As used herein, the phrases “Ebix,” “the Firm,” “we,” “our,” and “us” refer
to Ebix, Inc., a Delaware company, and its consolidated subsidiaries as a
mixed entity, besides the place it’s clear that the phrases imply solely Ebix, Inc.
Protected Harbor for Ahead-Wanting Statements – This Type 10-Q and sure
data included herein by reference accommodates forward-looking statements
and data throughout the “protected harbor” provisions of the Non-public Securities
Litigation Reform Act of 1995, Part 27A of the Securities Act of 1933, and
Part 21E of the Securities Trade Act of 1934. This data contains
assumptions made by, and data at the moment accessible to administration,
together with statements relating to future financial efficiency and monetary
situation, liquidity and capital sources, acceptance of the Firm’s merchandise
by the market, and administration’s plans and aims. As well as, sure
statements included on this and our future filings with the SEC, in press
releases, and in oral and written statements made by us or with our approval,
which aren’t statements of historic reality, are forward-looking statements.
Phrases similar to “might,” “might,” “ought to,” “would,” “consider,” “count on,”
“anticipate,” “estimate,” “intend,” “seeks,” “plan,” “undertaking,” “proceed,”
“predict,” “will,” and different phrases or expressions of comparable which means are
meant by the Firm to determine forward-looking statements, though not all
forward-looking statements comprise these figuring out phrases. These
forward-looking statements are discovered at numerous locations all through this report
and within the paperwork included herein by reference. These statements are
based mostly on our present expectations about future occasions or outcomes and data
that’s at the moment accessible to us, contain assumptions, dangers, and
uncertainties, and converse solely as of the date on which such statements are made.
Our precise outcomes might differ materially from these expressed or implied in
these forward-looking statements. Elements which will trigger such a distinction
embrace, however are usually not restricted to, these mentioned in Half I, Merchandise 1A, “Threat
Elements” in our Type 10-Okay for the yr ended December 31, 2021 which is
included by reference herein , and in Half II, Merchandise 1A “Threat Elements” in
this Type 10-Q, together with however not restricted to: the willingness of unbiased
insurance coverage businesses to outsource their pc and different processing must
third events; pricing and different aggressive pressures and the Firm’s potential
to achieve or keep share of gross sales because of actions by opponents and
others; modifications in estimates in essential accounting judgments; modifications in or
failure to adjust to legal guidelines and laws, together with accounting requirements,
taxation necessities (together with tax charge modifications, new tax legal guidelines and revised tax
interpretations) in home or international jurisdictions; trade charge
fluctuations and different dangers related to investments and operations in
international nations (notably in India, Australia, Asia, Latin America, and
Europe whereby we’ve got important and/or rising operations); fluctuations in
the fairness markets, together with market disruptions and important rate of interest
fluctuations, which can impede our entry to, or improve the price of, exterior
financing; the impacts of the COVID-19 world pandemic on our working
efficiency; potential to safe extra financing to assist capital
necessities; the flexibility to refinance the Credit score Facility by maturity as properly
as Credit score Facility provisions that would materially prohibit our enterprise; prices
and results of litigation, investigations, or related issues that would have an effect on
our enterprise, working outcomes and monetary situation; and worldwide
battle, together with terrorist acts. The Firm undertakes no obligation to
replace any such elements, or to publicly announce the outcomes of, or modifications to
any of the forward-looking statements contained herein to replicate future occasions,
developments, modified circumstances, or for some other cause.
Different necessary elements that would trigger precise outcomes to vary materially
from these in our particular forward-looking statements included on this Type 10-Q
embrace, however are usually not restricted to, the next:
•our future liquidity wants mentioned below “Liquidity and Monetary Situation”
relating to our potential to switch our Credit score Facility previous to or at maturity,
generate money from working actions and any declines in our credit score scores
or monetary situation which might prohibit our entry to the capital markets or
materially improve our financing prices (check with Notice Four of the Condensed Notes
to those Condensed Consolidated Monetary Statements on this Type 10-Q, “Debt”);
•uncertainties pertaining to the precise final price of our authorized contingencies
(check with Notice 5 of the Condensed Notes to those Condensed Consolidated
Monetary Statements on this Type 10-Q, “Commitments and Contingencies”, and
“Contractual Obligations” in Administration’s Dialogue and Evaluation of Monetary
Situation and Outcomes of Operation (“MD&A”)); and
•the MD&A and the evaluation of the six-month income tendencies relating to precise
realized stage of demand for our merchandise in the course of the instantly foreseeable
future, and fluctuations thereof
Readers ought to fastidiously overview the disclosures and the danger elements described
on this and different paperwork we file on occasion with the SEC, together with
future reviews on Kinds 10-Q and 8-Okay, and any amendments thereto. You might acquire
our SEC filings at our web site, www.ebix.com below the “Investor Data”
part, or over the Web on the SEC’s web site, www.sec.gov.
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The next data needs to be learn together with the unaudited
condensed consolidated monetary statements and the notes thereto included in
Half 1, Merchandise 1 of this Quarterly Report, and the audited consolidated monetary
statements and notes thereto and MD&A contained within the Firm’s Annual Report
on Type 10-Okay for the yr ended December 31, 2021.
