Core Insights - Ebix has launched ExposureHub in the US, a platform designed for real-time exposure visibility and analytics in the insurance industry [1][2] - The platform integrates AI analytics, portfolio modeling, and geocoding-based mapping to enhance risk understanding across regions and product lines [2][3] - ExposureHub aims to support property, casualty, and specialty insurers, as well as brokers and risk teams, facilitating data-driven decision-making and compliance [1][3] Product Features - ExposureHub features interactive dashboards for geographic data analysis, risk concentration evaluation, and potential catastrophic event prediction [2] - The platform includes a Data Quality Module for early detection of data discrepancies, ensuring reliable reporting and compliance [4] - Additional functionalities such as the Insight Module for immediate data analysis and ConfigHub for customizable validation rules and workflows are also part of the offering [5] Market Expansion - Ebix plans to extend ExposureHub's reach to key markets including the Asia-Pacific region, India, and Latin America, aiming to cater to a broader audience [4][6] - The introduction of ExposureHub is seen as a significant growth opportunity for Ebix's Risk Management vertical, enhancing its product portfolio [3][4] - The platform is already in use by over 15 underwriting clients in the London market, with many more in the implementation phase [5]

Core Insights - Ebix has modernized its EbixExchange connectivity stack and launched a new plug-and-play connector platform for various stakeholders in the insurance industry, powered by technology from 1SilverBullet [1][5] - The new platform allows for modular APIs that integrate seamlessly into clients' existing systems, enhancing efficiency and reducing maintenance efforts [2][3] Group 1: Platform Features - The platform exposes functionalities such as quoting, eApp, enrollment, underwriting checks, payments, and policy servicing as modular APIs [2] - It utilizes a standardized connector fabric with prebuilt mappings, enabling easier integration through configuration rather than custom builds [2][3] - The unified gateway model allows one interface to connect with multiple insurers and product lines, streamlining operations [2] Group 2: Client Benefits - Clients can access real-time multi-carrier quoting, enrollment, and eligibility data, improving operational efficiency [3] - In personal and commercial lines, brokers and MGAs can accelerate product launches by invoking connectors for various processes [3] - Life insurance distributors can enable simplified application processes, including eSigning and premium collection, through the new connectors [3] Group 3: Market Expansion - The connector platform is initially rolling out with a focus on health insurance use cases in the US and property & casualty in India, with plans for further expansion [5] - Existing customers can adopt the new APIs incrementally, while new customers can start with direct API integration [5] Group 4: Company Overview - Ebix operates AI-driven, API-first digital marketplaces across multiple industries, including health, life, and property & casualty insurance [6] - The company provides critical infrastructure for regulated markets and has a strong presence in over 40 nations [8]

Core Viewpoint - Ebix Inc. has successfully completed its Chapter 11 restructuring process, emerging as a debt-free and operationally stronger company, well-positioned for future growth [1][10]. Restructuring Process - Ebix exited Chapter 11 in less than 9 months, with the restructuring plan confirmed by the US courts on August 2, 2024 [2]. - The restructuring involved multiple legal and financial professionals from various international offices [2]. Financial Performance - Prior to entering Chapter 11, Ebix had a trailing 12-month EBITDA of approximately $145 million, primarily due to non-operating loans being called [3]. - The company has a history of 23 years of consistent profitability and a remarkable shareholder return of 27,500% at one time [3][4]. Consolidation and Leadership - Ebix's results will now be consolidated into Eraaya LifeSpaces Limited, a publicly traded company on the Bombay Stock Exchange, while Ebix remains a US domiciled company [3]. - Robin Raina continues as CEO and Chairman of Ebix, with a strong track record of profitability and innovation [4][5]. Client Focus and Operations - Ebix will maintain its US operations, servicing contracts with state governments, Fortune 500 companies, and various healthcare and insurance entities [6]. - The international subsidiaries will continue to operate normally, ensuring continuity in client service across more than 75 countries [7]. EbixCash Operations - EbixCash will continue its operations with a "Phygital" strategy, combining physical outlets and an online platform across India and Southeast Asia [8][14]. - The EbixCash portfolio includes services such as money remittance, foreign exchange, travel, and wealth management across 75+ countries [9][14]. Future Outlook - With a clean balance sheet and 85% recurring revenue, Ebix is positioned to deliver strong EBITDA and cash flows [10]. - The company aims to grow its international investor base and has secured investments from notable US investors [11]. - The CEO expressed confidence in the company's potential for long-term profitable growth and commitment to delivering value to stakeholders [12].

Debt Obligations - As of September 30, 2023, the outstanding balance of the Credit Facility was $616.8 million, classified as a current liability [119]. - The outstanding balance on the Revolver was $444.9 million with an interest rate of 13.43% as of September 30, 2023, compared to $449.9 million and 9.69% at December 31, 2022 [128]. - The outstanding balance on the Term Loan was $171.9 million, also carrying an interest rate of 13.43% as of September 30, 2023, down from $189.4 million and 9.69% at December 31, 2022 [129]. - The Company must refinance or pay off the entire $616.8 million of outstanding debt by November 15, 2023, as per the Forbearance Agreement [222]. - The Company is exploring a part-sale of its North America assets, with potential proceeds that could substantially or fully repay the outstanding indebtedness [223]. - The IPO of the Company's Indian subsidiary, EbixCash, could raise up to $787 million, with approximately $360 million aimed at reducing Ebix Inc.'s outstanding debt [225]. - If the IPO is completed before the Forbearance Period expires, the Company expects to reduce its overall debt by at least 50% [226]. - The Company had $616.8 million of outstanding debt obligations as of September 30, 2023, which included a $171.9 million term loan and a $444.9 million balance on the revolving line of credit [265]. Financial Performance - As of September 30, 2023, the company recorded external revenues of $480.4 million, with $114.7 million from North America and $365.8 million from international markets [166]. - Total revenues decreased by 53.8% year-over-year during Q3 2023 compared to Q3 2022, and 52.9% on a constant currency basis [205]. - Operating revenues for Q3 2023 were $119.2 million, a decrease of $1.3 million, or 1%, from $120.5 million in Q3 2022 on a Non-GAAP basis [206]. - International revenue accounted for 76.1% of total revenue for the nine months ended September 30, 2023, down from 85.1% in the same period of 2022 [194]. - International revenue accounted for 69.0% of total revenue in Q3 2023, down from 85.4% in Q3 2022 [207]. - The company reported a net income tax expense of $1.3 million for the nine months ended September 30, 2023, including $1.9 million from discrete items [162]. - The company expects its full year effective tax rate to be in the range of 8% to 10% [162]. Legal and Arbitration Matters - The final award from arbitration mandated the Company to buy the remaining 20% of ItzCash at fair value and pay INR 70.55 million ($855K) for legal cases [138]. - The Company has not yet resolved the anticipated IPO of EbixCash, with no assurances on the timing or terms of completion [119]. - The NCLT dismissed Ebix Singapore's application to declare Educomp as a non-going concern on October 9, 2023 [142]. - The Company and Ebix Singapore Pte. Ltd. purchased 80% equity shares of ItzCash, with a dispute raised by former shareholders regarding breaches of agreements, currently under arbitration [276]. - The arbitral tribunal mandated the Company to buy the remaining 20% stake at fair value and ordered payment of INR 70.55 million ($855K) and SGD 187,681.06 for legal cases [277]. - The Company has filed an appeal against the arbitration order regarding the Zillious buyout, asserting that the claims are not valid [293]. - The arbitration proceedings concerning ItzCash concluded with a partial award indicating breaches by the Company and Ebix Singapore, resulting in nominal damages awarded to claimants [276]. - Amadeus advanced $15 million to Ebix under the Global Agreement, which was to be recovered from ticket sales [294]. - The Arbitral Tribunal ruled that Ebix must pay Amadeus a total of EUR 12,061,814, which is approximately $12.893 million, after adjusting for ticket sales [296]. - No damages were awarded to Amadeus, and the amounts awarded were merely to return the sums advanced [297]. Cash Flow and