Q3 2019 Earnings Call
Session.
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I would now like to handle the conference over to your speaker today, they're in Joseph corporate Vice President of Ebix.
Go ahead Sir.
Thank you.
Welcome everyone to Ebix incorporate into 2019 third quarter earnings conference call joining.
Joining me to discuss the quarters, Ebix, Chairman, President and CEO , Rob and Rayna, President and churn service is North America, Hashitani Ebix CFO rubber Karen.
Following our remarks, we'll now open up that we will open up the call for your question.
Now let me quickly cover the safe Harbor some of the statements that we make today are forward looking including among others statements regarding your mixers future investments, our long term growth and innovation the expected performance of our businesses and our use of cash. These statements involve a number of risks and uncertainties that might cause actual results could differ materially.
And those project in the forward looking statements.
Please note that these forward looking statements reflect our opinions only as of the data. This presentation that we undertake no obligation to revise our publicly released a result of any revisions to these forward looking statements in light of new information for future events.
Additional information concerning factors that could cause actual results to materially differ from those and the forward looking statements made today are contained in our house you see filings, which leads to more detailed description of the risk factors that may affect our results.
Our press release announcing the Q3 2019 results was issued this morning. The audio this investor calls also being a webcast live on the website at Www Dot index Dot com forward Slash webcast. You can look at Ebix is financial the beyond what has been provided and their release on our website www W. Dot Ebix stock.
Uh huh.
The audio on the text transcript of this call will be available also on the Investor home page.
Website after four P.M. eastern standard time today.
Let me now discuss the quarter from a numerical perspective.
Revenue in Q3, 2019 increased 14% from a year ago 247.2 million.
On a constant currency basis, if it says Q3 2019 revenue increased 15% year over year to 148.4 million as compared to 128.6 million in Q3 of 2018.
The revenue improvements reflected growth in the company is either cash channel.
Exchanges cumulatively and putting in the insurance <unk> cash from actual exchanges accounted for 88% of the Q3 2019 revenue.
In Q3, our EBIT cash revenue was the largest channel for Ebix accounting for 56% of the company its revenues and our insurance exchange channel accounted for 32%.
Year over year revenue increase was primarily driven by the growth of the financial exchange.
The extracts exchange revenue grew 6% year over year in Q3, 2019, the 51.2 million well growing 7% year to date as compared to the same period in 2018.
Our explosive growth over the last 12 months, it's done primarily in India, driven by the growth and they give us cast financial exchange businesses that humans cast for National Exchange revenue grew 36% to 82.1 going into Q3 2019 as compared to 60.3 million in Q3 2018 and.
57% your day, that's compared to the same period in 2019.
After excluding the revenues from the discontinued eat governance business. If its cash Q3 2019 revenues grew 42% in Q3 2019, that's compared to Q3 2018.
On a constant currency basis, you just cash revenues grew 5% organically that's compared to Q2 2019.
We have a number of large initiatives in place that are targeted at getting or if its cash revenues on a standalone basis to between half a billion to 600 million annually over the next one year.
I will now I'll turn the call over to Bob.
Thank you Darren and thanks to all on the call for your continued interest and support there either.
First of all let me say, how gratifying I am to rejoin the Ebix team at this exciting time of the company's evolution.
A few things stood out in the corner Cort, one we had a strong quarter in terms of operating cash flows to we continue to grow our core insurance exchange anybody's guess businesses in the quarter. Three we made some tough conservative decisions along with our accounting policy to recognize a large bad debt reserve.
Let me discuss sees in reverse order.
In Q3 to copy booked a 12.1 million dollar bad debt reserve as a proportion measure against receivables due from or public sector entered TPS and now in India.
Payment. These receivables has been delayed due to liquidity crunch BSNL.
However, the government they have India has recently approved funding to yes or no.
And the company expects that the counts will be fully collectible wants to government funding reaches BSNL.
In spite of knowing this this receivable is secured by the might have the government. We chose and book a 12 million dollar bad debt reserve to be in sync with our company's accounting policies.
On the accounts receivable allowance front.
This reserve impacted the copies net income was six point sixmillion.
After factoring in the five and a half million portion attributable to the non controlling interest.
Because of the reserve that was for 232019 cap diluted earnings per share decreased 28% to 67 cents per share compared to 92% a year earlier.
Three very team.
non-GAAP diluted earnings per share in Q3, Threenineteen, However grew 12% as compared to one dollarsthree Stan.
Last year at Q3.
GAAP net income decreased 30%, 30% at 20.5 million compared to 29.2 million in Q3 was 18.
Despite an increase revenue principally due to the bad debt reserve that we spoke earlier, which hasn't net impact of 6.6 million.
Our also net income was affected by a increased interest expense associated with our expanding a bank credit facilities, which has provided funding for strategic acquisitions increased not nonoperating short term expenses associated with the company's recent investments and growth initiatives in India associated with service.
<unk> increased gross merchant merchandise value business businesses.
However, the Q3 2019, non cat increase actually increased 8% 31.7 million after excluding certain non recurring items.
