November 3, 2021 – Sapiens International Corporation, (NASDAQ and TASE: SPNS), a leading global provider of software solutions for the insurance industry, today announced its financial results for the third quarter ended September 30, 2021.
Summary Results for Third Quarter 2021 (USD in millions, except per share data)
|September 30, 2021||September 30, 2020||% Change||September 30, 2021||September 30, 2020||% Change|
|Operating Margin||13.8%||12.4%||140 bps||17.7%||18.2%||(50) bps|
|Net Income (*)||$13.3||$9.3||42.1%||$17.0||$13.7||23.5%|
(*) Attributable to Sapiens’ shareholders
“Revenue in the third quarter increased by 21% year-over-year, reaching a non-GAAP quarterly record of $118.4 million, and non-GAAP operating profit increased to a record $21.0 million for an operating margin of 17.7%,” stated Roni Al-Dor, President and CEO of Sapiens.
“We continue to reinforce Sapiens’ leadership position in the evolving insurance software industry, across all tiers, both in P&C and Life & Annuities/Pension. We are landing new business and expanding by upselling and cross-selling to existing customers, while focusing on further advancing our product offerings and our commitment to customer success. The solid results we achieved in the third quarter were the direct outcome of successfully executing our strategy and our commitment to achieving consistent growth and improving operating margin,” continued Mr. Al-Dor.
“We are reiterating our 2021 non-GAAP revenue guidance of $461 million to $466 million, expecting to reach approximately the midpoint of the range, and increasing our annual non-GAAP operating margin from 17.2%-17.5% to the range of 17.4%-17.5%,” concluded Mr. Al-Dor.
Quarterly Results Conference Call
Management will host a conference call and webcast today, November 3, 2021 at 9:30 am. Eastern Time (3:30 pm. 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): + 1-888-642-5032; International: +972-3-918-0609; UK: 0-800-917-5108 The live webcast of the call can be viewed on Sapiens’ website at: https://sapiens.com/investor- relations/ir-events-presentations. A replay of the call will be available one business day following the completion of the event, at the same link for 90 days.
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: non-GAAP revenue, non- GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income attributed to Sapiens shareholders, non-GAAP basic and diluted earnings per share, Adjusted EBITDA and Adjusted Free Cash-Flow.
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.
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: Valuation adjustment on acquired deferred revenue, amortization of capitalized software development and other intangible assets, capitalization of software development, stock-based compensation, compensation related to acquisition and acquisition-related costs, restructuring and cost reduction costs, and tax adjustments related to non-GAAP adjustments.
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.
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.
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables of this release.
The Company defines Adjusted EBITDA as net profit, adjusted for valuation adjustment on acquired deferred revenue, stock-based compensation expense, depreciation and amortization, capitalized of software development costs, compensation expenses related to acquisition and acquisition-related costs, restructuring and cost reduction costs, financial expense (income), 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 reflects 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. The Company uses Adjusted Free Cash-Flow as a measurement of its operating performance, and reconciles cash-flow from operating activities to Adjusted Free Cash-Flow, while reducing the amounts for capitalization of software development costs and capital expenditures. The Company adds back cash payments made for former acquisitions in respect of future performance targets and retention criteria as determined upon acquisition date of the respective acquired company, which were included in the cash-flow from operating activities. We
believe that Adjusted Free Cash-Flow is useful in evaluating our business, because Adjusted Free Cash-Flow reflects the cash surplus available to fund the expansion of our business.
Sapiens International Corporation (NASDAQ and TASE: SPNS) empowers the financial sector, with a focus on insurance, to transform and become digital, innovative and agile. Backed by more than 35 years of industry expertise, Sapiens offers a complete insurance platform, with pre-integrated, low- code solutions and a cloud-first approach that accelerates customers’ digital transformation. Serving over 600 customers in 30 countries, Sapiens offers insurers across property and casualty, workers compensation and life markets the most comprehensive set of solutions, from core to complementary, including Reinsurance, Financial & Compliance, Data & Analytics, Digital, and Decision Management. For more information visit sapiens.com or follow us on LinkedIn.
Chief Marketing Officer, Sapiens
Managing Partner, Hayden IR
Managing Director, Hayden IR