Ebix(US:EBIX)2020-05-11 19:42Revenue Performance - Total operating revenues decreased by $5.0 million, or 4%, to $137.9 million for the three months ended March 31, 2020, compared to $142.9 million in the same period of 2019[189]. - International revenue accounted for 69.6% of total revenue for the three months ended March 31, 2020, compared to 67.8% in the same period of 2019[187]. - Revenue from EbixCash exchanges was $77.9 million, slightly up from $77.7 million in the first quarter of 2019[191]. - Revenue from insurance exchanges decreased to $44.0 million from $48.0 million year-over-year[191]. - Payment solutions revenues increased by over 120% in Q1 2020 compared to Q4 2019 due to increased demand during the COVID-19 lockdown in India[194]. Cost and Expense Analysis - Costs of services provided increased by $11.5 million, or 25%, to $57.5 million in Q1 2020 compared to $45.9 million in Q1 2019[194]. - Product development expenses decreased by $1.8 million, or 16%, to $9.4 million in Q1 2020 compared to $11.2 million in Q1 2019[195]. - Sales and marketing expenses decreased by $2.3 million, or 38%, to $3.8 million in Q1 2020 compared to $6.1 million in Q1 2019[196]. - General and administrative expenses increased by $7.8 million, or 36%, to $29.2 million in Q1 2020 compared to $21.4 million in Q1 2019[197]. Cash Flow and Financial Position - Net cash provided by operating activities was $29.6 million for Q1 2020, compared to $21.0 million for Q1 2019[221][222]. - Net cash used for investing activities was $9.6 million in Q1 2020, primarily for acquisition-related payments and software development costs[223]. - Net cash used by financing activities was $32.2 million in Q1 2020, primarily due to a $24.7 million reduction in working capital facilities[225]. - The company's cash and cash equivalents decreased to $61.9 million at March 31, 2020, from $73.2 million at December 31, 2019[207]. - The current ratio increased to 1.71 at March 31, 2020, from 1.55 at December 31, 2019[211]. Debt and Financing - The Company had $713.3 million in outstanding debt obligations as of March 31, 2020, including a $272.4 million term loan and a $438.0 million balance on its commercial banking revolving line of credit[273]. - As of March 31, 2020, the outstanding balance on the revolving line of credit was $438.0 million, with an interest rate of 4.13%[230]. - The term loan balance was $272.4 million, with $22.6 million due within the next twelve months and an interest rate of 4.13%[231]. - During the three months ended March 31, 2020, $3.8 million of scheduled amortization payments were made on the term loan[231]. - The Company's revolving line of credit interest rate was 4.13% as of March 31, 2020, exposing it to potential increases in interest expense[273]. Impact of COVID-19 - The company continues to monitor COVID-19 developments and has implemented measures to protect employee health and strengthen financial position[185]. - The company expects demand variability for its products and services to continue as a result of the COVID-19 pandemic[183]. - COVID-19 has created significant uncertainty in global financial markets, potentially impacting demand for services and access to capital[238]. Legal Matters - The Company is involved in various legal proceedings, including a settled class action lawsuit with a settlement amount of $19.65 million[280]. - The Delaware Court of Chancery approved a Litigation Settlement, determining it to be fair and reasonable, with an award of $19.65 million in attorneys' fees and expenses payable by the Company within 20 days[280]. - The Settlement provides for full settlement and release of all claims asserted or that could have been asserted in the Litigation, with no admission of wrongdoing or liability[280]. - The Settlement was fully paid on May 2, 2019[280]. - The Company is involved in various other claims and legal actions arising in the ordinary course of business[281]. - Management believes that the ultimate disposition of these matters will not have a material adverse effect on the Company's consolidated financial position, results of operations, or liquidity[281]. Revenue Recognition - Revenue from EbixCash is primarily derived from financial transaction services, with a significant majority recognized at a point in time[241]. - Insurance Exchanges revenues are derived from SaaS platforms and related services, recognized over the contract duration[255]. - Risk Compliance Services revenues consist of transaction-based revenues from Certificates of Insurance and consulting services[263]. - The company recognizes revenue for consulting services on a time and materials basis or fixed fee basis, depending on the engagement[265]. Foreign Currency Risk - The adverse impact from foreign currency fluctuations reduced reported revenues by $3.7 million for the three months ended March 31, 2020[189]. - The net change in the cumulative foreign currency translation account for the three months ended March 31, 2020, was an unrealized loss of $49.8 million, compared to a gain of $3.5 million for the same period in 2019[272]. - A hypothetical 20% adverse change in foreign currency exchange rates could have resulted in a reduction to pre-tax income of approximately $3.4 million for the three months ended March 31, 2020[272]. - The Company is exposed to foreign currency exchange rate risk related to operations in countries where transactions are denominated in currencies other than the functional currency[272]. - A hypothetical 30 basis point increase in the LIBOR rate would have resulted in a reduction to pre-tax income of approximately $1.1 million for the three months ended March 31, 2020[273]. - 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 $104 thousand for the three months ended March 31, 2020[273]. Internal Controls - The Company maintains effective disclosure controls and procedures, with no material changes affecting internal control over financial reporting during the quarter ended March 31, 2020[278].