Q3 2022 Ebix Inc Earnings Call
Good morning, and welcome to Ebix Inc's third quarter, 2022 financial results Investor call.
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As a reminder, this conference call is being recorded.
I would now like to turn the call over to Ebix as corporate Vice President Darren Joseph Please go ahead.
Thank you.
Welcome everyone to Ebix Incorporated's 2022 third quarter earnings Conference call joining me to discuss the quarter is Ebix, chairman President and CEO Robin Raina.
Ebix Global CFO , Steve Hamil, and Ebix, North America, President Ash Sawhney.
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, 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 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 Q3 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 can look into ebix as financials beyond what has been provided in the release on our website www Dot <unk> dot com the audio and the text transcript of this call will be available on the investor homepage of the Ebix website. After four P M eastern time today.
Let me now present, the key metrics is in our Q3 'twenty two results.
Q3, GAAP EPS was <unk> 59.
With 18% year over year growth.
non-GAAP diluted EPS in Q3, 2022 were 70, GAAP revenues of $257 9 million with 35% year over year growth.
GAAP operating income of $30 4 million with 8% year over year growth.
Cash generated from operations in Q3, 2022 grew 48% sequentially to $23 6 million as compared to $15 9 million in Q2 2022.
Year over year cash generated from operations increased 30% in Q3 2022.
non-GAAP operating income in Q3, 22 was $33 6 million.
Let me at the outset tell you what we were against in this quarter.
The recent worldwide inflationary trends that resulted in the U S dollar strengthening against most currencies, resulting in a revenue headwind of $16 9 million in Q3 2022 versus Q2 two.
2022.
Year to date revenues were negatively impacted by currency exchange movements by $33 8 million.
Our bank costs were higher by $4 5 million in Q3, and 22 as compared to Q3, 'twenty as compared to Q3.
Good morning, one for reasons beyond our control.
We have experienced elevated costs associated with the across the board salary increases for our employees and most international geographies as compared to Q3 2021.
In spite of these issues faced by the company are worldwide GAAP revenues grew at 35% year over year and excluding the prepaid card business grew 29% year over year.
Excluding the prepaid gift card revenues Ebix cash GAAP revenues increased year over year by 82%.
Insurance GAAP revenues worldwide decreased by 2% year over year in Q3, 2022, and Rcs revenues increased 14% year over year during Q2 'twenty to 2022 <unk>.
Insurance exchange revenues were slightly higher year over year in Q3, 2022 on a constant currency basis.
On a constant currency basis, our Q3 2022 revenues grew by 43% year over year to $274 8 million.
On a constant currency basis eight of the 10 geography has experienced year over year revenue growth.
<unk> Q3, 2022 and on a year to date Q3 2022 basis.
Exchanges, including Ebix cash and our worldwide insurance exchanges continue to be Ebix is largest channel accounting for 92% of Q3 2022 revenues.
The main contributors to the strong growth in Q3 of 2022, where the company is EBIT cash travel.
And foreign exchange.
Maintenance revenues that grew a combined 100 and 445% year over year EBIT cash payment solutions revenue, primarily prepaid gift cards growth of 39% EBIT cash PPO revenues year on year growth of 42% Latin America revenue year over year growth of 55%.
U S annuity revenue growth up 16% year over year and E learning revenue year over year growth of 110%.
Our EBIT cash exchange revenues, excluding our prepaid gift card business generated 82% year over year growth in revenues in Q3 2022.
Our most negatively impact businesses from COVID-19, with an EBIT pass limited experienced solid year over year growth in the third quarter of 2022 in total our travel foreign exchange outward remittance inward remittance E learning and financial technologies businesses combined grew revenues by 86% year over year.
During the third quarter of 2022.
Year over year growth in travel and foreign exchange outward remittance revenues or 265% and 73% respectively.
Inward remittance revenues experienced a 22% year over year decline in revenues during the third quarter of 2022 due to certain onetime events.
In Q3.
Our E learning business continues to benefit from normal school operations in India, and contributed 110% growth rate year over year during the third quarter of 2022.
Finally, the financial technologies businesses had 28% year over year revenue growth in the third quarter of 2022.
In Q3, 2022, our non-GAAP EBITDA plus stock based compensation was $35 8 million, while we reported operating cash flows of $23 $6 million, we feel good about that as it speaks to the fundamental strength of our business I will now turn the call over to Steve.
