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 Kind 10-Q and sure
info integrated herein by reference accommodates forward-looking statements
and data inside the “secure 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 Change Act of 1934. This info consists of
assumptions made by, and data at the moment obtainable to administration,
together with statements relating to future financial efficiency and monetary
situation, liquidity and capital assets, acceptance of the Firm’s merchandise
by the market, and administration’s plans and targets. 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 corresponding to “could,” “might,” “ought to,” “would,” “imagine,” “anticipate,”
“anticipate,” “estimate,” “intend,” “seeks,” “plan,” “undertaking,” “proceed,”
“predict,” “will,” and different phrases or expressions of comparable that means are
supposed by the Firm to determine forward-looking statements, though not all
forward-looking statements include these figuring out phrases. These
forward-looking statements are discovered at varied locations all through this report
and within the paperwork integrated herein by reference. These statements are
based mostly on our present expectations about future occasions or outcomes and data
that’s at the moment obtainable to us, contain assumptions, dangers, and
uncertainties, and converse solely as of the date on which such statements are made.
Our precise outcomes could differ materially from these expressed or implied in
these forward-looking statements. Components that will trigger such a distinction
embrace, however are usually not restricted to, these mentioned in Half I, Merchandise 1A, “Danger
Components” in our Kind 10-Ok for the 12 months ended December 31, 2021 which is
integrated by reference herein , and in Half II, Merchandise 1A “Danger Components” in
this Kind 10-Q, together with however not restricted to: the willingness of impartial
insurance coverage businesses to outsource their pc and different processing must
third events; pricing and different aggressive pressures and the Firm’s potential
to realize or preserve share of gross sales on account of actions by rivals and
others; modifications in estimates in important 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 overseas jurisdictions; trade charge
fluctuations and different dangers related to investments and operations in
overseas nations (significantly in India, Australia, Asia, Latin America, and
Europe whereby now we have 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 the Credit score
Facility Maturity Date in addition to Credit score Facility provisions that would
materially prohibit our enterprise; prices and results of litigation,
investigations, or comparable 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 components, 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 components that would trigger precise outcomes to vary materially
from these in our particular forward-looking statements included on this Kind 10-Q
embrace, however are usually not restricted to, the next:
•our future liquidity wants mentioned underneath “Liquidity and Monetary Situation”
relating to our potential to interchange our Credit score Facility previous to or on the Credit score
Facility Maturity Date, 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 Word 4
of the Condensed Notes to those Condensed Consolidated Monetary Statements in
this Kind 10-Q, “Debt”);
•uncertainties pertaining to the precise final value of our authorized contingencies
(check with Word 5 of the Condensed Notes to those Condensed Consolidated
Monetary Statements on this Kind 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 nine-month income tendencies relating to precise
realized stage of demand for our merchandise through the instantly foreseeable
future, and fluctuations thereof
Readers ought to rigorously overview the disclosures and the chance components described
on this and different paperwork we file once in a while with the SEC, together with
future studies on Varieties 10-Q and 8-Ok, and any amendments thereto. Chances are you’ll acquire
our SEC filings at our web site, www.ebix.com underneath the “Investor Data”
part, or over the Web on the SEC’s web site, www.sec.gov.
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The next info ought 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 Kind 10-Ok for the 12 months 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
most important 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 techniques, and outsourced administrative and threat
compliance. The Firm’s merchandise function 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 plenty 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 in addition 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 85.6% and 84.3% of the Firm’s complete
income for the 9 months ended September 30, 2022 and 2021, respectively.
Ebix’s objective is to be a number one facilitator of insurance coverage and monetary
transactions on the earth. The Firm’s expertise imaginative and prescient is to give attention to the
convergence of all channels, processes, and entities in a fashion such that knowledge
seamlessly flows as soon as a knowledge entry has initially been made. Ebix strives to work
collaboratively with purchasers to develop progressive expertise methods and
options that deal with particular enterprise challenges and necessities. Ebix
combines the latest applied sciences with its capabilities in consulting, techniques
design and integration, IT and enterprise course of outsourcing, utility
software program, and internet and utility internet hosting to satisfy the person wants of
organizations.
