Q2 2019 Earnings Call

August 8, 2019

Once again, thank you for your patience and please standby.

19 earnings conference call at this time, all participants are in listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time, if anyone should require assistance. During the conference. Please press Star then zero on your Touchtone telephone.

As a reminder, this conference is being recorded.

I'd now like to turn the conference over to Darren Joseph Corporate Vice President Mr. Joseph you may begin.

If 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 Unix as future investments, our long term growth and innovation the expected performance of our businesses and our use of cash.

These statements involve a number of risks and uncertainties that may cause actual result result to differ materially from those projected in the forward looking statement.

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 our publicly release the results of any revision to these forward looking statements in light of new information or future events.

Additionally, additional information concerning factors that could cause actual results to materially differ from those in the forward looking statements made today is contained in our SEC filings, which list a more detailed description of the risk factors that may affect our results.

Our press release announcing the Q2 2019 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 at Ebix as financials beyond what has been provided in the release on our website www dot ebix stock comp.

The audio and text transcript of this call will be available also on the investor homepage of the Ebix website. After four P.M. eastern standard time today.

Let me now discuss the quarter from a numerical perspective.

Revenue in Q2, 2019 increased 16% from a year ago.

Two $144.3 million.

On a constant currency basis EBIT for Q2, 2019 revenue increased 18%.

Year over year to $147.4 million as compared to 124.6 million in Q2 of 2018.

The revenue improvements reflect the growth and the company's EBIT cash channel.

In Q2, our EBIT cash revenue was the largest channel for Ebix accounting for 55% of the company's revenues and our insurance exchange channel accounting for 32%.

The year over year revenue increase was primarily driven by the growth of the financial exchange.

Our explosive growth over the last 12 months has been primarily in India, driven by the growth in EBIT cash financial exchange business.

The Indian led ventures, including Indian led revenues build and other Asian countries showed 43% year over year growth in the three month period, ending June Thirtyth 2019 by growing to $78.9 million from 55.3 million in the same period in 2018, India is one of the emerging economies today that we intend to continue invest in over the next three years. As this is an academy with one of the largest middle classes in the world that's continuing to grow even at adverse economic periods.

After excluding the revenues from the discontinued E governance business EBIT cash Q2, 2019 revenues grew 58% in Q2 2019 as compared to Q2 2018.

We are pleased with the sequential growth in topline, our overall business and the various business segments Q2, 2019 revenues grew 1% by 1.4 million over Q1, 2019 revenues of $142.9 million.

Our financial exchange operations grew sequentially from 77.7 million to $78.9 million.

Q2, 2019 revenues reflect at $1.4 million or 1% sequential increase from Q1, 2019, and a 19.7 or 16% increase from Q2 of 2018.

On a constant currency basis Ebixs as Q2, 2019 revenue increased 18% to $147.4 million compared to 124.6 million in Q2 2018.

Exchanges, including the insurance on EBIT class financial exchanges accounted for 87% of Q2 2019 revenues.

Also on a constant currency basis year to date revenue increased 27% to 295.4 million as compared to 232.9 million during the same period in 2018.

Q2, 2019 diluted earnings per share increased 2% to 90 94 cents as compared to 92 cents in the second quarter 2018.

The non-GAAP diluted earnings per share in Q2, 2019 grew 17% to one dollar.

Oh, eight as compared to Q2 2018.

Ebix is weighted average diluted share us shares outstanding decreased to $30.67 million in Q2, 2019 compared to $31.63 million in Q2, 2018 and slightly increased.

From $30.6 million in Q1.

In Q1 2019.

As of today the company expects the diluted share count for Q3, 2019 will be approximately 30.7 million shares.

Q2, 2019, GAAP operating margins are at 29%, while the GAAP operating income for Q2, 2019 rose 8% to $41.3 million.

non-GAAP operating margins for Q2 thousand 2019 were at 30%, while non-GAAP operating income grew 13% to $43.4 million in Q2, 2019 as compared to $38.3 million in Q2 2018.

GAAP net increase.

GAAP net income decreased 1% to $28.9 million compared to $29.2 million in Q2 2018.

This isn't this is in spite of increased operating income principally due to increased non operating short term expenses associated with the company's recent investments and growth initiatives on India associated with servicing increase gross merchandise value.