Thanks Darren.
Global inflationary pressures and recessionary conditions have resulted in the strengthening of the U S dollar against most currencies during 2022.
For the third quarter and year to date period, the negative impact.
From foreign exchange movements reduced our reported revenues by $16 $9 million and $33 $8 million, respectively. This has been the largest quarterly and year to date negative impact from foreign exchange movements in the past eight fiscal years for Ebix in fact, the year to date Q3, 2022 negative impact of $33 eight.
$8 million is a larger headwind.
And then the year to date.
Q3, 2020 period, when Covid changed the world.
Despite this reality for a global company like Ebix, our GAAP revenues increased 35%, while constant currency revenues grew 43% year over year in Q3 2022 on a year to date basis as of September 32022, our GAAP revenues grew nine 2% year over year to $795 million, while our COO.
Constant currency revenues grew by 14% year over year.
Operating income in Q3, 2022 was $34 million, an 8% increase from Q3 dollars 21 operating income of $28 1 million and slightly higher than Q2, 2022 operating income of $31 million, our operating margin of 11, 8% in Q3 2022.
Compares to 12% in Q2, 2022, and 2014, 7% in Q3 2021.
Decrease year over year.
Relates primarily to revenue mix changes in Q3 2022 versus the prior year quarter EBIT cashless payment solutions business, which is primarily comprised of our prepaid gift card revenues and which have very low margins increased 39% year over year in Q3, 2022 as compared to Q3 2021.
<unk>, we've incurred some incremental costs due to inflation and investing in COVID-19 impacted business lines that are improving each quarter, such as our travel and foreign exchange businesses. These investments increased our total G&A cost by $9 million year over year in Q3 2022, primarily in the form of increased personnel costs of $4 9 million.
And increased rent expense of $3 $7 million.
Increased rent expense relates primarily to the reopening of foreign exchange operations in major ports of entry in India.
Excluding the impact of the prepaid gift card business Q3, 2022 operating margins were 26, 4%.
During the year to date period of 2022, we had the following major cash uses $33 million of cash interest paid 29 million for income related taxes paid globally.
Mined 18 plus million expended on Capex and software development costs 20.
$23 5 billion used to reduce the principal outstanding on our corporate credit facility and $7 million for our dividend payments.
This $111 million represents cumulative year to date payments just for lenders taxes dividends and Capex. We funded these initiatives from existing cash plus operating cash flows generated during the year.
After spending $111 million on these items. The company has liquidity on hand, which includes cash cash equivalents short term investments and restricted cash of $98 7 million as of 30 of September 2022 versus $125 2 million at $12 30.
121.
For the year to date 2022 periods versus the similar period in 2021, Ebix paid an incremental $14 4 million in cash taxes, and $8 $9 million in cash interest while also investing an incremental $8 5 million in the company in the form of Capex and software development costs.
Our total debt on September 32022 was $637 million.
A reduction of $30 million from total debt of $667 million as of September 32021.
Our current corporate credit facility contains two financial covenants, our consolidated net leverage covenant and our fixed charge coverage covenant.
Our consolidated net leverage ratio was approximately 375 times at 932022.
Versus 443 times at 932021.
And four two times at 12 31 2021.
Our consolidated net leverage covenant at 932022 was four five times. So we were comfortably inside of that.
Our fixed charge coverage ratio was approximately 153 times at 932022 versus our covenant level of one five times, we were in compliance with our credit facility financial covenants at 932020 to.
Robyn will provide a further update on the efforts that are ongoing to address the impending maturity of the credit facility in February 2023 during his remarks.
Ebix continues to improve its financial results. Despite the currency headwinds in a rising interest rate environment.
<unk> pre COVID-19 operating levels in the negatively impacted businesses is a goal we are continuing to move towards.
While we saw a rebound in activity in most of these businesses beginning late in 2021 Q3, 2022 revenues remained depressed from pre COVID-19 levels.
Q3, 2022 revenues from travel foreign exchange Remittance financial technologies any learning, we're 26% lower than Q4 2019 revenues last quarter prior to the beginning of the negative COVID-19 impact on Ebix.
However in Q2 2022 in Q1 2022, these business lines were approximately 31% and 55% lower than Q4 2019 revenues.
And this illustrates the continued improvement in these COVID-19 impacted business lines over time.
