U.S. Markets open in 8 hrs 29 mins

Edited Transcript of SPNS earnings conference call or presentation 5-Aug-19 1:30pm GMT

Q2 2019 Sapiens International Corporation NV Earnings Call

Rehovot Aug 12, 2019 (Thomson StreetEvents) -- Edited Transcript of Sapiens International Corporation NV earnings conference call or presentation Monday, August 5, 2019 at 1:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Roni Al-Dor

Sapiens International Corporation N.V. - President, CEO & Director

* Roni Giladi

Sapiens International Corporation N.V. - CFO & VP

* Yaffa Cohen-Ifrah

Sapiens International Corporation N.V. - CMO & Head of Corporate Communications

================================================================================

Conference Call Participants

================================================================================

* Bhavanmit Singh Suri

William Blair & Company L.L.C., Research Division - Partner & Co-Group Head of Technology, Media and Communications

* Bryan C. Bergin

Cowen and Company, LLC, Research Division - Director

* Mayank Tandon

Needham & Company, LLC, Research Division - Senior Analyst

* Tavy Rosner

Barclays Bank PLC, Research Division - Head of Israel Equities Research

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Ladies and gentlemen, thank you for standing by. Welcome to the Sapiens International Corporation's Second Quarter 2019 Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded, August 5, 2019.

It is now my pleasure to introduce your host, Mrs. Yaffa Cohen-Ifrah, Sapiens' CMO and Head of Corporate Communications. Mrs. Cohen, you may now begin.

--------------------------------------------------------------------------------

Yaffa Cohen-Ifrah, Sapiens International Corporation N.V. - CMO & Head of Corporate Communications [2]

--------------------------------------------------------------------------------

Thank you and good day, everyone. Our quarterly earnings release was issued before the market opened this morning, and it has been posted on the company's website at www.sapiens.com. Representing Sapiens today are: Roni Al-Dor, President and CEO; and Roni Giladi, our CFO.

Before we start, I would like to remind everyone that this conference call may contain projections or other forward-looking statements, and the safe harbor provision in the press release issued today also applies to the content of this call. Sapiens expressly disclaims any obligation to update or revise any of these forward-looking statements whether because of future events, new information, a change in its view or expectations or otherwise.

During the course of today's call, we will refer to the non-GAAP financial measures. A reconciliation schedule showing GAAP versus non-GAAP results has been provided in our press release issued before the market opened this morning. A replay of this call will be available after the call on our Investor Relations section of the company's website or via the website link, which is available in the earnings release that we published today. I will turn the call over to Roni Al-Dor, President and CEO of Sapiens. Roni?

--------------------------------------------------------------------------------

Roni Al-Dor, Sapiens International Corporation N.V. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Thank you, Yaffa. Sapiens' priorities for 2019 are growth and margin expansions. In the second quarter, we delivered on both of these goals. Top line revenue increased 9.6%, and operating margin improved 260 basis points year-over-year to 15.8%. Growth and improvement in profitability has accelerated during the quarter as we continue to execute on our key objectives, to win new customers, to cross-sell to existing customers, to leverage our offshore capabilities and to scale revenue over our efficient cost structure.

As we progress in the second half of the year, our sustained performance with continued revenue growth and margin improvement give us a confidence that we have the right strategy in place, and we are dedicated to further improvement shareholder value through long-term sustainable goals. Looking out to the remainder of 2019, I am encouraged by our pipeline of business and anticipated annual growth over 10%, and accelerated versus the first half as we anticipated when we started off the year.

In the second quarter, we closed 3 new P&C deals, and an existing customer expanded businesses with us and most recently, we closed a European customer in Life.

One of our 2 new Nordic wins this quarter, Gjensidige, selected Sapiens IDITSuite for P&C for its core system transformation project for transfer its legacy system to enhance digital experience. Our second Nordic win in the quarter was Folksam, one of the Swedish largest insurer who selected IDITSuite as its core digital solution as they focus on optimization customer engagement with sufficient improvement that will allow them to lower premiums while providing better terms and condition for their customers.

Another P&C win this quarter was King Wai, a leading insurance provider in Thailand who selected IDITSuite to replace an outdated legacy system to accelerate their growth, diversify their offering and increase distribution channels.