Darren already discussed of growth in our core insurance and Ebix cash business Robin provide you more color on on that during his talk.
From a cash for sector of cash generated from operations was strong this past quarter at $41 million major cash utilization during the past quarter consisted of 22.7 million used to pay down of working capital facility in India.
2.8 billion used to make payments on our term loan for slate with regions Bank 2.3 million was used to pay our quarterly dividend to millions used to purchase 45000 shares our common stock.
We also invested.
About $3 million on Capex and software development during this past quarter and we funded all these initiatives from existing cash and operating cash flows.
That said that Ebix ended the quarter with cash cash equivalents and short term investments of 129 million, which is up 22 million from just a previous quarter.
Ending in June was it and we now have available cash reserve adjustment of approximately $41 million, including available borrowing capacity under according feature on our credit facilities with our bank syndicated Bank group.
Finally, as two key balance sheet metrics, our balance sheet is healthy and we're in a copies financial positions sound. The current ratio of 1.50.
Working capital short term.
Liquidity position or 126.7 million and a debt leverage ratio or 3.65.
Ebix is weighted diluted shares outstanding decreased to 30.6 million in Q3 as compared to 31.6 million in Q3 of last year.
As of today, the company expects the dilutive share count for Q4 to 2019 will be approximately 30.8 million shares.
Images tenants you will be filed today and are now we'll pass the call onto cash.
Thank you Bob.
Good morning, ladies and gentlemen.
I will be discussing the Q3 performance of our U.S. insurance operations.
That's also they know the crystal ball for the future and dozens of regions performance.
Let me start by saying that I'm also pleased by the fact that the worldwide insurance exchange revenue grew 6% Euro what are your in Q2 FY 2019.
The 1.2 million, while growing 7% yesterday as compared to the same period.
In 2018.
The U.S. exchange revenue also grew 4% in Q3 2019.
As compared to Q3 2018.
The Rcs revenues in the U.S. in Q3, 2019 were down 37% as compared to Q3, 2018 and down 8% sequentially as compared to Q2 thousand 19.
We believe that we have closed for bottoming out on the decline and now expect that have news to start going back up in the Rcs setting up and 2020 .
In terms of our core business performance in the U.S. in Q3, 2019, we grew our life and annuities exchanges, Hello, ecommerce exchanges PMC business and show them starting ticket business.
These gains were offset primarily by decreases in the consulting business health content business and the PBM business overall.
Just didn't minus trouble U.S. insurance exchanges, 4% as compared to Q3 2018 in spite of these decreases we see that as a positive trend.
Looking ahead, we have made a lot of investments in the ideal solution selling sales realignment, new product creation and old I'm focused on straight through processing and the insurance arena.
Also leveraging our contacts worldwide that though as also leveraging our international insurance products.
Currently on the even discussion endo for sale in the U.S.
Our prospect pipeline today is bigger than ever before.
We are excited about our prospects in the insurance exchange or the now.
As we presently out in the final decision, making stages of almost 18 to 20 exchange deals in the U.S.
We have them our business deals with insurance business Giants that can move the needle substantially for us.
At this stage I cannot work in more details in view of the competitive nature of the business and the comfort in chunky associated with the deals that we believe ought to not pocket.
We are today in the midst of a number of business deals, where then we wouldn't be building a digital platform for clients and to end business.
Many of our product simply including CRM, quoting a new cabinet lightspeed et cetera.
Let me talk to a few of these initiatives.
Looking at creating any big study to see marketplace.
The vision would be to create a state of the art exchange that'd be would offer insurance products directly to the consumer.
The portal would provide straight through processing and instead underwriting enabling throughout insurance partners in essence, we wouldn't be playing an intermediary door and would be paid at the mission.
The bulk or would it be desktop with all of consumer facing assets such as well in this content.
Assessment tools education, but they do add them ask the doctor et cetera.
The border would be powered by artificial intelligence tools to make it easy for consumers to search select and apply for insurance.
What we're talking about share is something offer different scale.
We are presently working on a large project to create a private exchange for large household name financial institution.
Beyond the process of Onboarding, two caveats to this exchange and expect to add more in the coming quarters.
We had also initiating upward price changes to a few of our businesses and the effect of those the start showing big Thank you for 2019.
We are presently working on an initiative to deploy an illustration exchange for life insurance in Canada.
Also on the illustration exchange, we are introducing when flex insights product, which we announced recently have demanded by industry conference.
Insights is an analytics store, which leverages data from all what 18 million illustrations done on the platform. This store would allow colliers and distribute those to benchmark that performance against the industry and that theaters.
We have been collaborating with carrier partners for the design of the store and is now generally available to the market.
In 2020 , we also launched an artificial agent who assist case design us during the illustration process.
These tools will provide additional avenues of revenue.
Yeah, working on an initiative that will allow us to charge our distributors for certain products, while deploying some Neil I don't functionality.
Duffy normally provided free while getting some money from the carriers. This can be a good source of new revenue in the coming quarters.
Yeah, working but the fuel to now named industry I phones to reposition our health exchanges in the market.