Places of work and Geographic Data
The Firm’s company headquarters, together with considerably all of our
company administration features, is situated in Johns Creek, Georgia, the place we
personal a industrial workplace constructing and campus facility. Moreover, the Firm
leases workplace area in New Zealand, Australia, Singapore, Dubai, Brazil, Canada,
Indonesia, the Philippines, and the UK for assist, operations, and
gross sales places of work. The Firm additionally leases roughly 95 amenities throughout India,
whereas proudly owning six amenities in India.
Results of COVID-19 and Different International 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 overseas
governments carried out journey restrictions, quarantines, shelter-in-place
orders, and comparable 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 may very well be carried out, 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 staff and adjust to
relevant authorities orders, we restricted non-essential worker journey and
transitioned our staff to a distant work atmosphere. Throughout 2021 and 2022,
the Firm transitioned to a hybrid mannequin of distant/on website work at a lot of its
places. The continuing 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.
Throughout the fiscal 12 months ended December 31, 2020, significantly starting in
March, we skilled a lower in demand for sure of our options and
companies, significantly these associated to the Firm’s journey, overseas trade,
remittance, e-learning, and consulting enterprise areas, after sure authorities
restrictions had been carried out. This decreased demand continued all through 2020
and 2021 in various levels for every enterprise space, and even persists by
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 anticipate that
demand variability for our services will proceed on account 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 staff, we
took steps to strengthen our monetary place in 2020 to mitigate the antagonistic
influence that COVID-19 has had or could have on our enterprise and operations,
together with amending our Credit score Facility, lowering salaries for sure staff,
furloughing staff in essentially 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, now we have
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 state of affairs in Ukraine and
Russia that started in February 2022. In response to the invasion of Ukraine by
Russia, financial sanctions had been imposed on people in Russia, together with
monetary establishments, by governments around the globe, together with the U.S. and
the European Union. We now have no staff 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 example 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 overseas foreign money charges, elevated cyber disruptions, and better
provide chain prices. The length and extent of the consequences of the invasion of
Ukraine by Russia on the worldwide economic system and our operations is troublesome to
predict. Nonetheless, a big escalation or growth of the scope or of the
associated financial disruption might have an antagonistic impact on our enterprise and
monetary outcomes.
Our reported outcomes for the nine-month interval ended September 30, 2022 could
not be 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 can also exacerbate different dangers mentioned on this Quarterly Report. Refer
to Merchandise 1A, “Danger Components” in our Kind 10-Ok for the 12 months ended December 31, 2021
for an entire 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
utility service supplier (“ASP”) platforms, charges for enterprise course of
outsourcing companies, and charges for software program growth tasks, together with charges
for consulting, implementation, coaching, and undertaking administration offered to
prospects with put in techniques, e-governance options to governmental
businesses within the well being and training sectors, in addition to overseas trade,
remittance (each inward and outward), and journey companies from our monetary
exchanges.
Ebix’s income streams are derived from three product/service channels.
Offered within the desk under is the breakout of our revenues for every of these
product/service channels for the three and 9 months ended September 30, 2022
and 2021:
Three Months Ended 9 Months Ended
September 30, September 30,
2022 2021 2022 2021
(In hundreds)
EbixCash Exchanges $ 196,113 $ 131,571 608,906 549,876
Insurance coverage Exchanges 41,283 42,199 127,349 126,885
Danger Compliance Options 20,508 17,966 58,683 51,350
Totals $ 257,904 $ 191,736 $ 794,938 $ 728,111
The desk under supplies an approximation (as a % of complete 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 9 Months Ended
September 30, September 30,
2022 2021 2022 2021
Subscription 14 % 18 % 14 % 16 %
Transaction-Based mostly 81 % 73 % 81 % 78 %
Skilled Companies/Consulting/Different 5 % 9 % 5 % 6 %
Outcomes of Operations – Three Months Ended September 30, 2022 and 2021
Working Income
Throughout the three months ended September 30, 2022, our complete working revenues
elevated $66.2 million, or 35%, to $257.9 million as in comparison with $191.7 million
through the third 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, overseas 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 through the third fiscal
quarter of 2022 due primarily to year-over-year will increase within the Firm’s
cost options revenues in India (primarily pay as you go present playing cards), which
elevated roughly $40 million year-over-year, or 39%, journey and overseas
trade revenues (a mixed roughly $20 million improve, or 145%, over
the third quarter of 2021), BPO revenues in India ($Three million improve or 42%),
Latin America revenues ($1.7 million improve or 55%), U.S. annuity trade
revenues ($1.1 million improve or 16%) and e-learning revenues ($0.7 million
improve or 110%). Reported revenues had been negatively impacted by the weakening
of overseas trade charges in our working geographies through the third quarter
ended September 30, 2022. The biggest unfavorable influence resulting from trade charge
actions was within the Indian Rupee, British Pound Sterling, and the 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 three months ended September 30,
2022. This unfavorable influence from overseas trade charge actions was essentially the most
pronounced unfavorable influence on the Firm’s quarterly revenues prior to now 5
fiscal years. Worldwide income accounted for 85.4% and 80.0% of the
Firm’s complete income for the three months ended September 30, 2022 and 2021,
respectively.