Also, a Tier 1 South African Life and annuity client chose an IDITSuite for P&C to enable them to support the challenges and increased demand for their customer and client-seeking digital solution. We have had a good success cross-selling to this leading South African bank, and we are very pleased to expand our partnership with this valued customer.

Meanwhile, Sapiens' Life and Annuities segment announced a new customer win recently with MSV Life out of MAPFRE, the leading provider of life insurance, long-term saving and retirement planning in Malta, who selected our Core Suite Sapiens INTELLIGENCE MSV site to deploy AgentConnect over the cloud. MSV is decommissioning their legacy system and transforming their business with our innovative solutions.

In North America, our CoreSuite for P&C continued to gain momentum in the market. We see improvement in our competitive position and we accelerated our go-to-market timing.

We have a strong pipeline for 2018. And we are fully expected to continue to increase market share for this region.

We are expanding our global footprint. Our new office in India houses now over 1,000 employees in Bangalore, and support our growing base of global customer. The team in India will help to drive innovation and provide support for new and existing projects across our product portfolio, providing scale to our organization with sufficient cost structure.

The opening of the new facility is critical to supporting our further goals. The leadership in India has continuously exceeded our expectation. And this new facility will allow them to court and retain key talent. We are excited to have a growing presence in this innovative country.

Innovation in our product solution has been key differentiator in winning new customer and up-selling the existing ones. We are committed to continuously improving our offering in a cost-effective intelligent manner. Our partner ecosystem extended recently with newly announced partnership Discover, a predictive cyber risk modeling firm. Partnership are the cornerstone of our strategy to maximize our open API architecture and make innovative third-party insurtech solution available to our customer as they provide us with access to innovative developments and cutting-edge fintech solution. This critical capability is top of mind with our global customer base. And we will offer solutions, including Sapiens IDITSuite for Property & Casualty, Discover industry-leading Cyber Risk Modeling platform. We recorded strong results in all of our geographics in second quarter, particularly in our North America segment, which rose 13% primarily driven by our P&C businesses. Our P&C offerings continue to drive growth in all geographic segments, and we are pleased to see our Latin annuity businesses pick up adds as well.

Given the strong outlook for our industry, we see an opportunity to accelerate our growth with acquisitions.

At this time, our pipeline of suitable targets is building. Sapiens has demonstrated a solid track record of acquisition that have accelerated growth and improved our margin through both synergies and scale.

We have proven our ability through successfully integrated acquisition and proved operational performance of combined entities.

In addition to product and distribution, brand is an important growth driver for Sapiens. We launched a comprehensive rebranding of our company in the first quarter of 2019, which has nicely supported our sales team, messaging and competitive position of our offering. Our new brand identity highlights Sapiens as a Unified Global Provider of insurance software solution and highlights our one-stop-shop competitive advantage.

The new brand image has played out well in our trade shows and exhibits worldwide, including the Life Insurance Conference in Baltimore, Digital Transformation in Insurance in London, DigIn: The Digital Future of Insurance in Austin, ISA annual conference in Phoenix, and Insurance Innovation Nordic in Copenhagen. We had exhibit booths and teams also in Fintech P&C Conference in London and The Annual African Insurance Forum in Johannesburg, where we met insurers looking for innovation solutions that support migration away from legacy system.

It was very busy quarter for us. All in all, this was a very strong quarter that delivered improved cash flow and strengthened our balance sheet. Our offshore capabilities continue to improve and support our growth, and we are expanding our digital capabilities with key partnership. I would like to thank the Global Sapiens team for their commitment to our strategy and their enthusiasm for our future potential.

I would now like to turn the call over to our CFO, Roni Giladi, to provide more details on our financial results. Please go ahead, Roni.

--------------------------------------------------------------------------------

Roni Giladi, Sapiens International Corporation N.V. - CFO & VP [4]

--------------------------------------------------------------------------------

Thank you, Roni. I will begin my commentary with the review of the second quarter non-GAAP results, followed by comments on the balance sheet, cash flow and end with our 2019 outlook.

