JOHNS CREEK, GA – August 8, 2017 – Ebix, Inc. (NASDAQ: EBIX), a leading international supplier of On-Demand software and E-commerce services to the insurance, financial, e-governance and healthcare industries, today reported results for its second quarter ended June 30, 2017. Ebix will host a conference call to review its results today at 11:00 a.m. EDT (details below).
Ebix delivered the following results for the second quarter of 2017:
Revenues: Q2 2017 revenue rose 20.4% to $87.4 million compared to $72.6 million in Q2 2016 and increased 10.5% over Q1 2017 revenue of $79.1 million. The revenue improvement reflected growth in the Company’s Exchange and Risk Compliance channels, with the revenues from the acquisition of ItzCash reflected in the Exchange channel.
On a constant currency basis, Ebix Q2 2017 revenue increased 20% to $87.1 million compared to $72.6 million in Q2 2016. The Exchange channel continued to be Ebix’s largest, accounting for 69% of Q2 2017 revenues. Also, on a constant currency basis, year to date revenue increased 15% to $165.5 million as compared to $143.6 million during the same period in 2016.
|(dollar amounts in thousands)|
|Channel||Q2 2017||Q2 2016||Change||YTD
|Exchanges||$ 60,373||$ 49,322||+22%||$ 112,987||$ 99,408||+14%|
|Risk Compliance Solutions (RCS)||22,663||18,662||+21%||44,515||35,413||+26%|
|Total Revenue||$ 87,387||$ 72,574||+20%||$ 166,490||$ 143,640||+16%|
|Total Revenue on Constant Currency Basis||$ 87.1M||$ 72.6M||+20%||$ 165.5M||$ 143.6M||+15%|
Earnings per Share: Q2 2017 diluted earnings per share increased 6% to $0.74 compared to $0.70 in Q2 2016 due to higher net income and the benefit of ongoing share repurchase activity. Ebix’s weighted average diluted shares outstanding decreased to 31.6 million in Q2 2017 compared to 33.0 million in Q2 2016 and 32.0 million in Q1 2017.
Operating Income and Margins: Q2 2017 operating margins decreased to 30% as compared to 32% in Q2 2016. Excluding the impact of the recent ItzCash acquisition, Q2 2017 operating margins would have been 33%. Operating income for Q2 2017 rose 13% to $26.5 million compared to $23.6 million in Q2 2016.
Net Income: Q2 2017 net income increased by 2% to $23.4 million, compared to $23.0 million in Q2 2016.
Operating Cash: Cash generated from operations was $15.5 million in Q2 2017 compared to $20.4 million in Q2 2016 and $15.7 million in Q1 2017. The operating cash in Q2 2017 reflected the increased receivables associated with some of the contracts in Brazil, US and India that have longer payment terms.
Share Repurchases: In Q2 2017, Ebix repurchased 93,000 shares of its outstanding common stock for aggregate cash consideration of $5.2 million.
Q3 2017 Diluted Share Count: As of today, Ebix expects its diluted share count for Q3 2017 to be approximately 31.5 million.
Dividend: Ebix paid its regularly quarterly dividend of $0.075 per share in Q2 2017 for a total cost of $2.4 million.
Ebix Chairman, President and CEO Robin Raina said, “These are record results for the Company in terms of top line and we are pleased to get there with 30.4% in operating margins. These operating margins are significant considering that they include operating margins of less than 10% from the recently acquired ItzCash business. As we implement some of our synergetic initiatives related to ItzCash, we expect the ItzCash operating margins to approach 25% in the next 6 months. Once that happens, our operating margins will accordingly go up substantially.”
“Over the next few quarters, we expect substantial revenue growth from a number of areas – principal amongst them are the revenues expected to be generated from the execution of a large contract with one of the largest insurers in Brazil, a large e-governance contract with a public sector undertaking in India, continued growth from our financial exchange initiatives in India, and many new insurance exchange related contracts in US and Australia.”
Robin added, “We would like to be at a quarterly revenue run rate of $100 million by Q1 of 2018, with at least 30% in operating margins. While there are no guarantees that we will achieve this aspirational goal, you can be sure that we will make a strong endeavor to get there.”
