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 March, 2018

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 ¨

 

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): ¨

 

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): ¨

 

 

 

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: March 08, 2018

 

 

 

Exhibit 99.1

 

 

 

Sapiens Reports Fourth Quarter and Full Year 2017 Financial Results

 

 

HOLON, Israel, March 8, 2018 /PRNewswire/ -- Sapiens International Corporation, (NASDAQ: SPNS) (TASE: SPNS), a leading global provider of software solutions for the insurance industry, with a growing presence in the financial services sector, and a member of the Formula Group (NASDAQ: FORTY and TASE: FORT), today announced its financial results for the fourth quarter and full year ended December 31, 2017.

 

Fourth Quarter 2017 Highlights:

 

·

Revenue increases 25.4% to $71.6 million. Non-GAAP revenue increased 26.9% from the same period in the prior year to $72.4 million.

·

Operating income totaled $1.1 million, down 79.8% compared to last year. Non-GAAP operating income totaled $9.1 million, up 20.9% compared to the same period in the prior year.

·

Operating margin of 1.6%, compared to 9.8% last year. Non-GAAP operating margin of 12.5%, compared to 13.1% last year.

·

Net income attributable to Sapiens’ shareholders totaled $3.2 million. Non-GAAP net income attributable to Sapiens’ shareholders totaled $6.1 million, compared to $6.0 in the same period last year.

·

Diluted earnings per share of $0.07 per diluted share. Non-GAAP diluted earnings per share of $0.12 per diluted share, flat compared to the same period in the prior year.

 

Full Year 2017 Highlights:

 

·

Revenue increases 24.5% to $269.2 million. Non-GAAP revenue increased 25.8% from the same period in the prior year to $272.0 million.

·

Operating income totaled $1.0 million, down 96.0% from the same period in the prior year. Non-GAAP operating profit totaled $23.1 million, a decrease of 22.0% from last year.

·

Operating margin of 0.4%, compared to 11.5% in the same period in the prior year. Non-GAAP operating margin of 8.5%, compared to 13.7% last year.

·

Net income attributable to Sapiens’ shareholders totaled $0.4 million. Non-GAAP net income attributable to Sapiens’ shareholders totaled $15.5 million, a decrease of 35.8% from the same period in the prior year.

·

Diluted earnings per share of $0.01 per diluted share. Non-GAAP diluted earnings per share of $0.31 per diluted share.

 

 

"We made progress in 2017 executing to our long-term strategy of becoming a leading global provider of insurance software solutions and services. We invested in acquisitions to gain rapid entrance into the US market where we acquired products and solutions, clients, personnel and resources, and strong brands in focused geographies and market segments, as well as R&D to improve our competitive advantages through internal development of products and solutions," said Roni Al-Dor, president and CEO, Sapiens. "From a growth and profitability perspective 2017 was a mixed year. We reported full year Non-GAAP revenue of $272 million, near the top of our revised 2017 guidance range, a year-over-year increase of 25.8%, primarily due to the acquisition of StoneRiver. However, we did not fully meet our 2017 expectations for profitability, with adjusted non-GAAP operating margin for the year of 8.5%".

 

Al-Dor concluded: “Sapiens is reiterating prior guidance for 2018 full-year revenues in the range of $280-$285 million (on a non-GAAP basis), an increase of approximately 3% to 5%. Growth is anticipated to be below prior year levels due to the elimination of certain non-core revenue, extension of the rollout time-line for a large client, certain projects that came through an acquisition that will not renew, and the loss of some revenue due to product duplication between StoneRiver and Adaptik. We are also maintaining expectations for adjusted operating margin a range of 12% to 13% (on a non-GAAP basis), based on integration, restructuring benefits, and maximizing our acquired talent.”

 

Quarterly Results Conference Call

 

Management will host a conference call and webcast today, March 8 at 9:00 a.m. Eastern Time (4:00 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 March 18, 2017, as follows:

North America: 1-888-782-4291; International: +972-3-925-5918

 

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

 

 

 

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.

