Sapiens Announces Growth in Revenue and Net Profits for Q3 2010

CARY, North Carolina, November 8, 2010 /PRNewswire-FirstCall/ -- Sapiens International Corporation N.V. (NASDAQ and TASE: SPNS), a global provider of innovative software solutions for the insurance industry and a member of the Formula Group (NASDAQ: FORTY and TASE: FORT), today announced its results for the third quarter of 2010.

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Financial Highlights for the Third Quarter and Year to Date Results as of September 30, 2010

    - Revenues for the third quarter of 2010 reached $13.1 million.
      Revenues for the first 9 months of 2010 reached $37.6 million, 11%
      growth compared to first 9 months of 2009

    - Operating profit for the third quarter of 2010 reached $1.6 million.
      Operating profit for the first 9 months of 2010 reached $4.8 million,
      25% growth compared to first 9 months of 2009

    - On a non-GAAP basis, net income for the third quarter of 2010 reached
      $1.9 million. On a non-GAAP basis, net income for the first 9 months of
      2010 reached $5.5 million, 57% growth compared to first 9 months of
      2009.

For the third quarter ended September 30, 2010, total revenues were $13.1 million, with net income of $1.5 million, representing 11% of the revenue, or $0.07 per fully diluted share. This compares with revenues of $12.95 million and net income of $1.0 million, representing 8% of the revenue, or $0.05 per fully diluted share, for the same period in 2009.

On a Non GAAP basis, total net income was $1.9 million for the third quarter, or $0.08 per fully diluted share, a significant increase compared to $1.2 million or 0.06 per fully diluted share for the same period in 2009.

For the nine-month period ended September 30, 2010, total revenues were $37.6 million, with net income of $4.4 million, or $0.20 per fully diluted share. This compares with revenues of $33.9 million and net income of $2.9 million, or $0.14 per fully diluted share, for the same period in 2009.

Total cash and cash equivalents as of September 30, 2010 totaled $12.3 million, increased by $1.9 million during the quarter. Total shareholders' equity reached $32.5 million which represents 61% of the total balance sheet.

Roni Al-Dor, President and CEO of Sapiens International Corporation commented, "We're happy to announce a 16th consecutive quarter of operational profit. We experienced positive global momentum across the board, in both product lines and territories. We have extended our sales and marketing teams in North America and Europe, and continued R&D investments to maintain our innovation leadership. At all times, we remain dedicated to maintain top line growth for bottom line profits."

Mr. Al-Dor continued, "The strategic decision to strengthen our portfolio with the acquisition of Harcase and integration of the RapidSure Policy Administration product has proven to be a successful move. We have recently announced the going live of one of our major clients, Philadelphia Insurance companies that successfully deployed 5 lines of business in just 6 months. We will continue to lead by innovation, and grow our business organically and non-organically."

Reconciliation between U.S. GAAP and Non-GAAP results is summarized in the following table. For a complete reconciliation, please refer to the tables at the end of this release.

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

                         For the three months ended For the nine months ended
    U.S GAAP basis           09/30/2010  09/30/2009   09/30/2010  09/30/2009
                             (Unaudited) (Unaudited)  (Unaudited) (Unaudited)
    Revenues                     13,148      12,951       37,568      33,928
    Operating profit              1,592       1,489        4,773       3,829
    Net income                    1,505       1,035        4,446       2,939
    Basic earnings per share       0.07        0.05         0.20        0.14
    Diluted earnings per share     0.07        0.05         0.20        0.14

    NonGAAP
    Revenues                     13,148      12,951       37,568      33,928
    Operating profit              2,038       1,680        5,898       4,413
    Net income                    1,931       1,226        5,536       3,523
    Basic earnings per share       0.09        0.06         0.25        0.16
    Diluted earnings per share     0.08        0.06         0.25        0.16

U.S. GAAP results include amortization of capitalized software developments, capitalization of software development costs, and stock-based compensation expenses.

Comment Regarding Non-GAAP

Sapiens' management believes that the presentation of non-GAAP measures can enhance the understanding of the company's ongoing economic performance, and provides useful information to investors regarding financial and business trends relating to the company's financial condition and results of operations. Sapiens therefore uses internally the non-GAAP information to evaluate and manage the Company's operations.

These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Sapiens believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Sapiens' results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Sapiens' results of operations in conjunction with the corresponding GAAP measures.

Please refer to the Reconciliation of GAAP to Non-GAAP Results at the end of this release.

