Ebix Announces Q3 2023 Results

JOHNS CREEK, Ga., Nov. 14, 2023 (GLOBE NEWSWIRE) -- Ebix, Inc. (NASDAQ: EBIX), a leading international supplier of on-demand software and e-commerce services to the insurance, financial services, travel, healthcare, and e-learning industries today announced the following results for the quarter ended September 30, 2023:

• Q3 2023 GAAP Revenues of $119.2 million, with 1.1% Year-over-Year decline vs. Q3 2022 Non-GAAP Revenues of $120.5 million (with all revenues normalized on a net basis). On a GAAP basis, Q3 2022 revenues were $257.9 million (with pre-paid card revenues on a gross basis in Q3 2022).
• Constant currency GAAP Revenues of $121.8 million in Q3 2023 increased 0.8% Year-over-Year as compared to Non-GAAP Revenue of $120.5 million in Q3 2022.
• The Year-to-date(YTD) Constant currency GAAP Revenue of $379.3 million as of Q3 2023 increased 13.2% as compared to Non-GAAP YTD Revenue of $334.9 million as of Q3 2022
• Q3 2023 GAAP operating income of $20.5 million, a decrease of 32.4% over Q3 2022 operating income of $30.4 million, impacted adversely by certain one time increased expenses related to our credit agreement, EbixCash IPO, advisors and compensation.
• Q3 2023 Non-GAAP operating income of $28.6 million, a decrease of 5.9% over Q3 2022 Non-GAAP operating income of $30.4 million

Ebix delivered the following results for the third quarter of 2023:

Revenue:

Exchanges, including all financial and insurance exchanges, continued to be Ebix’s largest channel, accounting for 83.2% of Q3 2023 revenues.

(dollar amounts in thousands)
Channel Revenues	Q3 2023		Q3 2022			Change
Exchanges	$	99,291	$	99,991		(0.7	%)
RCS		19,937		20,508		(2.8	%)
Total Revenue	$	119,228	$	120,499		(1.1	%)
Total Constant Currency Revenue	$	121,449	$	120,499		+0.8	%

Note – Q3 2022 Revenues are non-GAAP with all revenues normalized on a net basis, for comparative purposes.

Operating Income: GAAP operating income for Q3 2023 of $20.5 million decreased by 32.4% year-over-year from $30.4 million in Q3 2022, primarily due to certain IPO marketing costs, and restructuring related cost. GAAP operating income of $80.1 million for nine-month ended Q3 2023 decreased by 11.5% as compared to $90.6 million in nine-month ended Q3 2022.

Earnings per Share and Net Income: Q3 2023 GAAP diluted earnings per share was at ($0.33) compared to $0.59 in Q3 2022. The decrease was primarily due to increased interest cost of $28.2 million, an increase of 82.2% year-over-year, a foreign exchange differential loss of $2.5 million, debt restructuring cost of $4.4 million as compared to Q3 2022, a cumulative negative effect of $0.64 in diluted earnings per share.

Q3 2023 GAAP net loss was $10.3 million compared to net income of $18.3 million in Q3 2022, primarily on account of the above increased non-operating costs and lower operating income.

Q4 2023 Diluted Share Count: As of today, Ebix expects its diluted share count for Q4 2023 to be approximately 30.9 million.

Amit Kumar Garg, CFO added, “In Q3 2023, EBITDA plus noncash stock compensation added to $28.3 million, which translates to approximately 23.7% of our worldwide revenues. During the nine month period ended September 30, 2023, we had the following major cash uses amongst other cash uses for operations: (i) $58.9 million of cash interest paid; (ii) $31.1 million for income-related taxes paid globally, (iii) $15 million paid for principal payments (iv) $11.1 million was used for capital expenditure and (v) $ 1.1 million was used for software development. We funded these initiatives from existing cash plus operating cash flows generated during the year. Despite these substantial payments adding to $117.2 million just for these items, the Company had strong liquidity on hand with cash, cash equivalents, short-term investments, and restricted cash of $ 99.2 million.”

Robin Raina, President & CEO, Ebix, Inc. said. “These are difficult times for the Company. In spite of that, the Company’s operating results after excluding the one-time items are consistent with our expectations. Our revenues on a YTD constant currency basis grew 13% YOY while the Q3 2023 revenues grew marginally in line with our expectations, even after deemphasizing our focus on certain lower margin businesses in Q3 of 2023. We intend to keep our focus on higher margin businesses in coming quarters with the stated goal of growing the top line and the operating income in tandem.”

