Sapiens, a global provider of business software solutions with U.S. headquarters in RTP, is back in the black after a strong performance in the fourth quarter.

Revenues in the fourth quarter totaled $17.5 million, representing a 51 percent increase over the same period in 2000 and a continued 9 percent rise over the third quarter of 2001. Further improvements in product mix, project delivery and resource utilization contributed to the increases, the company says.

“We are very focused on business and acquiring new customers over the last 12 months,” says Gil Arbel, executive vice president of Sapiens for the Americas. “We have been very clear at executing and have a clear plan to move back into profitability.”

David Basner of GF Capital in New York attributes the company’s turnaround to getting back to its core market of insurance companies and its management team in RTP as well as Sapiens’ worldwide offices in Israel.

“The company has turned around because the management team has done a great job,” says Basner, who used to work with a firm that covered Sapiens. GF Capital is an investor in Sapiens. “They’ve cut costs, and more importantly, really focused business on core markets, which is financial services, and that’s led to the turnaround.”

With the announcement of increased fourth quarter earnings, Sapiens, a publicly traded company under the symbol SPNS on the NASDAQ, saw its stock price rise 5.6 percent (six cents) to close at $1.12 per share. For the year, the stock reached a high of 1.50 last May and a low of 0.56 in November.

“This is no longer a cost-cutting story, which was necessary to stop the bleeding,” Basner explains. “Now there is growth because they have managed to refocus on what’s always been their core, and that’s helped turn around revenue and margins.”

Earlier problems

Since its establishment in 1986 by leading computer scientists and researchers from the renowned Weizmann Institute of Science in Israel, Sapiens’ strategic focus has been on the insurance and financial services market.

“We have an excellent reputation of delivering products on time, and it’s worked in a difficult economy now,” says Arbel. “We have been doing this for some time and understand it.”

But Basner says Sapiens abandoned its strategic focus for a while and tried some other ventures, hurting both the company’s revenue and stock performance.

“What hurt the company is they got away from their core and went into opportunistic areas, like Y2K, where made some good money,” he says. “But then with the Euro migration (currency conversion), that’s where they ran into problems.”

Bigger and better things

Sapiens is focusing again in the insurance industry. Basner says the company has always maintained strength in that market, but only now it is more of an “announced strategy.”

The newfound promise has Arbel looking ahead to bigger and better things at Sapiens, which has close to 900 employees worldwide and is active is active throughout the Americas, Middle East and Asia Pacific.

“We’re definitely at a stage where we’re trying to extend our activity, and we’ve grown in the U.S. and Canada more than 20 percent in the last year and focused on growth for this year,” Arbel says. “So we’re looking for talent and this is a great place to work for a great team, and we are lucky to be in a position where we’re looking to expand and have more good talent.”