Q1 2022 Ebix Inc Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by and welcome to the Ebix Q1, 2022 financial results Investor call.
All participants are in a listen only mode. Later, we will conduct a question and answer session and if you would like to ask a question during that time simply press star one on your telephone keypad.
I don't want you to quit assistance during the conference. Please press Star zero.
I would now like to turn the conference over to Darren Joseph Corporate Vice President. Please go ahead Sir.
Thank you.
Welcome everyone to Ebix incorporated 2020, 'twenty 2022 first quarter 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 we make today are forward looking including among others statements regarding <unk> future investments.
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 statement. Please.
Please note that these 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 are contained in our SEC filings, which list a more detailed description of the risk factors that may affect our results.
Our press release announcing the Q1 2022 results was issued this morning. The audio of this investor call is also being webcast live on the web at Www Dot Ebix dotcom forward Slash webcast you.
If you look at Ebix <unk> financials beyond what has been provided in their release on our website www dot com the audio and the text transcript of this call will be available on the <unk>.
Investor homepage of the Ebix website after four P M eastern time today.
Let me now discuss the key metrics in our Q1 'twenty two results released earlier today.
Q1, 2022 diluted EPS GAAP.
Grew 24% sequentially from 50 to.
62 cents and non-GAAP diluted EPS grew 15% sequentially from 66 to 76.
Q1, 2022, GAAP revenues grew 7% sequentially from 267 million to $286 3 million.
Our worldwide revenues, including prepaid gift card revenues increased 11, 5% year over year in the first quarter of 2022.
Q1, 2022, GAAP operating income declined sequentially by 7% from $32 4 million to $31 2 million.
Most negatively impacted business from COVID-19 within Ebix cash limited experienced solid year over year growth in the first quarter of 2022 in total our travel foreign exchange Remittance, you learning and financial technology businesses combined grew revenues by 28.
<unk> year over year during the first quarter of 2022.
Year over year growth in travel and foreign exchange revenues was 85% and 190%.
Percent respectively.
Our E learning business also benefited from the reopening of schools in India and contributed a 138% growth rate year over year during the first quarter 2022.
I will also note that our BPL revenues in India increased close to 70% year over year during Q1 2022.
Our U S revenues grew 2% year over year with 21% cumulative growth in our life speed and annuity exchange businesses.
Our insurance exchange revenues grew two 3% year over year, our risk compliance solutions Rcs revenues grew eight 3% year over year due mainly to a 27% year over year growth in Latin America, and 68% growth in our VPN business unit in India.
Year over year GAAP revenue in Q1, 2022 decreased 1%.
$286 million from $290 million in Q1, 2021 however on a constant currency basis year over year revenue in Q1, 'twenty to increase 1% to $294 million from $290 million in Q1, 2021.
Reflecting the strengthening of the U S dollar after the Ukraine conflict, which has the impact of hurting our worldwide GAAP revenue.
Exchanges, including the Ebix cash and our worldwide insurance exchanges continue to be Ebix is largest channel accounting for 94% of Q1 'twenty two revenues.
Our b to C and B to B businesses in India were strongly impacted by the omicron variant in the first few months of 2022.
So during that we feel good about the Q1 2022 results both in terms of revenue and operating income.
Our first quarter revenues and operating income are traditionally lower than the fourth quarter of the preceding year, primarily because of our continuing medical education business, having a seasonal increase in the fourth quarter Q1, 'twenty two was no different with CME revenues decreasing by approximately $2 7 million as compared to Q4 2021.
In spite of that headwind and the effect of the crime and Q1 2022 on many of our businesses, we still managed to grow overall revenues by 7% sequentially and 1% year over year on a constant currency basis in Q1 of 2022, we are pleased with that.
I will now turn the call over to Steve.
Yeah.
Thanks Darren.
We have and continue to operate in unprecedented times, while the negative impact of COVID-19 on our businesses is beginning to abate.
We still have a long way to go to get back to pre COVID-19 levels in many of our traditionally strong business lines.
Ebix, we've had to deal with our share of pain with the Omicron variant is having an impact on our operations, especially in the first two months of 2022.
Our results that we've produced in the first quarter provide positive evidence that ebix is beginning to see the long expected rebound from the COVID-19.
Pandemic.
Our worldwide revenues, excluding the prepaid gift card revenues increased 11, 5% year over year in the first quarter of 2022.
Our total GAAP revenues declined by one 3% year over year, which was driven by a six 7% year over year decline in prepaid gift card revenues during the first quarter.
<unk> and the year over year decline in gift card sales our topline in Q1 2022 grew sequentially by 7% and on a constant currency basis increased year over year by one 3%.
Our Latin American business was heavily impacted by COVID-19, but as we have mentioned in the past the demand funnel would loosen up as businesses begin to operate more normally.
