10-Q 1 ebix-20220331.htm 10-Q ebix-20220331
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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, 2022

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 CreekGeorgia 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 classTrading symbolsName of each exchange on which registered
Common stock, $0.10 par value per shareEBIXNasdaq 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 filerAccelerated filer
 
Non-accelerated filerSmaller 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 2, 2022 the number of shares of common stock outstanding was 30,904,811.



FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2022
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,
 20222021
Operating revenue$286,253 $290,053 
Operating expenses: 
Cost of services provided210,843 220,358 
Product development10,258 9,545 
Sales and marketing3,765 3,827 
General and administrative, net26,913 21,337 
Amortization and depreciation4,364 3,800 
Total operating expenses256,143 258,867 
Operating income30,110 31,186 
Interest income62 8 
Interest expense(10,251)(8,079)
Non-operating (loss) income(734)(1)
Foreign currency exchange gain (loss) 894 (625)
Income before income taxes20,081 22,489 
Income tax (expense) benefit(1,704)(1,202)
Net income including noncontrolling interest18,377 21,287 
Net loss attributable to noncontrolling interest(814)(304)
Net income attributable to Ebix, Inc.$19,191 $21,591 
Basic earnings per common share attributable to Ebix, Inc.$0.62 $0.71 
Diluted earnings per common share attributable to Ebix, Inc.$0.62 $0.70 
Basic weighted average shares outstanding30,712 30,558 
Diluted weighted average shares outstanding30,762 30,731 

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,
 20222021
Net income including noncontrolling interest$18,377 $21,287 
Other comprehensive income (loss):
                Foreign currency translation adjustments(11,284)(3,919)
                                Total other comprehensive income (loss)(11,284)(3,919)
Comprehensive income7,093 17,368 
Comprehensive loss attributable to noncontrolling interest(814)(304)
Comprehensive income attributable to Ebix, Inc.$7,907 $17,672 


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,
2022
December 31,
2021
ASSETS(Unaudited)
Current assets:  
Cash and cash equivalents$75,943 $99,625 
Receivables from service providers1,981 1,352 
Short-term investments16,194 16,463 
Restricted cash 10,100 9,080 
Fiduciary funds - restricted1,799 2,046 
Trade accounts receivable, less allowances of $19,225 and $19,874, respectively
151,793 153,609 
Other current assets81,759 84,389 
Total current assets339,569 366,564 
Property and equipment, net61,740 54,359 
Right-of-use assets9,853 10,051 
Goodwill931,558 939,249 
Intangibles, net44,134 46,795 
Indefinite-lived intangibles16,647 16,647 
Capitalized software development costs, net23,253 21,565 
Deferred tax asset, net101,100 84,514 
Other assets32,165 33,505 
Total assets$1,560,019 $1,573,249 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities: 
Accounts payable and accrued liabilities$75,785 $86,181 
Payables to service agents4,989 6,296 
Accrued payroll and related benefits10,367 11,360 
Working capital facility1,824 5,607 
Fiduciary funds - restricted1,799 2,046 
Revolving line of credit439,402  
Short-term debt1,122 1,954 
Current portion of long term debt and financing lease obligations, net of deferred financing costs of $1,489 and $1,635, respectively
204,939 28,577 
Contract liabilities41,033 33,164 
Lease liability3,366 3,173 
Other current liabilities28,844 26,837 
Total current liabilities813,470 205,195 
Revolving line of credit 439,402 
Long term debt and financing lease obligations, less current portion, net of deferred financing costs of $0 and $261, respectively
266 184,676 
Contingent liability for accrued earn-out acquisition consideration2,516 2,557 
Contract liabilities8,557 8,193 
Lease liability6,844 7,139 
Deferred tax liability, net1,150 1,150 
Other liabilities21,957 25,383 
Total liabilities854,760 873,695 
4

Stockholders’ equity: 
Preferred stock, $0.10 par value, 500,000 shares authorized, no shares issued and outstanding at March 31, 2022 and December 31, 2021
  
Series Y Convertible preferred stock, $0.10 par value, 350,000 shares authorized, no shares issued and outstanding at March 31, 2022 and December 31, 2021
  
Common stock, $0.10 par value, 220,000,000 shares authorized, 30,722,267 issued and outstanding, at March 31, 2022, and 30,683,393 issued and outstanding at December 31, 2021
3,072 3,068 
Additional paid-in capital15,994 15,068 
Retained earnings776,081 759,208 
Accumulated other comprehensive loss(133,306)(122,022)
Total Ebix, Inc. stockholders’ equity661,841 655,322 
Noncontrolling interest43,418 44,232 
Total stockholders’ equity705,259 699,554 
Total liabilities and stockholders’ equity$1,560,019 $1,573,249 

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
AmountAdditional Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive
Loss
Noncontrolling interestTotal
Balance, January 1, 202230,683,393 $3,068 $15,068 $759,208 $(122,022)$44,232 $699,554 
Net income attributable to Ebix, Inc.— — — 19,191 — — 19,191 
Net loss attributable to noncontrolling interest— — — — — (814)(814)
Cumulative translation adjustment— — — — (11,284)— (11,284)
Vesting of restricted stock39,981 4 (4)— — —  
Share based compensation— — 964 — — — 964 
Forfeiture of certain shares to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vested(1,107) (34)— — — (34)
Common stock dividends paid, $0.075 per share
— — — (2,318)— — (2,318)
Balance, March 31, 202230,722,267 $3,072 $15,994 $776,081 $(133,306)$43,418 $705,259 

