Sapiens International Corporation NV (SPNS) 2005 Q3 法說會逐字稿

Good morning, everyone, and welcome to the Sapiens quarterly conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (OPERATOR INSTRUCTIONS) Today's call is being recorded.

Hosting today's conference call is Sapiens' President and CEO, Yitzhak Sharir. Yitzhak is joined by Roni Al-Dor, the newly-appointed President and CEO, and Ori Brin, Sapiens' Chief Financial Officer.

Before turning the call over to Sapiens' management, I would 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 the call over to Yitzhak Sharir.

Thank you. Today is the last quarter that I will host. Happy to see the early signs of optimism that I will come back to for more details later in the conference.

I would like to start with welcoming Roni Al-Dor as the new President and CEO of Sapiens. Roni comes with a lot of experience in the IT industry and I wish him, on behalf of all of us, full success in leading Sapiens going forward.

I would like to turn the call now over to Ori Brin, who will review the financial results for the third quarter of 2005. Ori, please.

Thank you, Yitzhak. For the first quarter of 2005, the Company recorded revenues of 9.9 million, compared with $9.6 million in the second quarter of 2005, an increase of 3%. Gross profit is recorded at $3.7 million, with gross profit margins of 38%, compared with 3.8 million in the previous quarter.

The Company continued to reduce its losses. Operating loss reduced to $0.9 million from 1.3 million in the second quarter, an improvement of 30%. Net loss for the third quarter was reduced to 1.6 million from 1.7 million in the second quarter, an improvement of 6%.

The reported losses include a restructuring cost of $268,000 related to our continuing efforts to reduce expenses. That concludes the financial review. Back to you.

Thank you, Ori. Though still losing, we see for the first time a significant improvement of 50% over the previous quarter in new signed contracts. We see a small change for the better in our top line and a significant continued reduction of 30% over the previous quarter in our operational losses. I personally believe that this is the beginning of a change in trend where hopefully the worst is behind us and the quarters to come will continue to improve.

It is for the first time after a long period of declining revenues that this quarter represents signs of growth. The growth in revenues comes as a result of new contracts signed with new customers. After a long period of promoting our INSIGHT suite of insurance solutions, we are very proud in being selected by multiple clients in the different countries we are present, some of which will be announced soon.

In the Americas, we have signed another new contract for our property and casualty INSIGHT. We signed a first contract for our reinsurance INSIGHT solution with IAT, and a new contract with Paramed on our medical underwriting system.

Our product line continues to develop and our name recognition is now fully established. In Europe, we are proud to have signed two pan-European contracts with one of the world's largest insurance companies. This is indeed a major breakthrough.

In Israel, we made significant progress in delivering our major implementations of the life and pension solutions. And we can record a significant progress in Japan, where we continue successfully adding new customers to join on our eMerge technology, growing the revenues very nicely over last year.

The overall efforts of tight control on our expenses, together with the slight increase in revenues, enabled us to report a sharp reduction of 30% in our operational losses. As I have indicated earlier, I hope that the worst is behind us and that the early signs of improvements that we see in Quarter 3 will be transformed into a positive trend going forward. However, there is still a lot of work ahead and the road may still be bumpy.

It is my last day in leading Sapiens as it President and CEO, a challenge I assumed 5 years ago. I am proud of having had the opportunity of being a member of this outstanding family, and I am proud of the progress we made during the period. I thank our employees, customers, investors, and shareholders for their confidence and trust, and I congratulate Roni Al-Dor as the new President and CEO. I would like now to invite Roni to introduce himself. Roni, please.

Thanks, Yitzhak. Hi. My name is Roni Al-Dor. As of today, I am the new CEO of Sapiens. Let me briefly introduce myself. I come to Sapiens with over 20 years of management experience in the high-tech software industry. I was one of the founders and the president for 12 years of TTI Telecom, a company that sells software to telecom service providers. I led TTI through its successful IPO on the NASDAQ, and it now sells tens of millions of dollars worth of software to leading telecom organizations worldwide.

I am very excited to be here. Even through Sapiens has had some difficult period, I want to assure you I would not have taken the job if I did not believe that this Company can succeed. In my view, Sapiens has very strong assets -- a talent, a skilled group of employees, an impressive customer base, valuable core technology and beginning of penetration to the insurance market. I will put in all my energy and skill to try and leverage those assets.

Thank you. Back to Yitzhak.

Thank you, Roni. At this point, we will be pleased to take your questions.

(OPERATOR INSTRUCTIONS) There are no questions at this time. We have a last-minute questioner. Alexander Mack (ph) of (indiscernible).

My question is could you give an indication of the revenues in the fourth quarter?

As you may well know, we normally don't give forecasts, and we will stick to this line as of Quarter 4, but the work is progressing well.

Thank you.

(OPERATOR INSTRUCTIONS) There are no further questions at this time. I would like to remind the participants that a replay of this call is scheduled to begin at two hours after the conference. In the U.S., please call 1-866-500-4964, as well as in Canada. International callers, please call 972-3-925-5944.

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

Yes, I would like to make two comments. The first one, obviously, is to thank again everybody for their support. It has been a tremendous experience, a wonderful five years, significant progress. I am very proud of participating in that effort.

And the second comment again to welcome Roni to the new challenge of leading Sapiens going forward. Congratulations and have a good one. Thank you very much to everybody. Goodbye.