In the idea of health content exchanges, we just deploying to enable relationship in Canada post media.
Yeah walking on many initiatives that should result in RCM me and Radnets revenues showing good growth.
We expect the strong Q4.
In 2019 in terms of top line in the Sia Me Arena.
Yeah, working hard I'm getting our keeping it needs to go up we are targeting our partner caveats strongly and remain hopeful on getting done one off platform.
We have been working with the Ebix gosh wealth and asset management division to sell those products to our clients in the U.S.
These products are already successful than Europe , middle East and Asia.
We see an opportunity to create strong regarding their me opportunities out of these products.
Let me also that's beyond the initial stages of climbing the big Ebix in charters focused export and 2020 , we have huge interest from our clients and partners and that's not excited to make this a reality soon.
Let me finally summarize by saying that we got excited by what is ahead of us and believe that 2020 .
Can be a great deal for North America insurance operations.
I'll now hand to follow what the Robyn Thank you.
[noise] good morning, everyone.
I want to start by congratulating our theme, what an outstanding quarter wed been up a best operating cash flow performance, though along with that kind of revenue.
Bob and data have discussed the pneumatic outperformance on the company in the fourth.
While ash give you an insight.
The tremendous energy and passion backing the U.S. and killed us operation.
I'll focus my talk on one.
Nothing and shot up enough at a high level.
From any outside the U.S.
No.
The ebix cash operation.
Right.
Oh, gosh, I feel and lastly, my overall meals on what's ahead of us.
Let me just talk about then shoulder business itself.
I did well in California.
And company Apone thousand a 19.
Well good but.
But also for 2019 unexpected.
There by the traditional continuing medical education topline growth in the fourth quarter off the besides we have a number of new win in the area openshaw exchanges that should contribute a lot of though.
I'm pleased to let you know that we recently agreed on a multimillion dollar deal and been shown up funny enough with a fan base large financial institution.
<unk> came out on the cross selling up but often ebix gosh theme.
The Australian region.
Uh huh.
About the organic goal in the short extend button Oh by the decline in our consulting help content and be a bit less in late in the United States.
We feel that beyond that I bought that and have a very strong and shot of pipeline today.
Sure you don't want to growth in 2029 children, but nothing worldwide.
And they tell US what are you know we are investing in a lot of new product.
But as discussed in his talk I'm, particularly excited by the adoption of artificial intelligence.
Not in short the submission analytics and support based products.
We have the potential opened up new with stuff.
In short the industry.
Endpoint EBIT in Belgium, new revenue streams.
I'm also excited by the open shouldn't be bought in China based products in India, and the Middle East Africa, Asia and European market.
We ventured into wealth management at the bottom up on EBIT gosh operation.
And in Q.
19, we had organically grown that business.
No offence as compared to <unk>.
<unk>.
I brought in that area.
Came out, though selling melt management products in the Middle East Africa, Asia and India.
Incidentally, we met at 40% plus model and then that's been nothing yet.
Good day, seven people signed up on revenue in this business.
From the Middle East Europe Africa and Asia.
However, the.
Big opportunity and it showed up in the head up off in India, and the Paul all other bump at stock exchange.
BSC Ebix and shoulder 16 venture recently, we announced that we have geared up for all from being shut off at Atlanta.
The Bfc ebix venture deployed in India.
Simply going to leave enough our biggest ventures.
Ever from my perspective, the Bfc Ebix venture.
And Doug I think you'll handle in Chile distribution and Bakken to each other processing in a manner.
Ill never been attempt at in India.
How can be a domino abroad.
Oh up and be up financial institution, and he had a 20000, even scratched franchises.
Last month and breadth of India, we had attempting to bake in children fail.
The last mile in.
Born out of the country.
Ladies.
Last mile.
Across all Citi Bank age.
Broker wealth management and by the SEC.
The <unk>.
Business model on the distribution open children and focus on a beyond a mission based model since that's the most lucrative financially.
While selling life property and casualty equipment travel and help until its et cetera.
But fell 1.3 billion population of the country.
The Bfc vento, but also fell back in the children's products and that's what faded solve it though.
Then children between definitely on an on demand basis on a transaction in subscription basis.
We will not only be falling back on the children, but also for Whiting been showed us access to a marketplace be called up honesty, we shouldn't read no one has any of that.
But she got gala, yes, I think no no in India.
Recently size.
Sure.
In India mid approximate 11, new about 60 million decided to launch its IPO in India and bought valued at $1.5 billion.
Valuation, but based on the opportunity ahead of this system.
I believe that.
I think it'd be a theme and may larger and expand sale than business.
Besides.
We have India, most trusted and all the financial institution by outside in the form a Bombay stock exchange.
More on that plane.
Let me just got got briefly now and the momentum we have generated enough even.
Ebix cash grown.
Only 6% or no.
The other night.
As compared to company up above an ideal and approximately 5% organically and think when Chile or you don't know up above an idea.
The ebix cash, but not in Q3 up nine being good all 36%.
Right.
Headwind one.
