Ebix announces Record results with $0.73 Diluted EPS


Net Income Rises 41 percent to $8.96 Million in Q2 of 2009

Conference call: Wednesday August 5, 2009 at 11:00 A.M. EDT
Webcast / Replay URL: http://www.ebix.com, Click on Investor Home Page
Dial-in numbers: 1-866-293-2557 Conference ID # 22577649

ATLANTA, GA – August 5, 2009 — Ebix, Inc. (NASDAQ: EBIX), a leading international supplier of On-Demand software and E-commerce services to the insurance industry, today reported record financial results for the second quarter of 2009. The results marked the highest revenue, net income and diluted EPS in any one-quarter that the company has reported in its thirty-three year history.

The company reported total revenue of $22.42 million for the second quarter of 2009, compared to $17.80 million for the second quarter of 2008, marking a 26 percent increase in revenues.

The company’s operating income for the quarter rose 34 percent to $9.26 million, as compared to $6.91 million in the second quarter of 2008. Net income after taxes for the quarter rose 41 percent to $8.96 million, or $0.73 per diluted share, up from $6.34 million, or $0.54 per diluted share, in the second quarter of 2008— earnings per share growth of 35 percent. The company also reported basic earnings per share in the second quarter of 2009 of $0.88 as compared to $0.65 in the second quarter of 2008.

Currency adjusted revenues in second quarter of 2009 grew to $23.8 million, a 33.8 percent increase over the second quarter of 2008. Currency adjusted net income after taxes in the second quarter of 2009 grew to $ 9.9 million, a 55.6 percent increase over the second quarter of 2008. “Currency Adjusted” is a non-GAAP financial measure that we use solely for comparing numbers from two different periods without the impact of foreign exchange.

Results for the second quarter of 2009 were based on 12.49 million weighted average diluted shares outstanding, as compared to 11.98 million in the second quarter of 2008.

The company’s operating expenses for the quarter grew by 21 percent to $13.16 million as compared to $10.9 million for the second quarter of 2008. The company attributed the increase primarily to the acquisition of Acclamation in August 2008, Confirmnet in November 2008 & FACTS in May 2009.

The company also reported that its cumulative net income at the end of six months of 2009 grew by 44 percent to $ 17.29 million as compared to cumulative net income of $ 12.01 million at the end of six months of 2008. The six-month cumulative diluted EPS for 2009 also grew by 42 percent to $1.42 as compared to cumulative diluted EPS of $1.00 at the end of six months of 2008.

Robin Raina, president and CEO, Ebix said, “We are pleased that the second quarter results are in line with our expectations. The insurance industry continues to pass through a difficult phase with capital decisions related to deployment of backend systems being postponed or just being put into cold storage for want of budget or focus. Considering that inertia, and the adverse impact of the significant strengthening of the US dollar on our financial results in the second quarter of 2009 as compared to the second quarter of 2008 (as much as 15% with respect to Indian Rupee, 20% with respect to Australian dollar, 22% with respect to New Zealand dollar & 7% with respect to Singapore dollar); we are pleased that our revenues and net income both have still continued to grow. The current times have been a good test of our infrastructure based on-demand software exchanges, our recurring revenue model and the expanse of our customer base.”

“We are especially pleased that net margins after taxes in the second quarter grew to 40% from 36% in the same quarter last year.” Robin added, “The exchange and BPO channels continued to grow in a healthy manner and more than made up for the slight decrease in revenues associated with postponed implementations and delayed decision making relating to back-end systems, resulting from the broker and carrier channels. The second quarter saw the exchange channel become 59 % of our total revenues while the BPO channel accounted for 16% of our revenues. Broker systems business accounted for 13% and the carrier channel accounted for 12% of our worldwide revenues.”

Ebix Chief Financial Officer Robert Kerris commented: “The Company continues to produce substantial cash from its operating activities generating $15.54 million during the six months ending June 30, 2009 representing a 46% improvement over the same period in 2008, while at the same time sustaining attractive operating margins of 41% for both the second quarter and six-month periods of 2009, each an improvements from our performance in 2008.”

About Ebix
A leading international supplier of On-Demand software and E-commerce services to the insurance industry, Ebix, Inc., (NASDAQ:EBIX) provides end to end solutions ranging from infrastructure Exchanges, carrier systems, agency systems and BPO services to custom software development for all entities involved in the insurance industry.

