HOLON, Israel, May 7, 2018 /PRNewswire/ -- Sapiens
International Corporation, (NASDAQ: SPNS) (TASE: SPNS), a
leading global provider of software solutions for the insurance
industry, and a member of the Formula Group (NASDAQ: FORTY) (TASE:
FORTY), today announced its financial results for the first quarter
ended March 31, 2018.
First Quarter 2018 Highlights:
- Revenue totaled $71.0 million an
increase of 25.6% compared to last year.
Non-GAAP revenue increased 25.7% from the same period in the prior
year to $71.1 million.
- Operating income totaled $4.7
million, up from ($1.6)
million last year. Non-GAAP operating income totaled
$8.9 million, up from $1.7 million the same period in the prior
year.
- Operating margin of 6.6%, compared to negative margin last
year. Non-GAAP operating margin of 12.5%, compared to 3.0% last
year.
- Net income attributable to Sapiens' shareholders totaled
$2.8 million. Non-GAAP net income
attributable to Sapiens' shareholders totaled $6.3 million, compared to $1.2 in the same period last year.
- Diluted earnings per share of $0.06. Non-GAAP diluted earnings per share of
$0.13 per diluted share, compared to
$0.02 in the same period in the prior
year.
- Cash and cash equivalents totaled $61.7
million.
"In the first quarter we advanced the execution of our long-term
strategy to be a leading provider of insurance software solutions
and services around the globe. Last year we improved our
competitive position through both organic product and solution
development, and acquisitions in focused growth markets,
particularly in Europe and
North America. Now that we are
fully integrated, we are realizing deal synergies, and maximizing
our acquired talent. We are well positioned to help our customers
capitalize on current and future insurance trends, namely
digitalization, data analytics, and legacy transformation," said
Roni Al-Dor, president and CEO,
Sapiens.
"Revenues were above the high end of our guidance range in the
first quarter, and we improved profitability year-over-year. The
first quarter Non-GAAP operating margin of 12.5% was above our
guidance of 10%," concluded Roni
Al-Dor. "We remain on track to improve operating margins
throughout 2018 and reiterate our 2018 Non-GAAP operating margin
guidance of 12% to 13% with revenue in the range of $280-$285 million
(on a non-GAAP basis)."
Quarterly Results Conference Call
Management will host a conference call and webcast on
May 7, 2018 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): +
1-888-407-2553; International: +972-3-918-0610; 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 15, 2018, as
follows:
North America: 1-888-782-4291;
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, 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.
Non-GAAP financial measures consist of GAAP financial measures
adjusted to exclude: Valuation adjustment on acquired deferred
revenue, amortization of intangible assets, capitalization of
software development, stock-based compensation, compensation
related to acquisition and acquisition-related costs, restructuring
and cost reduction costs, loss on sales of Marketable Securities
and tax adjustment regarding non-GAAP adjustments, as well as the
impact of one-time adjustment to our deferred taxes as a result of
the U.S. Tax Cuts and Job act 2017.
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
valuation adjustment on acquired deferred revenue, stock-based
compensation expense, depreciation and amortization, capitalized of
software development costs, compensation expenses related to
acquisition and acquisition-related costs, restructuring and cost
reduction 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
reflects 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 is a leading global provider
of software solutions for the insurance industry, with a 30-year
track record of delivering to more than 400 organizations. The
company offers software platforms, solutions and services,
including a full digital suite, to satisfy the needs of property
and casualty/general insurers, and life, pension and annuity
providers. Sapiens also services the reinsurance, workers'
compensation, financial and compliance, and decision management
markets.
The company's portfolio includes policy administration, billing
and claims, underwriting, illustration and electronic application.
The digital suite features customer and agent portals, and a
business intelligence platform. 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, 2017, and subsequent
reports and registration statements filed from time to time with
the Securities and Exchange Commission.
