SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of June 2020
Commission File Number 000-20181
SAPIENS INTERNATIONAL CORPORATION N.V.
(Translation of registrant’s name into English)
26 Harukmim St.
Holon, 5885800 Israel
(Address of principal executive offices)
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 ☒ 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): ☐
Prospective Offering of Additional Sapiens Series B Debentures in Israel; Rating for Debentures
On June 1, 2020, Sapiens International Corporation N.V. (“Sapiens” or the “Company”) issued a press release announcing that it is pursuing an offering, in Israel, of up to an additional $60 million (to be denominated in New Israeli Shekels) of its non-convertible Series B Debentures. The new debentures will be part of the same series as, and will have terms that mimic the terms of, Sapiens’ already outstanding Series B Debentures. The prospective offering will be carried out pursuant to Sapiens’ existing Israeli shelf prospectus filed with the Israeli Securities Authority (“ISA”) and Tel Aviv Stock Exchange (“TASE”) on August 7, 2017, the effectiveness of which has been extended until August 7, 2020 (the “Israeli Shelf Prospectus”), and a supplemental shelf offering report to be filed with the ISA and the TASE that will describe the specific details of the offering. A copy of the above-referenced press release is appended to this Report of Foreign Private Issuer on Form 6-K (this “Form 6-K”) as Exhibit 99.1.
In connection with the prospective offering, Sapiens has received a rating report (the “Rating Report”) published by Ma’alot S&P Global (a part of the global rating firm Standard & Poor's Financial Services LLC) (“S&P Ma’alot”) with respect to Sapiens and up to an additional NIS 220 million (approximately $60 million) principal amount of Sapiens’ Series B Debentures. The Rating Report maintains the ilA+\stable and ilA+ ratings for Sapiens and its Series B Debentures, respectively, that S&P Ma’alot had published in August 2017 and had affirmed as of July 2018 and again as of July 2019.
A copy of an English translation of the Rating Report is furnished as Exhibit 99.2 to this Form 6-K and is incorporated herein by reference.
There is still no certainty concerning the Company’s ability to consummate the offering of additional Series B Debentures, which is still subject to the approval of the TASE. Any offering of additional Series B Debentures would not be made to U.S. persons and would be made in an “overseas directed offering” in Israel pursuant to the exemption from registration under Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Important Note re: Series B Debenture Offering and Related Disclosures
This Form 6-K is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration under the Securities Act or an exemption from the registration requirements thereunder. Any offering of securities pursuant to the Israeli Shelf Prospectus and any supplemental shelf offering report will be made only in Israel to residents of Israel, will not be registered under the Securities Act and will not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the Securities Act), except pursuant to an applicable exemption from registration under the Securities Act.
On June 1, 2020, Sapiens shared a general presentation to investors in connection with the foregoing Israeli Series B Debenture offering. That presentation is furnished as Exhibit 99.3 to this Form 6-K.
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.|
|Date: June 1, 2020||By:||/s/ Roni Giladi|
|Name: Roni Giladi|
|Title: Chief Financial Officer|
The following exhibit is furnished as part of this Form 6-K:
|99.1||Press release issued by Sapiens on June 1, 2020 announcing Sapiens’ pursuit of an offering, in Israel, of an additional $60 million (approximately NIS 220 million) principal amount of Sapiens’ non-convertible Series B Debentures|
|99.2||English translation of rating report of Ma’alot S&P Global (a part of the global rating firm Standard & Poor's Financial Services LLC) with respect to Sapiens and up to an additional NIS 220 million principal amount of Sapiens’ Series B Debentures, published by Sapiens on June 1, 2020|
|99.3||General presentation shared by Sapiens with Israeli investors on June 1, 2020|
Sapiens is Pursuing a Public Offering in Israel of additional Series B Non-Convertible Debentures
Holon, Israel – June 1, 2020 – Sapiens International Corporation (NASDAQ and TASE: SPNS), a leading global provider of software solutions for the insurance industry with a growing presence in the financial services sector, announced today that it is pursuing a public offering in Israel of additional Series B non-convertible debentures.
Sapiens reported today to the Israel Securities Authority (“ISA”) and the Tel-Aviv Stock Exchange (“TASE”) that the Company is pursuing a public offering in Israel of additional Series B non-convertible debentures of the same series issued by Sapiens in 2017 for an aggregate amount of up to $60 million (the “Debentures”) pursuant to a shelf prospectus filed by Sapiens in September 2017. The Debentures will mimic the terms of the currently outstanding debentures, issued in Israel in September 2017. If offered, the Debentures will be denominated in NIS linked to the U.S. dollar.