 Common Stock   
Issued
Shares
AmountAdditional Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive
Loss
Noncontrolling interestTotal
Balance, January 1, 202130,515,334 $3,052 $11,126 $700,304 $(101,503)$47,125 $660,104 
Net income attributable to Ebix, Inc.— — — 21,591 — — 21,591 
Net loss attributable to noncontrolling interest— — — — — (304)(304)
Cumulative translation adjustment— — — — (3,919)— (3,919)
Vesting of restricted stock43,990 4 (4)— — —  
Share based compensation— — 1,358 — — — 1,358 
Common stock dividends paid, $0.075 per share
— — — (2,321)— — (2,321)
Balance, March 31, 202130,559,324 $3,056 $12,480 $719,574 $(105,422)$46,821 $676,509 

See accompanying notes to the condensed consolidated financial statements.
6

Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
 March 31,
 20222021
Cash flows from operating activities:  
Net income attributable to Ebix, Inc.$19,191 $21,591 
Net loss attributable to noncontrolling interest(814)(304)
Adjustments to reconcile net income to net cash provided by operating activities: 
Amortization and depreciation4,364 3,800 
Provision (benefit) for deferred taxes
(17,583)(3,056)
Share-based compensation964 1,358 
(Benefit) provision for doubtful accounts(360)(2,060)
Amortization of right-of-use assets892 1,295 
Amortization of capitalized software development costs755 813 
Changes in assets and liabilities, net of effects from acquisitions: 
Accounts receivable901 (2,339)
Receivables from service providers(629)2,275 
Payables to service agents(1,307)(1,615)
Other assets3,114 (6,768)
Accounts payable and accrued expenses(9,357)(11,277)
Accrued payroll and related benefits(1,159)(1,076)
Contract liabilities8,370 4,517 
Lease liabilities(813)(944)
Other liabilities(962)2,368 
Net cash provided by operating activities5,567 8,578 
Cash flows from investing activities:  
Capitalized software development costs(2,666)(1,683)
Maturities (purchases) of unrestricted marketable securities, net457 2,335 
Capital expenditures(9,303)(270)
Net cash (used in) provided by investing activities(11,512)382 
Cash flows from financing activities: 
Principal payments of term loan obligation(8,402)(5,648)
Forfeiture of certain shares to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vested(34) 
Dividend payments(2,318)(2,321)
Payments of debt obligations, net(832)(62)
Payments of working capital facility, net(3,707)(4,589)
Payments of financing lease obligations, net(53)(47)
Net cash used in financing activities(15,346)(12,667)
Effect of foreign exchange rates on cash(1,088)(1,379)
Net change in cash and cash equivalents, and restricted cash(22,379)(5,086)
Cash and cash equivalents, and restricted cash at the beginning of the period114,764 120,213 
Cash and cash equivalents, and restricted cash at the end of the period$92,385 $115,127 
Supplemental disclosures of cash flow information:  
Interest paid$11,006 $7,505 
Income taxes paid$15,379 $9,695 
See accompanying notes to the condensed consolidated financial statements.







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Supplemental schedule of noncash financing activities:
    
         During the three months ended March 31, 2022, there were 1,107 shares, totaling $34 thousand, used to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vesting.
         During the three months ended March 31, 2021, there were no shares used to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vesting.


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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”, "we", "us", and "our") is a leading international supplier of on-demand infrastructure exchanges to the insurance, financial services, travel, and healthcare industries. In the insurance industry, the Company’s main focus is to develop and deploy a wide variety of insurance and reinsurance exchanges on an on-demand basis using software-as-a-service ("SaaS") enterprise solutions in the areas 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 software solutions designed to streamline the way insurance and financial industry professionals manage distribution, marketing, sales, customer service, and accounting activities. With a "Phygital” strategy that combines physical distribution outlets in India and 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 ASEAN markets. The Company has its headquarters in Johns Creek, Georgia and also conducts operating activities in Australia, Brazil, Canada, India, Indonesia, New Zealand, the Philippines, Singapore, Thailand, the United Arab Emirates, and the United Kingdom. International revenue accounted for 86.4% and 86.9% of the Company’s total revenue for the three months ended March 31, 2022 and 2021, 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, 2022 and 2021 are not necessarily indicative of the results that may be expected for future quarters or the full year of 2022. The condensed consolidated December 31, 2021 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, 2021.
Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and reported amounts of revenue and expenses during those reporting periods. Management has made material estimates primarily with respect to revenue recognition and contract liabilities, accounts receivable, acquired intangible assets, annual impairment reviews of goodwill and indefinite-lived intangible assets, contingent earn out liabilities in connection with business acquisitions, and the provision for income taxes. Actual results may be different from those estimates.
    Reclassification — Certain prior year amounts have been reclassified to be consistent with current year presentation within our financial statements.
Cash and Cash Equivalents — The Company considers all highly liquid investments with original maturity of three months or less at the time of purchase to be cash equivalents. Such investments are stated at cost, which approximates fair value. The Company does maintain cash balances in banking institutions in excess of federally insured amounts and therefore is exposed to the related potential credit risk associated with such cash deposits.
Short-Term Investments — The Company's primary short-term investments consist of certificates of deposit with established commercial banking institutions in India that have readily determinable fair values. Ebix accounts for such investments that are reasonably expected to be realized in cash, sold or consumed during the year as short-term investments that are available-for-sale. The carrying amount of investments in marketable securities approximates their fair value. The carrying value of short-term investments was $16.2 million and $16.5 million at March 31, 2022 and December 31, 2021, respectively.
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Restricted Cash — The carrying value of our restricted cash in current assets was $10.1 million and $9.1 million at March 31, 2022 and December 31, 2021, respectively. The March 31, 2022 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 our India operations for our working capital facilities.

