Sapiens International Corp NV

Ladies and gentlemen, thank you for standing by. Welcome to the Sapiens International Corporation's 2022 Fourth Quarter and Full Year Financial Results Conference Call. Sapiens issued a press release before the market opened this morning, and it has been posted on the company's website at www.sapiens.com. All participants are presently in a listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer sessions. I would now like to hand the call to Ms. Yaffa Cohen, Sapien's Chief Marketing Officer and Head of Investor Relations. Yaffa, would you like to begin?

Thank you, Operator. I would like to welcome all of you to Sapien's conference call to review our fourth quarter and full year results for 2022. With me on the call today are Mr. Rony Aldor, President and CEO, Mr. Rony Giladi, CFO, and Mr. Alex Zuckerman, Chief Strategy Officer. Following the summary of the results, we will be available to answer any questions. Before we start, I would like to remind everyone that this conference call may contain projections or other forward-looking statements. The safe harbor provision in the 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 the non-GAAP financial measures. A reconciliation of GAAP to non-GAAP result has been provided in our press release issue 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 or via the website link which is available in the earning release we published today. I will turn the call over to Rony Aldor, President and CEO of Sapiens. Rony?

Thank you, Yaffa. Welcome, everyone, to our call today. It is my pleasure to welcome you all to our Q4, an annual investor conference call. In today's call, we will discuss Sapiens quarterly and annual results and provide insight into our future plans. We appreciate your continued support and looking forward to sharing our progress with you. In 2022, we made significant achievements in our business, including the successful delivery of our 90% of our new deals through the cloud and remarkable increase in the number of multi-product deals for our SAPIENCE platform, leading to larger deal size. After several years of dedicated investment, and efforts with successful resumed growth in North America, a key market for us. Our hard work is paying off with new loan deals across the life, PNC, working compensation, and reinsurance sectors. Together, with notable growth in our pipeline across those sectors, we expect a positive impact on our future success and growth in the region. Our growth in North America, particularly in the fourth quarter, where we saw growth in life and PNC deals, was another contributor to our success this year. In Europe, we have taken significant steps to enhance our near-shore integration capabilities in our key regions, which has helped to reinforce our strong presence in this market. Our efforts in Europe resulted in continued growth and have been recognized by industry analysts who named Sapiens as the leading provider across both life and pension and property and casualty. Last week, Sapiens PNC Solution won an excellent award in the Salent EMEA Policy Administration Report. This recognition reinforced our industry leadership and increased our brand awareness in the insurance market. Overall, during 2022, we signed 18 new logos across all of our products and territories. In 2022, we met our revenue and operating margin guidance. This achievement is especially remarkable given the challenging business environment in 2022. In particular, the results reflect consistent progress in EMEA and APAC, which played a major role in achieving these successes. In addition, our cloud insurance platform offering allows us to focus on closing deals that include core products plus one or more additional applications. such as digital, data, and cloud, resulting in the majority of contracts for multiple products and an increase in the average deal size. Throughout 2022, we focus on maintaining operating profit and positive cash flow. We sustain a gross margin of 45% and expand our offshore team to lower operating costs. which enable us to maintain an operating margin of 70.6%, even in the face of inflation. The insurance industry is undergoing a major transformation, and one of the most significant trends in the market is the movement of core systems to cloud. Cloud is becoming the de facto choice of most carriers when replacing legacy solutions or implementing new capabilities. In 2022, Sapiens deliver over 90% of new deals on the cloud. We continue with our successful effort to move existing customer from on-prem to Sapiens Cloud this year. In the long run, as we continue to move our customer onto the cloud platform, we can manage numerous customers on the same resource and improve the efficiency of our operation. The insurance industry is adapting the growing trend of the increasing importance of data. Sapiens provides comprehensive data capabilities as part of its platform, providing several layers of data solution to carriers, from operational reporting and managing dashboard to advanced analytics to ML and AI use cases. Digital engagement and customer experience remain at the forefront of priorities for carriers. both for direct-to-consumer and direct-to-businesses, as well as digitally transforming the way they work with agents and brokers and other distribution channels. This trend is driving the increased adoption