• Revenue of $42.3 Million, up 31.2% Year-Over-Year
ATLANTA, GA – August 9, 2011 – Ebix, Inc. (NASDAQ:EBIX), a leading international supplier of On-Demand software and E-commerce services to the insurance industry, today reported record financial results for the second quarter of 2011 and will host a conference call at 11:00 a.m. EDT (details below)
Ebix delivered the following results for its second quarter, fiscal year 2011:
Earnings per Share: Q2 2011 diluted earnings per share rose 48% year-over-year to $0.53, as compared to $0.36 in the second quarter of 2010. For purposes of the Q2 2011 EPS calculation, there was an average of 42.3 million diluted shares outstanding during the quarter, as compared to 39.3 million diluted shares outstanding in Q2 of 2010.
Operating Income: Q2 2011 operating income was $18.6 million, an increase of 43% on a year-over-year basis, as compared to Q2 2010 operating income of $13.0 million. The operating income included a gain of $1.9 million from the reversal of contingent earn out accrued liabilities related to a few acquisitions made in 2010. The Company’s Operating income excluding this one-time non-recurring event was $16.7 million for the quarter, accounting still for a 40% operating margin.
Revenues: Total Q2 2011 revenue was $42.3 million, an increase of 31.2% on a year-over-year basis, as compared to Q2 2010 revenue of $32.2 million. During the six months ended June 30, 2011 revenue increased $18.5 million or 29.0%, to $82.3 million compared to $63.8 million during the same period in 2010.
Expenses: The Company’s operating expenses for the quarter grew by 23.2% to $23.7 million as compared to $19.2 million for the second quarter of 2010.
Margins: The Company reported an operating margin of 44% for Q2 2011 as compared to 40.4% for the same period during 2010.
Cash Flows: Net cash provided by the Company’s ongoing operations in Q2 2011 was $19.6 million, an increase of 22.5% year-over-year, compared to 16.0 million in Q2 of 2010. During the six months ended June 30, 2011 the Company generated $29.9 million of net cash flow from operating activities, as compared to $23.8 million in the first six months of 2010.
Net Income: Q2 2011 net income was $22.3 million, an increase of 59.5% on a year-over-year basis, as compared to Q2 2010 net income of $14.0 million. Net income for the quarter was affected by certain non-recurring matters including a net $4.5 million benefit resulting from the reversal of the remaining valuation allowances that had been held against our NOL carry forwards in the United States; and a non-operating loss of $577 thousand resulting from decrease in the fair value of the put option that was issued to the two former stockholders of E-Z Data who received shares of Ebix common stock as part of the acquisition consideration paid by the Company in October 2009.
Channel Revenues: The Exchange channel grew 41.6% year over year to $32.2 million or 76.2% of the Q2 revenues. The BPO channel decreased 5.8% year over year, to $3.75 million or 8.9% of the Q2 revenues. The Broker Channel grew 45.4% year over year, to $4.82 million or 11.4 % of the Q2 revenues. The Carrier channel decreased 31.9% year over year, to $1.5 million or 3.5% of the Q2 revenues.
Share Repurchases: During Q2 2011, the Company repurchased 1.2 million shares of our common stock at an average price of $19.80 per share for an aggregate amount of $23.8 million. Subsequent to June 30, 2011, the Company has purchased another 1.1 million shares of its common stock at an average price of $19.00 for an aggregate amount of $20.1 million. Year to date, the Company has repurchased 2.37 million shares of Ebix common stock in 2011, for an aggregate consideration in the amount of $46.3 million, representing an average price of $19.56 per share.
Q3 and Q4 Diluted Share Count: Taking into account the share repurchases made by the Company till date, the Company expects the diluted share count for Q3 2011 to be 40.74 million, and for Q4 to be 40.59 million which would be 4.1% lower than the Q2 diluted share count used for EPS calculation. This diluted share count is likely to be even lower if the Company continues to repurchase its common stock from the market.