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,
|
|
|
|
2018
|
|
2017
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
Revenue
|
|
70,995
|
|
56,534
|
Cost of
revenue
|
|
43,967
|
|
37,388
|
|
|
|
|
|
|
Gross
profit
|
|
27,028
|
|
19,146
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Research and
development, net
|
|
9,147
|
|
6,195
|
|
Selling,
marketing, general and administrative
|
|
13,184
|
|
14,588
|
Total operating
expenses
|
|
22,331
|
|
20,783
|
|
|
|
|
|
|
Operating
income (loss)
|
|
4,697
|
|
(1,637)
|
|
|
|
|
|
|
Financial
expense, net
|
|
838
|
|
438
|
Taxes and other
expenses, net
|
|
1,031
|
|
167
|
|
|
|
|
|
|
Net income
(loss)
|
|
2,828
|
|
(2,242)
|
|
|
|
|
|
|
Attributed to
non-controlling interest
|
|
(8)
|
|
(30)
|
|
|
|
|
|
|
Net income
(loss) attributable to Sapiens' shareholders
|
|
2,836
|
|
(2,212)
|
Basic earnings (loss)
per share
|
|
0.06
|
|
(0.05)
|
|
|
|
|
|
|
Diluted
earnings (loss) per share
|
|
0.06
|
|
(0.05)
|
|
|
|
|
|
|
Weighted
average number of shares outstanding used
to
compute basic earnings per share (in thousands)
|
|
49,773
|
|
49,047
|
|
|
|
|
|
Weighted
average number of shares outstanding used
to compute
diluted earnings per share (in thousands)
|
|
50,070
|
|
49,047
|
SAPIENS
INTERNATIONAL CORPORATION N.V. AND ITS
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED NON-GAAP STATEMENTS OF
INCOME
|
U.S. dollars in
thousands (except per share amounts)
|
|
|
|
|
Three
months ended
|
|
|
|
March
31,
|
|
|
|
2018
|
|
2017
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
Revenue
|
|
71,085
|
|
56,534
|
Cost of
revenue
|
|
40,801
|
|
36,064
|
|
|
|
|
|
|
Gross
profit
|
|
30,284
|
|
20,470
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Research and
development, net
|
|
10,324
|
|
7,260
|
|
Selling,
marketing, general and administrative
|
|
11,097
|
|
11,512
|
Total operating
expenses
|
|
21,421
|
|
18,772
|
|
|
|
|
|
|
Operating
income
|
|
8,863
|
|
1,698
|
|
|
|
|
|
|
Financial
expense, net
|
|
838
|
|
208
|
Taxes and other
expenses
|
|
1,726
|
|
336
|
|
|
|
|
|
|
Net
income
|
|
6,299
|
|
1,154
|
|
|
|
|
|
|
Attributable to
non-controlling interest
|
|
(8)
|
|
(30)
|
|
|
|
|
|
|
Net income
attributable to Sapiens' shareholders
|
|
6,307
|
|
1,184
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
per share
|
|
0.13
|
|
0.02
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
0.13
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding used
to compute basic earnings per share (in thousands)
|
|
49,773
|
|
49,047
|
|
|
|
|
|
Weighted average
number of shares outstanding used
to compute diluted earnings per share (in thousands)
|
|
50,070
|
|
49,998
|
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,
|
|
|
2018
|
|
2017
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
GAAP
revenue
|
|
70,995
|
|
56,534
|
Valuation adjustment
on acquired deferred revenue
|
|
90
|
|
-
|
Non-GAAP
revenue
|
|
71,085
|
|
56,534
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
profit
|
|
27,028
|
|
19,146
|
Valuation adjustment
on acquired deferred revenue
|
|
90
|
|
-
|
Amortization of
capitalized software
|
|
1,255
|
|
1,021
|
Amortization of other
intangible assets
|
|
1,911
|
|
303
|
Non-GAAP gross
profit
|
|
30,284
|
|
20,470
|
|
|
|
|
|
GAAP operating income
(loss)
|
|
4,697
|
|
(1,637)
|
Gross profit
adjustments
|
|
3,256
|
|
1,324
|
Capitalization of
software development
|
|
(1,177)
|
|
(1,065)
|
Amortization of other
