Q4 2020 Sapiens International Corporation NV Earnings Call
As you may recall back in 2016, we focused effort on expanding our presence in North America. And today we have a strong competitive position in this important month over the last 18 months be focused on expanding in European market this started with acquisition of calculus back in 2019 Ford Edge. They are very on Market followed by 2020 acquisition of some Kumho in the dark region, which I already covered in detail in previous calls.
Then in Q4 of twenty-twenty, we announced the acquisition of Technology. We still we deliver on our promise to our not the customer to build the local presence. It's called in Denmark Tia is more than 20 years of experience and nearly seventy customers globally mostly in Denmark Norway Sweden South Africa off and the baltics. One of the most important assets we gain is the insurance domain knowledge of tier two hundred employees that will help us to expand sapiens home a lifetime pension offering in the region. We are committed to serving our customers as we strongly believe in long-term partnership with our customers globally.
We have shown that our land and extend strategy is an effective way to go. We still are we will invade into the original culture and Regulatory wage to continue and goes in this region second Global presents and Broad product offering support by local professional team create a unique competitive advantage.
Julie Q4 we continue with the integration of Delphi which we acquire in Q3 there for the position both Rich MPL domain knowledge and the customer to enhance Open Sea offering and further advanced settings position in the US market.
As we enter 2021 we will remain focused on the successful integration of our recent acquisition and continue to carefully explore additional opportunities shifting to business highlights in 2020, the global safety and steam delivers. Once again, many new wins and go live across the various region off the market segments we operating in
Our rapid and professional adoption to the challenges of COVID-19 in your world deleting Norwegian insurance company yesterday select settings course with God for life and pension platform for this go. Please go pension individual risk saving and annuities businesses to support the expansion of their digital capabilities and grow its market share and city is in the process of implementing safety incidents with social solution for property casualty coverage cost the Nordic region off. This is an example of a trend. We have recently been seeing where customers require more than one social solution.
One of the main differentiators and Advantage we offer is our board folio solution addressing multiple and visits and needs.
In the Gateway a license cause forty-seven States owned by Buckle selected sapiens integrated Financial solution to streamline and automate home office Insurance processes.
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Sapiens Insurance, go seconds Financial incipient a control enable gateway to transform its Financial compliance and reinsurance management providing a 1/4 their needs.
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We have also announced a new win with American farmers and ranchers one of the largest farm organization with over 100,000 members wage. If was looking to replace his legacy system with a flexible solution to support all PNC lines of businesses.
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The functionality of taping solution made the extensive requirement and provide a single digital platform that enabled them to automate their current manual range another important project. I would like to share with you represent the long-term Partnership of sapience, which is customer you can workers compensation a bold hold out and an upgrade of Satan's claims for UConn acceptance client since 2006 is now able to streamline end-to-end claims processing and reduced claim processing expenses and settlement costs. The upgraded version will also enable you can to respond quickly to new business requirements are even more critical during the COVID-19 pandemic.
We also helped many customers each major milestone in their digital transformation project we sapiens.
To name a few mapfre msv. Leading provider of life insurance protection long-term in savings and retirement solution in Malta when Clive would go straight for life and pension bundle with our digital solution the cloud-based platform including policy Administration digital portals and advanced analytics wage and expanding Services. The first phase of implementation was completed on time and on budget despite the COVID-19 global pandemic.
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Will consolidate msv protection into a signal Administration platform at the next phase will consolidate the company investment and grow businesses offering.
Another important goal life was crossing in Croatia where we set the record in the implementation time of sale this week for PNC which was selected for the new age little brain.
This was the first stage in three phases for digital program. And it says already shown positive results for causing on the product formed. I'm proud to share wage to the June 20-24 products in our portfolio have been recognized as a market leaders.
Three of those Awards will publish during Q4 and we did sweet for PNC was recognized by silento as a leader in functionality in email. We also will selected the market leaders in government email magic quadrant for the non-life system our call Sweet for LifeStream pension received the highest rating for Five out of seven use cases evaluated by governor and earlier this year. Our solution was recognized by Gartner as a market leader in email.
Well, I did I think Pro was recognized as the market leader in the report or North America new businesses and underwriting functionality for the life insurance. And now he's stationed Paul was recognized as a market leader in the salon report on North America illustration solution.
