Q4 2020 Ebix Inc Earnings Call
Okay.
Good afternoon, ladies and gentlemen.
I think 2020 financial results Investor call at.
At this time, all participants are on a listen only mode.
We will conduct a question and answer session and instructions will follow at that time, Inc.
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I'd now like to turn the conference over to your host Mr. Darren Joseph Corporate Vice President.
Thank you.
Welcome everyone to Ebix Incorporated's 2020 annual results earnings Conference call.
Joining me to discuss the quarter is Ebix, chairman, President and CEO Robin Raina, President Insurance services, North America, Ash, Sawhney, and Ebix, EVP and CFO, Steve Hamil.
Following our remarks, we will open up the call for your questions.
Now let me quickly cover the safe Harbor some of the statements that may make today are forward looking including among others statements regarding its ebix as 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 to differ materially from those projected in the forward looking statements.
Please note that these are forward looking statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise or publicly release the results of any revisions to these forward looking statements in light of new information or future events.
Additional information concerning factors that could cause actual results to materially differ from those in the forward looking statements made today is contained in our SEC filings, which posted a more detailed description of the risk factors that may affect our results.
Our press release announcing their 2020 full year and Q4 2020 results was issued this morning.
The audio of this investor call is also being webcast live on the web at Www Dot Ebix Dotcom Force last webcast you can look at Ebix as financials beyond what has been provided in the release on our website www Dot Ebix dot com.
The audio and the text transcript of this call will be available also on the investor homepage of the Ebix website. After four P M eastern time today.
Let me now discuss the quarter and the full year.
GAAP revenue in Q4, 2020 increased 52% from a year ago to $221 1 million.
The revenue improvements reflected growth in the company's EBIT cash and insurance channel.
GAAP revenue for the full year of 2020 increased 8% from a year ago to $625 6 million.
On a constant currency basis, Ebix is 'twenty 'twenty revenues increased by 12%.
260, net $66 9 million to $647 5 million versus $580 6 million in 2019.
Exchanges, including Ebix cash and insurance exchanges worldwide continued to be Ebix is largest channel accounting for 91% of our fiscal year 2020 revenues.
The year over year revenue has increased in Q4 2020, a result, as a result of revenue growth from our payment solutions and continuing medical education businesses. Besides revenue growth generated from the company and its annuity risk management property and casualty and bus exchanges. These.
These growth areas were partially offset by declines in the COVID-19 infected affected areas of travel foreign exchange E learning and the Rcs strategic consulting businesses.
Our year over year Ebix cash revenues grew 21%, while the insurance revenues declined by 6%.
Primarily due to COVID-19, and the strengthening of the U S dollar against foreign currencies are.
Our businesses outside the U S are primarily in India, Australia, Brazil, The U K, New Zealand, and Singapore, which were impacted strongly by currency headwinds on a constant currency basis. The overall revenue of Ebix would have been higher by 21 9 million in 2020 at last year's average currency.
You're right.
Also on a constant currency basis. The overall revenue of Ebix, Inc. Q4, 2020 would have been higher by $6 million.
Our revenues grew sequentially and most of the geographies of our businesses, India revenues grew sequentially by 65%. The U S revenues had a sequential increase of 6% Australia had a sequential increase of 23% Singapore.
<unk>, an increase of 18% and New Zealand, a sequential increase of 15% Brazil.
Brazil had a sequential decrease of 8%.
Despite the devastating effects of COVID-19 on our travel for X E learning and other businesses our growth in the Indian market continued in 2020.
The India led ventures, including India led revenues from build items in other Asian countries showed 21% year over year growth in 2020, probably growing to $388 2 million from $320 million in 2019, and 70, 878% growth when comparing the full year 2020.
Indian led revenues of $388 2 million to 2000.
And 18 revenues of $217 5 million.
Likewise, our growth in the Indian market continued in Q4 2020, the Indian led ventures, including Indian led revenues built in other Asian countries showed 98% year over year growth in Q4, 2020 by growing to $160 4 million from $81 2 million in the same period in 2019 and 100.
43% growth from $65 9 million net same period in 2018.
International revenues in Q4, 2019 accounted for 81% of the total revenues for EBIT.
While India led revenues accounted for 72% of EBIT as total revenue in the fourth quarter exemplifying the tremendous growth we have experienced in our international businesses, primarily due to the EBIT cash financial exchange business.
As the vaccinations are fully implemented and the effects of COVID-19, subsides, we expect substantial revenue increases across the world.
I will now turn the call over to Steve. Thanks.
Thanks Darren.
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The last few months have provided EBIT with some challenges.
But I've seen some incredible dedication and effort by our employees to overcome these challenges to complete the 2020 on it in the 10-K preparation I'd like to thank all of our employees for their continued dedication to ebix and especially those employees that have shown incredible work ethic and we're directly involved with the successful completion of our 2020 on it.