Value of Companies Supplied
Value of companies offered, which incorporates prices related to buyer
assist, consulting, implementation, and coaching companies, elevated $53.5
million, or 44%, to $174.Three million within the third quarter of 2022 as in comparison with
$120.Eight million within the third quarter of 2021. For the three months ended
September 30, 2022, value of companies as a share of complete revenues elevated
to 67.6% of complete revenues as in comparison with 63.0% for the three months ended
September 30, 2021. The rise within the Firm’s value of companies offered as a
share of complete revenues is primarily resulting from income combine modifications
year-over-year, significantly the rise in cost options income inside
the EbixCash operations (primarily present playing cards). Fee options revenues
elevated by roughly 39% year-over-year within the third quarter ended
September 30, 2022 and carry decrease gross margins relative to different
options/companies supplied by the Firm. Moreover, the Firm has
incurred some prices to ramp up these companies most impacted by COVID-19, such
as our journey, overseas trade and remittance companies, as operations return
to a extra regular rhythm, which has had a unfavorable influence on gross revenue
margins.
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 knowledge exchanges to be used in home and worldwide insurance coverage markets, as
nicely because the Foreign exchange and journey sectors. Product growth bills elevated
$0.Three million, or 3%, to $10.5 million through the third quarter of 2022 as
in comparison with $10.2 million through the third quarter of 2021. The year-over-year
improve in product growth bills within the third quarter of 2022 was pushed
by elevated labor prices.
Gross sales and Advertising and marketing Bills
Gross sales and advertising bills of $4.Zero million within the third quarter of 2022
elevated in comparison with $3.Four million within the third quarter of 2021. The rise
was pushed by elevated advertising/promoting expenditures, primarily associated to
the EbixCash companies.
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Normal and Administrative Bills
Normal and administrative bills elevated $9.Zero million, or 35%, to $34.4
million within the third quarter of 2022 as in comparison with $25.Four million within the third
quarter of 2021. The year-over-year improve is primarily resulting from elevated
personnel prices, together with journey bills, of roughly $4.9 million, and
a rise in hire expense of roughly $3.7 million within the third quarter
of 2022 versus the comparable prior 12 months interval. The rise in hire expense is
primarily associated to the Firm’s overseas trade operations in India. As
airports and different factors of entry into India are starting to function at extra
regular capability, EbixCash has reopened operations in sure airports/factors of
entry and previous hire abatements resulting from COVID-19 have diminished within the third
quarter of 2022 versus the prior 12 months quarter.
Amortization and Depreciation Bills
Amortization and depreciation bills elevated $0.6 million, or 15%, to $4.4
million within the third quarter of 2022 as in comparison with $3.Eight million within the third
quarter of 2021, primarily as a result of 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. The elevated
depreciation is happening primarily inside the EbixCash BPO enterprise.
Curiosity Revenue
Curiosity earnings elevated $44 thousand, or 183%, to $68 thousand within the third
quarter of 2022 as in comparison with $24 thousand within the third quarter of 2021. The
improve resulted from each a better rate of interest atmosphere and elevated
quantities of interest-bearing brief time period investments and restricted money balances
in 2022 versus the comparable interval in 2021.