Reconciliation of GAAP operating income, net income and diluted earnings per share to non-GAAP operating income, net income and diluted earnings per share. Non-GAAP information is provided to enhance the understanding of the Company's financial performance and is reconciled to the Company's GAAP information in the accompanying tables.

Q3 2023
		Net Income			Diluted EPS
Q3 2023 GAAP Net Income		($10,296		)	($0.33		)
Q3 2023 GAAP Operating Income		$20,533
Non-GAAP Adjustments:
Amortization of Intangibles (1)		$3,295			$0.11
Stock-Based Compensation (1)		$316			$0.01
One-time Legal and Professional Services Costs (2)		$4,430			$0.14
Non-operating expense (3)		$1,074			$0.03
Income Tax Effects of Non–GAAP Adjustments (4)		($2,399		)	($0.08		)
Total Non-GAAP Adjustments (Operating Income)		$8,041
Total Non-GAAP Adjustments (Net Income)		$6,716			$0.22
Third Quarter 2023 Non-GAAP Net Income		($3,580		)	($0.11		)
Third Quarter 2023 Non-GAAP Operating Income		$28,574

1. Adjustments related to amortization of acquired intangibles and stock-based compensation recognized during the periods for GAAP purposes.
2. Non-recurring legal and professional services costs recorded during the period for GAAP purposes.
3. Non-recurring non-operating expense that is unrelated to any operating activities.
4. Non-GAAP adjustment is based on the Q3 2023 effective tax rate, which reflects currently available information and could be subject to change.

Non-GAAP Financial Measures and Other Metrics

This press release contains the following non-GAAP financial measures: non-GAAP Revenues, non-GAAP net income, non-GAAP operating income and non-GAAP diluted earnings per share. Non-GAAP operating income , non-GAAP net income and non-GAAP diluted earnings per share from operations exclude amortization of intangibles, stock-based compensation, as well as certain non-recurring expenses that are not associated with our ongoing operating business activities.

Ebix believes that these non-GAAP financial measures and other metrics provide useful information to management and investors regarding certain financial and business trends relating to Ebix’s financial condition and results of operations. The Company’s management uses these non-GAAP measures and other metrics to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation, and for budgeting and planning purposes. The Company believes that the use of these non-GAAP financial measures and other metrics provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures and other metrics to investors.

Management of the Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Ebix urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including the financial tables at the end of this press release, and not to rely on any single financial measure to evaluate the Company’s business.

The reported figures have been summarized as compared to those presented thus for better understanding of the quantum of business undertaken in the United States and other countries. Further, the product/service channels, Ebixcash Exchange and Insurance Exchange have been merged as Exchange.

The Registrant’s subsidiary, EbixCash Limited has filed a draft red herring prospectus with the Securities and Exchange Board of India and is in the process of executing an initial public offering of its equity shares, subject to market conditions and regulatory approvals. The financial information of EbixCash Limited consolidated into our financial statements as of and for the six months ended June 30, 2023 is summary, indicative and not final. Further such financial information has not been audited or reviewed by the auditors of such company.

About Ebix, Inc.

With approximately 200 offices across 6 continents, Ebix, Inc., (NASDAQ: EBIX) endeavors to provide on-demand infrastructure exchanges to the insurance, financial services, travel and healthcare industries.

With a "Phygital” strategy that combines over 650,000 physical distribution outlets in India and many Southeast Asian Nations (“ASEAN”) countries as of December 31, 2021, to an Omni-channel online digital platform, the Company’s EbixCash Financial exchange portfolio of software and services encompasses domestic and international money remittance, foreign exchange (Forex), travel, pre-paid gift cards, utility payments, lending and wealth management across 75+ countries including India. EbixCash’s Forex operations are carried out primarily through 82 retail branches, 62 retail kiosks in 16 international airports, including Delhi, Mumbai, Hyderabad, Chennai and Kolkata, 12 seaports, over 250 franchise partners across 69 cities, as well as offered through more than 1200 corporate clients, more than 27 bank clients, and 5-star hotels in India. EbixCash, through its travel portfolio of Via and Mercury, is also one of the leading non-bank travel exchanges based in India and catering to approximately 517,000 agents and approximately 17,900 registered corporate clients as of December 31, 2021. EbixCash's financial technologies business offers software solutions at the enterprise level for banks, asset and wealth management companies and trust companies within India, Southeast Asia, the Middle East and Africa. EbixCash's business process outsourcing services provide information technology and call center services to a variety of industries.

For more information, visit the Company’s website at www.ebix.com

SAFE HARBOR REGARDING FORWARD-LOOKING STATEMENTS

As used herein, the terms “Ebix,” “the Company,” “we,” “our,” and “us” refer to Ebix, Inc., a Delaware corporation, and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only Ebix, Inc.

