Investor Presentation

Transcription

1 Investor Presentation Roni Al-Dor, CEO Roni Giladi, CFO Yaffa Cohen-Ifrah, CMO May 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 1,700 Employees 190 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 Today: Modernize Next-generation insurance & technology portfolio Expanding to financial services Vertical Pivot Vertical-specific solutions for insurance market Early days: Horizontal platforms Customization for select verticals Rules management 4

5 Our Offerings Provide core software solutions for insurance and financial services companies: Core software policy administration solutions ~80% of the business Run mission-critical insurance operations Insurance Software Provide functionality to support the full life-cycle of insurance carriers Technology Based Solutions Life & Annuities Innovative platform for business decisions Retirement Property & Casualty Application development platforms Reinsurance ~20% of the business Includes a disruptive business decision engine 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 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 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% 9 Source: Market size data per Celent. April 2016

10 Today s Market Challenges & Trends Compliance Channels & Distribution Competition Growth Technology & Business Model Cost & Efficiency Need to cope with frequently changing regulations 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 10

11 Sapiens Today

12 Current Sapiens Portfolio Life, Annuities, Pension and Retirement Property & Casualty and Reinsurance Decision Technology 12

13 Our Value Proposition Life, Pensions & Annuities Retirement Property & Casualty Reinsurance Leading Technology Comprehensive platform for automating back-end core across policy, billing and claims Customizable to meet customers IT and business demands Modular yet integrated Digital-ready Award-winning packaged solutions Robust Domain Expertise Robust insurance industry expertise Team comprised of L&A and P&C industry experts Building solutions with customers & solving their business problems Enhancing solutions as industry evolves Consultative approach End-to-end Solutions One-stop-shop approach reduces risk on major re-platforming initiatives Unique combination of technology and services Ongoing maintenance and enhancement as business needs change Decades of proven project delivery Large global and expanding footprint 13

14 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/

15 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, KyongSunKong 15

16 Focus on Insurance Core Systems Constant Evolution and Expansion of the Sapiens Proposition BI Reporting BI Repository Distribution Management Document Management & Workflow/BPM Unique Comp. Agent Agent Portal Portal Customer Portal Underwriter Workbench Rating Engine CRM Core Policy Admin System Core Claims System Reinsurance Management Billing Disbursement General Ledger Sapiens offering Document Creation No offering currently 16

17 One-Stop-Shop Across Products and Services Benefits to Customer Hosting Product Upgrades Project Implementation Successful implementations Opportunity to enhance product functionality Single point of contact Ease of future enhancements and maintenance Sapiens L&A Sapiens Retirement Support Services Sapiens P&C Consulting Sapiens Reinsurance Testing Migration Training 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

18 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 18

19 Blue-Chip Global Customer-Base North America UK Europe APAC Bulgaria 34% 24% 31% 11% 19

20 Growth Strategy

21 Our Growth Strategy: Land and Expand How Strategy Win New Customers Maintain Product Leadership Grow with Existing Customers Leverage our Global Presence Mergers & Acquisitions Optimize Delivery Operations 21

22 Acquisitions What Are We Looking For? Customer Base Geographic Expansion Complementary Solutions 22

23 6 Acquisitions in 5 Years New Customers New Geographies New Products Off-Shore Operations Complementary Solution New Patent 23

24 Proven Management Team Executive team Regional team Roni Al-Dor President & CEO 2005 Norman Tutnauer Chief Business Officer 2016 Roni Giladi CFO 2007 Tal Sharon Regional Manager Israel 2001 Rami Doron Managing Director DECISION 2007 Ronald Karam President, NA insurance 2007 Irit Nusel Managing Director Life, Pension and Retirement 2013 Mike McCurley VP Sales Insurance Sector North America 2016 Liana Gelikas Managing Director Property & Casualty 2016 Raj Ghuman Regional Manager UK & Nordics 1995 Yaffa Cohen-Ifrah CMO and Head of Corporate Communications Anat Belluco VP Global HR 2014 Henry Ainouze Regional Manager Europe 2013 Ashok Bhavnani Regional Manager Asia Pacific Osnat Segev-Harel Head of Corporate Development 2009 Wayne Te Paa Regional Manager ANZ

