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Sapiens Q2 2012 Revenue Increases 91% to $27 Million

August 13, 2012

REHOVOT, Israel, August 13, 2012 /PRNewswire/ –

Sapiens International Corporation N.V.
[https://red001.mail.microsoftonline.com/owa/redir.aspx?C=54ed8fa42a0f4964b833a7a450f1f6ca&URL=http%3a%2f%2fwww.sapiens.com%2f ]
(NASDAQ and TASE: SPNS), a provider of innovative
insurance software solutions and a member of the Formula Group (NASDAQ: FORTY and TASE:
FORT), announces its financial results for the second quarter ended June 30, 2012.

(Logo:
http://photos.prnewswire.com/prnh/20120508/531104 )

Second Quarter Year-over-Year Financial and Business Highlights include:

        - Revenue increased 91% to $27.2 million, compared to revenue of $14.3
          million in the second quarter of 2011
        - Non-GAAP operating profit increased 81% to $3.7 million, compared to $2.0
          million in second quarter of 2011
        - Non-GAAP net income increased 77% to $3.5 million compared to $2.0 million for
          second quarter of 2011
        - KBC, Tokio Marine, Oranta Insurance Russia, Riverstone Resources LLC and
          DirectAsia.com went live with Sapiens solutions
        - Named to Russell Global and Russell 3000 Indices
        - Introduced Business Intelligence for Reinsurance market
        - Launched Billing and Workflow Management with RapidSure, Sapiens' new version
        - Sapiens ended the quarter with $31.2 million in cash, compared to $21.5
          million at December 31, 2011

Roni Al Dor, CEO of Sapiens International, commented, “This was a quarter of strong
execution, as we continue to grow our revenues and improve the profitability of the
consolidated organization, while capitalizing on increasing demand to our product
portfolio. Halfway through our first full year following the merger, we are delivering
revenues on our promise and reaching Non-GAAP operating margins of 13.7% which reflect
steady improvement from previous quarters. We continue to see high demand for our products
in North America and European markets with a strong pipeline to gain new customers in the
short term. We continue to invest in technology and functionality to further enrich our
product portfolio and recruit new employees to our R&D centers and target markets.

First half Year-over-Year Financial Highlights include:

Revenue for the six months ended June 30, 2012 increased 93% to $53.2 million,
compared to $27.6 million for same period in 2011.

Non-GAAP operating income was $7.0 million compared to $4.1 million. Non-GAAP net
income for the six months ended June 30 2012 totaled $6.7 million, compared to Non-GAAP
net income of $3.9 million for the same period in 2011

Non-GAAP Financial Measures

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude:
amortization of acquired intangible assets, share-based compensation expenses and certain
business combination accounting entries. The purpose of such adjustments is to give an
indication of our performance exclusive of non-cash charges and other items that are
considered by management to be outside of our core operating results. Our non-GAAP
financial measures are not in accordance with, or an alternative for, generally accepted
accounting principles and may be different from non-GAAP financial measures used by other
companies. In addition, these non-GAAP financial measures are not based on any
comprehensive set of accounting rules or principles. We believes that non-GAAP financial
measures have limitations in that they do not reflect all of the amounts associated with
our results of operations as determined in accordance with GAAP and that these measures
should only be used to evaluate our results of operations in conjunction with the
corresponding GAAP measures. Our management regularly uses our supplemental non-GAAP
financial measures internally to understand, manage and evaluate our business and make
operating decisions. These non-GAAP measures are among the primary factors management uses
in planning for and forecasting future periods.

        U.S. Dollars in thousands, except per share amounts
                  For the three months ended               For the six months ended
        U.S GAAP basis     30/06/2012              30/06/2011   30/06/2012           30/06/2011
                          (Unaudited)             (Unaudited)  (Unaudited)          (Unaudited)
        Revenues               27,182                  14,258       53,165               27,584
        Gross profit           11,610                   6,651       22,436               12,854
        Operating profit        2,762                   1,678        5,203                3,400
        Net income              2,601                   1,624        4,990                3,298
        Basic earnings
         per share               0.06                    0.07         0.12                 0.15
        Diluted earnings
         per share               0.06                    0.07         0.12                 0.14
        Non-GAAP
        Revenues               26,986                  14,258       52,821               27,584
        Gross profit           12,501                   7,926       24,227               15,219
        Operating profit        3,715                   2,048        7,023                4,084
        Net income              3,512                   1,973        6,724                3,937
        Basic earnings
         per share               0.09                    0.09         0.17                 0.18
        Diluted earnings
         per share               0.08                    0.08         0.16                 0.17

About Sapiens International

Sapiens International Corporation (NASDAQ and TASE: SPNS), is a leading global
provider of innovative business solutions for the insurance industry, helping to modernize
business processes, to proactively define and provide innovative new services and to
respond quickly to changes in the industry. We offer end to end solutions for the L&P, P&C
and Reinsurance markets, with customers across the globe. We jointly serve over 70
insurance customers, backed by a team of over 700 insurance experts. Coupled with our
financial stability, Sapiens aims to become the vendor of choice in the insurance software
marketplace. For more information about Sapiens, visit http://www.sapiens.com
[https://red001.mail.microsoftonline.com/owa/redir.aspx?C=54ed8fa42a0f4964b833a7a450f1f6ca&URL=http%3a%2f%2fwww.sapiens.com%2f ]
.

Except for historical information contained herein, the matters set forth in this
release are forward-looking statements that are dependent on certain risks and
uncertainties, including such factors, among others, as market acceptance, market demand,
pricing, changing regulatory environment, changing economic conditions, risks in new
product and service development, the effect of accounting policies, specific system
configurations and software needs of individual customers and other risk factors.