    The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:
As of
March 31,
2022
2021
(In thousands)
Cash and cash equivalents$75,943 $99,578 
Restricted cash10,100 8,114 
Restricted cash included in other long-term assets6,342 7,435 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows$92,385 $115,127 


Fiduciary Funds - Restricted — Due to EbixHealth JV being a third party administrator ("TPA"), the Company collects premiums from insureds and, after deducting its fees, remits these premiums to insurance companies. Unremitted insurance premiums and/or claim funds established for the benefit for various carriers are held in a fiduciary capacity until disbursed by the Company. The use of premiums collected from insureds but not yet remitted to insurance companies is restricted by law in certain states. The total assets held on behalf of others, $1.8 million and $2.0 million at March 31, 2022 and December 31, 2021, respectively, are recorded as an asset and offsetting fiduciary funds - restricted liability.

    Advertising — Advertising costs amounted to $1.9 million for the three month period ended March 31, 2022, and $1.6 million for the three month period ended March 31, 2021. The costs are included in sales and marketing expenses in the accompanying condensed consolidated statements of income. The Company expenses advertising costs as incurred.
    Fair Value of Financial Instruments — The Company follows the relevant GAAP guidance regarding the determination and measurement of the fair value of assets/liabilities in which 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 valuation hierarchy, which requires and entity to maximize the use of observable inputs when measuring fair value. 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, and 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, 2022, 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 for mutual funds and a Level 2 instrument for certificates of deposit.
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
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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, 2022 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, 2022 and December 31, 2021 approximates their carrying value as reported on the Company's condensed consolidated balance sheets.
    
    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:
Fair Values at Reporting Date Using*
DescriptionsBalance, March 31, 2022Quoted 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 ($6.5 million is recorded in the long
term asset section of the condensed consolidated balance sheets in "Other assets")
$22,551 $ $22,551 $ 
Mutual funds (recorded in
the long term asset section of the condensed consolidated balance sheets in "Other assets")
102 102   
Total assets measured at fair value$22,653 $102 $22,551 $ 
Liabilities
Contingent accrued earn-out acquisition consideration (a)$2,516 $ $ $2,516 
Total liabilities measured at fair value$2,516 $ $ $2,516 
(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, 2022, there were no transfers between fair value Levels 1, 2, or 3.
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Fair Values at Reporting Date Using*
DescriptionsBalance, December 31, 2021Quoted 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 ($6.3 million is recorded in the long term asset section of the condensed consolidated balance sheets in "Other assets")
$31,676 $ $31,676 $ 
Mutual funds167 167   
Total assets measured at fair value$31,843 $167 $31,676 $ 
Liabilities
Contingent accrued earn-out acquisition consideration (a)$2,557 $ $ $2,557 
Total liabilities measured at fair value$2,557 $ $ $2,557 
(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, 2021, 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, 2022 and during the year ended December 31, 2021:
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Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Contingent Liability for Accrued Earn-out Acquisition ConsiderationMarch 31, 2022December 31, 2021
(In thousands)
Beginning balance$2,557 $ 
Total remeasurement adjustments:
       Remeasurement against goodwill 2,560 
       Foreign currency translation adjustments **(41)(3)
Acquisitions and settlements
       Business settlements  
Ending balance$2,516 $2,557 
The amount of total (gains) losses for the period included in earnings or changes to net assets, attributable to changes in unrealized gains relating to assets or liabilities still held at period-end.$ $ 
** 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, 2022
 
Valuation Technique
 Significant
Unobservable
Input
Contingent acquisition consideration: $2,516Discounted cash flowProjected revenue and
probability of achievement
        
(In thousands) Fair Value at December 31, 2021 
Valuation Technique
 Significant
Unobservable
Input
Contingent acquisition consideration: 
$2,557
Discounted cash flowProjected 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 considers 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 2021, certain of the Company's contingent earn-out liabilities were adjusted because of changes to anticipated future revenues from these acquired businesses or as a result of finalizing purchase price allocations that were previously preliminary.
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    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 the sales of prepaid gift cards and consideration paid by customers for financial transaction services, including services for transferring or exchanging money. 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:

Gift Cards

    EbixCash sells general purpose prepaid gift cards to corporate customers and consumers that can be later redeemed at various merchants. The gift cards are co-branded between EbixCash and its card-issuing banking partners and are affiliated with major payment associations such as VISA, Mastercard, and Rupay. The gift cards are sold to a diversified set of corporate customers from various industries. The gift cards are used by corporate customers to disburse incentives to the end users, which are primarily their employees, agents, and business associates. The gift cards sold by EbixCash are not reloadable, cannot be used at ATMs or for any other cash-out or funds transfer transactions, and are subject to maximum limits per card (currently INR10,000 or approximately $130). Gift cards issued by EbixCash are valid for a period of 15 months from the date of issuance for virtual cards and three years for physical cards. EbixCash has entered into arrangements with banks and financial institutions to settle payments to merchants based on utilization of the gift cards.

The Company has end-to-end responsibilities related to the gift cards sold, from the activation and ongoing utilization of the gift cards to customer service responsibilities to risk of loss due to fraud on the gift cards sold. EbixCash acts a principal in the sale of gift cards, and, thus, gift card revenue is recognized on a gross basis (full purchase value at the time of sale) with the corresponding cost of the gift cards recorded as cost of services provided. Unredeemed gift cards at March 31, 2022 totaled approximately $12.8 million and are recorded as deferred revenues in the financial results.



EbixCash Travel Exchanges

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    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: (i) 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; (ii) ancillary fees, including travel insurance-related revenues and certain reservation booking fees; and (iii) 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 meetings, incentives, conferences, and exhibitions ("MICE") packages is recognized at full purchase value at the completion of the obligation, with the corresponding costs recorded under cost of services provided. 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.

