Sapiens International Corporation NV
Sapiens International Corporation NV — Q2 2024 Earnings Presentation
37 slides from Sapiens International Corporation NV's earnings presentation, Aug 1, 2024
Slide 1: Q2 2024 Investor Presentation
Q2 2024 Investor Presentation Roni Giladi, CFO Yaffa Cohen-Ifrah, CMO & Head of IR August 1, 2024
Slide 2: Forward Looking Statements
Forward Looking Statements • Certain matters discussed in this presentation, that are incorporated herein and therein by reference are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the safe harbor provisions of the U.S. Privat
Slide 3: Sapiens is the Most Comprehensive Insurance Software Platform in the Market
Sapiens is the Most Comprehensive Insurance Software Platform in the Market One-stop software solutions enabling the modern carrier experience Who What we are we do How Who The only truly global we do it provider of intelligent, purpose-built software Provide a suite of mission- critical solutions a
Slide 4: Sapiens at a Glance (NASDAQ: SPNS)
Sapiens at a Glance (NASDAQ: SPNS) ~$515 M 14.7% 600+ Revenue Revenue CAGR Customers (’12 – ‘23) $98M 19% 66% EBITDA EBITDA Recurring Margin & reoccurring $60B+ 38 Serving Global TAM Countries P&C and L&A (1) Figures represent 2023 actuals unless otherwise specified (2) Retention for Recurring + Reo
Slide 5: Strong Market Demand as Insurers Seek New Solutions to Address Industry Challenges
Strong Market Demand as Insurers Seek New Solutions to Address Industry Challenges Increased Adapt to Evolving Customer Competition Regulatory Expectations Changes Replace Legacy IT InsureTech Constant Drive Demand for Digital Infrastructure for Efficiency Transformation 5 5
Slide 6: Sapiens is at the Center of a Large and Growing Market Opportunity
Sapiens is at the Center of a Large and Growing Market Opportunity Outdated insurers technology presents a MASSIVE market for Sapiens Massive Insurance IT Spend… …In Sapiens’ Core Markets… …Underpins an Incredible TAM Opportunity $208B $208B 4% Data Center $60B 6% Devices $50B+ $27B Core TAM(2) $48B
Slide 7: Sapiens Insurance Platform
Sapiens Insurance Platform Industry Ecosystem Content 7
Slide 8: Sapiens Insurance Platform
Sapiens Insurance Platform Ecosystem Industry Content 70+ global Insurtech | Pre-configured products partners and solution and LOBs providers | Pre-integrated end-to-end 3rd-party business business processes applications (e.g., CRM, marketing automation, | Pre-configured persona- financial systems)
Slide 9: Sapiens is the Recognized Leader by Analysts
Sapiens is the Recognized Leader by Analysts Clear market recognition driven by Sapiens’ innovative product strategy and leadership NA L&A POLICY ADMIN SYSTEMS NA L&A (ILLUSTRATION) Celent Celent ‘Luminary’ ‘Luminary’ Designation Designation Breadth of Functionality Breadth of Functionality NORTH AM
Slide 10: Sapiens is the Recognized Leader by Analysts…
Sapiens is the Recognized Leader by Analysts… Clear market recognition driven by Sapiens’ innovative product strategy and leadership EMEA P&C POLICY ADMIN SYSTEMS APAC P&C POLICY ADMIN SYSTEMS Celent Celent ‘Luminary’ ‘Luminary’ Designation Designation Breadth of Functionality Breadth of Functionali
Slide 11: Clear Growth Opportunities to Achieve Long-Term Vision
Clear Growth Opportunities to Achieve Long-Term Vision Execute on Actionable, Transformative M&A Opportunities Continued Shift to Cloud and Growth Potential Product-Based Revenues Geographic Expansion Win New Logos Accelerate Cross-Sell Current 11
Slide 12: Cross-Sell: Massive Acceleration Opportunity
Cross-Sell: Massive Acceleration Opportunity Multi-directional cross selling opportunities across all customer tiers Across geographies Across products and services Data, Digital, Analytics, and Decision Business Applications Core P&C L&A Across customer tiers 12
Slide 13: Capture Market Share with New Logo
Capture Market Share with New Logo R&D Investment Accelerate Product Innovation Sales & Marketing Add Talent to Build New Logos Pipeline Acquire 20-30 Brand Building New Customers every year Trade Shows and Industry Analysts Geographies Penetrate new Geographies 13 15
Slide 14: Territory Snapshot
Territory Snapshot Nordics UK & DACH East Ireland Europe Poland South Iberia East Japan North Asia America Israel India Australia & New South South Zealand America Africa 14
Slide 15: M&A: Proven Track Record of Successfully Integrating Businesses Globally
M&A: Proven Track Record of Successfully Integrating Businesses Globally A history of strategic acquisitions expands Sapiens’ portfolio, capabilities and technology, and increases our presence in high growth markets 2010 2014 2016 2018 2020 2022 2011 2015 2017 2019 2021 2023 15
Slide 16: Financials
Financials 16
Slide 17: A Compelling Financial Profile
A Compelling Financial Profile Double digit Recurring and Profit and Resilient 10-Year re-occurring margin balance sheet, Revenue CAGR revenue expansion cash generation 17