Liquidity - The Company reported net cash provided by operating activities of $3.4 million for the nine months ended September 30, 2023, compared to $45.1 million for the same period in 2022 [237][238]. - The Company's unrestricted cash and cash equivalents were $71.2 million as of September 30, 2023, down from $110.6 million at December 31, 2022 [230]. - Net cash used in financing activities was $27.0 million for the nine months ended September 30, 2023, primarily for principal payments on the existing term loan [241]. - The average cash balances during the nine months ended September 30, 2023, were approximately $101.1 million, with existing cash balances of $71.2 million as of September 30, 2023 [265]. Asset Management - The carrying value of goodwill decreased to $879.3 million as of September 30, 2023, down from $939.2 million at the end of 2022 [171]. - The company’s total long-lived assets amounted to $1.2 billion as of September 30, 2023, with $386.2 million in North America and $816.9 million internationally [166]. - The total lease liabilities amounted to $9.347 million, with a present value of lease liabilities at $8.207 million, indicating a decrease from the previous period [177]. - The company’s net assets recorded under operating and finance leases were $7.7 million as of September 30, 2023, compared to $9.6 million as of December 31, 2022 [178]. Operational Expenses - Cost of services decreased by 59.8% for the nine months ended September 30, 2023, compared to the same period in 2022 [208]. - Product development expenses increased by $0.5 million, or 5%, to $11.0 million in Q3 2023 compared to $10.5 million in Q3 2022 [209]. - General and administrative expenses rose by $9.5 million, or 28%, to $43.9 million in Q3 2023 compared to $34.4 million in Q3 2022 [211]. - Interest expense increased by 82% to $28.2 million in Q3 2023 from $15.5 million in Q3 2022 [214]. Currency and Exchange Rates - The net change in the cumulative foreign currency translation account for the nine months ended September 30, 2023, was an unrealized loss of $4.8 million, compared to a loss of $90.1 million for the same period in 2022 [264]. - A hypothetical 20% adverse change in foreign currency exchange rates could have resulted in a reduction to pre-tax income of approximately $9.1 million for the nine months ended September 30, 2023 [264]. - The company recorded a net foreign currency exchange gain of $2.4 million for Q3 2023 [216].

Debt and Financing - As of June 30, 2023, the outstanding balance of the Credit Facility was $616.8 million, classified as a current liability[109]. - The Company expects to address the Credit Facility maturity prior to September 30, 2023, in conjunction with the anticipated IPO of EbixCash[109]. - The outstanding balance on the Revolver was $444.9 million with an interest rate of 11.95% as of June 30, 2023[118]. - The outstanding balance on the Term Loan was $171.9 million, also carrying an interest rate of 11.95% as of June 30, 2023[119]. - The Company made $17.5 million in principal payments on the Term Loan during the six months ended June 30, 2023[119]. - The Company entered into Amendment No. 15 on July 21, 2023, which included a change in the Amendment Fee from 1.50% to 2%[110]. - The Company is required to maintain working capital debt facilities totaling $5.0 million as of June 30, 2023, up from $3.4 million at December 31, 2022[121]. - The Company has $2.3 million of remaining deferred financing costs related to the Credit Facility as of June 30, 2023[117]. - The anticipated IPO of EbixCash could raise up to $787 million, with approximately $360 million proposed for debt reduction[183]. - The Company has a negative working capital position of $(470.4) million as of June 30, 2023[186]. - As of June 30, 2023, the outstanding balance on the Revolver was $444.9 million, with an interest rate of 11.95%[210]. - The outstanding balance on the Term Loan was $171.9 million as of June 30, 2023, also carrying an interest rate of 11.95%[211]. - The Company has a negative working capital position of $470.4 million due to the classification of the Credit Facility as a current liability[201]. - The interest rate on the Company's term loan and revolving line of credit was 11.95% as of June 30, 2023, exposing the Company to potential increases in interest expense[221]. - A hypothetical 30% increase in the SOFR rate would have resulted in a reduction to pre-tax income of approximately $3.7 million for the six months ended June 30, 2023[221]. - The Company's average cash balances during the six months ended June 30, 2023 were approximately $115.9 million, with existing cash balances of $62.2 million as of June 30, 2023[221]. - A hypothetical 20% decrease in interest rates earned on deposited funds would have resulted in a reduction to pre-tax income of approximately $0.1 million for the six months ended June 30, 2023[221]. Revenue and Income - External revenues for North America were $76,590 thousand for the six months ended June 30, 2023, compared to $79,671 thousand for the same period in 2022, reflecting a decrease of approximately 3.4%[132]. - International external revenues decreased to $284,601 thousand for the six months ended June 30, 2023, from $457,363 thousand in the same period of 2022, representing a decline of approximately 37.7%[132]. - Total revenues for the three months ended June 30, 2023, were $118.4 million, a 3% increase from $114.9 million in Q2 2022 on a Non-GAAP basis[168]. - International revenues increased by $5.1 million, or 6.7%, year-over-year for Q2 2023, accounting for 69.3% of total revenue[169]. - Subscription revenue as a percentage of total revenue increased to 33% in Q2 2023 from 16% in Q2 2022[165]. - Transaction-based revenue decreased to 55% of total revenue in Q2 2023 from 78% in Q2 2022[165]. - The Company recorded a net income tax expense of $164 thousand and $787 thousand (12.74%) for the three and six months ended June 30, 2023, with an expected full year effective tax rate of 8% to 10%[129]. Assets and Liabilities - The total long-lived assets as of June 30, 2023, were $1,191,628 thousand, compared to $1,160,637 thousand as of December 31, 2022, indicating an increase of approximately 2.7%[132]. - Total current assets increased to $98,598 thousand as of June 30, 2023, from $87,387 thousand as of December 31, 2022, representing an increase of approximately 12.8%[140]. - The Company has a total of $10,553 thousand in lease liabilities as of June 30, 2023, with a present value of lease liabilities amounting to $9,240 thousand[141]. - The company reported a total of $25,629,000 in other current liabilities as of June 30, 2023, slightly down from $25,783,000 in December 2022[147]. - The carrying value of goodwill increased to $887,101 thousand as of June 30, 2023, from $881,676 thousand at the end of 2022, reflecting a rise of approximately 0.5%[137]. - The Company recognized amortization expense of $3.5 million for acquired intangible assets during the six months ended June 30, 2023, compared to $5.0 million for the same period in 2022[137]. Expenses - General and administrative expenses rose by $4.4 million, or 14%, to $36.1 million in Q2 2023 compared to $31.7 million in Q2 2022[174]. - Interest expense increased by 111% to $24.6 million in Q2 2023 from $11.7 million in Q2 2022 due to higher interest rates[177]. - The total net lease cost for the three months ended June 30, 2023, was $1,100,000, an increase of 8.06% from $1,018,000 in 2022[143]. - Rental expense for office and airport facilities for the six months ended June 30, 2023, was $10.3 million, compared to $18.6 million in 2022, indicating a decrease of 44.4%[144]. Legal and Regulatory Matters - The Company is involved in arbitration regarding a dispute over the purchase of ItzCash, with a partial award issued on June 1, 2023[126]. - The court dismissed the class action against Ebix in its entirety with prejudice on July 17, 2023, for failure to state a claim[227]. - The arbitration proceedings regarding the dispute over the share purchase agreement of ItzCash concluded with a partial award on June 1, 2023, directing nominal damages of SGD 200 to two claimants and SGD 100 to each of 17 other claimants[231]. - The consolidated derivative action related to the RSM resignation is currently stayed by agreement of the parties and order of the Court[228]. - The Company is involved in various other claims and legal actions arising in the ordinary course of business, which management believes will not have a material adverse effect on its consolidated financial position[232]. Operational Insights - The Company continues to monitor the impacts of the COVID-19 pandemic on its operations, with ongoing demand variability expected in certain business areas[161]. - The Company aims to enhance its technology strategies to facilitate seamless data flow across its services, focusing on the convergence of various channels and processes[157]. - The Company has not experienced any material changes to its internal controls over financial reporting despite remote work due to the COVID-19 pandemic[226]. - The Company concluded that its disclosure controls and procedures are effective as of June 30, 2023[226]. - There were no other material changes to the Company's market risk exposure during the six months ended June 30, 2023[222].