E learning business.
<unk>.
Bye.
$1 million.
Vitameal decided not to put field, but yes, I know you governments opportunities.
In two.
Well that any being had given oh point $4 million in revenue.
If I exclude.
He learning and be a fundamental from the compatibility.
Then that amazing EBIT gosh business and.
1009 theme.
By 57 cents.
Compared to guilty of 2018.
Let me get a little bit more detail.
If I quoted.
All acquisitions made up of 2018.
Hi, David gas business growing 23, but then organically and guilty of nine being that's compared to three you'll be beam.
You bike voted that position made up a few though.
<unk>.
And the non quality learning a bit funnel, but nothing from the compatible then been remaining cash business.
In Q3 up overnight.
No organically by 41% as compared to.
You'll pay up above an idea.
But all I, but I want to business grew 61 cents quarter over quarter, you know what do you like ebay Gosh financial Technology Division Rone hundred 44%.
Payment solutions Division, Tony, but nothing odd E learning division revenue fell by 52%, primarily because of some onetime revenue contracting company up above an idea.
We are overall please.
The basic <unk> gosh buttoned up.
Oh.
He but let's say any like remittance lending technology traveled technology.
It's an asset management technology and E learning.
Then redding, 40% plus operating margins are between travel, but nothing in the board.
But at 27% margin, but no there.
We know that at the improved operating margins from Madeley.
From the vitamin acquisition.
Payment solutions and ballpark level, but nothing.
Nobody attorneys have gone back and the normal synergies in process, we shouldn't be then.
Got it wrong that cutting operating margin, but not.
At.
Hi level.
Like gotten shut off but nothing worldwide.
We are presently trying to draw a balance.
Not I pod.
Oh, gosh modeling and out of them there'll be a needle in the market.
Ebix cash performance, it's particularly noteworthy when you compare it to.
Company does that high valuations.
We lost a billion dollar philosophy up in the Indian market and deliver.
Much less topline not then even Scott.
Yes, let me very pleased about even got not story and maybe out of headed with it.
Let me give you any example.
Fred how aggregation network effect and leadership needs no new revenue streams.
Thanks, Phil opportunities and great operating margin.
For example, one is that I met the deal from the past the is within international money transfer operator.
Bad Ebix gets a $16 million signing bonus.
Get access, Jeff 35000 up or franchisee network.
That was built profit.
As for the signing bonus and the actual remittance transaction got a thought they try to Todd yet any made in addition.
For example until either the recent deal we announced.
A few traveling exchange plans, we had and we got bad in advance of $25 million.
Commit that transaction fee arrangement.
$75 million upward over the next.
Yes based on commitments from us in film though.
The segment that even provided to them.
The aggregation.
Allows us.
Now the consolidated the market as also aggressively grow our travel business.
On that.
That we can make these additional fees beyond our traditional problem commissions and other fee payment.
It also opens up an opportunity for us.
Bath part of the speed.
The new and pricing competition out vital booking commissions on business that we may not have other life the killer.
The hard example.
And I'm going to get shouldn't deal the deal that'd be a private mi negotiating in the financial services. The you know better and we Vaughan country level like let's say would be.
And possibly a lot signing bonus.
For White a lot.
So its player access to a franchisee let alone in India.
More on this that'd be finalized the deal.
We're very proud about a month that Oh gosh today have a lot.
Financial exchange in the Indian subcontinent.
Yep fully aware of the functionality that does that being a leader in any segment lots that then.
And he led the financial industry that puts in India.
And then the finance Minister of India.
That's probably the mud.
[laughter] fault on but I'm a consulting.
If that had been announced by the government of India in early 2019 doing it but didn't know.
Causing a lot of hot button amongst that I mentioned franchises.
Cash and myself.
Lead.
The what laying the industry can phone consultants to the finance Ministry and thanks to the humility and broaden the brought up the government.
Back what canceled on 16th.
The main theme and all of government notification, we pay the dominant media portal listening to the industry.
In Q2 thousand 19, we decided.
<unk>.
Book, a bad that although for $12.1 billion.
Outstanding amount would be if another government of India public the unit.
Yes, I know and they sometimes have faith liquidity issue because of the telecom company that pricing water led by Geo in India. The government, India led by Prime Minister Modi publicly conveyed that by BSNL cool a major funding.
Back it besides sanctioning a 40 itself could be a funnel a modern battlements game already accepted by 70000 I've done in 17000 employees.
And if they fail sanction.
Yeah, <unk> own noncore real estate, what than estimated $15 billion.
Via funnel continues to be an a plus rated credit company and build the credit Medina since sensitive backed by the government of India, who have.
I think of government undertaking go down since then the abundance of India and 1947.
Why don't we all thought to save all their children from BFN mill and the government.
The little get paid money being spent almost half a dozen funding we can only decided.
The $12.1 million bad that Oh, well being thing without company policy on bad debt.
In the short, though the booking up that brought a GAAP operating income down substantially for the quarter.
We believe that once we get bad.
On b or something else even funds from the government, we'll get back the income at that time.
