Company Quick10K Filing
Ebix
Price41.60 EPS3
Shares31 P/E15
MCap1,274 P/FCF16
Net Debt-149 EBIT122
TEV1,125 TEV/EBIT9
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-11
10-K 2019-12-31 Filed 2020-03-02
10-Q 2019-09-30 Filed 2019-11-12
10-Q 2019-06-30 Filed 2019-08-09
10-Q 2019-03-31 Filed 2019-05-10
10-K 2018-12-31 Filed 2019-03-01
10-Q 2018-09-30 Filed 2018-11-09
10-Q 2018-06-30 Filed 2018-08-09
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-03-01
10-Q 2017-09-30 Filed 2017-11-09
10-Q 2017-06-30 Filed 2017-08-09
10-Q 2017-03-31 Filed 2017-05-10
10-K 2016-12-31 Filed 2017-03-01
10-Q 2016-09-30 Filed 2016-11-09
10-Q 2016-06-30 Filed 2016-08-10
10-Q 2016-03-31 Filed 2016-05-10
10-K 2015-12-31 Filed 2016-02-29
10-Q 2015-09-30 Filed 2015-11-09
10-Q 2015-06-30 Filed 2015-08-10
10-Q 2015-03-31 Filed 2015-05-11
10-K 2014-12-31 Filed 2015-03-16
10-Q 2014-09-30 Filed 2014-11-10
10-Q 2014-06-30 Filed 2014-08-11
10-Q 2014-03-31 Filed 2014-05-12
10-K 2013-12-31 Filed 2014-03-17
10-Q 2013-09-30 Filed 2013-11-08
10-Q 2013-06-30 Filed 2013-08-09
10-Q 2013-03-31 Filed 2013-05-10
10-K 2012-12-31 Filed 2013-03-18
10-Q 2012-09-30 Filed 2012-11-09
10-Q 2012-06-30 Filed 2012-08-09
10-Q 2012-03-31 Filed 2012-05-10
10-K 2011-12-31 Filed 2012-03-15
10-Q 2011-09-30 Filed 2011-11-09
10-Q 2011-06-30 Filed 2011-08-09
10-Q 2011-03-31 Filed 2011-05-10
10-K 2010-12-31 Filed 2011-03-16
10-Q 2010-09-30 Filed 2010-11-09
10-Q 2010-06-30 Filed 2010-08-09
10-Q 2010-03-31 Filed 2010-05-10
10-K 2009-12-31 Filed 2010-03-16
8-K 2020-06-05
8-K 2020-05-14
8-K 2020-05-07
8-K 2020-04-27
8-K 2020-04-12
8-K 2020-04-08
8-K 2020-03-30
8-K 2020-03-02
8-K 2020-01-02
8-K 2019-11-12
8-K 2019-09-26
8-K 2019-09-23
8-K 2019-08-15
8-K 2019-08-08
8-K 2019-07-22
8-K 2019-07-16
8-K 2019-05-09
8-K 2019-05-07
8-K 2019-04-10
8-K 2019-04-10
8-K 2019-03-11
8-K 2019-03-01
8-K 2019-02-11
8-K 2019-01-07
8-K 2019-01-07
8-K 2019-01-02
8-K 2018-12-28
8-K 2018-12-21
8-K 2018-12-12
8-K 2018-11-28
8-K 2018-11-16
8-K 2018-11-08
8-K 2018-10-05
8-K 2018-10-05
8-K 2018-09-20
8-K 2018-08-14
8-K 2018-08-08
8-K 2018-06-11
8-K 2018-06-05
8-K 2018-04-10
8-K 2018-04-02
8-K 2018-03-01
8-K 2018-02-21

EBIX 10Q Quarterly Report

Part I - Financial Information
Item 1: Condensed Consolidated Financial Statements
Note 1: Description of Business and Summary of Significant Accounting Policies
Note 2: Earnings per Share
Note 3: Business Combinations
Note 4: Debt
Note 5: Commitments and Contingencies
Note 6: Income Taxes
Note 7: Geographic Information
Note 8: Investment in Joint Ventures
Note 9: Goodwill
Note 10: Capitalized Software Development Costs
Note 11: Other Current Assets
Note 12: Leases
Note 13: Concentrations of Credit Risk
Note 14: Other Current Liabilities
Note 15: Subsequent Events
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3: Quantitative and Qualitative Disclosures About Market Risk
Item 4: Controls and Procedures
Part II - Other Information
Item 1: Legal Proceedings
Item 1A: Risk Factors
Item 2: Repurchases of Equity Securities
Item 3: Defaults Upon Senior Securities
Item 4: Mine Safety Disclosures
Item 5: Other Information
Item 6: Exhibits
EX-10.1 active1290152431executed.htm
EX-31.1 ebix-ex311202010qxq1.htm
EX-31.2 ebix-ex312202010qxq1.htm
EX-32.1 ebix-ex321202010qxq1.htm
EX-32.2 ebix-ex322202010qxq1.htm

Ebix Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
1.71.41.00.70.30.02012201420172020
Assets, Equity
0.20.20.10.10.00.02012201420172020
Rev, G Profit, Net Income
0.20.10.0-0.0-0.1-0.22012201420172020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020

OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-15946
Ebix, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
 
Delaware
 
77-0021975
(State or other jurisdiction of incorporation or
 
(I.R.S. Employer Identification No.)
organization)
 
 
 
 
 
1 Ebix Way
 
 
Johns Creek
Georgia
 
30097
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: 678-281-2020
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading symbols
Name of each exchange on which registered
Common stock, $0.10 par value per share
EBIX
Nasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer
 
 
Accelerated filer
Non-accelerated filer
 
Smaller reporting company
 
 
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of May 8, 2020 the number of shares of common stock outstanding was 30,507,311.
 