The information contained in this Press Release contains forward-looking statements and information within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. This information includes assumptions made by, and information currently available to management, including statements regarding future economic performance and financial condition, liquidity and capital resources, acceptance of the Company’s products by the market, and management’s plans and objectives. In addition, certain statements included in this and our future filings with the Securities and Exchange Commission (“SEC”), in press releases, and in oral and written statements made by us or with our approval, which are not statements of historical fact, are forward-looking statements. Words such as “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “seeks,” “plan,” “project,” “continue,” “predict,” “will,” and other words or expressions of similar meaning are intended by the Company to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are found at various places throughout this report and in the documents incorporated herein by reference. These statements are based on our current expectations about future events or results and information that is currently available to us, involve assumptions, risks, and uncertainties, and speak only as of the date on which such statements are made.

Our actual results may differ materially from those expressed or implied in these forward-looking statements. Factors that may cause such a difference, include, but are not limited to those discussed in our Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent reports filed with the SEC, as well as: the ongoing effects of the Covid-19 global pandemic, the willingness of independent insurance agencies to outsource their computer and other processing needs to third parties; pricing and other competitive pressures and the Company’s ability to gain or maintain share of sales as a result of actions by competitors and others; changes in estimates in critical accounting judgments; changes in or failure to comply with laws and regulations, including accounting standards, taxation requirements (including tax rate changes, new tax laws and revised tax interpretations) in domestic or foreign jurisdictions; exchange rate fluctuations and other risks associated with investments and operations in foreign countries (particularly in India, Australia and Asia, Latin America and Europe wherein we have significant and/or growing operations); fluctuations in the equity markets, including market disruptions and significant interest rate fluctuations, which may impede our access to, or increase the cost of, external financing; ability to secure additional financing to support capital requirements; credit facility provisions that could materially restrict our business; costs and effects of litigation, investigations or similar matters that could affect our business, operating results and financial condition; and international conflict, including terrorist acts and wars.

Except as expressly required by the federal securities laws, the Company undertakes no obligation to update any such factors, or to publicly announce the results of, or changes to any of the forward-looking statements contained herein to reflect future events, developments, changed circumstances, or for any other reason.

Readers should carefully review the disclosures and the risk factors described in the documents we file from time to time with the SEC, including future reports on Forms 10-Q and 8-K, and any amendments thereto.

You may obtain our SEC filings at our website, www.ebix.com under the “Investor Information” section, or over the Internet at the SEC’s web site, www.sec.gov

CONTACT:

Darren Joseph
678 -281-2027 or [e-mail]

David Collins or Chris Eddy
Catalyst Global - 212-924-9800 or [e-mail]

Ebix, Inc. and Subsidiaries Condensed Consolidated Statements of Income (In thousands, except per share data) (Unaudited)
	Three Months Ended1								Nine Months Ended
	September 30,								September 30,
		2023				2022				2023				2022
Operating revenue	$	119,228			$	257,904			$	480,419			$	794,938
Operating expenses:
Cost of services provided		32,658				174,265				222,894				554,438
Product development		11,020				10,483				31,950				30,964
Sales and marketing		4,996				3,973				11,909				12,249
General and administrative, net		43,869				34,400				117,446				93,049
Amortization and depreciation		6,152				4,422				16,061				13,660
Total operating expenses		98,695				227,543				400,260				704,360
Operating income		20,533				30,361				80,159				90,578
Interest income		53				68				186				196
Interest expense		(28,175	)			(15,467	)			(75,052	)			(37,382	)
Non-operating (loss) income		(605	)			(438	)			(971	)			(1,580	)
Non-operating expense-debt restructuring expenses		(4,430	)			—				(8,041	)			—
Foreign currency exchange gain (loss)		2,409				4,928				349				9,051
Income before income taxes		(10,215	)			19,452				(3,370	)			60,863
Income tax (expense) benefit		(514	)			(1,926	)			(1,301	)			(6,108	)
Net income including noncontrolling interest		(10,729	)			17,526				(4,671	)			54,755
Net loss attributable to noncontrolling interest		(433	)			(724	)			(1,756	)			(2,029	)
Net income attributable to Ebix, Inc.	$	(10,296	)		$	18,250			$	(2,915	)		$	56,784
Basic earnings per common share attributable to Ebix, Inc.	$	(0.33	)		$	0.59			$	(0.09	)		$	1.85
Diluted earnings per common share attributable to Ebix, Inc.	$	(0.33	)		$	0.59			$	(0.09	)		$	1.85
Basic weighted average shares outstanding		30,866				30,777				30,854				30,745
Diluted weighted average shares outstanding		30,877				30,783				30,861				30,748

See accompanying notes to the condensed consolidated financial statements.