Firm Overview
Ebix is a number one worldwide provider of on-demand infrastructure software program
exchanges and e-commerce companies to the insurance coverage, monetary, journey, money
remittances, and healthcare industries. Within the insurance coverage sector, the Firm’s
essential focus is to develop and deploy all kinds of insurance coverage and reinsurance
exchanges on an on-demand foundation utilizing SaaS enterprise options within the areas of
CRM, front-end and back-end programs, and outsourced administrative and danger
compliance. The Firm’s merchandise characteristic totally customizable and scalable
on-demand software program designed to streamline the best way insurance coverage and monetary
trade professionals handle distribution, advertising, gross sales, customer support,
and accounting actions. With a “Phygital” technique that mixes over 650,000
bodily distribution retailers in India and lots of ASEAN nations, to an
Omni-channel on-line digital platform, the Firm’s EbixCash Monetary trade
portfolio of software program and companies encompasses home and worldwide cash
remittance, Foreign exchange, journey, pre-paid present playing cards, utility funds, lending, and
wealth administration in India and different primarily Southeast Asian Markets. The
Firm has its headquarters in Johns Creek, Georgia and likewise conducts working
actions in Australia, Brazil, Canada, India, Indonesia, New Zealand, the
Philippines, Singapore, the United Arab Emirates, and the UK.
Worldwide income accounted for 85.7% and 85.9% of the Firm’s whole
income for the six months ended June 30, 2022 and 2021, respectively.
Ebix’s purpose is to be a number one facilitator of insurance coverage and monetary
transactions on this planet. The Firm’s know-how imaginative and prescient is to concentrate on the
convergence of all channels, processes and entities in a fashion such that information
seamlessly flows as soon as an information entry has initially been made. Ebix strives to work
collaboratively with shoppers to develop modern know-how methods and
options that deal with particular enterprise challenges and necessities. Ebix
combines the most recent applied sciences with its capabilities in consulting, programs
design and integration, IT and enterprise course of outsourcing, software
software program, and net and software internet hosting to fulfill the person wants of
organizations.
Workplaces and Geographic Data
The Firm’s company headquarters, together with considerably all of our
company administration capabilities, is situated in Johns Creek, Georgia, the place we
personal a industrial workplace constructing and campus facility. Moreover, the Firm
leases workplace house in New Zealand, Australia, Singapore, Dubai, Brazil, Canada,
Indonesia, the Philippines, and the UK for assist, operations and
gross sales workplaces. The Firm additionally leases roughly 85 amenities throughout India,
whereas proudly owning six amenities in India.
Results of COVID-19 and Different World Occasions
In December 2019, COVID-19 was reported and unfold globally, together with to
each state within the U.S. On March 11, 2020, the World Well being Group
declared COVID-19 a pandemic, and on March 13, 2020, the U.S. authorities
declared a nationwide emergency with respect to COVID-19.
In response to the COVID-19 pandemic, many state, native, and international
governments applied journey restrictions, quarantines, shelter-in-place
orders, and related authorities orders and restrictions, in an try to regulate
the unfold of the illness. Such restrictions or orders, or the notion that
such restrictions or orders might be applied, resulted in enterprise closures,
work stoppages, slowdowns and delays, work-from-home insurance policies, and the
cancellation or postponement of occasions.
Starting in March 2020, in an effort to guard our workers and adjust to
relevant authorities orders, we restricted non-essential worker journey and
transitioned our workers to a distant work setting. Throughout 2021 and 2022
the Firm transitioned to a hybrid mannequin of distant/on website work at lots of its
places. The continued results of the COVID-19 pandemic on our operational and
monetary efficiency will rely on the length and unfold of COVID-19 and its
variants.
Through the fiscal yr ended December 31, 2020, notably starting in
March, we skilled a lower in demand for sure of our options and
companies, notably these associated to the Firm’s journey, international trade,
remittance, e-learning, and consulting enterprise areas, after sure authorities
restrictions have been applied. This decreased demand continued all through 2020
and 2021 in various levels for every enterprise space, and even persists via
the date of this submitting for all the above talked about enterprise areas, however most
notably within the remittance, e-learning and journey companies. We count on that
demand variability for our services will proceed because of
the COVID-19 pandemic, and we can not predict with any certainty when demand for
these options/companies will return to pre-COVID-19 ranges.
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We proceed to observe developments associated to COVID-19 and stay versatile in
our response to the challenges introduced by the pandemic. Together with the
measures talked about above to guard the well being and security of our workers, we
took steps to strengthen our monetary place in 2020 to mitigate the adversarial
influence that COVID-19 has had or might have on our enterprise and operations,
together with amending our Credit score Facility, lowering salaries for sure workers,
furloughing workers in probably the most negatively impacted enterprise areas,
eliminating sure worker positions, and eliminating, lowering, or deferring
non-essential expenditures. In 2021 we largely returned salaries to pre-COVID-19
ranges and, within the case of sure IT professionals, elevated wages in response
to a tightening labor market in India. Moreover, we’ve got ceased our share
repurchase program till enterprise situations enhance globally.
