investor conference · 2015. 2. 26. · investor conference roni al-dor, ceo tase february 26,...
TRANSCRIPT
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1 www.sapiens.com
www.sapiens.com
Investor Conference Roni Al-Dor, CEO
TASE February 26, 2015
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2 www.sapiens.com
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, 2013 and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission.
Safe Harbor Statement
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3 www.sapiens.com
2014
Summary
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4 www.sapiens.com
We Achieved our Targets
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5 www.sapiens.com
16.3% Revenue Growth
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6 www.sapiens.com
21.4% increase in
Operating Profit
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7 www.sapiens.com
Maintained over 130 customers
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8 www.sapiens.com
Deployed 10 new systems
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9 www.sapiens.com
Released new versions of all our products
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10 www.sapiens.com
30% increase in our sales team
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11 www.sapiens.com
Successful merger with KPI
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12 www.sapiens.com
Strengthened Sapiens’ brand
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13 www.sapiens.com
12 % increase in the
number of employees
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14 www.sapiens.com
Blue-Chip Global Customer-Base
North America UK Europe APAC
2014 Revenue Contribution
32% 22% 36% 10%
Bulgaria
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15 www.sapiens.com
What Do We Do?
Provide core software solutions for insurance and financial services companies
Core software policy administration solutions
Innovative platform for business decisions
For insurance & financial services customers, globally
Retail banks
Investment banks
Mortgage banks
Technology Based
Solutions
Insurance Software
Reinsurance Property &
Casualty
Retirement Life, Pension &
Annuities
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16 www.sapiens.com
The Insurance Market
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17 www.sapiens.com
The Insurance Industry
Source: Market size data per Celent. March 2014
Big Market
Potential
$4,300,000,000,000 gross written premium (GWP)
11,000 insurance companies globally
IT-related Investment
$170B in 2015 Life - $90B; P&C - $80B
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18 www.sapiens.com
The Insurance Industry by the Numbers
Source: Market size data per Celent. March 2014
Global IT Spending
External Software and IT
Spending Trends
Expected to increase by 9%
$162.1B => $176.7B 2014 2016
Expected to increase by 13%
$65B => $73B 2014 2016
Insurance companies shift IT budget
from internal to external vendors
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Sapiens Today
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20 www.sapiens.com
Insurance Core Systems
Agent Portal
BI Reporting BI Repository
Document Management & Workflow/BPM Distribution
Management
Underwriter Workbench
Rating Engine
CRM Customer
Portal
Core Claims System
Reinsurance Management
Billing
Core Policy Admin System
General Ledger
Document Creation
Unique Comp.
Distribution Management
BI Reporting BI Repository
Disbursement
Sapiens Offering
Potential Expansion
Agent Portal
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21 www.sapiens.com
Current Sapiens Portfolio
Life, Annuities, Pension and Retirement
Property & Casualty and Reinsurance
Decision Management Technology
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22 www.sapiens.com
Sapiens ALIS
• Major release: ALIS 6.5
• Value-add roadmap: innovation, digital, UX efficiency
New logos: Assurant preneed Altshuler Shaham
Wesleyan, our first ALIS 6.5 go-live
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23 www.sapiens.com
Sapiens Closed Books
Wesleyan closed books go-live: first old-co/new-co
Growing interest in closed books
LV - long term, binding relationship
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24 www.sapiens.com
Sapiens Topaz
Clal Pension in production early this year
Porting from AS400 to open system (Linux)
60% of Israeli pensions (Menorah and Clal) are managed with Sapiens
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25 www.sapiens.com
