sapiens annual investor meeting · sapiens’ annual investor meeting. roni al-dor president and...
TRANSCRIPT
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March 11, 2018
TASE
Sapiens’ Annual Investor Meeting
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Roni Al-Dor
President and CEO, Sapiens
Sapiens’ Year in Review and Into 2018
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Certain statements made in this presentation may 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, 2016 and subsequent reports and registration
statements filed from time to time with the Securities and Exchange Commission.
Safe Harbor Statement
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19 New Customers
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22 Customer Projects Went Live.
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▪ Proven track record in scouting, engaging and closing M&As
▪ Successful PMI execution
▪ We continue to look for:▪ Products, customer bases and new geographies
5 Acquisitions in 18 MonthsEnhanced U.S. presence, product portfolio and digital capabilities
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Beyond Core: Digital Division Was Established
Sapiens Core Policy Administration Services
Digital Enablement & API Layer
Sapiens INTELLIGENCE
BI, Analytics, Reporting
Data Warehouse & Data Store
Data Visualization
Self-Service BI
Cloud
External PoS/ Portal/
Applications
Sapiens DIGITAL Engagement Platform
Customer Engagement Tools &
Apps
Predictive Analytics
Data Lakes
Big Data
InsurTechEcosystem
Decisio
nM
anagem
en
t
PortalsCustomer Journey
AI&ML
Mobile
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The Market
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Insurance Carriers MUST Stand Out.
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Preventive Insurance – IoTSmart homes detect leakage and prevent floods.
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Competition from New Business ModelsPeer-to-Peer Insurance
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Sophisticated CustomersLow-Touch Interactions
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Leverage Data For Insights Social media and customer history used to manage risk.
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Cut Costs & Improve EfficiencyAs always…
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▪ P&C will continue to grow, with a focus in the U.S., EMEA
▪ Market experiencing fastest disruption – carriers must act fast
▪ L&A core market is slow – complex/tough ROI on migration projects
▪ Split of run-off projects, new business and complimentary
Impact on Solution Vendors
▪ Digital capabilities drive core replacement
▪ As standalone entry point, or on top of core
Industry analyst insights:
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How Sapiens is Aligning its Business
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Sapiens IDIT Maintains Leadership PositionFull P&C Suite, well-positioned as a market leader for 10+ years
Technology and Breadth of Functionality
Celent research: EMEA Policy Administration Systems, General Insurance, Property & Casualty, February 2016, Craig Beattie
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IDIT is Accelerating Across EMEA & APACThe platform has a good and growing reputation…
Singapore
Hong-KongThailand
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Into 2018: U.S. P&C
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The NA P&C market is the largest, most innovative insurance market globally, hence a strategic market for Sapiens.
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▪ Rapid growth in EMEA & APAC – IDIT attention and focus
▪ NA market is highly competitive
▪ IDIT suite is perceived as “Non-U.S.” – not fit-to-market
▪ Lack of North America P&C references
We selected the M&A approach to build our
North America P&C proposition
Factors Driving our NA P&C Market Strategy
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Stingray: a Solution for the Low-End MarketFull suite, out-of-the-box capabilities, bundled with BI & Portal
“Stingray’s full, end-to-end solution, combined with a high level of business knowledge, makes it a good solution for (primarily) smaller carriers.”
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▪ Preconfigured reports, dashboards and analytics
▪ Self-service BI
4SightAffordable, out-of-the-box BI capabilities, adopted by 30+ carriers
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▪ Stream Claims: ▪ One of the best claims systems in US market
▪ PowerSuite®: ▪ Monoline Workers’ Compensation – used by largest state plans
▪ Complimentary Offerings:▪ Reinsurance, Financial & Compliance
▪ Long-term client base using the J-Product/Specialty
StoneRiver (P&C)
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StoneRiver (P&C)A solid mix of large, mid and small carriers next to state funds
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Adaptik: Sapiens’ Policy & Billing for NAOne of Top 5; Proven Track Record; Solid Management Team
Celent, February 2018
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N
DATA &
DIGITAL
ADAPTIK
POLICY
F&C
ADAPTIK
BILLING
STREAM
CLAIMS
REINSURANCE
We Launched Our NA P&C PlatformFor commercial & personal lines
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EMEA & APAC North America
Fit-To-Market, Leading P&C OfferingsAll our products are highly ranked.