We additionally proceed to guage the potential results on our enterprise from different
financial situations and world occasions, together with the scenario in Ukraine and
Russia that started in February 2022. In response to the invasion of Ukraine by
Russia, financial sanctions have been imposed on people in Russia, together with
monetary establishments, by governments world wide, together with the U.S. and
the European Union. Now we have no workers or operations in both Ukraine or
Russia. Nonetheless, the invasion of Ukraine by Russia and the sanctions and different
measures imposed in response to this case have elevated the extent of
financial and political uncertainty in Russia and different areas of the world. Dangers
related to heightened geopolitical financial instability embrace, amongst
others, discount in shopper, authorities or company spending, worldwide
sanctions, embargoes, heightened inflation, volatility in world monetary
markets and international forex charges, elevated cyber disruptions and better
provide chain prices. The length and extent of the results of the invasion of
Ukraine by Russia on the worldwide financial system and our operations is tough to
predict. Nonetheless, a major escalation or growth of the scope or of the
associated financial disruption might have an adversarial impact on our enterprise and
monetary outcomes.
Our reported outcomes for the six-month interval ended June 30, 2022 is probably not
reflective of present market situations, or of our outcomes for any future
durations, which can be negatively impacted by the COVID-19 pandemic or different
world occasions or financial situations to a larger extent than the reported
interval. The influence of the COVID-19 pandemic and different world occasions talked about
above may exacerbate different dangers mentioned on this Quarterly Report. Refer
to Merchandise 1A, “Threat Elements” in our Type 10-Okay for the yr ended December 31, 2021
for a whole description of the fabric dangers that the Firm at the moment
faces.
Outcomes of Operations
Working Income
The Firm derives its revenues primarily from subscription and transaction
charges pertaining to services or products delivered over our exchanges or from our
software service supplier (“ASP”) platforms, charges for enterprise course of
outsourcing companies, and costs for software program growth initiatives, together with charges
for consulting, implementation, coaching, and undertaking administration supplied to
clients with put in programs, e-governance options to governmental
businesses within the well being and schooling sectors, in addition to international trade,
remittance (each inward and outward), and journey companies from our monetary
exchanges.
Ebix’s income streams are derived from three product/service channels.
Introduced within the desk under is the breakout of our revenues for every of these
product/service channels for the three and 6 months ended June 30, 2022 and
2021:
Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
(In hundreds)
EbixCash Exchanges $ 188,641 $ 187,957 412,793 418,305
Insurance coverage Exchanges 42,302 41,916 86,066 84,686
Threat Compliance Options 19,838 16,449 38,175 33,384
Totals $ 250,781 $ 246,322 $ 537,034 $ 536,375
The desk under supplies an approximation (as a % of whole income) of
subscription-based and software program upkeep income, transaction-based income,
{and professional} companies and consulting payment income:
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Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Subscription 15 % 16 % 14 % 15 %
Transaction-Primarily based 80 % 78 % 81 % 80 %
Skilled Providers/Consulting/Different 5 % 6 % 5 % 5 %
Outcomes of Operations – Three Months Ended June 30, 2022 and 2021
Working Income
Through the three months ended June 30, 2022, our whole working revenues
elevated $4.5 million, or 2%, to $250.Eight million as in comparison with $246.Three million
in the course of the second quarter of 2021. On March 11, 2020, COVID-19 was declared a
world pandemic by the World Well being Group. Throughout the U.S. and the world,
governments and municipalities instituted measures in an effort to regulate the
unfold of COVID-19, together with quarantines, shelter-in-place orders, faculty
closings, journey restrictions, and the closure of non-essential companies. Our
journey, international trade, remittance, e-learning, and monetary applied sciences
companies proceed to generate revenues under pre-COVID 19 working ranges,
however the Firm is seeing a fabric rebound in these companies throughout 2022
year-to-date. Complete revenues elevated year-over-year in the course of the second fiscal
quarter of 2022 due primarily to year-over-year will increase within the Firm’s
journey and international trade revenues (a mixed larger than $22 million
improve, or 293%, over the second quarter of 2021), BPO revenues in India (70%
improve), e-learning revenues (roughly 600% improve), Latin America
revenues (62% improve), and U.S. annuity trade revenues (21% improve).
These will increase have been offset, partly, by a decline within the EbixCash fee
options revenues in India (primarily pay as you go present playing cards), which decreased by
roughly $22.Three million, or 13.8%. Reported revenues have been negatively
impacted by the weakening of international trade charges in our working geographies
in the course of the second quarter ended June 30, 2022. The biggest adverse influence due
to trade charge actions was within the Indian rupee and Australian greenback.
Particularly, the year-over-year influence from fluctuations of trade charges in
the nations that we function, within the combination, decreased reported revenues by
roughly $9.Four million for the three months ended June 30, 2022.
Worldwide income accounted for 84.9% and 84.7% of the Firm’s whole
income for the three months ended June 30, 2022 and 2021, respectively.
Price of Providers Supplied
Price of companies supplied, which incorporates prices related to buyer
assist, consulting, implementation, and coaching companies, decreased $8.9
million, or 5%, to $169.Three million within the second quarter of 2022 as in comparison with
$178.2 million within the second quarter of 2021. For the three months ended
June 30, 2022, price of companies as a proportion of whole revenues decreased to
67.5% of whole revenues as in comparison with 72.3% for the three months ended June 30,
2021. The lower within the Firm’s price of companies supplied as a proportion of
whole revenues is primarily as a result of income combine modifications yr over yr,
notably the lower in fee options income throughout the EbixCash
operations (primarily present playing cards). Fee options revenues decreased by
roughly 13.8% year-over-year within the second quarter ended June 30, 2022 and
carry decrease gross margins relative to different options/companies provided by the
Firm.