While we have some important hurdles to clear in the next few quarters, most notably changing our capital structure to address the corporate credit facility maturity.
We continue to see incredible value proposition that ebix can provide to its stakeholders over the long term.
I want to thank <unk> thousands of employees around the world for all their hard work and dedication ebix. So that we can continue to provide strong customer experiences globally.
Finally, <unk> Form 10-Q will be filed later today.
I would like to now turn the call over to the President of our North American insurance businesses Ash Sawhney for his remarks on our third quarter 2022 operations Ash.
Thank you.
Steve.
I will now talk about the North American results and outlook.
The North American revenue for Q3 was down approximately one 8% compared to the same quarter last year.
On a year to date basis for the first three quarters. The business continues to be marginally higher compared to the same period in 2021.
Our core exchanges comprised of life and annuity health's illustration, P&C CRM and certificate.
<unk> businesses are collectively up approximately four 5% in Q3.
Good morning to compared to the same quarter last year.
These were offset by a 13% decline collectively not underwriting health content and noncore consulting businesses.
Our life and annuity and health exchanges collectively were the strongest performers showing an aggregate increase of 14% in Q3 2022 compared to the same quarter last year.
I will now provide a more granular overview of the underlying business units.
Annuity exchange revenue was up 16% in Q3, according to compared to the same quarter last year.
Number of transactions flowing through the platform were up 43% in Q3 compared to the same quarter last year.
Sequentially compared to Q2, our cornetto.
The transaction count was down 10% and the revenue was down one 6%.
Mainly due to the fact that Q2 was the highest quarter ever recorded in terms of revenue and transaction volume.
In Q3, we added a speed up to the platform. We also delivered new modules to <unk> and American National Insurance Company and.
In Q3, we successfully delivered and engineered release with over two dozen enhancements for the industry.
Our life insurance order entry exchange was up 26% in Q3 of cornetto compared to the same quarter last year and up 44% sequentially.
On a year to date basis. The division is up 26% and is on pace to deliver the highest revenue year in its history.
We are benefiting from new carriers that are being added to the platform and the ongoing build out of the Jpmorgan life platform.
Q3, we delivered over 30 enhancements, including updates to AIG Lincoln Credential, John Hancock and Edward Jones.
The last patient exchange revenue in Q3 was down approximately 6% compared to Q3 of last year as well as compared with Q2. According according to.
This was mainly due to projects that are still in implementation.
On a year to date basis, we are trending modestly higher than last year and the revenue level is the highest it has ever been for this group we are continuing to add new capabilities to the platform and plan to announce major upgrades of the <unk>.
<unk> exploration plan for Q1 in 2023.
The health exchange of Avenue in Q3, 2022 was up 10% compared to Q3 of 2021.
On a sequential basis revenue was up 6% in Q3 compared to Q2 last year.
Compared to Q2 this year.
This was the highest ever revenue quarter for this division aided by the Onboarding efforts of Aon and the expanded work with AIG Aon is expected to go live in Q1 of 2023.
The medical certification business was flat in Q3, compared to Q2 and down 2% compared to the same quarter last year.
<unk> video streaming and accreditation business was up in the subscription business was down this quarter, we have initiated a new omnichannel marketing effort, which we believe will be beneficial for this group in the long term.
In Q2, we signed several new contracts, including Harvard obesity, and NYU physical medicine, and the Cleveland Clinic, Pediatrics and internal medicine, we are getting up for Q4, which is historically the best quarter of the year for this division.
Our core consulting business was flat in Q3 relative to Q2 of 2022 main highlights this quarter with ongoing work from JP Morgan as feeder <unk> an anecdote.
Several of our core consulting services, including product setup testing and integration are now closely aligned with our exchanges.
We have several deals in the pipeline and expect a few of these to close in Q4.
The underwriting division was down 6% sequentially in Q3, and 5% compared to Q3.
2021, certain projects are running behind.
Schedule due to resource constraints remedial steps have been taken and we expect to fully catch up in the coming quarters. In Q3, we added annuity processing capabilities to the platform. We also delivered new product updates to Manulife, John Hancock sunlight denominator, and Indiana Farm Bureau.
The CRM division was down 5% sequentially on a year to date basis. The business is currently running flat.
This past year, we have focused on restructuring and repositioning the CRM division the.
The division has two distinct subdivisions, the retail segment, which targets smaller distributors and the enterprise division, which targets large enterprise accounts on the retail front.
