Holon, Israel – August 4, 2016 – 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 second quarter ended June 30, 2016.
Second Quarter Highlights:
- GAAP Revenue of $53.0 million, up 15.1% compared to $46.1 million in the second quarter of 2015.
- Non-GAAP revenue of $53.0 million, up 22.1% compared to $43.4 million in the second quarter of 2015.
- Cash, cash equivalents and securities investments as of June 30, 2016 was $100.0 million, following the distribution of a cash dividend in the amount of $9.8 million. The company has no debt.
- GAAP Operating profit increased by 6.3% and totaled $6.4 million (12.1% operating margin), compared to $6.0 million (13.1% operating margin) in the second quarter of 2015.
- Non-GAAP operating profit increased by 15.3% and totaled $7.4 million (14.0% operating margin), compared to $6.4 million (14.8% operating margin) in the second quarter of 2015.
- GAAP Net income attributable to Sapiens’ shareholders totaled $5.3 million or $0.11 per diluted share, an increase of 12.9% compared to $4.7 million or $0.10 per diluted share in the second quarter last year.
- Non-GAAP net income attributable to Sapiens’ shareholders totaled $6.3 million or $0.13 per diluted share, an increase of 19.5% compared to $5.2 million or $0.11 per diluted share in the second quarter last year.
“We saw strong double-digit growth and improved performance across our offerings and across all of our territories, driven by strong demand from existing customers and from ramping sales from new customers. As in recent quarters, the demand for our products and services remained strong,” said Roni Al-Dor, President and CEO of Sapiens.
“Overall, we improved our position in the market, and our competitive advantage in our various target markets resulted in several important wins with new customers. More importantly, we expect this momentum in sales to continue throughout the year.”
Mr. Al-Dor continued. “On the deal front, during the second quarter we signed a multimillion expansion with Anadolu Insurance Company, a private insurer operating in Turkey. As in many of our other strategic relationships, this win was part of a larger transformation project. We view this expansion as yet another key example of how our solutions can help our P&C client base grow and mature over time as they consolidate their multiple lines of business on a single platform, namely our IDIT software suite.
“In addition following the end of the second quarter, we acquired Maximum Processing, a US- P&C Solution Provider. Maximum Processing’s policy administration suite, Stingray System, services tier-4 and tier-5 P&C carriers, MGAs, TPAs and brokers. This acquisition will expand Sapiens’ overall presence in North America and expedite entry into the U.S. P&C market. We consider this acquisition consistent with our long-term growth strategy of organic growth next to M&A activity.”
Mr. Al-Dor concluded: “Based on the strength of our first half growth and our outlook for the remainder of the year, we are raising our guidance to 2016 full year non-GAAP revenues of $211 to $215 million, or annual growth of 18%-20%, up from prior guidance of $207 to $211 million.
To support this expansion in growth, we are increasing our short-term investments in R&D, delivery, sales and marketing. Also, we expect to see an impact of the British pound devaluation on our operations following the UK decision to exit the EU. We now expect full-year 2016 non-GAAP operating margins in the range of 13.5% - 14.0%, compared to our previous guidance of 15.0%-15.5%.”
Quarterly Results Conference Call
Management will host a conference call and webcast on August 4 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: +972-3-918-0685; UK: 0-800-917-9141
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 18, 2016, as follows:
North America: 1-888-269-0005; International: +972-3-925-5929.
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.
In addition, the Company adjusted revenues and expenses, recorded under US GAAP, of pre-acquisition date in respect of acquired business from its ultimate parent company. As this transaction is between companies under common control, under US GAAP, it was accounted for under the pooling of interest method. For non-GAAP measurement purposes, the Company excludes the pre-acquisition date revenues and expenses.
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included in 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, compensation expenses related to acquisition, acquisition related costs, pre-acquisition revenues and expenses accounted under pooling of interest method, 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.
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 200 financial services organizations. The Sapiens team of approximately 1,800 professionals operates through our fully-owned subsidiaries in North America, the United Kingdom, EMEA and Asia Pacific. For more information: www.sapiens.com.
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, 2015, and subsequent reports and registration statements filed periodically with the Securities and Exchange Commission.
Investors and Media Contact:
Chief Marketing Officer and Head of Corporate Communications
U.S. Mobile: +1-201-250-9414