Product Growth Bills
The Firm’s product growth efforts are targeted on the event of
new applied sciences for insurance coverage carriers, brokers, and brokers, the event of
new information exchanges to be used in home and worldwide insurance coverage markets, as
properly because the Foreign exchange and journey sectors. Product growth bills elevated
$0.1 million, or 1%, to $10.2 million in the course of the second quarter of 2022 as
in comparison with $10.1 million in the course of the second quarter of 2021. The year-over-year
improve in product growth bills within the second quarter of 2022 was
pushed by elevated labor prices primarily in India.
Gross sales and Advertising Bills
Gross sales and advertising bills of $4.5 million within the second quarter of 2022
elevated in comparison with $3.Four million within the second quarter of 2021. The rise
was pushed by elevated advertising/promoting expenditures, primarily associated to
the EbixCash companies.
Common and Administrative Bills
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Common and administrative bills elevated $8.Four million, or 36%, to $31.7
million within the second quarter of 2022 as in comparison with $23.Three million within the second
quarter of 2021. The year-over-year improve is primarily as a result of elevated
personnel prices, together with journey bills, of roughly $4.7 million, and
a rise in unhealthy debt expense of roughly $2.Eight million within the second
quarter of 2022 versus the comparable prior yr interval. The rise in unhealthy
debt expense outcomes from a mixture of a discount of the Ebix Vayam
allowance for uncertain accounts within the second quarter of 2021 and a rise in
unhealthy debt bills throughout the EbixCash journey enterprise within the second quarter of
2022.
Amortization and Depreciation Bills
Amortization and depreciation bills elevated $0.9 million, or 22%, to $4.9
million within the second quarter of 2022 as in comparison with $4.Zero million within the second
quarter of 2021, primarily because of the influence from elevated capital expenditures
over the previous a number of quarters, and sure reclassifications and helpful life
changes made by the Firm within the first quarter of 2022 that weren’t
materials to the general monetary situation of the Firm.
Curiosity Revenue
Curiosity revenue elevated $49 thousand, or 288%, to $66 thousand within the second
quarter of 2022 as in comparison with $17 thousand within the second quarter of 2021. The
improve resulted from increased quantities of interest-bearing quick time period investments
and restricted money balances within the comparable interval in 2022 versus 2021.
Curiosity Expense
Curiosity expense of $11.7 million within the second quarter of 2022 elevated 11%
as in comparison with $10.5 million within the second quarter of 2021. Whereas the typical
excellent stability below the Firm’s company credit score amenities decreased
year-over-year by $27.Three million from roughly $671.2 million to
roughly $643.9 million, the Firm’s rate of interest elevated by
roughly 1.7% year-over-year, leading to elevated curiosity expense
year-over-year of over $1.6 million. Offsetting the elevated curiosity expense
from the company credit score amenities was a yr over yr lower in curiosity
expense from the Firm’s working capital amenities in India. The common
stability of our working capital amenities declined year-over-year by in extra
of $8.Zero million.
Non-Working (Loss)/Revenue
Non-operating loss within the second quarter of 2022 decreased to $0.Four million as
in comparison with $1.Three million within the prior yr. These 2022 losses are attributable
to non-operating bills in our India operations, primarily associated to
company social duty packages which can be meant to profit the
welfare of the Indian society as a complete.
Overseas Forex Trade Acquire (Loss)
The Firm recorded a internet international forex trade acquire for the three months
ended June 30, 2022 within the quantity of $3.2 million which consisted of internet positive aspects
realized and unrealized upon the settlement of receivables or payables and
re-measurement of money balances denominated in currencies apart from the
practical forex of the respective working division recording the
instrument.
Revenue Taxes
The Firm recorded internet revenue tax expense of $2.5 million (11.62%) throughout
the three months ended June 30, 2022, which included tax expense of $0.Three million
from sure discrete objects associated to inventory compensation and unsure tax
positions. The revenue tax expense, unique of discrete objects, was $2.2 million
(10.09%) in the course of the three months ended June 30, 2022. The Firm expects its
full yr efficient tax charge to be within the vary of 9% to 10%.
Outcomes of Operations – Six Months Ended June 30, 2022 and 2021
Working Income
Through the six months ended June 30, 2022, our whole working revenues
elevated $0.7 million, to $537.Zero million as in comparison with 536.Four in the course of the six
months ended June 30, 2021. The yr over yr improve in revenues for the
year-to-date interval ended June 30, 2022 was due primarily to a year-over-year
improve within the Firm’s journey and international trade revenues (a mixed
roughly $30 million improve, or 194%, over the year-to-date interval in
2021), BPO revenues in India (52% improve), e-learning revenues (325%
improve), India IT Providers revenues (54% improve), Latin America revenues
(45% improve), U.S. annuity trade revenues (21% improve), and persevering with
medical schooling revenues (9% improve). These will increase have been offset by a
lower within the Firm’s fee options choices in India (primarily
pay as you go present playing cards),
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which decreased by roughly $35.9 million, or 9.8%. Reported revenues have been
negatively impacted by the weakening of international trade charges in our working
geographies in the course of the year-to-date interval ended June 30, 2022. The biggest
adverse influence as a result of trade charge actions was within the Indian rupee and
Australian greenback. Particularly, the year-over-year influence from fluctuations of
trade charges within the nations that we function, within the combination, decreased
reported revenues by roughly $16.9 million for the six months ended
June 30, 2022. Worldwide income accounted for 85.7% and 85.9% of the
Firm’s whole income for the six months ended June 30, 2022 and 2021,
respectively.
