Ebix, Inc.
Q1 2018 Earnings Call Transcript

Published: 9 May 2018

[Operator:]

Good day, ladies and gentlemen, and welcome to the Ebix First Quarter 2018 Investor Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer sessions and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Darren Joseph, Corporate Vice President. Please begin.

[Darren Joseph:]

Thank you. Welcome, everyone, to Ebix Incorporated 2018 First Quarter Earnings Conference Call. Joining me to discuss the quarter is Ebix Chairman, President and CEO, Robin Raina; and Ebix CFO, Sean Donaghy. Following our remarks, we will open up the call for your questions. Now let me quickly cover the safe harbor. Some of the statements that we make today are forward-looking, including, among others, statements regarding Ebix's future investments, our long-term growth and innovation, the expected performance of our businesses and our use of cash. These statements involve a number of risks and uncertainties that might cause actual results to differ materially from those projected in the forward-looking statements. Please note that these forward-looking statements reflect our opinions only as of the date of this presentation, and we undertake no obligation to revise or publicly release the results of any revisions of these forward-looking statements in light of new information or future events. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements made today is contained in our SEC filings, which list a more detailed description of the risk factors that may affect our results. Our press release announcing the Q1 2018 results was issued earlier morning. The audio of this investor call is also being webcast live on the web at www.ebix.com/webcast. You can look at Ebix's financials beyond what has been provided in the release on our website, www.ebix.com. The audio and the text transcript of this call will be available on the Investor homepage of the Ebix website after 4

[Sean Donaghy:]

Thank you, Darren, and thanks to all on the call for your continued interest and support of Ebix. At the outset let me say that we are very pleased with the company's first quarter 2018 financial results and operating performance and look forward to the rest of the year. Q1 2017 operating income was $25.7 million. The Q1 2018 operating income was 32% higher at $33.9 million. However, there were a number of non-operating expenses that led to the net income in Q1 2018 being 1% lower at $26.2 million versus $26.4 million in Q1 of 2017. The decrease principally reflected an $8.4 million increase in non-operating expenses such as foreign exchange loss, net interest charges and tax expense. From Q1 2017 to Q1 2018 the changes are as follows. There was a $600,000 foreign exchange loss in Q1 2018 versus a gain of $3.5 million in Q1 2017. There was a $3 million increase in net interest expense in Q1 2018 versus Q1 2017. There was $2.1 million in tax expenses in Q1 2018 versus $900,000 in Q1 of 2017. The Q1 2018 taxes reflect a provision for the Global Intangible Low-Taxed Income, GILTI tax, as per the 2017 Tax Cuts and Job Act i.e., The Trump’s Tax plan. Thus in spite of the operating income being 32% higher at $33.9 million, the Q1 2018 diluted earnings per share remains unchanged at $0.83 as compared to the first quarter of 2017. Ebix’s weighted average diluted shares outstanding were 31.7 million shares in Q1 2018 versus 32 million shares in Q1 2017. As of today, the company expects the diluted share count for Q2 2018 to be approximately 31.7 million shares. Cash generated from operations rose $10.6 million or 67% in Q1 2018 to $26.4 million compared to $15.8 million in Q1 of 2017. Q1 2018 cash flows reflected cumulative cash payments of $11 million for bank interest and income tax, including non-recurring advance Minimum Alternate Tax, MAT tax payments in India. We are pleased by the fact that the company continues to deliver attractive top line growth, cash flows and operating profit with a 31% operating margin during Q1 of 2018 for the entire business and approximately 34.1% operating margin for the core exchange business. In Q1 2018, we spent a total of $9.8 million on dividends, tax payments and building construction. Specifically during the quarter, we paid $6.8 million in taxes, spent $1.2 million on capital expenses, spent $6.6 million for the purchase of Transcorp’s inward remittent assets and paid dividends of $2.4 million, while drawing just $20 million from bank credit facilities. After these significant uses of cash, Ebix still ended the quarter with $132 million of cash, cash equivalents and short-term investments, an increase of $43 million as compared to $31 million December 31, 2017. We’re very pleased with the company's continued ability to generate cash and fund its growth and investor-friendly initiatives. As of March 31, 2018, the company still had access to approximately $488 million of readily available cash resources from its financing arrangement with its syndicated bank credit facility combined with cash on hand to adequately support continued organic and acquisitive growth and to expand the existing operations of the company as needed to meet the demand for our products and services. We will soon be announcing the record date for the Q2 2018 dividend payable to our shareholders. In Q1 2018, we paid a quarterly cash dividend of $0.075 per common shared to our shareholders. Finally, Ebix’s Form 10-Q will be followed tomorrow afternoon on Thursday May 10, 2018. I will now pass the call over to Robin Raina.