 

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: Valuation adjustment on acquired deferred revenue, amortization of intangible assets, capitalization of software development, stock-based compensation, compensation related to acquisition, acquisition-related costs, restructuring and cost reduction costs, loss on sales of Marketable Securities and tax adjustment regarding non-GAAP adjustments, as well as the impact of one-time adjustment to our deferred taxes as a result of the U.S. Tax Cuts and Job act 2017.

 

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, 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.

 

About Sapiens

 

Sapiens International Corporation (NASDAQ and TASE: SPNS) is a leading global provider of software solutions for the insurance industry, with a growing presence in the financial services sector. We offer integrated core software solutions and business services, and a full digital suite for the property and casualty/general insurance; life, pension and annuities; and reinsurance markets. Sapiens also services the workers’ compensation and financial and compliance markets.

 

Our portfolio includes policy administration, billing and claims; underwriting, illustration and electronic application; reinsurance and decision management software. Sapiens’ digital platform features customer and agent portals, and a business intelligence platform. With a 30-year track record of delivering to more than 400 organizations, Sapiens’ team of over 2,500 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, 2016, and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission.

 

 

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								Year ended
		December 31,								December 31,
		2017				2016				2017				2016
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenue			71,600				57,113				269,194				216,190
Cost of revenue			45,776				34,648				175,678				130,402
Gross profit			25,824				22,465				93,516				85,788
Operating expenses:
Research and development, net			8,427				5,087				31,955				16,488
Selling, marketing, general and administrative			16,265				11,787				60,559				44,460
Total operating expenses			24,692				16,874				92,514				60,948
Operating income			1,132				5,591				1,002				24,840
Financial expense (income), net			1,000				98				3,010				(533	)
Taxes and other expenses, net			(3,301	)			1,383				(2,564	)			5,772
Net income			3,433				4,110				556				19,601
Attributed to non-controlling interest			(157	)			(9	)			(189	)			(43	)
Attributed to redeemable non-controlling interest			43				7				43				(134	)
Adjustment to redeemable non-controlling interest			350				301				350				442
Net income attributable to Sapiens' shareholders			3,197				3,811				352				19,336
Basic earnings per share			0.07				0.08				0.01				0.40
Diluted earnings per share			0.07				0.08				0.01				0.40
Weighted average number of shares outstanding used to compute basic earnings per share (in thousands)			49,325				49,021				49,170				48,947
Weighted average number of shares outstanding used to compute diluted earnings per share (in thousands)			50,032				49,935				49,926				49,780

 

 

SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES

 

CONDENSED CONSOLIDATED NON-GAAP STATEMENTS OF INCOME

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

 

		Three months ended								Year ended
		December 31,								December 31,
		2017				2016				2017				2016
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenue			72,448				57,113				272,003				216,190
Cost of revenue			42,931				33,263				165,336				124,423
Gross profit			29,517				23,850				106,667				91,767
Operating expenses:
Research and development, net			9,663				6,178				37,522				22,033
Selling, marketing, general and administrative			10,795				10,179				46,032				40,119
Total operating expenses			20,458				16,357				83,554				62,152
Operating income			9,059				7,493				23,113				29,615
Financial expense (income), net			1,000				(9	)			2,780				(640	)
Taxes and other expenses			2,033				1,533				4,940				6,179
Net income			6,026				5,969				15,393				24,076
Attributable to non-controlling interest			115				(11	)			147				123
Net income attributable to Sapiens' shareholders			6,141				5,958				15,540				24,199
Basic earnings per share			0.12				0.12				0.32				0.49
Diluted earnings per share			0.12				0.12				0.31				0.49
Weighted average number of shares outstanding used to compute basic earnings per share (in thousands)			49,325				49,021				49,170				48,947
Weighted average number of shares outstanding used to compute diluted earnings per share (in thousands)			50,032				49,935				49,926				49,780

 

 

