly. On the same day, public event listings and organizers’ own notices gave different end dates for three of 25 pop-up stores in Seoul, up to 10 days apart. Business hours, closing days, last train times, and fares are among the areas where AI travel answers are most frequently inaccurate. DealLabs continuously updates this information using official sources.
All seven cities have AI-ready guide files (llms.txt) and data APIs, while Seoul also provides a standard API specification (OpenAPI). The seven cities are run using a single common engine, allowing a new city to be added simply by incorporating that city’s data and sources.
DealLabs is also piloting “Visit Plan Check,” which checks travel AI itineraries against official sources daily.
Young Cho, founder and CEO of DealLabs, said, “When travelers ask AI a question, what matters is whether the answer is accurate for that city today. We will establish a standard for local data that travel AI can rely on.”
DealLabs plans to expand its coverage to 10 cities by the end of 2026 and to 30 cities, including New York and Paris, by 2028.
For more information, please visit https://deallabs.net.
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SOURCE DEALLABS
Technology
Teijin Selects Kharon to Strengthen Export Controls Compliance Across Global Operations
Published
7 minutes agoon
October 28, 2026By
Kharon ClearView will support Teijin teams in Japan, the United States, and Europe as they navigate Japanese and U.S. export controls requirements.
DENVER, Oct. 28, 2026 /PRNewswire/ — Kharon, a data and technology company that provides risk intelligence solutions to help organizations manage regulatory and business risk, announced that Teijin Limited has selected Kharon ClearView to support its export controls compliance program.
Headquartered in Japan, Teijin operates a global materials business that includes carbon fiber and other advanced materials used in aerospace and industrial applications. Its international operations require compliance teams to navigate export control requirements across multiple jurisdictions, including Japan and the United States.
“As a global company, we need an export controls approach that can support our teams across markets,” said Hitoshi Onodera, General Manager of the Quality Assurance and Security Export Control Department and Manager of the Security Export Control Group at Teijin. “We selected Kharon because of the depth of its risk intelligence, ease of use, and its ability to give our teams greater visibility into the entities and relationships that matter to our reviews. ClearView will help us bring that context consistently into our due diligence processes across our operations.”
Teijin will deploy ClearView across its operations globally. ClearView enables compliance teams to investigate complex entity relationships, including ownership and commercial connections to parties subject to export controls and other trade restrictions.
“Advanced materials companies operate in an increasingly complex export controls environment, where understanding the parties behind a transaction can be just as important as screening the names directly involved,” said Ethan Woolley, Global Director of Strategy at Kharon. “Teijin’s decision to deploy ClearView across its operations reflects the importance of having that level of insight. We are pleased to support its teams as they strengthen their approach to export controls compliance.”
About Teijin
Teijin Limited is a Japan-based global technology company providing products and solutions across advanced materials, healthcare, and other technology-driven fields. Founded in 1918, Teijin’s businesses include high-performance materials such as aramid fibers, carbon fibers, and composites, serving applications across mobility, infrastructure, industry, and other markets. The Teijin Group comprises 126 companies and approximately 15,700 employees worldwide.
For more information, visit https://www.teijin.co.jp/.
About Kharon
Kharon’s intelligence supports compliance, trade, risk, and national security programs at organizations around the world, including seven of the 10 largest U.S. banks, six of the 10 largest EU banks, and over 35 Fortune 100 companies. Kharon’s data can also be directly integrated with AI applications and agentic operations through Kharon’s API, MCP, and agent gateway infrastructure, enabling organizations to embed Kharon’s sourced, structured insights into automated workflows alongside their teams.
Visit kharon.com and follow Kharon on LinkedIn to stay connected.
Media contact
Kharon
media@kharon.com
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SOURCE Kharon
SK hynix Announces 3Q26 Financial Results
DealLabs Builds Travel AI Data Layer with 280,000 Verified Local Records Across Seven Asian Cities
Teijin Selects Kharon to Strengthen Export Controls Compliance Across Global Operations
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