Sapiens International Corp NV

Ladies and gentlemen, thank you for standing by. Welcome to the Sapiens International Corporation third quarter 2021 results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded November 3rd, 2021. It is now my pleasure to introduce your host, Ms. Daphna Golden, Sapiens VP and Head of Investor Relations. Thank you, Ms. Golden. You may now begin.

Thank you, and good day, everyone. Our Q3 2021 earnings release was issued before the market opened this morning and was posted on the company's website at www.sapiens.com. Here with me today representing Sapiens are Juanel Do, President and CEO of Rony Giladi, CFO, and Alex Zuckerman, Chief Product and Strategy Officer, is also present. Before we start, I would like to remind everyone that this conference call may contain projections or other forward-looking statements. The safe harbor provisions in this press release issued today also apply to the content of the call. Sapiens expressly disclaims any obligation to update or revise any of these forward-looking statements. whether because of future events, new information, a change in its views or expectations, or otherwise. On today's call, we will refer to non-GAAP financial measures. A reconciliation schedule showing GAAP versus non-GAAP results has been provided in our press release issued before the market opened this morning. A replay of this call will be available after the call on our investor relations section of the company website. The link is available in the earnings release we've published today. I will turn the call over to Rony Aldo, President and CEO of Sapiens. Rony?

Thank you, Daphna, and welcome everyone to our review of Sapiens' third quarter 2021 results. In Q3, Sapiens delivered strong Eurovery revenue growth of 21%, reaching a new record high of $118.4 million. Operating margin reached 17.7% compared to 18.2% last year. On a dollar basis, operating profit increased by over $3 million to record of $21 million up from $17.9 million last year. These solid results were the direct outcome of successfully executing our strategy and and our commitment to achieving consistent growth and improving operating margin. The transformation of insurers from legacy system to modern and cloud solutions is a key growth driver for Sapiens. Our global footprint, broad product offering, business model, and commitment to customer success clearly differentiated Sapiens in the insurance software industry. Q3 results demonstrate the success of our strategy and the viability of our business, stable, profitable, and with high level of visibility. Our leading software solution serve the evolving technology needs of the insurance industry across a large and growing global market. With a target addressable market of $40 billion of insurance software solution and services across PNC and life and annuity lines of businesses, Sapiens market opportunity is large. We are well positioned to achieve continued success for several reasons. First, Sapiens has a global footprint, supported by our proven track record with over 600 customers in more than 30 countries. We have teams on the ground that understand the local regulations, culture, and languages in the countries in which we operate. Many existing and potential customers, including Tier 1 multinational carriers, appreciate our advantage. Second, our excellent offering. We continuously invest in our research and development to give our customers a wide range of offerings, products and services, deployment options, and delivery models. Our product leadership position is recognized time and time again, not only by customer, but also by industry analysts. Most recently, Sapiens was the only company to be recognized as a leader in two different Gartner Magic Quadrants for the European market, from both non-life insurance platform and life insurance policy administration systems. In a diversified market like ours, Where multiple vendors operate in specific markets and segments, this is a true differentiator and a clear testament of the quality of our offering. And finally, our team is world-class. We have over 4,000 professionals that choose to work at Sapiens to build and support our business. They serve our customers with the highest standards and retain the leadership position of our offerings. We continue to reinforce our already strong global presence across all tiers, both in P&C and life and annuities, by winning new customers and entering new geographics. We are expanding by upselling and cross-selling to existing customers, while focusing on advancing our product offerings. Our goal is to continue to offer our customers an innovative, diverse and flexible solution to provide their clients with the best experience while empowering them to gain a significant competitive advantage. Across multiple regions, we enable our customer to transform their business with modern cloud architecture, out-of-the-box functionality, and low-code, no-code capabilities. And our business model ensures that we are fully accountable for the success of our customer projects. Turning now to our performance by region. starting with North America. In course with PNC, we continue the path of investing in our product and enhancing our delivery capabilities to address growing demand in the region. The recently announced selection of our claims management platform by Tokyo Marine Highland demonstrate the confidence of customer have to Sapiens. Tokyo Marine, a longtime customer for policy and billing, recently select Sapiens claim poor cloud solution to accelerate its claims transformation. Sapiens will enable Tokyo Marine to work effectively and seamlessly with the brokers and the agents. In reinsurance, we also continue to gain momentum. In Q3, we add a new T1 customer, a high caliber, well-known global carrier, and the leader in this space that selects our reinsurance solution. Physician insurance is another reinsurance win. We