Investor Presentation

Transcription

1 Investor Presentation Roni Al-Dor, CEO Roni Giladi, CFO Yaffa Cohen-Ifrah, CMO August 2016 Q Results 1

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, 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 1,800 Employees 200 Customers 98 1 Global Footprint NA: 34% UK: 24% Israel: 16% Europe: 15% APAC: 11% Revenue Growth Non-GAAP revenue (USD M); See appendix for Non-GAAP reconciliation 1 Revenue of $98.1M in 2011 pro-forma for the FIS and IDIT acquisitions

4 Sapiens Evolution Early Days Horizontal platforms Customization for select verticals Rules management Vertical Pivot Vertical specific solutions for insurance market Turnaround Focus on maintaining top line with higher profitability Modernize Next-generation insurance and technology portfolio Expanding to financial services 4

5 Our Offering Provide core software solutions for insurance and financial services companies: Insurance software L&A Life and annuities Retirement Core software policy administration solutions Run missioncritical insurance operations Provide functionality to support the full life-cycle of insurance carriers Revenue contribution 78% P&C P&C Technology based solutions Innovative platform for business decisions Application development platforms Includes a disruptive business decision engine Revenue contribution 22% DECISION emerge 5

6 The Market 6

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

8 The Insurance IT Opportunity is Large and Growing Market Trend Sapiens Total Addressable Market $30B Source: Gartner Verticals Forecast world wide By Insurance, April 2016 and company analysis Global IT Spending expected to increase by 6% Highly Attractive Growing Market NEW External Software and IT Services Spending expected to grow by 7% 8 Source: Market size data per Celent. April 2016

9 Today s Market Challenges & Trends Compliance Need to cope with frequently changing regulations Channels & Distribution Competition Growth Technology & Business Model Cost & Efficiency Shift of power and distribution model towards endcustomers, omni-channel distribution Fierce competition between insurance carriers - need to differentiate Quick time-to-market capabilities Digitalization, IoT and wearable, mobile, analytics & Big Data, cloud & SaaS, new external market entrants Reducing cost of ownership across IT operation 9

10 Sapiens Today

11 Diverse and Unique Product Portfolio Insurance Solutions Technology Solutions L&P P&C Enterprise-scale platform to centrally author, store and manage all organizational business logic Comprehensive software solutions for the management of life, pension, annuity and retirement Comprehensive solutions, supporting personal, commercial and specialty lines emerge Decision ALIS Retirement Closed Books TOPAZ IDIT Reinsurance Stingray 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 global and expanding footprint Life, Pensions and Annuities Retirement Property and Casualty Reinsurance Closed Books 12

13 Leadership in L&A Insurance Solutions Breath 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, 12/

14 Leadership in P&C Insurance Solutions Technology and Breath of Functionality 2015 EMEA Technology 2015 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 Supported by integrated services Sapiens product portfolio Hosting Product Upgrades Project Implementation Run mission-critical insurance operations Provide functionality to support the full life-cycle of insurance carriers Sapiens L&A Sapiens Retirement Support Services Sapiens P&C Sapiens Reinsurance Sapiens DECISION Training Consulting Testing Migration Integrated product services Provide project implementation and maintenance services Also, offer migration and training services on an on-going basis 15

16 Blue-Chip Global Customer-Base North America UK Europe APAC Bulgaria Revenue contribution (2015) 11% 24% 34% 31% 34% 24% 31% 11% 16

17 Growth Strategy

18 Land and Expand Win New Customers Grow with Existing Customers Mergers & Acquisitions 18

19 Growth Supported by Focused M&A Strategy Completed 7 M&A NEXT STEP 3 core products Customer Base 2 off-shore operations Geographic Expansion INSECO 1 patent 76 new customers Complementary Solutions 19

20 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 Mike McCurley VP Sales Insurance Sector North America Raj Ghuman Regional Manager UK & Nordics Henry Ainouze Regional Manager Europe 2001 Osnat Segev-Harel Head of Corporate Development Regional Team Ronald Karam President, NA insurance Ashok Bhavnani Regional Manager Asia Pacific Wayne Te Paa Regional Manager ANZ

21 Financials

22 Revenue Continue our Growth Non-GAAP Revenues (USD millions) (1) Revenues of $98.1 M in 2011 pro-forma for the FIS and IDIT acquisitions 22

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

24 Go-Live Attractive Revenue Model Typical life of product engagement: years Illustrative $5M initial contract Revenue ($mm) Stage Year 1 Year 2 Pre-Production Year 3 Year 4 Year 5 Year 6-10 Ongoing Post-Production Stickiness Contractual High Initial Deal Size Retirement L&A P&C Closed Books Reinsurance $10 - $15m $7 - $10m $4 - $6m $3 - $5m $1 - $1.5m 24

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

26 Q2- Consistent Revenue & Operating Profit Growth Revenues Non-GAAP Revenue (USD millions) Operating Profit & Margin Non-GAAP Operating Profit (USD millions) % 14.0% 14.0% % $43.4 $ $6.4 $ % 8.0% 6.0% 4.0% % Q Q Q Q % See appendix for Non-GAAP reconciliation. 26

27 Strong Cash Flow Generation Annual Non-GAAP Operating Cash Flow ($ M) $100.0M Cash Dividend Payment of $9.8m in 2016, $7.2m in 2015 and $6m in 2013 Non-GAAP operating cash flow include the cost of capitalized software development $0M Debt 27

28 2016 Guidance 28

29 Revenue and Operational Margin Guidance Revenue Guidance Operational Margin Target % 14.0% 13.5% Guidance Guidance 29

30 Investment Highlights Business Financials Massive market High growth Technology leader Diversified revenue One-stop-shop Highly attractive revenue model Top-tier customers Margins expansion Proven management Well capitalized 30

31 Thank You Contact: Yaffa Cohen-Ifrah, Chief Marketing Officer & Head of Corporate Communications U.S. Mobile: Phone: Website: #

32 Appendix

33 Q2 and H1 Non-GAAP (in USD Million except per share amount) 2016 Q First Half 2015 Revenue Gross Profit % 42.7% 43.2% 42.9% Operational Profit % 14.8% 14.4% 14.5% Net Income % 12.0% 11.9% 11.8% Adjusted EBITDA** Diluted EPS Diluted Weighted Average Number of Shares 49,759 49,213 49,656 49,098 Outstanding Shares: 48,985 )as of June 30 th, 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). 33

34 Non-GAAP EBITDA to Adj. EBITDA Reconciliation (in USD thousands) Three months ended June 30 GAAP operating profit Amortization of capitalized software Amortization of other intangible assets Capitalization of software development Compensation related to acquisition and acquisition related cost Stock-based compensation Adjustments of pre-acquisition revenues and expenses accounted under pooling of interest method Non-GAAP operating profit Depreciation Adjusted EBITDA 1 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 Q4 and Annual- Non GAAP slide ,407 1, (1,396) , % 656 8, % ,029 1, (1,553) (139) 6, % 459 6, % 34

35 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 35