 
 
 
 



FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2020
INDEX
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Exhibit 101
 



PART I — FINANCIAL INFORMATION

Item 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)

 
Three Months Ended
 
March 31,
 
2020
 
2019
Operating revenue
$
137,876

 
$
142,924

 
 
 
 
Operating expenses:
 
 
 
Cost of services provided
57,457

 
45,929

Product development
9,417

 
11,242

Sales and marketing
3,804

 
6,121

General and administrative, net
29,244

 
21,444

Amortization and depreciation
3,641

 
4,057

Total operating expenses
103,563

 
88,793

 
 
 
 
Operating income
34,313

 
54,131

Interest income
54

 
350

Interest expense
(9,237
)
 
(9,818
)
Non-operating (loss) income
(19
)
 
3

Non-operating expense - litigation settlement

 
(20,452
)
Foreign currency exchange gain (loss)
618

 
(255
)
Income before income taxes
25,729

 
23,959

Income tax (expense) benefit
(1,284
)
 
1,084

Net income including noncontrolling interest
24,445

 
25,043

Net (loss) attributable to noncontrolling interest
(278
)
 
(667
)
Net income attributable to Ebix, Inc.
$
24,723

 
$
25,710

 
 
 
 
Basic earnings per common share attributable to Ebix, Inc.
$
0.81

 
$
0.84

 
 
 
 
Diluted earnings per common share attributable to Ebix, Inc.
$
0.81

 
$
0.84

 
 
 
 
Basic weighted average shares outstanding
30,476

 
30,524

 
 
 
 
Diluted weighted average shares outstanding
30,683

 
30,604


See accompanying notes to the condensed consolidated financial statements.


2



Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)


 
Three Months Ended
 
March 31,
 
2020
 
2019
 
 
 
 
Net income including noncontrolling interest
$
24,445

 
$
25,043

Other comprehensive income (loss):
 
 
 
                Foreign currency translation adjustments
(49,794
)
 
3,482

                                Total other comprehensive income (loss)
(49,794
)
 
3,482

Comprehensive income
(25,349
)
 
28,525

Comprehensive loss attributable to noncontrolling interest
(278
)
 
(667
)
Comprehensive (loss) income attributable to Ebix, Inc.
$
(25,071
)
 
$
29,192




See accompanying notes to the condensed consolidated financial statements.


3


Ebix, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
 
March 31,
2020
 
December 31,
2019
ASSETS
(Unaudited)
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
61,854

 
$
73,228

Receivables from service providers
13,423

 
25,607

Short-term investments
9,236

 
4,443

Restricted cash
24,756

 
35,051

Fiduciary funds - restricted
5,293

 
4,966

Trade accounts receivable, less allowances of $20,179 and $21,696, respectively
135,889

 
153,565

Other current assets
68,667

 
67,074

Total current assets
319,118

 
363,934

 
 
 
 
Property and equipment, net
46,831

 
48,421

Right-of-use assets
16,639

 
19,544

Goodwill
921,367

 
952,404

Intangibles, net
42,749

 
46,955

Indefinite-lived intangibles
42,055

 
42,055

Capitalized software development costs, net
19,536

 
19,183

Deferred tax asset, net
66,842

 
69,227

Other assets
28,473

 
29,896

Total assets
$
1,503,610

 
$
1,591,619

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued liabilities
$
70,102

 
$
84,735

Payables to service agents
8,720

 
12,196

Accrued payroll and related benefits
9,356

 
8,755

Working capital facility
2,746

 
28,352

Fiduciary funds - restricted
5,293

 
4,966

Short-term debt
1,050

 
1,167

Contingent liability for accrued earn-out acquisition consideration
8,111

 
8,621

Current portion of long term debt and financing lease obligations, net of deferred financing costs of $734 and $575, respectively
23,809

 
22,091

Contract liabilities
29,814

 
28,712

Lease liability
5,268

 
5,955

Other current liabilities
22,892

 
29,335

Total current liabilities
187,161

 
234,885

 
 
 
 
Revolving line of credit
438,037

 
438,037

Long term debt and financing lease obligations, less current portion, net of deferred financing costs of $1,392 and $1,534, respectively
248,912

 
254,467

Contingent liability for accrued earn-out acquisition consideration
1,405

 
1,474

Contract liabilities
8,649

 
8,541

Lease liability
11,169

 
13,196

Deferred tax liability, net
1,235

 
1,235

Other liabilities
35,326

 
40,339


4


Total liabilities
931,894

 
992,174

 
 