Price of Providers Supplied
Price of companies supplied, which incorporates prices related to buyer
assist, consulting, implementation, and coaching companies, decreased
$18.Four million, or 5%, to $380.2 million within the six months ended June 30, 2022 as
in comparison with $398.6 million within the six months ended June 30, 2021. For the six
months ended June 30, 2022, price of companies as a proportion of whole revenues
decreased to 70.8% of whole revenues as in comparison with 74.3% for the six months
ended June 30, 2021. The lower within the Firm’s price of companies supplied as
a proportion of whole revenues is primarily as a result of income combine modifications yr over
yr, notably the lower in fee options income throughout the EbixCash
operations (primarily present playing cards), offset, partly, by a rise in price of
companies associated to income will increase within the Firm’s journey and international
trade companies. Fee options revenues decreased by roughly 9.8%
year-over-year within the six months ended June 30, 2022 and carry decrease gross
margins relative to different options/companies provided by the Firm, whereas
revenues for the Firm’s journey and international trade companies elevated 194%
year-over-year for a similar interval in 2022.
Product Growth Bills
The Firm’s product growth efforts are targeted on the event of
new applied sciences for insurance coverage carriers, brokers, and brokers, the event of
new information exchanges to be used in home and worldwide insurance coverage markets, as
properly because the Foreign exchange and journey sectors. Product growth bills elevated
0.8, or 4%, to $20.5 million for the six months ended June 30, 2022 as in contrast
to $19.7 million for the comparable interval in 2021. The year-over-year improve
in product growth bills was pushed by elevated personnel prices
primarily in India.
Gross sales and Advertising Bills
Gross sales and advertising bills of $8.Three million for the six months ended June 30,
2022 elevated in comparison with $7.2 million in 2021. The rise was as a result of
elevated advertising/promoting expenditures, primarily in India.
Common and Administrative Bills
Common and administrative bills elevated $14.Zero million, or 31%, to
$58.6 million in the course of the six months ended June 30, 2022 as in comparison with
$44.7 million for a similar interval in 2021. The year-over-year improve is
primarily as a result of elevated personnel prices, together with journey bills, of
roughly $7.5 million, a rise in unhealthy debt expense of roughly
$4.5 million versus the comparable prior yr interval, in addition to an
roughly $1.1 million improve in lease expense, primarily associated to the
Firm’s international trade operations in India as journey turns into extra sturdy
from the COVID-19 impacted lows. The unhealthy debt expense improve is because of a
discount within the allowance for uncertain accounts related to the Ebix Vayam
three way partnership within the year-to-date interval in 2021 of roughly $2.Eight million
that pertains to receivables from a government-owned buyer in India, BSNL.
Through the year-to-date interval in 2022 the allowance for uncertain accounts was
elevated by roughly $0.Four million.
Amortization and Depreciation Bills
Amortization and depreciation bills elevated $1.5 million, or 19%, to $9.2
million within the six months ended June 30, 2022 as in comparison with $7.Eight million within the
comparable interval of 2021, primarily because of the influence from elevated capital
expenditures over the previous a number of quarters, and sure reclassifications and
helpful life changes made by the Firm within the first quarter of 2022 that
weren’t materials to the general monetary situation of the Firm.
Curiosity Revenue
Curiosity revenue elevated $103.Zero thousand to $128.Zero thousand for the six
months ended June 30, 2022 as in comparison with $25.Zero thousand for the comparable
interval in 2021. The rise resulted from increased quantities of interest-bearing
quick time period investments and restricted money balances within the comparable interval in
2022 versus 2021.
Curiosity Expense
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Curiosity expense of $21.9 million within the six months ended June 30, 2022
elevated 18% as in comparison with $18.5 million within the for a similar interval in 2021.
Whereas the typical excellent stability below the Firm’s company credit score
amenities decreased year-over-year by roughly $35.Zero million from
$682.9 million to $647.9 million, the Firm’s rate of interest elevated by
roughly 1.9% year-over-year, leading to elevated curiosity expense
year-over-year of larger than $5.Zero million. Offsetting the elevated curiosity
expense from the company credit score amenities was a yr over yr lower in
curiosity expense from the Firm’s working capital amenities in India. The
common stability of our working capital amenities declined year-over-year by
over $8.5 million.
Non-Working (Loss)/Revenue
Non-operating loss within the six months ended June 30, 2022 decreased to
$1.1 million as in comparison with $1.Three million within the prior yr. The losses are
attributable to non-operating bills in our India operations, primarily
associated to company social duty packages which can be meant to profit
the welfare of the Indian society as a complete.
Overseas Forex Trade Acquire (Loss)
The Firm recorded a internet international forex trade acquire for the six months
ended June 30, 2022 within the quantity of $4.1 million as in comparison with a international
trade lack of $(0.6) million within the comparable prior yr interval. These positive aspects
and losses consisted of internet positive aspects/losses realized and unrealized upon the
settlement of receivables or payables and re-measurement of money balances
denominated in currencies apart from the practical forex of the respective
working division recording the instrument.