One of our Capital allocation priorities is Cindy and we see this investment paying off nicely.
I will recently launched. It did go cloud-based plug-and-play pin see solution allows us to expand our Market reach and sell smaller carriers. This is a Mobile Home Solution which bring out of the box capabilities for faster deployment addressing the low end of the market. We did go. We now offer smaller the risk abilities of sapience market-leading solution during the last quarter. We have also accelerate the platform and functionality of our digital offering we have introduced a new generation of our digital Suite.
The new generation of digital offering which combines shape and in-house development and Technology acquired includes an API layer Advanced customer an employer portals a local local digital Journey Builder machine learning-based jet boat and an omni-channel live chat the digital suite life of us to provide a wide range of Advanced Digital solution that can be rapidly deployed either together with our call solution as part of full platform or the Staffing Solution for companies looking looking for digital solution to be deployed quickly onto their existing court system decision our business logic, which is used by global T1, financial institution continue to gain momentum in the insurance Market.
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Do is and he'll out why we see a growing demand for decision. This includes 31 players that find Great Value and decision. I'm certain this is one of the key differentiators in our portfolio. Another area we continue to focus on is our partner in short ecosystem as our platform is built with open a page of abilities. We are adding more and more partners that fully integrated with our solution enables enabling our customer to enjoy seamless integration with additional Solutions during Q4. We have announced several partnership.
To name a few we partnered with we pay to extend digital payment to Workers Compensation Insurance with click in to provide an automated a I bought a vehicle damage inspection and accelerate claims management.
And we close Sunday to offer Insurance Advanced data analytics on medical providers.
2020 was the year in which we all had to adjust to New Reality savings and the customer was dedicated to continue executing digital transformation project despite the challenges that remote work with scented. I'm proud of our achievement this year and the fact that sapiens came out even stronger. We are in a position for continue goal.
Looking ahead in 2021 our success in Quincy Market is expected to continue in All Region the Latin and pension Market. We now see growing demands for our platform supported by recent wins and solid pipeline. Our insurance platform is gaining momentum primary with a large carriers in addition hour south of multiple lines of business has caused both life and make sapiens the vendor of choice for Multinational Global ensures. We have planted the seeds to increase our Global expansion. We should focus on North America and Asia. We already see positive momentum from our investment in a barrier and
We saw over 600 global customer savings is making a significant impact with our both portfolio of solution and one hand to shake business model with nearly 4,000 of the industry. Most talented employee spread globally with all the tools in place to continue goals.
The descriptive COVID-19 and in the shift to digital are driving in sure to speed up their digital transformation project. We are fully prepared to lend new customer and expand existing customer businesses.
Now would like to tell the call to want to get a d i will see for please warning.
Thanks.
You're running I will begin my commentary with a review of the fourth quarter non-gaap result. The 2020 annual non-gaap result followed by the comments on a balance sheet in cash flow and we'll wrap up with our outlook for 2021.
And important you for Milestone detail by Ronald or was the completion of the accusation T results have been Consolidated starting December 1st, 2028 give you some perspective. It's Revenue has been flat and thirty million dollar run-rate. We anticipate a small decline in its Revenue towards the end of two thousand twenty one years with the military level. Is it 14%
Revenue in the fourth quarter of 2020 increased to one hundred and two point nine million dollar up 18.7% from the fourth quarter of 2019 off a revenue North America reach forty seven point three million dollar 15.1% higher than last year.
Revenue Europe reach forty nine point two million dollars up 31.4% and positively impacted during 2020 by some cool off into the small extent by dear moving to gross profits gross profit in 2020 was forty-seven million dollar up from thirty eight point four million allowing of last year was margin this quarter increased by 140 basis points to 45.7% from 44.3% in Q4 2019. We see constant increase in our gross margin water of the quarter.
Moving to operating profit operating profit this quarter Was Eighteen point seven million dollar up 30.1% from 14.3 million dollar in 2019, despite the negative impact of their profitability operating margin increased to 18.1% All by 160 basis points, nothing, beautiful to stop and shareholders for the quarter was fourteen point five million dollar up 37% from 10.6 million. Net income in 2018 bought a GPS for the quarter was $0.27 per diluted share compared to twenty one cents per diluted share in the fourth quarter of last year reflecting 28.6% EPS growth. Please note the EPS reflects the increasing Share account due to the public offering we've completed in Q4.
