- Raises 2015 Guidance for Full Year Revenue and Operating
Margin
- 61.0% Year-Over-Year Increase in Non-GAAP Quarterly
Operating Profit
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.
Logo - http://photos.prnewswire.com/prnh/20120508/531104
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
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/sapiens-reports-double-digit-revenue-growth-and-improved-profitability-300123948.html