on the payments and financial software space. Today, we have Yaffa Cohen-Ifrah. She's CMO and Head of Investor Relations at Sapiens. Yaffa's gonna run through a brief presentation, and then we'll do some Q&A at the end. Yaffa? Thank you. Thank you, everyone. I'm really excited to be here. I'll start with a quick presentation. I can always email everyone the full presentation, and I think it will be great if we can, you know, then just do a Q&A. So let's start with Sapiens. For those of you who doesn't know Sapiens, you know, we are a global software company focusing on P&C and life across the globe. $515 million revenue in 2023, a compounded annual growth rate of about 15%. We are operating in a great market, and I'll get into it in few minutes. We have a very comprehensive insurance platform going all the way from a core data digital, of course, a SaaS. And as I said, you know, I think we're unique in this market because we're both in P&C and life. The insurance market, if you don't know it, as good as we know, is an amazing market. You know, this is a market that has been going through transformation over the past decade, I would say. Insurance companies are looking to transform and move from old legacy systems to new systems, and we're helping them doing so. The challenges that insurance carriers are facing today are, you know, one, trying to be competitive in the market is very difficult when you have old systems. It's very, very difficult to react, especially with the increased competition from insurance carrier, but also from InsurTech companies that are coming and trying to penetrate this market. So competitive landscape is impacting insurance companies. They wanna be more efficient, and it's very difficult to do it with old systems, so this is one of the trigger to transform. Customers are very demanding today, looking for better experience. So we passed the date when we are, you know, calling an agent and asking to get a quote. You wanna do everything fast by yourself, so expectations are influencing also insurance companies. Regulation is always a story with insurance companies. They need to meet regulations, and it's very challenging with old systems. So basically, what you can see is a market that is facing challenges, and one of the ways to deal with it is by moving to new solutions. I wanna share with you this slide just to understand the size of our addressable market, and I put it here. You have a lot of data here, but let's just look on the right side, $60 billion addressable market, and you can see it across life and P&C. So we're operating in a market that is big and continue to grow. What we offer insurance companies is what we call one hand to shake, end-to-end solution. So it's not just the core software, but it's also data, digital, and business applications, and of course, everything is on the cloud in a SaaS model. Our solutions are quite advanced and recognized by industry analysts, and I put here a lot of slides. You don't have to take a look at everything. I think it's important to understand that we're investing a lot in R&D, so our solutions will be leading. And you can see it across the globe, and you can see it across P&C and life. How do we grow? Growth is key for Sapiens, and we have many ways to grow. We currently have 600 customers, and as I said, we are global. So we're accelerating our cross-sell opportunities. So let's say a customer chose Sapiens with P&C, you know, we have an opportunity to offer them life. You know, you start with core, with core, we can give you data, digital, et cetera. So cross-sell is one way to grow, but obviously it's not enough. New logos, you know, getting new customers every year, and I'll get to it in a minute. Geographic expansion is another way for us to grow and, of course, you know, the shift to cloud of existing customers. You know, we started with on-prem, then moved to, you know, hosted solutions, and now we are, you know, offering only cloud solutions, but we still have 450 customers that we want to transition slowly to the cloud. Another way, obviously, is acquisition. So few words about cross-sell, because I think we're quite unique in the space because, you know, a lot of insurance companies have, you know, a life and a P&C arm. So we can start with one and then, you know, offer them another one. We can start with a customer in one country and then expand to another country, the benefit of being global, and of course, always add additional solutions like data and digital.... New logos are obviously a key driver for growth. On an average year, we sign between 20-30 new customers. We don't publish everything because not all carriers allow us to put out a press release with the name, but at the end of every year, we do share this information, so between 20-30 new logos every year. I talked about geographic expansion, and you can see where we are—we have presence today, around 38 countries. Cloud transformation is another way to grow. I said we have 600 customers, 150 are already on the cloud, so 450 over time, we will transition to a cloud. Acquisition is another way for Sapiens to grow. Over the past, 10 or so years, we did 19 acquisitions, and we acquire typically companies for few different reasons. You know, geographic expansion is one of them. Sometimes we need additional solutions, so the fastest way to market will be by acquiring a company. I'll just give a quick example. You