Q2, 2019, non-GAAP net income increased 14% to $33.2 million after excluding certain non recurring items.

We are pleased with the fact that the company continues to report sequential quarterly revenue growth consistent operating income and attractive operating margins near 30%.

Cash generated from operations was negative $253000 in Q2, 2019 compared to $14.4 million in Q2, 2018, and 38.5 million in Q1 or 2019, the operating cash in Q2, 2019 reflected the $20.5 million derivative case legal settlement and other related legal fees.

Funding of new growth initiatives and associated with increased GMT and new receivables from executing certain new contracts inorganic areas like the bus exchange trucking logistics and the travel business.

During Q2 2019, we invested a total of $12.7 million for the acquisition of additional shares of Wiseman $2.3 million of dividend payments 2.9 million on Capex 850000 on capital software $3.8 million in principle payments turret towards the term loan and 2.4 million on tax payments.

Furthermore, our balance sheet remains healthy and our Companys financial position remained solid with the company ended the quarter with cash cash equivalents and short term investments of $107.1 million up by 10.7 million as of the 30 Onest of March 2019.

Finally, ebixs this Form 10-Q , we filed tomorrow.

And I will now pass the call on to Europe .

Good morning, everyone.

Let me now tried to detail out the various qualitative and exceptional aspects of the results that we announced today.

I am overall pleased.

The continued topline growth and second quarter of 2019.

In spite of having a very strong first quarter 2019.

We have a number of one time revenue.

We were able to beat the Q1 2019 number for Q2 2019.

Q2, 2019 revenue rose 16%.

$244.3 million compared to 224.6 in Q2 of 2018 and increased 1% sequentially.

Well look Q1 2019 revenue a 142.9.

After excluding the revenues from the discontinued E governance business Q2, 2019 revenue grew.

21% in second quarter up 19 have compared to second quarter of 2018.

Our constant currency year to date revenue that it to $95.4 million and we expect to continue the revenue growth in coming quarters.

We have signed a number on the new lot in Charlotte from related contracts in the us.

Ebix cash related contracts and the international markets that should provide us the momentum for further growth.

Let me discuss the performance of the insurance and financial exchanges both in the quarter.

The exceptionally well the insurance segment in the quarter, but the AIDEA, though the deal Singapore.

Adam.

Continuing medical education, and the area that the underwriting exchange revenues in Brazil grew sequentially almost 30%.

In the second quarter over the first quarter of 19.

20% in Singapore, and 7% in the Adam Fiomi area on the flip side, our underwriting revenue decreased 11% in the second quarter of 19 as compared to the first quarter to 19.

Not only because of federal project delays, we expect underwriting revenues in the third quarter to come back to the growth trajectory again.

As they have traditionally done.

With these exceptions the revenue in all other insurance functioning geographically areas, but essentially flat in the second quarter of 2019 sequentially.

The government of India recently approved a 100% foreign investment in the insurance distribution sector, we expect regulatory approval of our PSC Ebix and Sean front, Jeff Sloan now and are ready to deploy it immediately across India to the strong BSC financial institution that book as well thought on franchisee network.

Bfcs Ebix are also exploring setting up a reinsurance exchange and Prime Minister Modi the homestead good drop on the line of the PPL reinsurance initiative in London.

The aim of the proposed venture if the fed up with being shown on top that's going to gravitate.

Sharon Osbourne.

African and that's typically in China fitness to India.

More on that later once we close them.

As always.

I along with my management Humbly ahead, the Soviet interest and doing what we can do that most integrity to maximize value for you.

I've lived through many misinformation campaigns over the last two decades.

And always put my money, where my mouth is.

When information campaign is done.

I typically advised my management due on front of that through fundamental them move out and we will continue to do that if someone tries to spread misinformation about eating out through a bank some clients.

Then in my view, that's costing delight a line.

In recent times, we have secured black and White court rulings banding banning any such misinformation campaign and are prepared to take it to the next level if forced to do so.

For me.

I typically the sponsor misinformation by Jeff investing more in the back stop when others are driving it down.

I presently take all my salary and stock from the company. Besides the fact that I'm the largest.

