2
•
Disclaimer
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. Private Securities Litigation Reform Act of 1995, that are based on our beliefs, assumptions and expectations, as well as information currently available to us. Such forward-looking statements may be identified by the use of the words “anticipate,” “believe,” “estimate,” “expect,” “may,” “will,” “plan” and similar expressions. Such statements reflect our current views with respect to future events and are subject to certain risks and uncertainties. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: the COVID-19 (coronavirus) pandemic, which may last longer than expected and materially adversely affect our results of operations; the degree of our success in our plans to leverage our global footprint to grow our sales; the degree of our success in integrating the companies that we have acquired through the implementation of our M&A growth strategy; the lengthy development cycles for our solutions, which may frustrate our ability to realize revenues and/or profits from our potential new solutions; our lengthy and complex sales cycles, which do not always result in the realization of revenues; the degree of our success in retaining our existing customers or competing effectively for greater market share; difficulties in successfully planning and managing changes in the size of our operations; the frequency of the long-term, large, complex projects that we perform that involve complex estimates of project costs and profit margins, which sometimes change mid-stream; the challenges and potential liability that heightened privacy laws and regulations pose to our business; occasional disputes with clients, which may adversely impact our results of operations and our reputation; various intellectual property issues related to our business; potential unanticipated product vulnerabilities or cybersecurity breaches of our or our customers’ systems; risks related to the insurance industry in which our clients operate; risks associated with our global sales and operations, such as changes in regulatory requirements, wide-spread viruses and epidemics like the recent novel coronavirus outbreak, or fluctuations in currency exchange rates; and risks related to our principal location in Israel and our status as a Cayman Islands company.
While we believe such forward-looking statements are based on reasonable assumptions, should one or more of the underlying assumptions prove incorrect, or these risks or uncertainties materialize, our actual results may differ materially from those expressed or implied by the forward-looking statements. under the heading “Risk Factors” in our most recent Annual Report on Form 20-F and in our other filings with the SEC, in order to review conditions that we believe could cause actual results to differ materially from those contemplated by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this presentation, to conform these statements to actual results or to changes in our expectations.
3
•
The global
partner of
choice
for insurance carriers that seek
to digitally
transform their
4
4Sapiens by the Numbers
~$40bn
Target
Market
$385M
2020
Revenues
5
Industry Awards in 2020
$68M
2020
Operating Profit
2600+
Insurance
Customers
16.4%
2012-2020
Revenue CAGR
1
Hand-to-shake
Business Model
Global
Presence
17
Acquisitions 2010-2020
1
Represent revenues from customers that generated revenues in prior years.
5
Insurance Carriers Face Daily Challenges
Evolving Customer
Expectations
Legacy IT
Infrastructure
Demand for Digital
Transformation
Increased
Competition
Rigorous Regulatory
Environment
Constant Drive
for Efficiency
6
11,000 Insurance Carriers Globally
1 Source: Gartner, Forecast: Enterprise IT Spending for the Insurance Market, Worldwide, 2018-2024, 2Q20 Update. 2Includes internal services, telecom services,
devices, and data centers systems. 3Includes consulting, business process outsourcing, implementation, managed services and cloud infrastructure services. 4 Source: Company’s estimates; The above mentioned report by Gartner; Celent, IT Spending in Insurance, September-2020.
Sapiens Enjoys a Large and Growing TAM
Target Market
Global Insurance
Technology Spending
1
$48bn
Insurance
Software
Solutions
$74bn
IT Services
3
$96bn
Other Services
and Systems
2
$218bn
IT Services
Insurance
Software Solutions
$40bn
4
7
We Serve all Major Insurance Markets
Property &
8
Offer a One-Hand-to-Shake Business Model
Core Systems
Customer
Engagement
Solutions
Services
Claims
Policy
Billing
Data and
Analytics
Decision
Management
Digital
Engagement
Professional
Services
Cloud Managed
Services
Program
Delivery
Rich Product Portfolio
System Integration
Complementary Solutions
Reinsurance
Financial & Compliance
Underwriting
e-Application
9
Datawarehouse
& Reporting
Predictive Analytics
Use Cases
Big Data
A Unique Platform Architecture
Open Integration
Extending
Proposition Coverage
Customer &
Agent Portal
Digital Business
Journeys
Connect Anytime
Anywhere
Policy –
Billing – Claims
Configuration
Comprehensive
Business Logic
Cloud
Data & Analytics Layer
Open API Layer
Digital Customer Experience
CoreSuite for Insurance (P&C / L&A / WC)
InsurTech
Ecosystem
Recognized by the Analyst Community
Xcelent Award for EMEA P&C Functionality, 2021
Xcelent Award for NA NB & UW Systems, 2020
Non-Life-Insurance Platforms, Europe
Life Insurance Policy Administration Systems
11
Attained a Marquee Global Customer Base
Rest of World
Europe
12
Extensive Global Footprint
Development and Delivery Centers
Office Locations
Countries of Operations
Customers Across
28 Countries
600+
Development and
Delivery Centers
10
13
Multi-directional Cross Selling O
Note: Earth chart is illustrative; Dotted lines on right-hand-side chart denote future opportunity.
