Sapiens Reports Double-Digit Revenue Growth and Improved Profitability

Raises 2015 Guidance for Full Year Revenue and Operating Margin

61.0% Year-Over-Year Increase in Non-GAAP Quarterly Operating Profit

Aug 05, 2015, 03:04 ET from Sapiens International Corporation

HOLON, Israel, Aug. 5, 2015 /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: FORTY), today announced its financial results for the second quarter ended June 30, 2015.

Second Quarter Highlights:

  • Non-GAAP revenue of $43.4 million, up 12.4% compared to $38.7 million in the second quarter of 2014. Excluding the impact of foreign currency exchange rates, revenue growth was 22.3%.
  • Non-GAAP operating profit increase by 61.0% and totaled $6.4 million or 14.8% operating margin, compared to $4.0 million, or 10.4% operating margin, in the second quarter of 2014.
  • Non-GAAP net income attributable to Sapiens' shareholders totaled $5.2 million or $0.11 per diluted share increase of 45.2% compared to $3.6 million, or $0.07 per diluted share in the second quarter last year.
  • Cash, cash equivalents and securities investments as of June 30, 2015 was approximately $89.8 million, the company has no debt.
  • The Company increased full-year 2015 guidance. Management now expects revenues to be in a range of $176-$180 million, and operating margin to be in a range of 14%-14.5%

"We are pleased to report another strong quarter," said Roni Al-Dor, President and CEO of Sapiens. "Solid growth and performance across all of our offerings, from all geographies, enabled us to deliver another quarter of double-digit revenue growth. We are seeing the benefits of our business model as operating margins expanded as a result of improvements in our base business that have led to a more efficient cost structure. We believe our first half results and our expectations for the second half of 2015 affirm our growth strategy and provide us with additional clarity to raise our guidance for the full year."

Mr. Al-Dor continued, "The investments we have made in products and sales have strengthened our competitive position and are driving customer wins around the world. We have developed a strong line up of industry leading technology solutions that are clearly resonating with both new and existing customers, resulting in new wins during the quarter. Our recent acquisition of Insseco, which is not reflected in the results of the second quarter, opens a presence for us in Poland and expands the company's solid footprint in Europe. In addition, Sapiens expects to establish a regional delivery and development center in Poland to further support our global operations."

Increased 2015 Outlook

Mr. Al-Dor added, "Based on the strength of our first half results and our outlook for the remainder of the year, we are raising our 2015 full year guidance. Acquisitions and recent contract wins are driving higher top-line growth while higher margin revenues and our on-going pursuit of operational efficiencies are having a positive impact on our operating margins."

  • Full year 2015 revenue in the range of $176-$180 million, up from previous guidance of $174-$178 million, representing growth of approximately 20% over the prior year, on a constant currency basis.
  • Operating margins in the range of 14%-14.5%, up from previous guidance of 12%-13%.

Quarterly Results Conference Call

Sapiens management will host its earnings conference call today, August 5 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): + 1-888-281-1167; International: +972-3-918-0644; UK: 0-800-917-5108

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 August 12, 2015, as follows

North America: 1-888-295-2634; International: +972-3-925-5918

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.

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, 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 150 financial services organizations. The Sapiens team of approximately 1,300 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

Six months ended

June 30,

June 30,

2015

2014

2015

2014

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Revenues

43,436

100%

38,651

100%

84,450

100%

75,279

100%

Gross Profit

18,568

42.7%

15,675

40.6%

36,246

42.9%

30,323

40.3%

Operating profit

6,441

14.8%

4,001

10.4%

12,229

14.5%

7,653

10.2%

Net income to shareholders

5,230

12.0%

3,601

9.3%

9,957

11.8%

6,976

9.3%

Adjusted EBITDA

6,900

15.9%

4,417

11.4%

13,078

15.5%

8,437

11.2%

Basic earnings per share

0.11

0.08

0.21

0.15

Diluted earnings per share

0.11

0.07

0.20

0.14

 

 

Adjusted EBITDA Calculation U.S. dollars in thousands

Three months ended

Six month ended

 June 30,

 June 30 ,

2015

2014

2015

2014

GAAP operating profit

5,890

3,383

10,976

6,557

Non GAAP adjustments:

Amortization of capitalized software

1,135

1,459

2,350

2,506

Amortization of other intangible assets

608

557

1,129

1,118

Capitalization of software development

(1,553)

(1,686)

(2,865)

(3,087)

Compensation related to acquisition

71

-

71

-

Stock-based compensation

290

288

568

559

Non GAAP operating profit

6,441

4,001

12,229

7,653

Depreciation

459

416

849

784

Adjusted EBITDA

6,900

4,417

13,078

8,437

 

 

Revenues by category U.S. dollars in thousands

Three months ended June 30, 2015

Six month ended  June 30, 2015

Revenues

Percentage

Revenues

Percentage

License

2,615

6.0%

5,872

7.0%

Services and Maintenance

40,821

94.0%

78,578

93.0%

Total

43,436

100.0%

84,450

100.0%

Revenues by geographic breakdown U.S. dollars in thousands

Three months ended

June 30, 2015

Six months ended

 June 30, 2015

Revenues

Percentage

Revenues

Percentage

North America

14,294

32.9%

27,994

33.1%

Europe

23,743

54.7%

46,896

55.6%

APAC

5,399

12.4%

9,560

11.3%

Total

43,436

100%

84,450

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

  Six months ended

 June 30,

 June 30,

2015

2014

2015

2014

 (unaudited)

 (unaudited)