Turning now to the full year results for the 12 months ended December 31st, 2020 2020 was obviously affected globally by COVID-19 Panthers while COVID-19 is negatively affected our organic growth rate. It has enabled us to further improve our profitability, which I will elaborate on shortly with Revenue 2020 Revenue increase to 384.5 million dollar as we achieved high double-digit growth of 18.1% off do they verse Revenue base is clearly represented when looking at the result by geography and products, the main goals drive there by region was 29.2% off roof in Europe totally 172 point nine million dollar in 2020 followed by 15.2% growth in our largest region North America wage.
It's total 1.
8.5 million Doula rest of the world contributed twenty three point two million dollar in 2020 growth by product was driven mainly by the princess segment Bank of America and Europe and in from life and annuities in European countries in North America a life and annuity growth was driven by light components.
All diversity is also represented by the spread of Revenue among our customers. For example, I'll talk ten customer represented 23.5% of sapiens revenue office in the largest customer represented 4% of total revenue and improvement from previous years.
Organic growth in 2020 was 8.7% off which 0.7 per cent related to the positive impact from the currency Tailwind.
On top of that m&a has contributed 9.4% This included revenue from calculus some Kumho Delphi and tia topics while the opposition increased by fourteen point two million dollar. It was a real from increased our end in sg&a. We have successfully reduced expenses as percentage of Revenue in 2020. Our total is the percentage of Revenue was down by 60 basis points from 27.9% to 27.3% as a result operating margin move from 16% to 17.7% steadily crossing the 18% level since Q2 of 2020.
COVID-19 was important contributor to the higher operating margin in 2020 adding approximately 1.3%
I would like to highlight the improvement in our operating margin was achieved despite the fact that all 2020 position had profitability level which were lower than those of September in addition. You can see that goes margin has contributed about two-thirds of the operating margin expansion. This expansion was complemented by one third from the lower topics as percentage of Revenue.
These various elements resulted in operating profit of 67.9 million a 30.1% increase from 52.2 million in the prior-year.
Zacks expenses for the U where 11.8 million dollar representing an effective non-gaap tax rate of 18.4% increase by 50.4% to 72.6 million in 2020 from 55.7 million in 2,019. Our adjusted ebitda margin was up to 18.8% for the year from 17.1% of last year. Net income for the year increased by 33.6% to 52 million month from 38.9 Million Dollar in 2019. EPS per diluted share reach $1 up from $0.77 per diluted share in 2018 up 29.9% from last year.
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For balance as of December 31st 2020 we had cash and cash equivalents in short-term deposits totaling $182 in total debt of $100,000 spread over six years in 2020. We raised goats amount of $115 in equity in a public offering which includes the exercise of the Green Tube. We also raised sixty million in-depth in a non convertible debenture in parallel. We have required companies for a total amount of 423 million dollar and distribute the dividend in the amount of $7.
19 opponent Justice free cash flow June 2020. We reach free cash flow of 49.8 million which represent 96% of our non-gaap net profits off reflecting or clear ability to convert net profit Into Cash generation. I would like to turn on to our guidance for 2021.
Is the only stated in earlier we see increasing so offering in the market, we expect to start benefiting from the seed planted in the Bay Area in that region in 2028 in from our continued investment in our products.
In 2021, we anticipate returning to our 10% organic growth level in addition the impact of our 2020 m&a will add 9% off a result. We are introducing 2021 Revenue guidance in the range of 457 to $463 million dollars.
Operating margin guidance operating margin Improvement will come from continued Improvement in suspense activities and from improved operating profit of the acquired companies. I live in a decline in the pandemic and the resumption of a normal business practice which would include business travel and other operational expenses might increase our chances in the second half of 2021.
In this scenario, we might see some of the cost-saving all about fifty basis points of what we have achieved during 2020 been eliminated.
In addition we see growing demand for employees in the high-tech sector this might drive average employee cost up.
In addition, we will incur expenses related to integration costs from the Tia acquisition.
As a result operating margin in 2021 is expected to be in the range of 17.7 to 18% off dissipate that our annual tax rate will be at 18.5 to 19.5% slightly lower than the 2020. This is due to a tax incentive program that we mentioned last quarter.
