Investor Presentation Q4 and Full-Year 2016 Results Roni Al Dor, President and CEO Roni Giladi, CFO Yaffa Cohen-Ifrah, CMO

Transcription

1 Investor Presentation Q4 and Full-Year 2016 Results Roni Al Dor, President and CEO Roni Giladi, CFO Yaffa Cohen-Ifrah, CMO March 1, 2017

2 Safe Harbor Statement Certain statements made in this presentation may be constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934 and the United States Private Securities Litigation Reform Act of Words such as "will," "expects," "believes" and similar expressions are used to identify these forward-looking statements (although not all forward-looking statements include such words). These forward-looking statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management s current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking statement. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forwardlooking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment. New risks emerge from time to time and it is not possible for us to predict all risks that may affect us. For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in Item 3 of Part III of our Annual Report on Form 20-F for the year ended December 31, 2015 and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission. 2

3 Who is Sapiens? Leading global provider of software solutions across the insurance industry Growing presence in the financial services sector DNA of technology platform & insurance domain expertise Global Footprint North America: 34% United Kingdom: 22% Europe: 16% Israel: 14% APAC: 14% 2,000 Employees 200 Customers 114 Revenue Growth Non-GAAP revenue (USD M); See appendix for Non-GAAP reconciliation 3

4 Our Offering Provide core software solutions for insurance and financial services companies: Insurance software L&A P&C Life & Annuities Retirement Property & Casualty Reinsurance Core software policy administration solutions ~80% of the business Run mission-critical operations of insurance industry Provide functionality to support the full lifecycle of insurance carriers Technology based solutions Innovative platform for business decisions Decision Management Application development platforms emerge ~20% of the business Includes a disruptive business decision engine 4

5 Sapiens Mission Help our clients keep pace with the changes ahead and become fully digital Allow our clients to offer a personalized, omni-channel experience that puts the customer in the center Enable operational efficiency and agility to accelerate growth 5

6 The Insurance Markets 6

7 The Insurance Markets LIFE, ANNUITY, RETIREMENT Annuities Retirement Injuries Life Highly regulated industry with accelerating regulatory changes Competitive markets with little product differentiation Increased globalization Legacy IT transition challenges PROPERTY, CASUALTY, REINSURANCE Catastrophe Motor Property Liability Wealth Voice Enterprises are seeking modular, next-gen solutions to ease the transition and transform the consumer experience 7

8 The Insurance Industry Big Market $5,200,000,000,000 gross written premium (GWP) Potential 11,000 insurance companies globally IT-related Investment 3-4% of GWP invested in IT $185B in 2016 Life - $99B; P&C - $86B Source: Market size data per Celent. April

9 The Insurance IT Opportunity is Large and Growing Sapiens Total Addressable Market* $30B Highly Global IT spending expected to increase by 6% Highly Attractive Growing Growing Market Market External Software and IT services spending expected to grow by 7% ** Source: * Gartner Verticals Forecast world wide By Insurance, April 2016 and company analysis ** Source: Market size data per Celent. April

10 Today s Market Challenges & Trends Regulation Competition Risk Mitigation Customer Experience Personalization Flexibility Time to Market Efficiency New Models 10

11 Sapiens Today 11

12 Our Value Proposition Leading technology Domain expertise End-to-end solutions Award-winning, packaged solutions Consultative approach Decades of proven project delivery Large and expanding global footprint 12

13 Leadership in L&A Solutions Breadth of Functionality, 2015 Breadth of Functionality, 2015 EMEA North America The ALIS system has a very good user interface. It is simple for the user and flows well...the ALIS system has a graphical policy timeline that is unique and useful for a customer service representative working with a client. Sapiens is releasing new portals, which Celent reviewed, that are among the best we have seen.... Going forward, we expect the Sapiens ALIS system to make most evaluation short lists and Sapiens to expand its already rich customer base in the EMEA region. Nov XCelent Awards - EMEA Policy Administration Systems for Life, Annuities, Pension and Health, 11/

14 Leadership in P&C Solutions Technology and Breath of Functionality, 2015 Technology, 2015 EMEA APAC Sapiens IDIT continues to offer a strong digital policy administration system for insurers globally, with strong experience across Europe customers commented that Sapiens is responsive, committed, and constructive, and can provide creative solutions. Feb Celent research - EMEA Policy Administration Systems, General Insurance, Property & Casualty February 2016, Craig Beattie Celent research APAC Policy Administration Platform Property & Casualty, 04/2016, KyongSun Kong 14

15 One-Stop Shop Across Products and Services 15

16 One-Stop-Shop Across Products and Services Self-Sufficiency Project Implementation Training Sapiens IDIT Sapiens Reinsurance Sapiens Retirement Sapiens Closed Books Sapiens ALIS Product Upgrades Hosting and DevOps Benefits to Customer Successful implementations Migration Opportunity to enhance product functionality Single point of contact Ease of future enhancements and maintenance Consulting Testing Support Services Benefits to Sapiens Strategic importance to customers Deeper level of customer entrenchment Feedback mechanism to enhance product Opportunities to cross-sell current and future products and solutions

17 North America UK Continental Europe Bulgaria APAC Blue-Chip Global Customer-Base Long term Partnership 17

18 Site Development & Delivery Center Global Presence 18

19 Proven Management Team Executive Team Roni Al-Dor President & CEO 2005 Roni Giladi CFO 2007 Irit Nusel Managing Director Life, Pension and Retirement 2013 Yaffa Cohen-Ifrah CMO and Head of Corporate Communications 2014 Liana Gelikas Managing Director Property & Casualty 2016 Norman Tutnauer Head of Global Sales 2016 Rami Doron Managing Director, DECISION 2007 Anat Belluco Feinkuchen VP Global HR 2013 Tal Sharon Regional Manager Israel 2011 Osnat Segev-Harel Head of Corporate Development