Debt and Financing - As of March 31, 2023, the outstanding balance on the Revolver was $444.9 million, with an interest rate of 11.95%[108] - The outstanding balance on the Term Loan was $176.9 million, also carrying an interest rate of 11.95%[109] - The refinancing of the Credit Facility will require the Company to access debt and/or equity capital markets, with no assurances on terms or amounts[103] - The Company made a $5 million prepayment of the Revolver on February 21, 2023, and a $5 million amortization payment on the Term Loan on March 31, 2023[104] - The outstanding balance of the Credit Facility was $621.8 million as of March 31, 2023, classified as a current liability due to its impending maturity[167] - The Company had $621.8 million of outstanding debt obligations, including a $444.9 million balance drawn on its commercial banking revolving line of credit[198] - The Company's interest rate on its term loan and revolving line of credit was 11.95% as of March 31, 2023, exposing it to potential increases in interest expense[198] - A hypothetical 30% increase in the LIBOR rate would have resulted in a reduction to pre-tax income of approximately $1.7 million for the three months ended March 31, 2023[198] - A hypothetical 20% decrease in interest rates earned on deposited funds would have resulted in a reduction to pre-tax income of approximately $0.1 million for both the three months ended March 31, 2023 and 2022[198] Revenue and Performance - External revenues for the three months ended March 31, 2023, totaled $242.8 million, a decrease of 15.2% compared to $286.3 million for the same period in 2022[125] - Revenue from India was $179.4 million for the three months ended March 31, 2023, accounting for 73.9% of total external revenues[125] - Total operating revenues for the three months ended March 31, 2023, decreased by $43.5 million, or 15%, to $242.8 million compared to $286.3 million in the same period of 2022[154] - International revenue accounted for 84.5% of total revenue for the three months ended March 31, 2023, down from 86.4% in the same period of 2022[155] - Revenue from EbixCash Exchanges decreased by $44.7 million, or 20%, to $179.4 million in Q1 2023 compared to $224.2 million in Q1 2022[153] - Payment solutions revenues in India decreased approximately $61 million year-over-year, or 32%, while travel and foreign exchange revenues increased by approximately $12 million, or 64%[154] - Subscription revenue as a percentage of total revenue increased to 18% in Q1 2023 from 13% in Q1 2022[153] Expenses and Costs - Cost of services provided decreased by $54.4 million, or 26%, to $156.5 million in Q1 2023, with the cost as a percentage of total revenues decreasing to 64.5% from 73.7% in Q1 2022[156] - Product development expenses decreased by $0.3 million, or 3%, to $10.0 million in Q1 2023 compared to $10.3 million in Q1 2022[157] - Sales and marketing expenses decreased to $3.3 million in Q1 2023 from $3.8 million in Q1 2022[158] - General and administrative expenses increased by $10.6 million, or 39%, to $37.5 million in Q1 2023 compared to $26.9 million in Q1 2022[159] - Amortization and depreciation expenses rose by $0.7 million, or 15%, to $5.0 million in Q1 2023 from $4.4 million in Q1 2022[160] Taxation - The Company recorded a net income tax expense of $623 thousand (9.23%) for the three months ended March 31, 2023[121] - The Company expects its full year effective tax rate to be in the range of 6% to 8%[121] - The net income tax expense was $623 thousand (9.23%) for Q1 2023, with an effective tax rate expected to be between 6% to 8% for the full year[166] Assets and Liabilities - The carrying value of goodwill increased to $885.5 million as of March 31, 2023, from $881.7 million at the end of 2022, primarily due to foreign currency translation adjustments[129] - Total current assets increased to $107.6 million as of March 31, 2023, compared to $87.4 million as of December 31, 2022, reflecting a 23.1% increase[133] - Lease liabilities totaled $10.1 million as of March 31, 2023, with a weighted average discount rate of 8.2% for operating leases[135] - The company reported a total net lease cost of $1.1 million for the three months ended March 31, 2023, compared to $1.0 million for the same period in 2022[135] Foreign Currency and Market Risks - The weakening of foreign exchange rates decreased reported revenues by approximately $18.5 million for the three months ended March 31, 2023[154] - The net change in the cumulative foreign currency translation account for the three months ended March 31, 2023 was an unrealized gain of $7.7 million, compared to a loss of $11.3 million for the same period in 2022[197] - The Company assessed that adverse changes in foreign currency exchange rates of 20% could lead to a reduction in pre-tax income of approximately $2.7 million for the three months ended March 31, 2023[197] - The Company continues to monitor the impact of market risks, including foreign currency and interest rate risks, on its financial condition[199] Legal Matters - The Company is involved in various legal actions, but management believes these will not have a material adverse effect on its consolidated financial position or results of operations[213] - The Class Action lawsuit related to alleged violations of the Securities Exchange Act of 1934 is currently pending a decision from the Court on a motion to dismiss[206] - The Company believes that claims made by former shareholders regarding earn-out payments are without merit and is defending its position vigorously[212] - EbixCash entered into a stock purchase agreement to acquire a majority stake in Itz Cash Card Limited[212] - The acquisition included potential earn-out payments for the years ended March 31, 2019, and March 31, 2020, which were not achieved[212] - Sellers of Itz have initiated arbitration claims against EbixCash, alleging violations of the transaction documents[212] - The arbitration is being conducted under the rules of the Singapore International Arbitration Centre[212] - EbixCash believes the claims from the Sellers are without merit and is defending its position vigorously[212] - The Company asserts it has viable counterclaims related to improper termination of the transaction documents[212] Operational Insights - The Company is experiencing a material rebound in travel, foreign exchange, remittance, e-learning, and financial technologies businesses during 2023 year-to-date[154] - The Company is continually monitoring the impact of COVID-19 on its operations and internal controls[203] - The Company has not experienced any material changes to its internal controls over financial reporting despite remote work conditions due to the COVID-19 pandemic[203] - There have been no significant changes to critical accounting policies and estimates from the previous fiscal year[195] - The Company completed no business acquisitions during the three months ending March 31, 2023[176]