Revenue in the second quarter of 2019 totaled $79.5 million, up 9.6% from the second quarter of 2018. Our revenue in North America totaled $39.2 million, an increase of 13.3% compared to last year, and increase of 2.8% compared to prior quarter.

Revenue in Europe totaled $33.9 million, a 4.2% increase compared to last year and 5.2% increase compared to prior quarter.

While our P&C segment continue to grow quarter-over-quarter, we started to see initial stabilization in our Life and Annuity segment in the second quarter.

The 9.6% revenue growth this quarter represent organic growth and was negatively affected by currency fluctuation. When neutralizing currency impact, our growth rate would have been 12% with the currency of Q2 of 2018.

Moving to gross profit. Gross profit this quarter totaled $34.8 million compared to $30.4 million in Q2 of last year.

Our gross margin this quarter increased to 43.8% from 42% in the second quarter of last year and 43.1% in Q1 of 2019. The improvement of 180 basis points compared to last year is due to revenue growth over better cost structure following the continued expansion of our offshore operations.

We had demonstrated improvement in gross profit and margin in the last several quarters and plan to continue in the future as part of our plan.

Moving to operational costs. In the second quarter, we continued investing in R&D, with R&D investments of $10.5 million as compared to $9.9 million in the same period of last year and $10.2 million in the prior quarter. SG&A expenses totaled $11.8 million compared to $10.9 million last year and $11.2 million in the prior quarter. During the quarter, we added to our sales, presales and customer success teams to support our future growth.

We will continue to see increase in SG&A following the additional investment in both P&C and Life and Annuities.

Operating margin in the last 6 quarters improved quarter-over-quarter. And in Q2 of 2019, margin improved by 260 basis points compared to last year. While our revenue grow this quarter 9.6%, operating profit grew 31.4%, reaching to $12.6 million, demonstrating our effort to grow in an efficient and profitable way. As a result, our operating margin this quarter reached 15.8%.

Again, neutralizing currency impact, our operating margin would pass the 16% with currency of Q2 of 2018.

Our adjusted EBITDA margin this quarter reached record high of 16.8% compared to 14.3% last year. Net income attributable to Sapiens shareholders for the quarter was $9.5 million or $0.19 per diluted share compared to $6.4 million or $0.13 per share in the second quarter of last year.

Tax and other expenses increased to $2.6 million as compared to $1.8 million last year with effective tax rate of 22%.

Turning to our balance sheet. As of June 2019, we had cash and cash equivalent of $77.3 million. In the last 6 months, we increased our cash position by $12.7 million after $9.9 million payment of debenture.

The balance of Series B debenture at the end of the quarter is $68.7 million and will be paid in equal installments over the next 7 years.

In addition, on July 11, 2019, S&P Global Maalot reconfirmed the Israeli A+ rating with a stable outlook for our Series B debenture.

In our press release, we reported adjusted free cash flow to reflect the cash flow generated from ongoing business. The adjusted free cash flow eliminates capitalized software, which are noncash items, and deduct capital expenditure that we invest on an ongoing basis.

In addition, we are adding back payments on account of past M&A agreements related to future performance targets in retention criteria, which are agreed on the acquisition dates of the acquired company, usually for 1 to 3 years. During this quarter, our adjusted free cash flow totaled $14.6 million compared to negative adjusted free cash flow of $781,000 in Q2 of 2018, and $10.1 million in the previous quarter.

The increase in free cash flow and adjusted free cash flow is an indication to our continuous operation improvement, reduced unbilled amounts and improved collections efforts.

Next quarter, we expect to have onetime cash payment of approximately $7 million related to our investment in new office in India, which will amortize over the rent period.

I would like to turn now to our guidance for 2019. Revenue. Looking out to the remainder of 2019, we anticipate the primary growth driver to be the continued expansion of our P&C business. At the same time, we expect to see an improvement in our Life and Annuity business.

We reiterate our full year 2019 non-GAAP revenue in the range of $318 million to $323 million. However, we now expect revenue to be in the higher end of this range. The midpoint of our guidance represents growth rate of 10.7% and when neutralizing currency impact, our growth rate is expected to be 12.2%.