Growth via Proven Land and Expand Model
Across Products and Services
Across Geographies
Complementary
Solutions
Core
P&C
L&A
Customer Engagement and
Data Analytics
Across All Customer Tiers
14
Successful Track Record of Strategic
Acquisitions
2011
2015
2016
2017
2018
2019
2020
✓ Product proposition
✓ Customer base
✓ Geography
✓ Technology
✓ Talent expansion
A Decade of Strategic
Acquisitions Supporting
Core
Systems
Near and
Off-shore
U.S. Expansion
European Expansion
15
Well Positioned for Continued Growth
Continue
Strategic
Acquisitions
Accelerate
Product
Innovation
Expand
Geographically
Grow With
Existing
Customers
Acquire
New
Customers
16
17
A Compelling Financial Profile
Strong and consistent revenue growth
Diversified and sticky revenue model
Steady margin expansion
Strong balance sheet supported by robust
cash generation capabilities
114.2 135.4 157.5 179.3 216.2 272 290.3 325.7 384.5
2012
2013
2014
2015
2016
2017
2018
2019
2020
Revenue Growth Achieved Year-over-Year
18
Non-GAAP Revenues (USD millions
)
+16.3%
+13.8%
+6.7%
+20.6%
+25.8%
+12.2%
+18.6%
18.1%
Revenue Growth Trend –
Supported by a Strong Customer Base
249 287 333 30 36 27 11 3 24
2018
2019
2020
Existing Customers New Customers M&ANew
7%-11%
M&A
1%-6%
Existing 86%-88%
2018-2020 Average Percentage
- Revenue from existing customers represents revenue from customers which existed in previous years, including M&A.
- Revenue from M&A represents revenue for the first year of acquisition
20
Steadily Increasing Customer Base Diversity
450
500
600
Growing our Customer Base
Largest Customer as Percentage of Revenue
Top-10 Customers as Percentage of Revenue
5.8%
4.5%
4.0%
30.1%
26.3%
23.1%
2018
2019
2020
+
+
+
22%
31%
23%
24%
1 2 3 4 and 5
1Based on top 70% revenue. Tier 1, 2, 3, 4 and 5, represent Gross Written Premiums (GWP) of >$5bn, $1bn-$5bn, $250m-$1bn and <$250m, respectively.
2020 Revenue by Market, Geography and Tiers
By Market
By Geography
By Customer Tier
1
49%
45%
6%
North America Europe * Row
71%
21%
8%
P&C L&A Other
Annual Revenue Growth - by Geography
137.3 128.5 24.5 163.6 133.8 28.3189
172.9
23.1
NA
Europe*
APAC & SA
2018 2019 2020
22
* Europe includes UK, Nordics, Israel and rest of Europe
2020 Revenue Growth Analysis
238.0%
9.4%
0.7%
26.1M
30.5M
2.2M
$325.7M
$384.5M
23
40
52
68
2017
2018
2019
2020
74%
30%
31%
Operating Profit Growth
Non-GAAP Profit (USD millions
)
12.5%
14.8%
16.5%
18.1%
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
Translates into Significant Operating Margin Improvement
25
2018
2019
2020
+563 bps
Key Expansion Drivers
Off-shore operations
Economies of scale
Operating Margin Expansion Analysis with COVID-19 Impact
26
Non-GAAP Profit (USD millions
)
Cash & Cash Equivalents and Allocation Strategy
$182M
Post Tia Acquisition
$(120M)
$20M Paid on 1/1/21
5 more installments to
be paid over next 5
years
Debt
Cash
(1)
The
sum.cumo acquisition cost does not include EUR 4 million in Sapiens shares
(2)
2020 Dividend payout was lower due to COVID-19. $10M paid out in 2018. $11M paid out in 2019
.
(3)Non-GAAP
Acquisitions
sum.cumo
Delphi
Tiful Gemel
Digital IP
Tia
Dividend Payout
Policy 40% of
Non-GAAP Net Income
$123M
(1)
$7M
(2)
2020 Actual Allocation
December 31, 2020
Free cashflow
$39.8M
Net Income
$39.6M
FCF/Net Income
100%
2018-2020 Average
(3)
28
2021 Outlook
▪
20% total growth, 10% organic growth
▪
Expansion in the US and Europe
▪
Increasing our digital footprint
▪
Reap the fruits from the DACH, Iberian and Nordic regions
▪
Profitability expansion
▪
Focusing on integration of recent M&As
▪
Certain savings related to COVID-19 may diminish in H2
Revenue Guidance - Average Growth Analysis
29
2021 guidance per Sapiens press release dated February 25, 2021
(1) Sapiens + M&A which been on a full year with Sapiens (calculo and sum.cumo).
(2) Tia and Delphi
(3) 10% growth + 1 month of sum.cumo
(4) Currency
375
(1)
414
(3)
Non-GAAP Revenues (USD millions)
9.5
(2)
42
(2)
4
(4)2020
2021 Mid-Point
Guidance
384.5
460
Operating Margin Expansion Guidance Analysis with
COVID-19 Impact
30
Non-GAAP Profit (USD millions)
0.8%
(0.3%)
(0.3%)
31
31Sapiens by the Numbers
~$40bn
Target
Market
$385M
2020
Revenues
86-88%
2018-2020 Revenues
from Existing Customers
1$68M
2020
Operating Profit
2600+
Insurance
Customers
16.4%
2012-2020
Revenue CAGR
1
Hand-to-shake
Business Model
Global
Presence
17
Acquisitions 2010-2020
1