[Robin Raina:]

Thank, Sean. Good morning everyone. I will today focus my talk on vision and new opportunities especially in India. As I have been receiving a lot of request from our investor base to layout our vision for India and spell out the opportunity as I see it. I will briefly discuss Q1 2018 results as Sean and Darren have already done that in detail. In 2017, I had set a number of aspirational goals for the first quarter of 2018. One of the goals was to achieve $400 million in annualized revenue by Q1 of 2018 with 30% plus in operating income. Thus this has been an incredible quarter on many fronts for me. Q1 2018 translates to a record annualized revenue run rate of $432.8 million. Q1 2018 also translates to a record annualized EBITDA excluding stock-based compensation of $149.2 million. Q1 results translates to a record annualized operating income of $135.6 million, strong operating cash flows of $25.5 million, $0.83 diluted EPS despite an $8.4 million increase in non-operating expenses like foreign exchange loss, net interest charges and tax expenses from Q1 2017 to Q1 2018. The diluted number of $0.83 is pleasing for me especially since it includes the effect of the Global Intangible Low Taxed Income, GILTI tax, imposed on international income beginning 1st of January 2018 as per the 2017 Tax Cuts and Job Act. When I was laying the Ebix vision for my board a few years back, I had set up an aspirational goal of $150 million EBITDA when we reached the $450 million revenue mark. I'm excited that we are already at an annualized run rate rather close to the $150 million EBITDA mark. That $149.2 million in Q1 2018, while our annualized revenue run rate is at $432.8 million presently that’s just incredible. 2017 and 2018 have set the foundation of what I call Ebix 2.0. Ebix 2.0 is a company that has redefined its growth trajectory, expands our service and geographical reach considerably. The companies today set to meet or beat its aspirational goal of $500 million annualized revenue run rate by fourth quarter of 2018 or earlier. There are many things that should contribute to that aspirational goal, the main ones amongst them being as follows. Our insurance businesses worldwide that we intend to keep strengthening; two, our EbixCash business that at present has more than 500 sales people and 260,000 plus distribution outlet working to grow our sales numbers continually. New revenue streams from areas like foreign exchange, outward remittance, e-learning, lending technology ventures et cetera. 500 plus sales staffs just in the area of e-learning continually trying to expand our e-learning reach across the country. India is today emerging as a market that all top M&Cs are targeting and excited about because of the high economic growth rate associated with India. A few days Wal-Mart agreed to pay $16 billion to buy 77% stake in one of India’s leading e-retailers, Flipkart, after the Flipkart board rejected an even higher offer from Amazon. One of the Ebix cash competitors in India, an e-wallet company with financial metrics that pale in comparison to us in terms of revenue and operating income, both, is presently being valued at $10 billion as per the recent article in Wall Street Journal. These are just a few examples of how companies in India are being valued at much higher multiples by international investors because of the size of the opportunity involved. Let me now discuss our new and ongoing India initiative and why we are excited about that. On April 3, 2018, we announced that the company has entered into an agreement to acquire Centrum Direct Limited, CDL, the undisputed leader in India’s foreign exchange and outward remittance markets. CDL foreign exchange has an approximate 70% share of India’s airport foreign exchange business and compassing 24 international airports like Delhi, Mumbai, Bangalore, Chennai and Calcutta International Airports, while conducting over 1 million transactions per annum. The serial exchange is also in the process of initiating contracts with a number of international airports outside India in countries like Sri Lanka, Singapore, Bangladesh, Maldives and Seychelles to name a few. The CDL Exchange also has a 15% market share in India’s fast growing $1.5 billion education outward remittance business. The CDL exchange will bring thousands of travel agents, large corporates, SMEs and new outlets to EbixCash’s existing travel network offering. EbixCash through its travel portal Via.com is one of South East Asia’s leading travel exchanges with over 110,000 distribution outlets and 8000 corporate clients, processing over 24.5 million transactions every year. The CDL exchange is highly complementary to EbixCash’s Via.com travel exchange offering, because it now allows EbixCash’s travel outlets to sell Forex to its clients buying international travel. CDL’s corporate business is highly synergistic with EbixCash’s existing corporate business, as it now provides EbixCash the ability to sell Digital Forex and multicurrency cards et cetera to its existing thousands of corporate clients. EbixCash’s existing corporate clients are presently provided a variety of offerings including utility payments, corporate gifting, cash management, tele-medicine for employees, travel bookings, and prepaid gift cards et cetera. CDL’s presence in 24 international airports lends itself well to marketing the EbixCash brand to Indian and international consumers at these airports, besides being a very recurring source of business for EbixCash. CDL Direct will be rebranded as EbixCash WorldPay and has the potential to deliver revenues of $40 