Shareholder, but an ebix today holding stock all the way from 1999 2000.

Finally, a small brief on the proposed Ebix cash I feel next year.

We will soon be announcing the engagement of four to five leading investment banks to lead that ebix cash IPO targeted for the second quarter of 2020, we have made substantial progress in that direction and we'll be updating that invest a floor on the names of each of these leading investment bank. We believe that Ebix gas has all the ingredients to be a blockbuster IPO, though nothing can be gotten that about what valuations we command in the market but.

Ebix cash goes public.

Thank you.

With that I'll hand over the call to the operator.

Thank you ladies and gentlemen at this time if you have a question. Please press. The Star then the number one key on your Touchtone telephone. If your question has been answered or you wish.

So from the Q.

Please press the pound key and to prevent any background noise. We ask that you. Please place your line on mute what's your question.

And our first question comes from Jeff Van Rhee with Craig Hallum. Please proceed.

Great. Thanks, a couple from me Robin first maybe just touch on the legacy business. It looks like your bottom we grew a little bit here sequentially.

How do you think about the growth rates over the next few quarters. There you talked about some big signings, but just sort of level set for us what do you think would be a reasonable outcome over the next you know 12 24 months in terms of growth there.

Well look I think first of all I want to say I don't call. It legacy business, where we are it's a fundamentally strong business for us insurance, meaning Guy I'm sure you've thought today. The announcement that came out regarding one of our competitors, who is way smaller than enough and got sold at 20 times debt to EBITDA multiple and if you looked at the revenue stream leap, we pretty much have.

Away because revenue stream and we have three times their profitability I'm coming back to it.

We as a business.

I'm looking at in children and the fundamental strength for US we're going to continue to grow on an insurance business. We have spent a decent amount of time trying to ensure that we we got few hits I've talked about in the previous calls and with respect to insurance in the area of health, Adam, which we have stabilized now and we believe analysts' completely bottomed out and that's why you're seeing improvement and for example in today's call I talked about improvement out of the sea immediately we showed 7% growth.

So the second area has been consulting we had we have still not there in terms of the the.

We are kind of bottoming out there we are trying to grow that business up in fact in the in the consulting arena.

This quarter, we had basically flat performance in terms of in one of our consulting really not only showed actually substantial growth in another way do you have any showed a little bit up on decline, but they find a balance features each other off so having said that.

We've spent.

A decent amount of time stabilizing that business for it in this particular quarter this quarter would have looked.

A lot better in from an insurance perspective for example, if a lot of underwriting revenue had been at the same level as last quarter now I don't know that I think revenue the very strong when a market leader in the market than us and Canada, winning every deal that comes out if we are in the <unk> nine out of 10 five of winning the deal.

However, we.

I don't know revenue is a function up a fan base completion, and we had some project delays.

Associated with which we can pick up revenue as much revenue in the quarter, but that's something that is not going anywhere we're going to get that revenue. So I expect us to be back on that and then I think site and we are in we are getting a lot of insight now in the <unk> nine sites. So we think that business will continue to grow.

If you look at the annuity business and UTI business actually grew nicely this quarter. So we have.

If you look at the markets in Australia, we did relatively flat it was a little bit higher than what we normally do but relatively flat I would say the VW very strong performance I talked about Brazil, I think Singapore was actually higher a lot higher than what we normally do which was.

20% higher news Atlanta, the much smaller economies. So our numbers will essentially basically that we used to be at it anyway doesn't move that out that far out of London was essentially flat so coming back to it the value of uninsured business. So that it does vary it is continuing to generate positive and it will continue to.

We believe as we speak that business into a growth mode. We are going to see all of these numbers.

One of the strengths, we have with respect to EPS compared to our competition anybody in the market and then shot on says I want to have any sort of fit than insurance tend to be highly that got it we did not for the thought on it he is an insurance.

On trying to generate.

But your life Sciences, we didn't spend this time to say listen we're going to sell the life book a great deal of revenue in the next quarter look for new revenue.

We have always focused on recurring revenue sources, which incidentally is not the case for what the other companies that we are.

In the market at least in Lake Charles business, So coming back to it we feel that in sort of the business continued to grow we've actually stabilize a bit in this but even though we have taken a lot of hits in the business in filmed off.