intangible assets
|
|
922
|
|
951
|
Stock-based
compensation
|
|
587
|
|
455
|
Compensation related
to acquisition and acquisition-related costs
|
|
578
|
|
1,670
|
Non-GAAP operating
income
|
|
8,863
|
|
1,698
|
|
|
|
|
|
GAAP net
income (loss) attributable to Sapiens' shareholders
|
|
2,836
|
|
(2,212)
|
Operating
income adjustments
|
|
4,166
|
|
3,335
|
Loss on
sales of Marketable Securities
|
|
-
|
|
230
|
Tax and
other
|
|
(695)
|
|
(169)
|
Non-GAAP
net income attributable to Sapiens'
shareholders
|
|
6,307
|
|
1,184
|
Summary of
NON-GAAP Financial Information
|
U.S. dollars in
thousands (except per share amounts)
|
|
|
Three months
ended
|
|
March
31,
|
|
2018
|
|
2017
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
Revenues
|
71,085
|
100%
|
|
56,534
|
100%
|
Gross
profit
|
30,284
|
42.6%
|
|
20,470
|
36.2%
|
Operating
income
|
8,863
|
12.5%
|
|
1,698
|
3.0%
|
Net income
attributable to Sapiens' shareholders
|
6,307
|
8.9%
|
|
1,184
|
2.1%
|
Adjusted
EBITDA
|
9,945
|
14.0%
|
|
2,574
|
4.6%
|
|
|
|
|
|
|
Basic earnings per
share
|
0.13
|
|
|
0.02
|
|
Diluted earnings per
share
|
0.13
|
|
|
0.02
|
|
Non-GAAP Revenues
by Geographic Breakdown
|
U.S. dollars in
thousands
|
|
|
Q1
2018
|
|
Q4
2017
|
|
Q3
2017
|
|
Q2
2017
|
|
Q1
2017
|
|
|
|
|
|
|
|
|
|
|
North
America
|
31,035
|
|
31,580
|
|
32,780
|
|
28,544
|
|
19,465
|
Europe
|
34,479
|
|
29,789
|
|
28,984
|
|
31,418
|
|
30,735
|
Asia
Pacific
|
3,439
|
|
3,817
|
|
5,750
|
|
3,912
|
|
4,580
|
South
Africa
|
2,132
|
|
7,262
|
|
6,340
|
|
5,293
|
|
1,754
|
|
|
|
|
|
|
|
|
|
|
Total
|
71,085
|
|
72,448
|
|
73,854
|
|
69,167
|
|
56,534
|
Adjusted EBITDA
Calculation
|
U.S. dollars in
thousands
|
|
|
|
Three months
ended
|
|
|
March 31,
|
|
|
2018
|
|
2017
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
GAAP operating
income (loss)
|
|
4,697
|
|
(1,637)
|
|
|
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
Valuation adjustment
on acquired
deferred revenue
|
|
90
|
|
-
|
Amortization of
capitalized software
|
|
1,255
|
|
1,021
|
Amortization of other
intangible assets
|
|
2,833
|
|
1,254
|
Capitalization of
software development
|
|
(1,177)
|
|
(1,065)
|
Stock-based
compensation
|
|
587
|
|
455
|
Compensation related
to acquisition and
acquisition-related costs
|
|
578
|
|
1,670
|
|
|
|
|
|
Non-GAAP operating
income
|
|
8,863
|
|
1,698
|
|
|
|
|
|
Depreciation
|
|
1,082
|
|
876
|
|
|
|
|
|
Adjusted
EBITDA
|
|
9,945
|
|
2,574
|
SAPIENS
INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
U.S. dollars in
thousands
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
|
2018
|
|
2017
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
|
61,749
|
|
71,467
|
|
Trade receivables,
net
|
|
53,346
|
|
53,226
|
|
Other receivables and
prepaid expenses
|
|
7,534
|
|
6,280
|
|
|
|
|
|
|
|
Total current
assets
|
|
122,629
|
|
130,973
|
|
|
|
|
|
|
LONG-TERM
ASSETS
|
|
|
|
|
|
Property and
equipment, net
|
|
10,163
|
|
10,695
|
|
Severance pay
fund
|
|
4,559
|
|
4,547
|
|
Goodwill and
intangible assets, net
|
|
242,062
|
|
223,729
|
|
Other long-term
assets
|
|
4,514
|
|
3,675
|
|
|
|
|
|
|
|
Total long-term
assets
|
|
261,298
|
|
242,646
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
383,927
|
|
373,619
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
Trade
payables
|
|
5,656
|
|
7,044
|
|
Current maturities of
Series B Debentures
|
|
9,898
|
|
-
|
|
Accrued expenses and
other liabilities
|
|
48,144
|
|
46,612
|
|
