Ebix(EBIX) - 2019 Q1 - Quarterly Report

Revenue Growth - Total operating revenues increased by $34.7 million or 32% to $142.9 million for the three months ended March 31, 2019, compared to $108.2 million in the same period of 2018[196]. - International revenue accounted for 67.8% of total revenue for Q1 2019, up from 53.9% in Q1 2018[194]. - EbixCash segment growth and recent acquisitions contributed significantly to revenue increase, despite a $5.0 million adverse impact from foreign currency fluctuations[196]. Expense Increases - Costs of services provided rose by $6.3 million or 16% to $45.9 million in Q1 2019, primarily due to increased personnel and consulting costs related to acquisitions[203]. - Product development expenses increased by $2.8 million or 33% to $11.2 million in Q1 2019, driven by costs from recent acquisitions[204]. - Sales and marketing expenses surged by $2.1 million or 53% to $6.1 million in Q1 2019, mainly due to costs associated with India operations and acquisitions[205]. - General and administrative expenses rose by $1.9 million or 10% to $21.4 million in Q1 2019, influenced by costs from 2018 acquisitions[206]. - Amortization and depreciation expenses increased by $1.3 million or 45% to $4.1 million in Q1 2019, primarily due to costs from recent acquisitions[208]. Income and Tax - Interest income increased by $229 thousand or 189% to $350 thousand in Q1 2019, attributed to higher deposits in interest-bearing accounts[209]. - The company recorded a net income tax benefit of $1.08 million (4.52%) for Q1 2019, with an effective tax rate expected to be in the range of 8% to 9% for the full year[212]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $77.0 million as of March 31, 2019, down from $147.8 million at December 31, 2018[215]. - The current ratio increased to 1.46 at March 31, 2019, up from 1.35 at December 31, 2018, with working capital slightly increasing to $110.4 million[219]. - Net cash provided by operating activities was $38.5 million for Q1 2019, with primary components including net income of $25.7 million and $21.6 million in working capital requirements[240]. Acquisitions - The company completed two business acquisitions in Q1 2019, acquiring Essel Forex for approximately $7.9 million and an 80% stake in Zillious for $10.1 million[222][223]. - Total contingent liabilities related to business acquisitions decreased to $12.5 million as of March 31, 2019, down from $25.0 million at December 31, 2018[239]. Accounts Receivable and Working Capital - Days sales outstanding (DSO) in accounts receivable improved to 103 days at March 31, 2019, down from 116 days at December 31, 2018[219]. - The company intends to utilize cash flows from operations and its commercial bank credit facility to fund capital expenditures and strategic acquisitions in the insurance services sector[213]. Debt Obligations - As of March 31, 2019, the Company had $728.7 million in outstanding debt obligations, including a $287.5 million term loan and a $438.0 million balance on its commercial banking revolving line of credit[269]. - The term loan balance as of March 31, 2019, was $287.5 million, with $15.1 million due within the next twelve months[249]. - The Company's revolving line of credit interest rate was 5.00% as of March 31, 2019, with exposure to a potential $1.5 million reduction in pre-tax income from a hypothetical 30 basis point increase in LIBOR[269]. Legal Proceedings - The Company faced legal proceedings related to a proposed merger, with multiple class action complaints filed against it and its board of directors[275]. - The litigation includes claims of breach of fiduciary duty and challenges to the validity of certain agreements and corporate actions[278]. - The Delaware Court of Chancery approved the Litigation Settlement, awarding $19.65 million in attorneys' fees and expenses to plaintiffs' counsel, payable by the Company within 20 days[290]. - The Settlement contains no admission of wrongdoing or liability by the Company[292]. Foreign Currency Exposure - The net change in cumulative foreign currency translation for Q1 2019 was an unrealized gain of $3.5 million, compared to a loss of $(4.8) million in Q1 2018[268]. - A hypothetical 20% adverse change in foreign currency exchange rates could have reduced pre-tax income by approximately $6.9 million in Q1 2019[268]. - The Company is exposed to a potential 20% adverse change in foreign currency exchange rates, which could reduce pre-tax income by approximately $6.9 million for the three months ended March 31, 2019[268]. Disclosure Controls - The Company maintains effective disclosure controls and procedures, ensuring accurate reporting in compliance with SEC rules as of March 31, 2019[274]. - The Company has ongoing evaluations to improve the effectiveness of its disclosure controls and procedures[273].