A number of share at the end of the year increased to fifty four point seven million shares mainly as a result of the public offering we anticipate the number of diluted shares will go off about 400,000 shares every quarter.
On Damen a front we have added several companies to the sapiens family in 2020 and we intend to focus efforts on their integration. We will still evaluating any Targets in 2021 and act on them if we find the right opportunities to summarize despite COVID-19, which had a Global Effect starting early in 2020. We finish the year on a strong note as evident in both top-line growth and margin Improvement to Waco level looking ahead. We expect to positive momentum to be continued. I will now turn the call back to O'Neill do only thank you honey. I will great 2020 results are attributed to our solid business model which is built on several key pillars.
Filter our long-term relationship with our customer the partnership for success and our One-Stop shop strategy. Once again proved to be the right approach for a major digital information project.
Second novel and then extend strategies support support by our gain better Market coverage and closer relations with our customer.
And last but not least. Our commitment to Innovation is recognized by both our customers and Industry analysts.
I was out in the of global pandemic are credited to the sapience customer success team, which is doing an outstanding job providing critical support to our customer.
And to the dedicated delivery teams that are spread globally which are doing an outstanding job delivering our solution on-time on-budget despite the COVID-19 am distancing the same times our Global sales team continue to focus on creating new opportunities expanding the pipeline and signing new businesses in a challenging Market condition. Our leadership team remains focused on delivering growth and margin expansion as we execute against our long-term objective of improving shoulders value.
We see focus of go strategies Global diversity and even stronger balance sheet sapiens is well-positioned for additional success and goals. I would like now to class. I will prepare the amount and open the call for question, please.
Thank you. Ladies and gentlemen, at this time. We will begin the question-and-answer session. If you have a question, please press star one. If you wish to cancel your request, please press star to Earth. If you are using speaker or equipment kindly let's the handset before pressing the numbers. Please ask your question in a loud and clear voice. Your questions will be pulled in the order. They are received. Please stand by while we pull for your questions.
The first question is from Ashwin of City, please go ahead.
Thank you. Hi, Tony. Tony good results here. Congratulations. I think the first question I want I asked was with regards to understanding a little bit more on the Cadence of Georgia how revenue and earnings flows through the course of the Year given all the you know, the various issues that we have to think about a month and so on so that was the first question. Thank you. I asked me in this is only G. I assume you're asking about 2020. So obviously during the month I'm asking about how we should take from a modeling perspective into 20 21 for the four quarters. Okay for fair enough, no problem. So if I need to
Stop from a 2020 I will say that the beginning of the year. We had some slow down on the revenue and there was a worldwide pandemic and obviously impacted away when you graduate and as we continue doing the the year, we saw positive momentum the positive momentum continued toward the security info and obviously the enter into two thousand twenty one month and as we speak right now, we see increasing Pipeline and opportunity that will be closed. Therefore. We increase our Revenue organic growth to 10% coming from. And say companies excluding the last week with that came during the middle of the year, which are Tia and Delphi so 10% organic growth for a company and on top of that adding Thea slightly South to $13. This is the revenue nearly basis and fully of Delphi or fifteen million dollar if we a dog
If we will get to the middle of the range.
Understood and in terms of you know the cost actions that you do to the course of twenty twenty and some of those costs coming back in 20 21. How should we think of that?
Okay, so obviously during COVID-19. We had positive impact coming from several elements, like rent travel marketing exhibition that improve our operating profit by 1.3% We assume that the impact of this pandemic probably will slow down towards the end of the year two thousand one cool drink you for and obviously we'll give it will have increase in our cost. We assume this as a half of it will vanish and offered with today. We stay with the company therefore about 0.5% of operating margin will be vanished in 2021 because of COVID-19 on top of that of course happens is improving efficient, efficient processes, and of course offshore that will compensate for this reduction in profitability.
Got it in one very quick clarification the Tia. Is there any seasonality in the revenues there?
So he's no seasonality. Basically, there are some solution which are implemented that will go live to the second and third of the quarter of 2025. And therefore we see some reduction in Revenue towards the end of the year.
I just thank you very much. Thank you.
The next question is from Chris Merwin of Goldman Sachs, please go ahead.
