13 Aug 2008 11:38
SAPIENS ANNOUNCES Q2 2008 RESULTS Reports Seventh Consecutive Quarter of Operating Profit; Approximately $2.4 million of Cash Flow from Operations
Ra'anana, Israel, 13 August 2008 - Emblaze Ltd ("Emblaze" or "the Group") announces that Sapiens International Corporation N.V. , a member of the Emblaze/Formula Group , today announced its results of operations for the second quarter of 2008.
Highlights for Q2 2008 and H1 2008
- Revenue in the second quarter of 2008 reached $11 million, a 3% increase from the second quarter of 2007.
- The second quarter of 2008 shows seventh consecutive quarter of operating profit with $579,000, a significant increase of 257% from the second quarter of 2007.
- Cash flow from operations in the second quarter of 2008 is approximately $2.4 million.
- Operational profit for the first six months of the year is $1 million.
- During the first six months of the year, Sapiens generated $2.8 million in cash flow from operations, reaching total cash equivalents and short term investments on hand of $12 million.
- Sapiens is enjoying an increasing pipeline of potential deals with major customers' world wide.
U.S. GAAP
- Operating profit of $579,000, a 257% increase from the second quarter of 2007 and a 37% increase from the first quarter of 2008.
Non-GAAP
- Operating profit of $689,000, a turn around from the operating loss of $57,000 in the second quarter of 2007, and a 32% increase from $522,000 in the first quarter of 2007.
U.S. GAAP results include amortization of capitalized software developments, capitalization of software development costs, and stock-based compensation expenses.
Reconciliation between U.S. GAAP and Non-GAAP results is summarized in the following table. For a complete reconciliation, please refer to the tables at the end of this release.
U.S. Dollars in thousands, except per share amounts
For the three months ended For the six months endedU.S GAAP basis 06/30/2008 06/30/2007 06/30/2008 06/30/2007 (Unaudited) (Unaudited) (Unaudited) (Unaudited)Revenues 11,012 10,680 21,503 21,687Operating profit 579 162 1,002 311Net loss (526) (715) (1,726) (1,120)
Basic and diluted loss per share 0.02
0.05 0.08 0.07 Non-GAAPRevenues 11,012 10,680 21,503 21,687Operating profit (loss) 689 (57) 1,211 (59)Net loss (416) (934) (1,517) (1,490)
Basic and diluted loss per share 0.02 0.06 0.07 0.10Roni Al-Dor, President and CEO of Sapiens, commented: "Today wereported our seventh consecutive quarter of operating profit, which proves ourstrategy direction and improving performance. In the last six months weachieved a significant improvement in the aggregate of $1 million inoperational profit and $2.8 million in cash flow from operations. The net lossis a result of financial expenses relating to Sapiens's debentures, due to theevaluation of the New Israeli Shekel exchange rate against the U.S. Dollar.Neutralizing this exchange rate decrease, Sapiens would be reporting netincome today. However, despite the drop in the U.S Dollar/New Israeli Shekelexchange rate, we reported an operational profit of $579,000, an improvementcompared with the first quarter of 2008 and the second quarter of 2007. Inaddition, we improved our pipe line as we are competing in few major tendersand facing several promising opportunities, which we expect will become signedagreements in 2008.
Mr. Al-Dor added, "We thank our customers, our investors and our employees for the good news we reported today".
Comment Regarding Non-GAAP
Sapiens' management believes that the presentation of non-GAAPmeasures can enhance the understanding of the company's ongoing economicperformance, and provides useful information to investors regarding financialand business trends relating to the company's financial condition and resultsof operations. Sapiens therefore uses internally the non-GAAP information toevaluate and manage the company's operations.This non-GAAP financial measures are not in accordance with, or analternative for, generally accepted accounting principles and may be differentfrom non-GAAP financial measures used by other companies. In addition, thesenon-GAAP financial measures are not based on any comprehensive set ofaccounting rules or principles. Sapiens believes that non-GAAP financialmeasures have limitations in that they do not reflect all of the amountsassociated with Sapiens' results of operations as determined in accordancewith GAAP and that these measures should only be used to evaluate Sapiens'results of operations in conjunction with the corresponding GAAP measures.Please refer to the Reconciliation of GAAP to Non-GAAP Results atthe end of this release.Enquiries:EmblazeHadas Gazit, Hagit Gal + 972 9 7699302/ 339About Sapiens InternationalSapiens International Corporation N.V. , amember of Formula Group , which is a member ofthe Emblaze Group is a leading global provider of proven ITsolutions that modernize business processes and enable insurance organizationsto adapt quickly to change. Sapiens' innovative solutions are widelyrecognized for their ability to cost-effectively align IT with the businessdemands for speed, flexibility and efficiency. Sapiens operates through itssubsidiaries in North America, the United Kingdom, EMEA and Asia Pacific, andhas partnerships with market leaders such as IBM and EDS. Sapiens' clientsinclude AXA, ING, Liverpool Victoria, Menora Mivtachim, Norwich Union,Occidental Fire & Casualty, OneBeacon, Principal Financial Group, Santam andTexas Farm Bureau among others. For more information, please visithttp://www.sapiens.com.