Curiosity Expense
Curiosity expense of $15.5 million within the third quarter of 2022 elevated 41%
as in comparison with $11.Zero million within the third quarter of 2021. Whereas the common
excellent stability underneath the Firm’s Credit score Facility decreased year-over-year
by roughly $27.2 million from roughly $663.6 million to
roughly $636.Three million, the Firm’s rate of interest elevated by
roughly 2.6% year-over-year. The elevated rate of interest atmosphere,
coupled with elevated amortization of deferred financing prices within the third
quarter of 2022 versus the comparable prior 12 months quarter resulted in elevated
curiosity expense year-over-year of over $4.Eight million. Offsetting the elevated
curiosity expense from the Credit score Facility was a 12 months over 12 months 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
roughly $4.Zero million.
Non-Working (Loss)/Revenue
Non-operating loss within the third quarter of 2022 decreased to $0.Four million as
in comparison with $1.Three million within the prior 12 months. These bills in 2021 and 2022 are
attributable to non-operating bills in our India operations, primarily
associated to company social accountability packages which are supposed to profit
the welfare of the Indian society as an entire.
International Forex Change Achieve (Loss)
The Firm recorded a web overseas foreign money trade achieve for the three months
ended September 30, 2022 within the quantity of $4.9 million which consisted of web
positive factors realized and unrealized upon the settlement of receivables or payables and
re-measurement of money balances denominated in currencies aside from the
purposeful foreign money of the respective working division recording the
instrument.
Revenue Taxes
The Firm recorded web earnings tax expense of $1.9 million (9.90%) through the
three months ended September 30, 2022, which included tax expense of $0.7
million from sure discrete gadgets associated to inventory compensation and unsure
tax positions. The earnings tax expense, unique of discrete gadgets, was
$1.2 million (6.09%) through the three months ended September 30, 2022. The
Firm expects its full 12 months efficient tax charge to be within the vary of seven% to
10%.
Outcomes of Operations – 9 Months Ended September 30, 2022 and 2021
Working Income
Throughout the 9 months ended September 30, 2022, our complete working revenues
elevated $66.Eight million, to $794.9 million as in comparison with $728.1 million throughout
the 9 months ended September 30, 2021. The year-over-year improve in
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revenues for the year-to-date interval ended September 30, 2022 was due primarily
to a year-over-year improve within the Firm’s journey and overseas trade
revenues (a mixed roughly $49 million improve, or 146%, over the
year-to-date interval in 2021), BPO revenues in India (improve of $7.Four million or
48%), e-learning revenues (improve of $2.9 million or 220%), Latin America
revenues (improve of $4.Four million or 48%), and U.S. annuity trade revenues
(improve of $3.6 million or 20% improve). These will increase had been offset by a
lower within the Firm’s year-over-year U.S. consulting {and professional}
companies revenues (mixed $2.Eight million lower or 10%). Reported revenues
had been negatively impacted by the weakening of overseas trade charges in our
working geographies through the year-to-date interval ended September 30, 2022.
The biggest unfavorable influence resulting from 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 $33.Eight million for the
9 months ended September 30, 2022. This unfavorable influence from overseas trade
charge actions was essentially the most pronounced unfavorable influence on the Firm’s
year-to-date revenues prior to now 5 fiscal years. Worldwide income
accounted for 85.6% and 84.3% of the Firm’s complete income for the 9 months
ended September 30, 2022 and 2021, respectively.
Value of Companies Supplied
Value of companies offered, which incorporates prices related to buyer
assist, consulting, implementation, and coaching companies, elevated
$35.1 million, or 7%, to $554.Four million within the 9 months ended September 30,
2022 as in comparison with $519.Four million within the 9 months ended September 30, 2021.
For the 9 months ended September 30, 2022, value of companies as a share
of complete revenues decreased to 69.7% of complete revenues as in comparison with 71.3% for
the 9 months ended September 30, 2021. The lower within the Firm’s value of
companies offered as a share of complete revenues is primarily resulting from income
combine modifications year-over-year, significantly the expansion within the Firm’s journey and
overseas trade (146%), Indian BPO (48%), Latin America (48%) and U.S. annuity
trade (20%) revenues talked about above. The low margin cost options
revenues (primarily pay as you go present playing cards) elevated by lower than 1% year-over-year
within the 9 months ended September 30, 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 knowledge exchanges to be used in home and worldwide insurance coverage markets, as
nicely because the Foreign exchange and journey sectors. Product growth bills elevated
$1.1 million, or 4%, to $31.Zero million for the 9 months ended September 30,
2022 as in comparison with $29.Eight 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 and marketing Bills
Gross sales and advertising bills of $12.2 million for the 9 months ended
September 30, 2022 elevated $1.6 million as in comparison with $10.6 million in 2021.
