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1 www.sapiens.com
www.sapiens.com
Investor Presentation
May 2016
Roni Al-Dor, CEORoni Giladi, CFOYaffa Cohen-Ifrah, CMO
Q1 2016 Results
2 www.sapiens.com2 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, 2015 and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission.
Safe Harbor Statement
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Who is Sapiens?
Global Footprint
Revenue Growth
NA: 34%UK: 24%Israel: 16%Europe: 15%APAC: 11%
� Leading global provider of software solutions across the insurance industry
� Growing presence in the financial services sector
� DNA of technology platform & insurance domain expertise
114
98
135157
179
2011 2012 2013 2014 2015Non-GAAP revenue (USD M); See appendix for Non-GAAP reconciliation1 Revenue of $98.1M in 2011 pro-forma for the FIS and IDIT acquisitions
1
190 Customers
1,700 Employees
4 www.sapiens.com
Sapiens Evolution
Today: Modernize
Vertical Pivot
� Next-generation insurance & technology portfolio
� Expanding to financial services
Early days: � Horizontal platforms
� Customization for select verticals
� Rules management
� Vertical-specific solutions for insurance market
5 www.sapiens.com5 www.sapiens.com
Our OfferingsProvide core software solutions for insurance and financial services companies:
Core software policy administration solutions
Innovative platform for business decisionsTechnology
BasedSolutions
Insurance Software
Application development platforms
� ~80% of the business
� Run mission-critical insurance operations
� Provide functionality to support the full life-cycle of insurance carriers
� ~20% of the business
� Includes a disruptive business decision engine
ReinsuranceProperty & CasualtyRetirementLife & Annuities
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The Market
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The Insurance Markets
WealthLiabilityCatastrophe PropertyMotor Voice
Life, Annuity, Retirement
Annuities Retirement
� Highly regulated industry with accelerating regulatory changes
� Competitive markets with little product differentiation
� Increased globalization
� Legacy IT transition challenges
Enterprises are seeking modular, next-gen solutions to ease the transition and transform the consumer experience
Property, Casualty, ReinsuranceInjuries Life
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The Insurance Industry
Source: Market size data per Celent. April 2016
Big Market
Potential
$5,200,000,000,000 gross written premium (GWP)
11,000 insurance companies globally
IT-relatedInvestment
3%-4% of GWP invested in IT
$185B in 2016 Life - $99B; P&C - $86B
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The Insurance IT Opportunity is Large and Growing
Highly Attractive Growing Market NEW
Global IT Spending 2016-2017 expected to increase by 6%
External Software and IT Services Spending 2016-2017 - expected to grow by 7%
Sapiens Total Addressable Market
$30B
Source: Market size data per Celent. April 2016
Market Trend
Source: Gartner Verticals Forecast world wide By Insurance, April 2016 and company analysis
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Today’s Market Challenges & Trends
Need to cope with frequently changing regulations
Shift of power and distribution model towards end-customers, omni-channel distribution
Quick time-to-market capabilities
Digitalization, IoT and wearable, mobile, analytics & Big Data, cloud & SaaS, new external market entrants
Reducing cost of ownership across IT operation
Fierce competition between insurance carriers -need to differentiate
Compliance
Channels & Distribution
Cost & Efficiency
Competition
Growth
Technology & Business Model
Sapiens Today
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Current Sapiens Portfolio
Life, Annuities, Pension and Retirement
Property & Casualty and Reinsurance
Decision Technology
13 www.sapiens.com
Our Value Proposition
Award-winning packaged solutions
End-to-end SolutionsLeading Technology Robust Domain Expertise
� Comprehensive platform for automating back-end core across policy, billing and claims
� Customizable to meet customers’ IT and business demands
� Modular yet integrated
� Digital-ready
� One-stop-shop approach reduces risk on major re-platforming initiatives
� Unique combination of technology and services
� Ongoing maintenance and enhancement as business needs change
� Robust insurance industry expertise
� Team comprised of L&A and P&C industry experts
� Building solutions with customers & solving their business problems
� Enhancing solutions as industry evolves
Decades of proven project delivery Consultative approach
Large global and expanding footprint
Retirement ReinsuranceLife, Pensions & Annuities
Property & Casualty
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Nov. 2015
Leadership in L&A Insurance Solutions
Breath of Functionality 2015EMEA North America
XCelent Awards - EMEA Policy Administration Systems for Life, Annuities, Pension and Health, 12/2015
“The ALIS system has a very good user interface. It is simple for the user and flows well... The ALIS system has a graphical policy timeline that is unique and useful for a customer service representative working with a client. Sapiens is releasing new portals, which Celent reviewed, that are among the best we have seen “Going forward, we expect the Sapiens ALIS system to make most evaluation short lists and Sapiens to expand its already rich customer base in the EMEA region.”
