Sapiens International Corporation N.V. reports 154% EBITDA growth in 2018 and 8.5 pp EBITDA Margin growth from 6.3% to 14.8%
02/26/2019 • About Sapiens International Corporation N.V. (
$SPNS) • By InTwits
Sapiens International Corporation N.V. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Sapiens International Corporation N.V. is a fast growth stock: 2018 revenue growth was 7.6%, 5 year revenue CAGR was 16.4% at 2018 ROIC 10.7%
- Sapiens International Corporation N.V. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.2%. At the same time it's a lot of higher than industry average of 8.7%.
- CAPEX is quite volatile: $2m in 2018, $3m in 2017, $5m in 2016, $3m in 2015, $1m in 2014
- The company has business model with average profitability: ROIC is 10.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Sapiens International Corporation N.V.'s Revenue increased on 7.6%. Revenue growth showed slowdown in 18Q4 - it was 2.4% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 8.5 pp from 6.3% to 14.8% in 2018.
Gross Margin increased on 3.1 pp from 34.7% to 37.8% in 2018. SG&A as a % of Revenue decreased on 4.5 pp from 22.5% to 18.0% in 2018.
Net Income margin increased on 4.6 pp from 0.13% to 4.8% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 Sapiens International Corporation N.V. had CAPEX/Revenue of 0.66%. Sapiens International Corporation N.V.'s CAPEX/Revenue decreased slightly on 0.86 pp from 1.5% in 2015 to 0.66% in 2018. It's average level of CAPEX/Revenue for the last three years was 1.3%. During the last 5 years CAPEX as a % of Revenue topped in 2016 at 2.2% and was declining since that time.
Return on investment
The company operates at low ROIC (10.7%) and ROE (6.9%). ROIC jumped on 10.2 pp from 0.49% to 10.7% in 2018. ROE increased on 6.7 pp from 0.18% to 6.9% in 2018.
Leverage (Debt)
Debt level is -1.3x Net Debt / EBITDA and 0.2x Debt / EBITDA. Debt surged while cash decreased on 9.6%.
Sapiens International Corporation N.V. has no short term refinancing risk: cash is higher than short term debt (652.9%).
Valuation and dividends
The company's trades at EV/EBITDA 14.7x and P/E 49.8x.
Management team
Roni Al-Dor is a the company's CEO. Roni Al-Dor is a founder and has spent 13 years with the company. The company's CFO Roni Giladi has spent 12 years with the company.
Financial and operational results
FY ended 12/31/2018
Sapiens International Corporation N.V. ($SPNS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 157.5 | 185.6 | 216.2 | 269.2 | 289.7 | 7.6% |
| Gross Profit | 58.4 | 74.4 | 85.8 | 93.5 | 109.6 | 17.2% |
| SG&A | 32.1 | 39.9 | 44.5 | 60.6 | 52.1 | -13.9% |
| EBITDA | 23.6 | 34.0 | 34.9 | 16.9 | 42.9 | 154.2% |
| Net Income | 14.5 | 20.0 | 19.3 | 0.4 | 13.8 | 3,816.2% |
Balance Sheet
|
|---|
| Cash | 47.4 | 54.4 | 60.9 | 71.5 | 64.6 | -9.6% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 9.9 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 1.5 | 2.8 | 4.7 | 2.6 | 1.9 | -27.0% |
Ratios
|
|---|
| Revenue growth | 16.3% | 17.9% | 16.5% | 24.5% | 7.6% | |
| EBITDA growth | 19.5% | 43.8% | 2.6% | -51.6% | 154.2% | |
|
|---|
| Gross Margin | 37.1% | 40.1% | 39.7% | 34.7% | 37.8% | 3.1% |
| EBITDA Margin | 15.0% | 18.3% | 16.1% | 6.3% | 14.8% | 8.5% |
| SG&A, % of revenue | 20.4% | 21.5% | 20.6% | 22.5% | 18.0% | -4.5% |
| Net Income Margin | 9.2% | 10.8% | 8.9% | 0.1% | 4.8% | 4.6% |
| CAPEX, % of revenue | 0.9% | 1.5% | 2.2% | 1.0% | 0.7% | -0.3% |
|
|---|
| ROIC | 8.6% | 13.6% | 13.2% | 0.5% | 10.7% | 10.2% |
| ROE | 8.3% | 11.2% | 10.3% | 0.2% | 6.9% | 6.7% |
| Net Debt/EBITDA | -2.0x | -1.6x | -1.7x | -4.2x | -1.3x | 3.0x |
Sapiens International Corporation N.V. ($SPNS) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 71 | 72 | 73 | 73 | | 25.6% | 4.5% | 1.7% | 2.4% |
| EBITDA | 10 | 10 | 12 | 12 | | 551.7% | 928.1% | 29.8% | 114.9% |
| Net Income | 3 | 2 | 5 | 4 | | | | 76.0% | 17.4% |
Balance Sheet
|
|---|
| Cash | 62 | 59 | 64 | 65 | | 75.8% | 27.6% | -20.4% | -9.6% |
| Short Term Debt | 10 | 10 | 10 | 10 | | 23.7% | 23.7% | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | -100.0% | -100.0% | | |
Ratios
|
|---|
| Gross Margin | 38.1% | 37.2% | 38.0% | 38.0% | | 4.2% | 3.5% | 2.9% | 2.0% |
| EBITDA Margin | 13.9% | 13.4% | 15.9% | 16.0% | | 11.2% | 12.0% | 3.4% | 8.4% |
| Net Income Margin | 4.0% | 2.8% | 7.1% | 5.1% | | 7.9% | 8.0% | 3.0% | 0.7% |
Peers in Application Software
Below you can find Sapiens International Corporation N.V. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| Sapiens International Corporation N.V. ($SPNS) | | 17.9% | 16.5% | 24.5% | 7.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.1% |
|---|
| Sapiens International Corporation N.V. ($SPNS) | 37.1% | 40.1% | 39.7% | 34.7% | 37.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Sapiens International Corporation N.V. ($SPNS) | 15.0% | 18.3% | 16.1% | 6.3% | 14.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 3.0% | 2.3% | 2.4% |
|---|
| Sapiens International Corporation N.V. ($SPNS) | 0.9% | 1.5% | 2.2% | 1.0% | 0.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| Sapiens International Corporation N.V. ($SPNS) | 8.6% | 13.6% | 13.2% | 0.5% | 10.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.2x | -0.9x | -0.9x | -0.8x | -0.6x |
|---|
| Sapiens International Corporation N.V. ($SPNS) | -2.0x | -1.6x | -1.7x | -4.2x | -1.3x |
