Sapiens International Corp NV

Ladies and gentlemen, thank you for standing by. Welcome to the Sapiens International Corporation's 2023 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 session. 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 2023. With me on the call today are Mr. Rony Eldor, President and CEO, Mr. Rony Gil-Eddy, 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 disclaim any obligations to update or revise any of these forward-looking statements whether because of future events, new information, a change in its view or expectations, or otherwise. On today's call, we will refer to 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 want to turn the call over to Rony Aldor, President and CEO of Sapiens. Rony?

Thank you, Yaffa. Thank you for joining us today. 2023 was the year in which Sapiens successfully executed our growth strategy across both our regions and our product categories. I'm happy to report that in fourth quarter of 2023, Sapiens again delivered strong growth and resilience. Let's dive into the details. I will start with highlights from 2023 and then review the fourth quarter performance. In 2023, revenue increased by 8.4% and operating profit rose by 12.8%. Our growth was distributed across the region we serve. On a regional basis, Europe was impressive, 10.5%. North America achieved growth of 7.4%. Our annual operating margin was a robust 18.3%, reflecting our continuous commitment to operational efficiency and prudent financial management. I would like to emphasize several notable business achievements from 2023 that will serve a strong foundation for our objective in 2024. First, as promised, our North America business has experienced robust growth, and we are well positioned to sustain this growth in 2024. We expand our North America sales and marketing team, reinforcing our presence and capabilities in this important market. This investment will ensure that we are equipped to continue to grow in this key region. Second, we successfully introduced the global customer care engagement model, which is playing a pivotal role in enhancing our customer relationship and creating stronger connection with our client. Furthermore, we achieved significant increase in both new and cross sales, showcasing our ability not only to retain existing clients, but also to attract new ones. Third, we made significant progress in expanding our market share by signing about 30 new deals with both new and existing customers across core data, digital, and cloud in PNC, workers' comm, life, and reinsurance. This expansion is testament to our commitment to growth and increasing recognition of our value proposition in the insurance market. In addition, in 2023, we completed multiple successful goal lives globally. Lastly, we have recently started collaboration with system integrators to expand our reach and accelerated growth. To manage this new channel, we have hired a senior executive to develop our strategy and oversee the SI relationship. Our plan is to work with SI mostly in upper tiers and specific regions. We are currently in the process of selecting our preferred SI and are committed to this approach. As an example, in 2023, we partner with a leading SI in one of the large worker compensation deals in North America. We believe working with SI will have a mid to long-term impact. This achievement underscore our readiness to tackle the challenges and opportunities in 2024. Now, let's delve into our original performance, starting with North America. As I mentioned earlier, our North America sales, marketing, customer success, sales support, and product marketing team were expanded with the express goal of enhancing and supporting sales growth. These expansions align with the demand we have experienced in North America. We are particularly excited about the momentum we have experienced in the life segment in North America and are committed to capitalize on this growth opportunity. We closed new deals in the lifetime annuity for both core and components, a significant step up from prior years. BNC and workers' compensation continue to be verticals in North America, where we are adding new customers. In 2023, we signed new PNC customers and new workers' comp deals. Our proven track record in successful implementation and ongoing support were also a key factor in winning these deals. Reinsurance remained an active segment in North America for 2023, and Sapiens signed new customers on the platform. We are winning in reinsurance with our award-winning solution, enabling insurers to automate and manage end-to-end program with sufficiency and control through seamless integration. In EMEA and APAC region, we signed P&C deals across all of our products and new deals for our Core Suite Life platform. Our pipeline and backlog coming into 2024 are strong across all of our product lines, including P&C and Life & Pension, delivered in SAS model. This position us favorably to maintain momentum, secure new deals, and expand our presence in these markets. Our commitment to growth in North America, EMEA, and APAC is underscored by increasing in the size of our teams in these regions, including additional headcount across sales, marketing, and product marketing. Furthermore, we anticipate continued momentum and growth in cross-selling opportunity within our existing accounts across all regions throughout 2024. Additionally, our traditional territories in EMEA and APAC are showing significant growth potential, particularly in the life and pension and P&C space. This growth is a direct result of the investment we have made over the past two to three years, strengthening our foothold in these markets. As mentioned in the previous call, we believe that the APAC region, which has experienced growth and has shown our successful land and expense strategy, will be an additional growth catalyst for Sapiens in the near future. We are building a pipeline in this region and are excited about the progress we have made with current implementations. Now turning to the third quarter. Our overall revenue growth in Q4 was impressive at 9.6% and Q4 operating margin was 18.4%. I want to highlight two successful go-lives in the fourth quarter. First, in the Nordic region, a leading Norwegian insurance company, Jens CD, or GPF, went live with Sapiens CoreSuite for life and pension and Sapiens Cloud Services for their individual saving. This is very exciting. GPF is the first Nordic customer to go live with CoreSuite. which will expand the insurer's digital capability, boost its leading market position. Second, a leading European automotive brand went live with Sapiens Edit Suite and Sapiens Cloud for the company's self-guarantee and warranty insurance lines of business. Sapiens' solution replaced the company's existing system for policy portfolio management and claims management. Phase one of the implementation for automotive warranty took just over a year, with the second phase of product warranty implementation planned for 2024. And lastly, in the fourth quarter, we were engaged by Saskatchewan Workers' Compensation Board to transform its core workers' compensation system. Saskatchewan WCB selected Sapiens Core Suite for workers' compensation digital suite, and intelligence to transform its legacy core system with a modern, integrated platform for efficient service delivery. In summary, our original performance in EMEA in North America and strong momentum in fourth quarter as we exited 2023 positioned us well for continued growth and success in 2024. We remain dedicated to deliver value to our customers and shareholders. Looking ahead to 2024, I want to share some key initiatives that will guide our strategic direction. First, continue our transition to SaaS with all our products with our Revolt Sapiens Insurance Platform. Sapiens Insurance Platform includes an end-to-end integrated business-led SaaS platform with advanced technology and data capabilities. The Sapiens Insurance Platform unifies our core insurance capabilities, our digital engagement solution, our advanced data capabilities, and our ecosystem partners into a coherent, fully integrated, yet modular platform focused on our customer business need, harnessing the power of our ML and AI capabilities, our decision management tools, and our new generative AI capabilities to provide an innovating data-driven operation. Sapiens Insurance Platform's operating value lies in technology standardization across all products using a common tech stack and reusability of components across our various propositions. The platform value proposition for our customer and prospect is aimed at enhancing efficiency, driving growth, and fostering innovation. Sapiens plans to continue leading with our SaaS-based offering across all our markets and all our products. The new deals we are signing now are based on our SaaS model, which aligns with our core strategy going forward. In parallel, We are engaging with our existing customer base across our solution to initiate SaaS transition program for customer currently on-prem. Second, expanding North America, where we have made significant investments and sustain our growth in Europe, where we have a strong footprint by leveraging existing localization and reference to acquire new customer. In addition, focusing on cross-selling to existing customers to take advantage of our wide range of product Sapiens offers. In conclusion, we are excited about the opportunities that lie ahead in 2024. Our strong performance in 2023 and strategic initiatives position us well for continued growth and success. Now, I would like to turn the call to Roni Giladi, our CFO. Roni?