UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of May, 2015

 

Commission File Number 000-20181

 

SAPIENS INTERNATIONAL CORPORATION N.V.

(Translation of Registrant’s name into English)

 

c/o Landhuis Joonchi

Kaya Richard J. Beaujon z/n

P.O. Box 837

Willemstad,

Curaçao

(Address of Principal Executive Office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

 

 
 

  

 

Sapiens Reports 12% Year-Over-Year Increase in

Quarterly Revenue to $41 Million

 

Non-GAAP Quarterly Operating Profit Increased by 58.5% Year-Over-Year

 

Holon, Israel, May 6, 2015 Sapiens International Corporation, (NASDAQ and TASE: SPNS), a leading global provider of software solutions for the insurance industry, with an emerging focus on the broader financial services sector, and a member of the Formula Group (NASDAQ: FORTY and TASE: FORT), today announced record financial results for the first quarter ended March 31, 2015.

 

First Quarter Highlights

 

·Non-GAAP revenue of $41.0 million, up 12.0% compared to $36.6 million in the first quarter of 2014. The first quarter had a further negative impact of currency erosion on our revenues. Eliminating this erosion compared to the fourth quarter of 2014 exchange rates, our reported revenues would be higher by approximately $1.4 million.

 

·Non-GAAP operating profit was $5.8 million, or 14.1% operating margin, compared to $3.7 million, or 10.0% operating margin, in the first quarter of 2014, an increase of 58.5%.

 

·Non-GAAP net income attributable to Sapiens’ shareholders totaled $4.7 million, or $0.10 per diluted share, compared to $3.4 million, or $0.07 per diluted share, in the first quarter last year.

 

·The Sapiens Board of Directors approved the distribution of a cash dividend of $0.15 per share, representing approximately $7.2 million in the aggregate, to be distributed on June 1, 2015 to its shareholders of record as of May 21, 2015.

 

·Cash, cash equivalents and marketable securities investments as of March 31, 2015 totaled approximately $87 million, with no debt.

 

“Sapiens continues to execute our growth strategy. Consistent with recent quarters, in the first quarter we achieved double-digit revenue growth that was derived from both existing and new customers and across a range of geographies,” said Roni Al-Dor, president and CEO of Sapiens. “Our new product developments, supported by an expanded, global sales team, are resonating with customers and catalyzing increased market share and continued top-line growth. Correspondingly, our operating margins improved both year-over-year and sequentially, as we continue to expand our business and leverage both our investments in our products, and the scale of our organization. Sapiens’ results in the first quarter represent a solid start to achieving our financial targets for the full year.”

 

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2015 Business Outlook

 

Management reiterated revenue guidance for the full year 2015 in the range of $174-$178 million. By eliminating the erosion of all currencies vs the U.S. dollar, our revenue growth in 2015 would be approximately 17%. The company also reiterated expectations for full-year 2015 operating margins in the range of 12-13%.

 

Roni Al-Dor added, “We have built a solid combination of innovative products, industry expertise and a healthy balance sheet that positions us for increased revenue growth and the flexibility to pursue acquisitions. This quarter we announced the acquisition of IBEXI Solutions Private Limited, an India-based provider of insurance business and technology solutions. The IBEXI acquisition will strengthen Sapiens’ insurance presence in APAC, enrich its product portfolio and enhance delivery capabilities.” Roni Al Dor concluded, “With a larger and geographically-diverse professional services team and cost-effective offshore resources, Sapiens will be well-positioned to provide services and support to our customers across the globe.”

 

Quarterly Results Conference Call

 

Sapiens management will host its earnings conference call today, May 6 at 9:30 a.m. Eastern Time (4:30 p.m. 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): 1-888-668-9141

 

·International: +972-3-918-0609

 

·UK: 0-800-917-5108

 

The live webcast of the call can be viewed on Sapiens’ website at: http://www.sapiens.com/investors/presentations-and-webcast/

 

If you are unable to join live, a replay of the call will be accessible until May 13, 2015:

 

·North America: 1-888-782-4291

 

·International: +972-3-925-5904

 

A recorded version of the webcast will also be available via the Sapiens website for three months at the same location.

 

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Non-GAAP Financial Measures

 

This press release contains the following non-GAAP financial measures: non-GAAP revenue, non-GAAP gross profit, non-GAAP operating income, non-GAAP net income attributed to Sapiens shareholders, and non-GAAP basic and diluted earnings per share.