We have made several changes including rebuilding the entire sales team. We also added new product capabilities and have repositioned the product to be more than just a CRM platform.
And have included other value added services for their users.
We are pleased with the progress and feel that the retail unit is now turning around and will continue to.
Be on a growth path.
I'd also addressing the needs of the enterprise group.
We will be adding more sales resources and also launching new integrations to the platform, which will provide broader revenue opportunities.
The platform remains a preferred platform for thousands of insurance agents and agencies, who value the specialized insurance capabilities that the product provides.
The risk compliance certificate tracking business stayed steady showing 2% sequential growth and 5% increase over the same quarter last year.
Clients added to that this quarter include the San Diego County, <unk> management services, the Rockefeller Group West main and the Hyundai Motor Corporation.
The P&C risk management Division was up eight 8% sequentially in Q3 and relatively flat compared to the same quarter last year.
On a year to date basis, the division is stacking up approximately 4% relaunch.
We launched a new version of the risk management information system platform in Q3.
Looking forward towards Q4, we remain optimistic.
The last quarter of the year typically is the strongest quarter for the North American business.
Factors contribute to this optimism.
Historically, the medical certification business sees a significant uptick in the fourth quarter as physicians have a deadline to get their CE credits.
We expect this year to be no different.
Core life and annuity exchanges will continue on a growth path. This is driven by favorable interest rate conditions in the market as well as addition of several new carriers and distributors to the platform.
The pipeline remains strong we are also seeing a steady stream of work request from existing customers.
As we add more carriers and distributors, we also see a steady uptick in our core consulting revenue.
We expect this trend to continue well beyond the next quarter.
Starting earlier this year, we started to expand our sales team. We are pleased with the high caliber of sales executives that we have added to the team this year.
We have seen early successes with new deals and a healthy pipeline.
Our goal is to fully staff the sales organization by the end of the year. We are on track with this goal.
Suddenly we will start to catch up on the backlog of work on the underwriting platform. We are pleased with the rebuilding of the pipeline both in the U S and Canada.
Looking beyond Q4, we remain optimistic that the North American business will continue towards a path of organic growth.
As mentioned before our court exchanges are already trending at growth rates at mid single digits with.
With the rebalance of the underwriting division and our enterprise CRM platform, we will be able to increase this growth rate is.
As previously stated we expect to augment our organic growth with synergistic acquisitions based on the pending IPO in India and other capital raising initiatives.
We are excited about the Ebix Expo, which is being planned for Q1 of 2023. This is the first time since COVID-19 that our use of community will be able to meet in person this year.
Gives us a tremendous opportunity to showcase all of our products.
We will be announcing the launch of our upgraded exchange platform called the Super Highway more on this in the coming months.
While there is a growing concern in the industry about the business climate and the possible recession. We believe ebix is in a strong position.
Our robust business model, which is founded on our diverse customer base industry leading products.
And a largely recurring revenue model will allow us to maintain our strong position.
With that I will pass this along to Robin for his comments.
Good morning, everyone.
These are extraordinary times for the corporate sector globally.
Inflationary pressures and the session.
I think the normal condition.
Major currencies abnormally weakening against the us dollar.
Besides that rates climbing substantially worldwide.
Don has led to substantial pressure on international companies headquartered in the U S for obvious reasons.
You take that into account than EBIT.
22 results look, especially outstanding.
A few things stood out for me in the quarter.
135% year over year growth in worldwide GAAP revenues.
43%.
Growth in worldwide constant currency revenues.
9% growth in worldwide GAAP revenues, excluding the prepaid card business.
Ebix.
Ebix cash GAAP revenue growth of 32%, excluding the prepaid cards business.
Even though your growth in eight of the 11 geographies on a constant currency basis.
While all three business channels, namely insurance exchanges ebix cash and.
Compliance solutions channel showing year over year.
On a constant currency basis.
Brian solution channel showing.
GAAP revenue growth of 14%.
18%.
EPS on a GAAP basis, despite the company in.
Got it.
Incremental interest expense in Q3, 'twenty do well.
Approximately 15 cents per diluted share.
Our non-GAAP EPS.
71 cents.
What also stood out for me.
Can you with financial discipline exhibited by the company along with the regarding cash generation ability of the company.
Okay.
Got elaborate is down substantially.
Consolidated net leverage ratio as Steve defined well that ahead of the $3 75.
