Embed Size (px)
Citation preview
1 www.sapiens.com
www.sapiens.com
Investor Presentation
November 2015
Roni Al-Dor, CEORoni Giladi, CFOYaffa Cohen-Ifrah, CMO
Q3 2015 Results
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, 2014 and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission.
Safe Harbor Statement
3 www.sapiens.com
Who is Sapiens?
Founded Employees Global Footprint
IPO Customers Revenue Growth
1982
19922013
1,500+
1702012: 16%
2013: 19%
2014 : 16%
NA: 32%UK: 22%Europe: 18%Israel: 18%APAC: 10%
4 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 customers globally
Retail Banks
Investment Banks
MortgageBanks
TechnologyBased
Solutions
Insurance Software
ReinsuranceProperty&
Casualty
RetirementLife, Pension &
Annuities
Application development platforms
5 www.sapiens.com
Our Vision
To become a leading provider of innovative software solutions for the global Financial Services market, with focus on Insurance
6 www.sapiens.com
The Market
7 www.sapiens.com
Insurance is Everywhere
Property, Casualty, Reinsurance
Wealth
Pets
Liability Catastrophes
ExcessMarine Property
MotorVoice
Life, Annuity, Retirement
Annuities Retirement
Injuries Life
Pension Medical
8 www.sapiens.com
The Insurance Industry
Source: Market size data per Celent. March 2015
Big Market
Potential
$4,200,000,000,000 gross written premium (GWP)
11,000 insurance companies globally
IT relatedInvestment
3%-4% of GWP invested in IT
$175B in 2015 Life - $97B; P&C - $78B
9 www.sapiens.com
The Insurance IT Opportunity is Large and Growing
Highly Attractive Growing Market
NEW
Global IT Spending 2015-2016
expected to increase by 4%
External Software and IT Services spending
2015-2016 expected to grow by 5%
Sapiens Total Addressable Market
$25B
Source: Market size data per Celent. March 2015
Market Trend
10 www.sapiens.com
Technology is the Enabler for Growth
Insurers in Desperate Need of Growth
New customers and new distribution
channels
Regulation
Increased competition
Maintenance cost
Growth drivers
Cost
New lines of business
Speed to market
Geographic expansion
Consolidation
Efficiency
Operational cost
Sapiens Today
12 www.sapiens.com
Current Sapiens Portfolio
Life, Annuities Pension and Retirement
Property & Casualty and Reinsurance
Decision Technology
13 www.sapiens.com
Nov. 2013
Leadership in L&A Insurance Solutions
FUNCTIONALITY 2013
North America
“ALIS continues to be one of the leading products in the region… The product has one of the most elegant and intuitive user interfaces on the market, with features such as context sensitive menu structures and ‘hover-over’ information pop-ups... The graphical renditions for illustrations and other visual representations… are also among the best that Celent have seen.”
XCelent Awards - EMEA Policy Administration Systems for Life, Annuities, Pension and Health, 11/2013XCelent Awards - North American Policy Administration Systems 2013 Life, Annuities, and Health 11/2013
EMEA
14 www.sapiens.com
Jan. 2014
Leadership in P&C Insurance Solutions
Celent research, EMEA Policy Administration Systems, General Insurance, Property & Casualty, January 2014, Craig BeattieOvum Decision Matrix – P&C Policy Administration Platform Europe, 10/2013. Bubble size represents market impact.
3
4
5
6
7
8
9
6 7 8 9
Ove
rall
Exec
uti
on
Ass
essm
ent
Overall Technology Assessment Score (1–10)
Leader Challenger Follower
GuidewirePolicyCenter
Sapiens IDIT
Accenture DuckCreek PolicyAdministration
eBao TechGeneralSystem Suite
Innovation GroupInsurer Policy
GraphTalk A.I.A.
Xuber forInsurers
TCSBaNCS
“Sapiens continues to offer a solution with great functionality and very strong technology in the EMEA region,….Sapiens IDIT continues to excel as a leading solution in both functionality and technology.”
TECHNOLOGY AND FUNCTIONALITY 2013
EMEA
15 www.sapiens.com
Insurance Core Systems
BI Reporting BI Repository
Document Management & Workflow/BPMDistribution
Management
UnderwriterWorkbench
RatingEngine
CRMCustomer
Portal
Core Claims System
Reinsurance Management
Billing
Core Policy Admin System
General Ledger
Document Creation
UniqueComp.
