Roni Al-Dor, President and CEO Roni Giladi, CFO. March

Transcription

1 Roni Al-Dor, President and CEO Roni Giladi, CFO March

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 forward-looking 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, 2012 and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission. 2

3 Who is Sapiens? Provide core software solutions for insurance and financial services companies Key Statistics Founded / IPO: 1982 / 1992 / 2013 Employees: 900+ Customers: 100+ What Do We Do? Insurance Software Core software policy administration solutions Global Footprint: EMEA 58% / N. America 31% / APAC 11% of 2012 Revenue Revenue: $135.4mm in 2013; expect ~15.2% growth in 2014 Historical Perspectives For insurance & financial services customers, globally Early Days Pivot 1 Pivot 2 L&P Retirement P&C Application development platform Focus on insurance market Next-generation insurance & technology portfolio Technology-Based Solutions Innovative platform for business decisions Tailor-made solutions Expand to financial services Investment Banks Retail Banks Mortgage Banks Other 3

4 Our Vision To become a leading provider of innovative software solutions for the global Financial Services market, with focus on Insurance 4

5 Investment Highlights $25bn addressable market undergoing transformative modernization Full suite of core solutions for L&P, retirement, and P&C markets Innovative products with proven leading functionality and technology Blue chip customer base across a broad geographic footprint Strong financial profile with multiple growth drivers and good visibility Proven management team 5

6 Insurance and Financial Markets are Evolving Rapidly Insurance and financial services providers need to balance rapidly changing customer requirements and an evolving regulatory framework Market Drivers Improve end-customer experience through innovative initiatives Mobile, social media etc. Support customers growth & operations: Reduce time to market of new products Evolving Regulatory Framework Solvency II Basel Dodd-Frank Schedule F MISMORegulatory compliance Expansion into new geographies Cost reduction & improved operations 6

7 The Insurance IT Opportunity is Large and Growing 2014E Insurance External Software and Services Spend: $59.9 billion Legacy New Trends Total 2014 external software and services estimated spend: $59.9 billion growing at midsingle digits Of which, Sapiens TAM is estimated at $25 billion 7 Source: Market size data per Celent. New/Legacy graphic for illustrative purposes. Highly Attractive Growing Market Growth of TAM driven by shifts from: Legacy to modern solutions Internal to external spending

8 Market Transformation in the next Decade ERP Banking Insurance 8

9 Full Suite of Platform Solutions for the Insurance Market Focusing on Core System solutions Life, Annuity, Retirement Property, Casualty, Health Reinsurance Group Individual Worksite Personal Commercial Specialty Carriers Reinsurers Policy Billing Claims Accounting 9

10 Leadership in Insurance Solutions EMEA North America ALIS continues to be one of the leading products in the region among the best that Celent have seen. Celent, Nov 2013 Sapiens ALIS is a market leader and should be considered for most short-lists. Ovum Jan, Source: XCelent Awards EMEA Policy Administration Systems for Life, Annuities, Pension and Health, 11/2013. Xcelent Awards - North American Policy Administration Systems 2013 Life, Annuities, and Health 11/2013

11 Overall Execution Assessment Leadership in Insurance Solutions EMEA 9 Leader Challenger Follower 8 Guidewire PolicyCenter GraphTalk A.I.A. Xuber for Insurers TCS BaNCS ebao Tech GeneralSystem Suite Sapiens IDIT Accenture Duck Creek Policy Administration 4 Innovation Group Insurer Policy Overall Technology Assessment Score (1 10) Source: Celent research, EMEA Policy Administration Systems, General Insurance, Property&Casualty, January 2014, Craig Beattie Ovum Decision Matrix P&C Policy Administration Platform Europe, 10/2013. Bubble size represents market impact. 11 Sapiens continues to offer a solution with great functionality and very strong technology in the EMEA region,.sapiens IDIT continues to excel as a leading solution in both functionality and technology. Celent, Jan 2014.

12 Innovation of Technology Based Solutions Analytics and Decision Management Analytics Business Process Management Process Data Management Data Informal design and development methods Source: Gartner 12

13 Blue-Chip Global Customer-Base North America UK Europe APAC Bulgaria 2013 Revenue Contribution 33% 21% 37% 9% 13

14 Opportunities for Growth 5 Pursue strategic acquisitions 4 Enhance portfolio through innovative technologies 3 Growth into new markets 2 Acquire new customers 1 Expand with existing clients 14

15 Attractive Financial Profile Impressive Revenue Growth Total Revenue ($mm) Strong Cash Flow Operating Cash Flow ($mm) 98.1 (1) (2) Consistent Operational Profitability (3) Operating Profit ($mm) Non-GAAP 1 Revenues of $98.1mm in 2011 pro-forma for the FIS and IDIT acquisitions. 2 Non-GAAP revenues guidance per Sapiens press releases dated February 26, Non-GAAP operating profit excludes stock-based compensation, amortization of intangibles, capitalization and amortization of software, and valuation adjustment on deferred revenue. 15

