Ebix(US:EBIX)2019-11-12 22:25Revenue Growth - Total operating revenues increased by $18.6 million or 14% to $147.2 million for the three months ended September 30, 2019, compared to $128.6 million in the same period of 2018[209]. - Total operating revenues increased by $72.9 million or 20% to $434.4 million for the nine months ended September 30, 2019, compared to $361.5 million in the same period in 2018, driven by growth in the EbixCash segment and recent acquisitions[225]. - Revenue from EbixCash Exchanges for the three months ended September 30, 2019, was $82.1 million, compared to $60.3 million in the same period of 2018, representing a year-over-year increase of 36%[206]. - International revenue accounted for 69.4% of total revenue for the three months ended September 30, 2019, up from 62.4% in the same period of 2018[204]. - International revenue accounted for 68.7% of total revenue for the nine months ended September 30, 2019, up from 59.4% in the same period in 2018[225]. Expenses - Costs of services provided increased by $12.2 million or 28% to $55.2 million in the third quarter of 2019 compared to $43.0 million in the third quarter of 2018[214]. - Costs of services provided increased by $25.9 million or 21% to $152.1 million during the nine months ended September 30, 2019, primarily due to additional personnel and consulting costs related to acquisitions in India[229]. - General and administrative expenses rose by $18.7 million or 66% to $46.9 million in the third quarter of 2019, primarily due to a $12.1 million reserve against receivables from a public sector entity in India[218]. - General and administrative expenses increased by $26.8 million or 36% to $101.2 million during the nine months ended September 30, 2019, including a $12.1 million bad debt reserve related to receivables from BSNL in India[233]. - Product development expenses increased by $235 thousand or 2% to $11.2 million during the third quarter of 2019 compared to $11.0 million in the same period of 2018[216]. - Product development expenses rose by $5.8 million or 21% to $33.9 million during the nine months ended September 30, 2019, mainly due to costs associated with the operations of recent acquisitions[230]. - Amortization and depreciation expenses increased by $1.1 million or 44% to $3.6 million in the third quarter of 2019 compared to $2.5 million in the same period of 2018[219]. Financial Position - Cash and cash equivalents decreased to $124.2 million at September 30, 2019, from $147.8 million at December 31, 2018[242]. - The current ratio increased to 1.50 at September 30, 2019, from 1.35 at December 31, 2018, indicating improved liquidity[244]. - As of September 30, 2019, the Company had $721.0 million of outstanding debt obligations, including a $279.9 million term loan and a $438.0 million balance on its commercial banking revolving line of credit[317]. - The Company's revolving line of credit interest rate stood at 4.81% as of September 30, 2019, exposing it to potential increases in interest expense[317]. - The term loan balance was $279.9 million, with $18.8 million due within the next twelve months, and an interest rate of 4.81%[278]. Acquisitions and Investments - The company completed three business acquisitions during the nine months ended September 30, 2019, including the acquisition of WallStreet Canada for approximately $2.1 million[246]. - The total cash used for investing activities was $93.3 million for the nine months ended September 30, 2019, primarily for acquisitions including $77.4 million for Weizmann and $9.8 million for Zillious[269]. - Ebix completed thirteen business acquisitions during the twelve months ended December 31, 2018, including a 74.84% stake in Weizmann for $63.1 million and a public offer for the remaining 25.16% shares for approximately $21.1 million[251]. - The Company acquired assets of Pearl for $3.4 million and Lawson for $2.7 million, integrating them into Ebix Travels' operations[252][253]. - The acquisition of Centrum for approximately $179.5 million was integrated into EbixCash, enhancing its foreign exchange and remittance services[260]. Legal Matters - The Company is involved in various legal claims, but management believes these will not have a material adverse effect on its consolidated financial position[325]. - The Delaware Court of Chancery approved the Litigation Settlement on April 5, 2019, awarding plaintiffs' counsel $19.65 million in attorneys' fees and expenses, payable by the Company within 20 days[324]. - The Settlement Agreement resolves all claims asserted or that could have been asserted in the Litigation, with no admission of wrongdoing or liability by the Company[324]. - The Settlement was fully paid on May 2, 2019[324]. - Management believes that the outcome of various other claims and legal actions will not materially adversely affect the Company's consolidated financial position, results of operations, or liquidity[325]. Tax and Interest - The company recorded a net income tax benefit of $297 thousand (0.44%) during the nine months ended September 30, 2019, with an effective tax rate expected to be in the range of 6% to 7% for the full year[238]. - Interest expense increased by $14.5 million or 80% to $32.6 million during the nine months ended September 30, 2019, due to a 41% increase in the average outstanding balance on commercial banking credit facilities[236]. - The company reported a decrease in interest income of $4 thousand or 4% to $99 thousand in the third quarter of 2019 compared to $103 thousand in the same period of 2018[220]. Currency and Foreign Exchange - During the nine months ended September 30, 2019, the net change in the cumulative foreign currency translation account resulted in unrealized losses of $10.9 million, compared to $61.8 million for the same period in 2018[316]. - A hypothetical 20% adverse change in foreign currency exchange rates could have resulted in a reduction to pre-tax income of approximately $12.4 million and $11.1 million for the nine months ended September 30, 2019 and 2018, respectively[316]. - A hypothetical 30 basis point increase in the LIBOR rate would have resulted in a reduction to pre-tax income of approximately $4.5 million and $2.5 million for the nine months ended September 30, 2019 and 2018, respectively[317]. - A hypothetical 20 basis point decrease in interest rates earned on deposited funds would have resulted in a reduction to pre-tax income of approximately $227 thousand and $342 thousand for the nine months ended September 30, 2019 and 2018, respectively[317]. Operational Insights - Revenue is primarily derived from software subscription and transaction fees, software license fees, and professional service fees[285]. - EbixCash revenues are mainly from money transfer services, recognized at a point in time, with significant variability based on transaction factors[288]. - Insurance Exchanges revenues come from software licensing and related services, with contracts often including setup and customization services[297]. - Subscription services revenues are recognized ratably over the contract term, typically for an initial three-year period with automatic renewals[301]. - Transaction revenue is based on fees applied to the volume of transactions processed through SaaS platforms, recognized when invoiced[302]. - The company does not engage in off-balance sheet financing arrangements[280]. - Management analyzes accounts receivable and historical bad debts to evaluate the adequacy of the allowance for doubtful accounts[307]. - The Company had no impairment of its reporting unit goodwill balances for the years ended December 31, 2018 and 2017[310]. - The Company maintains effective disclosure controls and procedures, with no changes that materially affected internal control over financial reporting during the quarter ended September 30, 2019[322].