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 the Company's accounting policies, specific system configurations and software needs of individual customers and other risk factors detailed in the Company's SEC filings.
About Emblaze
Emblaze Ltd is a group of technology companies addressing both growth and innovation activities thus combining the stability of "bread and butter" mature technology enterprises with "high-risk / high-reward" investments in innovation.
Our Growth arm includes Formula Systems , which harbors the following subsidiaries: Magic Software EnterprisesLtd. develops, markets and supports compositeapplication development and deployment platforms with a service-orientedarchitecture (SOA), including application integration and business processmanagement (BPM), with existing and legacy systems; Matrix IT Ltd. (TASE:MTRX) is one of Israel's leading integration and information technologyservices companies, active in four principal areas: software solutions andservices, software products, infrastructure solutions and hardware products,and training and assimilation.; Sapiens International Corporation N.V. is a provider of IT solutions that modernize business processesto enable insurance and other companies to quickly adapt to changes; andnextSource Inc., designs, develops and implements web-based, high quality,innovative human capital management solutions.
Our Innovation arm includes Emblaze Mobile, a designer of advanced mobile devices; EMOZE, a provider of Push Email and synchronisation technology for mobile devices; and ZONE-IP (Emblaze V CON), a provider of wireless video communications technologies and conferencing solutions for operators and enterprise markets over IP networks.
The Emblaze Group is traded on the London Stock Exchange since1996. www.Emblaze.com SAPIENS INTERNATIONAL CORPORATION N.V. Condensed Consolidated Balance Sheets (U.S. Dollars in thousands) 06/30/2008 12/31/2007 (Unaudited) (Audited)Assets Cash and cash equivalents $ 8,990 $ 13,125 Short-term investments 3,000 - Trade receivables, net 9,397 7,549 Other current assets 2,287 1,881 Total current assets 23,674 22,555 Property and equipment, net 1,229 1,219 Other assets, net 30,485 28,758 Total assets $ 55,388 $ 52,532
Liabilities and shareholders' equity
Short-term bank credit and current maturities of long-term debt and convertible debentures $ 7,539 $ 9,456 Trade payables 1,872 1,088 Other liabilities and accrued expenses 10,166 8,375 Deferred revenue 6,066 4,203 Total current liabilities 25,643 23,122 Other long-term liabilities 1,740 1,132 Convertible debentures 5,885 6,428 Shareholders' equity 22,120 21,850
Total liabilities and shareholders' equity $ 55,388 $ 52,532 SAPIENS INTERNATIONAL CORPORATION N.V. Condensed Consolidated Statements of Operations (U.S. Dollars in thousands, except per share amounts) For the three months ended For the six months ended 06/30/2008 06/30/2007 06/30/2008 06/30/2007 Unaudited Unaudited Unaudited Unaudited Revenues $ 11,012 $ 10,680 $ 21,503 $ 21,687
Cost of revenues $ 6,542 $
6,849 $ 12,798 $ 13,925 Gross Profit 4,470 3,831 8,705 7,762 Operating expensesResearch and development, net $ 857 $ 486 $ 1,647 $ 976Selling, marketing, general and administrative $ 3,034 $
3,183 $ 6,056 $ 6,475 Operating Profit 579 162 1,002 311 Financial expenses, net $ 1,002 $ 692 $ 2,185 $ 1,116Other expenses, net (a) $ 103 $ 185 $ 543 $ 315 Net Loss $ 526 $ 715 $ 1,726 $ 1,120
Basic and diluted net loss per share (b) $ 0.02 $ 0.05 $ 0.08 $ 0.07 Weighted average shares used to compute -basic and diluted net loss per share (b) 21,541 15,514 21,541 15,184
Note: a: Includes taxes, equity losses, minority interest and capital losses due to repurchase of debentures.
b: Due to the net loss in the six and three months period ended June 30, 2007 and 2008 the inclusion of dilutive securities would be antidilutive
SAPIENS INTERNATIONAL CORPORATION N.V. Reconcilation of GAAP to Non-GAAP results (U.S. Dollars in thousands, except per share amounts) For the three months ended For the six months ended 06/30/2008 06/30/2007 06/30/2008 06/30/2007 (Unaudited) (Unaudited) (Unaudited) (Unaudited)GAAP operating profit 579 162 1,002 311Amortization of intangibles 1,042 885 2,002 2,068Capitalization of software development (982) (1,134) (1,858) (2,475)Stock-based compensation 50 30 65 37Total adjustments to GAAP 110 (219) 209 (370)
Non-GAAP operating profit (loss) 689 (57) 1,211 (59) GAAP net loss (526) (715) (1,726) (1,120)Total adjustments to GAAP as above 110 (219) 209 (370)Non-GAAP net loss (416) (934) (1,517) (1,490) Non-GAAP basic net loss per share 0.02 0.06 0.07 0.10 Weighted average number of ordinaryshares used in computing basic anddiluted net loss per ordinary share 21,541 15,514 21,541 15,184
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