Operating profit. We continue to anticipate incremental margin improvement in the coming quarters, as we manage our cost structure and enjoy economic of scale as the company continues to grow. While we are improving our operation, we are seeing weakness of the pound and euro versus the USA dollar and the strengthening of the Israeli shekel versus dollar. All are negatively impacting the company.

As a result of improved operation, while offsetting by negative currency headwind, we are increasing the guidance for non-GAAP operation margin to the range of 15.6% to 15.8% compared to our previous guidance of 15.2% to 15.6%.

In addition, there are 2 points I would like to address. Our recently published dividend policy and the filing of our shelf prospectus.

In the last several years and starting from 2013, we distributed dividends to our shareholders in the total amount of $42.6 million. We did so without having a policy in place. The Company plans to continue to pay dividend and would like to formalize it with a dividend policy. The company has adopted a dividend policy that was published earlier today, which states that each year after publishing the annual audited financial report on Form 20-F, the Company will distribute a dividend of up to 40% of its annual non-GAAP net profit.

The Company Board of Directors may change the policy or take an exceptional decision regarding the distribution of dividends as a result of one-time events. The distribution of dividend shall be made in compliance with applicable law and regulation as well as Sapiens' contractual obligations.

As a result of our performance, our Board of Directors approved the payment of cash dividend of $0.22 per share. The dividend, which amount to approximately $11 million in aggregate, will be paid on Tuesday, September 3, 2019, to Sapiens shareholders of record as of August 20, 2019.

In addition, we recently filed a shelf prospectus with the SEC for a maximum share offering of up to $200 million.

We view having an active shelf registration as a capital market best practice that provide us with the maximum flexibility to execute on our long-term growth strategy.

Our previous shelf expired on November 2018, and the current shelf will be effective for the next 3 years.

On the M&A front, we continue with our effort to find potential companies that fit our strategy and our valuation range. We're currently looking for small to midsized company with revenues in the range of $5 million to $30 million, which will follow our strategy, either geographic expansion, complementary products or customer base.

I would like now to turn the call back to Roni Al-Dor for closing comments. Roni?

--------------------------------------------------------------------------------

Roni Al-Dor, Sapiens International Corporation N.V. - President, CEO & Director [5]

--------------------------------------------------------------------------------

Thank you, Roni. I'm pleased to see the company back on track with growth and margin expansion in the second quarter of 2019.

Our 2019 priorities are growth and margin expansion. In the second quarter, we delivered on both of these goals. In 2019, we are looking to continue to expand our P&C businesses in North America, in EMEA and APAC, return our Life and Annuity businesses to growth and deliver further margin expansion.

I am pleased with our execution in another quarter of solid operating results, in which we execute well against our long-term strategy, priorities of long-term growth, profitability and improving shareholder value.

I would like now to close our prepared remarks and open the call for questions. Operator?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) The first question is from Bhavan Suri of William Blair.

--------------------------------------------------------------------------------

Bhavanmit Singh Suri, William Blair & Company L.L.C., Research Division - Partner & Co-Group Head of Technology, Media and Communications [2]

--------------------------------------------------------------------------------

Nice job there. I wanted to just touch initially first on your comment that you -- sort of, you're in a better position today to compete for the higher-tiered business in the past. I guess, I'd love for you to talk a little more about the opportunity there? And then what do you see in the competitive landscape that gives you that confidence?

--------------------------------------------------------------------------------

Roni Al-Dor, Sapiens International Corporation N.V. - President, CEO & Director [3]

--------------------------------------------------------------------------------

This is Roni-A. Let's start with the European. We are pushing our EBIT for several territory in Europe. And as all of you know, we are doing this for many, many years. We are building very good brand, reference is very good. And that help us to go to the higher tier. So it was a long time to compete on those tiers, but now we achieved it. It's a big contract, including a lot of, a lot of what we offer, it's including everything: core system, digital, data, [managed] services sometimes. So it's for many, many years, and it's good. So based on our brands and our reference and our products, that's in Europe. In the States, we have several solutions, but what we, we have the workers' comp business. This is -- in the future, we are looking for -- as you know, we have a solution for workers' comp for State. And we are looking in the next year or 2, more business to come in the Adaptik and StoneRiver, the new product that we offer. This is we -- we are seeing a huge growth. Again, we start with smaller need. We hire a lot of salespeople are specialized on Tier 1 and Tier 2. And this is the target that we are looking and complementary to the lower tiers. So all in all, all of our P&C looking positive and going to the IoT as well.