EBIT continued to experience negative impacts from the COVID-19 pandemic during the fourth quarter of 2020.
The company's foreign exchange travel remittance and E learning businesses experienced in excess of a 70% decline in year over year revenues during the fourth quarter of 2020, which is consistent with the third quarter of 2020 and an improvement.
From an approximately 90% decline year over year in the second quarter of 2020.
Despite the negative impact due to COVID-19, the company delivered Q4 2020, adjusted EBITDA, adding back the noncash stock compensation and the Q4 impairment charge related to our <unk> joint venture of <unk>.
$38 8 million, which is flat year over year and for which we are proud of in lieu of the challenges faced from COVID-19.
For the fiscal year 2020, excluding the $6 $2 million impairment charge recorded at ebay EBIT generated $150 5 million of EBITDA plus noncash stock comp.
2019, adjusted EBITDA, given how negatively COVID-19 impacted some of our key businesses I'm, sorry, I'm sorry.
I apologize while that is a 13% decrease from comparable 2019, adjusted EBITDA given how negatively COVID-19 impacted some of our key businesses. During 2020. This level of adjusted EBITDA speaks volumes as to the diversity of Ebix and the resilience of our solutions and services globally.
Darren provided an overview of the revenue results for the quarter saw focus on more details around the operating results.
Gross margin in the fourth quarter of 2020 was 32, 1% a decline from 44, 3% in Q3, 2020 and 63, 7% in Q4 2019.
For the fiscal year 2020, gross margin was 45, 1% compared to 64, 7% in 2019.
This decrease in gross margin in Q4 2020 and for the 2020 fiscal year was driven by increased sales of Ebix cash as prepaid gift cards in India.
Payment solutions business increased 96% sequentially in the fourth quarter from Q3 2020.
And for the fiscal year experienced year over year growth of approximately 590%.
This growth was fueled by several factors first the government of India has made the digitization in elektron vacation of the Indian economy, a priority in recent years.
Second actions taken in 2019 by the regulatory authorities in India resulted in prepaid gift cards being an attractive product for customers relative to traditional debit card auctions third COVID-19, and the Lockdowns that resulted from the pandemic increase the demand for our prepaid gift cards, and lastly, ebix consciously TARP.
We did this product with increased marketing efforts to address market demand and increase our own ebix cash brand awareness through the co branded gift cards between Ebix cash and our bank partner.
However, those revenues have materially lower margins than other ebix solutions and services and thus diluted our gross margins versus the prior year.
We expect elevated levels of demand for our payment solutions products in India, while the pandemic persists and possibly longer as consumers and businesses change their payment habits.
Both our product development, and our sales and marketing expenses decreased year over year in the fourth quarter of 2020 and for the 2020 fiscal year. These.
These decreases are directly the result of cost cutting moves that the company made when COVID-19 arose in March of 2020.
For Q4, 2020, and the fiscal year 2020 product development expenses decreased year over year, 23% and 22% respectively.
Sales and marketing expenses decreased 32% and 29% year over year during the fourth quarter of 2020 and full year 2020, respectively.
Ebix continues to manage its manage its G&A and other costs proactively our G&A expenses declined $17 $3 million in Q4, 2020 versus Q4 2019, that's a 44% reduction year over year.
The decline was primarily due to two items first the company's employee related costs, including travel expenses. In Q4, 2020 were approximately $7 million less than in Q4 2019.
Due primarily to COVID-19, total rent expense for Ebix was over $6 $5 million less in Q4 2020 versus Q4 2019.
The year over year rent decrease was primarily driven by rent forgiveness and reduced rents at international airports as a result of Lockdowns and significantly diminished air travel, particularly international travel into and out of India.
For the full year 2020, our G&A expenses declined year over year by approximately $53 million or 38% due to the same above mentioned COVID-19 impacts on the company's employee related costs and rent expense.
Regarding cash flow generation.
Ebix has $104 million of operating cash flow produced during 2020 compares favorably to $60 8 million of operating cash flow in 2019 the.
The increase in operating cash flow year over year was most impacted by trends in our trade accounts receivable during 2020 versus 2019 with COVID-19 negatively impacting the world economy. During 2020, our accounts receivable has decreased as a result of decreasing sales and our travel foreign exchange Robin.
And the learning businesses.
Total cash and short term investments and restricted cash of $138 $6 million at 12, 31, 2020 compares favorably to $112 $7 million at 12 31 19.
Our liquidity remains ample even after the company incurred significant cash usages in 2020, including investments of over $14 million per acquisition activities, non and $5 million for Capex and software development costs.
And $9 million per stock dividends as well as $32 million used for debt repayment.
$20 million for $29 million for debt service and $21 million in cash taxes paid.
