HOLON, Israel, May 15, 2017 /PRNewswire/ -- Sapiens
International Corporation, (NASDAQ and TASE: SPNS), a leading
global provider of software solutions for the insurance industry,
with a growing presence in the financial services sector, and a
member of the Formula Group (NASDAQ: FORTY and TASE: FORT), today
announced its financial results for the first quarter ended
March 31, 2017.
First Quarter Highlights:
- GAAP and non-GAAP revenue of $56.5
million, up 14.1% compared to $49.6
million in the first quarter of 2016.
- GAAP operating loss totaled $(1.6
million), compared to operating income of $6.2 million in the first quarter of 2016.
- Non-GAAP operating profit totaled $1.7
million (3.0% operating margin), compared to $7.3 million (14.8% operating margin) in the
first quarter of 2016.
- GAAP net loss attributable to Sapiens' shareholders totaled
$(2.2 million) or $(0.05) per diluted share, compared to net income
attributable to Sapiens' shareholders of $4.9 million, or $0.10 per diluted share in the first quarter last
year.
- Non-GAAP net income attributable to Sapiens' shareholders
totaled $1.2 or $0.02 per diluted share, compared to net income
attributable to Sapiens' shareholders of $6.0 million, or $0.12 per diluted share, in the first quarter
last year.
- Cash and cash equivalents as of March
31, 2017 were $35.1 million.
This amount is post cash payment for the $100 million acquisition of StoneRiver, Inc. in
the first quarter. Sapiens also raised $40
million in new bank debt during the first quarter to finance
the remainder of the StoneRiver acquisition and working
capital.
"Sapiens delivered another quarter of double-digit revenue
increase, driven by a mix of organic growth and our recent
acquisition of StoneRiver," said Roni
Al-Dor, president and CEO of Sapiens. Two factors are
offseting this growth to some extent in the near term, particularly
in terms of operational profitability: the halt of a software
development project with a significant customer and the integration
of StoneRiver. In the second quarter, we will continue
restructuring steps to address these developments and remain on
track in the second half of 2017."
Al-Dor continued, "We are very excited about the closing of the
StoneRiver acquisition towards the end of the first quarter. It
significantly expanded our presence and scale in the North American
insurance market and accelerated our entry into the U.S. P&C
and L&A spaces. We have already gained a new customer via our
new StoneRiver offerings and another StoneRiver customer is now in
production."
Sapiens won new customers and continued to expand its business
with existing customers during the first quarter. Alexander Forbes,
a pan-African financial services group, selected the full Sapiens'
portfolio. Sapiens' core systems will provide end-to-end,
integrated digital capabilities across all lines of business and
Sapiens will serve as the primary implementation partner.
Additionally, Sapiens was selected shortly after the conclusion of
the first quarter by a leading Nordic insurer for a modernization
project worth over $30 million. This
strategic new customer selected a wide range of Sapiens' P&C
and reinsurance solutions to modernize its environment.
"Sapiens has a strategy in place to improve our cost structure
and return to double-digit operating margins in the second half of
2017, and we believe we are currently on track with our plan," said
Roni Al-Dor, president and CEO. "We
are currently implementing a restructuring and reorganization
program that includes integrating Sapiens' and StoneRiver's
back-office operations to reduce expenses, maximizing synergies
between our respective delivery teams and combining our R&D
efforts to better utilize previously developed assets."
"Our plan also includes realigning and shifting employees away
from the halted project and downsizing as necessary,"
concluded Al-Dor.
Sapiens maintains its recently revised guidance for 2017 full
year revenues of $265 to $275 million
(on a non-GAAP basis) and maintains expectations for between 3-4%
operating profit margin for the first half of 2017, increasing to
13.5-14.5% in the second half of the year (in each case, on a
non-GAAP basis). Sapiens also maintains expectations for a
full-year operating profit margin between 9-10% (on a non-GAAP
basis).
Quarterly Results Conference Call
Management will host a conference call and webcast on
May 15 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: +972-3-918-0685; 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 22, 2017, as
follows:
North America: 1-877-456-0009;
International: +972-3-925-5940
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.
Non-GAAP financial measures consist of GAAP financial measures
adjusted to exclude: amortization of intangible assets,
capitalization of software development, stock-based compensation,
compensation related to acquisition, acquisition-related costs,
restructuring and reorganizational costs, loss on sales of
Marketable Securities and tax adjustment re non-GAAP
adjustments.
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 of this release.