The rise was resulting from elevated advertising/promoting expenditures, primarily
in India.
Normal and Administrative Bills
Normal and administrative bills elevated $23.Zero million, or 33%, to
$93.Zero million through the 9 months ended September 30, 2022 as in comparison with
$70.1 million for a similar interval in 2021. The year-over-year improve is
primarily resulting from elevated personnel prices, together with journey bills, of
roughly $12.6 million (primarily inside the Firm’s EbixCash
operations), a rise in hire expense of roughly $4.Eight million versus
the comparable prior 12 months interval, in addition to an roughly $4.Four million
improve in dangerous debt expense. The rise in hire expense is primarily associated
to the Firm’s overseas trade operations in India. As airports and different
factors of entry into India are starting to function at extra regular capability,
EbixCash has reopened operations in sure airports/factors of entry and previous
hire abatements resulting from COVID-19 have diminished within the year-to-date 2022 interval
versus the comparable 2021 interval. The dangerous debt expense improve is primarily
resulting from 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 over $5.Zero million
that pertains to receivables from a government-owned buyer in India, BSNL.
Throughout the year-to-date interval in 2022 the allowance for uncertain accounts
associated to the Ebix Vayam three way partnership was diminished by roughly $0.7
million.
Amortization and Depreciation Bills
Amortization and depreciation bills elevated $2.Zero million, or 18%, to
$13.7 million within the 9 months ended September 30, 2022 as in comparison with
$11.6 million within the comparable interval of 2021, primarily as a result of influence from
elevated
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capital expenditures in 2022 as in comparison with 2021, 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 earnings elevated $147 thousand to $196 thousand for the 9 months
ended September 30, 2022 as in comparison with $49 thousand for the comparable interval
in 2021. The rise resulted from a better rate of interest atmosphere within the
year-to-date interval of 2022 as in comparison with the 2021 year-to-date interval.
Curiosity Expense
Curiosity expense of $37.Four million within the 9 months ended September 30, 2022
elevated 27% as in comparison with $29.5 million within the for a similar interval in 2021.
Whereas the common excellent stability underneath the Firm’s Credit score Facility
decreased year-over-year by roughly $36.1 million from roughly
$676.Four million to $640.Three million, the Firm’s rate of interest elevated by
roughly 2.1% year-over-year. The elevated rate of interest year-over-year
and elevated amortization of deferred financing prices within the 2022 year-to date
interval versus 2021 resulted in elevated curiosity expense year-over-year of
roughly $10.Zero million. Offsetting the elevated curiosity expense from the
Credit score Facility was a year-over-year 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 $7 million.
Non-Working (Loss)/Revenue
Non-operating loss within the 9 months ended September 30, 2022 decreased to
$1.6 million as in comparison with $2.5 million within the prior 12 months. The losses are
attributable to non-operating bills in our India operations, primarily
associated to company social accountability packages which are supposed to profit
the welfare of the Indian society as an entire.
International Forex Change Achieve (Loss)
The Firm recorded a web overseas foreign money trade achieve for the 9 months
ended September 30, 2022 within the quantity of $9.1 million as in comparison with a overseas
trade lack of $(0.8) million within the comparable prior 12 months interval. These positive factors
and losses consisted of web positive factors/losses realized and unrealized upon the
settlement of receivables or payables and re-measurement of money balances
denominated in currencies aside from the purposeful foreign money of the respective
working division recording the instrument.
Revenue Taxes
The Firm recorded web earnings tax expense of $6.1 million (10.04%) throughout
the 9 months ended September 30, 2022, which included tax expense of $1.4
million from sure discrete gadgets associated to inventory compensation and unsure
tax positions. The earnings tax expense, unique of discrete gadgets, was $4.7
million (7.77%) through the 9 months ended September 30, 2022. The Firm
expects its full 12 months efficient tax charge to be within the vary of seven% to 10%.