 
 
Commitments and Contingencies (see Note 5)

 

 
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock, $0.10 par value, 500,000 shares authorized, no shares issued and outstanding at March 31, 2020 and December 31, 2019

 

Series Y Convertible preferred stock, $0.10 par value, 350,000 shares authorized, no shares issued and outstanding at March 31, 2020 and no shares authorized, issue and outstanding at December 31, 2019

 

Common stock, $0.10 par value, 220,000,000 shares authorized, 30,475,994 issued and outstanding, at March 31, 2020, and 30,492,044 issued and outstanding at December 31, 2019
3,048

 
3,049

Additional paid-in capital
8,211

 
6,960

Retained earnings
639,596

 
618,503

Accumulated other comprehensive loss
(128,192
)
 
(78,398
)
Total Ebix, Inc. stockholders’ equity
522,663

 
550,114

Noncontrolling interest
49,053

 
49,331

Total stockholders’ equity
571,716

 
599,445

Total liabilities and stockholders’ equity
$
1,503,610

 
$
1,591,619


See accompanying notes to the condensed consolidated financial statements.

5


Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)
(In thousands except for share figures)


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
Issued
Shares
 
Amount
 
Additional Paid-in
Capital
 
Retained
Earnings
 
Accumulated Other Comprehensive
Loss
 
Noncontrolling interest
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, January 1, 2020
30,492,044

 
$
3,049

 
$
6,960

 
$
618,503

 
$
(78,398
)
 
$
49,331

 
$
599,445

 
Net income attributable to Ebix, Inc.

 

 

 
24,723

 

 

 
24,723

 
Net loss attributable to noncontrolling interest

 

 

 

 

 
(278
)
 
(278
)
 
Cumulative translation adjustment

 

 

 

 
(49,794
)
 

 
(49,794
)
 
Vesting of restricted stock
9,476

 
1

 
(1
)
 

 

 

 

 
Exercise of stock options
30,000

 
3

 
633

 

 

 

 
636

 
Share based compensation

 

 
1,126

 

 

 

 
1,126

 
Forfeiture of certain shares to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vested
(55,526
)
 
(5
)
 
(507
)
 
(1,329
)
 

 

 
(1,841
)
 
Common stock dividends paid, $0.075 per share

 

 

 
(2,301
)
 

 

 
(2,301
)
 
Balance, March 31, 2020
30,475,994

 
$
3,048

 
$
8,211

 
$
639,596

 
$
(128,192
)
 
$
49,053

 
$
571,716

 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 











6


Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)
(In thousands except for share figures)


 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
Issued
Shares
 
Amount
 
Additional Paid-in
Capital
 
Retained
Earnings
 
Accumulated Other Comprehensive
Loss
 
Noncontrolling interest
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, January 1, 2019
30,567,725

 
$
3,057

 
$
3,397

 
$
535,118

 
$
(63,377
)
 
$
66,242

 
$
544,437

 
Net income attributable to Ebix, Inc.

 

 

 
25,710

 

 

 
25,710

 
Net loss attributable to noncontrolling interest

 

 

 

 

 
(667
)
 
(667
)
 
Cumulative translation adjustment

 

 

 

 
3,482

 

 
3,482

 
Repurchase and retirement of common stock
(50,000
)
 
(5
)
 

 
(2,167
)
 

 

 
(2,172
)
 
Vesting of restricted stock
6,382

 

 

 

 

 

 

 
Share based compensation

 

 
576

 

 

 

 
576

 
Forfeiture of certain shares to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vested
(351
)
 

 
(21
)
 

 

 

 
(21
)
 
Noncontrolling interest

 

 
398

 

 

 
(398
)
 

 
Common stock dividends paid, $0.075 per share

 

 

 
(2,297
)
 

 

 
(2,297
)
 
Balance, March 31, 2019
30,523,756

 
$
3,052

 
$
4,350

 
$
556,364

 
$
(59,895
)
 
$
65,177

 
$
569,048

 

See accompanying notes to the condensed consolidated financial statements.


7


Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
Three Months Ended
 
March 31,
 
2020
 
2019
Cash flows from operating activities:
 
 
 
Net income attributable to Ebix, Inc.
$
24,723

 
$
25,710

Net loss attributable to noncontrolling interest
(278
)
 
(667
)
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Amortization and depreciation
3,641

 
4,057

Benefit for deferred taxes
(44
)
 
(3,875
)
Share based compensation
1,126

 
576

(Benefit) provision for doubtful accounts
(618
)
 
134

Amortization of right-of-use assets
1,797

 
1,671

Unrealized foreign exchange (gain) loss
(419
)
 
313

Amortization of capitalized software development costs
833

 
596

Reduction of acquisition accruals

 
(15,392
)
Changes in assets and liabilities, net of effects from acquisitions:
 
 
 
Accounts receivable
9,687

 
(5,639
)
Receivables from service providers
12,184

 
11,488

Payables to service agents
(3,476
)
 
