Sapiens Reports 16.5% Revenue Growth in Q4 2015

Full-Year Revenue Growth of 13.9% and Diluted Earnings Per Share Growth of 36.2%

Feb 17, 2016, 04:44 ET from Sapiens International Corporation

HOLON, Israel, Feb. 17, 2016 /PRNewswire/ -- Sapiens International Corporation, (NASDAQ and TASE: SPNS), a leading global provider of software solutions for the insurance industry, with an emerging focus on the broader financial services sector, and a member of the Formula Group (NASDAQ: FORTY and TASE: FORT), today announced its financial results for the fourth quarter and year ended December 31, 2015.

Fourth Quarter Highlights:

  • Non-GAAP revenue of $48.7 million, up 16.5% compared to $41.8 million in the fourth quarter of 2014.
  • Non-GAAP operating profit increased by 48.4% and totaled $7.4 million (15.1% operating margin), compared to $5.0 million (11.9% operating margin) in the fourth quarter of 2014.
  • Non-GAAP net income attributable to Sapiens' shareholders totaled $6.3 million or $0.13 per diluted share, an increase of 28.0% compared to $4.9 million or $0.10 per diluted share in the fourth quarter last year.
  • Cash, cash equivalents and securities investments as of December 31, 2015 was $94.0 million and the company has no debt.

Full Year Financial Highlights:

  • Non-GAAP revenue increased by 13.9% to $179.3 million from $157.5 million in the same period of 2014. Excluding the impact of foreign currency exchange rates, revenue growth exceeded 20%.
  • Non-GAAP operating profit was $26.5 million (14.8% operating margin), compared to $17.0 million (10.8% operating margin) in 2014, an increase of 56.0%.
  • Non-GAAP net income attributable to Sapiens' shareholders reached $22.1 million, or $0.45 per diluted share compared to $16.0 million, or $0.33 per diluted share in the year ago period, an increase of 36.2%.

"We again delivered double-digit growth and improved performance across all of our offerings, from all geographies, and from both new and existing customers due to continued strong demand for our award-winning products and services," said Roni Al-Dor, President and CEO of Sapiens. "Our efforts to more efficiently leverage our operations and improve our operating margins enabled us to grow our bottom line, and we are well positioned to continue our revenue and profitability growth into 2016 and beyond."

Mr. Al-Dor continued. "Our strategic acquisitions of IBEXI in India and Insseco in Poland are clearly paying off, allowing us to increase our presence and support customers through new regional delivery and development centers in those markets. We expect to continue our acquisition strategy in 2016 to expand our geographic footprint and to enhance our product offerings. With new recent business wins across all our product lines, including our recently announced $30 million business expansion with a leading North American insurance company, we are confident for continued double-digit growth in 2016."

Mr. Al-Dor concluded: "Longer term, our expanded global presence and increasingly comprehensive suite of solutions will drive continued growth, and we remain enthusiastic about the near-term and long-term prospects for our markets and our strategic position as an innovative provider of advanced, industry-leading software solutions."

2016 Business Outlook

Management indicated it expects 2016 full year revenues of $207 to $211 million, a growth of 15.4%-17.7%.

The company also expects full-year 2016 Non-GAAP operating margins in the range of 15.0% - 15.5%.

Quarterly Results Conference Call

Management will host a conference call and webcast today, February 17, at 9:30 a.m. Eastern Time (4:30 p.m. in Israel) to review and discuss Sapiens' results. Please call the following numbers (at least 10 minutes before the scheduled time) to participate:

North America (toll-free): + 1-866-860-9642; International: +972-3-918-0664; UK: 0-800-917-9141

The live webcast of the call can be viewed on Sapiens' website at: http://www.sapiens.com/investors/presentations-and-webcast/

If you are unable to join live, a replay of the call will be accessible until February 27, 2016, as follows:

North America: 1-888-782-4291; International: +972-3-925-5901

A recorded version of the webcast will also be available via the Sapiens website, for three months at the same location.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: Non-GAAP revenue, Non-GAAP gross profit, Non-GAAP operating income, Non-GAAP net income attributed to Sapiens shareholders, Non-GAAP basic and diluted earnings 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 financial reports prepared for management and in 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.