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 Outward Remittance 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, including among other factors: (i) who pays the fee to EbixCash (consumer or biller); (ii) whether the service is offered to all consumers; (iii) whether the service is restricted to existing biller relationships of EbixCash; and (iv) whether the service utilizes a physical agent network offered for consumers’ convenience. 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 - collecting money from the consumer and processing the bill payment transaction. This service provides the billers real-time or near real-time information regarding their customers’ payments and simplifies the billers’ collection efforts. 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.

EbixCash Technology Services
    
    EbixCash also offers on-demand technology to various providers in the area of lending, wealth and asset management, and travel across the world. Additionally, EbixCash provides IT and call center outsourcing services to companies in a variety of industries, both in India and globally. The EbixCash technology software solutions are generally delivered on a SaaS subscription and/or transaction based pricing model. Please see below under "Insurance Exchanges" a description of revenue
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recognition policies for SaaS, Subscription and Transaction Fees, which are similar to how EbixCash technology software solutions revenues are recognized. For IT and call center outsourcing services provided by EbixCash businesses, revenues are generally recognized on a time and materials or 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 driven by the expected hours to complete the project measured against the actual hours completed to date.    
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 includes subscription services or professional services, apart from the upfront customization, these are considered separate performance obligations. The Company also has separate software licensing (on premise/perpetual), unrelated to the SaaS 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 which are accounted for as variable consideration. Revenue accounted for as variable consideration is immaterial and is recognized using the “right to invoice” practical expedient when the invoiced amount equals the value provided to the customer.
Software-as-a-Service

    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 judgment. 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 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 services. Professional service fees are generally on a time and materials basis or a fixed fee basis. Revenues for time and materials are
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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 Solutions ("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 revenues are transaction-based. 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 U.S. 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

    The Company provides consulting services to clients around the world for project management and development. Consulting services fees are generally earned on 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, 2022 and 2021:
Three Months Ended March 31,
Revenue:20222021
(In thousands)
India*$225,889 $231,541 
United States38,853 38,066 
Australia9,042 9,684 
Europe4,205 4,104 
Latin America3,926 3,098 
Canada*1,173 1,150 
Singapore*938 1,069 
Indonesia*749 405 
Philippines*684 444 
New Zealand453 492 
United Arab Emirates*341  
$286,253 $290,053 
*Includes India led businesses for which total revenue was $227.9 million for the three months ended March 31, 2022, and $232.6 million for the three months ended March 31, 2021.
    
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The Company’s revenues are derived from three product/service groups: EbixCash Exchanges, Insurance Exchanges, and Risk Compliance Solutions.
    Presented in the table below is the breakout of our revenue groups for each of those product/service channels for the three months ended March 31, 2022 and 2021.
Three Months Ended
March 31,
20222021
(In thousands)
EbixCash Exchanges224,152 230,347 
Insurance Exchanges43,764 42,770 
Risk Compliance Solutions18,337 16,936 
Totals$286,253 $290,053 

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 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, 2022 and December 31, 2021, the Company had $405 thousand and $910 thousand, respectively, of contract costs in “Other current assets” and $903 thousand and $912 thousand, respectively, in “Other assets” on the Company's condensed consolidated balance sheets.

March 31, 2022December 31, 2021
(Unaudited)
(In thousands)
Balance, beginning of period$1,822 $1,630 
Costs recognized from the beginning balance(618)(534)
Additions, net of costs recognized104 726 
Balance, end of period$1,308 $1,822 

Contract Liabilities
    Contract liabilities include payments or billings that have been received or made prior to performance. In certain cases, cash collections pertain to maintenance and support fees, initial setup or registration fees under hosting agreements, software license fees received in advance of delivery and acceptance, and software development fees paid in advance of completion and delivery. Approximately $7.4 million and $6.3 million of contract liabilities were included in billed accounts receivable as of March 31, 2022 and December 31, 2021, respectively.
    The Company records contract liabilities when it receives payments or invoices in advance of the performance of services. A significant portion of this balance relates to contracts where the customer has paid in advance for the use of the Company's SaaS platforms over a specified period of time. This portion is recognized as the related performance obligation is fulfilled (generally less than one year). Part of our performance obligation for these contracts consists of the requirement to provide our customers with continued access to, and use of, our SaaS platforms and associated customizations. Without continued access to the SaaS platform, the customizations have no separate benefit to the customer. Our customers simultaneously receive and consume the benefits as we provide access over time. The remaining portion of the contract liabilities balance consists primarily of customer-specific customizations that are not distinct from related performance obligations that transfer over time. This portion is recognized over the expected useful life of the customizations.
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March 31, 2022December 31, 2021
(Unaudited)
(In thousands)
Balance, beginning of period$41,357 $40,930 
Revenue recognized from beginning balance(16,660)(30,922)
Additions, net of revenue recognized and currency translation24,893 31,349 
Balance, end of period$49,590 $41,357 

Accounts Receivable and the Allowance for Doubtful Accounts — As of March 31, 2022, reported accounts receivable of $151.8 million (net of $19.2 million allowance for doubtful accounts receivable) includes $46.3 million of contract assets. As of December 31, 2021, reported accounts receivable of $153.6 million (net of $19.9 million allowance for doubtful accounts receivable) includes $50.1 million of contract assets. The Company records a contract asset when revenue recognized on a contract exceeds the billings. The contract asset is transferred to receivables when the entitlement to payment becomes unconditional. These contract assets are primarily related to project-based revenue where we recognize revenue using the input method calculated using expected hours to complete the project measured against the actual hours completed to date. Management specifically analyzes accounts receivable, historical bad debts, write-offs, customer concentrations, customer credit-worthiness, current economic trends, and changes in our customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. The Company recognized bad debt expense (recovery) in the amount of $(360) thousand for the three month period ended March 31, 2022, and $(2.1) million for the three month period ended March 31, 2021.