Working capital remains healthy at $171 million at December 31, 2020 versus $129 million at fiscal year end 2019.
Ebix has a weighted average diluted shares outstanding was $30 6 million for the fiscal year 2020.
And as of today the company expects the diluted share count for Q1, 2021 will be approximately $37 million.
Finally, ebix is form 10-K will be filed later today.
As I have surpassed the one year Mark of my tenure as CFO of Ebix I continue to believe that our collection of assets around the world are positioned to succeed over the long term and unlock significant shareholder value in the coming years Ebix has a portfolio of solutions and services that is diverse global and critical to our customer base.
While the company has endured some hardships over the past few months our belief in the value of this global business remains strong.
I would like to now turn the call over to the President of our North American insurance businesses Ash Sawhney for his remarks.
Thank you, Steve and downturn.
I will provide a summary of the Q4 'twenty 'twenty performance for North America.
And the narrative on the accomplishments for the full year.
I will also provide our perspective on the future outlook.
I am pleased to say that we closed Q4 on a high note.
Our North America revenues compared to Q3 grew by 6%.
Restaurants saw strong contributions from our medical certification business as well as our P&C exchange life illustration exchange and CRM exchange businesses.
These were partially offset by a sequential decline in our health exchange New peak change in underwriting exchange revenues.
The medical certification business fourth quarter revenues of $7 4 million was the highest quarterly revenues for the business in more than a decade.
This business went through a major transition.
Business model in 'twenty printing.
We were able to adapt the rapidly changing COVID-19 related market conditions.
As part of the bigger confirmation the division also reduced its marketing spend by 13%.
Our P&C exchange added 13, new clients in Q4.
We released a new work and our progress management information system with updated reporting and analysis.
We expect to continue to see aggregate year over year growth in 2020, one with new compliance services co workers compensation forms.
Renewed focus on compliance automation services.
And new risk and safety management solutions.
We saw a drop in our health and underwriting exchange revenues.
These are mainly due to large enterprise nature of the implementations.
Saw a general slowdown in the industry due to COVID-19.
Our enterprise businesses are supported by onsite resources since many offices were closed two I'm cranky 'twenty, our onsite billing saw a significant drop.
We hope to see these units to make a comeback in 2020, one as the market Scott to cover and officers begin to reopen.
Despite the headwinds due to COVID-19, we are overall pleased with the performance of our life and annuity insurance business.
We added around 25, new kinds during the year and expanded relationships with several others.
On the last patient in analytics platform, we added names like Wonder Medica, Fidelity, <unk> Guaranty life, Florida, skirts, Cincinnati life and Zurich.
We added names to our order entry and maintenance platforms, including RBC corresponding JP Morgan Chase Oceanview, Brighthouse Axa and submit a just to name a few.
We added and expanded consulting relationships with several reputable carriers and distributors, including USA, Inc.
Jackson National Delaware like Merrill Lynch see what I mean.
Sure and F N G.
We saw an increased demand for direct to consumer solutions be embarked on a significant initiative with security benefit.
And was selected to implement a direct to consumer solution for Navy mutual.
In 'twenty 'twenty, we expanded our partner network, allowing us to provide greater value to our customers and opening up.
The newest by incremental revenue.
And among these partnerships with Doctor sign a new D day clock, Simon and DTC.
Our risk compliance business to remain steady in Q4.
Some of the new clients brought on board in Q4, 'twenty, 'twenty, where new style contractors County of San Diego specific hotels, ACR NAV cuisine enterprises, Homescreen Bang and several others.
Altogether, we added 46, new clients in 'twenty 'twenty roughly the same level, we did in 2019.
Ebix is fortunate to have a client mix that includes many large clients in quote unquote essential businesses as it relates to COVID-19.
Such as Victor has like home people Lowes Walmart Costco.
Whole foods, and many commercial construction companies and homebuilders vs.
These organizations grew larger to the pandemic.
Ebix products are known to be best of breed in their respective categories in order to maintain this competitive advantage.
We are continuing to invest in product enhancements and then rolling out new capabilities.
The significant and noteworthy initiatives.
'twenty 'twenty include data analytics initiatives centered around electronic applications illustrations and underwriting.
We launched government flex product in Canada, and not in active discussions with several carriers and distributors.
We continued to enhance our direct to consumer solution. We believe our successful implementations on the DTC platform aligns us perfectly with the industry is headed.
We were proud to be recognized by Nevada, Com, a leading research firm in the insurance sector.
A dominant provider and their life health and annuity new business and underwriting report.
And <unk> J P. Morgan selected Ebix for that annuity processing.
We are pleased to say that in Q4, we did a successful pilot launch with them.
Starting in Q2, 2021 all the core carrier partners will be on the platform.