In addition, the Company adjusted revenues and expenses, recorded under US GAAP, of pre-acquisition date in respect of acquired business from its ultimate parent company. As this transaction is between companies under common control, under US GAAP, it was accounted for under the pooling of interest method. For non-GAAP measurement purposes, the Company excludes the pre-acquisition date revenues and expenses.

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.

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, compensation expenses related to acquisition, pre-acquisition revenues and expenses accounted under pooling of interest method, provision for income taxes and other income (expenses). These amounts are often excluded by other companies to help investors understand the operational performance of their business. The Company uses Adjusted EBITDA as a measurement of its operating performance because it assists in comparing the operating performance on a consistent basis by removing the impact of certain non-cash and non-operating items. Adjusted EBITDA reflect an additional way of viewing aspects of the operations that the Company believes, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures provide a more complete understanding of factors and trends affecting its business.

About Sapiens

Sapiens International Corporation (NASDAQ and TASE: SPNS) is a leading global provider of software solutions for the insurance industry, with an emerging focus on the broader financial services sector. We offer core, end-to-end solutions to the global general insurance, property and casualty, life, pension and annuities, and retirement markets, as well as business decision management software. We have a track record of over 30 years in delivering superior software solutions to more than 190 financial services organizations. The Sapiens team of approximately 1,600 professionals operates through our fully-owned subsidiaries in North America, the United Kingdom, EMEA and Asia Pacific. For more information: www.sapiens.com.

Forward Looking Statement

Some of the statements in this press release 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, please 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, 2014, and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission.

Investors and Media Contact: Yaffa Cohen-Ifrah Chief Marketing Officer and Head of Corporate Communications Sapiens International US Mobile: +1 201-250-9414 Mobile: +972 54-9099039 Email: yaffa.cohen-ifrah@sapiens.com

 

Summary of Non-GAAP financial Information

U.S. dollars in thousands (except per share amounts)

Three months ended

Year ended

December 31,

December 31,

2015

2014

2015

2014

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Revenues

48,674

100%

41,773

100%

179,263

100%

157,450

100%

Gross Profit

21,515

44.2%

17,478

41.8%

78,472

43.8%

64,193

40.8%

Operating profit

7,356

15.1%

4,958

11.9%

26,547

14.8%

17,014

10.8%

Net income to shareholders

6,332

13.0%

4,948

11.8%

22,105

12.3%

16,008

10.2%

Adjusted EBITDA

7,928

16.3%

5,363

12.8%

28,499

15.9%

18,596

11.8%

Basic earnings per share

0.13

0.10

0.46

0.34

Diluted earnings per share

0.13

0.10

0.45

0.33

 

Adjusted EBITDA Calculation

U.S. dollars in thousands

Three months ended

Year ended

 December 31,

 December 31,

2015

2014

2015

2014

GAAP operating profit

6,796

4,550

24,350

14,906

Non GAAP adjustments:

Amortization of capitalized software

1,323

1,194

4,875

4,926

Amortization of other intangible assets

392

544

2,106

2,209

Capitalization of software development

(1,641)

(1,556)

(6,032)

(6,094)

Compensation related to acquisition

51

-

270

-

Stock-based compensation

435

226

1,349

1,067

Adjustments of pre-acquisition revenues and expenses accounted under pooling of interest method

-

-

(371)

-

Non GAAP operating profit

7,356

4,958

26,547

17,014

Depreciation

572

405

1,952

1,582

Adjusted EBITDA

7,928

5,363

28,499

18,596

 