___________________
¹ Beginning April 1, 2023 Prepaid card revenues are presented on a net basis (based on contractual changes as further described in the “Ebix Cash Exchanges Gift Cards” Section)) while periods preceding April 1, 2023 reflect prepaid card revenues on a gross basis. Please see (non- GAAP financials) table with both periods recast on a net basis, for comparison purposes under heading "Condensed Consolidated Statements of Income prepared on Net Basis for Comparative Purposes Only (Non GAAP)".

Ebix, Inc. and Subsidiaries Condensed Consolidated Statements of Income prepared on Net Basis for Comparative Purposes Only (Non GAAP) (In thousands, except per share data) (Unaudited)
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
		2023				2022				2023				2022
Operating revenue	$	119,228			$	120,499			$	353,731			$	334,942
Operating expenses:
Cost of services provided		32,658				36,860				96,207				94,442
Product development		11,020				10,483				31,951				30,964
Sales and marketing		4,996				3,973				11,909				12,249
General and administrative, net		43,869				34,400				117,445				93,049
Amortization and depreciation		6,152				4,422				16,060				13,660
Total operating expenses		98,695				90,138				273,572				244,364
Operating income		20,533				30,361				80,159				90,578
Interest income		53				68				186				196
Interest expense		(28,175	)			(15,467	)			(75,054	)			(37,382	)
Non-operating (loss) income		(605	)			(439	)			(971	)			(1,580	)
Non-operating expense-debt restructuring expenses		(4,430	)			—				(8,041	)			—
Foreign currency exchange gain (loss)		2,409				4,928				349				9,051
Income before income taxes		(10,215	)			19,451				(3,372	)			60,863
Income tax (expense) benefit		(514	)			(1,926	)			(1,301	)			(6,108	)
Net income including noncontrolling interest		(10,729	)			17,525				(4,673	)			54,755
Net loss attributable to noncontrolling interest		(433	)			(724	)			(1,756	)			(2,029	)
Net income attributable to Ebix, Inc.		(10,296	)			18,249				(2,917	)			56,784
Basic earnings per common share attributable to Ebix, Inc.	$	(0.33	)		$	0.59			$	(0.09	)		$	1.85
Diluted earnings per common share attributable to Ebix, Inc.	$	(0.33	)		$	0.59			$	(0.09	)		$	1.85
Basic weighted average shares outstanding		30,866				30,777				30,854				30,745
Diluted weighted average shares outstanding		30,877				30,783				30,861				30,748

Ebix, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (In thousands) (Unaudited)
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
		2023				2022				2023				2022
Net income including noncontrolling interest	$	(10,729	)		$	17,526			$	(4,671	)		$	54,755
Other comprehensive income (loss):
Foreign currency translation adjustments		(14,902	)			(35,499	)			(4,789	)			(90,126	)
Total other comprehensive income (loss)		(14,902	)			(35,499	)			(4,789	)			(90,126	)
Comprehensive income		(25,631	)			(17,973	)			(9,460	)			(35,371	)
Comprehensive loss attributable to noncontrolling interest		(433	)			(724	)			(1,756	)			(2,029	)
Comprehensive income attributable to Ebix, Inc.	$	(25,198	)		$	(17,249	)		$	(7,704	)		$	(33,342	)

See accompanying notes to the condensed consolidated financial statements.