[Part I: Business and Risk Factors](index=8&type=section&id=Part%20I) This section outlines Ebix's global business, competitive landscape, human capital, and critical financial, operational, and litigation risks [Business Overview](index=8&type=section&id=Item%201.%20Business) Ebix is a global provider of on-demand software and e-commerce services for insurance, financial, travel, and healthcare, with significant international revenue from its "Phygital" EbixCash operations - Ebix is a leading international supplier of on-demand infrastructure exchanges for the insurance, financial services, travel, and healthcare industries, with a significant focus on its EbixCash financial exchange in India and ASEAN countries using a "Phygital" strategy[24](index=24&type=chunk) - International revenue constitutes a majority of the company's total revenue, accounting for **85.3% in 2022**, up from **84.4% in 2021**[28](index=28&type=chunk) - The company views acquisitions as an integral part of its growth strategy, focusing on complementary and accretive businesses. However, no business acquisitions were completed in **2022 or 2021**[29](index=29&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) Revenue by Product/Service Group (in thousands) | Product/Service Group | 2022 | 2021 | 2020 | | :-------------------- | :----------- | :----------- | :----------- | | EbixCash Exchanges | $797,805 | $749,774 | $386,564 | | Insurance Exchanges | $171,156 | $171,087 | $174,424 | | Risk Compliance Solutions | $81,185 | $74,077 | $64,621 | | **Total** | **$1,050,146** | **$994,938** | **$625,609** | [Products and Services](index=10&type=section&id=Products%20and%20Services) Ebix generates revenue from three main channels: EbixCash Exchanges (gift cards, travel, forex), Insurance Exchanges (SaaS, licenses), and Risk Compliance Solutions (COI, consulting) - **EbixCash Exchanges:** Primarily generates revenue from prepaid gift cards, financial transaction services (money transfer, forex), and travel services. Revenue from gift cards is recognized on a gross basis at the time of sale[42](index=42&type=chunk)[44](index=44&type=chunk)[46](index=46&type=chunk) - **Insurance Exchanges:** Revenue comes from SaaS platforms, software licenses, subscriptions, and transaction fees. Set-up and customization services for SaaS platforms are typically bundled as a single performance obligation and recognized over the contract duration[54](index=54&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - **Risk Compliance Solutions (RCS):** Consists of two main revenue streams: transaction-based fees for creating and tracking certificates of insurance (COI), and consulting services billed on a time-and-materials or fixed-fee basis[62](index=62&type=chunk) [Competition](index=14&type=section&id=Competition) Ebix operates in a diverse and fragmented competitive landscape across its EbixCash, Insurance Exchanges, and Risk Compliance Solutions segments, facing both large and specialized players - **EbixCash:** Competes with banks (ICICI, HDFC) and money exchange companies (Thomas Cook) in the Forex market. In travel, it competes with online players like MakeMyTrip and offline-focused companies like Thomas Cook and SOTC[73](index=73&type=chunk)[77](index=77&type=chunk) - **Insurance Exchanges (US):** Main competitors in the life and annuity exchange space are iPipeline and Insurance Technologies. Ebix differentiates itself by offering an end-to-end solution integrated with its CRM products[80](index=80&type=chunk)[81](index=81&type=chunk) - **Risk Compliance Solutions (P&C Systems):** In Australia, Ebix holds a dominant market position with approximately **80% market penetration** of P&C broker systems, competing with local vendors like Brokers Advantage and Steadfast Insight[90](index=90&type=chunk)[91](index=91&type=chunk) [Human Capital](index=16&type=section&id=Human%20Capital) As of December 31, 2022, Ebix employed 10,521 individuals globally, predominantly in India, maintaining a focus on diversity and flexible work arrangements - The company is committed to diversity and inclusion and has continued to utilize a hybrid work schedule implemented during the COVID-19 pandemic to ensure employee safety and flexibility[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk) Employee Distribution by Geography (as of Dec 31, 2022) | Geography | Number of Employees | | :------------------- | :------------------ | | India | 9,367 | | United States | 428 | | Latin America | 363 | | Philippines | 102 | | Australia | 97 | | Indonesia | 71 | | Europe | 49 | | Singapore | 17 | | United Arab Emirates | 10 | | New Zealand | 9 | | Canada | 8 | | **Total** | **10,521** | [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) Ebix faces critical risks including the impending Credit Facility maturity, uncertainty of the EbixCash IPO, potential decline in gift card revenue, and ongoing litigation from its former auditor's resignation [Financial and Strategic Risks](index=18&type=section&id=Financial%20and%20Strategic%20Risks) The company's primary financial risk is the May 2023 maturity of its $631.8 million Credit Facility, with refinancing uncertain and dependent on the delayed EbixCash IPO - The company's Credit Facility, with an outstanding balance of **$631.8 million** at year-end, matures in **May 2023**. The company may be unable to secure a replacement or extension, which would materially adversely impact liquidity[106](index=106&type=chunk)[108](index=108&type=chunk) - The planned EbixCash IPO, a key source of funds to repay debt, has been delayed and its completion is not guaranteed. A failure to complete the IPO could negatively affect the company's stock price and financial condition[113](index=113&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk) - The gift card business revenue grew substantially during the COVID-19 pandemic, reaching **$607 million in 2022**. There is no assurance this level of revenue, which provides marginal operating income, will continue[124](index=124&type=chunk) [Business and Industry Risks](index=20&type=section&id=Business%20and%20Industry%20Risks) Ebix is exposed to risks from economic downturns, intense competition, reliance on customer renewals, and the retention of key senior management - The business is exposed to economic downturns, particularly in the insurance and financial services industries, which could decrease demand for its products and services[120](index=120&type=chunk)[121](index=121&type=chunk) - The markets for Ebix's products are highly competitive and price-sensitive, which could require price reductions and negatively impact profit margins[129](index=129&type=chunk)[130](index=130&type=chunk) - The company's success is substantially dependent on the continued services of its senior management, particularly CEO Robin Raina. The loss of his services could harm the business[143](index=143&type=chunk) [Litigation and Regulatory Risks](index=33&type=section&id=Litigation%20and%20Regulatory%20Risks) Ebix faces significant legal and regulatory risks, including lawsuits stemming from its former auditor's 2021 resignation over "significant unusual transactions" in its Indian gift card business - The company is facing approximately **five derivative and class action lawsuits** following the resignation of its prior registered public accounting firm, RSM, in **February 2021**[198](index=198&type=chunk) - RSM stated its resignation was due to being unable to obtain sufficient audit evidence to evaluate the business purpose of "significant unusual transactions" in **Q4 2020** related to the company's gift card business in India[198](index=198&type=chunk)[547](index=547&type=chunk)[548](index=548&type=chunk) - Ongoing litigation and potential government investigations could require significant management time, result in substantial legal expenses and damages, and materially affect the company's business and financial condition[199](index=199&type=chunk)[200](index=200&type=chunk) [Properties](index=35&type=section&id=Item%202.%20Properties) Ebix owns its corporate headquarters in Georgia and six facilities in India, while leasing numerous other offices globally to support its operations - The company owns its corporate headquarters in Johns Creek, Georgia, and **six facilities in India**. It leases approximately **85 facilities** across India and maintains other leased offices internationally[208](index=208&type=chunk) [Legal Proceedings](index=35&type=section&id=Item%203.