Non-GAAP revenues by category

U.S. dollars in thousands

Three months ended December 31, 2015

Year ended  December 31, 2015

Revenues

Percentage

Revenues

Percentage

License

2,820

5.8%

12,300

6.9%

Services and Maintenance

45,854

94.2%

166,963

93.1%

Total

48,674

100.0%

179,263

100.0%

 

Non-GAAP revenues by geographic breakdown

U.S. dollars in thousands

Three months ended

December 31, 2015

Year ended

 December 31, 2015

Revenues

Percentage

Revenues

Percentage

North America

16,767

34.4%

61,332

34.2%

Europe

26,439

54.3%

97,419

54.3%

APAC

5,468

11.3%

20,512

11.5%

Total

48,674

100%

179,263

100%

               

         

 

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

  Year ended

 December 31,

 December 31,

2015

2014

2015*

2014

 (unaudited)

 (unaudited)

 (unaudited)

 (unaudited)

 Revenue

48,674

41,773

185,636

157,450

 Cost of revenue

28,633

25,731

111,192

99,095

 Gross profit

20,041

16,042

74,444

58,355

 Operating Expenses:

 Research and development, net

2,747

2,752

10, 235

11,352

 Selling, marketing, general and administrative

10,498

8,740

39,859

32,097

 Total operating expenses

13,245

11,492

50,094

43,449

 Operating income

6,796

4,550

24,350

14,906

 Financial expenses (income), net

(402)

26

(163)

(124)

 Taxes and other expenses (income), net

1,192

(88)

4,213

454

 Net income

6,006

4,612

20,300

14,576

 Attributable to non-controlling interest

134

(12)

284

113

 Net income attributable to Sapiens' shareholders

5,872

4,624

20,016

14,463

 Basic earnings per share

0.12

0.10

0.42

0.31

 Diluted earnings per share

0.12

0.09

0.41

0.30

 Weighted average number of shares outstanding used to compute basic earnings per share (in thousands)

48,758

47,655

48,121

47,210

 Weighted average number of shares outstanding used to compute diluted earnings per share (in thousands)

49,536

49,057

49,327

48,637

* Including consolidation of Insseco commencing December 31, 2014.

 

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

  Year ended

 December 31,

 December 31,

2015

2014

2015*

2014

 GAAP revenue

48,674

41,773

185,636

157,450

 Adjustments of pre-acquisition revenue accounted   under pooling of interest method

-

-

(6,373)

-

 Non-GAAP revenue

48,674

41,773

179,263

157,450

 GAAP gross profit

20,041

16,042

74,444

58,355

 Revenue adjustment

-

-

(6,373)

-

 Amortization of capitalized software

1,323

1,194

4,875

4,926

 Amortization of other intangible assets

151

242

794

912

 Adjustments of pre-acquisition cost of revenue   accounted under pooling of interest method

-

-

4,732

-

 Non-GAAP gross profit

21,515

17,478

78,472

64,193

 GAAP operating income

6,796

4,550

24,350

14,906

 Gross profit adjustments

1,474

1,436

4,028

5,838

 Capitalization of software development

(1,641)

(1,556)

(6,032)

(6,094)

 Amortization of other intangible assets

241

302

1,312

1,297

 Stock-based compensation

435

226

1,349

1,067

 Compensation related to acquisition

51

-

270

-

 Adjustments of pre-acquisition operating expenses   accounted under pooling of interest method

-

-

1,270

-

 Non-GAAP operating income

7,356

4,958

26,547

17,014

 GAAP net income attributable to Sapiens' shareholders

5,872

4,624

20,016

14,463

 Operating income adjustments

560

408

2,197

2,108

 Adjustment to redeemable non-controlling interest

151

-

224

-

 Adjustments of pre-acquisition financial and tax   expenses accounted under pooling of interest method

-

-

50

-

 Other

(251)

(84)

(382)

(563)

 Non-GAAP net income attributable to Sapiens' shareholders

6,332

4,948

22,105

16,008

 Non-GAAP basic earnings per share 

0.13

0.10

0.46

0.34

 Non-GAAP diluted earnings per share

0.13

0.10

0.45

0.33

Weighted average number of shares outstanding used   to compute basic earnings per share (in thousands)

48,758

47,655

48,121

47,210

Weighted average number of shares outstanding used   to compute diluted earnings per share (in thousands)

49,536

49,057

49,327

48,637

 * Including consolidation of Insseco commencing the acquisition date, August 18, 2015.

