Sapiens International Corp NV

Ladies and gentlemen, thank you for standing by. Welcome to the Sapiens International Corporation's first quarter 2024 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 listen-only mode. Following management's formal presentations, 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 first quarter 2024 results. With me on the call today are Mr. Ronnie Aldor, President and CEO, Mr. Ronnie Gilody, 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 obligation 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 results 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 the 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 Roni Aldor, President and CEO of Sapiens.

Roni? Thank you, Yaffa. Thank you for joining us today. Let's take a high-level look at the first quarter results. After, I will walk you through the exciting new step we are taking to launch our future-proof AI-based open and integrated sapiens insurance platform. Then I will touch on the progress related to our 2024 objective with the highlights of recent success in key regions. Starting with Q1 highlights, our revenue totaled $134 million, an increase of 7.6% compared to last year. And operating profit was $24 million and 18.1% of total revenue. We experienced year-over-year growth in all of our key regions. Recall that on our last earning calls, I stated that our 2024 priorities are, first, on transition our solution to SAS model with Sapiens Insurance Platform, and second, leverage our investment to drive performance in all of our key regions, North America, EMEA, and APAC. Let's start with Sapiens Insurance Platform Update. The Sapiens Insurance Platform is designed and built to accelerate innovation, deliver sustained value, and empower insurers to grow and remain competitive. The Sapiens SaaS insurance platform is the next generation in the evolution of our insurance solutions. The platform harmonizes the aspects of core business processing, digital engagement, data-driven decision-making, gen-AI, and machine learning capabilities. A large ecosystem of complementary capabilities into a coherent prepackaged and preconfigured platform. These provide out-of-the-box solution, focusing on the unique requirements of each business vertical or domain. From the customer perspective, the Sapiens platform accelerates innovation, improve time to market using low-code and low-code approach. We provide our customer with consistent user experience while reducing their total cost of ownership and increase their efficiency. leveraging the rich prepackage offering and the unified set of operating tools. The platform is offered in SaaS subscription-based model. From September's perspective, the platform offering is geared to increase the wallet share of each deal, enhance the potential of cross-sell via the pre-integrated architecture that creates a compelling proposition to new and existing customers and provide our customers with strong innovation capabilities and future readiness. All new deals are being structured and priced to be delivered as a service, and our goal is to transition over time our existing customers to the SaaS model in a way that manages and minimizes the near-term impact on our revenue. Moving to AI, We view AI machine learning and generative AI models like ChatGPT as an evolution step. Sapiens is leveraging AI to improve both of our solution and our internal process. Today, Sapiens is a library of out-of-the-box machine learning models, including predictive models for productivity improvement like renewal prediction and cross-selling, and risk mitigation like fraud protection and loss reserving, to name a few. These tools can create significant benefits for our customers in the form of increasing premium revenue, better loss ratio, and improved expenses ratios, thereby further increasing the value that our platform provides. In the domain of generative AI and following the release of our decision model AI capabilities last year, we announced in quarter one, 2024, the launch of integrated AI, the next in line capabilities from Sapiens Decision. Integrating machine learning models into a business friendly decision model workbench, Sapiens Decision user can integrate machine learning model as another component of their decision model diagram. In addition, as a part of larger development plan for Sapiens platform, we are releasing our new generative AI models in the next coming months, supporting various aspects of the insurance value change and providing strong efficiency and support enhancement to our customer. Sapiens is also beginning to use AI within its own delivery system and processes, improving our performance and streamline our product development. This enables us to offer cutting-edge and customer application differentiation and benefits. Our second priority this year is to leverage our ongoing investment to drive performance in all of our key regions, North America, EMEA, and APAC. We increase our teams in our top focus regions with additional headcount across sales, marketing, and product marketing, as we look to maximize the momentum we are building in these key regions. In North America, our investment in the live solution has proven highly successful, and in the first quarter, we had a few go live across our live solution, Illustration Pro and Underwriting Pro. In the workers' compensation space throughout the first quarter, our workers' compensation team has demonstrated progress in the implementation of the three key projects that were signed in 2023. As I said in our previous call, this market represents a significant opportunity for savings in U.S. and Canada in the coming years. This quarter, we made