Sapiens International Corp NV

Ladies and gentlemen, thank you for standing by. Welcome to the Sapiens International Corporation's second 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 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 second quarter 2024 results. With me on the call today are Mr. Ronnie Aldor, President and CEO of Mr. Rony Giladi, our 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 provisions in the press release issued today also apply to the content of the call. SAP has expressly disclaimed 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 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 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 Roni Aldor, President and CEO of Sapiens. Roni?

Thank you, Yaffa. Thank you for joining us today. Let's start by reviewing the second quarter results. Revenue totaled $137 million, marking a 6.6% increase compared to last year, while operating profit reached $25 million, representing 18.2% of total revenue. This quarter showcased solid execution, with North America delivering double-digit growth and Europe delivering mid-single-digit growth. Our profitability performance was notable this quarter, with an operating margin in the target range and a 13% growth in net income. Before I discuss the business details, I would like to remind everyone of our 2024 priorities. The first is to transition our solution to SAS model with Sapiens Insurance Platform, and the second is to leverage our investment to drive performance in all of our key regions. Let me explain how we are doing this, starting with Sapiens Insurance Platform. Sapiens recently collaborated with Microsoft and accelerated the use of AI in our platform, enhancing it with advanced GenAI capabilities and providing tailored unique solutions. I'm happy to share that we have successfully launched our intelligent insurance platform in the second quarter, a significant and exciting milestone for Sapiens. The platform represents the next generation of our insurance solutions and uses AI to help our customers drive growth and efficiency. It incorporates digital engagement, data intelligence, and core business process solutions with machine learning and GI capabilities. Designed to help insurers seamlessly innovate their offering and process, the platform enables them to stay competitive in a dynamic market with intelligent data-driven business decision and hyper-automation of business process. For our customers, the platform's pre-integrated design ensures rapid deployment, and seamless implementation, accelerating growth by supporting end-to-end insurance process across all line of businesses. The platform is delivered throughout SAS subscription model with new deal structure and price accordingly. Pivoting now to our second priority for 2024. Let me highlight how we leverage our investment in all of our key regions to drive your performance. In North America, our strategic investment in research and development, product innovation, and employees, together with our new partnership with System Integrator, have created a robust, effective platform to support our ambitious goals in this region. The positive momentum in the life business continues. In the second quarter, we signed a new platform deal with a leading life accident and health insurance company. The insurance carrier selected the Sapiens platform for life to modernize its platform, expand its TPA services, and enable it to scale quickly as it enters to new market. The platform also enables the insurance to implement its long-term care insurance specialty. We are pleased to deliver the end-to-end solution the carrier was looking for and to accommodate its long-term care market needs. Additionally, our life solution had several North America go-live in the quarter, including CoreSuite, Illustration Pro, Underwriting Pro, and we continue to progress with customer upgrades. One of the go-live that we would like to highlight is Republic Life Insurance. This is a Caribbean first digital direct-to-consumer insurer. made possible by Sapiens Core Suite for Life and Annuity and Sapiens Digital Suite deployed on Microsoft Azure Cloud. Customers can acquire life insurance policies with point-of-sale decision and manage their policies throughout innovating customer portal, providing an enhancement first-of-its-kind experience in this region. Also, this quarter, PEN America Life Insurance Group, PELIG, went live with Sapiens Illustration Pro SaaS solution on Microsoft Azure Cloud. Sapiens empowered Pellig to consolidate its enterprise illustration standard, streamline process, and extend product offering. After extensive competitor analysis, Pellig selected Sapiens to consolidate illustration and single platform and enable their insurance with a faster time to market within North America market its server. Sapiens Illustration Pro will accelerate and streamline process, providing an exceptional user and agent experience. In property and casualty, several North America projects went live this quarter, and we are progressing with customer upgrade. We continue to invest in our core suite for MPL solution to promote growth innovation in the medical professional liability industry. By expanding and augmenting our MPL capability and product for policy administration, finance, claims and