25 Financials

26 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 26

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

28 Attractive Revenue Model Typical life of product engagement: years Illustrative $5M initial contract $2.5 $2.5 Revenue ($mm) Go-Live $1.1 $1.1 $1.1 $1.1 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& P&C Reinsurance DECISION $10 - $15m $7 - $10m $4 - $6m $1 - $1.5m $1 - $4m 28

29 With Significant Visibility Customer stickiness and layered revenue streams create significant visibility YEAR % New Customers YEAR 4 Revenue YEAR 2 YEAR % Existing Customers YEAR

30 Q1 Continue Our Revenue Growth Non-GAAP Revenues (USD millions) See appendix for Non-GAAP reconciliation. 30

31 Consistent Gross & Operational Profit Growth Gross Profit & Margin Non-GAAP Gross Profit (USD millions) Operating Profit & Margin Non-GAAP Operating Profit (USD millions) 43.1% 43.5% % 14.8% 14.0% % % 0 $17.7 $ $5.8 $ % 6.0% % % 0 Q Q Q Q % See appendix for Non-GAAP reconciliation. 31

32 Strong Cash Flow Generation Annual Non-GAAP Operating Cash Flow ($ M) 34.4 $98.5M Cash $0M Debt Declare dividend of $9.8 M to be distributed on June 1, 2016 Non-GAAP operating cash flow include the cost of capitalized software development 32

33 2016 Guidance 33

34 Revenue Guidance Guidance 34

35 Operational Margin Target Non-GAAP Operating Margin 15.5% 14.8% 15.0% Guidance 35

36 Financial Summary High growth revenue CAGR of 16% Investments in sales and marketing to support growth Increased farming of existing customer base Diversified revenue Globally diversified across NA, UK, Europe, Israel, APAC Insurance sub-verticals: P&C, L&A, Retirement Over 190 customers Highly attractive revenue model Customer stickiness 80-85% of revenue from existing customers Long-term engagement cycle Margins expansion Expanding offshore presence Beneficiary of past R&D investments Well capitalized Strong cash flow conversion $98.5M available cash and marketable securities Debt-free balance sheet 36

37 Key Investment Highlights Massive market Technology leader Secular shifts, legacy IT and regulatory tailwinds driving insurance industry IT modernization Leading global provider of solutions across major segments of insurance industry One-stop shop One-stop-shop provider of technology and services Top-tier customers Long-term, well-established marquee customer base across the globe Proven management Proven management team comprised of industry experts Unique financial model Distinct combination of high growth, operating leverage and recurring revenue 37

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

39 Appendix

40 Q1 Non GAAP (in USD million except per share amount) 2016 Q Revenue Gross Profit % 43.1% Operational Profit % 14.1% Net Income % 11.5% Adjusted EBITDA* Diluted EPS Diluted Weighted Average Number of Shares 49,560 49,098 Outstanding Shares: 48,929 )as of March 31 st, 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). 40

41 Non-GAAP EBITDA to Adj. EBITDA Reconciliation (in USD thousands) Three months ended March 31 GAAP operating profit Amortization of capitalized software Amortization of other intangible assets Capitalization of software development Compensation related to acquisition 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 ,251 1, (1,384) , % 607 7, % ,798 1, (1,312) (712) 5, % 390 6, %

42 Q4 and Annual Non-GAAP (in USD Million except per share amount) 2015 Q * Annual 2014 Revenue Gross Profit % 41.8% 43.8% 40.8% Operational Profit % 11.9% 14.8% 10.8% Net Income % 11.8% 12.3% 10.2% Adjusted EBITDA** Diluted EPS Diluted Weighted Average Number of Shares 49,536 49,057 49,327 48,637 Outstanding Shares: 48,760 )as of December 31 st, 2015( * Including consolidation of Insseco commencing on the acquisition date, August 18, ** 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