Beginning to see that effect in Latin America with revenue increasing year over year in Q1 2022 by 27%.
In the U S. Our annuity and life speed exchange businesses cumulatively increased over 21% year over year as industry transaction levels increase and we continue to grow revenues from our existing client base.
Our life illustration solution increased revenues year over year by 8%.
Our life underwriting revenues decreased year over year by 9% as we continue to feel the impacts of a tight labor market and less hiring during the peak of COVID-19.
But life underwriting solutions generate substantial revenues from upgrades enhancements and implementations and changes which require on site and remote human resources to carry out.
We believe this business area will improve over the next few quarters as more resources have been hired are being trained and will become operational.
Our continuing medical education business in the U S increased 18% year over year as we deferred some traditional Q4 revenues in Q1 2022.
Our European business, whose technology powers the front end of the London reinsurance and insurance markets continues to perform steadily after a record 2021 with Q1 2022 revenues, increasing 3% year over year.
Our company's diversity of revenues, both by geography, and solutions and services, our customer stickiness and recurring and repeating nature of a large percentage of our revenue base.
<unk> allows ebix to endorse seasonality or a pandemic crisis like COVID-19.
I'll now discuss some key operating metrics for the first quarter.
Our gross margin in Q1, 2022 was 26, 3% versus 24% in Q1 'twenty one.
33% in Q4 2021.
Excluding the payment solutions business in India. The company's gross margins for Q1 2022 of 78, 5% compare to Q4 'twenty one in Q1, 'twenty, one gross margins of 77% and 80% respectively.
In addition to the continuing impacts of COVID-19 on our business Ebix had a year over year increase in G&A expenses of $5 $6 million in Q1, 2022, driven by increased personnel costs of approximately $3 1 million and a decrease in bad debt recovery of approximately $1 $7 million year over year.
Our operating margin was 10, 5% in Q1 2022 have declined sequentially from 12, 2% in Q4, 'twenty, one and a slight decline year over year from 10, 8% in Q1 'twenty one.
Low margin payment solutions revenues had the largest impact on the sequential comparison of operating margins exclude.
Excluding the payment solutions business in India, we generated 31, 6% operating margins in the first quarter of 2022, an increase of 50 basis points as compared to 31, 1% operating margins in Q4 2021.
Ebix strives to maintain greater than 30% operating margins for our suite of solutions and services outside of the low margin gift card business.
During the first quarter of 2020 to be at the following major cash uses $11 million of cash interest paid.
$15 $4 million for income related taxes paid globally.
By $12 million extended on capital expenditures and software development costs $8 $4 million used to reduce the principal outstanding on our corporate credit facility.
$3 $7 million used to reduce the balances of our working capital facilities in India, and $2 3 million for dividend payments.
Funded these initiatives from existing cash plus operating cash flows generated during the quarter.
As of March 31, 2022, the company has solid liquidity on hand, with cash cash equivalents short term investments and restricted cash of $102 $2 million.
Versus $125 $2 million at 12 31 2021.
Q1, 2022 required the company to make over $15 million of tax payments related to both our ebix cash businesses. Another global businesses that will not be repeated in the next few quarters in comparison during 2021, Ebix paid approximately $18 million in total cash taxes over half of which was paid during Q1.
'twenty one.
Additionally, the company made nonrecurring payments related to the credit facilities of approximately $4 million in Q1 2022.
We also had elevated capital expenditures during Q1 2022, as we've invested in the growth of our PPO business in India.
Our total debt at March 31, 2022 was $648 million a reduction of $55 million from total debt of $703 million as of March 31 2021.
After a difficult last two years as a result of COVID-19, and other external factors. We are seeing the beginning of a rebound from COVID-19.
Businesses that were materially negatively impacted by Covid are beginning to grow again.
While we still have plenty of runway to get back to pre COVID-19 revenue levels. We are optimistic at the results. We are currently seeing.
We believe that the diversity of our revenues and our market positions that we have globally will be the catalyst that will allow ebix to thrive in a post COVID-19 pandemic world.
While we faced challenges with the current global economic and geopolitical conditions.
We believe that our company is positioned well to take advantage of more normal risk business rhythms as the world moves further on from the pandemic.
I think all the thousands of employees around the world for all their hard work over the challenging past couple of years.
Finally, our Form 10-Q will be filed later today.
I'd like to now turn the call over to the President of our North American insurance businesses Ash Sawhney for his remarks on our first quarter 2022 operations.
Thank you Dan and Steve.
I will now talk about the North American results and outlook.
The North American revenue in Q1, 2022 was up 2% compared to Q1 2021.
This was a result of strong performance by the core business comprised of life, a new E House didn't see exchanges on the core consulting group, which altogether were up 9% in Q1 2022 compared to Q1 2021.