(8,977
)
Other assets
(4,035
)
 
3,142

Accounts payable and accrued expenses
(9,755
)
 
(7,730
)
Accrued payroll and related benefits
1,425

 
(1,208
)
Contract liabilities
1,980

 
(2,920
)
Lease liabilities
(1,596
)
 
(1,643
)
Reserve for potential uncertain income tax return positions
69

 

Liability - derivative litigation settlement

 
19,652

Other liabilities
(7,666
)
 
1,754

Net cash provided by operating activities
29,578

 
21,042

 
 
 
 
Cash flows from investing activities:
 
 
 
Cash paid for acquisitions, net of cash acquired
(1,858
)
 
(90,358
)
Cash paid to from Paul Merchants for 10% stake in MTSS combined business

 
(4,925
)
Capitalized software development costs
(2,089
)
 
(1,740
)
(Purchases) maturities of marketable securities
(5,105
)
 
11,775

Capital expenditures
(557
)
 
(1,798
)
Net cash used in investing activities
(9,609
)
 
(87,046
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from revolving line of credit, net

 
13,500

Principal payments of term loan obligation
(3,765
)
 
(3,766
)
Repurchases of common stock

 
(10,972
)
Proceeds from the exercise of stock options
636

 

Forfeiture of certain shares to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vested
(1,841
)
 
(21
)
Dividend payments
(2,301
)
 
(2,297
)
Payments on short-term notes, net

 
2,908

Principal payments of debt obligations
(203
)
 
(834
)
(Payments) proceeds of working capital facility, net
(24,693
)
 
15,621

Payments of financing lease obligations

 
(69
)
Net cash (used) provided by financing activities
(32,167
)
 
14,070

Effect of foreign exchange rates on cash
(10,173
)
 
190

Net change in cash and cash equivalents, and restricted cash
(22,371
)
 
(51,744
)
Cash and cash equivalents, and restricted cash at the beginning of the period
111,369

 
149,681

Cash and cash equivalents, and restricted cash at the end of the period
$
88,998

 
$
97,937

Supplemental disclosures of cash flow information:
 
 
 
Interest paid
$
8,820

 
$
9,573

Income taxes paid
$
1,086

 
$
4,128

See accompanying notes to the condensed consolidated financial statements.



8


Supplemental schedule of noncash financing activities:
    
As of December 31, 2018 there were 200,000 shares totaling $8.8 million of share repurchases that were not settled until January 2019.

During the three months ended March 31, 2020, there were 55,526 shares, totaling $1.8 million, used to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vesting.


9


Ebix, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements


Note 1: Description of Business and Summary of Significant Accounting Policies
Description of Business— Ebix, Inc., and its subsidiaries, (“Ebix” or the “Company”) is a leading international supplier of on-demand infrastructure exchanges to the insurance, financial, and healthcare industries. In the insurance sector, the Company’s main focus is to develop and deploy a wide variety of insurance and reinsurance exchanges on an on-demand basis, while also providing software-as-a-service ("SaaS") enterprise solutions in the area of customer relationship management ("CRM"), front-end and back-end systems, and outsourced administrative and risk compliance. The Company's products feature fully customizable and scalable on-demand software designed to streamline the way insurance professionals manage distribution, marketing, sales, customer service, and accounting activities. With a "Phygital” strategy that combines physical distribution outlets in many Association of Southeast Asian Nations ("ASEAN") countries to an Omni-channel online digital platform, the Company’s EbixCash Financial exchange portfolio of software and services encompasses domestic and international money remittance, foreign exchange ("Forex"), travel, pre-paid gift cards, utility payments, lending, and wealth management in India and other Asian markets. The Company has its headquarters in Johns Creek, Georgia and also conducts operating activities in Australia, Canada, India, New Zealand, Singapore, the United Kingdom, Brazil, Philippines, Indonesia, Thailand and United Arab Emirates. International revenue accounted for 69.6% and 67.8% of the Company’s total revenue for the three months ended March 31, 2020 and 2019, respectively.

Summary of Significant Accounting Policies
Basis of Presentation—The accompanying unaudited condensed consolidated financial statements and these notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") with the effect of inter-company balances and transactions eliminated. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP and SEC rules have been condensed or omitted as permitted by and pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements contain adjustments (consisting only of normal recurring items) necessary to fairly present the consolidated financial position of the Company and its consolidated results of operations and cash flows. Operating results for the three months ended March 31, 2020 and 2019 are not necessarily indicative of the results that may be expected for future quarters or the full year of 2020. The condensed consolidated December 31, 2019 balance sheet included in this interim period filing has been derived from the audited financial statements at that date, but does not necessarily include all of the information and related notes required by GAAP for complete financial statements. These condensed interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Reclassification - There were certain prior year amounts that have been reclassified to be consistent with current year presentation within our financial statements, specifically with respect to the presentation of receivables from service providers and payables to service agents.

