HOLON, Israel, May 6, 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: FORT),
today announced record financial results for the first quarter
ended March 31, 2015.
First Quarter Highlights
- Non-GAAP revenue of $41.0
million, up 12.0% compared to $36.6
million in the first quarter of 2014. The first quarter had
a further negative impact of currency erosion on our revenues.
Eliminating this erosion compared to the fourth quarter of 2014
exchange rates, our reported revenues would be higher by
approximately $1.4 million.
- Non-GAAP operating profit was $5.8
million, or 14.1% operating margin, compared to $3.7 million, or 10.0% operating margin, in the
first quarter of 2014, an increase of 58.5%.
- Non-GAAP net income attributable to Sapiens' shareholders
totaled $4.7 million, or $0.10 per diluted share, compared to $3.4 million, or $0.07 per diluted share, in the first quarter
last year.
- The Sapiens Board of Directors approved the distribution of a
cash dividend of $0.15 per share,
representing approximately $7.2
million in the aggregate, to be distributed on June 1, 2015 to its shareholders of record as of
May 21, 2015.
- Cash, cash equivalents and marketable
securities investments as of March
31, 2015 totaled approximately $87
million, with no debt.
"Sapiens continues to execute our growth strategy. Consistent
with recent quarters, in the first quarter we achieved double-digit
revenue growth that was derived from both existing and new
customers and across a range of geographies," said Roni Al-Dor, president and CEO of Sapiens. "Our
new product developments, supported by an expanded, global sales
team, are resonating with customers and catalyzing increased market
share and continued top-line growth. Correspondingly, our operating
margins improved both year-over-year and sequentially, as we
continue to expand our business and leverage both our investments
in our products, and the scale of our organization. Sapiens'
results in the first quarter represent a solid start to achieving
our financial targets for the full year."
2015 Business Outlook
Management reiterated revenue guidance for the full year 2015 in
the range of $174-$178 million. By
eliminating the erosion of all currencies vs the U.S. dollar, our
revenue growth in 2015 would be approximately 17%. The company
also reiterated expectations for full-year 2015 operating margins
in the range of 12-13%.
Roni Al-Dor added, "We have built
a solid combination of innovative products, industry expertise and
a healthy balance sheet that positions us for increased revenue
growth and the flexibility to pursue acquisitions. This quarter we
announced the acquisition of IBEXI Solutions Private
Limited, an India-based provider
of insurance business and technology solutions. The IBEXI
acquisition will strengthen Sapiens' insurance presence in APAC,
enrich its product portfolio and enhance delivery capabilities."
Roni Al Dor concluded, "With a
larger and geographically-diverse professional services team and
cost-effective offshore resources, Sapiens will be well-positioned
to provide services and support to our customers across the
globe."
Quarterly Results Conference Call
Sapiens management will host its earnings conference call today,
May 6 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):
1-888-668-9141
- International: +972-3-918-0609
- 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 May 13, 2015:
- North America:
1-888-782-4291
- International: +972-3-925-5904
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, and 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.
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 contained in 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 expenses,
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 is an additional
way to view 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,
reinsurance and retirement markets, as well as business decision
management software. The company has a track record of over 30