Controls: The Company also announced that it has engaged the services of Ernst & Young to augment the Company’s management and execution of our worldwide SOX compliance work regarding internal controls. The engagement deliverables include redesign of testing plans, testing of all controls related to Finance, HR, IT, Transfer Pricing, Income taxes and other operations; identification, analysis and reporting of any control deficiencies; remediation and retesting of controls if any deficiencies are identified. The engagement involves assisting in compliance with Section 404 of the Sarbanes-Oxley Act of 2002, across United States, Singapore, Australia and India. The Company believes that this endeavor will further strengthen Ebix’s control structure and internal processes over financial reporting and disclosures.
“We are pleased with our operating cash flows for the quarter, as they are in line with our expectations.” Ebix Chairman, President & CEO Robin Raina said, “We are satisfied with our results for the quarter especially since they include the effect of continued hiring’s being made by us to strengthen our sales efforts. As we scale up these hiring’s and deploy some of our newer exchanges fully, we expect our Exchange revenue streams to accordingly start generating higher levels of revenue, and margins for the business.”
Robin added, “We remain focused on generating shareholder value. Towards that, we intend to pursue three key initiatives – growing the business organically, making accretive acquisitions, and utilizing our substantial operating cash flows to buyback our common stock from the open market. We believe that we can do all three resulting in an ever improving business from an income and EPS perspective for our shareholders.”
Ebix SVP and CFO Robert Kerris said, “We are pleased to report $19.6 million of operating cash flows in the second quarter of 2011. Our current ratio improved to 1.61 at June 30, 2011 and our working capital position is $25.2 million an improvement of $3.5 million from year-end 2010. The improvement in our short-term liquidity position is the result of stronger operating cash flows, the refinancing of our revolving credit facility that is now set to mature in April 2014, and better collections on outstanding trade accounts receivable.”
With 30+ offices across Singapore, Australia, the US, New Zealand, India, China, Japan and Canada, Ebix powers multiple exchanges across the world in the field of life, annuity, health and property & casualty insurance, while conducting in excess of $100 billion in insurance premiums on its platforms. Through its various SaaS based software platforms, Ebix employs hundreds of insurance and technology professionals that provide products, support and consultancy to thousands of customers on six continents. Ebix’s focus on quality has enabled it to be awarded Level 5 status of the Carnegie Mellon Software Engineering Institute’s Capability Maturity Model (CMM). Ebix has also earned ISO 9001:2000 certification for both its development and BPO units in India. For more information, visit the Company’s website at www.ebix.com
Safe Harbor for Forward Looking Statements under the Private Securities Litigation Reform Act of 1995 — This press release contains various forward looking statements and information that are based on management's beliefs, as well as assumptions made by, and information currently available to management, including statements regarding future economic performance and financial condition, liquidity and capital resources, acceptance of the Company's products by the market and management's plans and objectives. The Company has tried to identify such forward looking statements by use of words such as "expects," "intends," "anticipates," "plans," "believes," "will," "should," and similar expressions, but these words are not the exclusive means of identifying such statements. Such statements are subject to various risks, uncertainties and other factors which could cause actual results to vary materially from those expressed in, or implied by, the forward looking statements. Such risks, uncertainties and other factors include the extent to which the Company's new products and services can be successfully developed and marketed, the integration and other risks associated with recent and future acquisitions, the willingness of independent insurance agencies to outsource their computer and other processing needs to third parties, the Company's ability to continue to develop new products to effectively address market needs in an industry characterized by rapid technological change, the Company's dependence on the insurance industry (and in particular independent agents), the highly competitive and rapidly changing automation systems market, the Company's ability to effectively protect its applications software and other proprietary information, the Company's ability to attract and retain quality management, and software, technical sales and other personnel, the potential negative impact on the Company's outsourcing business in India from adverse publicity and possible governmental regulation, the risks of disruption of the Company's Internet connections or internal service problems, the possibly adverse effects of a substantial increase in volume of traffic on the Company's website, mainframe and other servers, possible security breaches on the Company's website and the possible effects of insurance regulation on the Company's business. Certain of these, as well as other, risks, uncertainties and other factors, are described in more detail in Ebix’s periodic filings with the Securities and Exchange Commission, including the company’s annual report on form 10-K for the year ended December 31, 2010, included under "Item 1. Business—Risk Factors." Except as expressly required by the federal securities laws, the Company undertakes no obligation to update any such factors or to publicly update any of the forward looking statements contained herein to reflect future events or developments or changed circumstances or for any other reason.
(Financial tables follow)