Restricted Cash - The carrying value of our restricted cash in current assets was $24.8 million and $35.1 million at March 31, 2020 and December 31, 2019, respectively. The March 31, 2020 balance consists of fixed deposits (many in the form of certificates of deposit) pledged with banks for issuance of bank guarantees and letters of credit related to its India operations.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated statement of financial position to the amounts shown in the Condensed Consolidated Statement of Cash Flows:


10


 
Three Months Ended
 
March 31,
 
2020
 
2019
 
(In thousands)
Cash and cash equivalents
$
61,854

 
$
64,189

Restricted cash
24,756

 
29,743

Restricted cash included in other long-term assets
2,388

 
4,005

Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statement of Cash Flows
$
88,998

 
$
97,937



Advertising—Advertising costs amounted to $1.5 million and $3.6 million for the three months ended March 31, 2020 and 2019, respectively. The costs are included in sales and marketing expenses in the accompanying Condensed Consolidated Statements of Income.
Fair Value of Financial Instruments—Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction. This guidance establishes a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The hierarchy reflects the degree to which objective data from external active markets are available to measure fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable. The classifications are as follows:
Level 1 Inputs - Unadjusted quoted prices available in active markets for identical investments to the reporting entity at the measurement date.
Level 2 Inputs - Other than quoted prices included in Level 1 inputs, which are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 Inputs - Unobservable inputs, which are used to the extent that observable inputs are not available. Unobservable inputs, are used in situations where there is little or no market activity for the asset or liability and wherein the reporting entity makes estimates and assumptions related to the pricing of the asset or liability, including assumptions regarding risk.

A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

As of March 31, 2020, the Company had the following financial instruments to which it had to both consider fair values and make fair value assessments:

Short-term investments (commercial bank certificates of deposits and mutual funds), for which the fair values are measured as a Level 1 instrument.
Contingent accrued earn-out business acquisition consideration liabilities, for which fair values are measured as Level 3 instruments. These contingent consideration liabilities were recorded at fair value on the acquisition date and are re-measured quarterly based on the then assessed fair value and adjusted if necessary. The increases or decreases in the fair value of contingent consideration can result from changes in anticipated revenue levels and changes in assumed discount periods and rates. As the fair value measure is based on significant inputs that are not observable in the market, they are categorized as Level 3.

Other financial instruments not measured at fair value on the Company's unaudited Condensed Consolidated Balance Sheet at March 31, 2020 that require disclosure of fair values include: cash and cash equivalents, restricted cash, fiduciary funds, accounts receivable, receivables from service providers, accounts payable and accrued expenses, accrued payroll and related benefits, payables to service agents, finance lease obligations, working capital facilities, the revolving line of credit and term loan debt. The Company believes that the estimated fair value of such instruments at March 31, 2020 and December 31, 2019 approximates their carrying value as reported on the unaudited Condensed Consolidated Balance Sheet.
    
Additional information regarding the Company's assets and liabilities that are measured at fair value on a recurring basis is presented in the following tables:


11


 
 
Fair Values at Reporting Date Using*
Descriptions
 
Balance, March 31, 2020
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
 
 
(In thousands)
Assets
 
 
 
 
 
Commercial bank certificates of deposits ($163 thousand is recorded in the long
term asset section of the Condensed Consolidated Balance Sheets in "Other Assets")
 
$
9,399

$
9,399

$

$

Mutual funds (recorded in
the long term asset section of the Condensed Consolidated Balance Sheets in "Other Assets")
 
565

565



Total assets measured at fair value
 
$
9,964

$
9,964

$

$

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Contingent accrued earn-out acquisition consideration (a)
 
$
9,516

$

$

$
9,516

Total liabilities measured at fair value
 
$
9,516

$

$

$
9,516

 
 
 
 
 
 
(a) The income valuation approach is applied and the valuation inputs include the contingent payment arrangement terms, projected revenues and cash flows, rate of return, and probability assessments.
* During the three months ended March 31, 2020, there were no transfers between fair value Levels 1, 2 or 3.



12


 
 
Fair Values at Reporting Date Using*
Descriptions
 
Balance, December 31, 2019
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
 
 
(In thousands)
Assets
 
 
 
 
 
Commercial bank certificates of deposits ($50 thousand is recorded in the long term asset section of the Condensed Consolidated Balance Sheets in "Other Assets")
 
$
4,493

4,493

$

$

Mutual funds
 
1,058

1,058



Total assets measured at fair value
 
$
5,551

$
5,551

$

$

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Contingent accrued earn-out acquisition consideration (a)
 
$
10,095

$

$

$
10,095

Total liabilities measured at fair value
 
$
10,095

$

$

$
10,095

 
 
 
 
 
 
(a) The income valuation approach is applied and the valuation inputs include the contingent payment arrangement terms, projected revenues and cash flows, rate of return, and probability assessments.
* During the year ended December 31, 2019, there were no transfers between fair value Levels 1, 2 or 3.
For the Company's assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balances for each category therein, and gains or losses recognized during the three months ended March 31, 2020 and during the year ended December 31, 2019:

13


Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Contingent Liability for Accrued Earn-out Acquisition Consideration
 
March 31, 2020
 
December 31, 2019
 
 
(In thousands)
 
 
 
 
 
Beginning balance
 
$
10,095

 
$
24,976

 
 
 
 
 
Total remeasurement adjustments:
 
 
 
 
       Gains included in earnings **
 

 
(16,543
)
       Foreign currency translation adjustments ***
 
(579
)
 
(260
)
 
 
 
 
 
Acquisitions and settlements
 
 
 
 
       Business acquisitions
 

 
1,922

 
 
 
 
 
Ending balance
 
$
9,516

 
$
10,095

 
 
 
 
 
The amount of total (gains) losses for the period included in earnings or changes to net assets, attributable to changes in unrealized gains relating to assets or liabilities still held at period-end.
 