%20Legal%20Proceedings) Ebix is involved in significant legal proceedings, including class action and derivative lawsuits related to its former auditor's resignation and an arbitration seeking $38.4 million in damages - A putative class action lawsuit (Saraf v. Ebix, Inc.) alleges violations of the Securities Exchange Act related to false and misleading statements about the company's Indian gift card business and internal controls, following the resignation of auditor RSM[210](index=210&type=chunk) - Multiple shareholder derivative actions have been filed against company directors and officers, asserting claims like breach of fiduciary duty related to the RSM resignation. These actions are currently stayed pending motions in the class action lawsuit[213](index=213&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) - The company is in arbitration with the former shareholders of Itz Cash Card Limited, who are seeking damages of approximately **$38.4 million** for alleged breaches of the transaction documents, including disputes over earn-out payments[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) [Part II: Financial Information](index=38&type=section&id=Part%20II) This section provides management's discussion and analysis of financial condition and results, consolidated financial statements, and disclosures regarding changes in accountants [Management's Discussion and Analysis (MD&A)](index=41&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) 2022 revenue increased to $1.05 billion, driven by travel recovery, but net income declined due to higher interest expense and critical liquidity challenges from the May 2023 Credit Facility maturity Key Performance Indicators (2020-2022) | (In thousands except per share data) | 2022 | 2021 | 2020 | | :----------------------------------- | :----------- | :----------- | :----------- | | Revenue | $1,050,146 | $994,938 | $625,609 | | Operating income | $120,344 | $119,010 | $125,802 | | Net income attributable to Ebix, Inc. | $64,645 | $68,188 | $92,377 | | Diluted earnings per share | $2.10 | $2.22 | $3.02 | | Cash provided by operating activities | $77,567 | $69,471 | $100,356 | [Results of Operations](index=43&type=section&id=Results%20of%20Operations) In 2022, total revenue increased 6% to $1.05 billion, driven by EbixCash Travel and Forex recovery, but net income declined due to higher interest expense and negative foreign currency impacts - Revenue grew **6% to $1.05 billion in 2022**, primarily due to a **118% ($61.3M)** increase in EbixCash Travel and Foreign Exchange/Outward Remittance businesses, which are rebounding from COVID-19 impacts[255](index=255&type=chunk) - Growth was offset by a **3% (~$22M)** decline in the Payment Solutions (prepaid gift cards) business and a significant negative foreign currency impact of **$57.6 million**, mainly from the Indian Rupee[255](index=255&type=chunk)[256](index=256&type=chunk) - Gross margin increased to **31.3% from 29.1% in 2021**, mainly due to the revenue mix shift away from the low-margin prepaid gift card business[261](index=261&type=chunk) - Interest expense increased by **$13.7 million (33.1%) to $55.1 million in 2022**, driven by a **~170 basis point** increase in the weighted average interest rate on the corporate credit facility[267](index=267&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) Ebix faces critical liquidity challenges with its $639.3 million Credit Facility maturing in May 2023, resulting in a significant working capital deficit, as it pursues refinancing options including the EbixCash IPO - The company faces a critical liquidity challenge with its Credit Facility (**$639.3M** outstanding) maturing on **May 23, 2023**. The company does not have the cash on hand to repay the balance[274](index=274&type=chunk) - Working capital decreased to a deficit of **$(447.0) million** at year-end **2022** from a surplus of **$161.4 million in 2021**, primarily due to the reclassification of the entire Credit Facility balance to current liabilities[279](index=279&type=chunk) - The company is pursuing multiple capital-raising strategies to refinance the debt, including the pending EbixCash IPO, new debt, and equity options. A special committee has been formed to evaluate all alternatives[274](index=274&type=chunk)[275](index=275&type=chunk) Cash and Equivalents by Geography (as of March 6, 2023, in thousands) | Geography | Cash & Equivalents | | :------------------- | :----------------- | | India | $60,709 | | United States | $9,305 | | Philippines | $6,109 | | Australia | $5,085 | | Canada | $4,154 | | United Arab Emirates | $3,384 | | Latin America | $2,294 | | **Total** | **$97,181** | [Critical Accounting Policies](index=52&type=section&id=Critical%20Accounting%20Policies) Critical accounting policies involve significant management estimates, particularly in revenue recognition for SaaS and gift cards, goodwill valuation using discounted cash flow models, and complex income tax accounting - **Revenue Recognition:** Requires significant judgment in identifying performance obligations and determining standalone selling prices, especially for SaaS contracts. For most EbixCash transactions, revenue is recognized at a point in time, and gift card revenue is recognized on a gross basis[308](index=308&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk) - **Goodwill Valuation:** Goodwill is tested for impairment annually at the single reporting unit level. The company uses a discounted cash flow model, which requires significant estimates for future revenues, margins, and discount rates. No impairment was recognized in **2022**[335](index=335&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk) - **Income Taxes:** Involves estimating current tax exposure and assessing temporary differences for deferred tax assets and liabilities. The company considers its undistributed foreign earnings of approximately **$953.4 million** to be indefinitely reinvested[339](index=339&type=chunk)[511](index=511&type=chunk) [Financial Statements and Supplementary Data](index=58&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The 2022 consolidated financial statements reflect total assets of $1.54 billion, a working capital deficit due to the Credit Facility reclassification, and an unqualified auditor's opinion - The independent auditor, K G Somani & Co LLP, identified two Critical Audit Matters: the valuation of Goodwill due to significant management estimates in cash flow forecasts, and the recognition of Software as a Service (SaaS) revenue due to judgments in identifying performance obligations and determining standalone selling prices[355](index=355&type=chunk)[358](index=358&type=chunk) Consolidated Statement of Income Highlights (in thousands) | Account | 2022 | 2021 | | :------------------------------------ | :----------- | :----------- | | Operating Revenue | $1,050,146 | $994,938 | | Operating Income | $120,344 | $119,010 | | Interest Expense | ($55,068) | ($41,370) | | Income Before Income Taxes | $72,075 | $73,523 | | Net Income Attributable to Ebix, Inc. | $64,645 | $68,188 | Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :-------------------------- | :----------- | :----------- | | Total Current Assets | $384,520 | $366,564 | | Goodwill | $881,676 | $939,249 | | **Total Assets** | **$1,537,555** | **$1,573,249** | | Total Current Liabilities | $831,537 | $205,195 | | Revolving line of credit (long-term) | $0 | $439,402 | | Long-term debt | $160 | $184,676 | | **Total Liabilities** | **$878,115** | **$873,695** | | **Total Stockholders' Equity** | **$659,440** | **$699,554** | [Changes in and Disagreements with Accountants](index=102&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company's prior auditor, RSM, resigned in February 2021 citing insufficient audit evidence for "significant unusual transactions" in the Indian gift card business, leading to the engagement of K G Somani & Co LLP - RSM, the company's prior auditor, resigned on **February 15, 2021**[542](index=542&type=chunk) - RSM's resignation letter cited an inability to obtain sufficient audit evidence for "significant unusual transactions" in **Q4 2020** within the Indian gift card business and identified a material weakness in internal control over the gift card revenue cycle[547](index=547&type=chunk)[548](index=548&type=chunk) - A disagreement was also reported regarding the classification of a **$30 million** fund transfer, which RSM believed should be classified as 'other current assets' rather than 'cash or cash equivalent'[545](index=545&type=chunk) - The company engaged K G Somani & Co LLP as its new independent auditor on **March 5, 2021**. It also engaged Skadden Arps and AlixPartners to review the issues raised