Ebix, Inc.
Q1 2017 Earnings Call Transcript

Published: 9 May 2017

[Operator:]

Good day, ladies and gentleman, and welcome to the Ebix First Quarter 2017 Investor Call. At this time, all participants are in a listen-only mode. [Operator Instructions] later, we will conduct a question-and-answer session and instructions will follow at that time. I would now like to introduce your host for today's conference Mr. Darren Joseph, Corporate Vice President. Sir, please go ahead.

[Darren Joseph:]

Thank you. Welcome everyone to Ebix Incorporated's 2017 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 statement. 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 the 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, 2017 results was issued earlier this 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 also on the investor homepage of the Ebix website after 4

[Sean Donaghy:]

Thank you, Darren, and thank you to all in the call for your continued interest and support of Ebix. At the outset, let me say, we are very pleased with the Company's first quarter 2017 financial results and operating performance and look forward to the rest of the year. Q1 2017 diluted earnings per share increased 24% to $0.83 per share as compared to $0.67 in the first quarter of 2016. For purposes of the Q1 2017 EPS calculation, there was an average of 32 million diluted shares outstanding during the quarter compared to 33.3 million in Q1 of '16 and 32.5 million in Q4 of '16. As of today, the Company expects the diluted share count for the Q2 2017 to be approximately 31.7 million shares. Q1 2017 operating margins decreased to 32.55 as compared to 35% in Q1of '16. Operating income for Q1 of '17 rose 4% to 25.7 million as compared to 24.8 million in Q1 of '16. We are pleased by the fact that the Company continues to deliver attractive top line growth, cash flows and operating profits with a 33% operating margin during Q1 of '17 with the entire business and approximately 37% operating margin for the foreign exchange business. Cash provided by our operating activities rose to 15.7 million in Q1 of 2017 compared to 10.5 million in Q1 of 2015. Q1 2017 cash flows reflected cumulative cash payments of $8.95 million for bank interest income and income tax principally on account of certain non-recurring advance minimum alternative tax payments in India were $4.9 million. In Q1 of '17, we spend a total $52.3 million on share buybacks, dividends, tax payments and on building constructions. Specifically, during the quarter, we used $40.5 million to repurchase 704,000 shares of the Ebix common stocks, paid $6.7 million of taxes, spent $2.7 million on building out our facilities in India and Johns Creek, Georgia, and paid dividends of $2.4 million, while drawing just $40 million from our bank credit facilities. After these significant uses of cash, the Company still ended the quarter with cash flow from operating activities of $15.7 million and $123.5 million of cash, cash equivalents and short-term investments, up by 52.1 million as compared to March of '16. We’re very pleased with the Company's continued ability to generate cash and fund its growth and investor friendly initiatives. With these additional share repurchases, the Company has now repurchased approximately 7.26 million shares of its common stock for an aggregate amount 215.2 million at an average price of 29.65 since August 1, 2014, when the Ebix Board announced its decision to repurchase our own stock consistently over the next few years. We expect to continue to share buybacks utilize in our operating cash flows from the business. After spending accumulative $52.3 million on share buybacks, dividends, tax payments and CapEx in Q1 of '17 as of March 31 Ebix still had access to approximately $304.5 million of readily available cash free sources from its financing arrangement with 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. Furthermore, our balance sheet is healthy and our company's financial position remains solid with the current ratio of 3.14 of working capital short-term liquidity position of a 148 million, a debt leverage ratio of 2.6, and a debt of equity ratio of only 0.74 as of March 31, 2017. We will soon be announcing the record dates for the Q2 2017 dividend payable to our shareholders. In Q1 of 2017, we paid a quarterly cash dividend of $0.075 per common share to our shareholders. Finally, Ebix's Form 10-Q will be filled tomorrow afternoon, Wednesday May 10, 2017. I'll now pass the call back to Robin.

[Robin Raina:]