$

 
$
(16,543
)
 
 
 
 
 
** recorded as a reduction to general and administrative expenses
 
 
*** recorded as a component of other comprehensive income within stockholders' equity


Quantitative Information about Level 3 Fair Value Measurements
The significant unobservable inputs used in the fair value measurement of the Company's contingent consideration liabilities designated as Level 3 are as follows:
  
 
 
 
 
 
 
(In thousands)
 
Fair Value at March 31, 2020
 
             Valuation Technique
 
Significant Unobservable
Input
Contingent acquisition consideration:
(Wdev, Miles, and Zillious acquisition)
 
$9,516
 
Discounted cash flow
 
Projected revenue and probability of achievement

  
 
 
 
 
 
 
(In thousands)
 
Fair Value at December 31, 2019
 
             Valuation Technique
 
Significant Unobservable
Input
Contingent acquisition consideration:
(Wdev, Miles, Zillious, and Essel
 acquisition)
 
$10,095
 
Discounted cash flow
 
Projected revenue and probability of achievement

Sensitivity to Changes in Significant Unobservable Inputs
As presented in the table above, the significant unobservable inputs used in the fair value measurement of contingent consideration related to business acquisitions are projected revenue forecasts, as developed by the relevant members of Company's management team and the probability of achievement of those revenue forecasts. The Company applies these inputs in its calculation and determination of the fair value of contingent earn-out liabilities for purchased businesses. During 2019 and the three months ended March 31, 2020, certain of the Company's contingent earn-out liabilities were adjusted because of changes to anticipated

14


future revenues from these acquired businesses, or as a result of finalizing purchase price allocations that were previously preliminary.
Revenue Recognition and Contract Liabilities—The Company derives its revenues primarily from software subscription and transaction fees, software license fees, financial transaction fees, risk compliance solution services fees, and professional service fees, including associated fees for consulting, implementation, training, and project management provided to customers with installed systems and applications. Sales and value-added taxes are not included in revenues, but rather are recorded as a liability until the taxes assessed are remitted to the respective taxing authorities.
The Company determines revenue recognition by applying the following steps:
identification of the contract, or contracts, with a customer;
identification of the performance obligations in the contract;
determination of the transaction price;
allocation of the transaction price to the performance obligations in the contract; and
recognition of revenue when, or as, we satisfy a performance obligation.
The Company analyzes its different services individually to determine the appropriate basis for revenue recognition, as further described below. Additionally, certain services exist in multiple channels. As Ebix derives revenues from three product/service channels, EbixCash Exchanges, Insurance Exchanges, and Risk Compliance Solutions, for policy disclosure purposes, contracts are discussed in conjunction with the channel to which they are most significant.
The Company assesses the terms of customer contracts, including termination rights, penalties (implied or explicit), and renewal rights.
EbixCash Exchanges ("EbixCash")

EbixCash revenues are primarily derived from consideration paid by customers for financial transaction (foreign exchange, remittance, other payment solutions) and travel transaction services. The significant majority of EbixCash revenue is for a single performance obligation and is recognized at a point in time. These revenues vary by transaction based upon channel, send and receive locations, the principal amount sent, whether the money transfer involves different send and receive currencies, and speed of service, as applicable.

EbixCash also offers several other services, including payment services and ticketing and travel services, for which revenue is impacted by various factors. EbixCash acts as the principal in most transactions and reports revenue on a gross basis, as EbixCash controls the service at all times prior to transfer to the customer, is primarily responsible for fulfilling the customer contracts, has the risk of loss, and has the ability to establish transaction prices.

The main services from which EbixCash derives revenue are as follow:

EbixCash Travel Exchanges

EbixCash Travel revenues are primarily derived from commissions and transaction fees received from various travel providers and international exchanges involved in the sale of travel to the consumer. EbixCash Travel revenue is for a single performance obligation and is recognized at a point in time. Travel revenues include reservation commissions, segment fees from global travel exchange providers, and transaction net revenues (i.e., the amount charged to travelers less the amount owed to travel service providers) in connection with our reservation services; ancillary fees, including travel insurance-related revenues and certain reservation booking fees; and credit card processing rebates and customer processing fees. EbixCash Travel services include the sale of hotel rooms, airline tickets, bus tickets and train tickets. EbixCash’s Travel revenue is also derived from ticket sales, wherein the commissions payable to EbixCash Travel, along with any transaction fees paid by travel providers and travel exchanges, is recognized as revenue after completion of the service. The transaction price on such services is agreed upon at the time of the purchase.