Roni Al-Dor, President and CEO of Sapiens, said: “The funds to be raised through the issuance of the additional debentures will improve our financial flexibility and strengthen our balance sheet during these challenging times, when the effects of the COV-19 epidemic remain unclear. These funds will be used to replace a short term bank loan with long term debentures and provide additional capital to support our development needs, and will allow us to pursue potential M&A opportunities”.
Further, Standard & Poor’s Global Ratings Maalot Ltd. (“Maalot”), has published on June 1, 2020 a rating report regarding the Company. In its report, Maalot reaffirmed the Company’s ilA+ stable rating to support the potential offering of the Debentures. In its report, Maalot referred to the uncertainty surrounding the continued effects of the COV-19 epidemic on the global economy.
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, and retirement markets, as well as business decision management software. We have a track record of over 30 years in delivering superior software solutions to more than 500 financial services organizations. The Sapiens team of approximately 3,500 professionals operates through our fully-owned subsidiaries in North America, the United Kingdom, EMEA and Asia Pacific. For more information: www.sapiens.com.
No Offering in U.S.
This press release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration under the Securities Act or an exemption from the registration requirements thereunder. Any offering of securities pursuant to the Israeli shelf prospectus filed by Sapiens and any supplemental shelf offering report will be made only in Israel to residents of Israel, will not be registered under the Securities Act and will not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the Securities Act), except pursuant to an applicable exemption from registration under the Securities Act.
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. Factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things, the duration of the global COVID-19 pandemic, which, if extensive, may continue to impact, in a material adverse manner, our operations, financial position and cash flows, and those of our customers and suppliers. 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, 2019, and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission.
Investor and Media Contact
Kim Rogers | Hayden IR
Mobile: +1 541 904 5075
Phone: + 1 385 831 7337
Sapiens International Corporation N.V.1
May 31, 2020
A New Public Share Issuance
Providing an ‘ilA +’ rating for Bond issuance of up to
220 million NIS (nominal value)
Principal Credit Analyst:
Sivan Mesilati, +972-3-753-9735, email@example.com
Tamar Stein, +972-3-753-9721, firstname.lastname@example.org
|1||This is an English convenience translation of the Hebrew language original version. In case of any discrepancy, the binding version is the Hebrew language original version.|
A New Public Share Issuance
Providing an ilA + rating for issuance of bonds of up to NIS 220 million (nominal value)
S&P Maalot hereby announces “ilA +” rating for bonds of up to NIS 220 million to be issued by Sapiens International Corporation N.V. (ilA +/Stable) through a “Series B” expansion.
The proceeds will mainly be used for debt repayment and acquisitions.
There is a great deal of uncertainty about the speed of the COVID-19 (coronavirus) pandemic and when it will begin to decay. Some government agencies estimate that the outbreak will peak around mid-year, and we are using that assumption when assessing the pandemic’s economic implications and its impact on the credit quality of entities and companies. We believe that the measures that have been enacted to curb the spread of the virus have put the global economy into a recession (please see the current economic updates at www.spglobal.com/ratings).
As the situation continues to develop, we will update our assumptions and assessments accordingly.
For more information about the rating and additional regulatory requirements, please see the July 11, 2019 rating report.
General details, as of May 31, 2020
|Sapiens International Corporation N.V.|
|Long-Term Perspective||ilA +/Stable|
|Unsecured Senior Debt|
|Series B||ilA +|
|Issuer Rating History|
|August 13, 2017||ilA+\Stable|
|Time When the Event Occurred||6:08 p.m. (Israel Time), 01/06/2020|
|Time When the Event First Became Known||6:08 p.m. (Israel Time), 01/06/2020|
|Rating Initiator||The Rating Company|
S&P Maalot is the commercial name of S&P Global Ratings Maalot Ltd. For the updated ratings list and for more information about credit rating follow up, please visit the S&P Global Ratings Maalot Ltd. at www.maalot.co.il. .
All rights reserved ©. No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of S&P Maalot Ltd. or its affiliates (collectively, S&P).The Content will not be used for illegal or unauthorized purposes.
S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P parties make no commitment or exposition, explicit or implicit, including, but not limited to, the satisfactory quality or the suitability for one purpose or another, the absence of bugs, software errors or defects, that the functioning of the content will not be impaired or the content will function with any software or hardware configuration. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on for making investment or business decisions and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. Credit-related reports are correct at the publication time. S&P updates the Credit-related reports as a result of an annual follow up or event follow up.