years in delivering superior software solutions to more than 130
financial services organizations. The Sapiens team of over 1,000
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
U.S. 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
|
|
|
|
March
31
|
|
|
|
2015
|
|
2014
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
41,014
|
100.0%
|
|
36,628
|
100.0%
|
|
Gross
profit
|
|
17,678
|
43.1%
|
|
14,648
|
40.0%
|
|
Operating
profit
|
|
5,788
|
14.1%
|
|
3,652
|
10.0%
|
|
Net income
attributable to Sapiens' shareholders
|
4,727
|
11.5%
|
|
3,375
|
9.2%
|
|
Adjusted
EBITDA
|
|
6,178
|
15.1%
|
|
4,020
|
11.0%
|
|
|
|
|
|
|
|
|
|
Basic earnings
per share
|
|
0.10
|
|
|
0.07
|
|
|
Diluted
earnings per share
|
|
0.10
|
|
|
0.07
|
|
|
Adjusted EBITDA
Calculation
|
|
U.S. dollars in
thousands
|
|
|
|
|
|
Three months
ended
March
31
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
GAAP operating
profit
|
|
5,086
|
|
3,174
|
|
|
|
|
|
|
|
Non GAAP
adjustments:
|
|
|
|
|
|
Amortization of
capitalized software
|
|
1,215
|
|
1,047
|
|
Amortization of other
intangible assets
|
|
521
|
|
561
|
|
Capitalization of
software development
|
|
(1,312)
|
|
(1,401)
|
|
Stock-based
compensation
|
|
278
|
|
271
|
|
|
|
|
|
|
|
Non-GAAP operating
profit
|
|
5,788
|
|
3,652
|
|
|
|
|
|
|
|
Depreciation
|
|
390
|
|
368
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
6,178
|
|
4,020
|
|
Revenues by
Category
|
|
U.S. dollars in
thousands
|
|
|
|
|
Three months
ended
March 31, 2015
|
|
|
Revenues
|
Percentage
|
|
|
|
License
|
3,257
|
7.9%
|
|
Services and
maintenance
|
37,757
|
92.1%
|
|
Total
|
41,014
|
100%
|
|
Revenues by
Geographic Breakdown
|
|
U.S. dollars in
thousands
|
|
|
|
|
Three months
ended
March 31,
2015
|
|
|
Revenues
|
Percentage
|
|
|
|
North
America
|
13,700
|
33.4%
|
|
Europe
|
23,153
|
56.5%
|
|
APAC
|
4,161
|
10.1%
|
|
Total
|
41,014
|
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
|
|
|
|
March
31
|
|
|
|
2015
|
|
2014
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
Revenue
|
|
41,014
|
|
36,628
|
Cost of
revenue
|
|
24,745
|
|
23,251
|
|
|
|
|
|
|
Gross
profit
|
|
16,269
|
|
13,377
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Research and
development, net
|
|
2,621
|
|
2,889
|
|
Selling,
marketing, general and administrative
|
|
8,562
|
|
7,314
|
Total operating
expenses
|
|
11,183
|
|
10,203
|
|
|
|
|
|
|
Operating
income
|
|
5,086
|
|
3,174
|
|
|
|
|
|
|
Financial
income, net
|
|
330
|
|
(46)
|
Taxes and other
expenses, net
|
|
539
|
|
179
|
|
|
|
|
|
|
Net
income
|
|
4,217
|
|
3,041
|
|
|
|
|
|
|
Attributable to
non-controlling interest
|
|
58
|
|
19
|
|
|
|
|
|
|
Net income
attributable to Sapiens' shareholders
|
|
4,159
|
|
3,022
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
per share
|
|
0.09
|
|
0.07
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
0.09
|
|
0.06
|
|
|
|
|
|
|
Weighted
average number of shares
|
|
|
|
|
outstanding
used to compute:
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
per share
|
|
47,707
|
|
46,413
|
Diluted
earnings per share
|
|
48,894
|
|
48,493
|
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
|
|
|
March
31
|
|
|
2015
|
|
2014
|
|
|
|
|
|
Non-GAAP
revenue
|
|
41,014
|
|
36,628
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
profit
|
|
16,269
|
|
13,377
|
Amortization of
capitalized software
|
|
1,215
|
|
1,047
|
Amortization of
other intangible assets
|
|
194
|
|
224
|
Non-GAAP gross
profit
|
|
17,678
|
|
14,648
|
|
|
|
|
|
GAAP operating
income
|
|
5,086
|
|
3,174
|
Gross profit
adjustments
|
|
1,409
|
|
1,271
|
Capitalization
of software development
|
|
(1,312)
|
|
(1,401)
|
Amortization of
other intangible assets
|
|
327
|
|
337
|
Stock-based
compensation
|
|
278
|
|
271
|
Non-GAAP
operating income
|
|
5,788
|
|
3,652
|
|
|
|
|
|
GAAP net income
attributable to Sapiens' shareholders
|
|
4,159
|
|
3,022
|
Operating
income adjustments
|
|
702
|
|
478
|
Other