Liquidity and Capital Assets
Our principal sources of liquidity are the money flows offered 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 September 30,
2022 the excellent stability of the Credit score Facility, $628.Eight million, was
labeled as a present legal responsibility. The Firm has a unfavorable working capital
place of $469.1 as of September 30, 2022. The Firm expects to deal with the
maturity of the Credit score Facility previous to the Credit score Facility Maturity Date, and
intends to take action together with the decision of the anticipated IPO of
EbixCash Restricted described under. Any refinancing of the Credit score Facility will
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 obtainable in quantities or on phrases acceptable to us, if at
all, 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 Purple Herring
Prospectus (“DRHP”) with the Securities and Change 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 direction of buy of excellent compulsorily convertible
debentures from Ebix Asia Holdings Inc, Mauritius and in flip cost to Ebix,
Inc., which is proposed for use in 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
could be utilized
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in direction of, inter alia, growth-related initiatives of EbixCash Restricted, together with
acquisitions and different investments. No assurances may be given when the IPO will
be accomplished, if in any respect, or if will probably be accomplished on phrases acceptable to the
Firm.
The Firm can also be pursuing a number of different capital elevating methods to
deal with the refinancing necessities of the Credit score Facility, together with debt,
fairness, and hybrid debt/fairness choices on the company stage and inside the
EbixCash operations in India. If mandatory, the Firm may also pursue different
strategic choices, and the Board of Administrators has fashioned a particular committee to
help it in additional evaluating all alternate options to deal with the capital required
to refinance the Credit score Facility.
Our present ratio decreased to 0.42 at September 30, 2022 from 1.79 at
December 31, 2021 and our working capital place decreased to $(469.1) million
at September 30, 2022 from $161.Four million at December 31, 2021 as a result of
classification of the Credit score Facility as a present legal responsibility at September 30,
2022. Our present ratio and dealing capital place, web of the influence of the
classification of debt as present liabilities and assuming comparable present
maturities of debt at December 31, 2021, would have been roughly 1.7 and
$132.1 million, respectively, at September 30, 2022.
We imagine that the anticipated money flows offered by our working actions,
along with present money balances, shall be adequate to satisfy our projected
money necessities by January 2023. Nonetheless, there may 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.
Our money and money equivalents had been $71.Zero million and $99.6 million at
September 30, 2022 and December 31, 2021, respectively. The Firm holds
materials money and money equal balances abroad in overseas jurisdictions.
The free circulate 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 overseas subsidiaries would end in
the applying of withholding taxes on the overseas 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
overseas subsidiaries as of November 1, 2022 are introduced within the desk under:
Nation/Area Money, Restricted Money and Quick-Time period Investments
(In hundreds)
India $ 63,262
United States 7,785
Philippines 4,298
Australia 3,274
Indonesia 2,390
Latin America 1,756
Singapore 919
New Zealand 422
United Arab Emirates 594
Canada 3,165
Europe 962
Mauritius 22
Complete $ 88,849
To the extent now we have obtainable 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 combos with the doable issuance of extra debt
or fairness, to fund natural progress initiatives and capital expenditures, to make
strategic enterprise acquisitions, to retire excellent indebtedness, and to
repurchase shares of our widespread 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 widespread inventory, or have interaction
in different enterprise actions that may very well be within the Firm’s curiosity.
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Enterprise Combos
The Firm seeks to execute accretive enterprise acquisitions together
with natural progress initiatives as a part of its complete enterprise progress and
growth technique. The Firm seems to be to accumulate companies which are
complementary to Ebix’s current services.
Throughout the 9 months ending September 30, 2022, the Firm accomplished no
enterprise acquisitions.
Throughout the twelve months ended December 31, 2021, the Firm accomplished no
enterprise acquisitions.