As of September 20, do what it says.
For the.
When you go back and forth to Adam 30, plus.
December 21.
During the year 22 itself.
We also paid approximately $110 8 million on principal and interest payments to lend us income taxes dividend to shareholder doesn't capex et cetera.
The company has.
Liquidity on hand, which includes cash cash equivalents short term investments and restricted cash of $98 7 million as a plenty of September 'twenty two.
The company's financial discipline can be gauged from the fact that almost the last two years.
At September 2020, the company has made cumulative cash payments.
$229 million, Jeff for Cashback shareholder dividend.
London principal and interest payments only.
This include.
Payments of $71 $7 million towards debt reduction.
Right.
The $229 million of cash outflow, Jeff Lund.
And then the payment tax payments and shareholder dividend payments, our overall liquidity on hand.
Still at $98 7 million as compared to $126. Five on 30 September 2020. These numbers speak to the fundamental financial strength of the company for me.
On the IPO front.
Company is also up and ultimately approval opex subsidiaries at HB, leading to the filing of the Red Herring prospectus and the eventual IPO.
So David as Scott has already received.
Principal approval from the stock exchanges, Bombay stock exchange and National stock exchange for the IPO.
We are hoping to report something on this front.
John .
Also EBIT Scott in recent times has the feed all of that of course that the license renewals.
<unk> edge products various regulated businesses.
Foreign exchange.
God witnesses and the BBB oyu licenses from the financial regulatory body governing such license sale.
Site, having fled.
Section audit of the financial regulatory body successfully.
We add that independent joint statutory auditor.
For the consolidated India business, namely.
Grand product in India, and give you some money have audited and file the ebix cash audit for the <unk>.
And then Mike <unk>.
And expressed an unqualified opinion on board.
Consolidated media business and the Indian gift got subsidiary.
Public document accessible to all.
All of these are great steps forward in the direction of our EBIT gosh, I feel that our investment bank presently.
At the launch.
Within a short period six to eight weeks after the <unk> approval.
Let me now address that maturity.
We remain confident of addressing that debt maturity and are pursuing several avenues to that extent.
Our goal is to address the debt maturity.
Without the IPO proceeds.
These avenues include one.
<unk>.
Global investment bank in the United States.
Advisor.
To refinance the debt.
Our NIM after banker will be announced in a separate press release.
Thank you.
Joining me I feel investments in Ebix cash grew out of India investment bankers.
Active engagement with a few international financial institutions to seek financing in Ebix audits subsidiaries.
Active engagement with a few banks to secured loans in India.
Dave.
The launch of the Ebix cash IPO at the earliest.
We have reason to believe that we can succeed on many of these fronts.
To report progress on a few of these.
Good morning.
Our goal remains to seek a structure that is in the best interest of all our stakeholders and to file future for Ebix, which could require.
<unk> reduced debt.
The EBIT Scott I feel is launched and closed.
It's not it's obviously not lost on us that hypothetically, if we were able to generate enough cash infusion into the pharma minority would be.
And Hey, Ebix International subsidiary our subsidiaries for example through the Ebix cash IPO, then EBIT would have.
Net interest payments to account for it on a worldwide basis and our EPS could then be a number that will not stop.
Hello.
In a quarter.
We can only disclose more detail Ron.
We have specific results to disclose on the debt front that's for sure.
Sure.
This is the top priority of the company and the board.
As reported earlier.
Company has received inbound interest from several repeal to strategic and institutional international players.
For our substantial investments in EBIT.
And its subsidiaries accordingly, the independent Board investment committee will be evaluating any federal first.
Consultation with its investment bankers and legal advisors.
I have chosen not to discuss details.
Based on that metrics like revenues income et cetera across the world. During my talk today as Steve Darren and Ash have spoken about this in quite a bit of detail.
Clearly <unk> got it right.
Bouncing back of many of our Covid affected businesses like travel and foreign exchange that grew a combined 145% year over year.
As we ramp these businesses up in various geographies, including Philippines and Indonesia.
We are the leading player.
Operating metrics are expected to further improve with that.
I'll close my talk now and basketball to the operator to open it up for questions. Thank you.
Thank you as a reminder to ask a question. Please press star followed by the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
Our first question comes from Chris Sakai from singular research. Please go ahead. Your line is open.
<unk>.
Hi, good morning.
Good morning, guys can you provide.