of Sapiens Insurance Platform, which offers core solutions along with additional offerings in digital data and cloud. The integration of data digital with our decision solution creates a smart platform layer that automate process, promotes data-driven decision-making, and provides insightful, intelligent decision-making capabilities while delivering significant benefits to our business with a larger deal size. The ecosystem marketplace further enhances these capabilities. and highly relevant solution to meet the unique needs of our customer. Sapiens partners with over 60 insurance technology provider to offer custom solution for clients. Let's shift to focus on regional performance starting with North America. Sapiens made strategic advancement in our North America business during 2022 with successful close life deal in the third quarter. A major financial services entity selects Sapiens Core Suite along with our digital suite SaaS solution. This combined solution provides them with next-generation customer sales and service experience. Sapiens Core Administration solution and pre-integrated digital enablement platform will enable them to offer cloud-native solution life insurance services that are customer-centered and innovative. In 2022, Sapiens saw growth in our North America core life and business application businesses, acquiring new logo and advancing other deals. With a strong life pipeline, our outlook for 2023 is highly promising. In addition to the strong performance in life, Sapiens is also experiencing growth in North America PNC businesses. We anticipate several new deals closing in 2023 and have seen a solid reestablishment of our position in workers' compensation market, including expansion into Canada. The reinsurance segments continue to be strong, with new logos acquiring in 2022 and a solid pipeline for 2023. The North America pipeline is showing strong emphasis on migration to the cloud for 2023 and beyond. Sapient's effort and investment in product improvement have been recognized by CELAND. In North America, PNC and workers' comp segment. We received recognition for PNC claims pro functionality and added analytical and digital offering and claims solution for workers' compensation. These acknowledgments demonstrate Sapiens' commitment to delivering innovative and effective solutions to our customers. In 2022, Sapiens made major progress with our EMEA and APAC businesses, landing new logos in the region. Many of these deals include multiple solutions from Sapiens, including core platforms for P&C, LMP, reinsurance, digital, data, and analytics solutions, and cloud services. We are currently in the preferred bidder stage with small logos, demonstrating our strong position in the market. To support our continuous growth, we have a dedicated team to focus on new logo acquisition and account management in EMEA and APAC regions. This team will further improve our presence in the region. We have made remarkable progress with our P&C and life pension business in the UK and Ireland. successful securing new logos and advancing more to the final stage. This marks a promising start for the pipeline heading in 2023. A big focus for Sapiens is driving more cross-sell and up-sell business with our extensive portfolio insurance clients, especially with digital data and analytics and transition to Sapiens cloud services. We have successfully integrated the new acquisition of TIA, Sumcumo, and Calcolo with rebranding and implementing strategic account management. This has resulted in successful growth through growth and upselling to these clients, providing them with increased business value and savings. We are investing in pre-integrating Sapient's digital data and cloud platform to our TIA and Sumcumo products. And this enabled us to enhance our proposition to the existing customer base and resulted in several such customers adopting the innovation solution from Sapiens. In 2022, OMI in South Africa, a TIA customer, chose Sapiens data and reinsurance platform. In addition, another TIA customer in Denmark is moving to a full cloud services model. To support our business growth, Sapiens is increasing our near-shore capabilities in Europe, supporting our growth in Nordic, DACH, Sub-Sahara, UK and Iberia. We are investing more in our solution platform to support the new business we have already secured and to improve our value proposition. Looking ahead to 2023, we have several key goals. A top priority is deepening relationships with our existing customers and expanding in every territory we operate, including newly penetrated markets such as DACH and Iberia. Another top priority is to sustain and grow our presence in North American markets. We are committed to capitalizing on the vast opportunity in North American markets by executing with precision and determination. Our goal is ambitious to close new deals in life and PNC while establishing a solid foundation for our future growth with our robust pipeline. On the product front, an additional priority is ongoing expansion beyond our core offering into digital data and analytics. This will allow us to provide our customer with even more comprehensive and innovating solution and allow us to continue successfully close larger deals. And lastly, we want to focus and continue with transition to the cloud. Now I would like to turn the call to Roni Giladi, our CFO. Roni?