Sapiens Retirement
Next generation retirement services product to the U.S. market
New innovative offering in a legacy market
First go-live in a phased approach
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26 www.sapiens.com
Sapiens DECISION
World’s largest organizations are adopting DECISION as their strategic decision management platform
KPI acquisition: Sapiens now offers a holistic, end-to-end decision management solution
Penetrated 7 of the largest financial services firms in the world
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27 www.sapiens.com
Sapiens IDIT
Major release 12.1, new product core release
4 customers went live in 2014
Health market: collaboration with design partners
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28 www.sapiens.com
Sapiens Reinsurance
Major functional upgrade: The GL accounts module
New win: West Bend (USA), Hollard
Go-live with Hollard in South Africa
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29 www.sapiens.com
Sapiens Offerings P
RO
DU
CTS
Sapiens ALIS
Sapiens Retirement
Sapiens IDIT
Sapiens Reinsurance
Sapiens DECISION
Sapiens eMerge
Sapiens TOPAZ
SERV
ICES
Training Migration
Product Upgrades
Project Implementation
Consulting Hosting
Support Services
User Acceptance Testing
Sapiens Closed Books
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30 www.sapiens.com
Focused Sales Organization
Product
Support
Customer
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31 www.sapiens.com
Sales Regional Managers U
SA
Ben
elu
x,
Fran
ce
Isra
el
APA
C
Glo
bal
Uk ,N
ord
ic SA
Steve Rooney Global Sales DECISION
2014
Raj Ghuman Regional Manager UK & Nordics
1995
Ronald Karam Regional Manager NA
2007
Henry Ainouze Regional Manager Benelux/France
2011
Wayne Te Paa Regional Manager APAC
2014 Tal Sharon Regional Manager Israel
2012
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32
Marketing Activities
Client Conference
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33
Rebuilding Brand Presence
2 Product Videos Enhanced Digital Media Presence
New Brochures
and Infographics
New Blog:
Sapiens Spotlight
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34 www.sapiens.com
Our Growth Strategy
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35 www.sapiens.com
Our Vision
To become a leading provider of innovative software solutions for the global Financial Services market, with a focus on Insurance
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36 www.sapiens.com
2 3
4
5
1
Sapiens – Continue Our Growth
Pursue strategic acquisitions
Acquire new customers
Enhance portfolio through innovative technologies
Expand into new markets
Grow with existing clients
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37 www.sapiens.com
2015 Main Objectives
Growth
Profitability
Continue revenue growth
Improve operating margins
M&A Complementary solutions and customer base
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38 www.sapiens.com www.sapiens.com
THANK YOU
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Financials
Roni Giladi, CFO
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40 www.sapiens.com
52.2 69.9
114.2 135.4
157.5 27.8
2010 2011 2012 2013 2014
Strong Annual Revenue Growth
Non-GAAP in USD million
1 Revenues of $98.1mm in 2011 pro-forma for the FIS and IDIT acquisitions.
98.1
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41 www.sapiens.com
Annual Revenue by Geography
25.9
21.9
12.3
26.7
11.2
35.6
20.6 22.4 23.6
12.3
44.2
30.9
24.9 23.0
12.4
49.6
35.0
28.4 28.8
15.7
NA UK EU IL APAC
2011
2012
2013
2014
Consistent Revenue Growth in NA and Europe
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42 www.sapiens.com
32%
22% 18%
18%
10%
US
UK
Europe
IL
APAC
27%
22%
13%
27%
11%
Annual Revenue by Geography
2011 2014
Revenues of $98.1mm in 2011 pro-forma for the FIS and IDIT acquisitions.
$98.1mm $157.5mm
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43 www.sapiens.com
Q4 and Annual Highlights – Non-GAAP
Annual Q4
2013 2014 2013 2014
135.4 157.5 36.2 41.8 Revenue
55.8 64.2 14.9 17.5 Gross Profit
41.2% 40.8% 41.0% 41.8% Gross Margin
14.0 17.0 3.8 5.0 Operational Profit
10.4% 10.8% 10.4% 11.9% Operational Margin
14.0 16.0 3.4 4.9 Net Income
10.4% 10.2% 9.4% 11.8%
0.33 0.33 0.07 0.10 Diluted EPS
42,316 48,637 45,487 49,057 Diluted Weighted Average Number of Shares
(in USD million except per share amount) Outstanding Shares: 47,679 )as of December 31 , 2014(
* 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).