While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. S&P Publishes ratings related reports for various reasons that are not necessarily the result of a rating committee, including the publication of a periodic update regarding credit ratings and related analyses.
To the extent that the regulatory authorities allow a rating company, to acknowledge in a particular jurisdiction, a rating determined in another jurisdiction, for certain regulatory purposes, S&P reserves the right to determine, terminate or suspend such recognition at any time at its sole discretion. S&P parties do not undertake any obligation arising from a determination, termination or suspension of rating recognition or any liability for any damages alleged to have arisen.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P receives compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P’s public ratings and analyses are made available on S&P Maalot’s website, www.maalot.co.il, and S&P Global’s website, www.standardandpoors.com and may be distributed through other means, including via S&P publications and third-party redistributors.
Roni Al - Dor, CEO Roni Giladi, CFO Sapiens Investor Presentation June 1, 2020 Enabling the Transformation of Insurance Carriers Globally by Providing Integrated Core and Complementary Software Solutions, Technology - led Services and a Full Digital Suite
Safe Harbor Statement Certain statements made in this presentation 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, 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, 2019 and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission. 2 2
500 Insurance Carriers Global Presence 49.2 % North America 44.4 % Europe 1 6.4 % RoW 2 16. ϭ % 201 2 - 201 9 Revenue CAGR $ 325.7 M 201 9 Revenue P&C and L&A Serving Both Insurance Verticals $55.7 M USD EBIDTA 2019 1 . Includes Israel 2 . Includes APAC and South Africa Sapiens at - a - Glance Global Provider of Insurance Software Solutions 3 3 Strong Free Cash Flow Low Leverage
Sapiens Target Market • Approximately 11,000 insurance carriers globally • Most carriers are still on legacy systems In 2020 to reach $ 211 billion in constant U. S. dollars. As opposed to most IT spending segments, IT services and software will increase by 5.4 % and 8.8 % CAGR respectively from 2019 through 2024 . * Gross Written Premium (GWP) is the total premium (direct and assumed) written by an insurer before deductions for reinsuran ce and ceding commissions. Source: Gartner Forecast: Enterprise IT Spending for the Insurance Market, Worldwide, 2016 - 2022, 2Q19 Update; Organization for Economic Co - Operation and Development, World Insurance in 2018_Sigma – Swiss Re Sapiens’ estimates. $5.2 Trillion GWP * Globally $221bn Global Insurance IT Spending ~ 4 % of GWP Invested in IT $40bn TAM Insurance Software Solutions Large and Growing TAM 4 4
5 Global Macro Trend Favors Sapiens TAM Sapiens’ Total Addressable Market: $40B Source: Celent, April 2017, and Sapiens’ estimates. Highly Attractive, Growing Market Highly Attractive, Growing Market NEW 20%
Key Benefits of O ur Winning Model ✓ Single point of contact for the customer ✓ Lower client risk ✓ Successful implementation ✓ E nhance product functionality ✓ High LTV – cross - sell and up - sell opportunities ✓ High stickiness – long - term customer relationships with repeat revenues ✓ Collaboration – innovation and R&D efforts ✓ Ability to upsell across our product line Benefits to Customers: Benefits to Sapiens: Wide Range of Product Offerings Pre - & Post - Production Services One - Stop - Shop Business Model Comprehensive Product and System Integration for P&C and L&A Globally 7 7
Meeting Insurance Carriers’ Needs Fully Integrated Platform and Modular Components with Multiple Deployment Options Cloud Core Platform Beyond Core Deployment Options Cloud Hosted On - Premise Digital Ecosystem Data 8 8 L&A P&C
Germany Growing Global Footprint 9 • 6 major development, delivery and support centers: U.S., UK, Germany, Spain, Poland, Israel, India • Over 500 customers across 27+ countries Development, delivery and support center USA UK Poland India Israel
11 Growth Objectives • Expand in North America & European • Build Customer Success Executive team (farming) in addition to increasing Sales Executive team (hunting) • Targeted M&A
UK $40m Israel $ 30 m Benelux $5m European Expansion 2019 + Proforma Calculo & sum.cumo Iberia $10m France $5m DACH $ 20 m Poland $5m Nordics $40m Turkey $ 2 m 12
