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Sapiens Reports Third Quarter 2024 Financial Results

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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

Yaffa.cohen-ifrah@sapiens.com

+1 917-533-4782

Investor Contacts

 

Brett Maas

Managing Partner, Hayden IR

+1 646-536-7331

Brett.Maas@HaydenIR.com

 

Kimberly Rogers

Managing Director, Hayden IR

+1 541-904-5075

kim@HaydenIR.com

 

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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SK hynix Announces 3Q26 Financial Results

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Reports revenues of 104.6155 trillion won, operating profit of 83.3338 trillion won, net profit of 39.7756 trillion won; Quarterly sales surpass 100 trillion won for the first timeSales of HBM4 and high-value-added server products expanded; HBM4 expected to be the mainstream product from the fourth quarterLong-term agreements secured for more than 50% of 2027~2028 production capacity; A structure that reflects market conditions and ensures stable profitabilityMost 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

SEOUL, South Korea, Oct. 27, 2026 /PRNewswire/ — SK hynix Inc. (or “the company”, www.skhynix.com) announced today that it has recorded 104.6155 trillion won in revenues, 83.3338 trillion won in operating profit (with an operating margin of 80%), and 39.7756 trillion won in net profit (with a net margin of 38%) in the third quarter.

Record quarterly results in both revenue and operating profit and revenue surpasses 100 trillion won for the first time

In a market environment in which prices of key products have risen on the back of growing demand for AI memory, the company once again posted all-time-high quarterly results in both revenue and operating profit, underpinned by the competitiveness of its high-value-added products. In particular, revenue exceeded 100 trillion won for the first time in the company’s history. Revenue and operating profit increased by 32% and 38%, from the previous quarter, respectively.

– Q2 2026: Revenue of 79.3187 trillion won, Operating Profit of 60.5426 trillion won

By product, DRAM results were driven by a significant increase in sales of server DDR5 while HBM4 shipments began in earnest. In NAND, sales of 321-layer TLC eSSD expanded, and high-value-added products for data centers continued to grow across the board.

The company’s financial structure has also become significantly concrete. At the end of the third quarter, cash and cash equivalents stood at 114.5 trillion won, up 26.5 trillion won from the end of the previous quarter, while borrowings decreased by 2.8 trillion won to 15.8 trillion won. As a result, net cash increased to 98.7 trillion won.

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.

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DealLabs Builds Travel AI Data Layer with 280,000 Verified Local Records Across Seven Asian Cities

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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

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Teijin Selects Kharon to Strengthen Export Controls Compliance Across Global Operations

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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

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