 (unaudited)

 (unaudited)

 Revenue

43,436

38,651

84,450

75,279

 Cost of revenue

26,218

24,653

50,963

47,904

 Gross profit

17,218

13,998

33,487

27,375

 Operating Expenses:

 Research and development, net

2,385

2,855

5,006

5,744

 Selling, marketing, general and administrative

8,943

7,760

17,505

15,074

 Total operating expenses

11,328

10,615

22,511

20,818

 Operating income

5,890

3,383

10,976

6,557

 Financial income, net

14

(11)

344

(57)

 Taxes and other expenses, net

1,189

283

1,728

462

 Net income

4,687

3,111

8,904

6,152

 Attributable to non-controlling interest

(19)

6

39

25

 Net income attributable to Sapiens' shareholders

4,706

3,105

8,865

6,127

 Basic earnings per share

0.10

0.07

0.19

0.13

 Diluted earnings per share

0.10

0.06

0.18

0.13

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

47,910

47,177

47,809

46,797

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

49,213

48,759

49,098

48,362

 

 

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

  Six months ended

 June 30,

June 30,

2015

2014

2015

2014

 Non-GAAP revenue

43,436

38,651

84,450

75,279

 GAAP gross profit

17,218

13,998

33,487

27,375

 Amortization of capitalized software

1,135

1,459

2,350

2,506

 Amortization of other intangible assets

215

218

409

442

 Non-GAAP gross profit

18,568

15,675

36,246

30,323

 GAAP operating income

5,890

3,383

10,976

 

6,557

 Gross profit adjustments

1,350

1,677

2,759

2,948

 Capitalization of software development

(1,553)

(1,686)

(2,865)

(3,087)

 Amortization of other intangible assets

393

339

720

 

676

Compensation related to acquisition

 

71

 

-

 

71

 

-

 Stock-based compensation

290

288

 

568

559

 Non-GAAP operating income

6,441

4,001

12,229

7,653

 GAAP net income attributable to Sapiens' shareholders

4,706

3,105

8,865

 

6,127

 Operating income adjustments

551

618

1,253

1,096

 Other

(27)

(122)

(161)

(247)

 Non-GAAP net income attributable to Sapiens' shareholders

5,230

3,601

9,957

6,976

 Non-GAAP basic earnings per share 

0.11

0.08

0.21

0.15

 Non-GAAP diluted earnings per share

0.11

0.07

0.20

0.14

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

47,910

47,177

47,809

46,797

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

49,213

48,759

49,098

48,362

 

 

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

June 30,

December 31,

2015

2014

(unaudited)

 (unaudited)

 ASSETS

 CURRENT ASSETS:

Cash and cash equivalents

51,053

47,400

Trade receivables, net

27,384

28,540

 Other receivables and prepaid expenses

5,849

3,962

 Deferred Taxes

2,240

2,319

 Total current assets

86,526

82,221

 LONG-TERM ASSETS:

Marketable Securities

38,780

33,098

Property and equipment, net

5,293

4,763

Severance pay fund

6,493

10,735

Other intangible assets, net

28,568

27,060

Other long-term assets

2,445

3,248

Goodwill

71,351

67,698

 Total long-term assets

152,930

146,602

 TOTAL ASSETS

239,456

228,823

 

 LIABILITIES AND EQUITY

 CURRENT LIABILITIES:

 Trade payables

4,210

2,952

 Accrued expenses and other liabilities

30,471

25,159

Deferred revenue

10,722

9,272

 Total current liabilities

45,403

37,383

 LONG-TERM LIABILITIES:

 Other long-term liabilities

5,251

3,105

 Accrued severance pay

7,458

11,980

 Total long-term liabilities

12,709

15,085

REDEEMABLE NON-CONTROLLING INTEREST

242

159

 EQUITY

181,102

176,196

 TOTAL LIABILITIES AND EQUITY

239,456

228,823

 

 

SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOW U.S. Dollars in thousands

For the six months ended

June 30

2015

2014

(unaudited)

(unaudited)

Cash flows from operating activities:

Net income

8,904

6,152

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

Depreciation  and amortization

4,328

4,408

Amortization of premium and accrued interest on marketable securities

(184)

23

Stock-based compensation related to options issued to employees

568

559

Decrease (increase) in trade receivables

1,975

(1,790)

Deferred tax assets

1,808

85

Decrease in other operating assets

395

299

Increase (decrease)  in trade payables

1,294

(1,994)

Increase in other operating liabilities

1,869

3,053

Increase  in deferred revenues

1,502

1,001

Severance pay

(304)

152

Net cash provided by operating activities

22,155

11,948

Cash flows from investing activities:

Purchase of property and equipment

(1,209)

(1,224)

Purchase of marketable securities

(6,524)

(34,786)

Proceeds from sales of marketable securities

1,015

-

Payments for business acquisition, net of cash acquired

(1,736)

-

Increase in capitalized software development costs

(2,865)

(3,087)

Decrease (increase) in Restricted Cash

(1,712)

541

Net cash used in investing activities

(13,031)

(38,556)

Cash flows from financing activities:

Distribution of dividend

(6,486)

-

Proceeds from employee stock options exercised

501

1,305

Net cash provided by financing activities

(5,985)

1,305

Effect of exchange rate changes on cash and cash equivalents

514

364

Increase in cash and cash equivalents

3,653

(24,939)

Cash and cash equivalents at the beginning of period

47,400

70,313

Cash and cash equivalents at the end of period

51,053

45,374

 

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SOURCE Sapiens International Corporation



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