million or upwards in the coming 12 months with 30% or more in operating income. We are projecting a growth rate of approximately 20% in this business area. On April 19, 2018, we announced an agreement to acquire a 60% stake in India based Smartclass Education Services Private Limited, a leading e-learning company engaged in the business education services, development of education products and implementation of education solutions for K-12 schools. Ebix also is a fund bidder to acquire India's leading e-learning company Educomp in India’s bankruptcy court, while Educomp is India's undisputed market leader in e-learning, in landed up in bankruptcy courts because of certain ambitious decisions that termed out to be too risky in hindsight. Ebix over the years has made a business model out of buying companies in such distressed situations and turning them around and converting them into highly recurring and 30% plus operating margin businesses as long as they have great products and technology along with a strong sticky customer base. The e-learning business model is typically asset light and caters itself well to strong recurring operating margins, once the customer aggregation across a threshold levels. We have been eyeing India’s fast growing e-learning sector for many years now fueled by education being one of the highest spending areas traditionally for an Indian median household. Smartclass is one of India’s leading e-learning companies catering to the fast-growing K-12 education sector in India with approximately 500 sales staffs out of a total of 1000 employees, the company caters to accredited school education through rich media like 2-D, 3-D, Virtual reality animation et cetera. Smartclass’s 500-strong sales and marketing staff across the country has helped create a strong growth trajectory, in terms of top line and reach for the Company. Smartclass today has a customer base encompassing thousands of classrooms, paying for Smartclass e-learning products and services in an on-demand subscription basis. Smartclass will be tightly integrated into Ebix’s Education and e-learning initiatives in India and is one of the many steps that we intend to take to consolidate the e-learning sector in India. One of our new initiatives in e-learning is to combine our continuing medical education business with e-learning businesses in India and target India’s largest medical community comprising of doctors, nurses and pharmaceutical companies et cetera to sell our existing CME products that we presently sell primarily in The United States. This offers a fantastic opportunity for us to maximize our gains by selling our existing U.S. assets in new markets like India. We’re going to make a strong attempt to consolidate India’s e-learning market and create an undisputed leader. We intend to rebrand e-learning for K-12 markets as Ebix’s Smartclass and set the vision for an independent division that on its own has a valuation potential of being equivalent to Ebix’s present world-wide valuation. We believe that Ebix’s Smartclass has the potential of generating $30 million or more in revenues over the next 12 months with 30% or more in operating income. The annualized revenue generated can be cumulatively as high as $80 million in case the Educomp acquisition goes through. There are a number of new initiatives that we plan to undertake that all have the potential of helping us expand our revenue base sizably in India and abroad. I will discuss two such new initiatives in this call. One, Ebix’s bus travel has a strong area of growth in the Indian marketplace with 1.3 billion people and 70% of the country in an income bracket that does not allow for them to afford airline travel. Bus travel has emerged as a single biggest growing travel medium in the country for both intracity and intercity travel, especially in intracity travel, buses are the only real medium of mass transportation with less than 10 cities in India having intracity train system. We have evolved a comprehensive strategy to become an end to end solutions player in the bus market as it holds the potential for a large value of recurring revenue for Ebix with 30% plus in operating margins. It also is a perfect complement to a travel and EbixCash smartcard business. We intend to take a position in three areas of the bus travel business to establish a strong end to end airport like present in the bus market. One, we want to take a strong position in the bus e-ticketing business organically and organically, both. The right acquisition in the bus e-ticketing market once combined with a 260,000 strong distribution network and the Via travel brand can cater to a new recurring revenue stream for Ebix, more on that later. Two, we intend to possibly become an airport to bus travel if we can facilitate that technology that connects bus operators to the distribution, OTAs, travel agents and the e-ticketing markets, any company that can dominate that exchange connectivity will have natural means to cross-sell and grow all facets of its business. Three, we intend to take a strong position in the area of facilitating technology that allows consumers to pay for their tickets using smartcards when inside the bus. This technology involves each bus to carry certain hardware and software to allow passengers to pay using smartcards inside the bus, facilitate bus traffic control systems, keep a counter and track of all passengers in the bus, remote management of certain e-ticketing and camera functions et cetera. This can be a very recurring area of revenue and high profits as each of the 28 states in India has a fleet of 