 

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.

 

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 contained in this release.

 

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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 expenses, 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 is an additional way to view 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.

 

About Sapiens

 

Sapiens International Corporation (NASDAQ and TASE: SPNS) is a leading global provider of software solutions for the insurance industry, with an emerging focus on the broader financial services sector. We offer core, end-to-end solutions to the global general insurance, property and casualty, life, pension and annuities, reinsurance and retirement markets, as well as business decision management software. The company has a track record of over 30 years in delivering superior software solutions to more than 130 financial services organizations. The Sapiens team of over 1,000 professionals operates through our fully-owned subsidiaries in North America, the United Kingdom, EMEA and Asia Pacific. For more information: www.sapiens.com.

 

Forward-Looking Statement

 

Some of the statements in this press release may 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, please 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.

 

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Investors and Media Contact

Yaffa Cohen-Ifrah

Chief Marketing Officer and Head of Corporate Communications

Sapiens International

U.S. Mobile: +1 201-250-9414

Mobile: +972 54-9099039

Email: yaffa.cohen-ifrah@sapiens.com

 

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Summary of Non-GAAP Financial Information

U.S. dollars in thousands (except per share amounts)

 

   Three months ended 
   March 31 
   2015   2014 
   (unaudited)   (unaudited) 
                 
Revenues   41,014    100.0%   36,628    100.0%
Gross profit   17,678    43.1%   14,648    40.0%
Operating profit   5,788    14.1%   3,652    10.0%
Net income attributable to Sapiens' shareholders   4,727    11.5%   3,375    9.2%
Adjusted EBITDA   6,178    15.1%   4,020    11.0%
                     
 Basic earnings per share   0.10         0.07      
 Diluted earnings per share   0.10         0.07      

 

 

 

Adjusted EBITDA Calculation

U.S. dollars in thousands

 

  

Three months ended
March 31

 
   2015   2014 
         
GAAP operating profit   5,086    3,174 
           
Non GAAP adjustments:          
Amortization of capitalized software   1,215    1,047 
Amortization of other intangible assets   521    561 
Capitalization of software development   (1,312)   (1,401)
Stock-based compensation   278    271 
           
Non-GAAP operating profit   5,788    3,652 
           
Depreciation   390    368 
           
Adjusted EBITDA   6,178    4,020 

 

6
 

 

Revenues by Category

U.S. dollars in thousands

 

   Three months ended
March 31, 2015
 
   Revenues   Percentage 
License   3,257    7.9%
Services and maintenance   37,757    92.1%
Total   41,014    100%

 

 

 

Revenues by Geographic Breakdown

U.S. dollars in thousands

 

  

Three months ended

March 31, 2015

 
   Revenues   Percentage 
North America   13,700    33.4%
Europe   23,153    56.5%
APAC   4,161    10.1%
Total   41,014    100%

 

7
 

 

Sapiens International Corporation N.V. and Its Subsidiaries

Condensed Consolidated Statements of Income

 

U.S. dollars in thousands (except per share amounts)

 

   Three months ended 
   March 31 
   2015   2014 
   (unaudited)   (unaudited) 
         
Revenue   41,014    36,628 
Cost of revenue   24,745    23,251 
           
Gross profit   16,269    13,377 
           
Operating expenses:          
Research and development, net   2,621    2,889 
Selling, marketing, general and administrative   8,562    7,314 
Total operating expenses   11,183    10,203 
           
Operating income   5,086    3,174 
           
Financial income, net   330    (46)
Taxes and other expenses, net   539    179 
           
Net income   4,217    3,041 
           
Attributable to non-controlling interest   58    19 
           
Net income attributable to Sapiens' shareholders   4,159    3,022 
           
Basic earnings per share   0.09    0.07 
           
Diluted earnings per share   0.09    0.06 
           
Weighted average number of shares outstanding used to compute:          
           
Basic earnings per share   47,707    46,413 
Diluted earnings per share   48,894    48,493 

 

8
 

 

Sapiens International Corporation N.V. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Results

 

U.S. dollars in thousands (except per share amounts)

 