Deferred
revenue
|
|
20,228
|
|
16,513
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
83,926
|
|
70,169
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES
|
|
|
|
|
|
Series B Debentures,
net of current maturities
|
|
68,427
|
|
78,281
|
|
Deferred tax
liabilities
|
|
10,948
|
|
9,171
|
|
Other long-term
liabilities
|
|
7,850
|
|
8,271
|
|
Accrued severance
pay
|
|
5,633
|
|
5,500
|
|
|
|
|
|
|
|
Total long-term
liabilities
|
|
92,858
|
|
101,223
|
|
|
|
|
|
|
|
|
|
|
|
|
REDEEMABLE
NON-CONTROLLING INTEREST
|
|
1,353
|
|
1,353
|
|
|
|
|
|
|
EQUITY
|
|
205,790
|
|
200,874
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND EQUITY
|
|
383,927
|
|
373,619
|
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,
|
|
2018
|
2017
|
|
(unaudited)
|
(unaudited)
|
Cash flows from
operating activities:
|
|
|
Net income
(loss)
|
2,828
|
(2,242)
|
Reconciliation of net
income (loss) to net cash provided by
(used in) operating
activities:
|
|
|
Depreciation and
amortization
|
5,170
|
3,151
|
Amortization of
premium, accrued interest and
loss on sales of marketable securities
|
-
|
509
|
Stock-based
compensation related to options issued
to employees
|
588
|
455
|
|
|
|
Net changes in
operating assets and liabilities, net of
amount acquired:
|
|
|
Trade
receivables
|
1,664
|
(10,510)
|
Deferred tax
assets
|
(1,163)
|
(1,009)
|
Other operating
assets
|
(1,000)
|
681
|
Trade
payables
|
(3,013)
|
(771)
|
Other operating
liabilities
|
(1,138)
|
908
|
Deferred
revenues
|
4,729
|
1,556
|
Severance
pay
|
127
|
(49)
|
|
|
|
Net cash provided by
(used in) operating activities
|
8,792
|
(7,321)
|
|
|
|
Cash flows from
investing activities:
|
|
|
Purchase of property
and equipment
|
(477)
|
(580)
|
Proceeds from sales of
marketable securities
|
-
|
35,369
|
Payments for business
acquisition, net of cash
acquired
|
(17,893)
|
(94,111)
|
Capitalized software
development costs
|
(1,177)
|
(1,065)
|
|
|
|
Net cash used in
investing activities
|
(19,547)
|
(60,387)
|
|
|
|
Cash flows from
financing activities:
|
|
|
Proceeds from employee
stock options exercised
|
10
|
110
|
Loan received, net of
repayment of loan
|
(18)
|
39,987
|
Dividend to
non-controlling interest
|
(47)
|
-
|
|
|
|
Net cash provided by
(used in) financing activities
|
(55)
|
40,097
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
1,092
|
1,818
|
|
|
|
Increase in cash and
cash equivalents
|
(9,718)
|
(25,793)
|
Cash and cash
equivalents at the beginning of period
|
71,467
|
60,908
|
|
|
|
Cash and cash
equivalents at the end of period
|
61,749
|
35,115
|
Debentures Covenants
As of March 31, 2018, Sapiens was
in compliance with all of its financial covenants under the
indenture for the Series B Debentures that it issued in
September 2017, based on having
achieved the following in its consolidated financial results:
Covenant 1
- Target shareholders' equity (excluding minority interest):
above $120 million.
- Actual shareholders' equity equal to $206 million.
Covenant 2
- Target ratio of net financial indebtedness to net
capitalization (in each case, as defined under the indenture for
the Company's Series B Debentures) bellow 65%.
- Actual ratio of net financial indebtedness to net
capitalization equal to 7.45%.
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
View original
content:http://www.prnewswire.com/news-releases/sapiens-reports-first-quarter-2018-financial-results-300643443.html
SOURCE Sapiens International Corporation