This was the highest growth performance by these groups in aggregate going back several years, even prior to the commencement of the COVID-19 impact also contributing to the performance of Q1 was an 18% year on year growth in the medical certification business.
Overall, the Q1 growth was despite continued headwinds from the underwriting exchange business, which was down 9% compared to Q1, 'twenty, one and 2% sequentially compared to Q4 of 'twenty one.
Let me now give a more detailed narrative of performance of each of the major divisions.
The annuity exchange was up 15% compared to Q1 2021, 8% compared to Q4 2021.
Transaction volumes were up 11% and 20% respectively. During the same period.
March of 2022 saw the highest volume of transactions ever on the platform.
The increase was across all the major carriers and distributors.
I think we have seen over the past several quarters is a reflection of all the carriers and distributors. We have added to the platform in the past two years.
The life platform continued lack of brand with over 90% growth compared to Q1 2021.
We added several counties for the platform.
P. Morgan is now officially live on the Lifelock com with the initial set of categories.
And with a plan to add several more in the second half of 2022.
More to be announced during the course of the year.
And the last question exchange revenue was up 8% in Q1 2022 compared to Q1 2021.
And 5% compared to the previous quarter.
We are continuing to see near record revenues for this division.
Noteworthy in Q1 was the addition of Brighthouse on the platform and the rollout of a user friendly new advisor module called Ebix life, which is currently being deployed at J P. Morgan.
CRM revenue was up 2% compared to Q1, 'twenty, one and 12% compared to Q4 2021.
This was partly due to a cyclical uptick in data exchange revenue.
Retail CRM revenue was up 2% compared to the same quarter last year.
New from core enterprise clients, such as RBC HSBC TD Bank went up marginally by 1% compared to Q1 of 2021.
We are in the midst of implementing an end to end platform, including CRM policy administration and claims for a large health carrier called redirect health.
The health exchange the normally down 2%.
Compared to a strong Q1 in 2021 was up 4% sequentially.
In Q4, 'twenty, one investor call I mentioned that we are in the midst of contract negotiations with a large global brokerage firm.
I am pleased to announce that we have now successfully executed the contracts with the Super broker E on.
The Ebix enterprise platform and replace their legacy platform and help that employer clients by delivering flexible and customized employer sponsored benefits solutions.
This is one of the major larger deals one by the group in recent years.
In Q1, we also expanded our relationship with AIG by setting up an additional platform for one of the divisions. In addition to what they were already using.
The P&C exchange was up 2% compared to Q1 claim 41, we signed the state of Vermont to serve as their workers' comp E D I exchange.
The core consulting business was up 22% compared to Q1, 'twenty, one and down 11% sequentially compared to the high Q4, 2021 quarter.
Overall this business is trending well and continues to benefit from the Onboarding of new patios and distribute those for the life and annuity exchanges as we know package our services as part of the Onboarding cost process.
The medical certification business was up 18% compared to Q1, 2021 and down 27% compared to Q4 'twenty one.
The uptick compared to the same quarter last year was largely due to revenue that was deferred in Q4 'twenty one the <unk>.
Sequential drop from Q4, but Q1 is typical for this business as we do 25% to 40% of our revenue in the fourth quarter every year.
Overall, our digital business was up 18%, we signed new contracts.
Including new contracts with Brigham and women's and Cleveland Clinic.
The North American risk and compliance services business was down 2% compared to Q4 of 'twenty, one and 1% compared to Q1 of 'twenty one.
Core business, However remained strong and we added six new clients in this quarter.
The underwriting exchange unit, which historically was the strongest performing during pre Covid period continued to face headwinds in Q1. According to the issues are related to staffing constraints, while separate measures have been taken which will ultimately put this division's back on a progressive track.
The path to normalization has been slower than what we expected.
The core business with existing clients remained strong we successfully.
And he implemented January on the platform delivering a customized and wonderful kind facultative underwriting exchange.
Several enhancements were also delivered to clients that qunar, <unk> and annualize nationwide and Sun life.
On the operational front, we announced a major reorganization of our delivery and support organizations.
Previously, we were operating and supporting our times to a siloed operating structure and we have now aligned in a very customer centric manner.
Coal functions like client engagement services product management maintenance and support have now been centralized across all product groups.
This will enhance our customer engagements will bring more efficiency to our delivery model and will also create an organization of delivery professionals that are cross trained across multiple products.
All in all of this fits well with our strategy of offering end to end digital solutions supported by an organization that can deliver.
<unk> that are fully integrated.
Overall, we are pleased with the performance in Q1.
As we look forward to the rest of 2022, we remain positive on the outlook.
Several factors contribute to this optimism.
We expect continued growth in the annuity exchange.
Rising interest rates annuity sales tend to rise, which has a direct impact on our transactional business.
We also expect to onboard three to four additional down is in the coming quarters.