1,000s of buses catering to the high volume traffic of Indian bus passengers. The business model in this business is to make transaction money out of every tickets sold. EbixCash today is emerging as an end to end financial exchange that can cater to a desperate set of entities ranging from B2B entities like corporates, banks, insurance companies to B2C entities like consumers, e-retail website and digital outlets. Banks and lending institutions are key facets of a financial exchange and we intend to grow – we intend to continue to grow our presence in that segment. We today work with banks in many areas ranging from them serving as remittance distribution outlet. We work with them for co-branded prepaid and credit cards, real bank settlement of money with 10s of 1000s of outlets everyday using our banks, receiving daily deposits everyday from our outlets using banks et cetera. We intend to grow on our position with banks by potentially emerging as a technology player who can facilitate lending technology for them. Lending technology play can involve provisioning a CRM, loan origination, loan management and loan servicing systems all with the goal of providing a comprehensive transaction based lending technology to them. That also will facilitate the launch of a lending exchange that will allow lenders to reach out to tens of millions of consumers in the last mile using our fantastic distribution network. We today have a distribution reach that is five times the distribution reach of India’s largest bank, State Bank of India more on this later as we undertake more steps in this area. Our sales team of over 500 EbixCash executives is working diligently to expand our reach in the market both in terms of geography and outlet numbers. We are presently running a targeted campaign in the area of inward remittance and travel to move high performing distribution outlets from competitors to EbixCash. We have a few things going for us in that direction. One, we are the only company that can provide the outlet, the ability to represent market leading brands in multiple areas ranging from inward remittance, outward remittance, utility payments, domestic remittance, prepaid and gift card, airline, bus, train ticketing, hotel room bookings and of course insurance sales. Two, the EbixCash brand along with our topnotch provider relationships, provides assurance of a high level of footfall into each of the outlets. Three, we’re able to provide the outlets a higher level of productivity, customer satisfaction and ROI than others because of the volumes we manage and our ability to invest accordingly higher amounts in that direction. Lastly, we have the most organized and numerically largest sales force in the area of remittance and travel et cetera in the country to help us aggressively take on our competitors. We are working presently on increasing our reach in the corporate segment aggressively. EbixCash corporate clients are now provides a variety of offerings that include utility payments, corporate gifting, cash management, tele-medicine for employees, travel bookings, purchase of foreign exchange and prepaid gift cards et cetera. We have a separate corporate sales group that handles all of this for us in terms of sales. In addition to that, Ebix has a few things, few other things going for it. One, EbixCash already has a dominant leadership position in the inward remittance exchange arena in India. EbixCash is already the largest domestic remittance exchange in India with domestic remittance volume of approximately $100 million per month. EbixCash is also a recognized leader in prepaid cards, domestic remittances and bill payments, processing approximately 600,000 transactions per day and approximately $2 billion in annual payment volumes. EbixCash is also recognized as a leader in the gift card space with brand gift cards across all categories in 100 plus brand co-partners like Amazon, Flipkart.com, Croma, Lifestyle, Big Bazaar, Tanishq, BookMyShow.com, Reliance Digital, MakeMyTrip.com, Café Coffee Day, Pizza Hut, Myntra.com, and Pantaloon et cetera. EbixCash is a leader in the utility payment space serving as a payment exchange for the large utility providers like BSES, Tata Power, NDPL, Reliance Energy and Mahanagar Gas et cetera. Ebix’s recent joint venture initiative with Bombay Stock Exchange positions it as a gateway for insurance carriers to sell insurance to India’s vast populations through EbixCash’s tens of thousands of phygital outlets across the country, besides BS\E’s strong network across the country. As of Q1 2018, India led ventures were translating to an annualized run rate of $145 million with approximately $118 million coming from EbixCash Financial Exchanges. With all these opportunities ahead of us, we feel that we are on track to meet the $200 million India aspirational goal by fourth quarter of 2018. Our aspirations are high now and so are the facts from the ground. We feel we have momentum on our side with incredible products, aggregated networks, incredible reach, great partners and an unparalleled reference customer base. We seem to be on track to meet or beat the aspirational goal for Ebix to be at an annualized run rate of $0.5 billion by fourth quarter of 2018 or earlier. We would like to get there with at least 32% in operating margins. In closing I want to thank our customers, our partners, and our employees for their continued trust on us and for contributing to an outstanding Q1 and just exceptional results. That brings me to the end of my talk. I will now hand it over to the operator to open it up for questions. Thank you.