With 23 offices across Singapore, Australia, the US, New Zealand, India and Canada, Ebix powers multiple exchanges across the world in the field of life, annuity, health and property & casualty insurance, while conducting in excess of $100 billion in insurance premiums on its platforms. Through its various SaaS based software platforms, Ebix employs hundreds of insurance and technology professionals that provide products, support and consultancy to thousands of customers on six continents. Ebix’s focus on quality has enabled it to be awarded Level 5 status of the Carnegie Mellon Software Engineering Institute’s Capability Maturity Model (CMM). Ebix has also earned ISO 9001:2000 certification for both its development and BPO units in India. For more information, visit the Company’s website at www.ebix.com

Contact: Aaron Tikkoo
atikkoo@ebix.com
678-281-2027

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS - Safe Harbor for Forward Looking Statements under the Private Securities Litigation Reform Act of 1995 — This press release contains various forward looking statements and information that are based on management's beliefs, as well as assumptions made by, and information currently available to management, including statements regarding future economic performance and financial condition, liquidity and capital resources, acceptance of the Company's products by the market and management's plans and objectives. The Company has tried to identify such forward looking statements by use of words such as "expects," "intends," "anticipates," "plans," "believes," "will," "should," and similar expressions, but these words are not the exclusive means of identifying such statements. Such statements are subject to various risks, uncertainties and other factors which could cause actual results to vary materially from those expressed in, or implied by, the forward looking statements. Such risks, uncertainties and other factors include the extent to which the Company's new products and services can be successfully developed and marketed, the integration and other risks associated with recent and future acquisitions, the willingness of independent insurance agencies to outsource their computer and other processing needs to third parties, the Company's ability to continue to develop new products to effectively address market needs in an industry characterized by rapid technological change, the Company's dependence on the insurance industry (and in particular independent agents), the highly competitive and rapidly changing automation systems market, the Company's ability to effectively protect its applications software and other proprietary information, the Company's ability to attract and retain quality management, and software, technical sales and other personnel, the potential negative impact on the Company's outsourcing business in India from adverse publicity and possible governmental regulation, the risks of disruption of the Company's Internet connections or internal service problems, the possibly adverse effects of a substantial increase in volume of traffic on the Company's website, mainframe and other servers, possible security breaches on the Company's website and the possible effects of insurance regulation on the Company's business. Certain of these, as well as other, risks, uncertainties and other factors, are described in more detail in Ebix’s periodic filings with the Securities and Exchange Commission, including the company’s annual report on form 10-K for the year ended December 31, 2008, included under "Item 1. Business—Risk Factors." Except as expressly required by the federal securities laws, the Company undertakes no obligation to update any such factors or to publicly update any of the forward looking statements contained herein to reflect future events or developments or changed circumstances or for any other reason.

(Financial tables follow)

Ebix, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

Three Months Ended June 30,   Six Months Ended June 30,
  2009       2008       2009       2008  
Operating Revenue   $ 22,421       $ 17,803       $ 43,089       $ 34,442  
Operating expenses:              
Cost of services provided   4,532       3,225       8,833       6,161  
Product development   2,753       2,162       5,258       4,240  
Sales and marketing   1,121       818       2,255       1,665  
General and administrative   3,925       3,856       7,553       7,672  
Amortization and depreciation   830       837       1,573       1,656  
Total operating expenses   13,161       10,898       25,472       21,394  
Operating income   9,260       6,905       17,617       13,048  
Interest income   39       140       91       262  
Interest expense   (273)       (394)       (557)       (736)  
Foreign exchange gain (loss)   346       100       752       159  
Income before income taxes   9,372       6,751       17,903       12,733  
Income tax (expense)/benefit   (416)       (415)       (612)       (727)  
Net income   $ 8,956       $ 6,336       $ 17,291       $ 12,006  
Basic earnings per common share   $ 0.88       $ 0.65       $ 1.72       $ 1.21  
Diluted earnings per common share   $ 0.73       $ 0.54       $ 1.42       $ 1.00  
Basic weighted average shares outstanding   10,186       9,688       10,057       9,954  
Diluted weighted average shares outstanding   12,487       11,977       12,427       12,220  

Ebix, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share amounts)