The life exchange will continue its record run.
R 22 roadmap includes adding over 50 additional category of products on the platform before the end of the year.
This will afford us opportunities, we have never seen before.
Will it make us a dominant exchange in the life insurance space.
We are continuing to rollout new products and modules across the various platforms. We believe these will provide incremental revenue opportunities in Q1 'twenty 'twenty. Two we created a new center of excellence, which are focused on new product opportunities in collaboration with science and industry partners.
Our pipeline in the core exchange business remains strong.
We have also recently added several senior sales executives with deep and relevant industry experience.
We are excited about the addition, and the leverage we will derive from their network.
We expect our health exchange to see a revenue uptick once you have fully on boarded the Aon account the project is already underway.
We are in the midst of several meaningful industry partnerships. These partnerships have the ability to further enhance our offerings and provide meaningful incremental revenue opportunities.
We will be formally announcing these during the course of the year.
We are reviewing our pricing across all product lines and increasing our rates to tackle the inflationary pressures that we are experiencing ourselves.
Due to the vast expanse of our customer base customer base and contracts. This rate increase will be an ongoing exercise for the remainder of 2022.
I would like to thank all of the associates at Ebix that work hard to support our clients. We are truly blessed to have the brightest and.
And most hardworking people in the industry.
I'd also thankful for the ongoing support and trust of all our clients, which includes hundreds of insurance carriers thousands of distributors.
70 of the top fortune 500 companies and scores of top medical institutions I will now turn the call over to Robin Raina for his comments.
Good morning, everyone.
Despite that but despite the effects of omicron and COVID-19 on our businesses, especially in the first two months of 2021.
I am pleased to be reporting another great quarter for EBIT on many fronts.
Q1, 2022 GAAP revenues.
$86 3 million.
7%.
Sequential growth.
Our Q4 2021 revenues I'm, especially pleased with this since Q4 'twenty one revenue of $66 8 million.
9%.
When she'll go over Q3 2021 revenues.
Secondly constant currency revenue.
$193 7 million, implying an annual revenue run rate of approximately.
1.17 billion.
Yeah.
Our worldwide revenue.
Moving prepaid gift card revenues increased 11, 5% year over year in the first quarter of 2022.
Our diluted EPS of <unk> 62 in Q1 'twenty two.
Well the company.
24% sequential growth over Q4 'twenty one.
Yes no.
non-GAAP diluted EPS of <unk> 76 cents.
In Q1 2022.
15% sequential growth over Q4, 'twenty, one non-GAAP diluted EPS I'll fix it makes sense.
Excluding the payment solutions business in India, we generated $31 six operating margins in the first quarter of 2022.
An increase of <unk>, 5% as compared to 31.1% in Q4 of 'twenty, one, which as Steve defined is in line with our goal of more than 30% operating margins.
Let me now discuss our revenue performance in a little bit more detail I'd love to write insurance revenue grew two 3% year over year, you must have a newsgroup for San Diego.
Our risk compliance revenues grew eight 3% a year over year.
Excluding the prepaid gift card revenues.
Cash revenue.
Increased year over year.
My only 0.7%.
Also what was encouraging about Q1 'twenty two results was the fact.
That our revenues grew year over year in each of.
11 geographies up our business on a constant currency basis.
On a GAAP basis, our revenues grew year over year.
And seven of the 11 geographies up our business. Despite the adverse effect of the U S dollar strengthening strongly after the Ukraine crisis.
U S revenue had a year over year, 2%, Canada had a year over year.
Increase of 2%, but are you at all.
What do you have an increase of 27% you ought to try to increase up 2%.
Indonesia had a year over year increase of 85% Philippines.
Frees up 55%, while UAE grew by a large percentage number also.
Despite a 7% decline year over year in the gift card business at Ebix cash revenues.
On a constant currency basis, but higher than the Q1 2021 revenues.
We are pleased with the India EBIT cash flows out for Q1 2022.
Most negatively impacted business from COVID-19, but didn't Ebix cash limited experienced solid lady yet or what have you got in the first quarter of 2022 in total our travel foreign exchange remittance learning in financial technology businesses combined grew revenues by 20.
Eight for San Diego body during the first quarter of 2022.
You've got already a grow up in travel and foreign exchange revenues.
85% and another 9% respectively.
But E learning business also benefited from the reopening of schools in India and contributed 138 with some growth.
During the first quarter of 2022 of our BPL business also grew 68% year over to you.
Pardon me.
The insurance business related events.
Out in the first quarter of 2022 one.
Finally signed the contract.
With the worlds largest broker aon.
For the Ebix Enterprise health implementation in North America.
Two.
We got a go ahead from a top super broker in the world.
Ploy.
Ebix evolution P&C broker system product not just in many European countries, but part of United States and Canada, We will announce more detailed about the name of that broker in coming days.