Sean Donaghy, Ebix CFO commented, “Ebix continues to deliver strong operating performance and cash generation. During Q2 2017, we invested a total of $74.2 million related to the ItzCash acquisition, $5.2 million on share buybacks, $2.4 million on dividend payments, $2.3 million on CapEx, $3.1 million on principal payments towards the term loan and $1.2 million on tax payments. We funded these initiatives from existing cash plus operating cash flow of $15.5M during Q2 2017, as well as by drawing $20 million from our Bank credit facilities. Ebix ended the quarter with cash, cash equivalents, and short-term investments of $81.3 million, with available cash reserves of approximately $242 million, including the available borrowing capacity and the accordion available to the Company.”
|Call Date/Time:||Tuesday, August 8, 2017 at 11:00 a.m. EST|
|Call Dial-In:||+1-877-837-3909 or 1-973-409-9690; Call ID # 13609854|
|Live Audio Webcast:||www.ebix.com/webcast|
|Audio Replay URL:||www.ebix.com/result_17_Q2 after 2:00 p.m. EDT on August 8th|
A leading international supplier of On-Demand software and E-commerce services to the insurance, financial, e-governance and healthcare industries, Ebix, Inc. provides end-to-end on-Demand solutions ranging from infrastructure exchanges, front end & back end enterprise systems, outsourced administrative & custom software development solutions, and risk compliance solutions for various entities involved in these industries. With 40+ offices across Australia, Brazil, Canada, India, New Zealand, Singapore, the US and the UK, 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 annually on its platforms. Through its various SaaS-based software platforms, Ebix employs hundreds of domain specific business and technology professionals to provide products, support and consultancy to thousands of customers on six continents. For more information, visit the Company’s website at www.ebix.com
As used herein, the terms “Ebix,” “the Company,” “we,” “our” and “us” refer to Ebix, Inc., a Delaware corporation, and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only Ebix, Inc.
The information contained in this Press Release contains forward-looking statements and information within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. This information includes 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. In addition, certain statements included in this and our future filings with the Securities and Exchange Commission ("SEC"), in press releases, and in oral and written statements made by us or with our approval, which are not statements of historical fact, are forward-looking statements. Words such as "may," "could," "should," "would," "believe," "expect," "anticipate," "estimate," "intend," "seeks," "plan," "project," "continue," "predict," "will," "should," and other words or expressions of similar meaning are intended by the Company to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are found at various places throughout this report and in the documents incorporated herein by reference. These statements are based on our current expectations about future events or results and information that is currently available to us, involve assumptions, risks, and uncertainties, and speak only as of the date on which such statements are made.
Our actual results may differ materially from those expressed or implied in these forward-looking statements. Factors that may cause such a difference, include, but are not limited to those discussed in our Annual Report on Form 10-K and subsequent reports filed with the SEC, as well as: the risk of an unfavorable outcome of the pending governmental investigations or shareholder class action lawsuits, reputational harm caused by such investigations and lawsuits, the willingness of independent insurance agencies to outsource their computer and other processing needs to third parties; pricing and other competitive pressures and the Company's ability to gain or maintain share of sales as a result of actions by competitors and others; changes in estimates in critical accounting judgments; changes in or failure to comply with laws and regulations, including accounting standards, taxation requirements (including tax rate changes, new tax laws and revised tax interpretations) in domestic or foreign jurisdictions; exchange rate fluctuations and other risks associated with investments and operations in foreign countries (particularly in Australia, UK and India wherein we have significant operations); equity markets, including market disruptions and significant interest rate fluctuations, which may impede our access to, or increase the cost of, external financing; and international conflict, including terrorist acts.
Except as expressly required by the federal securities laws, the Company undertakes no obligation to update any such factors, or to publicly announce the results of, or changes to any of the forward-looking statements contained herein to reflect future events, developments, changed circumstances, or for any other reason.
Readers should carefully review the disclosures and the risk factors described in the documents we file from time to time with the SEC, including future reports on Forms 10-Q and 8-K, and any amendments thereto.
You may obtain our SEC filings at our website, www.ebix.com under the "Investor Information" section, or over the Internet at the SEC's web site, www.sec.gov.
Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|Cost of services provided||30,932||20,579||56,119||40,181|
|Sales and marketing||4,142||4,206||8,479||8,539|
|General and administrative, net||14,598||13,310||27,282||24,893|
|Amortization and depreciation||2,759||2,630||5,614||5,350|
|Total operating expenses||60,848||49,010||114,261||95,313|
|Foreign currency exchange gain (loss)||(391)||(195)||3,105||274|
|Income before income taxes||23,595||21,625||51,087||45,726|
|Income tax (expense) benefit||302||1,418||(567)||(332)|
|Net income including noncontrolling interest||23,897||23,043||50,520||45,394|
|Net income attributable to noncontrolling interest (see Note 8)||463||51||659||243|
|Net income attributable to Ebix, Inc.||$23,434||$22,992||$49,861||$45,151|
|Basic earnings per common share attributable to Ebix, Inc.||$0.74||$0.70||$1.58||$1.37|
|Diluted earnings per common share attributable to Ebix, Inc.||$0.74||$0.70||$1.57||$1.36|
|Basic weighted average shares outstanding||31,490||32,688||31,648||32,866|
|Diluted weighted average shares outstanding||31,637||32,969||31,805||33,140|
Ebix, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
|Cash and cash equivalents||$68,449||$114,118|
|Trade accounts receivable, less allowances of $3,356 and $2,833, respectively||83,345||62,713|
|Other current assets||15,199||12,716|
|Total current assets||194,120||207,046|
|Property and equipment, net||40,939||37,061|
|Capitalized software development costs, net||6,602||5,955|
|Deferred tax asset, net||35,328||31,345|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Accounts payable and accrued liabilities||$39,665||$44,855|
|Accrued payroll and related benefits||6,123||7,474|
|Short term debt, net of deferred financing costs of $136, respectively||12,364||12,364|
|Capital lease obligations||9||9|
|Current deferred rent||286||281|
|Contingent liability for accrued earn-out acquisition consideration||6,022||1,921|
|Other current liabilities||244||244|
|Total current liabilities||86,444||89,712|
|Revolving line of credit||214,029||154,029|
|Long term debt and capital lease obligations, less current portion, net of deferred financing costs of $401 and $452, respectively||99,619||105,824|
|Contingent liability for accrued earn-out acquisition consideration||33,438||6,589|
|Long term deferred rent||834||1,009|
|Preferred stock, $0.10 par value, 500,000 shares authorized, no shares issued and outstanding at June 30, 2017 and December 31, 2016||—||—|
|Common stock, $0.10 par value, 120,000,000 shares authorized, 31,443,622 issued and outstanding, at June 30, 2017 and 60,000,000 shares authorized, 32,093,294 issued and outstanding at December 31, 2016||3,144||3,209|
|Accumulated other comprehensive loss||(30,419)||(33,677)|
|Total Ebix, Inc. stockholders’ equity||437,688||426,896|
|Total stockholders' equity||478,439||438,636|
|Total liabilities and stockholders’ equity||$923,329||$803,755|
Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
|Six Months Ended|
|Cash flows from operating activities:|
|Net income attributable to Ebix, Inc.||$ 49,861||$ 45,151|
|Net income attributable to noncontrolling interest||659||243|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Amortization and depreciation||5,614||5,350|
|Benefit for deferred taxes||(5,877 )||(6,635)|
|Share based compensation||1,243||1,331|
|Provision for doubtful accounts||723||457|
|Unrealized foreign exchange (gain) loss||365||(187)|
|Amortization of capitalized software development costs||790||654|
|Reduction of acquisition earnout accruals||—||(511)|
|Purchase accounting adjustment||(948 )||—|
|Changes in assets and liabilities, net of effects from acquisitions:|
|Accounts receivable||(14,266 )||(6,065)|
|Accounts payable and accrued expenses||(7,254 )||(4,189)|
|Accrued payroll and related benefits||(1,694 )||(931)|
|Deferred revenue||(1,622 )||(1,136)|
|Deferred rent||(195 )||(83)|
|Reserve for potential uncertain income tax return positions||3,280||50|
|Net cash provided by operating activities||31,200||30,976|
|Cash flows from investing activities:|
|Acquisition of beBetter, net of cash acquired||(1,000 )||—|
|Acquisition of ItzCash, net of cash acquired||(70,184 )||—|
|Funding of escrow account for possible future contingent earn-out payment related to business acquisition||(3,998 )||—|
|Capitalized software development costs||(1,345 )||(694)|
|Maturities (Purchases) of marketable securities||1,626||(994)|
|Capital expenditures||(4,956 )||(2,190)|
|Net cash used in investing activities||(79,857)||(3,878)|
|Cash flows from financing activities:|
|Proceeds from revolving line of credit, net||60,000||(87,427)|
|Proceeds from term loan||—||125,000|
|Principal payments of term loan obligation||(6,250 )||—|
|Repurchases of common stock||(45,732 )||(37,657)|
|Proceeds from the exercise of stock options||52||29|
|Forfeiture of certain shares to satisfy exercise costs and the recipients income tax obligations related to stock options exercised and restricted stock vested||(237 )||(77)|
|Dividend payments||(4,800 )||(4,911)|
|Principal payments of debt obligations||—||(600)|
|Payments of capital lease obligations||(6 )||—|
|Net cash provided by (used in) financing activities||3,027||(5,643)|
|Effect of foreign exchange rates on cash||(39)||(620)|
|Net change in cash and cash equivalents||(45,669 )||20,835|
|Cash and cash equivalents at the beginning of the period||114,118||57,179|
|Cash and cash equivalents at the end of the period||$ 68,449||$ 78,014|
|Supplemental disclosures of cash flow information:|
|Interest paid||$ 5,173||$ 3,115|
|Income taxes paid||$ 7,958||$ 10,869|