Distribution Management
BI Reporting BI Repository
Disbursement
AgentPortal
Sapiens’s System
Not Playing currently
16 www.sapiens.com
Sapiens Strategy: ‘ONE STOP SHOP’
Product
17 www.sapiens.com
SERV
ICES
Training Migration
Product UpgradesProject
Implementation
Consulting Hosting
Support Services
Testing
Sapiens OfferingsP
RO
DU
CTS
Sapiens ALIS Sapiens
Retirement
Sapiens IDIT
Sapiens Reinsurance
Sapiens DECISION
Sapiens eMerge
Sapiens TOPAZ
Sapiens Closed Books
18 www.sapiens.com
From Dispersed Business Logic…
Business Strategy
Market ConditionRegulation
s
Customer RequirementsCompetition
CRM Loans MortgageERPCredit
• Vague• Obscure• Unverified• Incomplete• Variable• Uncontrolled• Unsustainable
19 www.sapiens.com
CRM LoansERPCredit
To a Single Point of Truth …
Mortgage
Decision management disciplines and systems seek to provide centralized, structured decision design and automated deployment to manage all aspects of business operations
Automated Code
Generation
Centralized Decision Logic
Business Strategy
Market ConditionRegulation
s
Customer RequirementsCompetition
• Unambiguous
• Visible
• Traceable
• Complete
• Consistent
• Governed
• Reusable
• Technology agnostic
20 www.sapiens.com
Blue-Chip Global Customer-Base
North America UK Europe APAC
2014 Annual Revenue Contribution
32% 22% 36% 10%
Bulgaria
21 www.sapiens.com
Proven Management Team
Roni Al-DorPresident & CEO
2005
Steve RooneyEVP Global Sales DECISION
2014
Raj GhumanRegional ManagerUK & Nordics
1995
Ronald KaramPresident, NA insurance
2007
Henry AinouzeRegional Manager Europe
2011
Wayne Te Paa Regional ManagerANZ
2014
Roni Giladi CFO
2007
Rami DoronManaging Director,DECISION
2007
Gary SherneManaging Director Property & Casualty
2014
Irit NuselManaging DirectorLife, Pension and Retirement
2013
Yaffa Cohen-IfrahCMO and Head of Corporate Communications
2014
Anat BellucoVP Global HR
2013 Tal SharonRegional ManagerIsrael
2001
Ashok Bhavnani Regional ManagerAsia Pacific
2015
Growth Strategy
23 www.sapiens.com
Our Strategic Direction
Investments in our Growth Engines
Strengthen our Geographic Presence
US UK Europe APAC
P&C
L&A
Decision
24 www.sapiens.com
Opportunities for Growth
Acquire New Customers
Growth Drivers
Expand with Existing Customers
Mergers & Acquisitions
Core
Products
Complementary
Solutions
New
Geographies
Additional
Services
(LOB, Regulation, Workflow)
25 www.sapiens.com
Ground Rules For Acquisitions
Geographic Expansion
Complementary Solutions
Off-shore Capabilities
Customer Base
Profitable
26 www.sapiens.com
6 Mergers in 5 Years
New Customers56New Geographies3New Products2Off-Shore Operations2Complementary Solution1New Patent1
Financials
28 www.sapiens.com28 www.sapiens.com
Revenue – Continue our Growth
1 Revenues of $98.1mm in 2011 pro-forma for the FIS and IDIT acquisitions2 Non-GAAP revenues. 2015 guidance per Sapiens press releases dated August 5, 2015
70.3
52.2
98.1
113.9
135.4
157.5
176-180
2010 2011 2012 2013 2014 2015Guidance
(1)
Guidance174-178
* Growth in Constant
Exchange rate 20%
29 www.sapiens.com
32%
22%18%
18%
10%
US
UK
Europe
Israel
APAC
27%
22%13%
27%
11%
Annual Revenue by Geography
Consistent Revenue Growth in NA and EU
(Non-GAAP USD Millions) 2011:Pro forma
2011 2014
25.921.9
12.3
26.7
11.2
35.6
20.6 22.4 23.6
12.3
44.2
30.0
24.9 23.0
12.4
49.6
35.0
28.4 28.8
15.7
NA UK EU Israel APAC
2011201220132014
30 www.sapiens.com
0.9 0.9 0.9 0.9
0.2 0.2 0.2 0.2
Year 3 Year 4 Year 5 Year 6-10
Illustrative $5mm initial contract
$2.5 $2.5
$1.1 $1.1 $1.1 $1.1
License MaintenanceServices
Revenue($mm)
Contractual High
Attractive Revenue Model …
RETIREMENT L&A P&C REINSURANCE DECISION
Typical life of product engagement: 10–15 years
Ongoing Post-ProductionPre-Production
2.0 2.0
0.5 0.5
Year 1 Year 2
$7 - $10m$10 - $15m $4 - $6m $1 - $1.5m $1 - $4m
Go
-Liv
e
InitialDeal Size
Stage
Stickiness
31 www.sapiens.com
… With Significant Visibility