Revenue Taxes
The Firm recorded internet revenue tax expense of $4.2 million (10.10%) throughout
the six months ended June 30, 2022, which included tax expense of $0.6 million
from sure discrete objects associated to inventory compensation and unsure tax
positions. The revenue tax expense, unique of discrete objects, was $3.5 million
(8.57%) in the course of the six months ended June 30, 2022. The Firm expects its full
yr efficient tax charge to be within the vary of 9% to 10%.
Liquidity and Capital Sources
Our principal sources of liquidity are the money flows supplied by our
working actions and money and money equivalents readily available. The Firm’s Credit score
Facility is because of mature in February 2023 and, because of this, at June 30, 2022
the excellent stability of the Credit score Facility, $636.Three million, was labeled
as a present legal responsibility. The Firm has a adverse working capital place of
$473.1 as of June 30, 2022. The Firm expects to refinance the Credit score Facility
throughout 2022, and intends to take action together with the decision of the
anticipated IPO of EbixCash Restricted described under. The refinancing of the
Credit score Facility would require the Firm to efficiently entry the debt and/or
fairness capital markets within the U.S. or internationally. Nonetheless, there are not any
assurances that such financing shall be accessible in quantities or on phrases
acceptable to us, if in any respect, or that the proceeds acquired by Ebix, Inc. from
the IPO described under shall be within the quantity at the moment anticipated.
The Firm’s Indian subsidiary, EbixCash Restricted, filed a Draft Pink Herring
Prospectus (DRHP) with the Securities and Trade Board of India on March 9,
2022, for an preliminary public providing aggregating as much as ?60,000 million or $787
million (the “IPO”). Of the IPO proceeds, roughly $350 million is proposed
to be utilized in the direction of buy of excellent compulsorily convertible
debentures from Ebix Asia Holdings Inc, Mauritius and in flip fee to Ebix,
Inc., which is proposed for use in the direction of discount of Ebix Inc.’s excellent
debt. Roughly $130 million is proposed to be utilized for working capital
necessities of EbixCash Restricted and its subsidiaries. The remaining proceeds
can be utilized in the direction of, inter alia, growth-related initiatives of EbixCash
Restricted, together with acquisitions and different investments. No assurances might be
given when the IPO shall be accomplished, if in any respect, or if it is going to be accomplished on
phrases acceptable to the Firm.
Our present ratio decreased to 0.43 at June 30, 2022 from 1.79 at December 31,
2021 and our working capital place decreased to $(473.1) million at June 30,
2022 from $161.Four million at December 31, 2021 because of the classification of the
Credit score Facility as a present legal responsibility at June 30, 2022. Our present ratio and
working capital place, internet of the influence of the classification of debt as
present liabilities and assuming related present maturities of debt as at
December 31, 2021, would have been roughly 1.6 and $130.2 million,
respectively.
We consider that the anticipated money flows supplied by our working actions,
along with present money balances, shall be adequate to fulfill our projected
money necessities via January 2023. Nonetheless, there might be no assurance that
extra capital won’t be required sooner. Any projections of future money
wants, money flows, and the overall market situations for debt and fairness
securities is topic to substantial uncertainty.
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Our money and money equivalents have been $67.5 million and $99.6 million at June 30,
2022 and December 31, 2021, respectively. The Firm holds materials money and
money equal balances abroad in international jurisdictions. The free move of
money from sure nations the place we maintain such balances could also be topic to
repatriation tax results and different restrictions. Moreover, the repatriation
of earnings from a few of our international subsidiaries would outcome within the
software of withholding taxes on the international supply and taxation on the U.S.
mother or father stage upon receipt of the repatriation quantities.
The approximate money, money equivalents, restricted money and short-term
investments balances held in our home U.S. operations and every of our
international subsidiaries as of August 1, 2022 are introduced within the desk under:
Nation/Area Money, Restricted Money and Quick-Time period Investments
(In hundreds)
India $ 59,991
United States 8,511
Philippines 6,650
Australia 2,762
Indonesia 1,720
Latin America 2,468
Singapore 1,803
New Zealand 662
United Arab Emirates 951
Canada 2,897
Europe 732
Mauritius 13
Complete $ 89,160
To the extent we’ve got accessible capital, we intend to proceed to make the most of money
flows generated by our ongoing working actions and the refinancing of our
Credit score Facility, in mixtures with the potential issuance of extra debt
or fairness, to fund natural development initiatives and capital expenditures, to make
strategic enterprise acquisitions, to retire excellent indebtedness, and to
repurchase shares of our frequent inventory if and as market and working situations
warrant. Nonetheless, the maturity of the Credit score Facility in addition to the covenants
in that Credit score Facility might adversely have an effect on our potential to make strategic
acquisitions, fund investments, repurchase shares of our frequent inventory, or have interaction
in different enterprise actions that might be within the Firm’s curiosity.
Enterprise Mixtures
The Firm seeks to execute accretive enterprise acquisitions together
with natural development initiatives as a part of its complete enterprise development and
growth technique. The Firm seems to accumulate companies which can be
complementary to Ebix’s current services.
Through the six months ending June 30, 2022, the Firm accomplished no enterprise
acquisitions.
Through the twelve months ended December 31, 2021, the Firm accomplished no
enterprise acquisitions.