US Expansion 13 North America Growth Strong Free Cash Flow 0 20 40 60 80 100 120 140 160 180 2016 2017 2018 2019 22% CoreSuite for P&C CoreSuite for Life, Pension & Annuities Reinsurance Components for L&A Workers’ Compensation Decision F&C Digital 51% 19 % Large Product Suite
50 0 Existing Customers Grow with New Customers Grow w ith Existing Customers New Customers 25 – 3 5 New Logos Every Year (Hunting) Complementary Products and Services (Farming) Model with Two Revenue Growth Levers 14
European Expansion Core Systems Off - shore Capabilities U.S. Expansion Successful Track Record of Acquisitions Ten - year history of strategic acquisitions expands Sapiens’ platform, capabilities, technology and increases our presence in high growth markets 15 2019 INSSECO 2010 2011 2014 2016 2018 2015 2017 20 20
17 Positive Annual Revenue Growth 114.2 135.4 157.5 179.3 216.2 272 290.3 325.7 2012 2013 2014 2015 2016 2017 2018 2019 Non - GAAP Revenues (USD millions ) + 16.3 % +13.8% +6.7% +20.6% +25.8% +12.2% +18.6%
49.6 91.3 16.6 61.3 92.0 26 74.5 107.2 34.6 112.4 120.9 38.7 137.3 128.5 24.5 163.6 133.8 28.3 NA Europe* APAC & SA 2014 2015 2016 2017 2018 2019 Annual Revenue Growth in Largest Markets 18 * Europe includes UK, Nordics, Israel and rest of Europe. Non - GAAP Revenue (USD millions)
Illustration of Repeat Revenue Stream Ongoing Post - Production Pre - Production Year 1 Year 2 Go - Live Contractual High Revenue ($mm) Stage Stickiness Expected upside from customer success executives (farming) – 100% focus on customers and the sale of the complete, expanded Sapiens product offering s 19 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Strong Recurring Revenue 20 Year 1 Year 2 Year 3 Year 4 Year 5 Post - production 75 % Revenue Breakdown New logo Implementation 15% 10%
2012 2013 2014 2015 2016 2017 2018 2019 2020 Strong Annual Revenue Growth Non - GAAP Revenues (USD millions) 1. From midpoint of 2020 revenue guidance per Sapiens press release dated May 14, 2020 . Non - GAAP Revenues (USD millions) Guidance +18.6% 290.3 179.3 21 + 16.3 % +13.9% + 20.6 % +25.8% +6.7% +12.2% +14.4% 135.4 114.2 157.5 179.3 216.2 272 290.3 325.7 368 - 377 Revenue Guidance reduced by 2 % due to COVID - 19 Pandemic 1
Operating Margin Expansion While Growing Revenue $ 8.9 $ 9.6 $10.3 $10.8 $11.7 $12.6 $13.5 $14.3 $ 14.6 12.5 % 13.2% 14.0% 14.8% 15.3% 15.8% 16.4% 16.5 % 16.1 % -2.0% 1.0% 4.0% 7.0% 10.0% 13.0% 16.0% 19.0% 22.0% 25.0% 28.0% 0. 3.5 7. 10.5 14. Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 • Gross margin expansion as o ff - shore operation s increase • Economy of scale increases as revenue grows (Non - GAAP, USD in Millions) Operating Income ($) Operating Margin (%) 22
23 Operating Margin Expansion 2019 A 2020E (Range) Growth 1 Revenue 325.7 368 < — > 377 +14.4% Operating Profit 52.2 58.9 < — > 62.2 +16% Operating Margin 16% 16.0% < — > 16.5% +25 bps Profitability Guidance unchanged despite impact of COVID - 19 Pandemic 1. From midpoint of 2020 revenue guidance per Sapiens press release dated May 14, 2020 . EBITDA 55.7 63.1 < — > 66.4 +16.2%
High Conversion of Net Profit to Free Cash Flow 24 Free Cash Flow 2018 2019 Cash - flow from operating activities 27,700 66,157 Increase in capitalized software development costs (5,160) (5,665) Capital expenditures (1,914) (5,149) Capital expenditures related to new campus in India - (6,325) Free - cash flow 20,626 49,018 Non - GAAP Net Income 28,063 38,896 Free Cash Flow/Non - GAAP Net Income 73% 126% Accumulated 69,644 66,959 104%
Cash and Cash Equivalents Debenture – 6 Years Short Term Loan HSBC Total 60 20 80 March 31, 2020 80 Cash Position Debt Net Cash 0 1. Net Debt: 0 2. Debt/EBITDA - 1.3 3. Maalot Rating: A+ Stable
26 Risk Mitigation Largest customer 4.6% Total Top 10 26.5% # Customers 500 Products 23 Recurring Revenue 75%/90% % Operational Margin 2019 16.0% USD Revenue/Total Revenue 56% Debt to EBITDA 1.3 Conversion of Net Profit to Free Cash Flow 104%
Key Take - Aways for Investors 27 • $40 billion insurance software industry growth driven by insurers replacing legacy systems 1 • Solid track record of double - digit growth accelerated by successful M&A execution • Margin expansion driven by economies of scale and off - shore operation • Low Leverage and High Free Cash Flow • Diversification of Risk Mitigation 1. Gartner Forecast: Enterprise IT Spending for the Insurance Market, Worldwide, 201 8 - 202 3 , 2Q2019 update .