Can you provide some more color on how much debt will be reduced once the ebix cash IPO happens.
As we have as we have specifically said look let's talk about a hypothetical transaction here, where if an IPO happens and presently the day outage be talks about approximately $780 million.
Money raise out of that but the RSP talks about $350 million being paid back to EBIT sank in the form of a CCD payment, which means looking at the hypothetical transaction that if we raised $780 million. The net result would be that our overall.
Presently.
Steve I think talked about a 637 million number. So if you have raised in the overall.
Money on $780 million than you are in a net cash positive position and while we might retire the 300 <unk>.
<unk> million dollars, you would have cash sitting in various other geographies, but you'd be earning.
The higher rate.
Decently different rates of interest.
Great.
In Asia tend to be much higher so having said that you.
You could get into a situation ideally if you had a good IPO and you raised that amount of money you would be basically in a position where your net cash in the bank would be more of them.
Debt obligations.
But this is all we're.
We're talking about.
Our successful IPO in the hypothetical transaction here.
Yes.
Okay. Thanks for that.
Thank you provide some color.
On.
The major growth drivers for insurance.
Asks do you want to you want to take a definitely I can talk to you from an international perspective look at it.
If you look at the international businesses, meaning currency, obviously has had a huge impact on the international businesses, but rather we consider whether we look at Brazil, whether we looked at Australia, whether we looked at Singapore.
We expect substantial amount of growth in coming quarters. One of the main reasons. It is driven by we already have orders in hand, we have orders in hand from some of the top brokers in the world. We're in we have support for example for one of the top brokers in the world one of the top three brokers in the world we are supposed to be.
We're supposed to implement upwards of 15 countries their entire backend system in 15 countries and these are large.
Lodge locations, like Italy, and Germany, and Belgium, and Youll Us and Canada and those by itself our subscription revenue, which will give us continued annuity stream over the years.
PMT.
In the P&C policy admin side of the business. So we have many such opportunities that are there.
One of the areas for example that.
I should have talked about is we are presently in the process.
Trying to setup, a joint venture with our regulator.
Yeah.
And this joint venture there'll be there'll be actually two regulatory agencies involved we are looking at setting up a joint venture to set up a reinsurance exchange in India, that's a completely new business opportunity for us.
<unk> said that I will hand, it over to ash to talk about.
But then give you an overall cohesive view from a North America perspective also on insurance.
Certainly.
Certainly so as you look at the business here in North America.
The corps exchanges are already trending at roughly mid single digits.
And in earlier conversations and our earnings calls we had said that we can.
Get the.
Growth rate up to the high single digits, and I think those goals our insight for our core business.
A few business units.
Have held us back during the Covid period for example, our underwriting exchange.
And are.
Some of our noncore consulting businesses.
Would it have lesser of an impact as we see a rebound so.
Overall the growth drivers continue to be the fact that we are adding.
More carriers and distributors for the platform than anytime in our history.
And when we say that each new addition to the platform provides multiple avenues of revenue, we certainly get the license fees and transaction fees, but there is a network effect. So when you add a distributor the distributor also brings in.
Carriers, along with them as we saw with the J P. Morgan.
Effect, so the core business is strong the interest rate.
Tailwind is really good for us.
I hate to say this but for some industries that are laying off people.
Very unfortunate, but that trend is actually going to be good for us because we are on the hiring side of things and we have a backlog.
That will help us as we are able to hire people more easily.
No.
Those are the key factors that I believe will continue to help us in our organic growth.
Chris.
To add to what Ed said I'm quite excited about it.
In the first quarter of 'twenty three we are organizing very large expo.
I think it's in Orlando Ash.
It's going to be one of our largest exposed with customers traveling nationally into.
Into that X X body that all insurance.
The who's who will be travelling.
And as to launch some newer products will make some announcements there as also talks about.
Some of the enhancements again, and we intend to put in another beauty one of the things that we're we absolutely stand apart from other fintech players in the insurance sector in the U S.
Our recurring revenue base is a lot higher I've looked at a lot of these companies some of them.
Our company, sometimes as an outsider.
As a possible acquirer and so on and what I have observed is the one thing which absolutely differentiate ebix is we don't think are available to take water out every day.
We create annuity stream of revenue.
Our revenue stream once we get a client we kind of lock them in and we have our transactions and subscriptions grow as that client starts doing well, we stopped doing well.
