Sapiens International Corporation NV (SPNS) 2004 Q3 法說會逐字稿

Good morning, everyone, and welcome to the Sapiens' Quarterly Conference Call.

(OPERATOR INSTRUCTIONS)

Hosting today's conference call is Sapiens' President and CEO, Itzick Sharir. Itzick is joined by Yuval Hadari, Sapiens' CFO.

Before turning the call over to Sapiens' management, I'd like to state that, except for historical information, the matters discussed this morning include forward-looking statements that may involve a number of risks and uncertainties. Actual results may differ significantly due to a number of factors and risks, which are detailed in the Company's most recent annual report and other filings with the Securities and Exchange Commission.

Now, I would like to turn over the call to Mr. Itzick Sharir. Please go ahead.

Hello and Shalom to all attendees. The results of the third quarter do not yet show a positive trend in revenue, and we face further delays in penetrating the insurance industry, related to a seasonable summer quarter.

However, we have succeeded in reducing costs, and that marginally improved our bottom line results. I will come back to describe in more detail the business and operational aspects. But fist, I would like to turn the call over to Yuval Hadari, our CFO, who will review the financial results for the third quarter. Yuval, please?

Thank you very much, Itzick. Third quarter revenue was $11.4 million compared with $11.8 million in the second quarter of 2004. Gross profit was $4.8 million compared with $5.2 million in the second quarter, and gross profit margin was 42.3 percent compared with 44 percent in the second quarter.

The Company reported an operating loss of $0.2 million and a net loss of $0.95 million in the third quarter of 2004, representing a minor improvement over an operating loss of $0.3 million and a net loss of $1.1 million in the previous quarter.

When compared with the results of the third quarter, revenues were at $11.4 million compared with $13.4 million in the third quarter of 2003. Gross profit was $4.8 million compared with $6.4 million in the third quarter of 2003. Gross profit margin was 42.3 percent, compared with 47.7 percent in the third quarter of 2003.

The Company reported an operating loss of $0.2 million compared with an operating income of $0.3 million in Q3 of 2003. Net loss for the quarter was $0.95 million, compared with a net income of $0.04 million in the third quarter of 2003. The diluted net loss per share for this quarter was 8 cents, compared with a net loss per share of 10 cents in the second quarter of 2004.

That concludes the financial review. And back to you, Itzick.

Thank you very much, Yuval. During the last few months, we have taken significant measures in cutting costs throughout the Company. We expect to achieve further improvements in the fourth quarter of 2004, and continue to believe that we can return to profitability as a result of growing revenues and further cost cutting.

We continue to push forward our efforts in the (indiscernible), selling our new offering while servicing our install-base customers. In the U.S., our pipeline in the property and casualty insurance sector is expanding and we are now launching to market our automated medical underwriting system, MediRisk.

In the UK, we are participating in two major tenders for BPO, Business Process Outsourcing, for life businesses and continue our marketing drive with our automated underwriting system with several potential customers, and launching legacy modernization technology (indiscernible).

In Israel, we are in advanced stages of delivering our Life&Pension INSIGHT in both (Nor) and (Makefid), while addressing new regulatory needs of the pension and provident fund markets.

In France, Germany and Switzerland, we are in the middle of a campaign, launching Life&Pension INSIGHT, addressing regulatory changes and new products. We are encouraged by market feedback.

We continue in our campaign to support our worldwide existing installed customer base, with new features of our eMerge technology and improved performance and productivity. We're expanding our partnerships to include now Sapiens Business Services and (indiscernible), in addition to IBM, (PDF) and (COC).

As announced recently, Sapiens will bring business rules technology to Linux. We are proud to bring to our customers (indiscernible) platform portability and reduced cost for ownership. This enables our existing customers to retain their long-term investments, and will enable our insurance customers in the future to enjoy interoperability and portability, ranging from PC to mainframes.

As indicated in our previous conferences, this process of penetration into the insurance industry takes more than originally planned as a result of longer sales cycles, as a result of continued development in our comprehensive solutions, and as a result of changes in investing patterns in the industry. And we will continue to require -- it will continue to require efforts in taking our insurance initiatives successfully to market.

We're making progress and continue to believe strongly that our unique product offering and reputation of long-standing for accurate and quality delivery will eventually lead to new order signs of new customers.

We expect to report further improvements in the fourth quarter, and continue to believe that we will return to profitability as a result of growing revenues and further cost cutting.

At this point, we would be pleased to take your questions.

(OPERATOR INSTRUCTIONS.)

There are no questions at this time.

I'd like to remind the participants that a replay of this call is scheduled to begin in two hours time after the conference. In the U.S. and Canada, please call 1-888-269-0005 and, internationally, please call 972-3-925-5901.

Mr. Sharir, would you like to make your concluding statement?

Just to thank all the participants and we'll see you next quarter. Thank you very much.