We successfully showed how our successful implementation.
Technology can result in a network effect.
It would be in life speed revenues combined growing 21% year over year.
Globally, because of the network effect of large distributors and the carriers they bring on exchanges.
We made a number of key hires in recent times one of them that reflects ebix efforts to invest in the Bse Ebix insurance distribution venture is the hiring of a new CEO and managing director.
Bse Ebix venture.
What's at stake.
Joined Bse Ebix, some honest thing young.
Well as a partner he was instrumental in leading and stepping up.
The fast growing.
And Fintech practice for understand young financial services Division since 2016 product Baidu Eni stopped and spent more than a decade with IBM consulting and a similar domain as executive blacked out.
Yeah.
I believe that Hudson brings to us.
Medians of more than two decades and areas for Whiting.
But writing up the thought leadership in the digital financial services.
Driving business transformation initiative, and helping us build cutting edge digital platform.
And driving Fintech and ensure that equal system in India and overseas markets.
Let me talk a little something.
We continue to focus on as a company.
We are focused on continuing to reduce our debt.
<unk> talked in detail about that reduction.
Just stop at that that that remains a key focus of ours today.
In Q1 2020 to be cumulatively spent $58 million.
Interest payments, that's payments dominant payment income taxes.
And capex payments and reduction of working capital facilities et cetera, and still our cash cash equivalents short term investments and restricted cash $102 2 million.
As of March 31st 2020, do what says $125 2 million as of December 30, plus 2021.
We are pleased with that as it speaks to the fundamental resilience of our businesses.
We conveyed.
That's a company the Indian subsidiary Ebix cash limited has filed a draft red Herring prospectus with the Securities and exchange Board of India for initial public offering aggregating up to.
60 million.
Rupees.
And I feel good.
After IPO proceeds approximately $350 million is proposed to be utilized to work, but changing up outstanding compulsory convertible debentures from Ebix Asia Holdings, Mauritius and Bill payment to Ebix, Inc.
It is proposed to be used towards reduction of Ebix inc's outstanding debt.
Approximate 300 million is proposed to be utilize for working capital requirements of EBIT Gaslog Ltd, and its subsidiaries that are meaningful seats.
Would be utilized to watch inter heavily on growth related initiatives of Ebix cash limited, including acquisitions and other investments.
With that they ought to be filed as part of England rules governing the process I cannot speak much about the ebix cash business.
The IPO now and that will need to point you to the D. At HP for all day thought regarding its regarding EBIT Sky's performance and any other questions you might have.
The outage is approved.
We'll be filing the bottom row red herring prospectus.
We will keep you updated about the IPO timeline.
And are presently.
Not in a position to comment about it in line with the IPO guidelines.
In India.
<unk>.
I will now pass the call to the operator.
Put it up for questions. Thank you.
Thank you Sir at this time I would like to remind everyone in order to ask a question press the star one on your telephone keypad again that is star one to ask a question.
We have your first question from Jeff's been with Craig Hallum. Your line is open.
Excuse me Sir your.
Your line.
Can you guys hear me I'm getting a lot of feedback there.
Jeff I can hear you play loud and clear good morning, Okay, great. Okay. Good morning.
I'll start with the U S business I mean, obviously, thank you for the transparency a lot of sub details in there and it sounds like a whole lot is going right. We can see that from the numbers, particularly as adjusted by constant currency.
But you know talk about maybe your expectations for 'twenty, two and 23, you know once in a while you have given us snapshots of what you think you can grow the overall business.
Obviously, you've got a view into the pipe. So maybe just some color you know however, detailed you can be about the pipe and what kind of growth rates do you think the U S can deliver 22 and 'twenty three.
And can you address this in a generality with respect to the U S business.
With respect to the future pipeline and what you see in the business.
Certainly.
So marni.
Jeff Yes, the pipeline is strong as I mentioned earlier, we have a number of carriers distributors that we are actively engaged in the pipeline is strong.
In terms of our ongoing you know growth in <unk>.
22, I think in our previous call I had indicated that.
We would expect probably a high single digit growth in.
In 2022 and as things normalize.
You know from the Covid impact and some of the challenges that we're seeing in our underwriting exchange and a few other business units that growth would be higher in 2023, now obviously, we cant control what we can't control some of the geopolitical impacts.
You know the economy itself.
We don't control, but generally speaking higher interest rate environments.
Good for US you know on annuity sales.
You know tend to get positively impacted so.
Those are some of the factors Jeff.
You don't give us that confidence.
I would say quarter to quarter, it's kind of hard to predict but I'm looking at it from a you know annualized basis 2022 and 'twenty three.
Great and I think you.
You had referenced in the script, that's one of the things holding you back is some some recruiting slash personnel just expand on that a second.