We have a number on would be ideal key initiative that I expect it at substantially what ebix cash revenue and income stream in the coming quarters.
I'll name a few.
Ill.
One a multimillion dollar agreement that we haven't had today for the you weigh airport products count the bad we await central Bank approval.
We also auditing the mix stuff back when they cannot climate change. We had we had we met in we added the final stages. We believe that's a pretty pipe offend anybody business.
But 20 $530 million and all the revenue.
And they sometimes we have had a fuel would deal with multiple India that knievel announcement.
Pool from a client.
We have a few new prospects in what do you feel deal in the financial exchange only not that we've all talked through once we have finally.
We have the yacht that acquisition amazing shareholder approval.
We they simply signed an agreement with box and King for the business fab for all their corporate clients and the inbound holiday, but client that's what I thought revenue stream.
I talk to the implementation off on new travel exchange deal that by itself in the large opportunity.
There are some new prospects PDL fortyx deals and international Baloney that we will talk to.
As we finalize that really simply to golar.
The end to end the running of India more like joining us Fran.
I'd ghibli the much.
More or.
The beauty of playing the Bakken or anything.
A prospect there might be deal win in the bus 16, delvina deployed by phone there.
Were you thinking at spectra abroad, how comes up there, but the cutting fees payable on each but.
Each bus ticket.
What I have malian stayed in India.
Also we have a few new acquisition opportunities.
I had a bus that extremely.
Hi.
On the marketing fun, we announced a number of the basic announcement targeted at making gosh a household name in India.
Even a population of 1.3 billion people.
A government committed bill.
Five trillion dollar economy in the next few years and abroad played.
That is one meeting at present, we announced a number of partnership in recent times.
In the game of cricket.
At getting in front of 600 million people, who watch cricket on TV in 2018.
Indians I forget grainy and in 2000, and they became more Indians watched I click at.
Then the Indian food water in the general elections.
We also.
Truck.
New York Brining partnership.
Number one English new channel in films of the ownership and reach across the country. We have a few other partnership and the work that will bring us not only in front of the math.
But awful that need bill and institutional investor.
A big way more on that later and meeting the deal.
All of the deal, but not only support ideal but will also help maximize.
Oh gosh revenue.
Jim.
And we believe will pay for themselves.
With regards to the IPO, we had evidently moving forward on many fronts.
The final stages of selecting and international investment banker at the fourth investment bank the joint not enough from banking theme, we already have yup, India, leading investment bank I see I see I accept them I don't like what actively working with US on died you'll look.
But at a very involved process that entail hiding up for legal from multiple subject matter, but analysts.
Got it right.
Hi out and be a phone audit done no.
Don't put all all numbers being filed across the us for all something that either sector.
And then Paul swing at seven well keep you informed about that.
We see the IPO at a possible month I back out opportunity for the head older EBIC thing.
And all of that financial extinct accompanied in it in Indiana billions of dollar than valuation do not have the financial metrics that operation in India has today.
Lastly.
Let me add.
But I'm more excited about ebix today than ever before.
Ebix yesterday said on a bad will be the largest.
Insurance and financial extending the Mo that perhaps the most intelligent and find that violence, establishing a meeting all any segment.
I'm diving into the call from an Indian had bought annoyed up.
That's above the belly, it's a public holiday today in India on account.
Let's say call it a little girl.
Then employee count in excess of 7000 employees in India.
Our operations have been totally blessed, but some of the best and brightest employing that any company can how.
Ebix has today not just a great company with incredible.
Culture, but help me that's on a mission.
That brings me to the end of my talk I will now and it or not.
Well the operator.
Well open it up for questions.
Thank you.
Thank you as a reminder to ask the question you would need to press Star then one on your telephone to withdraw your question. Please press the pound Keith.
Please standby we've compiled the culinary roster.
Our first question comes from the line of Jeff Van Rhee with Craig Hallum. Your line is not open.
Great. Thanks, Thanks for taking my questions on Robin. It's a series of questions from me I'm first I just want to touch on the comments about the.
The non ebix cash business the base the base exchange business in the U.S. just to be clear I think the release said.
Thought was 8% to 10% growth Ian.
20 to be clear is that everything, but ebix Kashi, you're talking about there I think gosh gave quite overview of the deal flows, but I just wanted to be clear, that's 8% to 10% growth on everything that is essentially not ebix cash is that right.
That's correct.
Okay.
Great. Okay, and then just couple of follow ups on the timing there I think you referenced a yatra we've got the shareholder vote and then obviously on the IPO.
You mentioned a lot of hoops, you've got to jump through from the audit and a whole series of other steps, what's best guess timing right now for both yachts and the IPO.
Well I.
Let me take another month or <unk>.
It was concerned we're still targeting a June or July anyway.
So nothing has changed on that front that no.
With respect to the effect condition.
They were in email me.
A final or go to the next step up making up common filing and so on and we were basically delayed by Madeley because of some perform up to me and and and some numbers to BT audited.
Yup upfront simply because that apart and file and the U.S. than we had to conform their number.