by RSM and the Board was satisfied that no further steps were necessary[548](index=548&type=chunk)[550](index=550&type=chunk) [Part III: Corporate Governance and Compensation](index=108&type=section&id=Part%20III) This section details the company's board, executive officers, corporate governance, executive compensation, and security ownership [Directors, Executive Officers and Corporate Governance](index=108&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Ebix's corporate governance is led by CEO Robin Raina, with an eight-member Board, seven independent directors, and key committees including a Strategic Investment Committee formed in 2022 - The executive team is led by Robin Raina (Chairman, President & CEO) and Steve Hamil (EVP & Global CFO)[101](index=101&type=chunk)[590](index=590&type=chunk)[591](index=591&type=chunk) - The Board has determined that **seven of its eight directors** are independent. Key board committees include the Audit, Compensation, and a Strategic Investment Committee[597](index=597&type=chunk)[609](index=609&type=chunk)[698](index=698&type=chunk) - The Board has designated Pavan Bhalla as the "audit committee financial expert" under SEC rules[608](index=608&type=chunk) [Executive Compensation](index=113&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation includes base salary, bonuses, and equity awards, with CEO Robin Raina's 2022 compensation totaling $3.6 million and a potential $71.5 million change of control payment - CEO Robin Raina has an Amended Stock Appreciation Right (SAR) Agreement that entitles him to a cash payment upon a change of control. Based on the **December 31, 2022** stock price, this payment would have been **$71.5 million**[662](index=662&type=chunk)[664](index=664&type=chunk) - The ratio of the CEO's **2022** total compensation (**$3.6M**) to the median employee in India was **940 to 1**. The ratio to the median US employee was **48 to 1**[666](index=666&type=chunk)[667](index=667&type=chunk) 2022 Summary Compensation | Name and Principal Position | Salary ($) | Bonus ($) | Total ($) | | :-------------------------- | :---------- | :---------- | :---------- | | Robin Raina, CEO | $1,200,000 | $2,400,000 | $3,611,452 | | Steve Hamil, CFO | $325,000 | $150,000 | $477,325 | [Security Ownership](index=126&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management) As of March 6, 2023, CEO Robin Raina is the largest insider beneficial owner with 13.9% of shares, while institutional investors Blackrock and Vanguard hold significant stakes - CEO Robin Raina has pledged **1,766,988 shares** of company common stock as security for a loan[680](index=680&type=chunk) Security Ownership of Major Holders (as of March 6, 2023) | Name of Beneficial Owner | Percent of Class | | :-------------------------------------------- | :--------------- | | Robin Raina | 13.9% | | Directors and executive officers as a group | 15.8% | | Blackrock Inc. | 13.1% | | The Vanguard Group | 9.8% | | Steven D. Lebowitz | 6.1% |

Financial Position - As of September 30, 2022, the outstanding balance of the Credit Facility was $628.8 million, classified as a current liability due to its maturity in February 2023 [121]. - The outstanding balance on the Revolver was $439.4 million with an interest rate of 8.56% as of September 30, 2022, compared to 5.50% at December 31, 2021 [125]. - The outstanding balance on the Term Loan was $189.4 million, with $23.5 million in principal payments made during the nine months ended September 30, 2022 [126]. - The total of working capital facilities was $6.1 million as of September 30, 2022, compared to $5.6 million at December 31, 2021 [129]. - The Company maintains working capital debt facilities with banks in India, typically carrying interest rates of 9.00% to 10% [127]. - The Company has $3.0 million of remaining deferred financing costs related to the Credit Facility as of September 30, 2022 [124]. - The Company anticipates addressing the Credit Facility maturity prior to the maturity date, potentially in conjunction with the IPO of EbixCash Limited [121]. - The company has a total of $19.4 million in commitments related to leases, with $3.9 million due in 2022 and $15.5 million in 2023 [159]. - The company's current ratio decreased to 0.42 at September 30, 2022, from 1.79 at December 31, 2021, due to the classification of the Credit Facility as a current liability [212]. - The existing cash balances as of September 30, 2022, were $71.0 million [242]. Revenue and Growth - External revenues for the nine months ended September 30, 2022, totaled $794.9 million, an increase from $728.1 million for the same period in 2021, representing a growth of approximately 9.2% [144]. - Revenue from India led businesses was $621.7 million for the nine months ended September 30, 2022, compared to $557.8 million for the same period in 2021, indicating a growth of about 11.5% [144]. - Total operating revenues for the three months ended September 30, 2022, increased by $66.2 million, or 35%, to $257.9 million compared to $191.7 million in the same period of 2021 [182]. - For the nine months ended September 30, 2022, total operating revenues increased by $66.8 million to $794.9 million compared to $728.1 million in the same period of 2021 [194]. - International revenue accounted for 85.6% of total revenue for the nine months ended September 30, 2022, up from 84.3% in the same period of 2021 [169]. - International revenue accounted for 85.4% of total revenue for the three months ended September 30, 2022, compared to 80.0% in the same period of 2021 [182]. - The company's payment solutions revenues in India increased approximately $40 million year-over-year, or 39%, during the third quarter of 2022 [182]. Expenses and Costs - Cost of services provided increased by $53.5 million, or 44%, to $174.3 million in the third quarter of 2022, representing 67.6% of total revenues [183]. - General and administrative expenses increased by $23.0 million, or 33%, to $93.0 million for the nine months ended September 30, 2022, compared to $70.1 million for the same period in 2021 [199]. - Amortization and depreciation expenses rose by $2.0 million, or 18%, to $13.7 million for the nine months ended September 30, 2022, from $11.6 million in the comparable period of 2021 [200]. - Interest expense increased by 41% to $15.5 million in the third quarter of 2022 compared to $11.0 million in the same period of 2021 [190]. - Interest expense increased by 27% to $37.4 million for the nine months ended September 30, 2022, from $29.5 million in the same period in 2021 [203]. - Sales and marketing expenses increased to $4.0 million in the third quarter of 2022 from $3.4 million in the same period of 2021 [185]. - Product development expenses increased by $0.3 million, or 3%, to $10.5 million during the third quarter of 2022 compared to $10.2 million in the same period of 2021 [184]. - Rental expense for office and airport facilities for the nine months ended September 30, 2022, was $11.9 million, compared to $7.3 million for the same period in 2021, reflecting a 63% increase [159]. Taxation - The Company recorded a net income tax expense of $1.9 million (9.90%) for the three months ended September 30, 2022, and $6.1 million (10.04%) for the nine months ended September 30, 2022 [140]. - The Company expects its full year effective tax rate to be in the range of 7% to 10% [140]. - The effective tax rate for the company is expected to be in the range of 7% to 10% for the full year [193]. Assets and Liabilities - The total long-term lease liabilities amounted to $10.2 million as of September 30, 2022, after accounting for present value discounts [156]. - The carrying value of goodwill decreased to $887.3 million as of September 30, 2022, down from $939.2 million at the end of 2021, a reduction of approximately 5.5% [149]. - Accounts receivable from Vayam amounted to $12.2 million as of September 30, 2022, down from $17.0 million as of December 31, 2021, a decrease of approximately 28.2% [145]. - Total other current assets were reported at $78.0 million as of September 30, 2022, compared to $84.4 million at the end of 2021, indicating a decline of about 7.6% [153]. - The company recognized $2.2 million in amortization expense for capitalized software development costs during the nine months ended September 30, 2022, compared to $2.5 million in the same period of 2021, a decline of approximately 12% [152]. Foreign Currency and Interest Rates - The net change in the cumulative foreign currency translation account for the nine months ended September 30, 2022, was an unrealized loss of $90.1 million, compared to a loss of $16.6 million for the same period in 2021 [241]. - The company recorded a net foreign currency exchange gain of $4.9 million for the three months ended September 30, 2022 [192]. - The company recorded a net foreign currency exchange gain of $9.1 million for the nine months ended September 30, 2022, compared to a loss of $(0.8) million in the prior year [205]. - A hypothetical 30% increase in the LIBOR rate would have resulted in a reduction to pre-tax income of approximately $1.8 million for the nine months ended September 30, 2022 [242]. - The Company is exposed to a potential loss of interest income from a hypothetical 20% decrease in interest rates, estimated to reduce pre-tax income by approximately $0.1 million for the nine months ended September 30, 2022 [242]. COVID-19 Impact - The company has implemented measures to strengthen its financial position in response to COVID-19, including amending its Credit Facility and reducing non-essential expenditures [176]. - The ongoing effects of COVID-19 have led to decreased demand in certain business areas, particularly travel and remittance services, with uncertainty regarding the return to pre-COVID-19 demand levels [174]. - Continuous monitoring of COVID-19's impact on the operating effectiveness of internal controls is being conducted [247]. Internal Controls - There were no significant changes to the Company's critical accounting policies and estimates from the previous fiscal year [239]. - The company's disclosure controls and procedures were evaluated as effective as of September 30, 2022 [247]. - There were no changes in internal control over financial reporting that materially affected the company during the quarter ended September 30, 2022 [247]. - The company has not experienced any material changes to internal controls despite remote work due to the COVID-19 pandemic [247].

Debt and Financing - As of June 30, 2022, the outstanding balance of the Credit Facility was $636.3 million, classified as a current liability due to its maturity in February 2023[123] - The outstanding balance on the Revolver was $439.4 million with an interest rate of 7.25% as of June 30, 2022, compared to 5.50% at December 31, 2021[127] - The Term Loan balance was $196.9 million as of June 30, 2022, with $15.9 million in principal payments made during the first half of 2022[128] - The Company expects to refinance the Credit Facility during 2022, contingent on the anticipated IPO of EbixCash Limited[123] - The Company intends to access debt and/or equity capital markets for refinancing, with no assurances on the availability of financing on acceptable terms[123] - The Company has $4.8 million of remaining deferred financing costs related to the Credit Facility as of June 30, 2022[126] - The company had $636.3 million in outstanding debt obligations as of June 30, 2022, which included a $196.9 million term loan and a $439.4 million balance on the Revolver[246] - The average cash balances during the six months ended June 30, 2022, were approximately $115.0 million, with existing cash balances of $67.5 million as of June 30, 2022[246] - The Company has not engaged in off-balance sheet financing arrangements[238] Revenue and Income - External revenues for the six months ended June 30, 2022, totaled $537.0 million, compared to $536.4 million for the same period in 2021, reflecting a slight increase[146] - Total operating revenues for the three months ended June 30, 2022, increased by $4.5 million, or 2%, to $250.8 million compared to $246.3 million in the same period of 2021[184] - For the six months ended June 30, 2022, total operating revenues increased by $0.7 million to $537.0 million compared to $536.4 million in the same period of 2021[196] - International revenue accounted for 85.7% of total revenue for the six months ended June 30, 2022, slightly down from 85.9% in the same period of 2021[171] - International revenue accounted for 84.9% of total revenue for the three months ended June 30, 2022, compared to 84.7% in the same period of 2021[184] Expenses and Costs - Cost of services provided decreased by $18.4 million, or 5%, to $380.2 million for the six months ended June 30, 2022, with a decrease in cost as a percentage of total revenues to 70.8%[199] - Product development expenses increased by $0.8 million, or 4%, to $20.5 million for the six months ended June 30, 2022, driven by increased personnel costs primarily in India[200] - General and administrative expenses increased by $8.4 million, or 36%, to $31.7 million in the second quarter of 2022 compared to $23.3 million in the same period of 2021[189] - General and administrative expenses increased by $14.0 million, or 31%, to $58.6 million for the six months ended June 30, 2022, compared to $44.7 million for the same period in 2021[202] - Interest expense increased by 11% to $11.7 million in the second quarter of 2022, despite a decrease in the average outstanding balance under corporate credit facilities[192] - Interest expense increased by 18% to $21.9 million for the six months ended June 30, 2022, from $18.5 million in the same period in 2021, despite a decrease in the average outstanding balance under corporate credit facilities[206] - Amortization and depreciation expenses rose by $1.5 million, or 19%, to $9.2 million in the six months ended June 30, 2022, from $7.8 million in the comparable period of 2021[203] Taxation - The Company recorded a net income tax expense of $2.5 million (11.62%) for the three months ended June 30, 2022, and $4.2 million (10.10%) for the six months ended June 30, 2022[142] - The Company expects its full year effective tax rate to be in the range of 9% to 10%[142] - As of June 30, 2022, the Company had a liability of $6.4 million for uncertain tax positions, an increase from $6.2 million as of December 31, 2021[143] - The effective tax rate for the company is expected to be in the range of 9% to 10% for the full year[195] Legal Matters - The Company is involved in various legal actions, including a class action lawsuit alleging violations of the Securities Exchange Act of 1934[132] - The Company believes that claims related to the arbitration with former shareholders of Itz Cash Card Limited are without merit and is defending its position vigorously[140] Cash Flow and Liquidity - Net cash provided by operating activities was $21.4 million for the six months ended June 30, 2022, with net income of $38.5 million as a primary component[224] - Net cash used for investing activities was $17.0 million for the six months ended June 30, 2022, primarily for capital expenditures and software development costs[226] - Net cash used in financing activities was $24.1 million for the six months ended June 30, 2022, mainly for principal payments on existing term loans and dividends[228] - The company's current ratio decreased to 0.43 at June 30, 2022, from 1.79 at December 31, 2021, due to the classification of the Credit Facility as a current liability[212] - The company plans to utilize cash flows from operating activities and refinancing of the Credit Facility to fund growth initiatives and capital expenditures[217] Foreign Currency and Exchange - The net change in the cumulative foreign currency translation account for the six months ended June 30, 2022, was an unrealized loss of $54.6 million, compared to a loss of $12.5 million for the same period in 2021[245] - A hypothetical 20% adverse change in foreign currency exchange rates could have resulted in a reduction