investor presentation · investor presentation q4 and full-year 2016 results march 1, 2017 roni al...
TRANSCRIPT
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www.sapiens.com
Investor PresentationQ4 and Full-Year 2016 Results
March 1, 2017
Roni Al Dor, President and CEO
Roni Giladi, CFO
Yaffa Cohen-Ifrah, CMO
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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 1995. 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
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Who is Sapiens?
3
Leading global provider of software solutions across the insurance industry
Growing presence in the financial services sector
DNA of technology platform & insurance domain expertise
North America: 34%United Kingdom: 22%Europe: 16%Israel: 14%APAC: 14%
Global Footprint
200 Customers
2,000 Employees
114 135
158 179
216
2012 2013 2014 2015 2016
Revenue Growth
Non-GAAP revenue (USD M); See appendix for Non-GAAP reconciliation
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Our Offering
44
Provide core software solutions for insurance and financial services companies:
Innovative platform for business decisions
Core software policy administration solutions
Technology based solutions
Insurance software
Application development platforms
Retirement
Life & Annuities
Decision Management eMerge
Property & Casualty
L&A
P&C
~80% of the business
Run mission-critical operations of insurance industry
Provide functionality to support the full lifecycle of insurance carriers
~20% of the business
Includes a disruptive business decision engine
Reinsurance
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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
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The Insurance Markets
66
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The Insurance Markets
Highly regulated industry with accelerating regulatory changes
Competitive markets with little product differentiation
Increased globalization Legacy IT transition challenges
Enterprises are seeking modular, next-gen solutions to ease the transition and transform the consumer experience
WealthLiabilityCatastrophe PropertyMotor Voice
PROPERTY, CASUALTY, REINSURANCE
LIFE, ANNUITY, RETIREMENT
Annuities Retirement LifeInjuries
7
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The Insurance Industry
Source: Market size data per Celent. April 2016
Big Market
$5,200,000,000,000 gross written premium (GWP)
11,000 insurance companies globally
Potential
3-4% of GWP invested in IT
$185B in 2016 Life - $99B; P&C - $86B
IT-related Investment
8
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The Insurance IT Opportunity is Large and Growing
Source: * Gartner Verticals Forecast world wide By Insurance, April 2016 and company analysis ** Source: Market size data per Celent. April 2016
Global IT spending 2016-2017 expected
to increase by
6%
External Software and IT services
spending2016-2017
expected to grow by
7%**
Sapiens’ Total Addressable Market*
$30B Highly Attractive Growing Market
Highly Attractive Growing Market
9
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Today’s Market Challenges & Trends
10
Regulation CompetitionRisk
Mitigation
Customer Experience
Personalization Flexibility
Time to Market Efficiency New Models
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Sapiens Today
1111
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Large and expanding global footprint
End-to-end solutionsLeading technology Domain expertise
Decades of proven project delivery Award-winning, packaged solutions Consultative approach
12
Our Value Proposition
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“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 makemost evaluation short lists and Sapiens to expand its already rich customer base in the EMEA region.”
Nov. 2015
XCelent Awards - EMEA Policy Administration Systems for Life, Annuities, Pension and Health, 11/2015 13
Leadership in L&A SolutionsBreadth of Functionality, 2015 Breadth of Functionality, 2015
EMEA North America
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Leadership in P&C Solutions
“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. 2016Celent research - EMEA Policy Administration Systems, General Insurance, Property & Casualty February 2016, Craig BeattieCelent research – APAC Policy Administration Platform Property & Casualty, 04/2016, KyongSun Kong 14
Technology and Breath of Functionality, 2015 Technology, 2015
EMEA APAC
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One-Stop ShopAcross Products and Services
1515
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Product Upgrades
Training
Support ServicesMigration
TestingConsulting
Project Implementation
Hosting and
DevOps
Sapiens ALIS
Sapiens Closed Books
Self-Sufficiency
One-Stop-Shop Across Products and Services
Sapiens Retirement
Sapiens IDIT
Sapiens Reinsurance
Benefits to Customer
Successful implementations
Opportunity to enhance product functionality
Single point of contact
Ease of future enhancements and maintenance
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
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Blue-Chip Global Customer-BaseLong term Partnership
Bulgaria
North America
UK
ContinentalEurope
APAC
17
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Global Presence
18
Development & Delivery Center
Site
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Executive Team
Roni Al-DorPresident & CEO
2005 Roni GiladiCFO
2007
2013Irit NuselManaging DirectorLife, Pension and Retirement
2014Yaffa Cohen-IfrahCMO and Head of Corporate Communications
2016Norman TutnauerHead of Global Sales
2007Rami DoronManaging Director,DECISION
2016Liana GelikasManaging Director Property & Casualty
2013Anat Belluco FeinkuchenVP Global HR
Tal SharonRegional ManagerIsrael
2011 Osnat Segev-HarelHead of Corporate Development
2009
Proven Management Team
19
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OurStrategy
2020
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Focus on InsurTech
21
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Land and Expand Strategy
22
Win New Customers
Grow with Existing Customers
M & A
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Customer Base
Geographic Expansion
Complementary Solutions
3 core products
2 offshore operations
76 new customers
1 patent
INSECO
Completed 8 M&A NEXT STEP