Capitalized Software Development Costs — In accordance with ASC 350-40 "Internal-Use Software" and ASC 350-985 "Software" the Company expenses costs as they are incurred until technological feasibility has been established, at and after which time those costs are capitalized until the product is available for general release to customers. Costs incurred to enhance our software products, after general market release of the services using the products, are expensed in the period they are incurred. The periodic expense for the amortization of previously capitalized software development costs is included in costs of services provided. See Note 10 "Capitalized Software Development Costs" for further details.
Costs of Services Provided — Costs of services provided consist of data processing costs, customer support costs (including personnel costs to maintain our proprietary databases), costs to provide customer call center support, hardware and software expense associated with transaction processing systems and exchanges, telecommunication and computer network expense, and occupancy costs associated with facilities where these functions are performed. Cost of services provided also includes the direct expenses associated with our services businesses, including the cost of prepaid gift cards, the cost of travel services provided and the cost of foreign exchange and remittance transactions. Depreciation expense is not included in costs of services provided.
Goodwill and Indefinite-Lived Intangible Assets — Goodwill represents the cost in excess of the fair value of the identifiable net assets from the businesses that we acquire. In accordance with ASC 350, “Goodwill and Other Intangible Assets" and ASU No. 2011-08, “Testing Goodwill for Impairment”, goodwill is tested for impairment at the reporting unit level on an annual basis or on an interim basis if an event occurred or circumstances change that would indicate that fair value of our reporting unit decreased below its carrying value. Potential impairment indicators include a significant change in the business climate, legal factors, operating performance indicators, competition, customer retention, and the sale or disposition of a significant portion of the business. The Company applies the accounting guidance concerning goodwill impairment evaluation, whereby the Company first assesses certain qualitative factors to determine whether the existence of events or circumstances would indicate that it is more likely than not that the fair value of a reporting unit was less than its carrying amount. If after assessing the totality of events and circumstances, we were to determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we would perform quantitative impairment testing.

    We perform our annual goodwill impairment evaluation and testing as of October 1st of each year or, when events or circumstances dictate, more frequently. No goodwill impairments occurred or were recognized in 2021 or through March 31, 2022.

    The Company has considered the guidance within ASC 350 “Goodwill and Other Intangible Assets” and ASC 280 “Segment Reporting” in concluding that Ebix effectively operates as one operating and reportable segment and one reporting unit.

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    The Company’s indefinite-lived assets are primarily associated with the estimated fair value of the contractual customer relationships existing with the property and casualty ("P&C") insurance carriers in Australia using the Company's P&C data exchange. Indefinite-lived intangible assets are not amortized, but rather are tested for impairment annually and tested on an interim basis if a triggering event has occurred. 

    Finite-lived Intangible Assets — Purchased intangible assets represent the estimated acquisition date fair value of customer relationships, developed technology, trademarks, non-compete agreements and other intangibles described below obtained in connection with the businesses we acquire. We amortize these intangible assets on a straight-line basis over their estimated useful lives, as follows:

Category Life (yrs)
Airport contracts
9
Backlog
1 - 1.5
Brand
3 - 15
Customer relationships 
4 - 20
Database
10
Dealer networks
15 - 20
Developed technology 
3 - 15
Non-compete agreements 
5 - 7
Store networks
5
Trademarks 
3 - 15
    Foreign Currency Translation — The functional currency is the U.S. Dollar for the Company's foreign subsidiaries in Dubai and Singapore.
    During the three months ended March 31, 2022, the net change in the cumulative foreign currency translation account, which is a component of accumulated other comprehensive loss within stockholders’ equity, was an unrealized loss of $11.3 million, which was primarily caused by the 1.6% weakening of the Indian rupee.
During the three months ended March 31, 2021, the net change in the cumulative foreign currency translation account, which is a component of accumulated other comprehensive loss within stockholders’ equity, was an unrealized loss of $3.9 million, of which $2.2 million was caused by the 0.4% weakening of the Indian rupee.
The functional currency of the Company's other foreign subsidiaries is the local currency of the country in which the subsidiary operates. The assets and liabilities of these foreign subsidiaries are translated into U.S. dollars at the rates of exchange at the balance sheet dates. Income and expense accounts are translated at the average exchange rates in effect during the period. Gains and losses resulting from translation adjustments are included as a component of accumulated other comprehensive income in the accompanying condensed consolidated balance sheets, and are included in the condensed consolidated statements of comprehensive income. Foreign exchange transaction gains and losses that are derived from transactions denominated in a currency other than the subsidiary's functional currency are included in the determination of net income.
    Income Taxes — Deferred income taxes are recorded to reflect the estimated future tax effects of differences between the financial statement and tax basis of assets, liabilities, operating losses, and tax credit carry forwards using the tax rates expected to be in effect when the temporary differences reverse. Valuation allowances, if any, are recorded to reduce deferred tax assets to the amount management considers more likely than not to be realized. Such valuation allowances are recorded for the portion of the deferred tax assets that are not expected to be realized based on the levels of historical taxable income and projections for future taxable income over the periods in which the temporary differences will be deductible.
    The Company applies the relevant Financial Accounting Standards Board ("FASB") accounting guidance on accounting for uncertainty in income taxes positions. This guidance clarifies the accounting for uncertainty in income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. In this regard we recognize the tax benefit from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
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    Recent Relevant Accounting Pronouncements — There were not any new recently released accounting pronouncements since December 31, 2021, that are material to our unaudited condensed consolidated financial statements, or expected to have a material impact on our business.

