www.sapiens.com
Investor PresentationQ2 2017 Results
August 7, 2017
Roni Al-Dor, CEO
Roni Giladi, CFO
Yaffa Cohen-Ifrah, CMO
Safe Harbor Statement
Certain statements made in this presentation may be 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, you should 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.
2
Who is Sapiens?
3
Global Footprint*
114 135
158 179
216
2012 2013 2014 2015 2016
Revenue Growth
Non-GAAP revenue (USD M); See appendix for Non-GAAP reconciliation
1982 $216m
~400
~2,500
+17%
Year founded
Customers*
Employees*
15%9
2016 EBITDA(non-GAAP)
EBITDA MarginAcquisitions in 6 years
$32.5m
2016 Revenuesnon-GAAP)
Revenue CAGR2013-2016
*As of June 2017
Development & Delivery Center
Site
Global Presence
North America: 41%United Kingdom: 18%Rest of Europe & SA: 25%Israel: 10%APAC: 6%
We provide core mission-critical solutions to insurance companies
Our Offering – Insurance Software Suites
4
Property & Casualty
Core: Policy administration solutions Core: Policy administration solutions
e App
Illustration
Needs analysis
Underwriting
Agent portal
Business services
DecisionCustomer engagementClient portal BI
Financial & ComplianceReinsurance
Digital Suite
Life & Annuities
Financial & Compliance
Sapiens’ Mission
Help our clients keep pace with the changes ahead and become fully digital
Allow our clients to offer a personalized, omni-channel experience that puts the customer in the center
Enable operational efficiency and agility to accelerate growth
5
The Insurance Markets
66
The Insurance Markets
▪ Highly regulated industry with accelerating regulatory changes
▪ Competitive markets with little product differentiation
▪ Increased globalization▪ Legacy IT transition challenges
Enterprises are seeking modular, next-gen solutions to ease the transition and transform the consumer experience
WealthLiabilityCatastrophe PropertyMotor Voice
PROPERTY, CASUALTY, REINSURANCE
LIFE, ANNUITY, RETIREMENT
Annuities Retirement LifeInjuries
7
The Insurance Industry
Source: Market size data per Celent. April 2016
Big Market
$5,200,000,000,000 gross written premium (GWP)
11,000 insurance companies globally
Potential
3-4% of GWP invested in IT
$185B in 2017 Life - $102B; P&C - $83B
IT-related Investment
8
The Insurance IT Opportunity is Large and Growing
Source: * Source: Market size data per Celent. April 2017 and company analysis
Global IT spending 2017-2018 expected
to increase by
5%
External Software and IT services
spending2017-2018
expected to grow by
8%
Sapiens’ Total Addressable Market
$30B Highly Attractive Growing Market
Highly Attractive Growing Market
9
Today’s Market Challenges & Trends
10
Regulation Competition Risk Mitigation
Customer Experience
Personalization Flexibility
Time to Market EfficiencyNew Distribution
Models
Sapiens Today
1111
Our Value Proposition
Global Presence
End-to-end solutionsLeading technology Domain expertise
Decades of proven project delivery Award-winning, packaged solutions Consultative approach
12
North America
“The ALIS system has a very good user interface. It is simple for the user and flows well...The ALIS system has a graphical policy timeline that is unique and useful for a customer service representative working with a client. Sapiens is releasing new portals,which Celent reviewed, that are among the best we have seen.“ ...”Going forward, we expect the Sapiens ALIS system to makemost evaluation short lists and Sapiens to expand its already rich customer base in the EMEA region.”
Nov. 2015
XCelent Awards - EMEA Policy Administration Systems for Life, Annuities, Pension and Health, 11/2015 13
Leadership in L&A SolutionsBreadth of Functionality, 2015 Breadth of Functionality, 2015
EMEA
Leadership in P&C Solutions
“Sapiens IDIT continues to offer a strong digital policy administration system for insurers globally, with strong experience across Europe…customers commented that Sapiens is responsive, committed, and constructive, and can provide creative solutions.”