know, North America was a target market for Sapiens for many, many years. We tried to penetrate by ourselves. It was quite a challenge, so in 2017, we end up acquiring a large North American player, and this would actually help us build our presence in North America and then grow. In some cases, we originally penetrate, like the Nordics market, with our own solution, and then step two is acquiring a company. Another example is TIA, an acquisition that we did in 2020. So you can see here a variety of acquisitions, you know, in Germany, in Spain, North America, and also in Israel. We haven't done an acquisition in the past three years, mainly because of valuation, but we constantly looking for acquisition because this is one of our way to expand and grow. So let's talk a little bit about our financial profile. I think Sapiens is unique because we are growing, and we're growing, you know, as I said, on average, compounded annual growth rate is around 15%, but we are also profitable, and we constantly improve our margins. So it's not just growth, it's growth and value, and I'll share with you some slides. So you can see here the growth, and you can see some years with high double digits. These are years where we did acquisitions. Our mid- to long-term targets is an organic growth of 8%-10% and accelerate this organic growth with acquisition. So you can see some years with, you know, very strong double-digit, as I said, acquisitions. You can see our geographic growth. North America, you know, we actually turn around our North America organization in the past two years and brought it back to growth. So last year was a nice growth in North America, and we started 2024 also with growth. You can see Europe and APAC and South Africa is small, but still it's a growing market. We started this year to give also an ARR information. We haven't done it before. So you can see in 2024, although our overall growth was around 8%, our ARR growth was double-digit. Here you can see the breakdown of our revenues geographically, but also by vertical. P&C is obviously a large portion of our revenue, 70%. In P&C, we include also workers' compensation and reinsurance. Life business is around 25%, and on the right side, you can see our geographic breakdown. Obviously, Europe is very, very strong. 50% of our business is coming from Europe, but North America is as strong, you know, with 41% of our total revenues. I think it's important to understand, you know, we have 600 customers, but our largest customer only accounts for 3.3%, and the top 10 accounts for less than 19%. Operating profit, I talked about growth and profit, and you can see here operating profit growing year-over-year, and you can see also the margin expansion. By the way, we constantly look to be more efficient. We have a very large operation in India. 52% of our employees are offshore: India, Latvia, and Poland. We have also nearshore, but this helps us constantly improve our margin and cash flow also. This is an annual number I'll share with you in a minute, Q1, but you can see a strong cash flow generation. Moving to Q1, we reported our results last week. You know, Q1 was very much in line with the guidance that we gave to the market, 7.6% growth. You can see North America growing, like, really, really high, Europe growth, and of course, the rest of the world. And again, I'm not gonna get into details unless you want me to get into it, but look at this slide, I think it's important. Overall growth was 7.3%, but ARR growth is, oh, I'm sorry, this one, is around 13%. So you see the same trend that you saw on the annual revenues. And this is our target, you know, to continue growing our ARR. All our new deals are SaaS today, so we're not offering new customers any other offer. But the challenge that we have, and also the opportunity, is to slowly transition existing customers into a SaaS model. We're looking for a trigger, typically, and it's the upgrade and, you know, the move to the cloud. And we're going to do it slowly because we want to mitigate the revenue impact. You can see also cash flow very much in line with what you saw on an annual basis, and I think this is a very important slide. You can see our cash position, but on the right side, you can also see the dividend. You know, Sapiens is paying dividend to its shareholders every year, actually twice a year. So we have a dividend policy of distributing up to 40% of our non-GAAP net income, and we distribute it twice a year. The latest one was in April of this year, $16 million to our shareholders. So the guidance that we gave the market for 2024 was revenue growth of around 7.3%. It's a little bit lower than our typical growth, and we explained when we gave the guidance that the transition to SaaS is actually impacting our growth rate by around 1%. So revenue guidance was $550-$555. What we're doing in 2024 is trying to accelerate our growth for 2025 and 2026 by increasing our investments in sales and marketing. You know, the sales cycle in our industry is very long, you know, between a year to two years, sometimes even longer than that. In order to accelerate growth, the investments that we're doing this year in sales and marketing. And on my other hat, I'm also the Chief Marketing Officer of Sapiens, in addition to being the Head of Investor Relations. So a lot of investments in marketing and sales that will help us accelerate the growth for 2025 and 