Note 2: Earnings per Share
A reconciliation between basic and diluted earnings per share ("EPS") is as follows:
Three Months Ended
March 31,
 20222021
 (In thousands, except per share data)
Net income attributable to Ebix, Inc.$19,191 $21,591 
Basic weighted average shares outstanding30,712 30,558 
Dilutive effect of stock options and restricted stock awards50 173 
Diluted weighted average shares outstanding30,762 30,731 
Basic earnings per common share$0.62 $0.71 
Diluted earnings per common share$0.62 $0.70 

The number of potential issuable shares with respect to stock options, which could dilute EPS in the future but which were excluded from the diluted EPS calculation because presently their effect is anti-dilutive for the three month period ended March 31, 2022 were 177,000, and for the three month period ended March 31, 2021 were 181,875.


Note 3: Business Combinations
The Company seeks to execute accretive business acquisitions (which primarily targets businesses that are complementary to Ebix's existing products and services), in combination with organic growth initiatives, as part of its comprehensive business growth and expansion strategy.
    During the three months ending March 31, 2022, the Company completed no business acquisitions.    
    During the twelve months ended December 31, 2021, the Company completed no business acquisitions.
A significant component of the purchase price consideration for many of the Company's business acquisitions is a potential subsequent cash earn-out payment based on reaching certain specified future revenue targets. The terms for the contingent earn out payments in most of the Company's business acquisitions typically address the GAAP recognizable revenues achieved by the acquired entity over a one-, two-, and/or three-year period subsequent to the effective date of their acquisition by Ebix. These terms typically establish a minimum threshold revenue target to achieve over the agreed upon period post acquisition to earn the specified cash earn out payment. The Company applies these terms in its calculation and determination of the fair value of contingent earn out liabilities for purchased businesses as part of the related valuation and purchase price allocation exercise for the corresponding acquired assets and liabilities. The Company recognizes these potential obligations as contingent liabilities and are reported as such on its condensed consolidated balance sheets. As discussed in more detail in Note 1, these contingent consideration liabilities are recorded at fair value on the acquisition date and are remeasured quarterly based on the then assessed fair value and adjusted if necessary. As of March 31, 2022, the total of these contingent consideration liabilities was $2.5 million, while at December 31, 2021, the total of these contingent consideration liabilities was $2.6 million.
Consideration paid by the Company for the businesses it purchases is allocated to the assets and liabilities acquired based upon their estimated fair values as of the date of the acquisition. The excess of the purchase price over the estimated fair values of assets acquired (including identified intangible assets acquired) and liabilities assumed is recorded as goodwill.    


Note 4: Debt

The Company maintains a senior secured syndicated credit facility, dated August 5, 2014, among Ebix, Inc., as borrower, its subsidiaries party thereto from time to time as guarantors, Regions Bank (as administrative agent and collateral
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agent) and the lenders party thereto from time to time (as amended from time to time, the "Credit Facility") that provides a $450 million revolving line of credit (the "Revolver") as well as a term loan (the "Term Loan"), which at March 31, 2022 had a balance of $204.5 million. The Credit Facility matures in February 2023 and, as a result, at March 31, 2022 the outstanding balance of the Credit Facility, $643.9 million, was classified as a current liability. The Company expects to refinance the Credit Facility during 2022, and intends to do so after the resolution of the anticipated IPO of EbixCash Limited, as further described within Item 2 "Management's Discussion and Analysis of Financial Conditions and Results of Operations - Liquidity and Capital Resources". The refinancing of the Credit facility will require the Company to successfully access the debt and/or equity capital markets in the U.S. or internationally. However, there are no assurances that such financing will be available in amounts or on terms acceptable to us, if at all, or that the proceeds received by Ebix, Inc. from the IPO of EbixCash Limited will be in the amount currently expected.

On April 9, 2021, The Company entered into Amendment No. 12 to its Credit Facility. Amendment No. 12 provided for, among other things, a waiver of any potential event of default arising under the Credit Facility from the failure to timely deliver the Company's audited financial consolidated financial statements and related compliance certificate for the year ended December 31, 2020, provided that there is no good faith determination by the requisite lenders under the Credit Facility of a "Material Circumstance" (as defined and further described in Amendment No. 12), which determination (if any) may only be made within a specified period described in Amendment No. 12 and is subject to certain cure rights of the Company. Amendment No. 12 also modified the applicable margin that applies from the date of the amendment forward, modified certain mandatory prepayment provisions, as well as certain other covenants related to restricted payments, investments and certain reporting requirements.

On March 31, 2021, Ebix entered into Amendment No. 11 to the Credit Facility. Amendment No. 11 provided, for, among other things, a limited waiver through April 10, 2021, of any potential event of default arising under the Credit Facility from failure to deliver the Company's audited consolidated financial statements and related compliance certificate for the year ended December 31, 2020. Amendment No. 11 also modified certain covenants contained in the Credit Facility, including with respect to certain permitted restricted payments and investments.

At March 31, 2022, the Company's condensed consolidated balance sheets include $3.7 million of remaining deferred financing costs in connection with the Credit Facility, which are being amortized as a component of interest expense through the maturity of the Credit Facility in February 2023. $2.2 million of such deferred financing costs pertain to the Revolver, and $1.5 million pertains to the Term Loan, of which $1.5 million is netted against the current portion of the Term Loan as reported on the condensed consolidated balance sheets. At December 31, 2021, the Company's Consolidated Balance Sheets included $4.7 million of remaining deferred financing costs in connection with the Credit Facility, with $2.8 million pertaining to the Revolver, and $1.9 million pertaining to the Term Loan, of which $1.6 million was netted against the current portion of the Term Loan and $261 thousand was netted against the long-term portion of the Term Loan as reported on the condensed consolidated balance sheets.