16 Revenue by Geography NA EU IL APAC Consistent Revenue Growth in NA and EU % 27% 27% 11% 20% 31% 17% 9% 33% US Europe IL 35% 38% 41% APAC )Non-GAAP USD Millions( 2011:Pro forma 16

17 Go-Live Attractive Revenue Model Illustrative $5mm initial contract $2.5 $2.5 Services License Maintenance Revenue ($mm) $1.1 $1.1 $1.1 $ Year 1 Year 2 Pre Production Year 3 Year 4 Year 5 Year 6-10 Ongoing Post-Production Stickiness Contractual High Typical life of product engagement: years 2-3x initial contract values Product L&A P&C Reinsurance DECISION Deal Size $7-$10m $4-$6m $1-$1.5m $1-$4m 17

18 Revenue With Significant Visibility Layered revenue streams create significant visibility Year 5 20% New Customers Year 4 Year 3 Year 2 80% Existing Customers Year 1 Time 18

19 Gross Margin Gross Profit Gross Margin $ % $55.0 $ % $50.0 $ % 41.2% $45.0 $ % Implementation of new L&P release Development of new product for retirement services Delivery staff recruitment to support the significant revenue growth (Non-GAAP USD Millions) 19

20 Go-Live Improved Gross Margins Key Initiatives $ Products Pre Delivery Ongoing Post-Delivery Gross Margin Typical Gross Margin of Engagement Time Improve Revenue Mix Invest in R&D to enhance technology and enrich product functionality, to allow higher license price Grow DECISION out of the total mix Start working with system integrators to shift low service work outside and keep the premium service to Sapiens Improve Delivery Margins Repeatable business from the same product line and the same territories Product maturity allow higher gross margin Increase recurring revenue (account management, extended maintenance, additional services etc, ( Shift non sophisticated tasks to Offshore 20

21 Profit and Loss Highlights Non GAAP Results Revenue Full Year Gross Profit % % Operational Profit % % Net Income % % Diluted EPS Weighted Average no. of shares Outstanding shares*: 46,015 * as of Dec 31 st, ,316 41,671 (in USD Million except per share amount) 21

22 Financial Highlights Balanced Financial Profile Risk diversification Highly Attractive Revenue Model Gross Margins Flexibility ~15.2% organic growth in 2014 Operationally profitable since Q Cashflow positive since 2007 Diversified revenue base: 4 continents Multiple product lines Over 130 customers Long engagement cycle with repeat revenues Existing clients account for 80% of revenues Multiple growth engines Gross margins leverage Revenue mix Post delivery margin Well Capitalized ~$70mm cash on balance sheet as of end-of-year 2013 No financial debt 22

23 Thank You Contact: Roni Al-Dor, CEO Roni Giladi, CFO Yaffa Cohen-Ifrah, VP Corporate Marketing & Communications Phone: Website 23

24 Appendix 24

25 Non-GAAP Reconciliation 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 Year ended 31/12/13 31/12/12 31/12/13 31/12/12 GAAP revenue $ 36,192 $ 31,170 $ 135,377 $ 113,909 Valuation adjustment on acquired deferred revenue and long term contract - (36) Non-GAAP revenue $ 36,192 $ 31,134 $ 135,377 $ 114,192 GAAP gross profit $ 13,500 $ 12,095 $ 50,406 $ 47,450 Revenue adjustment - (36) Amortization of capitalized software 1,130 1,191 4,500 3,757 Amortization of other intangible assets Non-GAAP gross profit $ 14,854 $ 13,462 $ 55,790 $ 52,333 GAAP operating income $ 3,325 $ 3,519 $ 11,883 $ 12,045 Gross profit adjustments 1,354 1,367 5,384 4,883 Capitalization of software development (1,456) (819) (5,392) (3,464) Amortization of other intangible assets 301 (282) 1,241 1,023 Stock-based compensation Non-GAAP operating income $ 3,758 $ 4,011 $ 14,049 $ 15,179 GAAP net income attributable to Sapiens' shareholders $ 3,421 $ 3,316 $ 11,604 $ 11,780 Operating income adjustments ,166 3,134 Other (468) (92) 252 (220) Non-GAAP net income attributable to Sapiens' shareholders $ 3,386 $ 3,716 $ 14,022 $ 14,694 Non-GAAP basic earnings per share $ 0.08 $ 0.09 $ 0.35 $ 0.37 Non-GAAP diluted earnings per share $ 0.07 $ 0.09 $ 0.33 $ 0.35 (in USD Million except per share amount) 25

26 Key Balance Sheet Highlights December 31 Cash Account Receivable Deferred Revenue Debt Total Equity Current Ratio Equity Ratio 267% 77% 159% 73% (in USD Million) 26

27 Strong Free Cash Flow December 31 Net cash provided by operating activities Net cash used for capitalization of R&D Net cash used for investing activities Net cash provided by (used for) financing activities Effect of exchange rate changes on cash Increase in cash Cash at beginning of year Cash at end of year (5.4) (4.3) (3.5) (1.4) (6.0) (0.4) (in USD Million) 27