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								Year ended
		December 31,								December 31,
		2017				2016				2017				2016
GAAP revenue			71,600				57,113				269,194				216,190
Valuation adjustment on acquired deferred revenue			848				-				2,809				-
Non-GAAP revenue			72,448				57,113				272,003				216,190
GAAP gross profit			25,824				22,465				93,516				85,788
Revenue adjustment			848				-				2,809				-
Amortization of capitalized software			1,270				1,092				4,824				4,929
Amortization of other intangible assets			1,575				293				5,518				1,050
Non-GAAP gross profit			29,517				23,850				106,667				91,767
GAAP operating income (loss)			1,132				5,591				1,002				24,840
Gross profit adjustments			3,693				1,385				13,151				5,979
Capitalization of software development			(1,236	)			(1,091	)			(5,567	)			(5,545	)
Amortization of other intangible assets			489				300				1,725				1,207
Stock-based compensation			655				522				2,035				1,955
Compensation related to acquisition and acquisition-related costs			144				786				2,685				1,179
Restructuring and cost reduction plan			4,182				-				8,082				-
Non-GAAP operating income			9,059				7,493				23,113				29,615
GAAP net income (loss) attributable to Sapiens' shareholders			3,197				3,811				352				19,336
Operating income (loss) adjustments			7,927				1,902				22,111				4,775
Adjustment to redeemable non-controlling interest			350				302				350				443
Loss on sales of Marketable Securities			-				-				230				-
Tax and Other *			(5,333	)			(57	)			(7,503	)			(355	)
Non-GAAP net income attributable to Sapiens' shareholders			6,141				5,958				15,540				24,199

 

*Includes $3.8M US tax Cuts and Job Act Effect in 2017

 

 

Summary of Non-GAAP Financial Information
U.S. dollars in thousands (except per share amounts)

 

		Three months ended																Twelve months ended
		December 31,																December 31,
		2017								2016								2017								2016
		(unaudited)								(unaudited)								(unaudited)								(unaudited)
Revenues			72,448				100	%			57,113				100	%			272,003				100	%			216,190				100	%
Gross profit			29,517				40.7	%			23,850				41.8	%			106,667				39.2	%			91,767				42.4	%
Operating profit			9,059				12.5	%			7,493				13.1	%			23,113				8.5	%			29,615				13.7	%
Net income to shareholders			6,141				8.5	%			5,958				10.4	%			15,540				5.7	%			24,199				11.2	%
Adjusted EBITDA			10,076				13.9	%			8,298				14.5	%			26,935				9.9	%			32,450				15.0	%
Basic earnings per share			0.12								0.12								0.32								0.49
Diluted earnings per share			0.12								0.12								0.31								0.49

 

Non-GAAP Revenues by Geographic Breakdown
U.S. dollars in thousands

 

		Q4 2017				Q3 2017				Q2 2017				Q1 2017				Q4 2016
North America			31,580				32,780				28,544				19,465				21,107
Europe & South Africa			37,051				35,324				36,711				32,489				28,292
APAC			3,817				5,750				3,912				4,580				7,714
Total			72,448				73,854				69,167				56,534				57,113

 

 

Adjusted EBITDA Calculation
U.S. dollars in thousands

 

		Three months ended								Year ended
		December 31,								December 31,
		2017				2016				2017				2016
GAAP operating profit (loss)			1,132				5,591				1,002				24,840
Non-GAAP adjustments:
Amortization of capitalized software			1,270				1,092				4,824				4,929
Amortization of other intangible assets			2,064				593				7,243				2,257
Capitalization of software development			(1,236	)			(1,091	)			(5,567	)			(5,545	)
Stock-based compensation			655				522				2,035				1,955
Compensation related to acquisition and acquisition-related costs			144				786				2,685				1,179
Restructuring and cost reduction plan			4,182				-				8,082				-
Valuation adjustment on acquired deferred revenue			848				-				2,809				-
Non-GAAP operating profit			9,059				7,493				23,113				29,615
Depreciation			1,017				805				3,822				2,835
Adjusted EBITDA			10,076				8,298				26,935				32,450