|
|
(134)
|
|
(125)
|
Non-GAAP net
income attributable to Sapiens' shareholders
|
|
4,727
|
|
3,375
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP basic
earnings per share
|
|
0.10
|
|
0.07
|
|
|
|
|
|
Non-GAAP
diluted earnings per share
|
|
0.10
|
|
0.07
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computing U.S. non-GAAP basic earnings per share (in
thousands)
|
47,707
|
|
46,413
|
Shares used in
computing U.S. non-GAAP diluted earnings per share (in
thousands)
|
48,894
|
|
48,493
|
Sapiens
International Corporation N.V. and Its Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
|
U.S. dollars in
thousands
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
|
2015
|
|
2014
|
|
|
|
(unaudited)
|
|
(unaudited)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
53,944
|
|
47,400
|
|
Trade receivables,
net
|
|
24,646
|
|
28,540
|
|
Other
receivables and prepaid expenses
|
5,917
|
|
3,962
|
|
Deferred
taxes
|
|
2,264
|
|
2,319
|
|
|
|
|
|
|
|
Total current
assets
|
|
86,771
|
|
82,221
|
|
|
|
|
|
|
Long-Term
Assets
|
|
|
|
|
|
Marketable
securities
|
|
33,076
|
|
33,098
|
|
Property and
equipment, net
|
|
5,135
|
|
4,763
|
|
Severance pay
fund
|
|
6,362
|
|
10,735
|
|
Other intangible
assets, net
|
|
26,001
|
|
27,060
|
|
Other long-term
assets
|
|
3,186
|
|
3,248
|
|
Goodwill
|
|
67,295
|
|
67,698
|
|
|
|
|
|
|
|
Total long-term
assets
|
|
141,055
|
|
146,602
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
227,826
|
|
228,823
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
Trade
payables
|
|
4,287
|
|
2,952
|
|
Accrued expenses and
other liabilities
|
|
24,142
|
|
25,159
|
|
Deferred
revenue
|
|
9,980
|
|
9,272
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
38,409
|
|
37,383
|
|
|
|
|
|
|
Long-Term
Liabilities
|
|
|
|
|
|
Other long-term
liabilities
|
|
2,976
|
|
3,105
|
|
Accrued
severance pay
|
|
7,424
|
|
11,980
|
|
|
|
|
|
|
|
Total long-term
liabilities
|
|
10,400
|
|
15,085
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
Non-Controlling Interest
|
|
159
|
|
159
|
|
|
|
|
|
|
Equity
|
|
|
178,858
|
|
176,196
|
|
|
|
|
|
|
Total Liabilities
and Equity
|
|
227,826
|
|
228,823
|
Sapiens
International Corporation
|
Consolidated
Statement of Cash Flow
|
|
U.S. dollars in
thousands
|
|
|
For the three
months ended
March
31
|
|
2015
|
2014
|
|
(unaudited)
|
(unaudited)
|
Cash flows from
operating activities:
|
|
|
Net income
|
4,217
|
3,041
|
Reconciliation of net
income to net cash provided by operating activities:
|
|
|
Depreciation and
amortization
|
2,126
|
1,976
|
Amortization of
premium and accrued interest on marketable securities
|
187
|
–
|
Stock-based
compensation related to options issued to employees
|
279
|
271
|
Decrease (increase) in
trade receivables
|
2,808
|
(1,172)
|
Deferred tax
assets
|
615
|
(27)
|
Decrease (increase) in
other operating assets
|
(724)
|
88
|
Increase
(decrease) in trade payables
|
1,511
|
(2,056)
|
Increase (decrease) in
other operating liabilities
|
(28)
|
1,738
|
Increase in
deferred revenues
|
1,050
|
2,168
|
Severance
pay
|
(156)
|
(31)
|
|
|
|
Net cash provided by
operating activities
|
11,885
|
5,996
|
|
|
|
Cash flows from
investing activities:
|
|
|
Purchase of property
and equipment
|
(891)
|
(511)
|
Increase in
capitalized software development costs
|
(1,312)
|
(1,401)
|
Increase in restricted
cash
|
(1,809)
|
(57)
|
Net cash used in
investing activities
|
(4,012)
|
(1,969)
|
|
|
|
Cash flows from
financing activities:
|
|
|
Proceeds from employee
stock options exercised
|
223
|
727
|
Net cash provided by
financing activities
|
223
|
727
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(1,552)
|
(98)
|
|
|
|
Increase in cash and
cash equivalents
|
6,544
|
4,656
|
Cash and cash
equivalents at the beginning of period
|
47,400
|
70,313
|
|
|
|
Cash and cash
equivalents at the end of period
|
53,944
|
74,969
|
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SOURCE Sapiens International Corporation