In.

For example, we under the exchange we call. It the Animalia comes on to the next stage that we had to take some hits in the claim they India for example, and all of that had to be substituting through growth in other areas.

So essentially when you look at insurance and when you look at a relatively flat performance or it is because it has it means that actually many sectors have done very well and have compensated for some of the other decline. So we actually feel that the declines that we have had inside of them some of those 80 out.

Bottoming out now so we actually think that in children's business is going to grow you're also going to see us make acquisition delaying children study now besides organically growing up and that's NHL study now.

So if I sum all that up I mean, it sounds like you would expect them you sold some modest sequentials, you're so putting all that together is likely or the expectation is over the next call. It two quarters that we would continue to see sequential growth even if it's just modest.

I would I would believe so yes, yes, okay.

And then flip to the other side babies cash business.

On a sequential basis I think you commented it was up a percent or two and you know I think longer term you've talked about how growth rates north of 20% on a year over year basis. So.

I know you called out some particular strength seasonally in Q1, there, but maybe just a little more expansion on the sequential growth. If it was up modestly 2% overall something's would seem to have been down. So maybe what was down and then in that same thing how do you think about etes cash on its own in terms of sequential growth in the coming quarter or two.

Yes, actually we had a very strong ebix, we did very well this quarter any big cash. This is what has why is it that the growth is not showing as much we're going to put some growth and the number would have looked a lot better though because in the last quarter. We had to what he said we had built up.

One thing revenue in the Ebix cash business that onetime revenue, there's not that many onetime revenue, let's say they need because gas, but this was one of those quarters like we had a onetime revenue now that onetime revenue once that goes away we had to make up for that one time revenue through our transaction related services, which we did so and when you look at the overall growth. If you got if I pick that one thing revenue out last quarter.

Sequentially. The revenue went up by more than $6 million this quarter any of its cash so that it's that it doesn't it looks like more like tool I had two and change.

Because they did that 400 million onetime revenue that was down in the previous quarter. So having said that we believe ebix gas is absolutely on the right path like on a detailed it out in terms of for example, I just talked about or the end of last quarter. In Q1, we did around 960000. This quarter, we did two and a half million dollars already from from the audio business.

We had no we had vetoed by sustained revenue last quarter. This quarter, we have one and a half million dollars about 16 revenue and so on I can go on and to eat Daddy N. detail. It out for you, but basically what has what.

D did those onetime revenue that was there in the in the previous quarter and that's part of why we had a very strong or even stuff. You know we were very pleased with Q1 or how many live valve Oh and they bought a bit was that one time revenue a 4 million that we hadn't done.

And so yeah that then just to complete the question the the thinking on the forward quarters. I mean is it your expectation, we'll get back to a 5% plus type sequential.

Run some better some worse, but something that maps to that 20% plus growth rate there.

I look really I couldn't tell you I haven't done the math on telling you whether it's a 5% or it's at Staples Center, you know that the 7% rate I think it will a lot will depend on how we are on some of these businesses. How we move forward part of it is.

All of these businesses demand GMB funding.

So I'll, let them, we can grow this business and fast as he wants to but the adult photo member Ebix as a company.

ER has to also make sure.

I don't think we don't have the luxury of doing what other companies can which is to bring free money and basically not body.

To fund close to $100 million of Onyx transactions.

Right.

That means I need I need more GMB. So we have a lot of business opportunities in front of it. This is part of the reason we're going for an IPO because we do want to raise and raise money because we see the value of what we can do with this business, but we're also being very calculated because we can't go crazy on funding DMV.

So when you look at the growth in in the financial business you have to you have to grow in a bit of a cautious manner in the fence because you're also funding Europe will have to put that much extra money on the table.

To fund the audio me. So for example, this quarter you are seeing the cash flow was basically zero and the reason was first of all we made a 20.8 million payment, but then beyond that you got to look at all the funding we had to do any business that we are growing right now we're going to have to fund many times over for that business to be funded in terms of GMP. For example, we grew our travel business. For example, we added the audio business, where the cycle of money 70 days. For example, we added the bus exchange business, where initially the cycle of money is 90 days right. So we have to be very calculated with respect to the usage of our money as to how we grow this business.