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Feb. 2016
Leadership in P&C Insurance Solutions
Celent research, EMEA Policy Administration Systems, General Insurance, Property & Casualty February 2016, Craig BeattieCelent research– APAC Policy Administration Platform Property & Casualty, 04/2016, KyongSun Kong
EMEA
“Sapiens IDIT continues to offer a strong digital policy administration system for insurers globally, with strong experience across Europe…customers commented that Sapiens is responsive, committed, and constructive, and can provide creative solutions.”
Technology 2015Technology and Breath of Functionality 2015APAC
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Focus on Insurance Core Systems
Agent
Portal
BI Repository
CRMCustomer Portal
Core Claims System
Reinsurance Management
Billing
Core Policy Admin System
General Ledger
Document Creation
UniqueComp.
Distribution Management
BI Reporting
Disbursement
Sapiens’ offering
No offering currently
AgentPortal
UnderwriterWorkbench
RatingEngine
Document Management & Workflow/BPM
Constant Evolution and Expansion of the Sapiens Proposition
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One-Stop-Shop Across Products and Services
Sapiens Retirement
Sapiens P&C
Sapiens L&A
Sapiens Reinsurance
Hosting
Product Upgrades
Training Support Services
Migration
TestingConsulting
Project Implementation
Benefits to Customer� Successful implementations� Opportunity to enhance product
functionality� Single point of contact� Ease of future enhancements and
maintenance
Benefits to Sapiens� Strategic importance to customers� Deeper level of customer
entrenchment� Feedback mechanism to enhance
product � Opportunities to cross-sell current
and future products and solutions
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CRM LoansERPCredit
Sapiens DECISION
Mortgage
Automated Code
Generation
Centralized Decision Logic
Business Strategy
Market ConditionRegulation
s
Customer RequirementsCompetition
Manages business logic across organizations, for large organizations that operate in highly-regulated and complex decision-making environments, cutting time, cost and risk
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Blue-Chip Global Customer-BaseNorth America UK Europe APAC
34% 24% 31% 11%
Bulgaria
Growth Strategy
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Optimize Delivery Operations
Our Growth Strategy: Land and Expand
Mergers &Acquisitions
Grow with Existing Customers
Win New Customers
MaintainProduct Leadership
Leverage our Global PresenceHo
wSt
rate
gy
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Acquisitions – What Are We Looking For?
Customer Base
Geographic Expansion
Complementary Solutions
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6 Acquisitions in 5 Years
New Customers56New Geographies3New Products2Off-Shore Operations2Complementary Solution1New Patent1
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Proven Management Team
Roni Al-DorPresident & CEO
2005
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 DirectorDECISION
2007
2016
Irit NuselManaging DirectorLife, Pension and Retirement
2013
Yaffa Cohen-IfrahCMO and Head of Corporate Communications
2014
Anat BellucoVP Global HR
2013 Ashok Bhavnani Regional ManagerAsia Pacific
2015
Mike McCurley VP Sales Insurance Sector North America
Liana GelikasManaging Director Property & Casualty
2016Norman TutnauerChief Business Officer
Regional team
Osnat Segev-HarelHead of Corporate Development
2009
Executive team
2016
Tal SharonRegional ManagerIsrael
2001
Financials
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Revenue – Continue our Growth
1 Revenues of $98.1 M in 2011 pro-forma for the FIS and IDIT acquisitions
98.1
70.3
135.4
157.5
179.3
2011 2012 2013 2014 2015
(1)
Non-GAAP Revenues (USD millions)
113.9
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Annual Revenue by Geography
25.9
21.9
12.3
26.7
11.2
35.6
20.622.4 23.6
12.3
44.2
30.0
24.923.0
12.4
49.6
35.0
28.4 28.8
15.7
61.3
42.6
26.528.3
20.5
NA UK EU Israel APAC2011 2012 2013 2014 2015
Non-GAAP Revenues (USD millions)
Focus on NA and Europe
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Year 3 Year 4 Year 5 Year 6-10
Illustrative $5M initial contract$2.5 $2.5
$1.1 $1.1 $1.1 $1.1Revenue($mm)
Contractual High
Attractive Revenue Model
Retirement L& P&C Reinsurance DECISION
Typical life of product engagement: 10–15 years
Ongoing Post-ProductionPre-Production
Year 1 Year 2
$7 - $10m$10 - $15m $4 - $6m $1 - $1.5m $1 - $4m
Go-
Live
InitialDeal Size
Stage
Stickiness
29 www.sapiens.com
With Significant VisibilityCustomer stickiness and layered revenue streams create significant visibility
Reve
nue
15-20% New Customers
80-85%Existing Customers
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
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Q1 – Continue Our Revenue GrowthNon-GAAP Revenues (USD millions)
41.0
49.6
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.0
10.0
20.0
30.0
40.0
50.0
2015 2016
See appendix for Non-GAAP reconciliation.
