Ebix Inc. (EBIX)
Q2 2008 Earnings Call
August 1, 2008 11:00 am ET
Robin Raina - President and Chief Executive Officer
Robert Kerris – Chief Financial Officer
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Thank you for attending Ebix’s 2008 second quarter investor conference call. I have also here with me Ebix’s CFO, Robert Kerris.
The last few days have seen a few important announcements from Ebix. Yesterday the acquisition of Pittsburgh based Acclamation, Inc., and today the second quarter 2008 financial results followed by the three for one stock split announcement. In today’s investment call my intent would be to cover all these announcements from the company.
Let us start with the financial results. Our Q2 2008 results were announced yesterday. Let me summarize those results for you from our perspective. Q2 results were yet again record results, the best ever in Ebix 32 years young history in terms of diluted EPS. To look at these results and compare them to the same quarter last year or to the first quarter of 2008 would reveal to you that the company has shown consistent growth over this period.
Each of the last many quarters has been a record result with each quarter beating all the preceding quarters in our 32 year history as a company, this being our 10th quarter of sequential growth in terms of net income or EPS. Q2 results were pleasing to us since there was nothing spectacular that accounted for these results. No large one time deals were booked in this quarter that accounted for this growth. It was simply normal organic growth with each of our divisions contributing to the increased revenue in the quarter.
In the Ebix model of keeping a tight control on costs, increased revenue is likely to result in increased margins, as is evident in this quarter. Revenues grew consistently in Q2 2008 if you were to compare it to Q1 2008 or Q2 2007. Revenues grew to $17.8 million in Q2 2008 from $9.82 million in Q2 2007, an 81% growth. If you were to compare it to Q1 of 2008, revenue grew 7%. As revenues grew, net margins in second quarter of 2008 grew to 36% from 34% in the first quarter of 2008 and 26% in the second quarter of 2007.
Net income after taxes for the quarter rose 152% to $6.34 million, or $1.62 per diluted share, up from $2.51 million, or $0.75 per diluted share, in the second quarter of ‘07, and earnings per share growth of 116%. Net income after taxes for the quarter, if we were to compare it to the first quarter of 2008, the net income after taxes for the quarter rose 12% to $6.34 million, up from $5.67 million, basically an earnings per share growth of 16%.
Results for the second quarter of ’08 were based on 3.99 million weighted average diluted shares outstanding as compared to 3.37 million in the second quarter of ’07, or 4.15 million in the first quarter of ’08. The company also reported basic earnings per share in the second quarter of ’08 of $1.96 as compared to $0.85 cents in the second quarter ’07 and $1.66 in the first quarter of ’08.
The company also reported an accumulative net income at the end of six months of ’08 grew by 168% to $12 million as compared to cumulative net income of $4.48 million at the end of six months of ’07. The six months cumulative diluted EPS for ’08 also grew by 121% to $3.01 as compared to accumulative diluted EPS of $1.36 at the end of six months of ’07.
To put the company’s 2008 six month performance in perspective, you could compare the six month performance of the company in ’08 to the 12 month performance of the company in ’07. That is, compare six month income, or EPS numbers in ’08, to the 12 month income or EPS numbers in ’07.
In 2007, the company’s net income for the full year was $12.67 million as compared to the net income number of $12 million for the first six months of ’08.
Similarly in 2007, the company’s EPS for the full year was $3.61 as compared to company’s EPS of $3.01 for the first six months of 2008. So why are second quarter 2008 results better than first quarter 2008 results? I would like to say the quarter was rather uneventful with nothing real noteworthy in terms of any special large deals that caused these improved results. The only noteworthy reason is that as in the case of all our acquisitions, we keep improving the economics each quarter as we grow revenues and we keep integrating the businesses.
Our business is continuing to evolve and strengthen with each quarter. The company business can be broken primarily into four main channels today, the insurance company, the broker channel, the exchange channel, and the BPO channel. The second quarter for the exchange channel became 53% of our total revenues while the BPO channel accounted for 10% of our revenues. Broker systems business accounted for 19% and the carrier channel accounted for 16% of our worldwide revenues.