A significant factor of the acquisition worth consideration for lots of the
Firm’s enterprise acquisitions is a possible subsequent money earn-out fee
based mostly on reaching sure specified future income targets. The phrases for the
contingent earn out funds in many of the Firm’s enterprise acquisitions
sometimes deal with the GAAP recognizable revenues achieved by the acquired entity
over a one-, two-, and/or three-year interval subsequent to the efficient date of
their acquisition by Ebix. These phrases sometimes set up a minimal threshold
income goal to realize over the agreed upon interval submit acquisition to earn
the required money earn out fee. The Firm applies these phrases in its
calculation and willpower of the truthful worth of contingent earn out
liabilities for bought companies as a part of the associated valuation and
buy worth allocation train for the corresponding acquired property and
liabilities. The Firm acknowledges these potential
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obligations as contingent liabilities and are reported as such on its condensed
consolidated stability sheets. As mentioned in additional element in Notice 1 of the
Condensed Notes to the Condensed Consolidated Monetary Statements on this Type
10-Q, these contingent consideration liabilities are recorded at truthful worth on
the acquisition date and are remeasured quarterly based mostly on the then assessed
truthful worth and adjusted if crucial. As of June 30, 2022, the entire of those
contingent liabilities was $2.Four million, whereas at December 31, 2021, the entire
of those contingent consideration liabilities was $2.6 million.
Working Actions
Internet money supplied by our working actions was $21.Four million for the six
months ended June 30, 2022. The first elements of the money supplied by our
working actions in the course of the six-month interval consisted of internet revenue of
$38.5 million, $9.2 million of depreciation and amortization, $1.9 million of
non-cash share-based compensation, $1.Eight million of right-of-use property
amortization, $1.5 million of amortization of capitalized software program growth
prices, an $8.Eight million improve in contract liabilities, a $(24.4) million
influence from the availability for deferred taxes, and $13.Zero million of working
capital necessities, primarily as a result of a rise in accounts receivable and
different property, offset partly by a rise in accounts payable. Through the six
months ended June 30, 2022, the Firm made $24.2 million of tax funds.
Internet money supplied by our working actions was $21.7 million for the six
months ended June 30, 2021. The first elements of the money supplied by our
working actions in the course of the six-month interval consisted of internet revenue of
$37.Three million, $7.Eight million of depreciation and amortization, $2.7 million of
non-cash share-based compensation, $2.5 million of right-of-use property
amortization, $1.6 million of amortization of capitalized software program growth
prices, and $(28.3) million of working capital necessities, primarily as a result of
decreased accounts payable and accrued bills, a rise within the different property
in the course of the year-to-date interval, and a rise in receivables from service
suppliers. Through the six months ended June 30, 2021, the Firm made $12.1
million of tax funds.
Investing Actions
Internet money used for investing actions in the course of the six months ended June 30,
2022 was $17.Zero million, and consisted primarily of $9.6 million for capital
expenditures and $4.2 million for software program growth prices that have been
capitalized.
Internet money used for investing actions in the course of the six months ended June 30,
2021 was $6.Four million, and consisted primarily of $3.1 million for software program
growth prices that have been capitalized, $1.7 million for capital expenditures,
and reduces in marketable securities of $11.Three million (particularly financial institution
certificates of deposit).
Financing Actions
Through the six months ended June 30, 2022, internet money utilized in financing
actions was $24.1 million, which consisted primarily of $15.9 million used to
make principal funds on the present time period mortgage, a $1.7 million discount in
EbixCash working capital amenities in India, a $1.7 million discount in different
debt outdoors the company credit score amenities and the working capital
amenities, and $4.6 million of quarterly dividends to our frequent stockholders.
Through the six months ended June 30, 2021, internet money utilized in financing
actions was $43.1 million, which consisted primarily of a $6.9 million
discount in EbixCash working capital amenities in India, $31.Three million used to
make scheduled funds on the present time period mortgage and $4.6 million of quarterly
dividends to our frequent stockholders.
Credit score Facility
The Firm’s Credit score Facility supplies a $450 million revolving line of credit score
(the “Revolver”) in addition to a time period mortgage (the “Time period Mortgage”), which at June 30,
2022 had a stability of $196.9 million. The Credit score Facility matures in February
2023. Because of the approaching maturity throughout the subsequent twelve months from
the June 30, 2022 monetary statements date herein, the excellent stability of
the Credit score Facility, $636.Three million, is classed as a present legal responsibility inside
the Condensed Consolidated Steadiness Sheets. Due to this classification of the
Credit score Facility as a present legal responsibility, the Firm has a adverse working
capital place of $473.1 million.
On April 9, 2021, The Firm entered into Modification No. 12 to its Credit score
Facility. Modification No. 12 supplied for, amongst different issues, a waiver of any
potential occasion of default arising below the Credit score Facility from the failure to
well timed ship the Firm’s audited monetary consolidated monetary statements
and associated compliance certificates for the yr ended December 31, 2020,
supplied that there isn’t any good religion willpower by the requisite lenders
below the Credit score Facility of a “Materials Circumstance” (as outlined and additional
described in Modification No. 12), which willpower (if any) might solely be made
inside a specified interval described in Modification No. 12 and is topic to
sure remedy rights of the Firm.
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Modification No. 12 additionally modified the relevant margin that applies from the date
of the modification ahead, modified sure obligatory prepayment provisions, as
properly as sure different covenants associated to restricted funds, investments and
sure reporting necessities.