 

 

SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. Dollars in thousands

		December 31,				December 31,
		2017				2016
		(unaudited)				(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents			71,467				60,908
Trade receivables, net			53,226				34,684
Other receivables and prepaid expenses			6,280				6,389
Marketable securities			-				18,220
Total current assets			130,973				120,201
LONG-TERM ASSETS
Marketable securities			-				17,228
Property and equipment, net			10,695				9,807
Severance pay fund			4,547				4,041
Goodwill and intangible assets, net			221,403				101,951
Other long-term assets			3,675				4,623
Total long-term assets			240,320				137,650
TOTAL ASSETS			371,293				257,851
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade payables			7,044				6,562
Accrued expenses and other liabilities			46,277				32,049
Deferred revenue			16,513				9,137
Total current liabilities			69,834				47,748
LONG-TERM LIABILITIES
Other long-term liabilities			15,451				9,864
Debenture			78,281				-
Accrued severance pay			5,500				4,940
Total long-term liabilities			99,232				14,804
REDEEMABLE NON-CONTROLLING INTEREST			1,353				908
EQUITY			200,874				194,391
TOTAL LIABILITIES AND EQUITY			371,293				257,851

 

 

SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES

 

CONSOLIDATED STATEMENT OF CASH FLOW
U.S. dollars in thousands

		Year ended December 31,
		2017				2016
		(unaudited)				(unaudited)
Cash flows from operating activities:
Net income (loss)			556				19,601
Reconciliation of net income (loss) to net cash provided by operating activities:
Depreciation and amortization			15,871				10,021
Amortization of premium, accrued interest and loss on sales of marketable securities			509				(516	)
Stock-based compensation related to options issued to employees			2,270				1,955
Net changes in operating assets and liabilities, net of amount acquired:
Trade receivables			(5,253	)			(5,435	)
Deferred tax assets			(8,840	)			1,664
Other operating assets			3,688				(3,309	)
Trade payables			(1,388	)			1,101
Other operating liabilities			118				2,223
Deferred revenues			1,249				(1,035	)
Severance pay			(37	)			(231	)
Net cash provided by operating activities			8,743				26,039
Cash flows from investing activities:
Purchase of property and equipment			(2,622	)			(4,664	)
Purchase of marketable securities, net of interest received			-				(9,017	)
Proceeds from sales of marketable securities			35,369				13,898
Payments for business acquisition, net of cash acquired			(103,103	)			(4,382	)
Capitalized software development costs			(5,567	)			(5,545	)
Restricted cash			-				1,393
Net cash used in investing activities			(75,923	)			(8,317	)
Cash flows from financing activities:
Proceeds from employee stock options exercised			1,823				890
Payment to shareholders in respect of acquisition			-				(1,440	)
Loan received net of repayment of loan			-				(9,786	)
Issuance of debenture, net			78,173				-
Repayment of loan			-				(824	)
Distribution of dividend			(9,851	)			(73	)
Net cash provided by (used in) financing activities			70,145				(11,233	)
Effect of exchange rate changes on cash and cash equivalents			7,594				68
Increase in cash and cash equivalents			10,559				6,557
Cash and cash equivalents at the beginning of period			60,908				54,351
Cash and cash equivalents at the end of period			71,467				60,908

 

 

Debenture Covenants

 

As of December 31, 2017, Sapiens was in compliance with all of its financial covenants under the indenture for the Series B debentures that it issued in September 2017, based on having achieved the following in its consolidated financial results:

 

Covenant 1

 

§

Target shareholders' equity (excluding minority interest): above $120 million

§

Actual shareholders’ equity equal to $200 million

 

Covenant 2

 

§

Target ratio of net financial indebtedness to net capitalization (in each case, as defined under the indenture for the Company's Series B debentures) bellow 65%

§

Actual ratio of net financial indebtedness to net capitalization equal to (3.28)%.

 

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: [email protected]

 

 

 

 

 

SEC Filings