2026. So what we did say when we gave our guidance for 2024 is operating profit is going to grow, but margins are going to remain flat to 2023 because of the additional investments. Obviously, we continue with efficiency and increasing our offshore activity, but this is how we are expecting 2024 to look like. So I mentioned already, we're not just growth, we're a growth and value company. And I'll leave this slide for you just as a, as the closing slide, and I'll be happy to answer any questions or get deep dive into areas where you want me to. Yeah. I'll kick it off with some questions. Yes. The first question is, when you think of the conversion from your existing platform to the SaaS platform, can you talk about the financial impact to your model that you expect for near term and long term to the revenue and profits? Okay, so I think that the platform that we're offering now to our customers... By the way, it's not that we did not have a platform before, but we put a lot of R&D investments in order to make it a platform that you can easily. I don't wanna say plug and play, because this is a very complex solution, but the base, the data, the digital, the cloud is very similar across all our solutions. So, when you go to market with a platform, you know, the share of wallet from each customer is higher because you're offering them everything, and everything is integrated. So they're buying the core, they're buying the data, the digital, and everything is obviously with our cloud services. So our expectations are, one, that the deal size will be a little bit higher compared to previous, but also add other solutions will be easier now. So even if someone does not choose to buy the full platform, they know that it's one platform, and they can easily add other solutions. Now, with existing customers, by the way, what we're trying to do is slowly, you know, as we migrate them to this SaaS model, also offer them other solutions, and this is part of our cross-selling. So hopefully I answered that question. Is there any financial impact you could share with us, in terms of- ... No, so I think that, and I already mentioned, so I think the move to a SaaS model obviously have some impact on our top line, and it's around 1%. And in the short term, like the first two to three years, has also some impact, and we said 50 basis points on gross margin. But we are trying to with efficiencies, I think we can, you know, still continue, sorry, to be profitable, which you saw in Q1 already. I'll ask one more question, then let the others chime in if they like it. The pipeline of new deals, what's the set look like both on the P&C side, on life, and what are you seeing from the market for new opportunities? Okay. So the pipeline is healthy. I think what we see in recent years, and it's worth mentioning, is that insurance companies are taking longer to make decisions because we're talking about, you know, big, very big transformation projects, and especially as you move to platform, you know, it's quite complex. So we see that the time is longer than in the past. So I think the pipeline overall is healthy. We. You know, you saw our guidance, so obviously taking into consideration new deals. We signed a new one, you know, a week ago. So I think it's healthy across all our geographies and all our products. Yes. You made brief reference to InsurTech. I'm wondering if you can elaborate on that. Is that an opportunity? Is it a potential competition? Some of them are, whether they're holding the risk or they're MBAs, is it just overall disruption? If you can elaborate a little on that. So we see InsurTech as an opportunity. You can look at the number of InsurTech companies that we collaborate with. It's around 70. So I think that the main impact of InsurTech today is not competing with other insurance carriers, but rather bringing additional value to insurance companies. So what we are trying to do as an established software provider is, instead of developing everything by ourself, collaborate with various InsurTech companies and bring them together with us when we go to market. We are very active with a lot of startups in Israel, so the InsurTech space in Israel is quite advanced, so we collaborate with them and we go to market together. So we see it as a great opportunity because there is no reason to try and, you know, develop everything by ourselves. So this is key for our growth. I'm curious, following up, as you think about, like, the health of your customer base, some of the InsurTechs, you know, some of their underwriting criteria, which needs yet to be tested in the manner that the more established insurance companies have. From the perspective of evaluating the health of your customer base, you know, how do you think about that? How How do you evaluate it, if that's relevant? I'm not sure. I'm not sure I totally understand the question. So the health of our customers? The- Right. To the extent that any of your customers or partners are some of the more nascent InsurTechs that, you know, some of them have robust underwriting models, and perhaps some of them less so than- Oh, okay. So our customers are insurance companies. Right. So, but when we go to market with an ecosystem partner, obviously we, we evaluate them and, you know, it's before we do that, but we don't see it as a risk. But our customers, our end customer, is insurance companies, so. Right. Right. So the health of