To a U.S. GAAP accounting and so that process have already being undertaken and so we shouldn't be seeing some quick action on it but my my guess is we have probably still 90 days away.
Somebody out there.
Deal getting cool.
Okay.
Okay, and then just high level kind of vision one of the common questions that I get is [laughter] is you know the belief, but a lot of people, but the world is going pure digital that that they settled physical locations.
For booking travel remittance, a lot of lot of those channels ultimately go away and become pure digital.
You've obviously built up a very substantial business and done it while maintaining very high levels of profitability going a lot of customer relationships et cetera, but the question goes to essentially what is what's the thinking it's sort of the strategy. If you will on taking those.
Physical or digital customers and turning them into pure digital customers in that context, I think there's an embedded additional question, which is just kind of the the cross sell up sell that's going on as you're bringing all these businesses together right now so maybe two questions there.
Yeah. So let me that's your first question on behalf of authentic, though I think the first thing we understood that everything.
But we have.
Yes.
So.
From an EBITDA perspective.
Being digit, though it would give us.
Yeah.
Company, we went in the digital more on a fast only more on an on demand more in children. In 2001. When people were not been people talked me crazy to do that so when we look at the financial exchanges or then shoulder 16 been though you know goals.
From my perspective going.
But given however, when you are they did though.
Let me of the market so what.
There are multiple ways you can.
Being financial extended or any chilling effect and then one way is.
To be I don't have had been it though.
Clearly we have every venue available.
Similar to the Bakken provider to our partner to anybody.
And you know they still mode. So we are providing weather.
Getting using ebix cash.
On on their own devices, whether it is on it and it happens.
Mobile devices, but anything on auto there.
But technology agnostic laptop machine you name it we have available and that they still on the board impacting your food going we have food launching a new what's shown up ebix cash dot com, but it'll be a tiny tribe action already and then yeah level website news apps and stuff.
Like that and we've been launched a big marketing campaign around it with a completely digital.
Friendly Paul Knight.
A more math oriented I'm more scalable than we have today.
Having said that but then you have to face that reality all.
A country like India are part of that Matt.
The reality often she on region country.
The reality of the country is that they can they have got like cap and up in India.
The cap bucket Inspite of the fact that wasn't the all of that already ahead.
Good luck at a 4% today, 96% gap than it getting book.
Nobody is walking into a physical location and asking for a cap that's the reality of India. The favorable whatever single biggest block today in selling insurance across the company.
The other players what.
Isn't that super shouldn't read them there.
That does not currently seven people offenders.
And then villages.
Nobody.
It wasn't religious.
So what is happening in if we expect a village at double digit, though that's not happening in my lifetime, because that liquidity levels on their individual well should be leaves seven people [laughter] three behind.
Obviously that is not correct. So how do you get there you get there by deploying physical location in all these have been really the a.
And having the physical locations actually become upon deal that we laid.
To quote did though having that one cents data within the village. For example, we had in you can make heavier but in fact, you can report, but you can have your that Packard you can literally by insurance you can open a new bank account you can do you have crop insurance.
You can you can get a people got all of that their day, if you don't.
I think plays in that millet, you're going to be basically leaving that we laid out of the digital revolution. So there is a step plan plus.
Yes to engage people I told me he told in the area, but it does technology isn't anything today, because it's easy to.
So you have to come up with a plan abrasive did you tell me that given but then you need.
Based on the other thing, though Indian markets and the daily, but if that isn't bipedal Whiting digital to anybody who is the development with a builder savvy so provide them all the younger.
In the Philippines, who want to computer fabby, and I'm willing to Gordon, though we absolutely available for them in a digital format.
The other side.
And then you go to meet the theme can you ought to be to be channel, what our China, because we have power the auto plant lumped together.
No doubt mine and data.
And the problems of employees that they've got to play itself. So we need them without spending marketing money well need to know each of these them.
And then you go out to though 'cause it got location, we had in our job is to make each physical okay and then it though beat the began it fit a b C. <unk> C b.
Let me make them up that the yellow evolution, the yellow number in India don't lie in April that you don't lie in the big Metropolitan but to the big focus off some of the larger players who have come from abroad that aneel money lie in the in the.
He could it be the began to be the de <unk> and the rule though.
Right.
And in those areas you will have to have a must type wrong. The Polish you need to being the last mile you need to how.
I think on location, but you will be digital so look we are ready for bolt, that's so simple reality, but.
Having a physical location actually give the.
A tremendous ed over our competition because the all in favor of marketing money, we don't have clearly been but no money that others have to spend because they need lead we already have these 320000 locations already and as we get into more and more orderly area and we started working with dumping thing.
And yet we will get an automatic lead without spending money and people come to left to do a government settlement and in the process, possibly by traveling chart on sort of level or Atlantic at all Deltic I don't want that went out right. So I think that vision with effect.
I think on what's embedded though so we want them, but I bought but in intelligently, having said that when the effect of the up sell.
That's an ongoing that's an ongoing process.
Everything they do we get into facing each other so Dave going on as that if you want to book for example.