[Operator:]

[Operator Instructions] We have a question from Jeff Van Rhee of Craig-Hallum. Your line is open.

[Jeff Van Rhee:]

Great, thanks. So, Robin with respect to the bus opportunity, can you just expand a bit more on the timing there? It sounds like you've got a pretty fleshed out in your mind as to what you want to accomplish. You referenced organic and inorganic. Just a little bit of a sense of when that hits the streets in terms of something you're actually driving revenue from and whether the bias there is more towards acquired versus what you have. Just expand on that a bit if you would.

[Robin Raina:]

Well, I think first of all let me address the bias part. Meaning we clearly feel that as we today do bus ticketing using the Via brand. At the same time we’re not a large player in the bus market. And to give you an exact size of the market, there is a player that recently got sold to MakeMyTrip and the valuation of that player is approximately – in the private markets is seen as $1 billion, $1 billion, and all they do is bus ticketing. It’s a very large market, the bus e-ticketing market. So having said that we feel for us to organically just keep growing the business. We will absolutely do that at the same time not going to move the needle much. If we want to be a leader in that business, we need to have a very comprehensive strategy. To have that comprehensive strategy, you need to have these three different pieces. You need to be on the B2C front, but then you need to be at the backend front. What I mean by that is I talked to three different pieces. On the front end, we have the ticketing module, which we today have with Via. At the same time, we would like to acquire somebody who would – who has size, who's already seen as a large player in that market and amalgamate that, integrate that player within Via that by naturally will bring will bring synergies to Via as to expand our reach. reach. Some of these players already have relationships with private operators and with government operators. It so happened that the largest bus operators in the country are the state government, the state transport corporations. Each of those transport corporations can have buses in the range of 10,000 to 50,000 buses in their fleet. So they tend to be – they can be generating decent amount of revenues. So the way we look at it, we have three different opportunities. One, to be on the e-ticketing front, increasing our base or present base of e-ticketing sizably by acquiring somebody and then amalgamating it within that distribution reach. If somebody who we acquire already comes with existing contract with bus operators, government or private, now we – it gives us that license to go out through a distribution reach to really use that – those contracts very well and generate a lot more transactions. So there is complete synergy on the e-ticketing side. Then you look at the second piece, which is basically owning the telephone wire, right? To own the telephone wire, what I mean by that is to make any transaction happen in any business, you need an in-between wire medium and exchange that connects the e-ticketing business operator, the bus operators, for example, to the e-ticketing front end operators, whether it is travel agents, whether it is OTAs, whether it is any other entity, to connect them to the bus operator, you need an in-between exchange in the middle. And so happened that, that business is centralized in a few names who dominate that market. So that is an inorganic – would be an inorganic thing that we would need to acquire if we want to be in that market. However, anybody who owns that in-between piece and if they have the front end and the back end, they will absolutely be able to establish dominance because you own the telephone wire and you own – and you will now be and you also own one end of the telephone, to some extent. That by itself can drive – get your customers on the other end of the telephone. So the third piece of it is when you get into the bus that defined, this is more of devices. These are devices that sit inside a bus. Now this is a business that we don't have today. So we will have to acquire it. We will have to acquire. Ideally, you want to acquire somebody who already has a very good role in the market, who already all these strong relationships, let's say, with government roadways, transport corporations, because if you do that, you're going to on day one know that you will be able to transact sizable amount of business. And so when you put these three pieces together, right, you get an end-to-end approach to things. Now a timing on this is – this is – I would like to see this happen in the near future. I mean, it might be that we take all three pieces. It might be that we succeed at two of those pieces and the third piece of them happens so soon. But at the end of the day, where our goal is to make things happen over the next 90 days with respect to, so this is in the short term.

[Jeff Van Rhee:]

Got it, got it. Okay, that’s helpful. I appreciate it. And then just jumping over to the e-learning side, obviously you've got Smartclass here. I guess, you're in process on Educomp. The way you phrased it, looking at it as the potential could be as large as the existing valuation of the current company. Are there other issues to drop there in terms of other pieces that you expect to bolt on to those two? Or if you get those two, is it primarily, you've got the core assets and you can execute from there?