On March 31, 2021, Ebix entered into Modification No. 11 to the Credit score Facility.
Modification No. 11 supplied, for, amongst different issues, a restricted waiver via
April 10, 2021, of any potential occasion of default arising below the Credit score
Facility from failure to ship the Firm’s audited consolidated monetary
statements and associated compliance certificates for the yr ended December 31,
2020. Modification No. 11 additionally modified sure covenants contained within the Credit score
Facility, together with with respect to sure permitted restricted funds and
investments.
At June 30, 2022, the excellent stability on the Revolver was $439.Four million and
the Revolver carried an rate of interest of seven.25% at June 30, 2022. The stability on
the Revolver is included within the present liabilities part of the condensed
consolidated stability sheets. Through the six months ended June 30, 2022, the
common and most excellent balances of the Revolver have been each $439.4
million. At December 31, 2021, the excellent stability on the Revolver was
$439.Four million and the Revolver carried an rate of interest of 5.50%. This stability
was included within the long-term liabilities part of the condensed consolidated
stability sheets. Throughout 2021, the typical and most excellent balances on the
Revolver have been each $439.Four million.
At June 30, 2022, the excellent stability on the Time period Mortgage was $196.9 million,
of which $196.9 million is due throughout the subsequent twelve months. $15.9 million of
principal funds have been made in the course of the six months ended June 30, 2022, of which
$13.2 million have been scheduled amortization funds. This Time period Mortgage additionally carried
an rate of interest of seven.25% at June 30, 2022, topic to the identical above talked about
improve in rate of interest because the Revolver. The Time period Mortgage is included within the
present liabilities part of the condensed consolidated stability sheets. At
December 31, 2021, the excellent stability on the Time period Mortgage was $212.9 million,
of which $28.2 million was due inside twelve months. The Time period Mortgage additionally carried
an rate of interest of 5.50% at December 31, 2021.
Contractual Obligations
For a presentation relating to materials modifications outdoors the atypical course of
enterprise to the Firm’s contractual obligations please check with Notes Four and 5
of the Condensed Notes to Condensed Consolidated Monetary Statements on this
Type 10-Q.
Off-Steadiness Sheet Preparations
We don’t have interaction in off stability sheet financing preparations.
Latest Accounting Pronouncements
For details about new accounting pronouncements and the potential influence
on our Consolidated Monetary Statements, see Notice 1 of the Condensed Notes to
the Condensed Consolidated Monetary Statements on this Type 10-Q and Notice 1 of
the Notes to Consolidated Monetary Statements in our 2021 Type 10-Okay.
Important Accounting Insurance policies and Estimates
The preparation of monetary statements in conformity with GAAP, as promulgated
within the U.S., requires our administration to make important estimates and
assumptions that have an effect on the reported quantities of property and liabilities, revenues
and bills and associated disclosures in our Condensed Consolidated Monetary
Statements and accompanying notes. We consider probably the most advanced and delicate
judgments, due to their significance to the Condensed Consolidated Monetary
Statements, outcome primarily from the necessity to make estimates and assumptions
in regards to the results of issues which can be inherently unsure. These accounting
insurance policies contain using “essential accounting estimates” as a result of they’re
notably depending on estimates and assumptions made by administration about
issues which can be unsure on the time the accounting estimates are made. In
addition, whereas we’ve got used our greatest estimates based mostly on info and circumstances
accessible to us on the time, totally different estimates moderately might have been used
within the present interval, and modifications within the accounting estimates that we used are
moderately prone to happen from interval to interval each of which can have a
materials influence on our monetary situation and outcomes of operations. For
extra details about these insurance policies, see Notice 1 of the Condensed Notes
to the Condensed Consolidated Monetary Statements on this Type 10-Q. Though
we consider that our estimates, assumptions and judgments are affordable, they
are restricted based mostly upon data presently accessible. Precise outcomes might
differ considerably from these estimates below totally different assumptions, judgments
or situations.
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COVID-19 and different world occasions, similar to different world financial situations and
the invasion of Ukraine by Russia starting in February 2022, has created and
might proceed to create important uncertainty in world monetary markets,
which can cut back demand for our companies, influence the productiveness of our
workforce, cut back our entry to capital, and hurt our enterprise and outcomes of
operations. As of the date of our Condensed Consolidated Monetary Statements,
we’re not conscious of any particular occasion or circumstance that will require us to
replace our estimates or judgments, or to revise the carrying worth of our property
or liabilities. Nonetheless, these estimates might change as new occasions happen and
extra data is obtained, which can lead to modifications being acknowledged
in our consolidated monetary statements in future durations. Whereas we thought of
the results of COVID-19, different world occasions and financial situations in our
estimates and assumptions, because of the present stage of uncertainty over the
longevity of the financial and operational impacts of COVID-19 and different world
occasions on our enterprise, there could also be different judgments and assumptions that have been
not at the moment thought of. Such judgments and assumptions might lead to a
significant influence to our monetary statements in future durations. Precise outcomes
might differ from these estimates and any such variations might have a fabric
influence on our monetary statements.
There have been no important modifications to our essential accounting insurance policies and
estimates from the data supplied in Merchandise 7, “Administration’s Dialogue and
Evaluation of Monetary Situation and Outcomes of Operations,” included within the
Annual Report on Type 10-Okay for the fiscal yr ended December 31, 2021.
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