   Three months ended 
   March 31 
   2015   2014 
         
Non-GAAP revenue   41,014    36,628 
           
GAAP gross profit   16,269    13,377 
Amortization of capitalized software   1,215    1,047 
Amortization of other intangible assets   194    224 
Non-GAAP gross profit   17,678    14,648 
           
GAAP operating income   5,086    3,174 
Gross profit adjustments   1,409    1,271 
Capitalization of software development   (1,312)   (1,401)
Amortization of other intangible assets   327    337 
Stock-based compensation   278    271 
Non-GAAP operating income   5,788    3,652 
           
GAAP net income attributable to Sapiens' shareholders   4,159    3,022 
Operating income adjustments   702    478 
Other   (134)   (125)
Non-GAAP net income attributable to Sapiens' shareholders   4,727    3,375 
           
Non-GAAP basic earnings per share   0.10    0.07 
           
Non-GAAP diluted earnings per share   0.10    0.07 
           
Shares used in computing U.S. non-GAAP basic earnings per share (in thousands)   47,707    46,413 
Shares used in computing U.S. non-GAAP diluted earnings per share (in thousands)   48,894    48,493 

 

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Sapiens International Corporation N.V. and Its Subsidiaries
Condensed Consolidated Balance Sheets

 

U.S. dollars in thousands

 

   March 31,   December 31, 
   2015   2014 
   (unaudited)   (unaudited) 
ASSETS          
           
Current Assets          
Cash and cash equivalents   53,944    47,400 
Trade receivables, net   24,646    28,540 
Other receivables and prepaid expenses   5,917    3,962 
Deferred taxes   2,264    2,319 
           
Total current assets   86,771    82,221 
           
Long-Term Assets          
Marketable securities   33,076    33,098 
Property and equipment, net   5,135    4,763 
Severance pay fund   6,362    10,735 
Other intangible assets, net   26,001    27,060 
Other long-term assets   3,186    3,248 
Goodwill   67,295    67,698 
           
Total long-term assets   141,055    146,602 
           
TOTAL ASSETS   227,826    228,823 
           
LIABILITIES AND EQUITY          
           
Current Liabilities          
Trade payables   4,287    2,952 
Accrued expenses and other liabilities   24,142    25,159 
Deferred revenue   9,980    9,272 
           
Total current liabilities   38,409    37,383 
           
Long-Term Liabilities          
Other long-term liabilities   2,976    3,105 
Accrued severance pay   7,424    11,980 
           
Total long-term liabilities   10,400    15,085 
           
Redeemable Non-Controlling Interest   159    159 
           
Equity   178,858    176,196 
           
Total Liabilities and Equity   227,826    228,823 

 

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Sapiens International Corporation

Consolidated Statement of Cash Flow

 

U.S. dollars in thousands

  

For the three months ended

March 31

 
   2015   2014 
   (unaudited)   (unaudited) 
Cash flows from operating activities:          
Net income   4,217    3,041 
           
Reconciliation of net income to net cash provided by operating activities:          
Depreciation  and amortization   2,126    1,976 
Amortization of premium and accrued interest on marketable securities   187     
Stock-based compensation related to options issued to employees   279    271 
Decrease (increase) in trade receivables   2,808    (1,172)
Deferred tax assets   615    (27)
Decrease (increase) in other operating assets   (724)   88 
Increase (decrease)  in trade payables   1,511    (2,056)
Increase (decrease) in other operating liabilities   (28)   1,738 
Increase  in deferred revenues   1,050    2,168 
Severance pay   (156)   (31)
           
Net cash provided by operating activities   11,885    5,996 
           
Cash flows from investing activities:          
Purchase of property and equipment   (891)   (511)
Increase in capitalized software development costs   (1,312)   (1,401)
Increase in restricted cash   (1,809)   (57)
Net cash used in investing activities   (4,012)   (1,969)
           
Cash flows from financing activities:          
Proceeds from employee stock options exercised   223    727 
Net cash provided by financing activities   223    727 
           
Effect of exchange rate changes on cash and cash equivalents   (1,552)   (98)
           
Increase in cash and cash equivalents   6,544    4,656 
Cash and cash equivalents at the beginning of period   47,400    70,313 
           
Cash and cash equivalents at the end of period   53,944    74,969 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Sapiens International Corporation N.V.
   
  By: /s/ Roni Giladi
  Roni Giladi
  Chief Financial Officer

 

Dated: May 6, 2015