[Robin Raina:]

Well I think when you look at those two core assets, especially when you combine those with the medical assets that we already have, I think that gives us a very comprehensive offering. Then what you would really need to do, in addition to what they presently have, I think the market is more and more moving towards. And again, this is a relatively new concept. But if you, for example, watch Tim Cook stock when he was showing the new Apple, he talked about all the new concept of augmented reality, he actually showed a particular presentation with a frog in it and showed how that frog pops out of the iPad and it seems like as if the frog is sitting on a table. That’s what augmented reality is all about. What’s happening in the education markets is that that’s a big thing. And that’s what Tim Cook actually talked about. He talked about specifically about the education markets and he was trying to emphasize on Apple's foray into the education market. So having said that, I think, that’s an important piece for Ebix to have, whether to build it in house, or to acquire, but it will be a piece that we will need to have. So I think between if we had both Smartclass and Educomp and we already have the CME knowledge, I think, the only thing we would like to kind of build or acquire would be new technology in the area of augment reality rather than anything else.

[Jeff Van Rhee:]

Got it. And then just a couple cleanups from me. The Ebix India business I recall that you'd said in Q4 was $125 million run rate. And then at the end of the quarter it was running, if I remember $137 million. And then in a press release today you talk about $33 million of revenues in Q1 which would translate to a $132 million run rate. So the question is I guess if it was running $137 million run rate at the end of Q4 and $133 million in Q1, obviously a step down, but some of the other maths that you’ve referenced seem to suggest…

[Robin Raina:]

It’s $145 million just the number for the quarter is, we’re basically at $145 million. India led initiative what happened with some of the revenue is we actually report that revenue, it’s all lead from India. But we report that revenue under different heads. You’re going to now see new heads come in. You’re going to see Philippines, you're going to see Indonesia. So all of that revenue is serviced and driven out of EbixCash initiative which are led from India. But then we report some of that revenue in places like Philippines, and Dubai, and Indonesia and Singapore. So when you add those together, the India led initiative on EbixCash and e-governance, they add up to $145 million. So that’s the number you should be thinking about.

[Jeff Van Rhee:]

Okay so….

[Robin Raina:]

Last quarter.

[Jeff Van Rhee:]

This was the last quarter…

[Robin Raina:]

When you look at…

[Jeff Van Rhee:]

So last quarter, everything fell under Ebix India, where as this quarter the India business “of $32.9 million” in the quarter does not include the portions outside of the country [indiscernible]?

[Robin Raina:]

So the total number including those numbers for EbixCash and e-governance included, that adds up to annualized run rate of $145 million, so that is approximately, I would say, $36.25 million.

[Jeff Van Rhee:]

Got it, got it. That makes sense, okay. I got it. And then just….

[Robin Raina:]

That’s more of a reporting issue from my perspective off where do we – where does some of that revenue get reported, right.

[Jeff Van Rhee:]

And for closing date Centrum and Smartclass, what's your expectation there?

[Robin Raina:]

So closing of Centrum is virtually we are days away from that.

[Jeff Van Rhee:]

Okay.

[Robin Raina:]

And Smart classes again days away.

[Jeff Van Rhee:]

Okay. And then with respect to the taxes you referenced the increase related to GILTI, as well as you had some advanced MAT taxes. How do you think about the remainder of 2018 when you think about taxes in general, including those two items? Do you have additional MAT taxes to come and does GILTI recur, just help us there?

[Robin Raina:]

Yes so I think last quarter when I talked, I actually talked about the fact that we don't have all the right answers yet on the Trump tax plan. As you know that at that time the tax plan was relatively new – people – implementation of that planner was still questionable. Big phones were grappling with the how does GILTI work? How does a BEAT tax work? Are there any ways of saving money, and so on so. So having said that, this quarter, in Q1, we have had a lot of clarity related to GILTI tax. So this is an ongoing tax. So basic premise of this taxpayer is that the U.S. Government basically wants to tax, wants to ensure that if you have any region anywhere, when you sum total your international income outside the U.S., they want to make sure, U.S. Government wants to make sure that you have at least paid 10.5% taxes. So let's say you're taxed in a place like Dubai was zero percent, right, but when you cumulatively added up every tax in other places and let's say you ended up with 2% tax. That means you still have a dealt of 8.5% that U.S. government will charge you on top of that. So I think that's the kind of stuff that I has happened. So the net reality of that is, so we need to – this is a complex area where you have to absolutely add up all your taxes in all areas and basically then figure out what’s your international income overall in terms of percentage. And let’s say your income is 4% that means you were shortfall of 6.5% and that's going to be a GILTI tax in the quarter. So that’s the way the GILTI tax works. So this is going to be an ongoing tax. This is not going away. You see over a period of time I’m sure firms will find other ways in terms of what it really means, there might be people don't have as much of a player understanding of the GILTI tax today, but I would say we are more well-informed today than we were at the end of the last quarter. So today it seems like that this is an ongoing tax that we will have to pay to make up for that 10.5% if we have any income in a loan where your tax – where your income is being taxed at less than 10.5%.