NV can we manage our cash properly. So we're trying to keep our feet on the ground and not get carried away because growth.

In Ebix cat, if we had that we had substantial amount of money you could basically see way higher growth rates in terms of year over year, we're more than 20% in this business. So I know I gave you a long answer Jeff, but this is very critical to understand that in the financial services business and when you have to be very careful with your money spending to ensure that you don't you have to be careful with the fact that we do want to grow our business and be a sequentially.

Going to continue to grow our business, but we have to be a bit careful and cautious to ensure that we are spending money wisely.

To ensure that we are not taking extra on that then we can handle.

Right. So this is this is a little bit of a balance you have to arrive when your funding D. and we got I don't have a private equity group today.

You know coming in.

Funding me the way my way my competitors have it.

So I have we are pretty funding it all four but then.

At the company.

Got it.

Last one for me just as it relates to the overall strategy than in India with the respective miscarriage digital has been the words that you used you've done a really potent physical distribution network I'm curious from from sort of a tracking is a metric standpoint, how what have you been observing with respect to the customer base, namely the foot traffic in those units.

You know, how how are you measuring and tracking the ability to take that foot traffic and upsell and cross sell them you've added a lot of products a lot of capabilities. You know you just kinda talk about that EBIT, Scotch business and I'm thinking, particularly of the physical side of the overall piece, but you can also incorporate the the online travel component. So just curious what are the core metrics in terms of how you're tracking the customer stickiness and the customer cross sell in the Ebix cash out of the business.

Jeff That's a great question. So obviously, that's a very critical part of what we're trying to do in terms of cross selling.

You're going to fee in coming days were working on now a major marketing effort, where we want to further leverage what we do with respect to the footprint that we have created a wave it you're going to see a full blown effort in terms of branding where our goal over the next.

Over the next 12 months our goal is to become a household name in India. The way you in India. The way people would talk about a coke or Pepsi or for example pay them for that matter, we would like to be fishing in that life and so we intend to go very aggressive on marketing, we believe that when we do that aggressive marketing and have a physical footprint at the site of the fact that we have.

It plays extremely well so what we are doing today with respect to that footprint. There I'll give you. A recent example of two deals that we just think.

In the in that using that footprint for one of those deals is.

With.

Danis.

This was followed on the finance side, what we basically did is where do you think that and higher digital network to be able to collect loan money for them.

When they show loans across the country when they have to collect that money our physical network would work like an exchange to collect that money for them now second one that we recently did I can't give you. The name right now that company for confidentiality reasons, It's a very large health insurance company in India, who basically a broad stuff for telemedicine, but ended up doing.

Moving out of footprint and we believe as we go live with death, we are presently working with them to go like we believe that will become our largest client in India with respect to simply collection up insurance premiums.

So this is the kind of cross selling that we do so I couldn't give you a lot of examples of how for example, I talked about a lot here, how army spreading rodeo how ought to be organizing that asset light blocking model because what is already a lot. There is an asset light blocking model like an over somebody wants trucks, a coke wants struck and trucks and we want to be able to give them 250 trucks.

But it would be what we have done we have used our entire franchisee network by enabling them by incentivizing them and today, our franchisee network across the nation.

He is actually sort of thing.

These trucks for us is actually doing the fulfillment of the dental business in the asset light model. So again. This is a you know you you you know we are interfacing, our trucking logistics division with the payments division for that matter if I could walk you through so many of these examples of how we are issuing travel God, how we are issuing photonics card.

At the franchisee level today, while sitting in there. So we have a part of it is even think of it in such a manner that you have all of these different group under common managing directors Allman, Vice President and all of them. The metrics are even in such a manner.

Our senior folks.

Are they see everything as and one straight through processing kind of.

Kind of a solution. So we're not necessarily trying to sell these are individual products, but to say today, we tried to pull it up in many many form and we believe abbvie going into a full fledged marketing campaign.

And we believe we can we can multiply our reach further and.

With that.

As compared to the footprint, we have today, but just.

Incidentally very very strong.

Great. That's it for me thank you.

Thank you.

I Wonder if you have a question. Please press Star then one our next question comes from Allen Klee with Maxim Group. Please proceed.