The Company defines Adjusted EBITDA as net profit, adjusted for
stock-based compensation expense, depreciation and amortization,
capitalized of software development costs, compensation
expenses related to acquisition, acquisition-related costs,
restructuring and reorganizational costs, financial expense
(income), 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 400 financial services
organizations. The Sapiens team of approximately 2,500
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, 2016, 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
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,
|
|
|
|
2017
|
|
2016
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
Revenue
|
|
56,534
|
|
49,567
|
Cost of
revenue
|
|
37,388
|
|
29,607
|
|
|
|
|
|
|
Gross
profit
|
|
19,146
|
|
19,960
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
Research and
development, net
|
|
6,195
|
|
3,253
|
|
Selling,
marketing, general and administrative
|
|
14,588
|
|
10,456
|
Total operating
expenses
|
|
20,783
|
|
13,709
|
|
|
|
|
|
|
Operating
income (loss)
|
|
(1,637)
|
|
6,251
|
|
|
|
|
|
|
Financial
expense (income), net
|
|
438
|
|
(80)
|
Taxes and other
expenses, net
|
|
167
|
|
1,458
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
(2,242)
|
|
4,873
|
|
|
|
|
|
|
Attributable to
non-controlling interest
|
|
(30)
|
|
(14)
|
|
|
|
|
|
|
Net income
attributable to Sapiens' shareholders
|
|
(2,212)
|
|
4,887
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
per share
|
|
(0.05)
|
|
0.10
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
(0.05)
|
|
0.10
|
|
|
|
|
|
|
Weighted average
number of shares outstanding used to compute basic earnings per
share (in thousands)
|
|
49,047
|
|
48,819
|
|
|
|
|
|
Weighted average
number of shares outstanding used to compute diluted earnings per
share (in thousands)
|
|
49,047
|
|
49,560
|
Summary of
Non-GAAP Financial Information
|
U.S. dollars in
thousands (except per share amounts)
|
|
|
Three months
ended
|
|
March
31,
|
|
2017
|
|
2016
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
Revenues
|
56,534
|
100%
|
|
49,567
|
100%
|
Gross
Profit
|
20,470
|
36.2%
|
|
21,574
|
43.5%
|
Operating
profit
|
1,698
|
3.0%
|
|
7,348
|
14.8%
|
Net income to
shareholders
|
1,184
|
2.1%
|
|
5,986
|
12.1%
|
Adjusted
EBITDA
|
2,574
|
4.6%
|
|
7,955
|
16.0%
|
|
|
|
|
|
|
Basic earnings per
share
|
0.02
|
|
|
0.12
|
|
Diluted earnings per
share
|
0.02
|
|
|
0.12
|
|
Non-GAAP revenues
by geographic breakdown
|
U.S. dollars in
thousands
|
|
|
Q1
2017
|
|
Q4
2016
|
|
Q3
2016
|
|
Q2
2016
|
|
Q1
2016
|
|
|
|
|
|
|
|
|
|
|
North
America
|
19,465
|
|
21,107
|
|
19,706
|
|
17,601
|
|
16,041
|
Europe & South
Africa
|
32,489
|
|
28,292
|
|
28,675
|
|
26,124
|
|
28,421
|
APAC
|
4,580
|
|
7,714
|
|
8,099
|
|
9,305
|
|
5,105
|
|
|
|
|
|
|
|
|
|
|
Total
|
56,534
|
|
57,113
|
|
56,480
|
|
53,030
|
|
49,567
|
Adjusted EBITDA
Calculation
|
U.S. dollars in
thousands
|
|
|
|
Three months
ended
|
|
|
March
31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
GAAP operating
profit
|
|
(1,637)
|
|
6,251
|
|
|
|
|
|
Non GAAP
adjustments:
|
|
|
|
|
Amortization of
capitalized software
|
|
1,021
|
|
1,409
|
Amortization of other
intangible assets
|
|
1,254
|
|
511
|
Capitalization of
software development
|
|
(1,065)
|
|
(1,384)
|
Stock-based
compensation
|
|
455
|
|
458
|
Compensation related
to acquisition and acquisition related costs
|
|
1,670
|
|
103
|
|
|
|
|
|
Non GAAP operating
profit
|
|
1,698
|
|
7,348
|
|
|
|
|
|
Depreciation
|
|
876
|
|
607
|
|
|
|
|
|
Adjusted
EBITDA
|
|
2,574
|
|
7,955
|
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,
|
|
|
2017
|
|
2016
|
GAAP
revenue
|
|
56,534
|
|
49,567
|
Adjustments of
pre-acquisition revenue accounted under pooling of interest
method
|
|
-
|
|
|
Non-GAAP
revenue
|
|
56,534
|
|
49,567
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
profit
|
|
19,146
|
|
19,960
|
Amortization of
capitalized software
|
|
1,021
|
|
1,409
|
Amortization of
other intangible assets
|
|
303
|
|
205
|
Non-GAAP gross
profit
|
|
20,470
|
|
21,574
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
income
|
|
(1,637)
|
|
6,251
|
Gross profit
adjustments
|
|
1,324
|
|
1,614
|
Capitalization
of software development
|
|
(1,065)
|
|
(1,384)
|
Amortization of
other intangible assets
|
|
951
|
|
306
|
Stock-based
compensation
|
|
455
|
|
458
|
Compensation related
to acquisition and acquisition related costs
|
|
1,670
|
|
103
|
Non-GAAP
operating income
|
|
1,698
|
|
7,348