We have also initiated a parallel track to get them on our life exchange.
This effort is underway.
And more to follow on this soon.
When the World was hit with the challenges of COVID-19, we knew that it would be a challenging year in the industry.
We are pleased to say that we'd rather to this.
Due to the dedication of our employees and the trust and partnership of our diverse customer base.
Continued to support our customers by quickly adapting to work from home.
All our systems were up and running we continue to add new customers and we manage that cost prudently I believe this has made us stronger.
As I look towards 'twenty or 'twenty, one and beyond that at a number of factors that provide a positive outlook.
We will see continued growth in our corner childrens business as.
As mentioned earlier all of the new clients added onto the platform will contribute towards incremental revenue.
We are particularly excited about the progress with Jpmorgan on both the life and annuity attack.
Believe once our clients resume on site working with are likely be towards Q2 and Q3 Timeframes.
We'll start to see growth again in our enterprise solution offerings for the health and life underwriting of the year.
We have established the Kentucky, we have stabilized the consulting group, which over the last few years had seen a constant decline in revenues. We have successfully added many new relationships and expect to monetize them in 2021 and beyond.
In Q4, we launched a joint venture with data cloud a specialized mandates managed cloud.
This has provided us with a significant presence in North America.
We are seeing cloud migration and modernization as the top two to three initiatives at our clients.
EBIT supports these science that several of our mission critical exchanges.
Our plan is to leverage these relationships and our domain experience to help our clients with cloud migration strategy transition and ongoing management and support.
We are in the midst of.
Leading the Ebix data cloud value proposition as one of our core offerings in North America.
We believe the partnership with data cloud has the potential to significantly move the needle for us.
Their engagements tend to be large and recurring in nature debt.
Record and strong partnership with Microsoft are significant factors in giving us a competitive advantage.
More on this in the coming quarters.
Our investment in new product launches such as the legislation analytics and direct to consumer mix. It is what timely and we see more and more guidance adopting these offerings.
In the medical certification business some of the noteworthy accomplishments in 2020.
It will help us increase our revenues in the future include the launch of our Neogen per product launch unfortunate events and a new E Commerce site.
I want to close by thanking all our employees, who helped us in 2020 I'm excited about how we are positioned for the future.
I will now pass this along to Robin for his comments.
Thanks cash.
Good morning, everyone I, just want to start by acknowledging the efforts and sacrifices being made by Ebix employees across the world in these pandemic hit guidance.
While I said that I don't think these results many of our employees are in the ICU.
Are you fighting life in debt because of COVID-19.
Ill thought employees passed away in the last 96 hours.
I am painfully.
The devastating effects of COVID-19 on our staff and their loved ones.
India is presently in the midst stuff the last wave of the pandemic and its right now to find a family that is unimpeded by the disease in India and <unk>.
Fight them all of that.
Business continues and our employees continue to find ways to do their best for the company, while ensuring that our clients got debt.
Top class uninterrupted service that Ebix is known for.
I am highly in bad debt through our staff across the world for their services to the company.
As we announced the results let me remind you that Ebix has an incredible record in terms of consistency there.
Do we wish it would be net.
Our financial performance to speak for itself.
2020 was no different with the company's consistency wrap that impact both for the quarter. The credit for this goes to the splendid effort put in by our 9000 plus employees worldwide.
Incredibly humbled by debt at foot.
Despite that but.
The effects of COVID-19 on our business is low light I'm pleased to be reported another great quarter.
For Ebix on many fronts.
Our record topline $647 5 million in constant currency revenue.
$625 6 million in GAAP revenues.
Direct lead topline after.
Total 20 811 million in constant currency revenue.
And 120 to one 1 million and GAAP revenues.
And annualized run rate.
Watching 900 million for the first time.
Q4, 2020 revenue grew 44% sequentially and 50 don't want to try to get over to you.
Net operating cash flow of $104 million.
101, 4 million as compared to $16 8 million.
19.
Q4, 2020, non-GAAP operating margin.
1.2%, excluding the lower margin payment solutions business.
This has been a 21st.
Consecutively.
When show growth.
Let's remember that these results are in spite of our travel foreign exchange E learning remittance and consulting business is being impacted.
Italy.
Based on what all day late in the pace of new deals being granted by clients on account of COVID-19.
These numbers also exclude but just not the impact of foreign exchange variations.
On a constant currency basis would have added approximately 6 million below our fourth quarter 'twenty 'twenty revenue and accordingly would have resulted in an additional increase in net income.
Also what was encouraging about the fourth quarter 2020 results was the fact that our revenue grew sequentially in most of the jobs at our feet up our business, India revenue grew sequentially by 65% U S Avenue had a sequential increase of 6% Australia had a sequential increase of 23 per se.
And Singapore had a sequential increase of EBITDA.
