Ebix(US:EBIX)2023-05-09 16:00Debt 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]