About Sapiens International

Sapiens International Corporation N.V. is a leading global provider of business solutions for the insurance industry, helping modernize business processes and enabling insurance organizations to adapt quickly to change. Sapiens' innovative solutions are widely recognized for their ability to cost-effectively align IT with the business demands for speed, flexibility and efficiency. Sapiens operates through its subsidiaries in North America, the United Kingdom, EMEA and Asia Pacific. For more information, please visit 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.
                    Condensed Consolidated Balance Sheets
                         (U.S. Dollars in thousands)

                                   9/30/2010          12/31/2009
                                  (Unaudited)           (Audited)
    Assets

      Cash and cash equivalents     $ 12,328            $ 11,172
      Trade receivables, net           7,337               5,132
      Other current assets             2,513               3,008
      Total current assets            22,178              19,312

      Property and equipment, net        962                 897
      Other assets, net               30,161              25,565

    Total assets                    $ 53,301            $ 45,774

    Liabilities and equity

      Trade payables                $  1,086               1,197
      Other liabilities and
      accrued expenses                11,426              10,199
      Deferred revenues                6,956               6,991
      Total current liabilities       19,468              18,387

      Long-term debt and other
      long-term liabilities            1,360                 972
      Equity(*)                       32,473              26,415

    Total liabilities and equity    $ 53,301            $ 45,774

    (*) Sapiens issued and outstanding share capital as of September 30,
        2010 are 22,409,050 and 22,058,256, respectively.


                      SAPIENS INTERNATIONAL CORPORATION N.V.
                  Condensed Consolidated Statements of Operations
               (U.S. Dollars in thousands, except per share amounts)

                       For the three months ended  For the nine months ended
                          09/30/2010   09/30/2009    09/30/2010   09/30/2009
                           Unaudited    Unaudited     Unaudited    Unaudited

    Revenues                $ 13,148     $ 12,951      $ 37,568     $ 33,928

    Cost of revenues         $ 7,773      $ 7,576      $ 21,745     $ 18,762

    Gross Profit               5,375        5,375        15,823       15,166

    Operating expenses
    Research and development,
    net                        $ 842        $ 758       $ 2,314      $ 2,206
    Selling, marketing,
    general and
    administrative           $ 2,941      $ 3,128       $ 8,736      $ 9,131

    Operating Profit           1,592        1,489         4,773        3,829

    Financial expenses, net     $ 35        $ 385          $ 57        $ 748
    Other expenses, net         $ 52         $ 69         $ 294        $ 142

    Net Income               $ 1,505      $ 1,035       $ 4,422      $ 2,939

    Attributable to
    non-controlling interest       -            -         $ (24)         $ -

    Net income attributable
    to Sapiens               $ 1,505      $ 1,035       $ 4,446      $ 2,939

    Earnings per share
    Basic                     $ 0.07       $ 0.05        $ 0.20       $ 0.14
    Diluted                   $ 0.07       $ 0.05        $ 0.20       $ 0.14

    Weighted average number
    of shares used to
    computation of earnings
    per share

    Basic                     22,058       21,591        21,862       21,591
    Diluted                   22,846       21,591        22,427       21,591



                       SAPIENS INTERNATIONAL CORPORATION N.V.
                     Reconciliation of GAAP to Non-GAAP results
                (U.S. Dollars in thousands, except per share amounts)

                       For the three months ended         For the year ended
                          09/30/2010   09/30/2009    09/30/2010   09/30/2009
                          (Unaudited)  (Unaudited)   (Unaudited)  (Unaudited)

    GAAP operating profit      1,592        1,489         4,773        3,829
    Amortization of
    intangibles assets and
    compensation related
    to acquisition               154            -           257            -
    Amortization of capitalized
    software                   1,510        1,203         4,306        3,271
    Capitalization of
    software development      (1,357)      (1,067)       (3,765)      (2,841)
    Stock-based compensation     139           55           327          154
    Total adjustments to GAAP    446          191         1,125          584
    Non-GAAP operating profit  2,038        1,680         5,898        4,413

    GAAP net income            1,505        1,035         4,446        2,939
    Total adjustments to GAAP
    as above                     446          191         1,125          584
    Deferred taxes related
    to acquisition               (20)           -           (35)           -
    Non-GAAP net income        1,931        1,226         5,536        3,523

    Non-GAAP basic earnings
    per share                   0.09         0.06          0.25         0.16

    Non-GAAP diluted earnings
    per share                   0.08         0.06          0.25         0.16

    Weighted average number
    of shares used to
    computation of earnings
    per share
    Basic                     22,058       21,591        21,862       21,591

    Diluted                   22,846       21,591        22,427       21,591



    For More Information

    Roni Giladi
    Chief Financial Officer
    Sapiens International
    Tel: +972-8-938-2721
    E-mail: [email protected]

    Roni Al-Dor
    Chief Executive Officer
    Sapiens International
    Tel: +972-8-938-2721
    E-mail: [email protected]

SOURCE Sapiens Technologies