EbixCash Travel revenue for the corporate MICE (Meetings, Incentives, Conferences, and Exhibitions) packages is recognized at full purchase value at the completion of the obligation with the corresponding costs recorded under direct expenses. For MICE revenues, EbixCash Travel acts as the principal in transactions and, accordingly, reports revenue on a gross basis. EbixCash Travel controls the service at all times prior to transfer to the customer, is responsible for fulfilling the customer contracts, has the risk of loss, and has the ability to establish transaction prices.


15


EbixCash Money Transfer

For the EbixCash money transfer business, EbixCash has one performance obligation whereupon the customer engages EbixCash to perform one integrated service. This typically occurs instantaneously when the beneficiary entitled to receive the money transferred by the sender visits the EbixCash outlet and collects the money. Accordingly, EbixCash recognizes revenue upon completion of the following: 1) the customer’s acknowledgment of EbixCash’s terms and conditions and the receipt of payment information, 2) the money transfer has been processed, 3) the customer has received a unique transaction identification number, and 4) funds are available to be picked up by the beneficiary. The transaction price is comprised of a transaction fee and the difference between the exchange rate set by EbixCash to the customer and the rate available in the wholesale foreign exchange market, as applicable, both of which are readily determinable at the time the transaction is initiated.

Foreign Exchange and Payment Services

For EbixCash’s foreign exchange and payment services, customers agree to terms and conditions for all transactions, either at the time of initiating a transaction or signing a contract with EbixCash to provide payment services on the customer’s behalf. In the majority of EbixCash’s foreign exchange and payment services transactions, EbixCash makes payments to the recipient to satisfy its performance obligation to the customer, and, therefore, EbixCash recognizes revenue on foreign exchange and payment when this performance obligation has been fulfilled.

Consumer Payment Services

EbixCash offers several different bill payment services that vary by considerations such as: 1) who pays the fee to EbixCash (consumer or biller), 2) whether or not the service is offered to all consumers, 3) whether the service is restricted to existing biller relationship of EbixCash, and 4) whether the service utilizes a physical agent network offered for consumers’ convenience, among other factors. The determination of which party is EbixCash’s customer for revenue recognition purposes is based on these considerations for each of EbixCash’s bill payment services. For all transactions, EbixCash’s customers agree to EbixCash’s terms and conditions, either at the time of initiating a transaction (where the consumer is determined to be the customer for revenue recognition purposes) or upon signing a contract with EbixCash to provide services on the biller’s behalf (where the biller is determined to be the customer for revenue recognition purposes). As with consumer money transfers, customers engage EbixCash to perform one integrated service, collect money from the consumer and process the bill payment transaction, thereby providing the billers real-time or near real-time information regarding their customers’ payments and, thus, simplifying the billers’ collection efforts. EbixCash’s revenues from bill payment services are generated from contracts to process transactions at any time during the duration of the contract. The transaction price on bill payment services is contractual and determinable. Certain biller agreements may include per-transaction or fixed periodic rebates, which EbixCash records as a reduction to revenue.

Gift Cards

EbixCash resells gift cards to consumers that can be later redeemed at various merchants. Gift cards are recorded as inventory until sold to the consumer. Gift card revenue is recognized at full purchase value at the time of sale with the corresponding cost of vouchers recorded as cost of services provided.

EbixCash Technology Services
    
EbixCash also offers on-demand technology to various providers in the area of lending, wealth & asset management, travel and logistics across the world.    
Insurance Exchanges
    
Insurance Exchanges revenues are primarily derived from consideration paid by customers related to our SaaS platforms, related services and the licensing of software. A typical contract for our SaaS platform will also include services for setup, customization, transaction processing, maintenance, and/or hosting. Determining whether products and services are considered distinct performance obligations that should be accounted for separately may require significant judgment. Set-up and customization services related to our SaaS platforms are not considered to be distinct from the usage fees associated with the SaaS platform and, accordingly, are accounted for as a single performance obligation. These services, along with the usage or transaction fees, are recognized over the contract duration, which considers the significance of the upfront fees in the context of the contract and which may, therefore, exceed the initial contracted term. A customer's transaction volume tends to remain fairly consistent during the contract period without significant fluctuations. The invoiced amount is a reasonable approximation of the revenue that would be allocated to the related period under the variable consideration guidelines in ASC 606-10-32-40. To the extent that a SaaS contract

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includes subscription services or professional services, apart from the upfront customization, these are considered separate performance obligations. We also have separate software licensing (on premise/perpetual), unrelated to our SasS platforms, which is recognized at a point in time when the license is transferred to the customer.
Contracts generally do not contain a right of return or refund provisions. Our contracts often do contain overage fees, contingent fees, or service level penalties that are accounted for as variable consideration. Revenue accounted for as variable consideration is recognized using the “right to invoice” practical expedient when the invoiced amount equals the value provided to the customer.
Software-as-a-Service ("SaaS")

The Company allocates the transaction price to each distinct performance obligation using the relative stand-alone selling price. Determining the stand-alone selling price may require significant judgement. The stand-alone selling price is the price at which an entity has sold or would sell a promised good or service separately to a customer. The Company determines the stand-alone selling price based on the observable price of products or services sold separately in comparable circumstances, when such observable prices are available. When standalone selling price is not directly observable, the Company estimates the stand-alone selling price using the market assessment approach by considering historical pricing and other market factors.