    At March 31, 2022, the outstanding balance on the Revolver was $439.4 million and the facility carried an interest rate of 5.50% at March 31, 2022. The balance on the Revolver is included in the current liabilities section of the condensed consolidated balance sheets. During the three months ended March 31, 2022, the average and maximum outstanding balances of the revolving line of credit component of the credit facility were $439.4 million and $439.4 million, respectively. At December 31, 2021, the outstanding balance on the revolving line of credit with Regions was $439.4 million and the facility carried an interest rate of 5.5%. This balance was included in the long-term liabilities section of the condensed consolidated balance sheets. During 2021, the average and maximum outstanding balances on the revolving line of credit were $439.4 million and $439.4 million, respectively.

    At March 31, 2022, the outstanding balance on the Term Loan was $204.5 million, of which $204.5 million is due within the next twelve months. $8.4 million of principal payments were made during the three months ended March 31, 2022, of which $5.6 million were scheduled amortization payments. This Term Loan also carried an interest rate of 5.50% at March 31, 2022. The Term Loan is included in the current liabilities section of the condensed consolidated balance sheets at March 31, 2022. At December 31, 2021, the outstanding balance on the Term Loan was $212.9 million, of which $28.2 million was due within twelve months. The Term Loan also carried an interest rate of 5.50% during the quarter ended December 31, 2021.

    The Company maintains working capital debt facilities with banks in India for working capital funding requirements to support our foreign exchange and payment remittance businesses. We are required to extend short term credits to franchisee networks (B2B) and corporate customers. Additionally we are required to maintain minimum levels of foreign currency inventory across branches and airport operations. Typically, these facilities carry interest rates of 9.00% to 10%, are rupee-
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denominated working capital lines, and are collateralized against the receivables of these businesses and existing foreign currency inventory on hand.

    As of March 31, 2022 and December 31, 2021, the total of these working capital facilities was $1.8 million and $5.6 million, respectively, and is included in current liabilities in the Company's condensed consolidated balance sheets.