        Sapiens International Corporation N.V. and its subsidiaries
        Condensed consolidated statements of income
        U.S. dollars in thousands (except per share amounts)
                                                    Three months ended       Six months ended
                                                         June 30,                 June 30,
                                                    2012        2011        2012        2011
                                                 Unaudited   Unaudited   Unaudited   Unaudited
        Revenues                                  27,182      14,258      53,165      27,584
        Cost of revenues                          15,572       7,607      30,729      14,730
        Gross profit                              11,610       6,651      22,436      12,854
        Operating Expenses:
         Research and development, net             2,436       1,191       4,736       2,251
         Selling, marketing, general
          and administrative                       6,412       3,782      12,497       7,203
        Total operating expenses                   8,848       4,973      17,233       9,454
        Operating income                           2,762       1,678       5,203       3,400
        Financial expenses (income), net            (85)          54       (146)         102
        Taxes and other expenses (income), net       272           -         380           -
        Net income                               $ 2,575     $ 1,624     $ 4,969     $ 3,298
        Attributetable to non-controlling
         interest                                 $ (26)           -      $ (21)           -
        Net income attributable to
         Sapiens shareholders                    $ 2,601     $ 1,624     $ 4,990     $ 3,298
        Basic earnings per share                  $ 0.06      $ 0.07      $ 0.12      $ 0.15
        Diluted earnings per share                $ 0.06      $ 0.07      $ 0.12      $ 0.14
        Weighted average number of shares
        outstanding used to compute:
        Basic earnings per share                  40,088      22,050      39,927      22,047
        Diluted earnings per share                42,334      23,723      42,250      23,735

        Sapiens International Corporation N.V. and subsidiaries
        Reconciliation of GAAP to non-GAAP results
        U.S. dollars in thousands (except per share amounts)
                                              Three months ended          Six months ended
                                             2012            2011       2012            2011
        GAAP revenues                      $ 27,182        $ 14,258   $ 53,165        $ 27,584
        Valuation adjustment on acquired
         deferred revenue and long term
         contract                             (196)               -      (344)               -
        Non-GAAP revenues                  $ 26,986        $ 14,258   $ 52,821        $ 27,584
        GAAP gross profit                  $ 11,610         $ 6,651   $ 22,436        $ 12,854
        Revenues adjustment                   (196)               -      (344)               -
        Amortization of capitalized software    875           1,275      1,709           2,365
        Amortization of other intangible
         assets                                 212               -        426               -
        Non-GAAP gross profit              $ 12,501         $ 7,926   $ 24,227        $ 15,219
        GAAP operating income               $ 2,762         $ 1,678    $ 5,203         $ 3,400
        Gross profit adjustments                891           1,275      1,791           2,365
        Capitalization of software
         development                          (935)         (1,275)    (1,915)         (2,430)
        Amortization of other intangible
         assets                                 839             296      1,636             590
        Stock-based compensation                158              74        308             159
        Non-GAAP operating income           $ 3,715         $ 2,048    $ 7,023         $ 4,084
        GAAP net income attributable
         to Sapiens shareholders            $ 2,601         $ 1,624    $ 4,990         $ 3,298
        Operating income adjustments            953             370      1,820             684
        Non-controlling interest in
         amortization intangible assets        (22)               -       (46)               -
        Deferred taxes related to
         acquisition                           (20)            (21)       (40)            (45)
        Non-GAAP net income attributable
         to Sapiens shareholders            $ 3,512         $ 1,973    $ 6,724         $ 3,937
        Non-GAAP basic earnings per share    $ 0.09          $ 0.09     $ 0.17          $ 0.18
        Non-GAAP diluted earnings per share  $ 0.08          $ 0.08     $ 0.16          $ 0.17

        Sapiens International Corporation N.V. and its subsidiaries
        Condensed consolidated balance sheets
        U.S. dollars in thousands
                                                           June 30,             December 31,
                                                             2012                   2011
                                                          Unaudited               Audited
                       ASSETS
        CURRENT ASSETS:
         Cash and cash equivalents                         $ 31,234              $ 21,460
         Restricted cash                                        447                   456
         Trade receivables, net                              14,654                14,484
         Other receivables and prepaid expenses               3,168                 3,229
         Total current assets                                49,503                39,629
        LONG-TERM ASSETS:
         Property and equipment, net                          1,948                 1,814
         Severance pay fund                                   9,711                10,172
         Other intangible assets, net                        32,911                35,138
         Goodwill                                            65,227                66,715
         Total long-term assets                             109,797               113,839
        TOTAL ASSETS                                      $ 159,300             $ 153,468
                       LIABILITIES AND EQUITY
        CURRENT LIABILITIES:
         Trade payables                                   $ 3,356                 $ 2,559
         Accrued expenses and other liabilities            17,270                  19,731
         Deferred revenue                                  12,968                   9,603
         Total current liabilities                         33,594                  31,893
        LONG-TERM LIABILITIES:
         Other long-term liabilities                          632                     614
         Accrued severance pay                             11,108                  10,714
         Total long-term liabilities                       11,740                  11,328
        EQUITY                                            113,966                 110,247
        TOTAL LIABILITIES AND EQUITY                    $ 159,300               $ 153,468

        Investor Relations Contact:
        Roni Giladi, CFO
        Sapiens International
        Tel: +972-8-9382721
        E-mail: roni.g@sapiens.com

        Or

        James Carbonara, Regional Vice President
        Hayden IR
        Office: +1-646-755-7412
        James@haydenir.com

.


    Photo: 

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SOURCE Sapiens International Corporation


Source: PR Newswire