Sapiens 2012 Annual Revenue Increases 63% to $114 Million 2012 Non-GAAP Annual Operating Profit Grows by 65% to $15.2 million

REHOVOT, Israel, March 5, 2013 /PRNewswire/ --

Sapiens International Corporation N.V. (NASDAQ and TASE: SPNS), a provider of innovative software solutions for the financial services and a member of the Formula Group (NASDAQ: FORTY and TASE: FORT), announces its financial results for the fourth quarter ended December 31, 2012.

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"In the fourth quarter we continued to win new customers such as Trustmark for Life & Annuities and Achmea Australia for P&C; we launched the newest version of Decision and signed a new deal with a major financial institution, underscoring a year of revenue growth of 63%, with organic growth of 17.4%." said Roni Al Dor, President and CEO of Sapiens International. "Our strategy to grow sales of our P&C and L&P software products, close new deals in our target markets in North America, UK, Europe and APAC, and introduce our new business decision management solution to top tier financial institutions has been successful and is evident in our results, in our solid balance sheet, record high revenue and profit, and strong cash flow from operations."

Mr. Al Dor added, "We believe that the huge insurance industry built on legacy systems will transform over the next decade to new technology and external vendors. We also believe that Sapiens is well positioned to become one of the dominant players in this market over time, and our recruitment of over 100 new employees, investment in R&D and end-to-end coverage of core system solutions for all insurance segments, is focused on solidifying our position as a marketplace leader and further accelerating our growth."

Fourth Quarter Year-over-Year Highlights include:

  • Revenue increased by 27% to $31.2 million, compared to revenue of $24.6 million in the fourth quarter of 2011.
  • Non-GAAP operating profit increased by 52 % to $4 million, compared to $2.6 million in fourth quarter of 2011.
  • Non- GAAP net income attributable to Sapiens' shareholders increased by 35% to 3.7 million, compared to 2.8 million in the fourth quarter of 2011. Net income attributable to Sapiens' shareholders increased by 218% to 3.3 million, compared to 1 million in the fourth quarter of 2011.
  • Non-GAAP operating margin expanded to 12.9%, compared to 10.6% for fourth quarter of 2011.
  • Non-GAAP diluted EPS was $0.09, compared to $0.07 per diluted share for the fourth quarter of 2011.

Full Year 2012 Highlights include:

  • Full year revenues increased by 63% to $113.9 million, compared to $69.9 million in 2011.
  • Non- GAAP operating profit increased by 65 % to $15.2 million, compared to $9.2 million in 2011.
  • Non- GAAP net income attributable to Sapiens' shareholders increased by 57% to $14.7 million, compared to $9.4 million in 2011. Net income attributable to Sapiens' shareholders increased by 100% to $11.8 million, compared to $5.9 million in 2011.
  • Non-GAAP diluted EPS grew up to $0.35, compared to $0.30 per diluted share in 2011.

Balance Sheet and cash flow

  • Total equity by total assets is 73%, compared to 72% as of December 31, 2011.
  • Cash and cash equivalent position of $29.1 million, an increase from $21.5 million as of December 31, 2011, and after completing buy-back of 5% of company's shares for total consideration of $7 million.
  • The Company generated $18.8 million in cash from operation activities, an increase from $8.4 million in 2011.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: Non-GAAP operating income, Adjusted EBITDA, Non-GAAP net income and Non-GAAP net income per share.

Sapiens believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Sapiens' financial condition and results of operations. The Company's management uses these non-GAAP measures to compare the company's performance to that of prior periods for trend analyses, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. These measures are used in monthly financial reports prepared for management and in monthly and quarterly financial reports presented to the Company's board of directors. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Management of the Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. Sapiens urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company's business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables of this release.