Growth Supported by Focused M&A Strategy
23
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StoneRiver Acquisition
24a definitive agreement, subject to customary closing conditions
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25
About StoneRiverA provider of Insurance software and services in North America
500 Professionals 200 Customers $80M RevenuesWide Range of
Insurance Products
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Geographic Presence Customer Base People Products
26
The Benefits Of the Acquisition
Expands presence in the North American insurance market
Double Sapiens’ customer count from 200 to over 400
Adding over 500 insurance experts with Industry knowledgeclose to U.S. customers
P&C offerings Complementary
L&A offerings Reinsurance suites
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Financials
2727
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Revenue – Continue our GrowthNon-GAAP Revenues (USD millions)
1 Revenues of $98.1 M in 2011 pro-forma for the FIS and IDIT acquisitions 28
70.3
114.2
135.4
157.5
179.3
216.2
98.1
2011 2012 2013 2014 2015 2016
(1)
Non-GAAP Revenues (USD millions)
+16.4%
+18.8%
+16.3%
+13.9%
YoY Growth
+20.6%
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Revenue Growth Analysis
2015 2016
ExchangeRate
M&AOrganic179
+38.1
+3.5 -4.6
216
29
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Annual Revenue by Geography
Non-GAAP Revenues (USD millions)
Focus on North America and Europe
30
35.5
26.622.4 23.6
12.5
44.2
31.1
24.923
12.2
49.6
35
28.4 28.8
15.7
61.3
42.6
26.528.3
20.5
74.5
46.9
35.5
29.1 30.2
NA UK EU Israel APAC
2012 2013 2014 2015 2016
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-2.41% -2.84% -3.46%
-14.02%
-2.70%
1.91%
7.76%
14.29%
15.90%
13.19%13.29%
10.38%
10.80% 14.8%
13.7%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Non-GAAP Operating Margin
Sapiens Evolution
Revenue ($mm)
Vertical Specific Turnaround Modernization and Growth
$45M $50M $216M
31
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Year 3 Year 4 Year 5 Year 6-10
Contractual High
Attractive Revenue Model
Ongoing Post-ProductionPre-Production
Year 1 Year 2
Go
-Liv
e
Typical life of product engagement: 10–15 years
Revenue ($mm)
Initial Deal Size
Stage
Stickiness
$7 - $10m$10 - $15m $8 - $10m $3 - $5m $1 - $1.5m
Retirement ReinsuranceL&A P&C Closed Books
32
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With Significant VisibilityR
eve
nu
e
≈15%New Customers
≈85% Existing Customers
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
Customer stickiness and layered revenue streams create significant visibility
33
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Consistent Revenue GrowthNon-GAAP Revenue (USD millions)
See appendix for Non-GAAP reconciliation.
$48.7
$57.1
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
Q4 2015 Q4 2016
34
$179.3
$216.2
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
$-
$50.0
$100.0
$150.0
$200.0
2015 2016
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Consistent Operating Profit GrowthNon-GAAP Operating Profit (USD millions)
See appendix for Non-GAAP reconciliation.
$7.4 $7.5
15.1%13.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Q4 2015 Q4 2016
$26.5$29.6
14.8% 13.7%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2015 201635
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Strong Cash Flow Generation
$96M Cash
$0M Debt
Annual Non-GAAP Operating Cash Flow ($ M)
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
15.3
11.9
15.4
34.4
20.5
2012 2013 2014 2015 2016
36
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2017 Guidance
37
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Revenue and Operational Margin GuidanceRevenue Guidance Operational Margin Target
38
216
270
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
50
100
150
200
250
300
2016 2017 Guidance
13.7%13%
0
5
10
15
2016 2017Guidance
280.0
38
Revenue Guidance Operational Margin Target
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Investment Highlights
3939
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Financial and Investment Highlights
High growth Diversified revenue Well capitalize Attractive revenue model
40
Massive Market Technology Leader Top-tier customers Proven management
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www.sapiens.com
Thank You
Contact: Yaffa Cohen-Ifrah, CMO & Head of Corporate Communications
Mobile: +1-201-250-9414 | Phone: +972-3-7902032Email: [email protected] | Website: www.sapiens.com
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Q4 and Annual – Non-GAAP Results
** 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
AnnualQ4
2015201620152016
179.3216.248.757.1Revenue
78.591.821.523.9Gross Profit
43.8%42.4%44.2%41.8 %
26.529.67.47.5Operational Profit
14.8%13.7%15.1%13.1%
22.124.26.36.0Net Income
12.3%11.2%13.0%10.4%
28.532.57.98.3Adjusted EBITDA**
0.450.490.130.12Diluted EPS
49,32749,78049,53649,935Diluted Weighted Average Number of Shares
Outstanding Shares: 49,036)as of December 31, 2016(
(in USD million, except per share amount)
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Non-GAAP EBITDA to Adj. EBITDA Reconciliation
Note: In accordance with non-GAAP accounting, 2015 includes consolidation of Insseco commencing with the acquisition date, August 18, 20151 See definition of Adjusted EBITDA in Q3 and Nine month - Non GAAP slide 43
Year ended December 31
20152016
24,35024,840GAAP operating profit
4,8754,929Amortization of capitalized software
2,1062,257Amortization of other intangible assets
(6,032)(5,545)Capitalization of software development
1,3491,955Stock-based compensation
2701,179Compensation related to acquisition and acquisition related cost
(371)-Adjustments of pre-acquisition revenues and expenses accounted under pooling of interest method
26,54729,615Non-GAAP operating profit
14.8%13.7%
1,9522,835Depreciation
28,49932,450Adjusted EBITDA1
15.9%15.0%
(in USD thousands)
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CRM LoansERPCredit
Sapiens DECISION
Mortgage
Automated Code
Generation
Centralized Decision Logic
Business Strategy
Market ConditionRegulation
s
Customer RequirementsCompetition
Manages business logic across organizations, for large organizations that operate in highly-regulated and complex decision-making environments, cutting time, cost and risk
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