Layered revenue streams create significant visibility
Rev
en
ue
20% New Customers
80% Existing Customers
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
32 www.sapiens.com
3.4 3.3 3.6 3.8 3.7 4.0 4.45.0
5.86.4 6.7
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Consistent Operational Profit GrowthQuarterly Non-GAAP Operating Profit ($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 2015
www.sapiens.com33
Operational Margin – Historical Perspective Non-GAAP Operating Margin
Declining Stable GrowthRevenue
-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%
14%-14.5%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Guidance
www.sapiens.com34
Operational Margin Target
10.4%10.8%
14.5%-15%
2013 2014 2015Guidance
10%10.4%
10.9%
11.9%
14.1%
14.8%15.1%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
Non-GAAP Operating Margin
www.sapiens.com35
DECISION Division
• Move from loss to break-even
Product Profitability
• Sell more of what we have • Product maturity
Efficiency and Cost Savings
• Offshore capabilities
Scale • Efficiency of scale
Operational Margin – Key Drivers
36 www.sapiens.com
Strong Cash Position
$85M Cash
$0 Debt
Operating Cash Flow ($mm)
8.4
18.817.3
21.6
2011 2012 2013 2014
YTD 2015 cash flow $28.6 MDividend Payment of $7.2M on June 2015
37 www.sapiens.com
Financial Highlights
• 2011-2015E CAGR, 16.06%• Cash flow positive
Diversified revenue base:• 4 continents• Multiple product lines• Over 170 customers
• Long engagement cycle with repeatable revenues• Existing clients account for 80% of revenues• Multiple growth engines
• Offshore• Scale
• ~$85 mm cash and securities investments • No financial debt
Strong Financial Profile
Risk Diversification
Highly Attractive Revenue Model
Operational Margins Expansion
Well Capitalized
38 www.sapiens.com
$25bn addressable market undergoing transformative modernization
Full suite of core solutions for L&P, retirement and P&C markets
Innovative products with proven, leading functionality and technology
Blue chip customer base across a broad geographic footprint
Strong financial profile with multiple growth drivers and good visibility
Proven management team
Investment Highlights
39 www.sapiens.com www.sapiens.com
THANK YOU
Contact:
Yaffa Cohen-Ifrah, Chief Marketing Officer & Head of Corporate Communications
US Mobile: +1-201-250-9414 | Phone: +972-3-7902032e-Mail: [email protected] | Website www.sapiens.com
Appendix
41 www.sapiens.com
Q3 and Nine Month - Non GAAPNine monthsQ3
20142015*20142015*
115.7130.640.446.1Revenue
46.757.016.420.7Gross Profit
40.4%43.6%40.6%44.9 %
12.119.24.47.0Operational Profit
10.4%14.7%10.9%15.1%
11.115.84.15.8Net Income
9.6%12.1%10.1%12.6%
13.220.64.87.5Adjusted EBITDA*
0.230.320.080.12Diluted EPS
48,23549,25449,00649,484Diluted Weighted Average Number of Shares
(in USD Million except per share amount)Outstanding Shares: 48,755)as of September 30st , 2015(
* 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).
* Including consolidation of Insseco commencing the acquisition date, August 18, 2015.
42 www.sapiens.com
Key Balance Sheet Highlights
(in USD Million)
December 31, 2014 *September 30, 2015
47.445.2Cash and cash equivalents
33.139.6Marketable securities
31.832.6Account Receivable
9.39.8Deferred Revenue
00Debt
178.3175.6Total Equity
* December 31, 2014 Balance Sheet was revised to reflect the acquisition of Insseco, in accordance with the pooling of interest method.
43 www.sapiens.com
Strong Free Cash Flow
(in USD Million)
September 30th
20142015
16.228.6Net cash provided by operating activities
(4.5)(4.4)Net cash used for capitalization of R&D
(36.5)(12.8)Net cash used for investing activities
1.5(12.0)Net cash provided by (used for) financing activities
(1.9)(1.6)Effect of exchange rate changes on cash
(25.2)(2.2)Increase in cash
70.347.4Cash at beginning of period
45.145.2Cash at end of period