And he was Atlanta had a sequential increase of 15%, but he was the only country that had a sequential decrease of 8% ex except for India.
All of the jobs I think our revenue increases.
Already up insurance exchanges vital.
India primarily means.
<unk> exchanges to us at present.
Got it and Steve discussed the revenue and expenses and quite a bit of detail. So let me just talk about some of the COVID-19 affected businesses, that's going to give us increases as COVID-19 effects reduced low light.
Our revenues in the travel and foreign exchange.
It.
Have been down approximately 85% because of the effects of COVID-19, and the medical dumps that decrease translates to revenue of approximately $180 million a year in the pre COVID-19 period.
Ebix cash has being the undisputed leader in the foreign exchange sector in India.
Foreign exchange, but enough is driven primarily by international travel and educational remedied unsafe.
Both have been severely impacted because of COVID-19.
Ebix cash has been the market leader in the overseas students segment. So.
Moving every fourth student traveling overseas for education purposes.
We cover.
Our total you don't want to send the student market share in India.
We have been tapping this segment a lot of force.
Finishing with a large educational loan providers such as a do you think that in a low Atlanta, OXXO low and and quit that translates to.
One $5 billion in transaction value as COVID-19 effects subside in the U S and UK.
These transactions will be back as student fees needs to be limited for them to studying these countries.
We have payment processing partners for international payment companies such as total My addition.
The study.
Well, the Western Union and global PE and recently, we added fly why do that lift also we have deep association with reasonable.
And national educational consultants, but processing university fee payment and student maintenance two other branches situated across India.
While it is hard to draw a line in defense, we expect the overseas education segment growth.
At a substantial rate.
Providing us the opportunity to increase the market share.
And nobody I think payment solutions offering for the students segment in line with that endeavor for innovating.
Student's payment solutions business, we are in deposits up introducing but did get though knowing our customer module put allowing customers to complete the gave I see our loyal customer verification process online.
And to enable people to less transactions just flow to enable us to improve the customer journey and increase our footprint in new geographies without having a new infrastructure.
In the corporate travel segment.
I just.
So the partner to more than 100 companies and debt.
In the Fortune 500 category, which range across various industries, such as I B I D E.
So the manufacturing and services industry.
Segment EBITDA.
Dominantly uses the prepaid travel card.
Indian Mod forgetting foreign exchange the corporate travel card market is estimated at about $4 $5 billion with Ebix cash having a substantial share.
We have been a pioneer for digitizing the corporate travel segment by introducing products that acquisition system for all Inc. Corporate employees to book Foreign exchange and debt convenience.
With digitally managing the auto processing request, we have been servicing more than 900, plus multinational companies and large corporate and close to 700, plus midsized corporates with regional partners to our foreign exchange net book going forward.
The collection of our people travel got we would be able to add more value in our proposition to the corporate.
In the COVID-19 effect at times most of the smaller players in the foreign exchange area are finding it hard to sustain themselves and a larger foreign exchange plans have increased their percentage share of the market.
Net cash in recent times has signed an exclusive arrangement with Tonight Airport.
Besides signing up new large corporate names like goblet sundae and N P. C S.
We haven't gone slow in southern International Airport opportunities.
We prefer to wait for the international travel to become more normal life again, this could be a meaningful it did get revenue area for us annually vault international travel resumes.
We believe that our foreign exchange business is extremely well placed to possibly dominate the India market average.
The effects of COVID-19, subsides, we see this as a matter of time.
In the travel, but necessarily yes, we have spent the last two quarters focusing on automating our travel technologies for the COVID-19 have you to use digital means to increase net expense booked in the b to b and B to C space.
On a pre COVID-19 basis, we have been a leading player in Gainesville, natural geographies like Philippines and Indonesia.
India.
International travel resumes we will be.
Uniquely positioned with our technology to them our travel agent support all of these geographies also we have spent in recent times the make of our hotel technology better and more agile.
All of that positions us well for the more normal lifetimes than at present.
Eddie vs.
Just added that in.
Dial eight how's the strong network of.
Agents do a lot of Moneygram distribution net book. We also added 10000 did you need money agents do lot of Moneygram when I make those distribution net book will be the lesions that are expected to significantly increase but I'm going to that's revenue. We are presently exploring the ability to bring digital transaction.
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Pro forma once these into digital gods eval expense plastic cards, that's a substantial revenue opportunity for ebix cash with our worldwide partner scheme to work with US in this area Moneygram alone bring close to $1 billion in digital transactions annually to India that.
Scott doesn't have access to at present.
In the area of transport management systems Ebix cash bus exchange Technology initiative is focused on deploying and win burst exchange solutions.
But that's what all of those companies in India.
Bothering integrated transport management systems.
That entire portfolio of buses and bus depots.
Recently Ebix bus exchange Division one of the day.