[Jeff Van Rhee:]

Okay, alright. And then one last for me then just circling back to sort of the EbixCash e-business, may be just spend a minute and talk about the differentiation Paytm seems to at their $10 billion valuation be named the most know, or the name that people know the best, I guess. Just compare and contrast where they're going, what they're doing versus what you see clearly? You focused on the digital. You've got the distribution locations and they've gone in a different direction. But I get a lot of questions along that line. Maybe just spend a minute on that, thanks.

[Robin Raina:]

Jeff, I think the biggest differentiation to start with is it’s purely on financial metrics. If you compare the two businesses, like we've obviously, we’re not burning any marketing money, we’re not putting money in people's wallets to gain them as a customer. The joke I like to give is that if I stand outside Ebix India’s office, and I start handing over $50 to everybody who walks around and say if you become my customer, I want to put $50 in your wallet. I'm sure everybody would become a customer. That's how I feel about some of these names, because that's what exactly they're doing. What they're doing is they're putting money in e-wallets of people. If you become a customer, they give you cash back. If you'd studied players like, there have been players in the past that have collapsed. Players like FreeCharge have been there who haven't done as well in the market, and so on. So we're not a big fan of that concept. And overall if you look at the financial metrics of what was declared last year from some of these players and you compare it to Ebix, it is a day and night difference in terms of what we produce, in terms of income and also in terms of our revenue generation. We actually, if you look at our revenue numbers right now and compare it to let's say what one of these players that you named was doing last year, you're going to see that our revenue number is more than what they were producing last year. Now they might have increased it, but so are we going to increase it this year. So we think we're doing extremely well. So our biggest differentiation is, one, they are focused spending money, marketing money to get the consumer, that’s basically their business model. Two, they are basically focused on the e-wallet, right. We're not a big proponent. Why do we have an e-wallet and we're going to aggressively launch actually a new e-wallet in India. At the same time perhaps it’s an add-on activity. It's an additional tool to give consumer, to give a metropolis consumer more ways of doing a transaction. For us, we’re not hanging our add-on e-wallets, whereas these companies are focused completely on the e-wallet. So having said that, our business model has been focusing on reaching out to the consumer without burning money by reaching out through our distribution outlets because we established the last mile. Today when we say we have 500 sales people in the business, let's not forget that each one of those 260,000 outlets is a sales person for us. Each one of those distribution outlets don't make money until they sell. So they are sales people, they are sitting in the last mile they are advertising free for us, because that’s how they get the client – customer coming in. So that’s one of our major differentiating factors. And then you look at the expanse of services. On one side you have basically an e-wallet in the front and then you have a number of others services that are basically catering to the e-wallet. Whereas what we have done, we have taken very focused, dominant position in the business. When we – if we enter the area of remittance, international remittance, we became the dominant player with majority of the market. When we entered the area of Forex with Centrum, on day one we would have 25 international airports and we would have a very viable, profitable 30% plus operating business, margin business. When we entered the business of – you name any business of domestic remittance, for example, we are today India’s leader in that market. If you look at utilities, we are one of the leaders of other top two, three players in the market. Similarly, you look at travel, we're the only player out of the three players in India, the only two other travel players known in the market are, there is MakeMyTrip.com, who in size is number one; and the number two is Yatra. If you look at both of these players they're not making any money. And then you look at Via.com, our effort, what we have done not only do we generate strong operating margins, but we have created a business model that does not have wait for a consumer to come to Via.com in terms of having to spend – burn dollars, marketing dollars. What we did we created first of all a digital outlet model, whereby each of our outlets was available to make those bookings and advertise for us, market for us. But what we also did, we became the largest player in the corporate market. Today, we have 8,000 corporates in India who are standardize on us. It's not just a travel solution. It's a workflow solution. We provide them internal expense management. We provide them the workflow to decide on the travel. And then we provide them a conference of discount strategy, whereby, they get to every year as they generate revenue for us, we are generating increased dollars back for them. What you also did, we then integrated our ForEx management into each of those corporates. To give you an example, if you are a large corporate, you have employees traveling across the world. And when they travel across of the world, as a business you need to buy them foreign exchange for their travel. You either will give them a multi currency card, or you will buy foreign exchange in cash. Either of those Ebix located to. You will need to buy them health insurance. Again Ebix caters to that too. So what we did, we interfaced a variety of all these solutions and kept integrating them into this and created one of the largest travel omni channel brands Via. So I think our differentiation is more in the area – is in the area of technology superiority, functional superiority. I think business model superiority because our business model is recurring. Our business model is not dependent on spending marketing dollars. I’ll challenge anyone of these companies to stop spending the marketing dollars in the sizes that they're spending and to see what the result will be and then look at Ebix, it won't – it makes no difference to us because of the model that we have created. So there is so many differentiating factors that we have taken. When you look at insurance, for example, a company like Paytm doesn't really have a comprehensive insurance piece. Whereas what we are doing, we are – we took up again a pioneering role by setting joint venture in place with the most imminent financial institution in the country, Bombay Stock Exchange. Bombay Stock Exchange is known to every individual, every kid in India. And when you look at Bombay Stock Exchange, it's represented, Bombay Stock Exchange is represented the who’s who of the financial institutions. They have 300,000 terminals in addition to that. And last time, when Bombay Stock Exchange entered the mutual fund market, almost two and half, three years back, today they own 26% of that market. We would like to believe that we can have huge success with the insurance arena. What we are trying to do in the insurance arena is create a new market that nobody has created by selling insurance through mom-and-pop shop, through grocery shop, through watch shop, through agents, of course. But what we're also doing there opening up a new median, a new distribution medium for international carriers. Many international carriers don't work in India today because they don't understand the distribution medium. What we believe we can do, we can bring in distributors to the table and say, big carriers to the table, international carriers to the table and say look you don't have to worry about distribution, we'll handle your distribution. You need to write new paper to handle these policies. So I think it's a completely new paradigm what we are trying to do. We're trying to create an end-to-end financial exchange, an airport. Whereas, the Paytm is a pure, is a B2C operation, where they want to make a few percentage points out of every transaction that you do today in the market in terms of using your e-wallet. So I think companies like Paytm are going to be very sudden when WhatsApp comes in and launches their e-wallet, or when Amazon comes in and launches their e-wallet, these are all real threats like Google Places have come in India, and so on. It doesn't matter to us because our business model is so integrated and so key to the various basics of India's financial industry that it doesn't impact us how people use it. For example, PTM is also our partner and for Centrum for foreign exchange. So we don't really see them as competition. We see our activities as complementary to them in a way. And we want to be the airport who can work with virtually with anybody including Paytm.