A significant factor of the acquisition value consideration for most of the
Firm’s enterprise acquisitions is a possible subsequent money earn-out cost
based mostly on reaching sure specified future income targets. The phrases for the
contingent earn out funds in a lot of the Firm’s enterprise acquisitions
usually 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 usually set up a minimal threshold
income goal to attain over the agreed upon interval publish acquisition to earn
the desired money earn out cost. The Firm applies these phrases in its
calculation and willpower of the honest worth of contingent earn out
liabilities for bought companies as a part of the associated valuation and
buy value allocation train for the corresponding acquired belongings and
liabilities. The Firm acknowledges these potential obligations as contingent
liabilities and are reported as such on its condensed consolidated stability
sheets. As mentioned in additional element in Word 1 of the Condensed Notes to the
Condensed Consolidated Monetary Statements on this Kind 10-Q, these contingent
consideration liabilities are recorded at honest worth on the acquisition date and
are remeasured quarterly based mostly on the then assessed honest worth and adjusted if
mandatory. As of September 30, 2022, the full of those contingent liabilities
was $2.Three million, whereas at December 31, 2021, the full of those contingent
consideration liabilities was $2.6 million.
Working Actions
Web money offered by our working actions was $45.1 million for the 9
months ended September 30, 2022. The first parts of the money offered by
our working actions through the nine-month interval consisted of web earnings of
$56.Eight million, $13.7 million of depreciation and amortization, $2.9 million of
non-cash share-based compensation, $2.6 million of right-of-use belongings
amortization, $2.2 million of amortization of capitalized software program growth
prices, an $2.Four million improve in contract liabilities, a $(25.4) million
influence from the availability for deferred taxes, and $5.6 million of working
capital necessities, primarily resulting from a rise in accounts receivable and a
lower in accounts payable and accrued bills, offset partly by will increase
in payables to service brokers, different liabilities and contract liabilities.
Throughout the 9 months ended September 30, 2022, the Firm made $28.9 million
of tax funds.
Web money offered by our working actions was $39.Eight million for the 9
months ended September 30, 2021. The first parts of the money offered by
our working actions through the nine-month interval consisted of web earnings of
$52.Eight million, $11.6 million of depreciation and amortization, $4.Zero million of
non-cash share-based compensation, $3.5 million of right-of-use belongings
amortization, $2.5 million of amortization of capitalized software program growth
prices, and $26.6 million of working capital necessities, primarily resulting from
elevated accounts receivable and receivables from companies supplies, an
improve within the different belongings, and decreased accounts payable and accrued
bills. Throughout the 9 months ended September 30, 2021, the Firm made
$14.Four million of tax funds.
Investing Actions
Web money used for investing actions through the 9 months ended
September 30, 2022 was $22.9 million, and consisted primarily of $12.7 million
for capital expenditures, $5.7 million for software program growth prices that had been
capitalized and a rise in marketable securities of $4.5 million
(particularly financial institution certificates of deposit).
Web money used for investing actions through the 9 months ended
September 30, 2021 was $2.Zero million, and consisted primarily of $4.6 million for
software program growth prices that had been capitalized, $5.Three million for capital
expenditures, and reduces in marketable securities of $11.9 million
(particularly financial institution certificates of deposit).
Financing Actions
Throughout the 9 months ended September 30, 2022, web money utilized in financing
actions was $31.Eight million, which consisted primarily of $23.5 million used to
make principal funds on the present time period mortgage, a $0.9 million improve in
EbixCash working capital amenities in India, a $2.Zero million discount in different
debt exterior the Firm’s Credit score Facility and the working capital amenities,
and $7.Zero million of dividends to our widespread stockholders.
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Throughout the 9 months ended September 30, 2021, web money utilized in financing
actions was $52.9 million, which consisted primarily of an $8.6 million
discount in EbixCash working capital amenities in India, $36.9 million used to
make scheduled funds on the present time period mortgage and $7.Zero million of dividends
to our widespread stockholders.
Credit score Facility
The Firm’s Credit score Facility supplies a $450 million Revolver in addition to a Time period
Mortgage, which at September 30, 2022 had a stability of $189.Four million. The Credit score
Facility matures in February 2023. Because of the approaching maturity inside
the following twelve months from the September 30, 2022 monetary statements date
herein, the excellent stability of the Credit score Facility, $628.Eight million, is
labeled as a present legal responsibility inside the Condensed Consolidated Stability
Sheets. Due to this classification of the Credit score Facility as a present
legal responsibility, the Firm has a unfavorable working capital place of
$469.1 million.