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
attributable to Sapiens' shareholders
|
|
(2,212)
|
|
4,887
|
Operating
income adjustments
|
|
3,335
|
|
1,097
|
Adjustment to
redeemable non-controlling interest
|
|
|
|
66
|
Loss on sales of
marketable securities
|
|
230
|
|
|
Other
|
|
(169)
|
|
(64)
|
Non-GAAP net
income attributable to Sapiens' shareholders
|
|
1,184
|
|
5,986
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP basic
earnings per share
|
|
0.02
|
|
0.12
|
|
|
|
|
|
Non-GAAP
diluted earnings per share
|
|
0.02
|
|
0.12
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding used to compute basic earnings per
share (in thousands)
|
49,047
|
|
48,819
|
Weighted average
number of shares outstanding used to compute diluted earnings per
share (in thousands)
|
49,998
|
|
49,560
|
SAPIENS
INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
U.S. Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
35,115
|
|
60,908
|
|
Trade receivables,
net
|
|
52,837
|
|
34,684
|
|
Other receivables and
prepaid expenses
|
|
8,036
|
|
6,389
|
|
Marketable
securities
|
|
-
|
|
18,220
|
|
|
|
|
|
|
|
Total current
assets
|
|
95,988
|
|
120,201
|
|
|
|
|
|
|
LONG-TERM
ASSETS:
|
|
|
|
|
|
Marketable
securities
|
|
-
|
|
17,228
|
|
Property and
equipment, net
|
|
10,945
|
|
9,807
|
|
Severance pay
fund
|
|
4,205
|
|
4,041
|
|
Goodwill
and intangible assets, net
|
|
225,845
|
|
101,951
|
|
Other long-term
assets
|
|
4,091
|
|
4,623
|
|
|
|
|
|
|
|
Total long-term
assets
|
|
245,086
|
|
137,650
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
341,074
|
|
257,851
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Trade
payables
|
|
7,136
|
|
6,562
|
|
Accrued
expenses and other liabilities
|
|
44,024
|
|
32,049
|
|
Deferred
revenue
|
|
18,729
|
|
9,137
|
|
Current Maturities of
Long Term Loans
|
|
8,000
|
|
-
|
|
Total current
liabilities
|
|
77,889
|
|
47,748
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES:
|
|
|
|
|
|
Other long-term
liabilities
|
|
26,679
|
|
9,864
|
|
Long Term
Loans
|
|
32,000
|
|
-
|
|
Accrued
severance pay
|
|
5,106
|
|
4,940
|
|
|
|
|
|
|
|
Total long-term
liabilities
|
|
63,785
|
|
14,804
|
|
|
|
|
|
|
|
|
|
|
|
|
REDEEMABLE
NON-CONTROLLING INTEREST
|
|
908
|
|
908
|
|
|
|
|
|
|
EQUITY
|
|
|
198,492
|
|
194,391
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND EQUITY
|
|
341,074
|
|
257,851
|
SAPIENS
INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
|
CONSOLIDATED
STATEMENT OF CASH FLOW
|
U.S. dollars in
thousands
|
|
|
For the three
months ended
March
31,
|
|
2017
|
2016
|
|
(unaudited)
|
(unaudited)
|
Cash flows from
operating activities:
|
|
|
Net income
(loss)
|
(2,242)
|
4,873
|
Reconciliation of net
income to net cash provided by operating activities:
|
|
|
Depreciation and
amortization
|
3,151
|
2,527
|
Amortization of
premium, and accrued interest and loss on sales of
marketable securities
|
509
|
(134)
|
Stock-based
compensation related to options issued to employees
|
455
|
458
|
|
|
|
Net changes in
operating assets and liabilities, net of amount
acquired:
|
|
|
Trade
receivables
|
(10,510)
|
(6,682)
|
Deferred tax
assets
|
(1,009)
|
107
|
Other operating
assets
|
681
|
(227)
|
Trade
payables
|
(771)
|
419
|
Other operating
liabilities
|
908
|
98
|
Deferred
revenues
|
1,556
|
3,052
|
Severance
pay
|
(49)
|
(34)
|
|
|
|
Net cash provided by
operating activities
|
(7,321)
|
4,457
|
|
|
|
Cash flows from
investing activities:
|
|
|
Purchase of property
and equipment
|
(580)
|
(849)
|
Purchase of marketable
securities, net of interest received
|
-
|
99
|
Proceeds from sales of
marketable securities
|
35,369
|
-
|
Payments for business
acquisition, net of cash acquired
|
(94,111)
|
-
|
Capitalized software
development costs
|
(1,065)
|
(1,384)
|
Restricted
cash
|
-
|
(2)
|
|
|
|
Net cash used in
investing activities
|
(60,387)
|
(2,136)
|
|
|
|
Cash flows from
financing activities:
|
|
|
Proceeds from employee
stock options exercised
|
110
|
473
|
Loan received net of
Repayment of loan
|
39,987
|
-
|
|
|
|
Net cash used in
financing activities
|
40,097
|
473
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
1,818
|
1,534
|
|
|
|
Increase in cash and
cash equivalents
|
(25,793)
|
4,328
|
Cash and cash
equivalents at the beginning of period
|
60,908
|
54,351
|
|
|
|
Cash and cash
equivalents at the end of period
|
35,115
|
58,679
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/sapiens-reports-q1-2017-financial-results-300457361.html
SOURCE Sapiens International Corporation