    U.S. Dollars in thousands, except per share amounts

                                   For the three months ended       For the year ended
    U.S GAAP basis               31/12/2012          31/12/2011  31/12/2012    31/12/2011
                                 (Unaudited)         (Unaudited) (Unaudited)   (Unaudited)
    Revenues                       31,170               24,586     113,909        69,927
    Operating profit                3,519                  864      12,045         5,624
    Net income attributed to
    Sapiens' shareholders           3,316                1,044      11,780         5,897
    Basic earnings per share         0.08                 0.03        0.29          0.21
    Diluted earnings per share       0.08                 0.02        0.28          0.19

    NonGAAP
    Revenues                       31,134               24,835     114,192        70,301
    Operating profit                4,011                2,636       15,179        9,224
    Net income attributed to
    Sapiens' shareholders           3,716                2,761       14,694        9,377
    Basic earnings per share         0.09                 0.07        0.37          0.33
    Diluted earnings per share       0.09                 0.07        0.35          0.30


About Sapiens

Sapiens International Corporation (NASDAQ and TASE: SPNS) is a global provider of innovative software solutions for the financial services industry. We offer core, end-to-end solutions for the general insurance, property & casualty, life, pension and annuities markets, and business decision management software, globally. We have a track record of over 30 years in delivering superior software solutions to more than 100 financial services organizations. Our team operates through our fully-owned subsidiaries in North America, the United Kingdom, EMEA and Asia Pacific. For more information please visit Sapiens website at http://www.sapiens.com.

Except for historical information contained herein, the matters set forth in this release are forward-looking statements that are dependent on certain risks and uncertainties, including such factors, among others, as market acceptance, market demand, pricing, changing regulatory environment, changing economic conditions, risks in new product and service development, the effect of the Company's accounting policies, specific system configurations and software needs of individual customers and other risk factors detailed in the Company's SEC filings.

    SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    U.S. dollars in thousands (except per share amounts)


                                                    Three months ended        Years ended
                                                        December 31,          December 31,
                                                     2012       2011        2012       2011
                                                  Unaudited  Unaudited   Unaudited  Unaudited

    Revenues                                     $ 31,170   $ 24,586    $ 113,909  $ 69,927
    Cost of revenues                               19,075     15,354       66,459  $ 40,067

    Gross profit                                   12,095      9,232       47,450    29,860
    Operating Expenses:
     Research and development, net                  2,594      1,126       10,169     5,008
     Selling, marketing, general and administrative 5,982      6,517       25,236    18,113
                                                        -        725            -     1,115
    Total operating expenses                        8,576      8,368       35,405    24,236

    Operating income                                3,519        864       12,045     5,624

    Financial income, net                             192         86        (193)     (104)
    Taxes and other expenses (income), net             11      (271)          435     (230)

    Net income                                    $ 3,316    $ 1,049     $ 11,803   $ 5,958

    Attributetable to non-controlling interest          -        $ 5         $ 23      $ 61

    Net income attributable
     to Sapiens shareholders                      $ 3,316    $ 1,044     $ 11,780   $ 5,897

    Basic earnings per share                       $ 0.08     $ 0.03       $ 0.29    $ 0.21

    Diluted earnings per share                     $ 0.08     $ 0.02       $ 0.28    $ 0.19

    Weighted average number of shares
    outstanding used to compute:

    Basic earnings per share                       39,665     39,647       39,953    28,460
    Diluted earnings per share                     41,224     41,955       41,671    30,764


  • Total Common shares as of December 31, 2012 were 38,679,505
    (post buyback of 2,000,000 common shares at November 29, 2012).

    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         Years ended
                                                  2012        2011        2012       2011
    GAAP revenues                              $ 31,170    $ 24,586   $ 113,909   $ 69,927
    Valuation adjustment on acquired
     deferred revenue and long term contract       (36)         249         283        374
    Non-GAAP revenues                          $ 31,134    $ 24,835   $ 114,192   $ 70,301

    GAAP gross profit                          $ 12,095     $ 9,238    $ 47,450   $ 29,860
    Revenues adjustment                            (36)         249         283        374
    Amortization of capitalized software          1,191       1,227       3,757      4,639
    Amortization of other intangible assets         212         275         843        418
    Non-GAAP gross profit                      $ 13,462    $ 10,989    $ 52,333   $ 35,291

    GAAP operating income                       $ 3,519       $ 864    $ 12,045    $ 5,624
    Gross profit adjustments                      1,367       1,751       4,883      5,431
    Capitalization of software development        (819)     (1,287)     (3,464)    (4,768)
    Amortization of other intangible assets       (282)         479       1,023      1,487
    Stock-based compensation                        226         104         692        335
                                                      -         725           -      1,115
    Non-GAAP operating income                   $ 4,011     $ 2,636    $ 15,179    $ 9,224