--------------------------------------------------------------------------------

Bhavanmit Singh Suri, William Blair & Company L.L.C., Research Division - Partner & Co-Group Head of Technology, Media and Communications [4]

--------------------------------------------------------------------------------

Got it. Got it. Got it. I think if you look at the lower tiers primarily, because sort of upper Tier is still, sort of, let's just say, evolving and relatively nascent, but if I look at the lower tiers, how significant are the deal sizes (technical difficulty) as you've been going after bigger deals, is there a change in salesforce? How do you think about the positioning of the salesforce for the larger deals, for the higher tier providers? Do you think it'd still be a partnership approach with consulting companies that own some of those relationships? Or do you think it's more just about retooling or hiring the sales guys that can go win those large enterprise wins?

--------------------------------------------------------------------------------

Roni Giladi, Sapiens International Corporation N.V. - CFO & VP [5]

--------------------------------------------------------------------------------

Bhavan, this is Roni. As a matter of fact with we already started to recruit, the team members that relevant to the Tier 1 customers, especially in P&C in the States, as we have this in Europe already. So we have this already in the P&C side. On top of that, approaching the bigger deals require us to engage with some system integrators, and we are doing so. We are already in discussion with some of them to potentially win potential customers in the future. So we are doing so. We already recruited some people and we are engaging some system integrators.

--------------------------------------------------------------------------------

Bhavanmit Singh Suri, William Blair & Company L.L.C., Research Division - Partner & Co-Group Head of Technology, Media and Communications [6]

--------------------------------------------------------------------------------

Got it, got it, got it. And then one last one from me. As you look at the pipeline into 2020, just some color on how you're feeling about that pipeline in comparison to the pipeline coming into '19? How do you feel about it? Obviously, you've hired the sales challenge, you've got the partnerships, but just some color would be helpful.

--------------------------------------------------------------------------------

Roni Al-Dor, Sapiens International Corporation N.V. - President, CEO & Director [7]

--------------------------------------------------------------------------------

I think based on the investment that we did in the last year, just again to remind, we shared with you at the beginning of the year, we started to build out Customer Success. They are taking care about our existing client. And as you know, we have more than 450 clients all over. By the way, in the next September, we have a big client conference in Phoenix. In October, we have in Rome. So we are putting a lot of investment in this area that help us to generate the pipeline. And in the States, at the beginning of the year, we hired a Head of Sales. And we just hired from the competitive company, people that are on the P&C, on the Life, on the workers' comp, reinsurance and so on. So based on all the investment and all the wonderful work that Yaffa is doing in all the marketing stuff and the branding. So all in all, we feel confident with the pipeline that we have for 2020.

--------------------------------------------------------------------------------

Operator [8]

--------------------------------------------------------------------------------

The next question is from Mayank Tandon of Needham & Company.

--------------------------------------------------------------------------------

Mayank Tandon, Needham & Company, LLC, Research Division - Senior Analyst [9]

--------------------------------------------------------------------------------

Roni, you mentioned several deal wins. I just wanted to better grasp, is that a case of takeaways from other providers? Or are you replacing the in-house providers? Maybe just some perspective on the dynamics in the space, if it's more in-house driven? Or is it more takeaways from your competitors?

--------------------------------------------------------------------------------

Roni Al-Dor, Sapiens International Corporation N.V. - President, CEO & Director [10]

--------------------------------------------------------------------------------

I think it's more in-house or legacy as people in our industry, if they replace and it work, they cannot take on to replace them after a few years. And most of our competitors are, again, the new ones are in the industry, let's say, 10 years, so we don't see a lot of replacement for those but we are seeing a lot from legacy. So in-house, all the companies are more than 10 years.