20 Our Strategy 20

21 Focus on InsurTech 21

22 Land and Expand Strategy Win New Customers Grow with Existing Customers M & A 22

23 Growth Supported by Focused M&A Strategy Completed 8 M&A NEXT STEP 3 core products Customer Base INSECO 2 offshore operations 1 patent Geographic Expansion 76 new customers Complementary Solutions 23

24 StoneRiver Acquisition a definitive agreement, subject to customary closing conditions 24

25 About StoneRiver A provider of Insurance software and services in North America 500 Professionals 200 Customers $80M Revenues Wide Range of Insurance Products 25

26 The Benefits Of the Acquisition Geographic Presence Customer Base People Products Expands presence in the North American insurance market Double Sapiens customer count from 200 to over 400 Adding over 500 insurance experts with Industry knowledge close to U.S. customers P&C offerings Complementary L&A offerings Reinsurance suites 26

27 Financials 27

28 Revenue Continue our Growth Non-GAAP Revenues (USD millions) +20.6% +13.9% % YoY Growth +16.4% +18.8% (1) Revenues of $98.1 M in 2011 pro-forma for the FIS and IDIT acquisitions 28

29 Revenue Growth Analysis Organic M&A Exchange Rate

30 Annual Revenue by Geography Focus on North America and Europe Non-GAAP Revenues (USD millions) NA UK EU Israel APAC 30

31 Sapiens Evolution Non-GAAP Operating Margin Vertical Specific Turnaround Modernization and Growth Revenue ($mm) $45M $50M $216M 14.29% 15.90% 13.19% 13.29% 10.38%10.80% 14.8% 13.7% 7.76% 1.91% % -2.84% -3.46% -2.70% % 31

32 Go-Live Attractive Revenue Model Typical life of product engagement: years Revenue ($mm) Stage Stickiness Year 1 Year 2 Pre-Production Contractual Year 3 Year 4 Year 5 Year 6-10 Ongoing Post-Production High Initial Deal Size Retirement L&A P&C Closed Books Reinsurance $10 - $15m $7 - $10m $8 - $10m $3 - $5m $1 - $1.5m 32

33 Revenue With Significant Visibility Customer stickiness and layered revenue streams create significant visibility YEAR 4 YEAR 5 15% New Customers YEAR 2 YEAR 3 85% Existing Customers YEAR 1 33

34 Consistent Revenue Growth Non-GAAP Revenue (USD millions) $ $ $216.2 $48.7 $57.1 $100.0 $ $ Q Q $ See appendix for Non-GAAP reconciliation. 34

35 Consistent Operating Profit Growth Non-GAAP Operating Profit (USD millions) % 13.7% % 13.1% % % 14.0% 12.0% 10.0% $7.4 $ % % % 4.0% % $26.5 $ % 6.0% 4.0% 2.0%.0 Q Q % See appendix for Non-GAAP reconciliation. 0.0% 35

36 Strong Cash Flow Generation Annual Non-GAAP Operating Cash Flow ($ M) $96M Cash $0M Debt Dividend Payments: $9.8m in 2016 $7.2m in 2015 $6m in 2013 Non-GAAP operating cash flow include the cost of capitalized software development 36

37 2017 Guidance 37

38 Revenue and Operational Margin Guidance Revenue Guidance Operational Margin Target % 13% Guidance Guidance 38

39 Investment Highlights 39

40 Financial and Investment Highlights High growth Diversified revenue Well capitalize Attractive revenue model Massive Market Technology Leader Top-tier customers Proven management 40

41 Thank You Contact: Yaffa Cohen-Ifrah, CMO & Head of Corporate Communications Mobile: Phone: Website:

42 Q4 and Annual Non-GAAP Results (in USD million, except per share amount) 2016 Q Annual 2015 Revenue Gross Profit % 44.2% 42.4% 43.8% Operational Profit % 15.1% 13.7% 14.8% Net Income % 13.0% 11.2% 12.3% Adjusted EBITDA** Diluted EPS Diluted Weighted Average Number of Shares 49,935 49,536 49,780 49,327 Outstanding Shares: 49,036 )as of December 31, 2016( ** The Company defines Adjusted EBITDA as net Profit, adjusted for stock-based compensation expense, depreciation and amortization, capitalized internal-use software development costs, amortization of internal-use software development costs interest expense, provision for income taxes and other income (expenses). 42

43 Non-GAAP EBITDA to Adj. EBITDA Reconciliation (in USD thousands) GAAP operating profit Amortization of capitalized software Amortization of other intangible assets Capitalization of software development Stock-based compensation Compensation related to acquisition and acquisition related cost Year ended December ,840 4,929 2,257 (5,545) 1,955 1, ,350 4,875 2,106 (6,032) 1, Adjustments of pre-acquisition revenues and expenses accounted under pooling of interest method Non-GAAP operating profit Depreciation Adjusted EBITDA 1-29, % 2,835 32, % (371) 26, % 1,952 28, % Note: In accordance with non-gaap accounting, 2015 includes consolidation of Insseco commencing with the acquisition date, August 18, See definition of Adjusted EBITDA in Q3 and Nine month - Non GAAP slide 43

44 Sapiens DECISION Manages business logic across organizations, for large organizations that operate in highly-regulated and complex decision-making environments, cutting time, cost and risk Regulation s Business Strategy Market Condition Competition Customer Requirements Centralized Decision Logic Automated Code Generation Credit ERP CRM Loans Mortgage 44