Yes, so Jeff this is an industry wide problem right. It's not just E bikes. So we've had.
In India, a big shuffling of resources.
Since people are working remotely they felt that they could work anywhere and we saw a lot of people are turning over.
Companies.
Doctor said, EBIT, but industry wide.
Hum.
We did hire a lot of people you know, but like Steve mentioned earlier that took wise.
It looks to be trained and ready to be on projects.
The second dynamic, which we are facing right now is the positive side as we've opened all our offices. So people are actually back at work, which is the which is a very positive impact because now you.
It's easier to train people, it's easier to manage projects.
But it does require and there may be a short term.
Disruption because some people just don't want to come back to work.
We're seeing that here in the U S. We're seeing that back in India.
Christian I believe may continue for a short duration, but ultimately.
All of the measures that we've taken hiring of people training opening reopening of the offices.
All of that will have a positive impact.
Hi, Jeff.
I go to add to what Josh said.
I think that sharply summed it up from my perspective, what I have seen in.
Optical it is.
There is a we are in the domain specific industry. So as we continue to hire it is not as simple for us to immediately to place the talent that we had simply because we've got to teach them, what we do right and because we had a domain specific industry. So there's a training time as he aptly put it. So that's one challenge we have the second.
They said that this is a worse.
Worse than anything I have seen in India at least in the last 22 years, a big name that's showing on a month over month basis, they're showing 32% attrition rates, maybe just bizarre and it's primarily what has happened with COVID-19 have changed the thinking process for some of these younger folks they go.
Feel sometimes they feel they can pick two jobs now they can work with two companies at the same time, while they're sitting at home.
And sometimes they just feel that they don't want it to be back to work now and a lot of companies, including Ebix.
And forcing it all and a lot of the big empty that doing that in India. The enforcing that all that you got to come back to work simply because it will allow people to work from home you just losing the culture. The word culture I picked the look I think that you can build them.
Motivation that he can build and employees and and they look for particularly for it and we had a lighting that.
You know that we really need to bring them packing blocking up a lot of people don't like it. So it is it's a phenomenon that is happening in India, specifically in the technology world in a big manner.
And.
Besides that the salaries have gone up dramatically I'll give you a simple example that debate. If you today there are people who are getting 45 countries, even if they leave you.
It's a it's a bizarre market overall in India and a lot of it has to do with a lot of startups that have started and the foreign money that have come into India.
They're willing to pay a lot of money without any type of profit.
Having said that that's created a little bit of a nightmare to situations. Good news is that for the.
We have arrested that decline if you look at our attrition rate I just went through the attrition rate numbers for US you know, but you you probably have seen some of these you'll Google you know some of the larger players in India and you will see that the rates have been 32 and 33%. The last we looked at the lofty.
While the attrition rate came out at around 14%, which means.
But the challenge we have is on a low base is it looks like 14, but when you look at it from a technology perspective, it's actually a lot more than 14.
And that's the way a lot of challenges in technology, and then the technology one of them.
The products, where we need it as one of our most complicated products one of our most advanced products in terms of technology is that underwriting exchange, we have been able to substitute people in most of our other products. So we don't we're not really running into the challenges with respect to people in most of that.
With waste products, we've been able to handle it.
Mainly this one product the underwriting exchange the D. P people living in the level of knowledge required to be working on that product is a lot higher than any other part of it it's not a cookie cutter come in and just work on that product, but that's something that some of our challenges have been and we're working through it and part of a cycle.
That got disconnected was.
During Covid, we were not able to highest precious so normally what we do and this is something.
That is true for all Linda all companies in India.
When COVID-19 happened most of the schools and colleges little closed.
Two quick cycle stopped in terms of hiding pressure, that's a very important piece of the puzzle because you're going to hire freshers.
You don't want to beat those pressures will stay with you for a decent amount of time because they are eager to work. They don't have those many job opportunities.
They're with you for X number of P F.
It is a given.
And you teach them over a period of time and you make them very absolutely functional in six to eight months.
The math works in a fantastic manner that cycle broke we would not they would know hiring of precious but do we yes. So suddenly now when we had the outboard.
Put in an output when there were people, leaving you also had earlier pressures coming in and they would step into that role on a cyclical basis continually refreshing Gulf of useful to fail. That's a freshman broke because there was no fractures being hired so we have well were going away we have.
Now we have gone back to the basics, we haven't gone back and started hiring factual.
In a big way out the technical institutes in the country that by itself is going to show dramatically Good result, and.
So I think that's part of what is happening in India. So he can give you.
This detail and so but this is a big issue.
It's pretty light today, then it's not just an ebix issue it to the government.
It's become quite a large issue for it.
For India at present.
Okay.
A couple on the Ebix cash in an understandable if you can't go there.
I'm sure you'll say, so but you know.