One operate order to deploy and maintain one solution across more than 2000 roadways buffers for the city of Pony.
Each of these deals tend to be a multi million dollar recurring revenue opportunities.
We are presently at advanced stages of many such deals that can contribute strongly to our numbers. Most of these deals have been delayed because of COVID-19, and the lack of bunch of travel and the effects of COVID-19, subsides. This business it'll be back strongly.
Buses comprised the primary mode of travel in India, and the bus travel market has been growing at an average rate of 27% annually before COVID-19.
This is an area where.
In a multi year contract for just one state could mean $40 million in revenues.
Our E learning businesses have also been affected quite adversely with schools closed indefinitely because of COVID-19.
It does create an economic crisis for schools with parents not willing to pay fees. During these COVID-19 affected days accordingly.
Schools have confirmed their budgets on the lending book, but it'll be back at school to the deal.
That's a good future opportunity for us we've got expansion E learning across the country and all solutions that today address more than 16000 courses, but skype by Indian governments.
National Council for educational research and cleaning and CRP.
How 'bout Bse Ebix joint venture, putting children's exchange is another one large opportunity that in a more normalized low could be quite lucrative in the area of insurance distribution EBITDA.
<unk> joint venture with Bombay stock exchange positions it as a gateway for an insurance guy used to sell insurance to India last population.
Combining cash 320000 physical outlets across the country with DSC is strong national net book.
Basically if you want a selling show us through any distribution outlet that has a relationship with the consumer.
And I lost my reach and use their last mile reach even if they have never sold insurance, we feel that we can make it succeed as we have three key ingredients already for it to succeed one but backing off a joint venture partner Bombay stock exchange with the reach of 300000 terminals and financial.
Bulk of the institutions all across the country.
Who can now sell insurance to Ebix cash already has an existing outlet base.
<unk>.
All of those distributions.
Distribution outlets across 3200 cities ready to sell insurance assets. It gives these outlets a new tool to maximize net income can be.
Insurance technology and functionality is ebix core strength and an integral part of our DNA helical structure.
That technology has been built for key product lines already and we believe that this JV is valid place to embrace the opportunity ahead of it let me now talk to a number of things that we are focused on at the company.
We are focused on continuing to reduce net debt and to watch that we made an additional $25 $6 million income loan payments.
Two it's related to our senior secured credit facility since the first of December.
2020 <unk>.
We've got 30, plus December 2020, we had already paid our debt down by 31 4 million as compared to 35 at December 2019.
As of 31st December 'twenty 'twenty, we had cumulatively spent $117 7 million on interest payments tax payments.
Non payments acquisition related activities dividend payments, an election, a working capital facility the backdrop and still our cash cash equivalents short term investments and restricted cash.
At $138 6 million as of 30, plus day December 'twenty 'twenty $112 7 million as of 30 plus day December 2019.
We are pleased with that as it speaks to the fundamental strength of our businesses.
We are now targeting day Ebix cash I feel for the first quarter of 'twenty 'twenty. Two accordingly, we are now getting the process started leading to the filing of the DH RP Red Herring documents with the Securities and exchange Board of India.
We have already hired for the leading investment banks in India, namely I see API access animal life in F and state Bank of India caps for Whiting, That's a dream team from an India perspective.
We are in the midst snow up adding an international investment banker as the fifth investment banker.
We are also soon hiding of international audits from the song as doing what it does for Ebix cash going forward and for the Ebix cash I feel this will ensure that our ebix cash resolve all signed off by the audit firms overbuilt, one national and run.
Net of Nashville from providing further clarity to our IPO.
Lastly, great companies do more than just creating great products and great services. They establish integrity transparency and trust have their buying values, we have always endeavored to do that with the shareholders.
Most of our partners and our most prized assets unemployed. We are proud of the fact that Ebix has a strong record over the last two decades on that front.
We must be crushed and crops in terms of perception, but finally ebix has always emerged fundamentally stronger day.
Then before out of every such perception event.
I have always believed that will become growth you first need to pass through five.
That has been the EBIT journey.
For me over the last two decades, Inc.
In clothing.
I want to thank our customers our partners and our employees for their continued trust enough.
And for contributing to an outstanding fourth quarter.
And just exceptional full year results. Thanks, everyone for that but that I will now pass the call.
Back to you Angela to open it up for questions.
Thank you.
Ladies and gentlemen, if you have a question at this time. Please press the star and the number one key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
Yeah.
Your first question is from the line of Jeff Van <unk> with Craig Hallum Capital. Please go ahead.
On for Jeff Thanks for taking my questions.
My first one I guess is for you ash as I look at the North American business the insurance exchanges.
I guess about six and a half million sequentially I'm, just what all drove debt how much of that was J P. Morgan.
Related and then on the Rcs.