--------------------------------------------------------------------------------

Mayank Tandon, Needham & Company, LLC, Research Division - Senior Analyst [11]

--------------------------------------------------------------------------------

That makes sense. And then just going towards guidance, Roni, you obviously talked about the constant currency growth rates, 12% plus, which obviously is very impressive. It's probably the fastest in several years. So just want to understand, you're not raising the revenue guidance for the remainder of the year. Is that just a function of the FX headwinds? Or is there something else that you're factoring into the second half guidance on revenue?

--------------------------------------------------------------------------------

Roni Giladi, Sapiens International Corporation N.V. - CFO & VP [12]

--------------------------------------------------------------------------------

Mayank, we are factoring the currency headwinds that impact the company on reducing the potential revenue, both on pound, euro and also -- yes, pound and euro are mainly a factor on this. So after calculating those, we are having a growth rate with currency exchange rate of 12.2%. So impact -- negative impact of the euro and pound going forward.

--------------------------------------------------------------------------------

Mayank Tandon, Needham & Company, LLC, Research Division - Senior Analyst [13]

--------------------------------------------------------------------------------

Okay. And then looking at margins, again, really impressive performance in terms of getting the business back on a mid-teens margin trajectory. So just looking longer term, how should we think about margins? Is there more upside as you scale, as you leverage offshore, which you've done, obviously, very successfully. Just wanted to get a better sense of what the long-term margin profile could look like? Again, not looking for specific numbers, but just maybe directionally where margins could go for a company like yours as you scale the business?

--------------------------------------------------------------------------------

Roni Al-Dor, Sapiens International Corporation N.V. - President, CEO & Director [14]

--------------------------------------------------------------------------------

Yes. So when we entered the year, the margin mid-term was about 15%, 17%, and as we enter to -- into this year and execute on all our performance criteria, we'd like to shoot to 17%. This, we come between short-to-midterm period. When we are talking about what are the factors that can impact this? This is, first of all is the offshore capabilities. We recently announced a campus in India that can capture up to 1600 employees. Today, we have only 1,000. So the infrastructure is there and it's very productive. [We have] the scalability issue in the cost of goods sold, so we have the management and we need to team to -- and the management is a fixed-price of that. And obviously, as Roni mentioned, we are signing right now deals. The pipeline looks very good, even better than the previous years. And this means also additional license also a factor in the gross margin. So if we factor all of these parameters, the 17% in the short to midterm seems reasonable. If we calculate our operational profit without currency this quarter, we're already at 16%.

--------------------------------------------------------------------------------

Mayank Tandon, Needham & Company, LLC, Research Division - Senior Analyst [15]

--------------------------------------------------------------------------------

Right. That's very helpful. Again, congrats on the results, great job.

--------------------------------------------------------------------------------

Operator [16]

--------------------------------------------------------------------------------

The next question is from Tavy Rosner of Barclays.

--------------------------------------------------------------------------------

Tavy Rosner, Barclays Bank PLC, Research Division - Head of Israel Equities Research [17]

--------------------------------------------------------------------------------

Most of the questions have been asked. Just maybe a follow-up on India. Can you remind us what's the structure of employees there per division, i.e., R&D versus sales versus support staff? And how do you see the split over time throughout the organization?

--------------------------------------------------------------------------------

Roni Al-Dor, Sapiens International Corporation N.V. - President, CEO & Director [18]

--------------------------------------------------------------------------------

Okay. It's Roni Al-Dor. India, just to remind, we acquired the company 4 years ago. At that time, the number of employees was 150 and now we are 1,000. The India has a few things. One, we are -- we see Asia Pacific as a territory. It's still small territory, but it's important and growth territory. So we have people that's working in this territory in support. And in this case, they are doing everything end-to-end, so meaning sales, delivery and R&D.