Clearly the whole world stopped with Covid and FX travel all these businesses you had to right size the cost structures to survive, but now that we're coming back out the other end of Covid and people are unlocked and get back to life.
You know whats your certainty that you've retained share do you believe your routine share gain share loss here how are you coming out of this.
But at this point.
[laughter], so definitely I I can't go into too much detail, but I will give you a very simple and so if somebody answer which is that we believe we have grown our market share decisively in both the areas of travel and foreign exchange.
It is simple reason for it a lot of the smaller players just died by the site during COVID-19 and they were not able to sustain themselves and in the Meanwhile, we just kept signing new business and.
New corporate new airports, we believe me we have done well, we feel ready we feel very good about the pipeline. We have the business. We have on board on the travel and Forex right I think that without soft Q1 by itself value that'd be all had it all sort of remember that many of the countries, where we are leaders.
Haven't really Havent opened up in Q1.
Indonesia, and Philippines, we have been the number one travel player in these two countries right and they are far.
Our most profitable travel businesses.
And having said that those countries were basically at the stop and I should actually come to put them on but just Singapore.
All three places what are the absolute full stop there was no tourism happening in these places they'll still countries have been have continued to open out beginning April and it's been a gradual process and as the travel opened up in these countries. The business is going through our profitability will grow our revenue.
It will go from the travel business you know in addition to whatever we have you know.
All of it.
The day the growth that'd be anyway feel we can get out of the Indian.
Travel and Florida.
Fitness.
Great. Thanks for the transparency on those two domestic international.
As you are.
Just two other brief ones if I could you know as it relates to capital markets Robin Obviously U S markets.
In in Chaos Slash Freefall recently, particularly.
You know some of the software you know small cap tech, but I know, India is a different market L. I see you got their deal done it looks like can you just talk to the degree you are able to about what's going on in India capital markets right. Now obviously, you can't predict when exactly happens to you, but observe what's going on in the overall capital markets.
I guess I'm not allowed to talk about it but to stop at that I think you've already you can Google and she likes she had a great issue. It's actually got a good pretty good foreign investment ultimately in the last few the last date and they had a good issue and he can go in terms of valuation in terms of how it got lifted, but having said that I I.
I have specifically been told we can't talk about it until they can give guidelines. So I'm going to just completely stay away, but maybe I'll go back to a previous question and add something too you know there is because we have talked about it in the past I can possibly talk about it one of the areas that besides travel and Forex.
Where are we in Ebix cash we should see improvements there.
It's going to be the Remington failure rate of Covid is opening up but I mean, it doesn't get enough he'll continue to improve we have.
A lot revenue line that I expect to come in in 'twenty due in 'twenty play into our business when I say locked the reason I say it a lot because it's in announced deal. If you remember we had announced an exclusive agreement with Moneygram.
In India, when he announced that agreement as a part of that agreement dealer five distribute this large distributors.
Well, who under the rules had to continue doing business with them.
Their contract either elapsed all big game underneath Ebix Ebix cash.
Two of them are still left out who have not come underneath us and contractually they have gone back got so what one of them.
Its actually Thomas Cook, whose contract gets all in September .
September and another one is a political Supreme was contract got so what next year in July .
Under the rules they did under the partnership agreement that Moneygram publicly announced all of those those businesses will come underneath us.
All though they'll do the money that is flowing right now, which incidentally is 15% of Moneygram revenue in India right now 50% of that revenue isn't coming to US right now is coming through these two players because it's a contractual.
The agreement they had that by automatically under the contractual films will come to us.
Some of it in September of 'twenty, three 'twenty, two and some of it in July of Oh, Ninety-three oddly if those parties decide to come underneath that under.
The new rates that would be able to provide them. The new commission rates. So having said that that gives us some more children's of continue to grow with them.
Alright.
The ADF products that you're working on in the in the maintenance area. So I thought I should probably add that to the mix of you know.
What we talked to about the Ebix cash businesses Yep.
Okay, Great I'll leave it there thank you.
Thank you.
We have your next question from Chris Sakai, We'd singular research your line is open.
Yes.
Hi, good morning.
Good morning, Chris.
Could you could you just talk about the drivers on the decline for the he paid gift card revenues.
Well really if you look at the decline it's it's not a large decline it's a 7% decline so there's no specific.
The reason, though because it's not a large enough decline and you know this is a cyclical business. It continues to we it depends on how many large corporates do business with you and so on so I wouldn't read much into it.
You know it will be it is theres no kind of in that in any form or fashion. So yeah.
But are you happy with the well we had a very strong Q1 and in 'twenty. One. So we actually think they have done very well in this quarter and we you know it is a.
We can continue to grow this business as we move forward, we don't see any limiting factors to the business in terms of.