That had about a little over.
2 million declined sequentially, just what drove that as well.
Sure so.
The the increase Jeff was in several different areas I would say you know the JP Morgan impact has actually yet to set in.
I'm just you know to give some context, we did a pilot launch in Q4.
And.
Q2 has been in.
Q2 of 2020, one as grants.
All of their carrier partners.
Come onto the platform.
That's when we start to see the <unk>.
Incremental uptick.
But remember last year and the year before we I did many many other customers to the platform and it takes a little while for them to get on boarded and the transactions to start hitting so we are seeing.
Strong growth across many of our groups all day.
Our C. Aside the COVID-19 risk compliance business stayed steady.
It is where we saw a decline or mainly on the consulting side and that also into dawn core insurance.
Sure thing.
We believe you know that business has flattened out we added a number of new customers on debt on the consulting side.
And you know we expect that we will continue to expand our relationships with them.
Right.
Medical.
Our business as I mentioned and you know it is cyclically low Q4 is.
Historically, a strong quarter for us, but this was exceptionally strong you know kudos to the team we totally transformed the business rehab.
I said Gardner digital we had the best quarter, we've had in almost 10 years and I see us.
Continuing to build on that foundation that we have a very successfully launched in 2020.
So do at two two at Ash are upset with regarding US, yes, I'm on it just to emphasize.
Asks during his talk talk through the data glove relationship and we expect that to make a meaningful impact to our Rcs revenues their relationship with Microsoft and Microsoft partner.
They're relationship can result in large deals video cutting deals, which can give us additional sources of revenues.
From our existing client, it's a cross selling opportunity do you see this as a <unk>.
As a possible game changer in the consulting market. So we do expect.
We have high expectations from that relationship.
Great very helpful. Robin I guess, you know the payments that the prepaid slash gift card business I think.
It's probably roughly 130 million on Q4, if I have it right.
And I know you expect the strength to persist from COVID-19.
How would you know what's the expected trajectory from your Q1 two three.
And so on in 'twenty, one from that 130 million base in Q4.
Look it's very difficult to have a crystal ball to predict what will happen, but I will tell you that until COVID-19 stays.
This business will keep going up.
One school that subsides and the effect of effects of COVID-19 to come down I would see a reasonable decline in this business in terms of overall numbers stated the sport and the market primarily driven by.
A number of factors that have driven this AR increase some of them will go away, which is mainly the COVID-19.
Effects of COVID-19, but then there are certain things that the state are one of the factors was government of India, India is of any cash based economy. One of the ways government of India felt that they should've cut age people to use prepaid cards was they allowed people to not do what gave like fee.
And launch and they introduced this concept of God mature below that value of approximately $230.
A consumer doesn't need to do okay, let's see so what that did was that really brought in a sport in terms of people.
We looked at those gods like cash having said that one of the key factors that.
We drove people to use these gods, what do you figure out where to use these cuts do day. What has happened is utterly yet if you like India is a is an economy that in if you want to pay you. The next day Bill or your telephone Bill all your cable bill or for that matter virtually every utility in India most of the utility.
These are in most of the cities actually government driven.
In earlier days people used to stand in a queue and pay their bills and believe it or not that was there a few years back and then government of India introduced this concept of make allowing people.
To make these payments digitally for today people make these payments using these kind of got these gift cards at low value even in low to middle class can have these guys are low and in underprivileged gonna have these got and they use them digitally to make these payments to pay for their utilities for their service.
For the power gas you know.
Let's see and so on that's really brought in a.
Our sport in this business. So I, if I had that crystal ball I would basically say that we this business will continue to be a increase in the first quarter and possibly the second quarter, depending on that considering the effects of COVID-19 seem don't seem to be fighting in India at present and.
And they are going through the worst of faith actually at present as I.
As we speak at this minute.
But if as I'm very hopeful that look without the vaccinations are going to continue its a large country, but that's vaccinations continue I think the debt.
The effects of COVID-19 are going to reduce and when that happens we might see.
Somewhat downward trend how much it is very hard for me to predict at this minute.
Got it very helpful. What in a.
The $6 2 million impairment charge in the Hague.
Just what drove that.
Look it's a.
We have a joint venture partner in EMEA, which is I'd say, it's a publicly traded company independent holding Corporation a day.
The business has undergone a lot of changes they love what not only a a JV partner.
Day, but also a big client so when we originally set up the deal because they've got a joint venture partner.
Their debt Uh huh.
The customer relationship.
One of them was set up had a indefinite value.
And that was the way it was set up on day one.
Many is back and the reason was simply because.
At that time, 50% plus share holder right now 49% share holder.
And so it was it didnt seem sensible not for them not to be using the product simply because they want to fold it up though.
And we had just bought the business from that.
However, a lot changed over the last.