On April 9, 2021, The Firm entered into Modification No. 12 to its Credit score
Facility. Modification No. 12 offered for, amongst different issues, a waiver of any
potential occasion of default arising underneath 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 12 months ended December 31, 2020,
offered that there is no such thing as a good religion willpower by the requisite lenders
underneath the Credit score Facility of a “Materials Circumstance” (as outlined and additional
described in Modification No. 12), which willpower (if any) could solely be made
inside a specified interval described in Modification No. 12 and is topic to
sure remedy rights of the Firm. Modification No. 12 additionally modified the
relevant margin that applies from the date of the modification ahead, modified
sure obligatory prepayment provisions, in addition to 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 offered, for, amongst different issues, a restricted waiver by
April 10, 2021, of any potential occasion of default arising underneath the Credit score
Facility from failure to ship the Firm’s audited consolidated monetary
statements and associated compliance certificates for the 12 months 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.
As of September 30, 2022, the excellent stability on the Revolver was $439.4
million and the Revolver carried an rate of interest of 8.56% at September 30,
2022. The stability on the Revolver is included within the present liabilities part
of the condensed consolidated stability sheets. Throughout the 9 months ended
September 30, 2022, the common and most excellent balances of the Revolver
had been each $439.Four 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 common and most excellent
balances on the Revolver had been each $439.Four million.
As of September 30, 2022, the excellent stability on the Time period Mortgage was $189.4
million, of which $189.Four million is due inside the subsequent twelve months. $23.5
million of principal funds had been made through the 9 months ended
September 30, 2022, of which $20.7 million had been scheduled amortization funds.
This Time period Mortgage additionally carried an rate of interest of 8.56% at September 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 exterior the strange 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
Kind 10-Q.
Off-Stability Sheet Preparations
We don’t have interaction in off stability sheet financing preparations.
Current Accounting Pronouncements
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For details about new accounting pronouncements and the potential influence
on our Consolidated Monetary Statements, see Word 1 of the Condensed Notes to
the Condensed Consolidated Monetary Statements on this Kind 10-Q and Word 1 of
the Notes to Consolidated Monetary Statements in our 2021 Kind 10-Ok.
Crucial Accounting Insurance policies and Estimates
The preparation of economic 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 belongings and liabilities, revenues
and bills, and associated disclosures in our Condensed Consolidated Monetary
Statements and accompanying notes. We imagine essentially the most advanced and delicate
judgments, due to their significance to the Condensed Consolidated Monetary
Statements, consequence primarily from the necessity to make estimates and assumptions
in regards to the results of issues which are inherently unsure. These accounting
insurance policies contain the usage of “important accounting estimates” as a result of they’re
significantly depending on estimates and assumptions made by administration about
issues which are unsure on the time the accounting estimates are made. In
addition, whereas now we have used our greatest estimates based mostly on information and circumstances
obtainable to us on the time, completely different estimates fairly might have been used
within the present interval, and modifications within the accounting estimates that we used are
fairly 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 Word 1 of the Condensed Notes
to the Condensed Consolidated Monetary Statements on this Kind 10-Q. Though
we imagine that our estimates, assumptions and judgments are cheap, they
are restricted based mostly upon info presently obtainable. Precise outcomes could
differ considerably from these estimates underneath completely different assumptions,
judgments, or situations.
COVID-19 and different world occasions, corresponding to different world financial situations and
the invasion of Ukraine by Russia starting in February 2022, has created and
could 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 might require us to
replace our estimates or judgments, or to revise the carrying worth of our belongings
or liabilities. Nonetheless, these estimates could change as new occasions happen and
extra info is obtained, which can end in modifications being acknowledged
in our consolidated monetary statements in future durations. Whereas we thought of
the consequences of COVID-19, different world occasions and financial situations in our
estimates and assumptions, as a result of 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 had been
not at the moment thought of. Such judgments and assumptions might end in a
significant influence to our monetary statements in future durations. Precise outcomes
might differ from these estimates and any such variations could have a fabric
influence on our monetary statements.
There have been no important modifications to our important accounting insurance policies and
estimates from the data offered in Merchandise 7, “Administration’s Dialogue and
Evaluation of Monetary Situation and Outcomes of Operations,” included within the
Annual Report on Kind 10-Ok for the fiscal 12 months ended December 31, 2021.
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