Any kinds of films that drive our revenue down or yeah, but you're going to see slight changes here right in terms of it can happen that's normal Hey, Robyn Let me, let me just add that even though we had a six 7% decline year over year. If you look at it sequentially. We grew those revenues by 17% in the first quarter.
Since Q4.
No that's a very good point yeah.
Thank you Steve.
Yes.
Okay. Thanks for that.
As we head into the summer months.
You know how are you seeing travel inform exchanged or are those going to be are you going to see continued growth there.
Oh, absolutely are we winning I look you can't predict that make but today, what we see in India airports have jampacked airports are full of the debt is almost a debenture with them happening in the country right. Now are people just want to travel you try to book a.
Our flight domestically or internationally and they're going to find a flight it's very difficult to find play. So businesses is coming back and are lowering manner and we expect that trend to continue one of the good things that are happening in the travel business sale.
Events travel business is coming back in a big manner, and what I mean by events travel is in.
It wouldn't go with one of the things that completely diet out was.
Conferences, but one of the biggest place one of the big ways of doing travel businesses, we handle and the wind event for let's say a bank, but maybe I'll go it could be anybody right and they were bringing 3000 people into conflict, you'll have a bank, who will give us a $4 million even just some hypothetical example to you.
Our bank will give us a 4 million dollar deal and say look in one corner, we need you to fly and 6000 people into those cities and organizing and when conference for US right. We Andy pick another project that business is coming back in a big manner. We are absolutely right now.
Absolutely back then.
The that you'll say they'll probably associated with respect to that business. So we feel very good about that and from a.
Forex perspective again as international travel is opening up it doesn't matter, though that you're gonna see more money come out coming on to the airport site and we obviously are the dominant player in the airport business.
In the potash business as airports 80, you know when you look at five star the majority of the Big five Star hotels do business with US all the religious George Stupid and that's really the most of them and so on so we feel very good about all of those who have placed at all that I get to play through as people as travel opens up products will automatically open up and we have launched a lot of new products in the product failure.
And if you look at the present trend.
I I am very bullish about travel and products up in coming quarters for coming quarters.
Yes.
Okay, Great and last for me.
It was the bus exchange business this quarter I didn't hear much about that.
Well I mean, we because we're not discussing too many details with respect to exchange Ebix guys bidding, but that's exchange business say that strong as it could be we had actually had they didn't do you know we announced if you remember in the first quarter, we actually announced two deals.
The state of Andhra Pradesh, and that's been golf are these are two large stage two of those large states in India out of 28 States that India has a we have basically picked up the deploying the bus exchange business. The unit systems in all of the buses in these places indeed paulsen the buses in each of.
These days now remember that revenue isn't factored into today in these numbers that'd be announced because what's going to happen that it takes for sometime to deploy these and when we deploy advanced they'd get life. That's when we started picking up that revenue. So so right now none of that revenue was factored in of the new deals that we had and I don't think we have a very strong pipeline.
In the bus exchange business, we are the dominant player in the market you know, we already announced the outage be also self stop it that'd be already had 14 states subsequent to that we announced two more states. So when you if you're at 16 O. The 28 states that's a pretty dominant player already so we feel very good about that business because that's been lovely.
Two multiple opportunities it's not just it's not just the idea of my system that we call. It it's not just the information technology management system for.
What about flight E ticketing and so on but it also leads to.
<unk> got a business prepaid card business at least through our card business, we had a new wave of smart card and you stopped paying 40 or 40 of stuff and it leads to many other products in coming days I'll give you a real example of a product that can happen, but even in travel incidentally, we wanted to launch a product like somebody wants to go into a bus and phase and housing.
Ebix got Scott any basically he or she basically says I don't have the money and I traveled to someplace I buy now pay later right and we would partner with banks, who are basically provide of that facility of instant credit to those people and it will all happen through our technology interface to the bus.
And so on and then the next opportunity comes in.
We ended up with these systems two systems for now a bus travel stops at a bus depot and then from you know and and it lands up.
At a train station in a bus and now carries the same God what train system. If you can integrate those two systems.
Putting up a brand new opportunity for us in that area right by using the same god by deploying standard system that the train now you can have the same traveler.
And for that they get you don't put a brand on the same god that they bought the bus sky right. So that's interoperate operate ability and then when you go into a cab you still pay for you know whatever you're doing and your capital what do you think that God. So that's what I'll tell you the ability is and some of the newer opportunities that we have.
Feeling right now.
Okay great.
Great.
Thanks for your answers.
Thank you Chris.
Yes.
I'm showing no further questions at this time I would like to turn it back to Mr. Robin <unk> for any closing remarks.
Thank you thank.
Thank you.
But basically what this will close the call I look forward to speaking to each one of you as we go into the Q2 investor call. Thanks, everyone.
Thank you.
Ladies and gentlemen, this concludes today's call. Thank you for your participation.
Participation you may now disconnect.
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