Last one here and in fact, the trend started almost doing as bad debt their business continue to evolve and as it evolves they changed the nature of their business. They started.
Thinking they faced some challenges it's not my place to talk about their challenges, but all I will say is it has all of its output and lower.
The amount of business that they were processing with us and so we had to make a call and we kept thinking that this is a temporary phase and it will improve and that will the nature of an ongoing discussion, but we realized at some point as COVID-19 came in that even if the business came back it might be.
After a prolonged amount of time, so we felt that default level that we should take this impairment charge and we took that impairment charge per primarily because it was set up with an indefinite values Sylvia accordingly decided to take that hit.
In the fourth quarter.
Got it and then I just wanted to make sure I heard you correct or the 10-K will be filed later today.
That's correct.
Great Alright, great. Thanks, guys. That's it for me.
Yeah.
Your next question is from the line of Chris the Southeast with singular research. Please go ahead.
Hi, everyone. Good morning, just.
Good morning.
I asked about.
I guess product mix going into Q1.
And the margin are they going to be similar to what they were in Q4.
Look first of all we have.
I think it does not for me to right now predict Q1, because Q1 is already over so it would be a pretty leading statement for me to talk about Q1, considering that we're supposed to file Q1.
Soon enough in fact, what we are planning to do is presently we're thinking debt, but since we need to give it all it does kgs enough time to do the review are.
We might have to seek good that'd be one extension for a week or so so I expect that will possibly file Q1.
Steve if I'm thinking correctly by May 17th and if we had to do that you know it does I don't think it's my place lighten a little bit talking about the quarter that we've already finished five O I voted off.
Neither of those assets come out for Q1, and then you'll get a better picture of how we performed now if you want to talk about the future going forward I think what they are going to happen is that for some time, we will have to deal with the COVID-19 impact, it's very hard for us to predict right now what is going to be the COVID-19 impact because every day with COVID-19.
Good day.
And we.
We feel that we have tried to bulletproof our businesses by we have learnt a lot in the last 12 months. We have we have we now know how to work from home we already employees across the world already successfully doing that at the same time, we don't know what is next on the COVID-19 front is that is it going to be.
Improved dramatically is it going to be a is it going to be a downward spiral for some more time I don't know.
From a product mix perspective look odd products will be talked through our products and quite a bit of detail. All the products are what they are at a margin. We are continually ash talked through some of the newer initiatives that we are launching some of the newer product set three at launching I talked through the Ebix cash knew what any share deals that if COVID-19 effect.
Right.
The medical your margin it'll go up simply because we will have new revenue sources that we have shrunk because of COVID-19. When you have those new revenue sources from travel foreign exchange E learning increased consulting not just in India, but increased consulting in Australia, you've got a U S. Brazil, you'll have increased margins.
Now the good news is and if you look at our present margin structure. If I take that low margin. You know you talked through the payment solutions business. If you take debt payment solutions business out for a for a minute.
Hum.
Our operating EBITDA margin, but very fairly high I think if I'm remembering correctly, the non-GAAP EBITDA margin of around 41%, plus which is fairly good and so our goal would be to keep it at those levels. If we can earn and grow our revenue streams going forward I think that's how.
Oh, I see though the how we that's how I see the future happening for us.
Okay.
Yeah, that's that's helpful.
And then I just had one question on the new auditors I don't know if you can say anything about this.
Did the new auditors have a.
Material effect on the debt.
Or any changes on the statement.
Steve you want hands, so that many I tried to answer there's no. What it does then you would have seen than you would've seen that but Steve go ahead. Please answer I'm sorry can you clarify your question did they have a materials.
Oh effect on on the financial statements between say, what they were gonna be and what they are now.
Well, we only issue one financial statement and that's the audited financial statements. So we will be filing the 10-K this afternoon.
With an unqualified opinion from kgs could you some money.
And I would certainly welcome you to read that.
We had a very productive.
Operative audit with kg some money they had a immense amount of resources that were applied to the ebix accounts.
No.
Three four plus times the number that we would typically have on an audit because they were trying to help us get back into compliance and get our audit done so.
If you want to follow up after taking a look at the 10-K, when we file it we're happy to do that Darin and I arent, but.
We only have one financial statement and that's the one that's audited and filed with the 10-K.
Okay, alright, great. Thanks.
Thank you.
And I'm showing no further questions at this time I would like to turn the conference back to Robin Raina for closing remarks.
Thanks, Angela I think that brings us to the end of the call. We look forward to and I'll think of Q1 dissolve possibly may 17th and we will we look forward to speaking to each one of few are doing debt unless the call. Thanks, everyone and be safe. Thank.
Thank you.
Ladies and gentlemen. This concludes today's conference call. Thank you for your participation and how they want to have a wonderful day.
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Okay.
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