Again, the product sometimes is, they are doing in Israel or mainly in Israel and India, but that's for the territory. If we are talking and this is the major part of India is offshore for the other business, we started with one product we did. As you know, we have close to 10 products in the company. In each of the product, we have R&D and we have delivery. At the beginning, we start mainly on delivery. Year-over-year, we are moving more and more R&D. So right now, I think it's more or less, let's say -- it's almost scheduled to Sapiens. So if we have x percentage R&D, we have the same percentage there. Right now, I can share with you that 90% of our products, we are doing R&D in India -- again, part of the R&D, and the services is 100%. So 100% of the services, we're able to do it from India. All what I can share with you that in the last year, we just added more than 200 people and not all of them are effective from day one. There is a time to train the people, it's time to move, to transform the knowledge from other area to there. So the productivity, still not 100%. And this is again, we believe over the year, we can improve also the productivity. And as Roni mentioned, we have just 1,000 and we plan ourselves for 1,006 for this building. In terms of management, we also invest a lot in the management. We have excellent CEO that runs these businesses in India and very professional. Out of the 4 founders, 3 remain with us. We added a few more management. So all in all, we are very happy. And with Sapiens Invest, we build a new -- total new offices with all the IT, all the infrastructure, very modern. So we see them as overall Sapiens employee.

--------------------------------------------------------------------------------

Operator [19]

--------------------------------------------------------------------------------

The next question is from Bryan Bergin of Cowen.

--------------------------------------------------------------------------------

Bryan C. Bergin, Cowen and Company, LLC, Research Division - Director [20]

--------------------------------------------------------------------------------

I wanted to ask on the revenue outlook. Are we considering a consistent acceleration through the second half? Can you talk about the cadence you're anticipating over third quarter and fourth quarter? I'm curious how some of the deal ramps may be progressing.

--------------------------------------------------------------------------------

Roni Giladi, Sapiens International Corporation N.V. - CFO & VP [21]

--------------------------------------------------------------------------------

Bryan, this is Roni-G. We see increase in revenue in coming quarters. Earlier, we discussed about pipeline and the trend of the deals signed. We are happy to announce that we already signed a few deals in the Life. It wasn't in the last several years. And we have also some important things going forward in Q3 and Q4. Obviously, there will be some impact into 2019, the second half, but not all. So this is on the Life Style. On the P&C side, we see Europe continue to grow double-digit side -- double-digit figures, which is confidence and good. And also in the States, if we look at the last year, we grow only, let's say mid-single-digit and right now, we are talking about double-digit. And this is through the integration between Adaptik and StoneRiver stream. We see high pipeline and high deals that we signed and we potentially will go into sign Q3 and Q4. So to recap on that, we see a continuation on the P&C Europe moving to double-digit growth. In the U.S. Sapiens, see will continue as on Q3 and Q4 and change in trend in the Life that we started to see this quarter and will continue in Q3 and Q4 of this year. All of that will grow our revenue in Q3 and Q4 of this year.

--------------------------------------------------------------------------------

Bryan C. Bergin, Cowen and Company, LLC, Research Division - Director [22]

--------------------------------------------------------------------------------

Okay. And then I have just a macro question here, any sense that client concerns just given the increased volatility around broader macro? I mean, it sure doesn't sound like it based on the momentum you're putting up here, but curious on how clients may behaving and some of the conversations that you are having.

--------------------------------------------------------------------------------

Roni Giladi, Sapiens International Corporation N.V. - CFO & VP [23]

--------------------------------------------------------------------------------

We do not see any trend in the macro deals or opportunities. We do not have any operation in China, for example. And the USA and Europe at least, from our customers' insurance carriers, and the same trend continue. The only thing that is affecting us on the macro level is the currency. And as we mentioned earlier, all of the currency currently are working against us. Euro and pound are weakening against dollars and the shekel strengthening, which all of this affect the company in the profitability.

--------------------------------------------------------------------------------

Operator [24]

--------------------------------------------------------------------------------

(Operator Instructions)

There are no further questions at this time. Before I ask Mr. Al-Dor to go ahead with his closing statement, I would like to remind participants that a replay of this call is scheduled to begin in 2 hours. In the U.S., please call 1 (877) 456-0009. In Israel, please call 03-925-5921. And internationally, please call 972-3-925-5921. Mr. Al-Dor, would you like to make your concluding statement?

--------------------------------------------------------------------------------

Roni Al-Dor, Sapiens International Corporation N.V. - President, CEO & Director [25]

--------------------------------------------------------------------------------

Yes. Thank you for you, and thank you for all participants for joining us on today's call. Have a good day.

--------------------------------------------------------------------------------

Operator [26]

--------------------------------------------------------------------------------

Thank you. This concludes the Sapiens International Corporation's Second Quarter 2019 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.