    GAAP net income attributable
     to Sapiens shareholders                    $ 3,316     $ 1,044    $ 11,780    $ 5,897
    Operating income adjustments                    492       1,772       3,134      3,600
    Non-controlling interest in
     amortization intangible assets                (22)        (35)        (88)       (35)
    Deferred taxes related to acquisition          (70)        (20)       (132)       (85)
    Non-GAAP net income attributable
     to Sapiens shareholders                    $ 3,716     $ 2,761    $ 14,694    $ 9,377

    Non-GAAP basic earnings per share            $ 0.09      $ 0.07      $ 0.37     $ 0.33

    Non-GAAP diluted earnings per share          $ 0.09      $ 0.07      $ 0.35     $ 0.30




    SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    U.S. dollars in thousands


                                                          December 31,   December 31,
                                                             2012           2011
                                                          Unaudited      Unaudited

                   ASSETS

    CURRENT ASSETS:
                   Cash and cash equivalents               $ 29,050       $ 21,460
                   Restricted cash                              536            456
                   Trade receivables, net                    16,299         14,484
                   Other receivables and prepaid expenses     1,785          1,823
                   Deferred Taxes                             2,750          1,406
                   Total current assets                      50,420         39,629

    LONG-TERM ASSETS:
                   Property and equipment, net                2,243          1,814
                   Severance pay fund                        10,306         10,172
                   Other intangible assets, net              29,212         31,592
                   Other long-term assets                     2,316          3,546
                   Goodwill                                  68,087         66,715

                   Total long-term assets                   112,164        113,839

    TOTAL ASSETS                                          $ 162,584      $ 153,468

                   LIABILITIES AND EQUITY

    CURRENT LIABILITIES:
                   Trade payables                           $ 4,382        $ 2,559
                   Accrued expenses and other liabilities    20,014         19,731
                   Deferred revenue                           7,301          9,603

                   Total current liabilities                 31,697         31,893

    LONG-TERM LIABILITIES:
                   Other long-term liabilities                  803            617
                   Accrued severance pay                     11,645         10,711

                   Total long-term liabilities               12,448         11,328

    EQUITY                                                  118,439        110,247

    TOTAL LIABILITIES AND EQUITY                          $ 162,584      $ 153,468


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    U.S. dollars in thousands


                                                                      December 31,
                                                                    2012         2011
    Cash flows from operating activities:
    Net income                                                    $ 11,803     $ 5,958
    Reconciliation of net income to
     net cash provided by operating activities:
      Depreciation and amortization                                  7,392       6,748
      Stock-based compensation                                         690         336
      Compensation associated with acquisition of subsidiary           128         755

    Net changes in operating assets and
     liabilities, net of amount acquired:
      Trade receivables, net                                       (1,649)     (3,333)
      Other operating assets                                           152       (480)
      Deferred tax assets, net                                       (194)         222
      Trade payables                                                 1,746     (1,279)
      Other operating liabilities                                      334       (804)
      Deferred revenues and customer advances                      (2,372)       (408)
      Accrued severance pay, net                                       762         698

    Net cash provided by operating activities                       18,792       8,413

    Cash flows from investing activities:

      Purchase of property and equipment                           (1,327)       (482)
      Capitalized software development costs                       (3,464)     (4,735)
      Issuance expenses relating to FIS and IDIT acquisition             -       (102)
      Earn-out payment with respect to Harcase acquisition               -       (952)
      Payments for business acquisitions, net of cash acquired           -       3,741
      Restricted cash                                                 (68)           -

    Net cash used in investing activities                          (4,859)     (2,530)

    Cash flows from financing activities:

      Proceeds from employee stock options exercised                 1,199         207
      Repurchase of shares                                         (7,000)           -
      Dividend to non-controlling interests                          (182)       (134)

    Net cash provided by (used in) financing activities            (5,983)          73

    Effect of exchange rate changes on cash                          (360)       (678)

    Increase in cash and cash equivalents                            7,590       5,278
    Cash and cash equivalents at beginning of year                  21,460      16,182

    Cash and cash equivalents at end of year                      $ 29,050    $ 21,460


Contact:
James Carbonara, Regional Vice President
Hayden IR
Office: +1-(646)-755-7412
e-Mail: James@haydenir.com

Moshe Shamir, VP Marketing
Sapiens International
Tel: +972-3-6250951
e-Mail: moshe.shamir@sapiens.com

SOURCE Sapiens International Corporation



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