Okay, thank you so much for taking my questions and congrats on a strong finish to the year. I wanted to ask you about Europe. Can you talk a bit about where you're finding success so far in that market wage would be in terms of the size of customer that you're winning what type of products they're taking whether that's core Solutions or maybe more of a data and digital products. Just trying to get a sense of where the the early traction is so far there and I have a follow-up. Thanks.
Yes. Hi Chris. This is only a door. We in terms of the product line. We continue to see demand for the court system as well and digital. We are seeing also demand in the court system. We have our P&C platform Venture and platform the light platform. So we see a slightly higher demands on the on the life that it was at the past. Mainly the rest of the world was recall email and Asia on the PNC. We are continue to grow for sure whether any that makes sense mention about the billion the dark we start to see some positive momentum of those area on the digital. We are in all of our court system. We are fully embedded our digital solution, but we are also start to see demand for our Standalone digital offering again in us and Europe as well.
Okay, great. Thank you. And just the follow-up was that I think for the 21 guidance you talked about 10% organic growth which sounds like an acceleration from fiscal twenty. So can you talk about some of the main drivers of the organic growth acceleration that you're anticipating this year? Thanks. This is the only G if we live again back to this to recipients over the years being able to grow about 10% organically over real. This is our Target Model to continue going forward. Of course, we can accelerate this but it will be very effective with ability. When we enter 2020. This was our guidance also 10% and because of COVID-19 in the impact from the customer and from sapiens, we reduce it. So we think I'm back on track right now and we see the growth from a PNC globally both in the state any new European life. Yep.
the only mention also the see that
We plant in the Bay Area in the region. We hope to see fruit in 2021.
Perfect. Thanks so much. Thank you, Chris.
The next question is from Levon story of William Blair, please go ahead.
Hey guys. Thanks for taking our questions. This is this is Dylan actually on for Bob on a nice job closing out the year. I guess I just wanted to start. I mean obviously twenty-twenty was off with the highly acquisitive year. And then if that going back even to 2018 with your expansion into North America, can you got to help me understand or help us understand with integrated those P&C Solutions are and they have a different offering in North America different offering um in Europe. So kind of integrating those two solutions and kind of looking at your guys's spin on R&D as a as a percent of Revenue compared to maybe some of your competitors that that offer a global Solution on one kind of platform. Can I help us get a sense of what your plans are and thoughts kind of around integrating the two solutions there.
I will I I will start with the I will start not on the number just to explain where we are with you. As you mentioned. We are we have two platform for rest of the world and in North America and but what we are seeing all of our digital platform is is good with both side. So the investment is the same digital offering and that's become percentage-wise more part of the offering that we are serving in terms of Faith. Well, we are on the integration. We integrated fully integrated our policy and claim system. We continue ahead with our Billing System. So right now we are supporting full billing claims in North America last year. This is we are really grow this business in Europe. We are for many many years. We saw we did platform we yep.
Really see a lot of growth as I mentioned. We also announced our we lunch hours. We did go to self also the smaller client. So the overall we are continue to develop in a both both solution. Okay, great. Yeah the ideal and this is only G. I will just want to answer your question about the investment compared to other companies. So I think the business model of sapience is different from the rest. And therefore you see different in percentage-wise. We are a one-stop-shop meaning of the softer, but we are also the system integrator which allow us during the implementation of our solution and the customer to develop our product and enhance its in generic way beautiful. It's not only the percentage that we see in the report which is about twelve to thirteen percent, but it's also have even percentage in the cost of goods which are really off.
Hindi we estimate this about 7% all together.
That if you combine the two we are reaching about 20%
Right. Okay. Yep. That's right. That's helpful. And then I guess to just wanted to follow-up. It sounds like kind of over the last couple of quarters. There's been to say Demand on the life side compared to maybe what we've seen a couple of years. Can you can you can you just give us a sense of what's driving kind of some of that, um uptick in interest from a client perspective and maybe even a product perspective and then how that competitive landscape maybe differentiate as well compared to a relative to the seaside. Thanks guys.