Yes, Hello, you talked about the underwriting revenue being down due to some project delays would that you think will be coming back.

Tim can you just help us quantify how much that would be.

Well the quarterly from a quarterly perspective, I think it was $1.2 million or something but it went down from what we expected it to be yet.

In the quarter.

Okay, Great and then can you just give us an update on your borrowing capacity that still available.

Well I think we from a borrowing capacity perspective, we have.

Oh.

Yup.

So that sounds Fallon.

So so look we can grow this further we can go in and take an additional line.

We have lots of different possibilities available, but we are right now being very very careful what we want to do part of it is we believe that as we head into this IPO. We believe and you know we hopefully have here right. We believe this is going to be a very strong IPO and metrics are strong. So we believe that.

We shouldn't go overboard on raising that because we believe that we can raise very strong amount of money through our IPO.

Okay, and then just so that I understand with the E governance business in India.

I think I heard you say, it's around a 10 million headwind in the sense that it was 10.2 million last year and and so far 200000, almost no. It was almost 22 million last year. It okay. Thanks to adjust in six months.

So we have taken this business down to CDEL from 22 million a year last year.

Okay, and it's going to say is we rule. It was 10.2 million only in the first six months.

After 2018.

And the plan is to keep it at zero because.

Presently fought now part of it frankly is that the largest plan you'll see we didn't want to deal with that central government.

So what we did in let me start any covenants in India chose who we will do benefit.

And we decided to do business with.

Public sector undertakings, the autonomous public sector undertakings, which are basically the largest one of the largest and most cash rich organizations in India, you will still be BSNL.

BSNL, while India's largest telecom player five years back they had foreign its they had they had catch up to the $10 billion in their back.

It's so so we went in and decided that the vs and allowed them to central government because central government. There's the money takes a much longer time to come.

So we thought if we work with public sector undertakings that many professional BSNL has a fantastic track record of paying all them and sell them.

So many large undertaking 200000 employees and so on.

Yes, I know over the last 12 months.

First of all we executed in the line if I take a step back we executed four projects very successfully for Vietnam.

Originally we quoted to BSNL through an entity called Ebix My on so what we did.

They have other vendor out there, obviously I know who are who handle all that.

Contact who met all their tender conditions.

So what we did we formed a JV with that Brenda.

And that when that would pick up the orders and we and immediately that because they met the conditions. It's hard for a new vendor, perhaps we were a new window for Vietnam. So the order would come to wipe them to us. So we implemented four deals very very successfully.

In the Meanwhile, since we met now we meet that Endo conditions Ebix alone. So we went in.

When we started we went into BSNL and now be a center based on the success for like God that Ebix have had been invited us into a partner a national certified partner an actual certified partner means I can today go hand in hand, Ebix can go with BSNL based on very large deals.

And get their money in escrow get it directly from a third party rather than.

Yes, I know, that's a fantastic start as to how.

Having said that what changed was that in the last 18 months BSNL ran into a few money issues because of Geo Geo came in into India. Geo has emerged as a giant and Geo has basically created.

Travel for all the telecom players, including BSNL, Vodafone Bharti everybody.

As you know standard of it.

Yes, I don't control all the landline phones in India controls all the.

You know the border areas controls hopped of fiber in India, and so on 200000 employees.

But he made a conscious decision we said.

And still be SNL has the financial stability and have the cash.

We don't want to be bidding on any bigger funnel business until we feel comfortable that be ethanol has all the cash in spite of having a very good start up now with Vietnam.

A few weeks back government of India Prime Minister of India spoke in Congress.

And basically talked about the importance of BSNL and talked about the fact that.

They will be the government of India basically in approving $10.4 billion of funding into BSNL now if that happens then we might be back in that business because I don't feel it's a prudent decision.

To be going in and doing projects until they feel that they have all the the funding that is required and Hudson government undertaking and in India. No government undertaking that will count gone down in the history of India, but having said that.

We want to make sure that when we do the work we get paid quickly and so to that extent, we decided that we will discontinue doing business.

Only governance with BSNL until the Senate has strong amount of cash in the business now if they do which which had been talked about in Congress.

And it's been great in the public Guy in India. So, it's basically I believe that 90 days away from being.