your partners, you evaluate. Yes, of course. Of course. So we're not. You're not going to see us partnering with someone that has been in the market, you know, for a short period of time or doesn't have the stability that we need to see when we take them together to our customers. Yes. Yes. Yaffa, are you starting to work more with SIs now, given the Sapiens' model? Yes. How are you doing on that? Yeah. So, you know, Sapiens' model for many, many years was, we're doing everything. You know, you buy the software, we're doing the implementation, and we're doing also the post-production support. We decided last year that we want to expand this model, but do it in a smart way. So, we chose three partners in North America, and if you listened to our call last week, we spoke about PwC, Deloitte, and LTI Mindtree. So, and we're very focused. So for example, Deloitte is already with us on a workers' compensation deal that we signed last year. Some are going to be more focused on the life side, and we're going to do it mainly for the upper tiers, where before we didn't really see those deals because we were never working with SIs. In Europe, we're doing the same thing. We're evaluating now a potential partners, and it's going to be also for the upper tiers or in territories where we don't have presence. So we're not changing the business model, we're just expanding it, because we realized that we're missing a lot of deals because we don't work with SI. So we already have some success stories, and we're hoping to grow it as, you know, we expand the model. Could you speak to competition then? Obviously, there's Guidewire on the upper end of the market, Duck Creek, private, there are other private companies both here and in Europe. Can you talk about the competitive landscape? Yeah. So the competitive landscape vary between the territories, but also P&C and life. So obviously P&C, you know, Guidewire, Duck Creek, Majesco in North America, way stronger than Sapiens, okay? I'm not trying to say anything different. But in Europe, by the way, where we compete head-to-head with, you know, some of them, we have a very strong presence. You know, we started in Europe, so... And we have local presence. I think this what makes us stronger because if you're buying Sapiens in the Nordics, we have, you know, hundreds of employees in, you know, on the ground supporting you. By the way, because of the acquisition of TIA, you know, this gave us a strong presence in the Nordics market. So we do see, you know, some of our competitors in the P&C. On the life space, it's very different because we're the only true global player in the life space, and we're selling, by the way, the same solution all over the world. And here, you know, there is FAST in North America that was acquired by Verisk. You know, you see iPipeline, and you don't see any real global player in the life space. But what we do see in Europe is more local players. So you have some vendors that only focus on certain parts of Europe or, you know, one country. One of the way to deal with it is actually acquisitions, and this is what we did, you know, in Spain, we did it in Germany, we did it in the Nordics. But the other way is, you know, being global and, you know, selling our platform across Europe help us also when we only compete with a local player. Well, that's a good segment. The next question around M&A. Yeah. So where do you see opportunities? Would they be more on the P&C side? Would it be more life? How are the valuations in the market right now? So the valuation is a little bit better compared to, like, two years ago. We're looking for a variety. So we're looking at Europe, but we're also looking in North America, P&C, life. Because when you think about why or what type of companies we look to acquire, it's always, you know, market expansion. So if we can find someone that will help us expand or penetrate a territory where we currently don't have presence, this is something that will be very attractive, either P&C or life, by the way. And in some cases, we're looking for companies that has solutions that can expand our offering to our customers. So we are looking for everything. I mean, it has to be obviously the right company, but P&C and life, Europe or North America, but the valuation is a little bit better. We have a few more minutes. Anyone else? I guess combining that question with mine, how do you think about unprofitable M&A targets, given your emphasis on profitability? Unpro- ... Is that remotely on the horizon or not an issue at all? Usually, I mean, and you can look at the history, we usually acquire companies that were profitable but not as profitable as Sapiens. And one of the. When we look at an attractive acquisition, we are always thinking how we can improve this company. So when we acquire the company in Spain, you know, integrating them into Sapiens and bringing the leverage that Sapiens has with, you know, our delivery organization and our. You know, we were able, quite fast, to improve the profitability of these companies. Typically, we are not buying companies that are losing, okay? It was not part of, you know, our DNA of acquisitions. But we know that even if we buy a non-attractive company, let's put it this way, we can easily improve the company, you know. And you can look at the history of the 19 acquisitions that we did. I guess on that note, we'll end it. Perfect. Thank you so much.