Yes, so if you are going today still be when we acquire many many years ago the the Alice platform today we call it cost me for life. We save money on technology side and also on the to develop all the lines of visits and also the regulation so it was a lot of investment that we did at the past the same time. She also took penetrate to the US market what we decide to do in 2018. We decide to to focus mainly on the rest of the world based on our investment off the group function. That was very important function because they until then we are more specialized on the individual. So what we start to see momentum package 2019-2020, we signed few deals and besides those both those areas. We also have a product that focus on the Run of business dead.
So if you take all of this investment that we did plus the success with the customer and also a gardener as we mention a position as the leader. It's also helped us. So in the sales people and reference all-in-all is bring more demand and more Wingate on the deals that we have right now. He's mentioned with we are now considering to go back to us. Also now policy. This is we are in the starting point on this face, but I believe in the future wage out to see results as well. One moment comment on the state on the component side. We see growth in the last several year, but the single midday digit
Yeah, if I can squeeze come one more quickly in there as well. Just expanding on that. I know it had been kind of a no-growth kind of segment for a little while. But if we kind of take about that 10% organic piece off maybe coming from the from the life side of there.
Currently it's below 10% We do not provide the percentage there, but it's it's below 10%
next question again
The next question is from surrender thin of Jeffries, please go ahead.
Good morning. I'd like to start with a question just about the general outlook for the insurance base and just client demand wage. I think one of the working thesis that's been out there is with all of the the disruption that's going on in the space that there was a potential to see demand accelerate over the next few years. It sounds like you guys are back to your normal expected growth rates around 10% Can you comment on the ability to maybe get above that at this point or is it just you know clients are going to kind of grow at the fact that they've been growing at historically?
In a high in our business model because we are I believe on the one hand to shake and when we go we also going our services business office. It's all depend of hiring more more employee. So we all the time balance between growth and profitability and if if you ask me if we can go more yes, but it will affect our profitability and this is why we we are now put ourselves on the percentage that they only mentioned.
In terms of demand of the market we have Demand on the market. We as a management. We will make a decision if we can do a little bit more. But right now we are focusing on what we what we share with you.
But would you say that the demand is back at historical levels or it's greater than historical levels and you're just being careful about your your growth strategy or how would you characterize that from an industry wage?
Looked at the life, they like business was very slow many many years mainly people start to buy a lot of insurance company both books of business from a company. It was a lot of consolidation right now. We see I'm all demand in general in the Life business and also for us, so right now the trend is positive goes
Under 6 and then a question about m&a one of the comments that was made that you're you know, you carefully continuing to explore additional Acquisitions. How should we think about the lack of any potential deals given that you guys just did a large deal, you know, does it make sense to maybe hold off for a while or you know, is there increased risk if you were to do a genie return?
Hi, this is only G.
We as you mentioned correctly. We completed the five in the last year. And obviously this is take a lot of attention in terms of integration doing the right tools keeping the employees integration the product corporate stuff and all of that a lot of effort because you want to succeed and of course we are not holding company. So the effort is much higher on integration. We are right now focusing on integration, but still looking for additional opportunities, if you ask us off probably towards the second half of the year, we should expect to do m&a the size of the m&a is typically what we are looking midsize to medium-sized company. This is what we are good at 5 would like to continue with it, you know to minimize risk.
Got it. Okay. Thank you. That's it for my questions. Thank you.
The next question is from Sterling Audi of JPMorgan, please go ahead.
Yeah, thanks. Hi guys to follow up on the comments that you made demand is a little bit better on the on the light side. I'm curious why perhaps we're not seeing better wage demand in PNC and maybe a follow-on to that. Where are you seeing the best demand in terms of size of organization tier-1 tier-2 all the way down.
Yeah, just to make sure that they understand your question you ask about the life or you ask General also on the PNC or general including the PNC Bank fluke. We will say parents. We are in Europe. We are targeting also higher tier in us. We are not going to the highest hill without PNC Bank in life calls. So in the components and the insurance we are going to also for the higher theater in terms of demand. We see demanding all are dead. So they also the higher. I have the newest most of them are already invest heavily on the P&C. So we more see the the medium package deals and but in the in Europe, we are definitely see the higher-tier as well as medium feel. That's the general answer. Yep.
Going more more deep in the PNC pinching. Your Parsippany is ready for all tails in us. We are at this moment. We are more on the medium and low table and then again as I mentioned on the life, we are more focusing on rest of the water this moment and we plan to move to come to the u.s. Mainly with our individual not because we don't have group but group is no competitive situation right now and individual we have an advantage.