Somebody in India and wants to book of flight or build all what ebix cash today that we have another few player than the market, who will say who can provide that can do what everything ranging from a beat the.
Getting them either or put it probably too.
Pending there.
Turning to get that topic at their hotel that local fab that rental cars, if they want any adventure fault or anything enrol, whether they need foreign exchange, but other than the travel insurance, whether they need a health insurance. So you name it we.
Handle that in the wind transaction and what's cross selling natural because it's the same can you what was going to travel on its the same institution ought to go on a quarter, playing well going to make one of their employees travel, but that's just an example of how we do cross selling today.
We've actually become cross selling to the next level one of examples I gave today in today's call is Walmart Ebix cash Dominion [noise].
Who he who recently help.
Sure. This guy is the satellite multimillion dollar deal in Philippines, but a lot financial institution.
This is ideal for Ebix evolution, where in.
The we already had this large institution that fine our wealth management and asset management. So it wasn't that so for us going and promote in charge of products to them. So we went in.
In a promoted they shut off product teamed up both divisions teamed up and that would be made me, there's I would say the M.
Somebody accepting that proposition.
It was all selling the natural and that's why we had the beneath the conference in India.
You know we brought everybody together one of them lead and got a cross selling on a mass scale.
Got it into two other brief questions for me then with respect to first let me hit the revenue question that I want to get to margins and expenses, but with respect the revenues.
Certainly the B S eat approval was a a challenging process you've got it essentially there can you dial that in a little further what's what's a reasonable timeline for this to be lot, even any any sort of framing of revenue potential impact just help us to envisioned when this is going hit the personnel in simple terms.
So be a CE approval, we gotta in principle approval or what that the other thing the print and simple approval landfill 22 conditions.
Add too and that the potato processor that'd be out in the mid stuff right no promote bfc ebix I'm looking pull that it's more helpful. A process of giving them. Some undertaking some you know I'm regulatory conditions, which we think we've opened over the next studied it once that happens we basically in business for them that Matt.
Our leaching, though and spreading out marketing that I mean.
Putting up brand out in the market, establishing we already have established a deem deploy the product we have already in the back down while that I collection like late April was almost a year, we use that time no interface products with multiple of Cat is we had already trying too hard.
Well some specific customer deals.
The big different fed and it.
Yes, the because they tend to what's in the traditional we'd be able to an extended in the USA. We are going to not just be a thoughts of transaction money here, we are going to function like can.
We're going to function like a distinguishing need and we will be making commission.
On the distribution side, we made that defendant fitting we'd be a theme because he has been very very knowledgeable on that front as they they brought you. They they entered the mutual fund market a few years back and now own 26% of India Mutual fund.
Business.
And so we.
For example, learn from that expedience them. Another key things to do what do you make a lot more money to commission gladly commissions and in some of the in children nope tends to be Wayne, let tie other than the traditional transaction fees. So we feel that that should hold up and good light no.
The Bakken side, we're going to tie transaction fees like would traditionally doing the U.S., we'll have the mix of subscription and but that shouldn't be with respect to all the patios. The broker that that will open up the called me up the market, we will be able to pellet patio look if you want to be on this and you don't have the dual we'll give you our underwriting tools will give you.
Technology.
Enable you to be on the weekend.
Bucket and backed by itself is very exciting for the patios to get the see you, you'll basically for whiting them less than Brett I'm worried or cadieux.
So at that whitesell, either the the big deal I think for any kind of yet so having said that.
I think there.
You know we Oh.
Please one quarter away from what time bed, and we would be starting to pull off some revenue out of it. So presently we we are looking pull the whole process and showing now that we have the regulatory approval that we put all of a relationship but nothing relationship and though.
In place because until you have the regulatory approval you constantly only nine business agreement with some of these data yet so now we're going to spend the time signing these business agreements bottoming out the commission deal and then it's a matter of all time of the pulling all of these.
Through the market.
Okay, great and.
Last one for me then you referenced a number of things that that stand out on the expense side.
It sounds like first on the <unk> on the revenue side it looks like acceleration when you combine the east cash in the in the insurance exchange businesses. So we're seeing maybe a pick up the on the revenue outlook and at the same time margins were bit below me on the non-GAAP basis. This quarter and you mentioned a lot of spend you talked about a couple of cricket teams and network in some other things that you're spending on.
Preparation for IPO in some some other factors how do we think about margins going forward.
Yeah, let me pick it unless thought or you talked about marketing and the IPO, let's see I don't know me look at the marketing as an IPO initiative, because frankly, that's not the livia thinking that thinking about marketing as a tool to get in front of the consumer look out of competition collectively between the companies left.
Lost a billion dollar and if you look at the giant in the room, meaning they grew their business the theme for a thin wildcat losses.
Grew by 350% year over here.
Considering that you compare it to Ebix gas, we've done fantastically well the would be out at today. We then he is in the U.S. to get to that point from bad I started in 1999 and doing a happy and we had already at the point when you're talking about maybe the modern didn't can improve but.