Slide 18: Revenue Growth Achieved Year-Over-Year
Revenue Growth Achieved Year-Over-Year Non-GAAP Revenues (USD Millions) 8.4% 2.4 % 514.8 20.6% 463.6 474.8 18.1% +12.2% 384.5 +6.7% +25.8% 325.7 +20.6% 290.3 272 +13.8% +16.3% +18.6% 216.2 179.3 157.5 135.4 114.2 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 18
Slide 19: Annual Revenue Growth - by Geography
Annual Revenue Growth - by Geography Non-GAAP Revenue (USD millions) 10.6% 7.4% 189.3 197.5 212.2 239.5 232.9 257.4 44.4 45.2 34.7 NA Europe* APAC & SA 2021 2022 2023 • Europe includes UK, Nordics, Israel and rest of Europe 19 • APAC includes Australia, Thailand, Singapore, Japan, India, Hong Kong,
Slide 20: Annualized Recurring Revenue - ARR
Annualized Recurring Revenue - ARR +13.5% 164.8 145.2 2022 2023 • ARR Include Subscription, Term Licenses, Maintenance and cloud solutions • The Figures Are Q4 Of Each Year Multiplied By 4 20
Slide 21: Unique Proposition
Unique Proposition Multiple Segments Global Player By Market By Geography 5% 9% 600+ Customers Across 25% 41% 50% 70% 30+ EUROPE North America ROW Countries P&C L&A Other 2023 Revenue - $515 Million 21
Slide 22: Customers Concentration – 2023 Vs 2022
Customers Concentration – 2023 Vs 2022 Top 10 Customers Largest Customers 24.2% 18.8% 4.6% 3.3% 2022 2023 2022 2023
Slide 23: Annual Operating Profit Growth
Annual Operating Profit Growth Non-GAAP Profit (USD millions) 12.8% 2.5% 94 20% 81 84 30% 68 32% 52 40 2018 2019 2020 2021 2022 * 2023 13.6% 16.0% 17.7% 17.6% 17.6% 18.3% 23 * 2022 Operating profit on a constant currency base is 89.7M USD
Slide 24: Adjusted Annual Free Cash Flow
Adjusted Annual Free Cash Flow Non-GAAP (USD Thousands) Free Cash Flow 2021 2022 2023 Average Cash flow from operating activities 80.5 43.8 79.4 68 Increase in capitalized software development costs (7.9) (6.1) (6.5) (6.8) Capital expenditures (3.8) (2.7) (2.5) (3) Free cash flow 68.8 35 70.4 58.1 C
Slide 25: Q2 2024 Results
Q2 2024 Results SAPIENS
Slide 26: Q2 2024 Highlights
Q2 2024 Highlights Non-GAAP Q2 2024 Q2 2023 % Change QOQ regional performance : Revenue $136.8 $128.4 6.6 % • North America grew 11.1% Gross Profit $62.5 $58.0 7.7 % Gross Margin 45.7 % 45.2 % 50 bps • Europe grew 5.0% (constant exchange Operating Income $24.8 $23.4 6.1 % rate 5.9%) Operating Margin
Slide 27: Business Stickiness – Recurring and Re-Occurring Q2-24
Business Stickiness –Recurring and Re-Occurring Q2-24 +18.8% Revenue From Software products 82.6 98.0 and re-occurring 64.3% 71.7% post-production services -15.4% Revenue From Pre-production 45.8 38.8 implementation 35.7% 28.3% services Q2 23 Q2 24
Slide 28: Q2 - Annualized Recurring Revenue - ARR
Q2 - Annualized Recurring Revenue - ARR +12.1% 168.6 150.4 Q2 23 Q2 24 • ARR Include Subscription, Term Licenses, Maintenance and cloud solutions • The Figures Are Q4 Of Each Year Multiplied By 4 28
Slide 29: Adjusted Free Cash Flow Q2-24
Adjusted Free Cash Flow Q2-24 Non-GAAP (USD Millions) Free Cash Flow Q2 23 Q2 24 Cash flow from operating activities 14.6 9.3 Increase in capitalized software development costs (1.7) (1.8) Capital expenditures (0.8) (1.4) Free cash flow 12.1 6.1 Cash payments attributed to acquisition-related costs
Slide 30: Cash and Cash Equivalents (June 30, 2024)
Cash and Cash Equivalents (June 31, 2024) USD millions $186M $40M 2020 - $ 7M (COVID-19) $20M Paid 1/1/24 2021 - $ 20M 2 more installments to 2022 - $ 39M be paid over next 2 years 2023 - $ $28.1M 2024 - $ 16 M * Cash Debt Dividend Distribution Cash and Cash S&P Israel (Mallot): ilAA-/Stable Up to 4
Slide 31: Guidance
Guidance SAPIENS
Slide 32: Revenue and Profitability Increase – 2024 Guidance
Revenue and Profitability Increase – 2024 Guidance Non-GAAP (USD millions) 2024 2024 2023 Guidance Guidance Guidance Actual Mid Low High Growth of Revenue $514.8M $550M $555M 7.3% Operating Passing $94.1M $99.6M $102.7M Profit $100M Operating 18.3% 18.1% 18.5% Stable Margin 32
Slide 33: Growth $550M+ Operating Profit ~$100M+
Growth Operating Profit $550M+ ~$100M+ 33
Slide 34: Why Choose Sapiens? Growth vs Value
Why Choose Sapiens? Growth vs Value AND 34
Slide 35: Rare, Highly Compelling Investment Opportunity
Rare, Highly Compelling Investment Opportunity Compelling opportunity defined by market leadership, growth profile, and scarcity Immense market Best-in-class product Global opportunity offerings leadership Huge whitespace Successful M&A Multiple levers for opportunity and large playbook with continu
Slide 36: Rare, Highly Compelling Investment Opportunity
Rare, Highly Compelling Investment Opportunity Compelling opportunity defined by market leadership, growth profile, and scarcity Immense market opportunity Best-in-class product offerings Global leadership $60B+ TAM with sizeable tailwinds Unmatched breadth of insurance Unrivaled geographic reach wi
Slide 37: Thank you!
Thank you! Contact Us Yaffa Cohen-Ifrah, CMO & Head of RI [email protected] 37
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