risk management, and seamless integration with value-added vendor solution, Sapiens meets the needs of MPL insurers in the rapidly consolidation MPL market. We are proud of our leadership in MPL ecosystem and are committed to this market. Our advanced solution unburdened insurers from complex business problems enable business users to take control of the process. We create a synergy between those two worlds, giving MPL insurers a clean bill of health to empower them to succeed. Our worker compensation team has made significant progress during the second quarter and implemented the three projects signed in 2023. As mentioned in our previous call, we see this market as a significant opportunity for sapiens in the U.S. and Canada in the years to come. Moving to EMEA and the rest of the world. We had a few successful goal lives with our EDIT Suite, TIA Suite, SKIP Suite, and Rent Insurance Master this quarter. I would like to highlight one of the largest, most complex PNC goal lives with Bangkok Insurance BKI a leading insurer in Thailand. BKI went live with Sapiens property and casualty platform, including a good suite for PNC insurance master and Sapiens data suite. We were chosen for our integration capability, end-to-end solution, and proven ability to meet regional regulations. Overall, we see continuous demand in the market for our PNC platform solution. AI is becoming a focus point on this market. We see a generative AI model. The Sapiens insurance platform can support the insurance value chain to provide customers in this region with a higher effectiveness and support achievements. We see an appetite for an insurance platform as they're offering across all solution lines and tiers. The majority of our new business leads are now SaaS platform-based. As we said in our previous call, digital over legacy is also a theme for sapiens in the EMEA region. This is particularly effective for smaller carriers and peer organizations. Insurance in the EMEA region wants the ability to roll out platforms in multiple countries which may have different languages, currencies, and regulations. With its global footprint, Sapiens has built this capability into its offering and is uniquely positioned to support clients in successful multi-country implementation. This capability is an important differentiator for us in EMEA. The increased demand we have seen for our PNC platform in various regions, including Europe, South Africa, and APAC, is reflected in our growth for our pipeline in this market. In the election pension space, demand is growing across EMEA and APAC, with increasing appetite for more business automation and AI-enabled solution to drive new business to market and improve services. We are seeing business channels wider to retail, white labeling, especially for bank issuers. We are seeing large life and pension players looking at platform transformation in group and individual investment, pension and annuity, in addition to protection in the simpler line of business, such as funerals. Those trends are reflected in the strengthening of our pipeline for our life and pension platform across Europe, South Africa, and APAC. In the reinsurance space, we also see a growing interest for platforms across EMEA, APAC, and North America to enable capacity and manage solvency as a business look to grow and diversify. Insurers face growing pressure to increase capital to sustain their operations, driven by reassessment of natural catastrophe risk due to climate change and recent surge in inflation rates, which elevate risk liability. Accordingly, the demand for reinsurers is on the rise, creating a favorable market for reinsurers. The current trends we see in the reinsurance market are in the increase of reinsurance rate and cost for reinsurers, and strict underwriting terms and conditions in reinsurance contracts. Insurers must comply with the reinsurance requirements and therefore must adapt and fine-tune their underwriting guidelines and practices. Sapiens reinsurance solutions enable reinsurance to automate and manage end-to-end programs covering both seated and assumed, Sapiens is the world's leading software vendor for reinsurance with over 100 customers using our reinsurance solutions. Moving to our marketing activity, the second quarter is typically our event season. In this quarter, we participate in 20 trade shows globally, 14 in North America, 4 in Europe, and 2 in APAC. We are encouraged by the feedback we receive from trade show participants and the potential new businesses leads that will generate. Our North America Client Summit is scheduled for September in Austin, Texas. We look forward to updating you on this exciting event at our next investor call. In conclusion, the second quarter demonstrates strong financial and operating performance marked by solid revenue growth and profitability. We are effectively executing our 2024 priorities, including transitioning to SAS model with Safiance Insurance Platform and leveraging our investment across key region. Our success in North America, our positive momentum in our life, pension, and annuity line of business, and our ongoing innovations in all of our product lines demonstrate our commitment to deliver innovative, comprehensive solution globally. Now I would like to turn the call to Rony Giladi, our CFO. Rony.