  June 30,

2009

  December 31,

2008

  (Unaudited)    
ASSETS      
Current assets:      
Cash and cash equivalents   $ 11,876       $ 9,475  
Short-term investments   3,154       1,536  
Accounts receivable, less allowance of $548 and $453, respectively   16,394       13,562  
Other current assets   1,558       951  
Total current assets   32,982       25,524  
Property and equipment, net   4,668       3,774  
Goodwill   102,251       88,488  
Indefinite-lived intangibles   13,637       11,589  
Other intangible assets, net   11,014       10,235  
Other assets   636       1,557  
Total assets   $ 165,188       $ 141,167  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable and accrued expenses   $ 3,766       $ 8,245  
Accrued payroll and related benefits   2,353       2,709  
Short term debt   24,945       24,945  
Current portion of convertible debt   5,306       11,518  
Current portion of long term debt and capital lease obligations   212       912  
Deferred revenue   7,671       5,383  
Other current liabilities   212       142  
Total current liabilities   44,465       53,854  
Convertible debt   15,000       15,000  
Long term debt and capital lease obligation, less current portion   419       290  
Other liabilities   2,708       941  
Deferred revenue   96       330  
Deferred rent   730       610  
Total liabilities   63,4185       71,025  
Commitments and Contingencies, Note 9      
Stockholders’ equity:      
Convertible Series D Preferred stock,
$.10 par value, 500,000 shares authorized,
no shares issued and outstanding 		 

—

      —  

Common stock, $.10 par value,
20,000,000 shares authorized,
10,331,872 issued and
10,318,369 outstanding at June 30, 2009 and
10,006,455 issued and
9,946,710 outstanding at December 31, 2008

  1,032       981  
Additional paid-in capital   118,282       111,641  
Treasury stock
(13,503 and 59,745 shares repurchased as of
June 30, 2009 and December 31, 2008 respectively) 		  (76)       (1,178)  
Accumulated deficit   (12,908)       (30,199)  
Accumulated other comprehensive income   (4,560)       (11,103)  
Total stockholders’ equity   101,770       70,142  
Total liabilities and stockholders’ equity   $ 165,188       $ 141,167  

Ebix, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

  Six Months Ended June 30,
  2009       2008  
Cash flows from operating activities:      
Net income   $ 17,291       $ 12,006  
Adjustments to reconcile net income to net
cash provided by operating activities: 		     
Depreciation and amortization   1,573       1,651  
Stock-based compensation   100       64  
Restricted stock compensation   513       254  
Unrealized foreign exchange gain on forward contracts   (144)      
Provision for doubtful accounts   90       179  
Changes in operating assets and liabilities:      
Accounts receivable   (2,617)       (2,738  
Other assets   (404)       44  
Accounts payable and accrued expenses   (479)       (1,283)  
Accrued payroll and related benefits   (532)       216  
Deferred revenue   1,092       (368  
Deferred taxes   (1,125)       653  
Deferred rent and other liabilities   178       (20)  
Net cash provided by operating activities   15,536       10,659  
Cash flows from investing activities:      
Investment in Telstra eBusiness Services, net of cash acquired   —       (42,968)  
Investment in Periculum, net of cash acquired   (200       (1,067)  
Investment in ConfirmNet, net of cash acquired   (3,094)       —  
Investment in IDS, net of cash acquired   (1,000)       —  
Investment in Acclamation, net of cash acquired   (85)       —  
Investment in Facts, net of cash acquired   (5,704)       —  
(Purchase) Maturities of marketable securities, net   (1,618)       (655)  
Capital expenditures   (1,200)       (382)  
Net cash used in investing activities   (12,901)       (45,072)  
Cash flows from financing activities:      
Proceeds from (payments on) line of credit   —       9,295  
Proceeds from the issuance of common stock, net of issuance costs   —       12,518  
Proceeds from the exercise of the stock options   1,422       514  
Repurchase of Common Stock   (507)       (24,000)  
Payments on capital lease obligations   (105)       (2)  
Principal payments of debt obligations   (700)       (490)  
Net cash provided/(used) in financing activities   110       (2,165)  
Effect of foreign exchange rates on cash   (344)       (1,469)  
Net change in cash and cash equivalents   2,401       (38,047)  
Cash and cash equivalents at the beginning of the period   9,475       48,437  
Cash and cash equivalents at the end of the period   $ 11,876       $ 10,390  
Supplemental disclosures of cash flow information:      
Interest paid   $ 429       $ 459  
Income taxes paid   $ 2,873       560