Feb. 2016Celent research - EMEA Policy Administration Systems, General Insurance, Property & Casualty February 2016, Craig BeattieCelent research – APAC Policy Administration Platform Property & Casualty, 04/2016, KyongSun Kong 14
Technology and Breath of Functionality, 2015 Technology, 2015
EMEA APAC
Sapiens P&C
Sapiens L&A
Hosting
Product Upgrades
TrainingSupport Services
Migration
TestingConsulting
Project Implementation
End-to-End Solution – Software and Services
15
400 Blue-Chip Global Customers
North America
UK
ContinentalEurope
APAC
Bulgaria
16
Global PresenceExpanded U.S. Presence
17
Development & Delivery Center
Site
OurStrategy
1818
Land and Expand Growth Strategy
19
Win New Customers
Grow with Existing Customers
M & A
Our M&A Strategy
20
Complementary Solutions Growing Customer Base Geographic Expansion
3 core products
2 offshore operations
76 new customers
1 patent
INSECO
Completed 8 M&A
Growth Supported by Focused M&A Strategy
21
22
Recent Acquisition -$80 million dollar Revenues
500 Professionals 200 CustomersGeographic Presence
$80M Revenues
Wide Range of Insurance Products
Domain expertise Customer base Expand U.S presence Core & complementary solutions
Click to edit Master subtitle style
Getting Together in Numbers
23
2,500employees
400customers
15products
25offices
Financials
2424
Revenue – Continue our GrowthNon-GAAP Revenues (USD millions)
1 Revenues of $98.1 M in 2011 pro-forma for the FIS and IDIT acquisitions 25
70.3
114.2
135.4
157.5
179.3
216.2
98.1
2011 2012 2013 2014 2015 2016
(1)
Non-GAAP Revenues (USD millions)
+16.4%
+18.8%
+16.3%
+13.9%
YoY Growth
+20.6%
Annual Revenue by Geography
Non-GAAP Revenues (USD millions)
Focus on North America and Europe
26
35.5
26.622.4 23.6
12.5
44.2
31.1
24.923
12.2
49.6
35
28.4 28.8
15.7
61.3
42.6
26.528.3
20.5
74.5
46.9
35.5
29.1 30.2
NA UK EU Israel APAC
2012 2013 2014 2015 2016
Year 3 Year 4 Year 5 Year 6-10
Contractual High
Attractive Revenue Model
Ongoing Post-ProductionPre-Production
Year 1 Year 2
Go
-Liv
e
Typical life of product engagement: 10–15 years
Revenue ($mm)
Initial Deal Size
Stage
Stickiness
$7 - $10m $8 - $10m $3 - $5m $1 - $1.5m
ReinsuranceL&A P&C Closed Books
27
With Significant VisibilityR
eve
nu
e
≈15%New Customers
≈85% Existing Customers
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
Customer stickiness and layered revenue streams create significant visibility
28
Q2 – Non-GAAP Results
** 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, restructuring and cost reduction cost, provision for income taxes and other income (expenses). 29
Q2
20162017
53.069.2Revenue
22.726.4Gross Profit
42.9%38.2 %
7.43.2Operational Profit
14.0%4.7%
6.21.9Net Income
11.8%2.8%
8.14.2Adjusted EBITDA**
0.130.04Diluted EPS
49,75949,887Diluted Weighted Average Number of Shares
(in USD million, except per share amount)
Strong Cash Flow Generation
$46.4M Cash
$38M Debt
Annual Non-GAAP Operating Cash Flow
Dividend Payments:$9.8m in 2016, $7.2m in 2015 and $6m in 2013
Non-GAAP operating cash flow include the cost of capitalized software development
15.3
11.915.4
34.4
20.5
2012 2013 2014 2015 2016
30
Cash and Debt as of June 30, 2017
2017 Guidance
31
Revenue and Operational Margin GuidanceRevenue Guidance Operational Margin Target
32
216
265
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
2016 2017 Guidance
13.7%13.5%
9%
0
5
10
2016 H2 2017Guidance
2017Guidance
275.0
32
Revenue Guidance Operational Margin Target
14.5%
10.0%
Run rate
-50 bp
Investment Highlights
3333
Financial and Investment Highlights
High growth Recurring revenue model Risk mitigation Global player
34
Massive Market Technology Leader Top-tier customers Proven management
www.sapiens.com
Thank You
Contact: Yaffa Cohen-Ifrah, CMO & Head of Corporate Communications
Mobile: +1-201-250-9414 | Phone: +972-3-7902032Email: [email protected] | Website: www.sapiens.com
Non-GAAP EBITDA to Adj. EBITDA Reconciliation
1 See definition of Adjusted EBITDA in Q2 2017 press release
36
Quarter ended June 30
20162017
6,407(2,986)GAAP operating profit (loss)
1,2561,235Amortization of capitalized software
4951,727Amortization of other intangible assets
(1,396)(1,850)Capitalization of software development
182617Compensation related to acquisition and acquisition related cost
482456Stock-based compensation
-3,900Restructuring and cost reduction plan
-118Valuation adjustment on acquired deferred revenue and long-term contract
7,4263,217Non-GAAP operating profit
14%4.7%
656962Depreciation
8,0824,179Adjusted EBITDA1
15.2%6.0%
(in USD thousands)
Q4 and Annual – Non-GAAP Results
** 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). 37
AnnualQ4
2015201620152016
179.3216.248.757.1Revenue
78.591.821.523.9Gross Profit
43.8%42.4%44.2%41.8 %
26.529.67.47.5Operational Profit
14.8%13.7%15.1%13.1%
22.124.26.36.0Net Income
12.3%11.2%13.0%10.4%
28.532.57.98.3Adjusted EBITDA**
0.450.490.130.12Diluted EPS
49,32749,78049,53649,935Diluted Weighted Average Number of Shares
Outstanding Shares: 49,036)as of December 31, 2016(
(in USD million, except per share amount)