Note 5: Commitments and Contingencies
Contingencies — On February 22, 2021, Christine Marie Teifke, a purported purchaser of Ebix securities, filed a putative class action in the United States District Court for the Southern District of New York, captioned Teifke v. Ebix, Inc., et. al., Case No. 1:21-cv-01589-JMF, on behalf of herself and others who purchased or acquired Ebix securities between November 9, 2020 and February 19, 2021. The complaint asserts claims against the Company, Robin Raina, and Steven M. Hamil (“Defendants”), for purported violations of Section 10(b) of the Securities Exchange Act of 1934, alleging that Ebix made false and misleading statements and failed to disclose material adverse facts about an audit of the company's gift card business in India and its internal controls over the gift and prepaid card revenue transaction cycle. The complaint alleges that Ebix's stock price fell as a result of the revelation that Ebix's independent auditor, RSM US LLP (“RSM”), had resigned, citing concerns with the company's internal controls and disagreements over other accounting issues. The complaint also asserts a claim against Robin Raina and Steven M. Hamil for purported violations of Section 20(a) of the Exchange Act arising out of the same facts. The complaint seeks, among other relief, damages and attorneys' fees and costs. On May 11, 2021, the court issued an order appointing Rahul Saraf, another purported purchaser of Ebix, Inc. securities, as lead plaintiff in the action, and the caption in the action was changed to Saraf v. Ebix, Inc., et. al., Case No. 1:21-cv-01589-JMF (the "Class Action").
On May 14, 2021, Javier Calvo, a purported shareholder of the Company, filed a derivative action in the United States District Court for the Southern District of New York on behalf of Ebix captioned Calvo v. Raina, et. al., Case No. 21-cv-4380-JMF (the "Calvo Action"), against individual defendants Robin Raina, Steven M Hamil, Hans U. Benz, Rolf Herter, Neil D. Eckert, Pavan Bhalla, Hans Ueli Keller, and George W. Hebard, and nominal defendant Ebix asserting claims related to the RSM resignation. The complaint asserts claims of breach of fiduciary duty against all of the individual defendants, and also asserts claims under Sections 10(b) and 21D of the Securities Exchange Act of 1934 for contribution against Robin Raina and Steven M Hamil. On July 7, 2021, the court granted a stipulation and order staying the Calvo Action pending the resolution of any motion(s) to dismiss the Class Action.
On July 13, 2021, Peter Votto, another purported Ebix shareholder, filed an additional derivative action in the United States District Court for the Southern District of New York on behalf of Ebix, captioned Votto v. Raina, et. al., Case No. 21-cv-5982-JMF (the "Votto Action"), asserting claims against the same defendants as the Calvo Action. The complaint asserts claims relating to the RSM resignation against all of the individual defendants for breach of fiduciary duties, unjust enrichment, waste of corporate assets, and rescission under Section 29(b) of the Securities Exchange Act of 1934, and claims for contribution under Sections 10(b) and 21D of the Securities Exchange Act of 1934 against Robin Raina and Steven M Hamil. On July 23, 2021, the court granted a stipulation and order consolidating the Calvo and Votto Actions. The July 7, 2021 order staying the Calvo Action pending the resolution of any motion(s) to dismiss the Class Action remains in effect for the consolidated Calvo and Votto Actions.
On July 26, 2021, Lead Plaintiff filed an amended complaint in the Class Action, alleging similar violations of Sections 10(b) and 20(a) of the Exchange Act. On September 24, 2021, the Defendants moved to dismiss the amended complaint. On October 15, 2021, Lead Plaintiff filed a second amended complaint in the Class Action. Defendants moved to dismiss the second amended complaint and briefing on Defendants’ motion concluded on November 19, 2021. The parties await a decision from the court on the motion. Defendants deny any liability and intend to defend the action vigorously.
On November 5, 2021, Daniel Lilienfeld, a purported shareholder of the Company, filed a derivative action in the United States District Court for the Northern District of Georgia on behalf of Ebix captioned Lilienfeld v. Raina, et. al., Case No. 1:21-cv-04590-ELR (the "Lilienfeld Action"), asserting claims against the same defendants as the consolidated Calvo and Votto Actions. The complaint similarly asserts a claim of breach of fiduciary duty related to the RSM resignation against all of the individual defendants. On January 17, 2022, the parties filed a joint motion to stay the Lilienfeld Action pending the resolution of the motion to dismiss the Class Action. On January 18, 2022, the court issued an order denying the motion in favor of administratively closing the case pending a ruling on Defendants’ motion to dismiss the Class Action.
On December 29, 2021, Sunil Shah, a purported shareholder of the Company, filed a derivative action in the Superior Court of Fulton County of the State of Georgia on behalf of Ebix captioned Shah v. Raina, et. al., Civil Action File No. 2022-cv-358481 (the "Shah Action") against the same defendants as the Calvo, Votto, and Lilienfeld Actions. The complaint similarly asserts a claim of breach of fiduciary duty related to the RSM resignation against all of the individual defendants. On
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March 30, 2022, the court granted a joint motion to stay the Shah Action pending the resolution of the motion to dismiss the Class Action.
On July 16, 2019, Yatra Online, Inc. ("Yatra"), Ebix, Inc. ("Ebix"), and EbixCash Travels, Inc. ("Merger Sub") entered into a Merger Agreement. On May 14, 2020, Yatra entered into an agreement with Ebix and Merger Sub extending the outside date of the Merger Agreement (the "Extension Agreement"). On June 5, 2020, Yatra terminated the Merger Agreement and filed a complaint in the Delaware Court of Chancery against Ebix and Merger Sub (the "Complaint") in the action captioned Yatra Online, Inc. v. Ebix, Inc., et al., 2020-0444-JRS (Del. Ch.). On September 25, 2020, Yatra amended the Complaint and added as a defendant each financial institution (each, a “Defendant Lender”) party to that certain credit facility between them and Ebix, most recently amended on May 7, 2020. The Complaint, as amended, alleged that Ebix and Merger Sub breached certain representations, warranties, and covenants contained in the Merger Agreement and the Extension Agreement and that Ebix negotiated in bad faith. The amended Complaint also alleged fraudulent actions by Ebix and the Defendant Lenders arising from certain terms of the credit facility and tortious interference with the closing of the Merger Agreement by Ebix and the Defendant Lenders. The Complaint sought, among other relief, damages, pre-judgment and post-judgment interest, and attorneys' fees and costs. On December 23, 2020, the defendants filed motions to dismiss the amended Complaint and opening briefs in support thereof. Briefing on defendants' motions to dismiss concluded on February 9, 2021. On August 30, 2021, the court granted defendants' motions to dismiss and dismissed the amended Complaint in its entirety ("the Dismissal"). On September 17, 2021, Yatra filed a notice of appeal of the Dismissal to the Supreme Court of the State of Delaware. Briefing on Yatra’s appeal of the Dismissal concluded on December 17, 2021. On April 11, 2022, the Supreme Court of the State of Delaware affirmed the Dismissal made by the Court of Chancery of the State of Delaware made on August 30, 2021.
On May 12, 2017, Ebix Software India Pvt. Ltd. (“Ebixcash”) entered into several agreements with the most prominent shareholders of Itz Cash Card Limited (“Itz”), the most relevant among these a stock purchase agreement (the “SPA”), to purchase a majority ownership stake in Itz. Further, as part of the overall purchase of Itz, a share purchase agreement between Ebixcash and individual ESOP holders of Itz was entered into on July 7, 2017 (the “ESOP SPA”) (with the SPA, the ESOP SPA, and the other purchase documents, collectively, the “Transaction Documents”). Part of the consideration for Ebixcash’s purchase of Itz consisted of two individual potential earn-out payments, the first for the period for the year ended March 31, 2019 (the “First Earn-Out”) and the second for the following year, ending on March 31, 2020 (the “Second Earn-Out”). Neither the First Earn-Out nor the Second Earn-Out were achieved pursuant to the terms of the SPA. After correspondence between the parties between September 2019 and May 2020, the former shareholders of Itz (“Sellers”) sent Ebixcash notices of arbitration (“NOAs”) under which they were availing themselves of the arbitration dispute provisions set forth in the Transaction Documents. Apart from the amounts claimed owed under the earn-out provisions, the Sellers also alleged in the NOAs other violations of the terms of the Transaction Documents, including, certain non-competition and restricted matter approval violations. The matter is under arbitration in accordance with the rules of the Singapore International Arbitration Centre. The Company believes that each of the Sellers claims is without merit and continues to defend its position vigorously. The Company believes that Ebixcash has several viable counterclaims related to improper termination of the Transaction Documents and violation non-compete provisions.
The Company is involved in various other claims and legal actions arising in the ordinary course of business, which in the opinion of management, the ultimate likely disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

Note 6: Income Taxes
    The Company recorded a net income tax expense of $1.7 million (8.49%) during the three months ended March 31, 2022, which included tax expense of $309 thousand from certain discrete items related to stock compensation and uncertain tax positions during the three months ended March 31, 2022. The income tax expense, exclusive of discrete items, was $1.4 million (6.95%) for the three months ended March 31, 2022. The Company expects its full year effective tax rate to be in the range of 9% to 12%.
     As of March 31, 2022 and December 31, 2021 a liability of $6.3 million and $6.2 million for uncertain tax positions is included in other long-term liabilities of the Company's condensed consolidated balance sheets. The Company increased this liability reserve during the three months ended March 31, 2022 and 2021 by $72 thousand and $334 thousand, respectively. The Company recognizes interest accrued and penalties related to unrecognized tax benefits as part of income tax expense.


Note 7: Geographic Information
    The Company operates within