Okay, and then one follow-up, you mentioned the the new digital platform what opportunities in 2021 do you see to migrate some of your existing customers down to the new platform? And if you do what kind of Revenue impact will that have?
No, we don't need all of our digital platform just to remind we we what we decide to do we take we build something called Ace wage is to open all of our court system to work very efficient with any digital platform include sapiens. That's one this we already did the next release of all of our products are getting the the the the major major release for them is our digital open API decide this month everything around the digital in data everything that I mentioned in my call and this is additional to what they have today. It's not replacing the additional.
Got it. Thank you.
Thank you.
The next question is from Tavi Rosner of Barclays, please go ahead.
Hi, good afternoon. I just wanted to touch a little bit on the on the bigger picture. I get in your conversation with the insurance companies that are still using Legacy software. You know, are you are you still going after those that mean proactively in your go-to-market, you know knocking on doors and trying to convince them to move to move to digital and how was the conversation involved with Corona. I mean does that mean that goes from they make there is more more interest in kind of moving their solution to offer something more Dynamic and and cloud-based.
Yes, hi, David Phillips the volume in terms of coffee and we cannot knock in the door anymore. So we do it by dialing for them. It's joke. So we yes, so the answer is yes, we all continue to look after you remember in our many years of presentation that we feel 80% of all compared to all the local it and Legacy system. So this is a good Target to go after them and the way that we are going we we have zero remember we have a very broad offering so we we we we prefer the company will prefer to fully full implementation of our court system. But if that's not work, we are going to MVP just to find one line of business and we can do it or if the company is dead.
Ready for full full blown replacement. We are taking all the siloed porch or we can come with our digital offering always the inventions. So the idea is that when we locking the door where we try to do something by the way, we last year. It was very good deal for our decision also for the insurance pays. So this is another way up to us. And if we are if we start to work with the customer say print has a lot to offer and in terms of copied, I think the yes, we all have still have the car off but the insurance carrier continue to invest mainly in the digital and they I think everything that's happening now and she'll take and and Lemonade Life Insurance all of this for us. It's wake-up call for the insurance. So they are all understand they need to invest because the competitors are around
Great. I appreciate it. Thanks for their Comming. Thank you, Debbie.
The next question is from Emeryville Bart of Legacy value Partners, please go ahead.
I run in running congratulation for the great quarter another great quarter two questions, please the first one is regarding the wage the previously 12 months Acquisitions of a TIA which was the more recent and some, Germany. It is now a little bit more than Thursday with the 12 months since some Kumho are closed. What do you see in the Dutch Market the job market and you recently announced the major executive higher over there, but still no no, no New Deal over their wage. I'm remembering correctly. So if you can give a little bit color on the progress over there, obviously a very important large market and regarding the TV akwid.
Sent from what we can understand and from what Gartner to say. It's a very well-regarded company very respected. It's actually not not not that far from from settings in the magic world. And of course, of course, so what qualities do you see in Thea you pay off handsomely for this company and how do you see it complete. And maybe 1/3 in growth over the next several months from now. This is my first question.
You ask the question in one question. So let's let's start with. It's very important market for walk-ins that we decide to penetrate and it was good idea for us to do through some Kumho some Chrome OS you remember they are specialized on the digital offering for this Market. I'm doing doing that. They continue to do their business very well more than expectation in terms of the integration between the companies also work very well. We all we all already has some customer for sapience in the region. So they start to be involved with the person that you mentioned is is a sales and pre-sale that we hire from our competitors and they all of them are now built with the marketing building pipeline hopefully to system results this month.
So overall it's a growing market for say pants. Definitely see demand acceptance. Welcome very well. We think it's in the insurance business. It's everything take time. It's take time to build the president's marketing confidence and so on but with the two hundred people that you have today and good job that we are doing and they so in the next in this year and the next few years. Definitely we see a goal if we are going to Tia as you as you say in your right here is very good company. It's excellent product. We say 56 the customer know the South Africa and several other area. They are also working with system integrator not the same model of sapience. So this is something that we birth
Let me right now we are.