[Jeff Van Rhee:]

Got it, got it. Okay and then last one from me, the sales headcount, you just said you had 500 reps. How do you think about that number, say, by the time we hit the end of the year?

[Robin Raina:]

Well we have just 500 reps just in EbixCash and then we have 500 reps in the e-learning operation also. And then we have more reps in a few other areas. So this is a fairly, when you look at our sales force, we have – we believe we have the largest sales force in the remittance – sorry in the travel, in the utility business area in India, the most organized and professional sales force. So we expect this number to continue to grow as we most success in the market. So I don't have a targeted number frankly, in terms sales – in terms sales people, purely because we want to scale it up as our business grows, as we keep increasing the reach, the expanse. If we, for example, add new bus technology, for example, we’re going to add a lot more sales people to that area, simply to cater to that. So what we're trying to do is on one side we are driving convergence amongst all these tools. On the other side, we realize that there is a path of losing focus. For example, if we're going to converge all of this and let's say we converge outward remittance and inward remittance, a simple example. We might overall meet our numbers, but how do we make sure that the outward remittance is generating continual growth while inward remittance is generating inward growth – is generating enough growth too. So there has to be system in this convergence wherein you want to create focus on one side and you want to create convergence on one side. So you'll have salespeople who are getting incentivized on a weightage basis with respect to each of these products to ensure that we are selling almost everything. So we expect to keep scaling up our sales force, but I don't have a specific target in terms of sales numbers, in terms of sales employees, I have targets in terms of sales numbers. And as we go through the year, we're going to keep deciding based on where we are and how we are gaining successes, we're accordingly going to keep scaling up our sales force.

[Jeff Van Rhee:]

Okay. Got it. Great, thank you.

[Robin Raina:]

Thank you.

[Operator:]

Thank you. [Operator Instructions] And this will conclude the Q&A Session. I’ll turn the call back over to Robin Raina for closing remarks.

[Robin Raina:]

I think that brings me to the end of the call. Thank you everyone for participating in the call. We look forward to the second quarter call. Thank you. And with that, I'll close the call.

[Operator:]

Thank you. Ladies and gentlemen this concludes today’s conference. You may now disconnect. Good day everyone.