 

 

SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. Dollars in thousands

December 31,

December 31,

2015

2014*

 (unaudited)

 (unaudited)

 ASSETS

 CURRENT ASSETS:

Cash and cash equivalents

54,351

47,400

Trade receivables, net

29,761

31,832

Other receivables and prepaid expenses

5,455

3,964

Marketable Securities

8,776

-

 Total current assets

98,343

83,196

 LONG-TERM ASSETS:

Marketable Securities

30,875

33,098

Property and equipment, net

5,675

5,011

Severance pay fund

5,551

10,735

Other intangible assets, net

27,540

27,905

Other long-term assets

4,252

5,567

Goodwill

70,035

67,698

 Total long-term assets

143,928

150,014

 TOTAL ASSETS

242,271

233,210

 LIABILITIES AND EQUITY

 CURRENT LIABILITIES:

 Trade payables

4,721

3,310

 Accrued expenses and other liabilities

32,012

26,951

 Deferred revenue

10,268

9,272

 Total current liabilities

47,001

39,533

 LONG-TERM LIABILITIES:

 Other long-term liabilities

6,414

3,217

 Accrued severance pay

6,662

12,008

 Total long-term liabilities

13,076

15,225

REDEEMABLE NON-CONTROLLING INTEREST

385

159

 EQUITY

181,809

178,293

 TOTAL LIABILITIES AND EQUITY

242,271

233,210

* December 31, 2014 Balance Sheet was revised to reflect the acquisition of Insseco, in accordance with the pooling of interest method.

 

 

 

SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOW 

U.S. dollars in thousands

For the year ended

December 31

2015

2014

(unaudited)

(unaudited)

Cash flows from operating activities:

Net income

20,300

14,576

Reconciliation of net income to net cash provided by operating activities:

Depreciation  and amortization

9,625

8,717

Amortization of premium and accrued interest on marketable securities

(453)

(225)

Stock-based compensation related to options issued to employees

1,349

1,067

Decrease (increase) in trade receivables

1,893

(6,637)

Deferred tax assets

2,169

(1,020)

Decrease (increase) in other operating assets

(1,229)

127

Increase (decrease)  in trade payables

1,511

(3,297)

Increase in other operating liabilities

4,134

8,469

Increase (decrease)  in deferred revenues

1,300

(223)

Severance pay

(159)

7

Net cash provided by operating activities

40,440

21,561

Cash flows from investing activities:

Purchase of property and equipment

(2,815)

(1,468)

Purchase of marketable securities

(7,678)

(34,906)

Proceeds from sales of marketable securities

1,499

1,543

Payments for business acquisition, net of cash acquired

(2,934)

(2,064)

Capitalized software development costs

(6,032)

(6,094)

Decrease (increase) in restricted Cash

(893)

239

Net cash used in investing activities

(18,853)

(42,750)

Cash flows from financing activities:

Distribution of dividend

(7,186)

-

Proceeds from employee stock options exercised

1,568

1,569

      Payment to shareholders in respect of acquisition

(8,482)

-

      Dividend to non-controlling interest

(77)

(106)

Net cash provided by (used in) financing activities

(14,177)

1,463

Effect of exchange rate changes on cash and cash equivalents

(459)

(3,187)

Increase (decrease) in cash and cash equivalents

6,951

(22,913)

Cash and cash equivalents at the beginning of period

47,400

70,313

Cash and cash equivalents at the end of period

54,351

47,400

 

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SOURCE Sapiens International Corporation



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