What we decide to do is fully integrated their business recipients. That's one plus one will be 3.5. We are next week. We plan to launch the fully-integrated between this company. It says three months is very short time. We don't see any chance from the customer. We are give the old confidence to the customer that we are fully continue to support strategy-wise we decide where to put sapiens and well to continue to sell t-shirts and this is something that we are working on it. But definitely we plan to continue to develop we integrated with our digital platform on top of their Thursday. We are also already start to put any service for their clients. We take something they decide to invest they call it off start and we find it very good for the entire month.
So all-in-all very positive with the and the culture wise is excellent fit no issue. So let's I hope so. Yeah, thank you. That was very helpful. Now if I'm a another question more question now, obviously, you know, I talked I know you you want to focus on execution not on the stock, but if we can ask the question about the stock price, it's done very well over the last few years and still a major evaluation gap between you and some of your, you know, shiny maybe competitors. I'd like to ask you
What are your thoughts about about this this Gap and if you are considering especially with now with more interesting settings from large know worst your bank institutions et cetera. And after your last secondary IPO a secondary offering if you considering maybe give more money kpi more data more non-gaap measures about about the business. Maybe maybe it's a question more for when you get a d a m like to I would love to hear your thoughts about it. Thanks. I already this is only G say Obviously we are focusing on the execution. You're totally right and if you mess up, you know the execution over the the share price say continue to grow and we hope to see this also in the future as we evolve as a company. We are in Palm
In the reporting and adding additional metrics. I'm sure that you will be able to say additional metrics in 2021 as we continue growing having other products recruiting employees those lights. So the answer for that is of course. Yes regarding the the following that we completed the last year and the last year major Bangkok involved with this and as we talk right now with investor, we are talking with big investor of the in the past and we all hopefully this is taking time. We'll see we'd like to see the result during 2012-13 one is we continue to progress with the results. I see. Okay. Thank you again guys, and on the reason for the quarter. Thank you very much. Thank you.
the next question is
From Brian satterlee of Rebecca, please. Go ahead.
Hi. Thanks so much for taking my question and congratulations on your results was hoping you can provide a bit more detail or examples on how you're growing revenues with your existing customers over time and not much of your Revenue growth. You see going forward from areas like software and other sources that are more recurring versus one-time in nature. Thank you.
This is a I will start with the second one although We Are One Stop Shop combination of sauce house and the service say providing service or implementation are on their product significant part of our Revenue are requiring in nature. Although they are not signed that off to you. If we analyze the Matrix of how much revenue we have any given year coming from existing customer. It's running between 86 to 8% off the last three years. This is a indicator of strong repeatable business from our customer the additional percentage coming from new logo off of about 1/8 to 10% and the the other is coming from m&a. So, although it's not sassa driven or this phrase. Although it's not
Method or backlog the business from existing customers that have relationship with us using our product. They need us to support the operation is significantly higher continue over there as I mentioned between 86 to 88% This was related to this question. Can you remind us the first one?
No, thank you. That's great. Actually change it a little bit here because you're talking about the amount coming from existing customers. And how long would you say these days does it take for you to get home sort of the full earning potential per customer? Is there like a you know multi-year uptick and how much you can earn per per new logo gained.
So if I eat talk about core system implementation, it's usually running the first deal. Let's say 7 to 15 million over the first two years in after the that we take order of this amount every year running from the extended maintenance maintenance light off and say batches all of the meaning supporting the customer hosting many services supporting the customer on the day-to-day business.
Usually it can run lifetime ten fifteen years easily. This is closest to implementation and in nature survive for many years with us.
Understood. No, thank you. That's very helpful. Appreciate it. Congratulations again. Thank you very, thank you.
Is there any additional questions, please? Press star one. If you wish to cancel your request, please press star to please stand by while we pull for more questions.
There are no further questions at this time before I ask. Mr. Aldor to go ahead with his concluding statement. I would like to remind participants that a replay of this call is scheduled to begin off in two hours in the US. Please call one eight seven seven four five six nine in Israel. Please call 039-2900 and internationally, please call. 972-239-2559. Would you like to make your concluding statement?
Yes. Thank you for all of you to joining us today. See you next water.
Thank you. This concludes the sapiens international corporation fourth-quarter and full-year 2020 results conference call. Thank you for your participation. You may go ahead and disconnect wage.