Ebix, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except share amounts)
	September 30, 2023				December 31, 2022
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	71,162			$	110,637
Receivables from service providers		8,523				4,223
Short-term investments		17,526				17,438
Restricted cash		10,465				8,210
Fiduciary funds - restricted		1,835				2,092
Trade accounts receivable, less allowances of $13,971 and $18,167, respectively		156,302				154,533
Other current assets		93,068				87,387
Total current assets		358,881				384,520
Property and equipment, net		53,154				52,448
Right-of-use assets		7,720				9,636
Goodwill		879,254				881,676
Intangibles, net		45,085				50,900
Indefinite-lived intangibles		16,647				16,647
Capitalized software development costs, net		16,184				15,342
Non Current Accounts receivable, less allowance		10,512				—
Deferred tax asset, net		123,887				96,290
Other assets		50,667				30,096
Total assets	$	1,561,991			$	1,537,555
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	116,080			$	99,194
Payables to service agents		31,479				11,299
Accrued payroll and related benefits		16,537				10,651
Working capital facility		15,341				3,367
Fiduciary funds - restricted		1,835				2,092
Revolving line of credit		444,902				449,902
Short-term debt		991				3,000
Current portion of long term debt and financing lease obligations, net of deferred financing costs of $3,287 and $469, respectively		170,502				190,866
Contract liabilities		40,832				32,028
Lease liability		2,739				3,354
Other current liabilities		24,113				25,784
Total current liabilities		865,351				831,537
Revolving line of credit		—				—
Long term debt and financing lease obligations, less current portion, net of deferred financing costs of $0 and $0, respectively		47				160
Contingent liability for accrued earn-out acquisition consideration		2,285				2,299
Contract liabilities		7,261				14,098
Lease liability		5,287				6,612
Deferred tax liability, net		1,150				1,150
Other liabilities		29,066				22,259
Total liabilities		910,447				878,115
Stockholders’ equity:
Preferred stock, $0.10 par value, 500,000 shares authorized, no shares issued and outstanding at September 30, 2023 and December 31, 2022		—				—
Series Y Convertible preferred stock, $0.10 par value, 350,000 shares authorized, no shares issued and outstanding at September 30, 2023 and December 31, 2022		—				—
Common stock, $0.10 par value, 220,000,000 shares authorized, 30,899,335 issued and outstanding, at September 30, 2023, and 30,819,533 issued and outstanding at December 31, 2022		3,090				3,082
Additional paid-in capital		20,355				18,800
Retained earnings		811,866				814,780
Accumulated other comprehensive loss		(224,226	)			(219,437	)
Total Ebix, Inc. stockholders’ equity		611,085				617,225
Noncontrolling interest		40,459				42,215
Total stockholders’ equity		651,544				659,440
Total liabilities and stockholders’ equity	$	1,561,991			$	1,537,555

See accompanying notes to the condensed consolidated financial statements.

Ebix, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)
	Nine Months Ended
	September 30,
		2023				2022
Cash flows from operating activities:
Net income attributable to Ebix, Inc.	$	(2,915	)		$	56,784
Net loss attributable to noncontrolling interest		(1,756	)			(2,029	)
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation		16,061				13,660
Provision (benefit) for deferred taxes		(28,130	)			(25,361	)
Share-based compensation		1,604				2,905
(Benefit) provision for doubtful accounts		3,104				1,687
Amortization of right-of-use assets		2,894				2,633
Amortization of capitalized software development costs		131				2,246
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable		(16,473	)			(15,994	)
Receivables from service providers		(4,300	)			(104	)
Payables to service agents		20,180				7,330
Other assets		(23,155	)			1,577
Accounts payable and accrued expenses		25,901				(3,195	)
Accrued payroll and related benefits		6,005				(736	)
Contract liabilities		2,023				2,415
Lease liabilities		(2,944	)			(2,532	)
Reserve for potential uncertain income tax return positions		—				—
Other liabilities		5,200				3,807
Net cash provided by operating activities		3,430				45,093
Cash flows from investing activities:
Capitalized software development costs		(1,057	)			(5,676	)
Maturities (purchases) of unrestricted marketable securities, net		(507	)			(4,518	)
Capital expenditures		(11,076	)			(12,671	)
Net cash (used in) provided by investing activities		(12,640	)			(22,865	)
Cash flows from financing activities:
Prepayments related to Debt Refinancing		(6,341	)			—
Proceeds from term loan		—				—
Principal payments of term loan obligation		(30,527	)			(23,464	)
Forfeiture of certain shares to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vested		(42	)			(107	)
Dividend payments		—				(6,954	)
Payments of debt obligations, net		(1,997	)			(1,953	)
(Payments) of/Borrowings under working capital facility, net		12,018				868
Payments of financing lease obligations, net		(120	)			(147	)
Net cash used in financing activities		(27,009	)			(31,757	)
Effect of foreign exchange rates on cash		(1,644	)			(21,252	)
Net change in cash and cash equivalents, and restricted cash		(37,863	)			(30,781	)
Cash and cash equivalents, and restricted cash at the beginning of the period		124,959				114,764
Cash and cash equivalents, and restricted cash at the end of the period	$	87,096			$	83,983
Supplemental disclosures of cash flow information:
Interest paid	$	58,861			$	32,989
Income taxes paid	$	31,123			$	28,875

See accompanying notes to the condensed consolidated financial statements.

Supplemental schedule of noncash financing activities:

During the nine months ended September 30, 2023, there were 2,282 shares, totaling $42 thousand, used to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vesting.

During the nine months ended September 30, 2022, there were 3,914 shares, totaling $107 thousand, used to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vesting.