Software Licenses
Software license revenues attributable to a software license that is a separate performance obligation are recognized at the point in time that the customer obtains control of the license.
Subscription Services

Subscription services revenues are associated with performance obligations that are satisfied over specific time periods and primarily consist of post-contract support services. Revenue is generally recognized ratably over the contract term. Our subscription contracts are generally for an initial three-year period with subsequent one-year automatic renewals.

Transaction Fees
    
Transaction revenue is comprised of fees applied to the volume of transactions that are processed through our SaaS platforms. These fees are typically based on a per-transaction rate and are invoiced for the same period in which the transactions were processed and as the performance obligation is satisfied. The amount invoiced generally equals the value provided to the customer, and revenue is typically recognized when invoiced using the as-invoiced practical expedient.

Professional Services

Professional service revenue primarily consists of fees for setup, customization, training, or consulting. Professional service fees are generally on either a time and materials basis or a fixed fee basis. Revenues for time and materials are recognized as such services are rendered, while fixed fee revenues are recognized based on the input method that is driven by the expected hours to complete the project measured against the actual hours completed to date. Professional services, particularly related to SaaS platforms, may have significant dependencies on the related licensed software and may not be considered a distinct performance obligation.

Risk Compliance Services ("RCS")

RCS revenues consist of two revenue streams - Certificates of Insurance (COI) and Consulting Services. COI revenues are derived from consideration paid by customers for the creation and tracking of certificates of insurance. These are transactional-based revenues. Consulting Services revenues are driven by distinct consulting service engagements rendered to customers, for which revenues are recognized using the output method on a time and material basis as the services are performed.

COI Creation and Tracking

The Company provides services to issue and track certificates of insurance in the United States and Australian markets. Revenue is derived from transaction fees for each certificate issued or tracked. The Company recognizes revenue at the issuance of each certificate or over the period the certificate is being tracked.


Consulting Services

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The Company provides consulting services to clients around the world for project management and development. Consulting services fees are generally on either a time and materials basis or a fixed fee basis. Revenues for time and materials are recognized using an output method as the services are rendered, while fixed fee revenues are recognized based on the input method that is driven by the expected hours to complete the project measured against the actual hours completed to date.

Disaggregation of Revenue
The following tables present revenue disaggregated by primary geographical regions and product/service channels for the three months ended March 31, 2020 and 2019:

 
 
Three Months Ended March 31,
Revenue:

 
2020
 
2019
 
 
(In thousands)
India*
 
$
73,915

 
$
72,908

United States
 
41,912

 
46,075

Australia
 
8,186

 
8,625

Latin America
 
4,237

 
4,022

Europe
 
3,281

 
3,787

Indonesia*
 
2,142

 
2,545

Singapore*
 
1,253

 
2,129

Philippines*
 
1,276

 
1,150

Canada
 
1,114

 
1,051

New Zealand
 
435

 
522

United Arab Emirates*
 
125

 
110

 
 
$
137,876

 
$
142,924

 
 
 
 
 
*Primarily India led businesses for which total revenue was $77.9 million and $77.7 million for the three months ended March 31, 2020 and 2019, respectively.

The Company’s revenues are derived from three product/service channels: EbixCash Exchanges, Insurance Exchanges, and Risk Compliance Solutions ("RCS").
Presented in the table below is the breakout of our revenue streams for each of those product/service channels for the three months ended March 31, 2020 and 2019.

 
Three Months Ended
 
March 31,
 
2020
 
2019
 
(In thousands)
EbixCash Exchanges
77,855

 
77,737

Insurance Exchanges
44,001

 
48,015

Risk Compliance Solutions
16,020

 
17,172

Totals
$
137,876

 
$
142,924



Costs to Obtain and Fulfill a Contract
The Company’s capitalized costs are primarily derived from the fulfillment of SaaS-related setup and customizations, from which the customer receives benefit through continued access to and use of the SaaS product platforms. In accordance with

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the guidance in ASC 340-40-25-5, we capitalize the costs directly related to the setup and development of these customizations, which satisfy the Company’s performance obligation with respect to access to the Company’s underlying product platforms. The capitalized costs primarily consist of the salaries of the developers directly involved in fulfilling the project and are solely based on the time spent on that project. The Company amortizes the capitalized costs ratably over the expected useful life of the related customizations, matching our treatment for the related revenue, and the capitalized costs are recoverable from profit margin included in the contract. At March 31, 2020 and December 31, 2019, the Company had $710 thousand and $734 thousand, respectively, of contract costs in “Other current assets” and $1.1 million and $1.2 million, respectively, in “Other Assets” on the Company's Condensed Consolidated Balance Sheets.

 
March 31, 2020