First is linked.
Our client success and that means that it isn't that interest to provide top notch service and to ensure that our client is doing extremely well right and that's been the single biggest reason that has separated us out we didn't we didn't focus a lot on you are not going to see us go in and say we're going.
Big large perpetual license sale and try to pick up this big large revenue stream in one quarter. We just we just invested in our products and we invested in our future we invested in.
We think our product stream, which was kind of proprietary X gene is that we had but they were and Glenn so once the client came in.
Dealer hooked into it because they were using a lot of different services and from there onwards, we it gave us a lot of flexibility it gave us at all to keep that client as also part.
Possibly if we wanted to come up with price increases I think in the last call ash hinted about price increases in coming quarters.
A good example of it is recently in one of the Latin American countries, we decided to do a 26% price right. We came up with the 26% price layers and we can get back to close to 50% of our client base and nobody really can play a part of it they were hoping to.
We ought to be a growth driver we are part of their growth story of these clients.
And so that is one thing we really differentiate settle when we go into future growth opportunities. We already have a large revenue base and every new client addition helps us in growing our revenue base.
And if we had all these resource constraint solved and that change was.
And of the two.
At the end of his last answer.
It would be a lot better for us simply because we're sitting on hardware that at times, we're not unable to execute because of the shortage of lethal.
And.
So I think that sums it up.
Thanks, Chris hopefully we answered it okay. Thanks.
Yeah, Thanks, Robin and ask for the answer.
Our next question comes from Jeff Van <unk> from Craig Hallum. Please go ahead. Your line is open.
Great. Thank you guys hear me all right.
Hey, Jeff Hey.
Hey, guys.
So a couple from me.
First I mean, obviously given the macro situation these numbers.
Absolutely that constant currency, but Greg here I'm not going to spend a ton of time on that we can deal with that later, but but I think the front and center issues or the IPO and the debt situation.
Robin how are you managing the timing on the debt first the IPO the IPO with the weighting on the Red Herring.
It sounds like <unk> taken a lot longer from here it.
It sounds like you feel like you are on the cusp of getting that approval and could then have cash on hand, and six to eight weeks.
And at the same time, given their delays, thus far with a lot of People's hearing yours as well.
You've got to have in mind, the drop dead date, where that debt has got to be dealt with through other avenues. How do you think about the timing on the debt versus the IPO and then also obviously in the context of this.
Major U S investment bank that youre hiring to handle the debt just how should we think about the timing and sort of drop dead date, and how you're balancing those two.
Look Jeff. Thank you for your question I think the first thing that I want to emphasize as I said that during my talk that that is obviously, our biggest priority right now and from a priority perspective, we did that without the IPO.
Well, we want to handle that debt maturity and refinanced the debt. So that is the first and said do it now and we are working towards it and I can't obviously give you specific details of who and what and what timeline, but I can tell you that our strategy is that without without this IPO, we want to pay.
This debt now.
Having an IPO.
Obviously, the cheapest form of getting this.
Thats handled simply because that would be an equity infusion into ebix got it doesn't dilute any of my ebix shareholders. It brings in money into the company and basically the P&L zooms up as you know Dr.
<unk> talked about in my in my talk.
So on our interest cost go away and so on so.
Fully aware of it.
Having said that we can't at the same time.
And then when you look at the.
The IPO process.
From a CPE perspective, it is not like we are the ones that we did take an extraordinary amount of time with respect to Ebix cash, let's say the others. If you ran an analysis on Ebix cash what it says people who filed a bad I feel at the same time, you're going to see many of them.
Most of them have not about that approval that yes part of it has COVID-19 changed a lot of things and it created a lot of pressure on the regulatory organizations and so on in terms of Theres, a long pipeline of things that they were handling however.
I haven't even to believe that we should we should be getting some approval very soon now I can't speak for CB <unk> for security. They didn't see obviously until we have something to announce so having said that I will stop at that as regards to that one because the data we have the approval.
We will announce it immediately to the market.
Presently.
All of the roadblocks.
If you look at where we are with respect to look we all our regulatory approvals out there.
All day long to organizations that would have had to give go ahead in terms of any issues with ebix cash in any form.
Given our comes up which I love restaurants, whether it's cirrhotic.
Does that regulatory bodies.
The financial audit.
The license renewal all of them have happen so it's a process.