announced physician-selected Sapiens to transform its reinsurance process and move to the cloud with our reinsurance platform. Our life business continues to gain momentum across all the life solution portfolio. A new customer, Guardian Group, a $1 billion carrier serving 21 countries across the English and Dutch Caribbean, selected Sapiens Underwriting Pro and Sapiens Intelligent to accelerate its underwriting processes and achieve automation of 95% of its cases. Sapiens, together with its InsurTech partner, Atidot, will enable Guardian Group to leverage Sapiens' best practice, new data sources, and AI to support accelerated underwritings. Our core Suite Life and Annuity in North America enjoys growing traction. We continue to grow our pipeline and we completed the blueprint process, a pre-project analysis with a prospective customer. Decision is gaining momentum with insurers and is providing a unique value proposition in growing number of use cases. A recent example is Berkshire Hathaway Guard insurance companies that select Sapiens Decision no-code automation platform to support Guard's business users in their decision processes, empowering them to make rapid change on policy terms. On the worker compensation front, as the job market improves, we see new opportunities and RFPs. Just two weeks ago, we attended the National Workers' Compensation and Disability Conference in Las Vegas. It was great for the team to meet customers and prospects in person after last year's virtual industry events. I would like to elaborate now how maintaining an ongoing dialogue with our customers helps us remain close to market trends while also seeding future business opportunities. In September, we held our annual Executive Council, where C-level executives from our leading customers meet virtually to collaborate, share best practices, and discuss industry trends. During the first week of October, we attend the InsurTech Connect conference in Las Vegas, the world's largest event in this space. This was the first major non-virtual event this year with thousands of participants from global insurance carriers. CEPEN presents a keynote speech on digital insurance hosted in private events with more than 100 insurers and partners. Finally, last week we held a The Sapiens 2021 North America Summit, a three-day virtual event, more than 800 attendants from approximately 200 organizations participate in the event. We provide the gateway for productive collaboration between Sapiens customers and employees who exchange ideas, discuss market trends, and explore innovative propositions. In North America, the build-out of our leadership team continues under Jamie Yoder's leadership. we are enhancing our senior team of highly accomplished, experienced professionals in all areas. In the European market, Sapiens has expanded its presence in the region, a direct outcome of our successful land and expense strategy and M&A investment. Our leadership position as a dual leader by Gartner, which I mentioned earlier, is clearly unique and a big advantage for Sapiens in the European market. Our momentum in this region is growing with insurers transforming their businesses to become more digital. Let me share a few examples of recent customer wins in Europe. Long-time customer, Dentist Provident, a leading provider of income protection insurance for dental professionals in the UK and Ireland, expanded the relationship with Sapiens. They select Sapiens to leverage market trend and accelerate digital transformation. Sapiens Digital Suite will refresh dentist digital customer and agent portal together with our Core Suite and Customer Connect. In Norway, Jens Sidi, a leading life and pension provider, also expanded its relationship with us by adding Sapiens Digital Suite to our already implemented Core Suite. And German-based HDI Global Specialties select our Reddit Suite solution for a multi-country deployment to modernize its core business using our cloud architecture with out-of-the-box functionality. Our business in the rest of the world, which includes APAC in South Africa, is a smaller and growing market. In Asia, we announced the expansion of our relationship with Direct Asia, a leading digital automobile and travel insurance in Singapore and Thailand. With a digital core upgrade, to its existing Sapiens platform. The upgrade enables integration with external systems and supports their cloud strategy. Direct Asia joins Thailand-based BKI, which I discussed last quarter. We have also expanded our presence in South Africa. We recently announced that APSA, one of the country's leading financial institutions, selects Sapiens as its transformation partner. Applying our industry experience, we are working with APSA to migrate its system and data to the cloud and ensure a seamless integration into its broad banking ecosystem. To sum up, we are clearly achieving tremendous success in both landing new business with customers and geographics, as well as expanding our relationship with existing customers with wholesale opportunities. the continued accomplishment of SAPIEN's strategy across the industry and around the globe. Insurance are transforming the way they do business, from how they launch new products and propositions to expanding their distribution and engagement channels and evaluating their risk and capital. These trends fuel the need for our products and services as insurance embarks on the transformation journeys. Sapiens has high-performing global team of professionals, excellent product development capabilities, and multiple competitive advantage to address the market trends and support our growth strategy. As a global player that is serving customers in more than 30 countries in both P&C and life and annuity in the insurance software industry, Sapiens is uniquely positioned to play a critical role in the growing disruptive insurance software. Now I would like to turn the call to Roni Giladi, our CFO. Roni.