28 Appendix Slides
Q4 and Annual – Non - GAAP Results Non - GAAP Revenues (USD millions) 1. The Company defines Adjusted EBITDA as net profit, adjusted for stock - based compensation expense, depreciation and amortizati on, capitalized internal - use software development costs, amortization of internal - use software development costs, interest expense, provision for income taxes and other income (expenses ). Annual Q4 201 8 201 9 2018 201 9 (USD in Millions, Except per Share Amount) 290.3 ϯϮϱ͘ϳ 73.4 ϴϲ͘ϳ Revenue 122.9 ϭϰϯ͘Ϭ 31.3 ϯϴ͘ϰ Gross Profit 42.4% ϰϯ͘ϵ % 42.7 % ϰϰ͘ϯ % 39.6 ϱϮ͘Ϯ 10.8 ϭϰ͘ϯ Operational Profit 13.6% ϭϲ͘Ϭ % 14. 8 % ϭϲ͘ϱ % 28.1 ϯϴ͘ϵ 7.8 ϭϬ͘ϲ Net Income 9.7% ϭϭ͘ϵ % 10.7% ϭϮ͘Ϯ % 43.3 ϱϱ͘ϳ 11.8 ϭϱ͘ϯ Adjusted EBITDA 1 0.56 0. ϳϳ 0.16 Ϭ͘Ϯϭ Diluted EPS 50,106 50, ϲϱϯ 50,210 ϱϭ͕ϬϬϵ Diluted Weighted Average Number of Shares Outstanding Shares: 50,160 ( as of December 31, 201 9) 2 9 29
Q 1 2020 and Q1 2019 – Non - GAAP Results Non - GAAP Revenues (USD millions) 1. The Company defines Adjusted EBITDA as net profit, adjusted for stock - based compensation expense, depreciation and amortizati on, capitalized internal - use software development costs, amortization of internal - use software development costs, interest expense, provision for income taxes and other income (expenses ). Q1 2019 2020 (USD in Millions, Except per Share Amount) 76.8 90.5 Revenue 33.1 39.8 Gross Profit 43.1 % ϰϰ % 11.7 14.6 Operational Profit 15.3% ͘ ϭϲ 1 % 8.4 10.4 Net Income 10. 9 % ϭ 1.5 % 12.5 15.7 Adjusted EBITDA 1 0.1 7 Ϭ͘Ϯ 0 Diluted EPS 50,329 51,083 Diluted Weighted Average Number of Shares Outstanding Shares: 50,229 ( as of March 31, 2020) 3 0 30
Adjusted Free Cash Flow Non - GAAP Revenues (USD millions) 1. Included in cash flow from operating activities. (U . S . D ollars in Thousands) Q1 2020 Q 4 2019 Q 3 2019 Q 2 2019 Q1 2019 Cash flow from Operating Activities 5,759 21,429 18,671 15,507 10,550 Capitalized Software Development Costs (1,437) (1,162) (1,541) (1,570) (1,392) Other Capital Expenditures (552) (2,456) (973) (1,079) (641) New campus in India - - (6,325) - - Free Cash Flow 3,770 17,811 9,832 12,858 8,517 New campus in India - 6,325 - - Acquisition - related Costs 1 737 200 100 1,692 1,608 Adjusted Free Cash - flow 4,507 18,011 16,257 14,550 10,125 31
32 Contact: Kim Rogers | Hayden IR Mobile: +1 541 - 904 - 5075| Phone: +1 385 - 831 - 7337 Email: SPNS@haydenir.com | Website: www.sapiens.com