We are handling so having said that it can happen anytime and as soon as it happens we're going to announce but without a doubt. The IPO. We are absolutely clear and that is why you saw all of the other revenues that I laid out I laid out all the other revenue it's not that we're going to use all fee revenues.
But the idea is that we're not going to bank on one venue, we need to handle that.
Whether that IPO happens or not and that's why we have all of those different avenues that they had and obviously the hiring of the engagement of.
Our U S bank.
U S Bank is obviously going to be another thing that we will once we announced that and you'll see the name Youre, obviously going to get a better angle better handle on what we are trying to do now I think we know what the timing on that that there's we know what.
What we are trying to do so we are quite focused on achieving the right result out of it.
Okay.
On the on the underlying.
Fundamentals of the business I think if you ex out some.
Gift cards.
Broadly I think across the board you beat on the revenue side, I guess, what I'd like to understand a little bit better as I think about Q4, you talked about the Hill's business, having upward bias for Nash address some other thing can you just address the situations travel wise.
How does Q4, thus far and expected.
Parents than what you posted in Q3 or are we thinking meaningful sequential dollar growth there.
Look at <unk>, It's a hard question to answer only because I know that in local currency will have substantial growth.
But I don't know what the.
How the dollar behave over the next two months for example, so I can't really predict because dollar has strengthened.
And if it keeps strengthening further it'll be impossible for me at this minute have a crystal ball to predict what the dollar increase or whether it stays at that level and three the left alone I know this is my that in local currency.
Expect the sequential growth to continue travel is continuing to do very very well. We are extremely pleased with where we where we are with our travel portfolio. If you look at our corporate travel for example, we believe we have the right right not the leading player in the country. We have got them ahead of virtually everybody in the corporate.
Travel business from our perspective in terms of you know, it's a who's who of the client base that we continue to sign a number speak for themselves.
If you look at our data we travelled beef we continue to be one of the two players and leaders in the market right in the <unk> space now, Indonesia, and Philippines haven't fully opened up yet from a travel perspective, we across the board are a leader in these two countries and traditionally our margins are very high in both these countries.
So once these countries they are coming back.
The Covid situation has dramatically improved in these countries and as more tourism is going towards let me say the big spot for tourism, so its Philippine and as that happens a revenue number that's going to continue to increase.
And our income numbers are going to continue to improve events.
We are the we are the largest player I've got a dominant player in the market today and that that will continue to happen in the in Q4. So I expect continued growth in the in the travel business and importantly, the products business is also we are we in in local currency terms.
We expect solid sequential growth in the products business. There are many reasons for that which I could walk through if you want but we.
We feel that we are well positioned in both these areas.
Okay last question for me as it relates to the IPO process.
Two questions one.
In terms of what you're updating the street I know.
Portal that gives vega.
Which is pending.
His response.
To be clear is there any left for you to do response wise kind of what's the timing.
Unfortunately, the extent you can share.
And then maybe more importantly.
When you get that approval you referenced the six to eight.
Timeline can you spend just a second talking about what.
With marketing.
And deal with Joe process.
It looks like in India to the extent that it won't be different from the U S.
Yes.
So I think desktop first question.
The short answer is no. There is nothing pending from US there is no. There is no communication funding everything thats been done.
The chart and so.
With respect to the other.
So now the second question with respect to the process look I don't want to go into specific details part of it as you know we have a lot of friends across the world.
I don't want to be providing them easy part of all of our plans I want to keep our plans to close to our chest.
Simply because.
Sometimes don't want us to succeed for whatever reason and therefore their own selfish interest of whatever we would say, but having said that we it will be it will be a short process.
Our bankers are all geared up.
The analysts already with their analyst report everybody is geared up to launch an IPO as soon as we have done.
Through a process, it's not a long drawn out process as I as I talked about that process can be a six week process at most.
Adding to the lifting of the IPO or it could be at most a big process from the IP from the approval of the <unk> piece. So that it's not a long drawn out process and we are all geared up all our banks are excited and ready to launch this.
Yes, okay.
That's helpful. Thank you. Thank you.
We have no further questions I would like to turn the call back over to the presenters for closing remarks.
Thank you.
Thanks, everyone for participating in the call today, we look forward to speaking to you.
As we announce our annual results.
Thanks, everyone.
With that I'll close the call now.
This concludes today's conference call. Thank you for your participation you may now disconnect may now disconnect.
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