Data & Digital
Mid- to high-end carriers
Large, state-fund workers compensation
Low-end carriersPersonal,
commercial and specialty
lines
IDIT Adaptik & Stream
PowerSuite Stingray
Reinsurance | Financial & Compliance
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Sapiens’ Global P&C Business – 2015-2018Continued growth momentum.
0
20
40
60
80
100
120
140
160
180
2015 2016 2017 2018
Sapiens Global P&C Revenue ($m)
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Into 2018: L&A
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EMEA
No
rth
Am
eric
a
Sapiens ALIS for New Business One of Top Players, Full Core Suite for L&A carriers
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Sapiens Closed Books to Manage RunoffReducing the Cost of Ownership
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
Year 1 Year 2 Year 3 Year 4 Year 5
Cost of Runoff Business as-is
Cost of Runoff Business With Sapiens*
* Graph reflects real customer use case
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▪ Streamlines New Business
▪ Provides point-of-sale access anywhere
Sapiens Complimentary L&A Offerings Leading Underwriting and Illustrations solutions (StoneRiver)
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Fit-To-market, Leading L&A Solutions
Core New Business
Sapiens ALIS
Focus on EMEA
Focus on new business
Run-Off Core
Closed Books
One of the best in the market
Big-player BPO market
Complementary Offerings
LifeSuite®, LifeApply®,
LifePortraits®
Successful in North America
Expand to EMEA
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Into 2018: Digital
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Established Sapiens Data & Digital DivisionInjecting digital capabilities into and around our core.
Ease of doing
business
Online insurance
Mobile interaction
Social media
integration
Tailored customer journey
Preventive insurance
Risk-related insights
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Our Data & Digital Assets Enhance Our Core
Core
Data Digital
Core
DigitalData
Cloud
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We Expanded Our EcosystemWorking closely with small and large innovation companies.
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Into 2018: Services
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▪ Project & program management
▪ Business analysis
▪ Implementation services
▪ On & off-shore mix
▪ System integration
▪ Business consultancy
▪ Business transformation
▪ Training
▪ Data migration
▪ UAT & Testing
▪ Hosting
▪ Application management
▪ Full managed services
▪ Support & maintenance
Expanded Our Services Offering
Implement Transform Manage
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Into 2018: Territories
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TerritoriesObserving rapid growth in U.S. & Nordics;South Africa & Turkey Emerging…
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0
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60
80
100
120
140
160
2015 2016 2017 2018
Sapiens’ NA Business ($m)% of WW revenue
Sapiens’ NA Market Presence is GrowingGrowing focus on NA, via M&As and organic growth.
50%
41%
34%31%
Revenue ($m)
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0
5
10
15
20
25
30
2015 2016 2017 2018
Sapiens Nordics Revenue ($m)
Sapiens’ Presence in NordicsNew market penetration
1.4%
8.5%9.5%
Revenue ($m)
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Cross- & Up-Sell
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So What’s The Difference?
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We have DOUBLED Our Customer Base
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We are ready to accelerate and scale-up, by leveraging our customer base for up-selling and cross-selling.
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Corporate Focus – Into 2018
IDIT growth
Go-lives New logos
NA P&C
Complete PMIAccelerate growth
Cross-/up-sell
Leverage 400+ customer relationships
L&A
New business, run-off & complimentary
Digital
Enhance offering and accelerate sales
Other
DECISION – accelerateRI – expand
Growth & profit balance
Expand services
Managed services, UAT, migration
Prepare for 2020…
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The Pit Stop isfinished, and we’re ready to drive full speed ahead!
50
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Thank You
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Markets, trends & solutions in the global insurance marketAlex Zukerman, Head of Corporate Product Strategy
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An industry going through deep transformation
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InsurTech by Numbers
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InsurTech by Numbers
185Newly Funded Companies
107Enablers
20169
Insurers
69Intermediaries`
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Insurance Tech is on the Rise
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Blockchain Insurance Industry Initiative
Collaborations and Alliances
B3i – a true industry collaboration The Automated Driving Insurer Group
13 insurance brands formed an alliance to tackle the changes needed to ensure driverless cars are safe
and comply with regulations
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Insurers with Innovation units
Source:
Accelerators, Hubs & Labs
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InsureTech – Reality check
Gartner Hype Cycle Diagram
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Insurance vs. InsurTech Firms
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Core Solutions are Key to Business Success
“Over 60% of life and P&C CIOs indicate the legacy modernization is extremely or very important”
- Gartner
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Disruption, Revolution, Evolution
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Disruption, Revolution, Evolution
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Digitalization of Business(“Inwards looking”)
Digitalization of existing processes
Modernizing & automating existing structures & processes
Digital Insurance
(“Outwards looking”)
Creating new digital business models and engagement models
Digital Strategy in Insurance
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IoT & Wearables
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Machine-learning & Artificial Intelligence (AI)
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ChatBots, ClaimBots, MedicalBot, Etc.