And so having said that Gordon you then a modest in a very good on most of the but nothing that I laid out in the call. So no we ever talk about the any other data models it isn't that good.
So when we when we look at that to me mopping is an area of enemy and even need to spend.
We are going to be a needed in the market to be yacht and.
We believe marketing actually now that didn't rating enough cash flow now that get didn't do anything enough model. Then we can afford to spend a little bit off that model and on the market growth, but in the further but a fifth having.
Company, though what doesn't blowing money away and moving money on marketing. So to me marketing is not going to be a band in the.
Yep pinpoint to.
To me marketing, if you spend intelligently should actually generate more organic growth and should pay for itself because the Bakken. These are already existing you see the Bakken deals when we didn't rate up and you don't want today, we know how to get money out of that we know how to get the Bakken play a big part.
<unk> for that because we have been given these deals which are based on scale, so which means if you can either scale, but a lot of getting the grown like in the U.S. at me, but growing up scale out a lot of didn't became a deep effect, but and then it became pretty pipe effect and so on.
The question of growing up scale and spend that marketing money, what going beginning late that scale and that's what I put that we don't have without IPO. This isn't any city, we need to undertake no spectrum of 10 I should tell you. The main let's put it this quarter into the model then what Mindy Budd.
We made an acquisition the wise men and why is this all.
Basically was more or less the breakeven button.
And there were multiple even thought it no my expectation from why isn't that what I believe that this acquisition would give up 25% or more in lot of him, but unfortunately, it gave us growth two three or 4% lot of him and why did that happen it happened because what the big that either one of them.
He them was that some of the bank what involved in working with us and create and in the God have been Oh, My God business decided to get out of that got a bit because different.
I felt that all bank fat.
The only two banks are what involved in it but we've been.
I think of India, and just secured I don't approval lawn title God bless them, a non bank had been given that a pool. So now that we have that approval. We clearly expect substantial revenue from that business, but that revenue that we did not suddenly have in Q3.
Secondly, we ran into a few airport met in we have committed.
We have committed to money, although the airport and.
Not getting enough, but I mean, you know from those at board now why did that happen, but be borne wise when they want a few airport, where they had given some regional commitment thin film the money to be paid on annualized basis and those were good intelligent.
Got it says that they hadn't made on analytics that they had based on analytic what happened in certain airports to give you. An example, an airport like Oh a veteran.
So who show politically killed him go out there was some grape incidents that happened in go over that not not no. Yet it has there been but I think that thought if traffic down by 70% to go up from international but what that they'd want it automatically impacted our product, but nothing no we have a lot.
Outflow money.
Antibody and the inflow money the lot NOLA so be at the company had to make some intelligent decisions, we'll have to make some intelligent opinion, which is like saying we need to be we don't need to pick up a revenue for the pick up revenue, but to get out of some of these airport deal that many people feel that you're not making enough money you actually have to get.
I'm noticing and then you need and that's what Ebix is done so the good news I feel we have a better you go to handle on life, but we feel we can very quickly take this business back in two people that modern business. The vitamin business. This product on the three phenomena, which basically popped up a bit public.
Even though operating margin so vitamin perspective, the other but nothing that we have no automotive didn't.
Corporate travel and my spend enough the event.
And endorsed too but nothing.
That's the nature of those businesses those up project based businesses and then broad based businesses.
You're recognizing revenue.
Growth level, whereas a lot of didn't go to study the level at all the going to be a bit lower and you have always been aware of that but that if you want to be a leader in that level market. That's a very important but not for us to get an AD me good either one some of that but.
It didn't see additional segment it didn't really additional hotel and they put a lot of <unk>.
Let me know thing for us because we are now able to.
Do you have a certain targets on a cumulative site and generate more money, but wouldn't be looked at the overall scheme of things. If we can if we can handle wise man hour model will come to a level that you're getting beyond the Putney button model that we want to be yet on PAMA overall ebix bus.
See in the short, though we want to be intelligence, we don't want to be Penny My phone. Please on one side, we have an IPO that of the head up but on the other side, we have learned a tremendous opportunity to lead them up good international players, but stepping in India, and what's truly boarding and money too.
To get there the market share.
I don't want to be budding about 2% had a bad and though the modern dance and give up on the market share, but we are getting so I would rather compromise my mother didn't buy Hooper said, if I can and get that market chat and and.
By organic growth increased organic growth. So we're trying to draw balance the good news is that we.
Feel we have a good handle on thing you know exactly where we have all the great any other business had a modest is a great. We know we had a lot of things that law and Justin.
All new but these are not materially up for us the bitumen and the the carpet and the mice business.
If you look at these once you're aware, where youre modeling as low as you know exactly where to target and also a fancy I've given you already opened Alfredo Alonso.
Got you would that you Paul how are we thinking about it.
Yes.
Helpful. Thank so much.
Thank you.
And we have no further questions in the queue at this time.
Thank you considering that we don't have any more questions I'll close the call I look forward to speaking to you all up you and me announced yet another though thanks, everyone for being on the call.
And did that I've called the call.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.