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44 www.sapiens.com
Key Highlights
(in USD million)
December 31, 2013 December 31, 2014
70.3 47.4 Cash and cash equivalents
33.1 Marketable securities
0 0 Debt
23.7 28.5 Accounts Receivable
59 days 61 days DSO
17.3 21.6 Net cash provided by operating activities
(5.4) (6.1) Net cash used for capitalization of R&D
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45 www.sapiens.com
2015 Guidance
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46 www.sapiens.com 46 www.sapiens.com
Revenues – Continue our Growth
1 Revenues of $98.1mm in 2011 pro-forma for the FIS and IDIT acquisitions 2 Non-GAAP revenues. 2015 guidance per Sapiens press releases dated February 25 2015
52.2
69.9
70.3
114.2
157.5
52.2
98.1
114.2
135.4
157.5
174-178
2010 2011 2012 2013 2014 2015 Guidance
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47 www.sapiens.com 47 www.sapiens.com
Currency Impact on Revenue
157.5
174-178
185
2014 2015
Guidance
Currency Percentage
$ 32%
£ 22%
€ 18%
₪ 18%
¥ 7%
Other 3%
2014 Revenue Split
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Revenues
Exchange Rates
Pipeline
Long Sales Cycle
Market Growth
Projects Delays
• Strong pipeline for all our products
• Long sales cycle: 9-24 months
• The insurance market is growing and investment in IT is growing
• Delays in customer decision making
• Negative impact of currency on revenues
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49 www.sapiens.com
3.4 3.3 3.6 3.8 3.7 4.0 4.4
5.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Consistent Operational Profit
Quarterly Non-GAAP Operating Profit ($mm)
Non-GAAP operating profit excludes stock-based compensation, amortization of intangibles, capitalization and amortization of software, and valuation adjustment on deferred revenue.
2013 2014
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-2.41% -2.84% -3.46%
-14.02%
-2.70%
1.91%
7.76%
14.29%
15.90%
13.19% 13.29%
10.38% 10.80%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Operational Margin – Historical Perspective
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Operational Profit – Past and Future
2012-13
Additional R&D Investments
2014
Additional Sales Investments
2015
Target - Improving Operating Profit
2011
Merger with FIS and IDIT
Projects with Low Profitability
Projects with Low Profitability
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Operational Margin Targets
10.4%
10.8%
12%-13%
2013 2014 2015Guidance
10%
10.4%
10.9%
11.9%
Q1 2014 Q2 2014 Q3 2014 Q4 2014
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Increase Licenses
DECISION Division
Product Profitability
Efficiency and Cost Savings
Scale
• Move from loss to break-even
• Sell more of what we have • Products are more mature
• Offshore capabilities
• Efficiency of scale
• Internal R&D, Funded R&D
Improving Profitability
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54 www.sapiens.com
Continue to Search for M&A Opportunities
$81M
$0 Debt
Customer base
Complementary solutions
Enhance geographic presence
Offshore
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55 www.sapiens.com
Summary Highlights
• 2011-2015E CAGR 15.7% organic growth • Cash flow positive
Diversified revenue base: • 4 continents • Multiple product lines • Over 130 customers
• Long engagement cycle with repeatable revenues • Existing clients account for 80% of revenues • Multiple growth engines
• Offshore • Scale
• ~$80.5 mm cash and securities investments • No financial debt
Strong Financial Profile
Risk Diversification
Highly Attractive Revenue Model
Operational Margins Expansion
Well Capitalized
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56 www.sapiens.com www.sapiens.com
THANK YOU
Contact: Yaffa Cohen-Ifrah, VP Corporate Marketing & Communications
US Mobile: +1-201-250-9414 | Phone: +972-3-7902032 e-Mail: [email protected] | Website www.sapiens.com