AVA is Metromile’s AI claims assistantIt accurately verifies claims in seconds and
quickly resolves them
Jim is Lemonade’s claims botIt reviews, cross-references policies and even
pay claims instantly
Eve is microUmbrella’s chatbotIt assists customers in buying the right protection plan and in making a claim.
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Voice Computing
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Robo-Advice & Needs Analysis
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Predictive Analytics & Algorithmic Business
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Social Media in Insurance
Admiral to price car insurance based on Facebook posts
AXA, the first insurance brand to adopt Facebook Messenger
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Autonomous Cars
Drones
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Blockchain
Fraud Detection and Risk Prevention
Digital Claims Management
Distribution
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Cloud & SaaS
“Cloud is no longer just about cost reduction, as insurers use it to drive organizational agility”
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Direct-to-Consumer
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New domains are getting insured (Cyber, Drones…)
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On-Demand Insurance
trōv SURE.
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Personalization & Usage-Based Insurance
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Social Responsibility, Collaboration and Environment
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New Disruptive Entrants: Customer Ownership
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The Effect of Digital Disruption
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New Digital Architecture – Platforms
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Disruption, Revolution, Evolution
PROPERTY/CASUALTY
INSURER CIO PRESSURES
AND PRIORITIES 2018
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Disruption = Opportunity
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Leadership in a Rapidly Changing, Fast-Growing Environment
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Sapiens Strategy – Digital Platform
Core
Data Digital
Core
DigitalData
Cloud
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Innovation & Digital-focused organization
CTO Office Product Strategy
Digital Division
Market Strategy
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Innovation
Partnerships
Thought leadership
Customers’ dialog
Research
Domain Expertise
InsurTech Ecosystem
Entrepreneurship
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Industrialization
Sapiens’ Innovation Approach
POC and capability
proof
Identify innovative technology
solution(partnership / development)
Define a Use Case
Identify a business need or a current
market malfunction
From the drawing board to reality
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Partnerships & EcosystemInsurTech
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Partnerships & Ecosystem
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Partnerships & EcosystemFew of our partners
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Sapiens Digital Platform
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Sapiens Digital Platform
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Sapiens Digital Platform
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Sapiens Digital Platform
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Sapiens Digital Platform
Digital Accelerator & API Layer
Sapiens Core PAS External Systems
Sapiens Intelligence
Digital Engagement
Sap
ien
s C
LOU
D
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Sapiens Digital Platform
Digital Accelerator & API Layer
Sapiens Core PAS
Sapiens IDIT
Sapiens ALIS
Sapiens CB
External Systems
Legacy PAS CRM BillingNA P&C
Suite
Sapiens Intelligence
BI & Data Analytics
Digital Engagement
InsurTech & Industry API
Customer Engagement
Customer Centricity
MobileOmni-
ChannelJourneys Self-Service
Machine learning Artificial Intelligence Personalized Video ChatBot IoT Image recognition
Sap
ien
s C
LOU
D
Data Management
Digital Micro-Engines
API & Integration
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In the frontline of Insurance Disruption
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Thank You
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Financial Results 2017Roni Giladi, CFO
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2017 Summary
Revenue
$272MH1
$4.9M3.9%
H2 $18.2M
12.4%
Operational Profit