Funded to the tune of anywhere between $5 billion to $10 billion, if that happens ebix might be back in business. We will just go back to be a funnel and would like to again start picking up their other deals but in the Meanwhile, until that happens we made a conscious decision that we will stay out of it now we could have bid on other central banks central witnesses and other central government business.

He government projects.

Our state Egovernment spot, if we made a conscious decision.

That we don't want to bid on state government projects and up until government project, because they tend to have longer payment cycle, the associated with them and we did not feel comfortable going with those projects. So that's why you why we made this.

Decision.

Okay. Thank you and then maybe just finally ill.

I had seen the news about I pipeline and and the multiple being paid I'm a little surprising at the company that bought them most.

Why that why they would be.

Buying a software company, but.

The valuation implies some pretty good things for yourselves do you do you think that them getting acquired by who they are or is changing their competitive position or.

No no not clearly when you look I wouldn't say anything negative how many I feel that I pipeline is a great company. They did a tremendous job of being there.

Again, we feel that our revenue sources are way stronger than I pipeline.

The only because for one simple reason our revenue sources are more cutting its that simple I don't have any thoughts of the motor cutting our business model is different they have gone and they have a lot of these they do a lot of the engine work with respect to illustration engines and in that business. They the I call. It digging a battle every year and taking water out we don't do that in our business as we create very the cutting business and so having said that.

Hi pipeline I promise Bravo basically did a great job of creating a business taking the cost out of the business, creating a business, which basically.

You know as you saw in the press release, they talked about close to $200 million, but revenue with I think approximately $80 million the EBITDA and.

You know and.

Ultimately they got $1.6 billion for that.

Having said that look private equity team have always value you a little bit over the higher meaning frankly, we get approached every day by private equity.

What this has done we were fully aware that this was going to happen with respect to I pipeline in the sense that many of these things leak out in the market, but basically we have had so many inroad from private equity or especially over the last as our stock price has come down.

You know you become very attractive to private equity private equity feel look we can pay a decent premium and possibly get this asset and ultimately have.

Yeah, and even if you know when you look at the multiples off.

Or what people are willing to pay EBIT saw ebix, obviously, the steel and you know you can afford to pay a lot more and still be it would be a steel having said that I personally have been up the opinion that you know the time to do that is probably not no because I strongly believe we set up the basic ground rules are with where we are headed our way stronger than any of these companies. What we are creating an international giant I think time will tell what you're doing so having said that meaning again you know.

At the end of the day, we are.

We are out there and then you're a public company you're out there for him offer and anybody can make an offer and finally to be the board's decision.

The big if if something like that happens, but I think overall for the industry. It's good that I pipeline basically had gotten a reasonable multiple.

I think that the purchase whether it's <unk> or is it the software company not necessarily in the insurance arena.

Now I could say it would be focus them, but I think it's too early for me to say it would be focus then we would have to see how they conduct themselves how they how they run it.

Per se.

So I wouldn't I wouldn't.

Comment yet on that simply because I think I'd, rather give them time to see how they pursue it.

All I could tell you is that you know we have gotten very strongly in the areas that we compete with <unk> pipeline on.

We don't easily lose business to them. So we do extremely well in the business they really know their business area.

Well, we didnt, though they they have the pumps business.

But one of the biggest businesses they have as the illustration engine business, where they create the value. The basic tool kit of illustration engine and then they can figure that engine for you.

We have not been in that business and we've stayed away from that business. So I think.

Overall I think it's a it's a it's it's a good deal for I think it's a it's ultimately going to play itself out in terms of what it does for the markets and for the insurance industry.

Okay. Thank you so much.

Thank you.

Thank you and I'm showing no further questions in queue I'd like to turn the call back over to Robin Raina for closing remarks.

Well. Thank you very much I think I'll take the opportunity to thank all my employee for I believe for.

Having taken us to these fantastic results. Thanks, Sean Thank you for being on the call and I.

I appreciate all of you investors being on the call and we look forward to trying to improve on where we are and continuing to make ourselves better by there with each and every quarter that.

Happens from here onwards.

Thanks for patience and thank you.

With that I'll end the call.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program you may now.

Everyone have a great.

Oh.

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