to pre-tax income of approximately $6.9 million for the six months ended June 30, 2022[245] - The company recorded a net foreign currency exchange gain of $3.2 million for the three months ended June 30, 2022[194] - The company recorded a net foreign currency exchange gain of $4.1 million for the six months ended June 30, 2022, compared to a loss of $(0.6) million in the prior year period[208] Lease Obligations - Total long-term lease liabilities amount to $6,934,000, with $6,720,000 from operating leases and $214,000 from financing leases[159] - The company reported a total net lease cost of $2,041,000 for the six months ended June 30, 2022, compared to $2,656,000 for the same period in 2021, reflecting a decrease of approximately 23%[161] - The company’s lease liability was reported at $10.5 million as of June 30, 2022, excluding certain arrangements[160] - The weighted average lease term for operating leases is 4.2 years, while for finance leases it is 2.4 years[161] - The weighted average discount rate for operating leases is 7.6%, and for finance leases, it is 6.1%[161] - The company experienced a rental expense of $6.3 million for the six months ended June 30, 2022, compared to $5.4 million for the same period in 2021, indicating an increase of approximately 17%[161] Software Development - The Company capitalized software development costs of $1.5 million and $4.2 million for the three and six months ended June 30, 2022, respectively, compared to $1.4 million and $3.1 million for the same periods in 2021[154] Accounting Policies - There were no significant changes to critical accounting policies and estimates from the previous fiscal year[243]

Debt and Financing - As of March 31, 2022, the outstanding balance on the Revolver was $439.4 million, with an interest rate of 5.50%[119] - The outstanding balance on the Term Loan was $204.5 million, also carrying an interest rate of 5.50%[120] - The Company expects to refinance the Credit Facility during 2022, contingent upon the successful IPO of EbixCash Limited[115] - The Company has $3.7 million of remaining deferred financing costs related to the Credit Facility, amortized as interest expense[118] - The Credit Facility, totaling $643.9 million, was classified as a current liability as of March 31, 2022[115] - The Company had $643.9 million in outstanding debt obligations as of March 31, 2022, including a $204.5 million term loan and a $439.4 million balance on the revolving line of credit[232] - The interest rate on the Company's term loan and revolving line of credit was 5.50% as of March 31, 2022, exposing the Company to potential increases in interest expense[232] - A hypothetical 30% increase in the LIBOR rate could reduce pre-tax income by approximately $0.3 million for both the three months ended March 31, 2022, and 2021[232] - A hypothetical 20% decrease in interest rates earned on deposited funds would have resulted in a reduction to pre-tax income of approximately $0.1 million for both the three months ended March 31, 2022, and 2021[232] Revenue and Income - External revenues for India were $225.9 million for the three months ended March 31, 2022, compared to $231.5 million for the same period in 2021, reflecting a decrease of approximately 2.5%[139] - Total operating revenues for the three months ended March 31, 2022, decreased by $3.8 million, or 1%, to $286.3 million compared to $290.1 million in the same period of 2021[182] - International revenue accounted for 86.4% of total revenue for the three months ended March 31, 2022, compared to 86.9% in the same period of 2021[182] - The decline in payment solutions offerings in India decreased by approximately $13.6 million, or 6.7%, which was a significant factor in the overall revenue decrease[182] - The Company recorded a net income tax expense of $1.7 million (8.49%) for the three months ended March 31, 2022, with an effective tax rate expected to be in the range of 9% to 12% for the full year[135] - The Company expects its full year effective tax rate to be in the range of 9% to 12%[193] Expenses - Cost of services provided decreased by $9.5 million, or 4%, to $210.8 million, resulting in a decrease in cost of services as a percentage of total revenues to 73.7% from 76.0%[183] - Product development expenses increased by $0.7 million, or 7%, to $10.3 million during the first quarter of 2022, driven by increased labor costs primarily in India[184] - General and administrative expenses increased by $5.6 million, or 26%, to $26.9 million, primarily due to increased personnel costs and bad debt expense[187] - Interest expense increased by 27% to $10.3 million, despite a decrease in the average outstanding balance under corporate credit facilities[190] Assets and Liabilities - The total long-lived assets as of March 31, 2022, amounted to $1.22 billion, an increase from $1.19 billion as of December 31, 2021[139] - The carrying value of goodwill decreased to $931.6 million as of March 31, 2022, from $939.2 million as of December 31, 2021, primarily due to foreign currency translation adjustments[144] - The total lease liabilities amounted to $11.7 million as of March 31, 2022, with long-term lease liabilities of $7.1 million[151] - The Company had a liability reserve for uncertain tax positions of $6.3 million as of March 31, 2022, reflecting an increase of $72 thousand from the previous year[136] - Customer advances (deposits) increased to $26.416 million as of March 31, 2022, up from $24.393 million at the end of 2021[154] - The Company reported a negative working capital position of $458.7 million due to the classification of the Credit Facility as a current liability[216] Cash Flow - Net cash provided by operating activities for the three months ended March 31, 2022, was $5.6 million, with net income of $19.2 million and $4.4 million in depreciation and amortization[208] - Net cash used for investing activities during the same period was $11.5 million, primarily for $9.3 million in capital expenditures and $2.7 million in capitalized software development costs[210] - Net cash used in financing activities for the three months ended March 31, 2022, was $15.3 million, including $8.4 million for principal payments on the term loan and $2.3 million in dividends[212] Legal and Regulatory - The Company is involved in various legal actions, but management believes these will not materially affect its financial position[134] - The Company has not experienced any material changes to its internal controls over financial reporting despite remote work due to the COVID-19 pandemic[237] - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective as of March 31, 2022[237] - The Company continuously monitors the impact of COVID-19 on the operating effectiveness of its internal control over financial reporting[237] Foreign Currency and Geopolitical Impact - The Company experienced unrealized foreign currency translation losses of $(11.3) million for the three months ended March 31, 2022[231] - The Company reported unrealized losses of $(11.3) million and $(3.9) million in the cumulative foreign currency translation account for the three months ended March 31, 2022 and 2021, respectively[231] - A hypothetical adverse change of 20% in foreign currency exchange rates could have reduced pre-tax income by approximately $2.8 million and $2.6 million for the three months ended March 31, 2022 and 2021, respectively[231] - The company continues to monitor the impacts of geopolitical events, including the situation in Ukraine, which may affect global economic conditions[175] Technology and Development - The Company capitalized $2.7 million in software development costs during the three months ended March 31, 2022, compared to $1.7 million in the same period of 2021[146] - The Company recognized $755 thousand of amortization expense for capitalized software development costs during the three months ended March 31, 2022[147] - The company's technology vision focuses on the convergence of all channels and processes to enhance data flow and operational efficiency[166]