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135.4
157.5
179.3
216.2
272.0
2013 2014 2015 2016 2017
RevenueNon-GAAP Revenues (USD millions)
+16.3%+13.9%
YoY Growth
+20.6%
+25.8%
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Revenue Growth Analysis
2016 2017
M&A
Organic216.2
+26.8
+68
272
-26.5
-12.5Halted Project
Japan
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49.6
91.3
16.10.5
61.3
92.0
20.65.4
74.5
107.2
30.2
4.4
111.8
121.5
18.1 20.6
NA Europe* APAC South Africa
2014 2015 2016 2017
Annual Revenue by Geography
Non-GAAP Revenues (USD millions)
Focus on North America and Europe
* Including UK, Europe, Nordics, Israel
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2017 Annual Non-GAAP Results
2016 H1 2017 H2 2017 2017 Annual
Revenues 216,190 125,701 146,302 272,003
Gross Profit 91,767 46,859 59,808 106,667
42.4% 37.3% 40.9% 39.2%
R&D 22,033 18,062 19,460 37,522
SG&A 40,119 23,882 22,150 46,032
Operating Profit 29,615 4,915 18,198 23,113
13.7% 3.9% 12.4% 8.5%
Financial Income (expenses) 640 (917) (1,863) (2,780)
Minority 123 38 109 147
Profit before Tax 30,378 4,036 16,444 20,480
Tax (6,179) (925) (4,015) (4,940)
Tax % 20.3% 22.9% 24.4% 24.1%
Net income 24,199 3,111 12,429 15,540
11.2% 2.5% 8.5% 5.7%
(in USD million, except per share amount)
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OPEX Reduction During 2017
Q2/17 H2/17 AVGReduction in
OPEX - Q
Revenues69,167 73,151
GM %38.2% 40.9% +2.7%
OPEX23,172 20,805 -2,367
Profit3,217 9,099
4.7% 12.4%
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Japan 2014-2018
0%
5%
10%
15%
20%
25%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2014 2015 2016 2017 2018
Revenues Profit (%)
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Growth in Our Off-Shore Activities
Q1 2015 Q4 2015 Q4 2016 Q4 2017
India 25 86 212 359
Poland 1 14 92 118
Total 26 100 303 478
% Offshore from Delivery & R&D
3% 8% 20% 28%
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Currency impact
H2 2016 Actual
H2 2017 Actual
H2 2017 in Constant Currency
Diff
Revenue 113.6 146.3 143.3 -3.0
Expenses 98.7 128.2 123.1 -5.1
Profit 14.9 18.1 20.2 2.1
% 13.1% 12.4% 14.1% 1.7%
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Cash Position
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Cash Position
Cash 31/12/2017 $71.5m
Acquisition of Adaptik ($20m)
Current debenture ($80m)
Principal payment $10m every year starting 1/1/2019
Interest rate paid twice a year 3.67%
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2018 Guidance
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Revenue Guidance
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157.5
179.3
216.2
272 280-285
2014 2015 2016 2017 2018 Guidance
Revenue TrendsNon-GAAP Revenues (USD millions)
1 2018 guidance per Sapiens press release dated February 12, 2018.
(1)
+13.9%
+20.6%
+25.8%
+2.9-4.8%
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Revenue Growth Analysis
2017 2018 Guidance
M&A
272
-10
280-285
India & Poland Japan
Mega Project extensionOrganic
growth
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Revenue Mix - Growth Areas
% of Revenues
High growth 43%
Growth 30%
Stable 25%
Decline 2%
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Revenue Split by Lines of Business
50%30%
30% 60%
20% 10%
2016 2018
L&P P&C Decision & Tech
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Revenue Split by Regions
50% 45%
35% 50%
15%5%
2016 2018
Europe U.S. Rest of World
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Profitability
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Back to Profitability
13.7%
2017 20182016
8.5% 12-13%
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Back to Profitability – Continued
2016 2017H1
2017H2
2018Q1
2018Q2,Q3,Q4
13.7% 3.9% 12.4% 10%
2018
12%-13%
Gradual improvement
2017
8.5%
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Profitability Growth>Year 2018 :
1. New customers/projects▪ Focus on profitability▪ Team setup preparation at the final stage
2. Improve offshore activity going forward▪ Increase the ratio of offshore▪ Initiative to begin product development activity offshore
3. Integration of Adaptik & Stream▪ Savings on R&D efforts
4. Corporate saving
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Reducing the Risks
2015 2016 2017
Largest customer 14% 6% 5%
Total Top 10 50% 34% 30%
Revenues Expenses Diff
USD 60% 35% N/A
ILS 8% 43% Negative
GBP 15% 8% Positive
Euro 10% 3% Positive
Other 7% 11% Negative
Revenues & Expenses Split by Currencies
Top Customers
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Any Questions?
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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