Ebix, Inc. (EBIX)

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Ebix, Inc. (EBIX)

Q3 2010 Earnings Conference Call

November 9, 2010 11:00 AM ET


Neil van Helden – Corporate Manager, Marketing

Robin Raina – Chairman, President and CEO


Walter Ramsley – Walrus Partners

Mike Latimore – Northland Capital

Mark Rye – Singular Research



Good day ladies and gentlemen, and welcome to the Ebix third quarter 2010 conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder this conference call is being recorded. I would now like to turn the call over to your host Neil van Helden, Corporate Manager of Marketing. Please go ahead.

Neil van Helden

Welcome everyone to Ebix Inc. third quarter 2010 earnings conference call. Joining me to discuss the quarter is Ebix’s Chairman, President and CEO, Robin Raina. Following Robin’s remarks, we will open up the call for your questions to be addressed by Robin and Ebix CFO, Robert Kerris. Let me take this time to remind you that the primary purpose of today’s call is to provide you with information regarding our third quarter fiscal year 2010 performance.

However, some of our discussion or responses to your questions may contain forward-looking statements. These statements are subject to risks, uncertainties and assumptions. Should any of these risks or uncertainties materialize, or should our assumptions prove incorrect, actual company results could differ materially from these forward-looking statements.

All these risks, uncertainties, and assumptions, as well as other information on potential factors that could affect our financial results, are included in our reports filed with the SEC including our Form 10-K for the year ended 31st of December 2009, particularly under the heading risk factors.

At times in our prepared remarks or in response to your questions today, we may offer certain additional metrics to provide a greater understanding of our business or quarterly results. Please be advised that we may or may not update these additional metrics on future calls.

Our press release announcing the third quarter results was issued a few hours back. The audio of this investor call is also being webcast live on the web at www.ebix.com/webcast. You can look at Ebix’s financials beyond what has been provided in the release on our website www.ebix.com. The audio and the end text transcript of this call will be available also on the investor homepage of the Ebix website after 2:00 PM Eastern Time. Robin with open today’s call with a few prepared remarks and then we’ll open things up to your questions.

Because we want to address as many of you as possible, I do ask that you limit yourself to a single question today. Now let me turn you over to Robin Raina.

Robin Raina

Thank you Neil. Good morning gentlemen. Our third quarter 2010 results were record results again for Ebix in terms of diluted EPS, net income and revenues. We reported today the strongest quarter in Ebix’s history. I’m going to take this opportunity to discuss these results on the financial and qualitative fronts, while giving you an insight into where Ebix would like to go from a future vision perspective.

A comparison of the third quarter 2010 numbers to the third quarter 2009 numbers reveals that all four areas namely revenue, income, EBITDA and diluted EPS grew in this quarter as compared to third quarter of 2009. Revenues in the third quarter of 2010 were $33.3 million as compared to $23.3 million in the third quarter of 2009, a 43% increase. Nine month cumulative revenues at the end of September 2010, increased by 46% to $97.1 million as compared to $66.4 million in the same period a year ago.

Our exchange business grew 66% year-over-year to become 71% of our total revenue this quarter. Net income after taxes in the third quarter of 2010 was $16.7 million as compared to $9.4 million in the third quarter of 2009, a 77% increase. EBITDA for the current quarter was $19.1 million, a 57% EBITDA margin which is a 75% improvement over the $10.9 million EBITDA, a 46% EBITDA margin in the third quarter of 2009.

The company’s operating expenses for the quarter grew by 50% to $20.2 million as compared to $13.5 million for the third quarter of 2009. Results for the third quarter of 2010 were based on 39 million weighted average diluted shares outstanding as compared to 37.8 million in the third quarter of 2009. Diluted EPS in the third quarter of 2010 rose 77% to $0.43 as compared to $0.25 in the third quarter of 2009. Our net margins after taxes grew to 50% in the third quarter of 2010 as compared to 41% in the third quarter of 2009 primarily because of the non-cash operating income of $3.9 million associated with the decrease in the fair value of the put option issued to former shareholders of E-Z Data.

Ebix business is broken into four channels, Carrier channel, Exchanges, Broker channel and the BPO channel. To look at the performance of these channels, I have a few numbers for you. Exchanges this quarter was 71% up for revenues, BPO 12%, Broker systems 10% and Carrier systems 7%. Exchanges, Broker and BPO channel grew this quarter in comparison to third quarter of 2009, while the Carrier system sales continued to be affected by delayed decisions, tight budgets and implications of the major downturn in property and casualty insurance industry.

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