31 www.sapiens.com
Consistent Gross & Operational Profit Growth
Non-GAAP Operating Profit (USD millions)
Operating Profit & MarginNon-GAAP Gross Profit (USD millions)
Gross Profit & Margin
$5.8$7.3
14.1% 14.8%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Q1 2015 Q1 2016See appendix for Non-GAAP reconciliation.
$17.7$21.6
43.1% 43.5%
0.0
5.0
10.0
15.0
20.0
Q1 2015 Q1 2016
32 www.sapiens.com
Strong Cash Flow Generation
$98.5M Cash
$0M Debt
Annual Non-GAAP Operating Cash Flow ($ M)
Declare dividend of $9.8 M to be distributed on June 1, 2016
3.7
15.311.9
15.5
34.4
2011 2012 2013 2014 2015
Non-GAAP operating cash flow include the cost of capitalized software development
33 www.sapiens.com
2016 Guidance
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Revenue Guidance
179.3
207.0
211.0
20152016
Guidance
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Operational Margin Target
14.8% 15.0%
2015 2016Guidance
Non-GAAP Operating Margin
15.5%
36 www.sapiens.com36 www.sapiens.com
Financial Summary• 2011-2015 revenue CAGR of 16% • Investments in sales and marketing to support growth • Increased farming of existing customer base
� Globally diversified across NA, UK, Europe, Israel, APAC� Insurance sub-verticals: P&C, L&A, Retirement� Over 190 customers
� Customer stickiness� 80-85% of revenue from existing customers � Long-term engagement cycle
� Expanding offshore presence� Beneficiary of past R&D investments
� Strong cash flow conversion� $98.5M available cash and marketable securities� Debt-free balance sheet
High growth
Diversified revenue
Highly attractive revenue model
Margins expansion
Well capitalized
37 www.sapiens.com
Key Investment Highlights
Secular shifts, legacy IT and regulatory tailwinds driving insurance industry IT modernization
Leading global provider of solutions across major segments of insurance industry
Long-term, well-established marquee customer base across the globe
Proven management team comprised of industry experts
Distinct combination of high growth, operating leverage and recurring revenue
One-stop-shop provider of technology and services
Massive market
Technology leader
One-stop shop
Top-tier customers
Proven management
Unique financial model
‹#›www.sapiens.com
Contact: Yaffa Cohen-Ifrah, Chief Marketing Officer & Head of Corporate CommunicationsU.S. Mobile: +1-201-250-9414 | Phone: +972-3-7902032E-Mail: IR.sapiens@Sapiens.com | Website: www.sapiens.com
Thank You
Appendix
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Q1 – Non GAAPQ1
20152016
41.049.6Revenue
17.721.6Gross Profit
43.1%43.5 %
5.87.3Operational Profit
14.1%14.8%
4.76.0Net Income
11.5%12.1%
6.28.0Adjusted EBITDA*
0.100.12Diluted EPS
49,09849,560Diluted Weighted Average Number of Shares
Outstanding Shares: 48,929)as of March 31st , 2016(
* 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).
(in USD million except per share amount)
41 www.sapiens.com
Non-GAAP EBITDA to Adj. EBITDA ReconciliationThree months ended
March 31
20152016
5,7986,251GAAP operating profit
1,2151,409Amortization of capitalized software
521511Amortization of other intangible assets
(1,312)(1,384)Capitalization of software development
-103Compensation related to acquisition
278458Stock-based compensation
(712)-
Adjustments of pre-acquisition revenues and expenses accounted under pooling of interest method
5,7887,348Non-GAAP operating profit
14.1%14.8%
390607Depreciation
6,1787,955Adjusted EBITDA1
15.1%16.0%
(in USD thousands)
Note: In accordance with non-GAAP accounting, 2015 includes consolidation of Insseco commencing with the acquisition date, August 18, 20151 See definition of Adjusted EBITDA in Q4 and Annual- Non GAAP slide
42 www.sapiens.com
Q4 and Annual – Non-GAAPAnnualQ4
20142015*20142015
157.5179.341.848.7Revenue
64.278.517.521.5Gross Profit
40.8%43.8%41.8%44.2 %
17.026.55.07.4Operational Profit
10.8%14.8%11.9%15.1%
16.022.14.96.3Net Income
10.2%12.3%11.8%13.0%
18.628.55.47.9Adjusted EBITDA**
0.330.450.100.13Diluted EPS
48,63749,32749,05749,536Diluted Weighted Average Number of Shares
Outstanding Shares: 48,760)as of December 31st , 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 on the acquisition date, August 18, 2015.
(in USD Million except per share amount)
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