additional investment in our Canadian operation. Sapiens has been successful serving leading insurance in Canada for more than 15 years. With this additional resource, we will be able to elevate the level of services we provide to our customers in Canada. Over the past few months, we strategically prioritized our presence at the key trade shows across North America, including LIMRA, AHOU, BBC, and insurance innovators. This aligns with our commitment to expanding market reach and cultivating valuable connection within the insurance industry. Our participation in these events has provided invaluable opportunity to showcase our innovation solution to diverse audience of prospects, generating significant interest and potential leads. As we continue to invest in this engagement, we anticipate further strengthening our position in North America market, driving growth and delivery value to our investors. Moving to EMEA and rest of the world, we had a few successful go-lives with our Edit Suite, TIA Suite, Skip Suite, and Rensurance Master this quarter. I would like to highlight two of our go-lives. In the DACH region, a priority territory for Sapiens in Europe, we had successful goal life with a German pet insurance brand, Cleos, with the Sapiens Skip Suite to accelerate their underwriting digital sales and go-to-market process. We provide Cleos with a competitive edge in a niche market with our low-code insurance platform, enabling them to develop and sell new products quickly to our digital channel. APAC is another region where we had focus on accelerate our goals. The goal live in Q1 was Opus Digital Insurance, the leading digital insurance in Vietnam, was watched closely by our prospects in the region. The successful goal live helped us build customer referrals in APACs. Opus adapts Sapiens EBIT Suite for property and casualty coupled with Sapiens Intelligent to modernize its core PNC insurance process. Overall, the demand continues to be strong for PNC platform solution in EMEA and the rest of the world. There is an increased trend in the PNC claims platform solution, and the appetite for platform in SAS model continues to be very strong across all solution lines. The demand for the life and pension platform is also steady across EMEA and APAC. In addition, digital over legacy is a strong theme for Sapiens. This enables us to offer insurance carrier digital over existing legacy as a phase one, and then phase two to effectively replace the underlying legacy system utilizing the already established digital front end. Moving to product recognition. In the first quarter, we received two CELENT luminary awards. Sapiens was named as a 2024 luminary in EMEA and APAC for our PNC claim solution. We also received the CELENT luminary awards for our claim pool in North America. I'm proud that Sapiens has maintained its leading position in ten consecutive CELENT reports. Silent recognition reinforce our position as a leading claim solution and underscores our strong regional presence across multiple line of business for local and multinational carriers. Our ecosystem of partners continue to evolve, further supporting our customer solution. In Q1, we announced a strategic partnership with DataCrest, a pioneer in innovative insurance solutions. to transform the application process and drive premium growth for P&C insurers. We also announced a partnership with Bina AI, the number one health and wellness check software provider that aims to empower more insurance companies worldwide to use client-provided health data for improved risk management and value-add services and reduce costs. Strategic partnership between Sapiens and leading insurtech play an important role in future achievement of insurance carriers and provide effective way for us for leveraging their cutting-edge solutions. Coming out 2023, we discuss collaborating with System Integrator to expand our reach and accelerate growth. I would like to update you regarding the progress we have made thanks to the work of the new team we built to support this initiative. In North America, Sapiens continues to strengthen its Deloitte America relationship with a recent expansion into Canada and the Caribbean. Sapiens has recently entered into a joint business relationship with PwC in the U.S., which will focus primarily in the lifetime annuity market. We continue to expand our relationship with LTI MindTree from a PNC course with focus to add capabilities for Sapiens Ransurance Master. In addition, we are engaging more with partners in Europe, mainly for higher tier to increase our chance of winning. Another major strategic alliance is our partnership with Microsoft. Sapiens is one of the few selected vendor to collaborating strategically with Microsoft on OpenAI. This partnership is central to Sapiens AI strategy and important to our customer, as we view this as a low-risk innovation. The Microsoft global and strategic partnership spans across multiple domains. This collaboration is key to our SaaS architecture and all the activities around the ongoing development of our SaaS platform and our cloud operation, ensuring that we are using the most advanced capabilities in that aspect. In conclusion, we had a good start to 2024. We are pleased with our global progress, particularly in our key regions, EMEA and North America. Our ongoing investment in our solution and partnership with Microsoft reflect our commitment to innovation and ongoing enhancement. Providing innovating solutions to our customers remains a top priority. We are confident that our efforts will foster additional growth and generate substantial value for our stakeholders. Now I would like to turn the call to Ronny Gilady, our CFO. Ronny.