Thanks, Sean. Good morning, I last spoke to all of you two months back on February 28th, while announcing our 2016 annual results. Our business is reasonably consistent and does I had a fair idea of first quarter results on that date and does my talk in investor call then reflected my views about the direction of the first quarter analysis of the year 2017 and '16. I'll thus try not to be repetitive in my thoughts and focus my thoughts on a brief analysis of the quarter and primarily on anything new that might be on horizon for Ebix. With respect to the results announced today, they are in line with our expectations and where we expected to be in terms of top line. From my perspective, the top line performance is solid as sequentially we had a deal with the seasonal increases of $3 million in Q4 of 2016, which incidentally were not predictable for us in Q4 the way when we get into Q1, we get to see how much of the business that we got from continued education was seasonal versus continual. So, there is a little bit of hindsight talk about to that goes into it. For the most part, we came with our increases in revenue from a number of segments as discussed during Darren's talk. We agreed on material deals with a few key accounts that should continue to give us consistent revenue for the next few years. We also made good stride in the area of straight to processing by agreeing on new exchange deals the key clients like HSBC Bank, Emeritus, DFS, Merrill Lynch amongst others. We also agreed on a deal with one of the super brokers Arthur J. Gallagher in Australia to implement our fast based end-to-end broker system Ebix Evolution in Australia. I am especially excited about the AJ Gallagher implementation as it drove serve as a catalyst for the implementation of Ebix Evolution to our other super broker clients spread across more than 50 countries. A key source which could be a key source of future revenue for us both in terms of new license fees and consulting dollars, also it further increases our dominance in the Australian market. I was recently in London to oversee the progress of the PPL London marketplace exchange for reinsurance. I am pleased to tell you that the exchange is working wonderfully with Ebix design, functionality, responsiveness, attention to detail and technology expertise, winning us a positive review from all the key customers of the London insurance market. I am very excited about this as each of the pillars of the PPL Exchange are who's who of the London market with each one being a potential direct client of Ebix for a variety of services other than reinsurance exchanges. Ebix continues to review each of our business line in terms of margin performance. From this disciplined review, we are able to focus our resources on a best performing opportunities as well as possibly reduce our focus on areas where margins are under pressure. Ebix continues to deploy increased manpower on strategic opportunities such as our implementation of the PPL Reinsurance Exchange in London and the underwriting exchanges in the U.S. These steps have not only contributed new consistent long-term revenue streams, but have also created tremendous goodwill for Ebix and a customer sales force the helps us sell purely on the strength of our reference base. The growing customer awareness of Ebix domain expertise and performance has opened up many new business opportunities. Deals that we would not have known about had our customers not made the strong positive recommendations. I talked about our area of the momentum and focus in the Annual Investor call. Today, Darren spoke about the Q1 quarterly performance already. So, I'll not talk more about it, now until the Q2 investor call. We'll focus on growing our revenues while keeping our operating margin intact. The margins from our core exchange business were strong at 37% while our overall margins were on 33%, I'm pleased with that trend. We've been bearing the brunt of the U.S. dollar strengthening against other international currencies for many years now. For example, the U.S. dollar strengthening with respect to the British pound has taken our annual revenues from the PPL deal in London down by approximately $5 million from the time the deal was in it. As in one exchange rate move our way, we’re going to see handsome increases in revenue just on a count of exchange rate changes. During the Annual Investor call, I talked at length about acquisition opportunities and our approach to them. So, I'll not say much for now except they that hopefully soon we will announce an acquisition that we believe can be a great growth driver for Ebix in coming quarters and years, more on that very soon, hopefully. In recent times, some of our decisions to walk away from prospective acquisitions that did not pass a due diligence or valuation tests have proven to be right in the public eye. We're fully aware that our acquisition history that looks fantastic today could look absolutely terrible, if we are proven to be wrong on one material acquisition. For everyone acquisition that you get to know about once we announce it, we might have walked away from a few that you may have never heard about. Sean talked about our access to cash and our desire to use that cash for both growth and investor friendly activities. In the first quarter of 2017, we decided to take advantage of the low stock price and accordingly brought 704,000 shares for $40.5 million. We like to be opportunistic in repurchasing our stock and this decision is amply reflected in our purchase of approximately 7.26 million share of our common stock at an average price of $29.65 for an aggregate amount of $215.2 million since 1st August 2014, when we announced the Ebix Board decision to repurchase our own stock. Consistently over the next few years, we intend to continue to be opportunistic in repurchasing our stock over the coming quarters and years. We apparently focused on trying to achieve our aspirational goals defined earlier in pervious semester calls. Let's see where we end up in the first quarter of 2018 in terms of conformance to those aspirational goals. Thank you. With that, I'll hand over the call back to the operator.

[Operator:]

[Operator Instructions] Our first question comes from the line of Jeff Van Rhee with Craig-Hallum.

[Jeff Van Rhee:]

Robin, just a couple for me, actually, several for me. The -- as I look at the release last quarter you talked about that you had quoted agreed on a number large value contracts that will contribute in 2017. And I think you touched a little bit on the call today in the release for today's earnings you said you agreed to undertake a few substantial deals that involve implementations that should contribute to result over '17. Can you expand on that when -- have those deals that you've agreed to undertake impacted the P&L at all here in Q1? And if not, when do they start to impact, can you give a little sense of the scope of the impact?

[Robin Raina:]

So, Jeff, they have started to get revenue in Q1. Again as you know, we can't recognize revenue until we have, until we are at the right stage of implementation. So, we have to follow the GAAP rules on recognition. So, we have taken a small impact of those deals. At the same time, we believe that the most of the size of these deals are large enough and we should see a continued effect going into the next few quarters, as our implementation gains space, we will see increased revenue coming from these deals.

[Jeff Van Rhee:]

And can you give us some samplings of the scope of the opportunities sounds big enough that you mentioned it in the release. So, certainly seems like it's what you're believing is either out of the gate or overtime going to be material. Can you help us scope the revenue opportunity?

[Robin Raina:]

I'll give you -- you think we're under NDA with the, technically with these -- technically with the one of the larger one client. So, we -- I can't give you specifics of the name of the client and details at the time I will tell you that in our book any deal that has the potential of giving us revenue between 10 million to 30 million a year is a large deal. And so, I'll leave it with that.

[Jeff Van Rhee:]

And I guess just conceptually, is there something that comes in big lumps or should we see this gradually grow over the course of this year?

[Robin Raina:]

Well, it will be -- you see part of our effort there, frankly that we would like to be very consistent. So, we're not looking for lump that's the first things. When it from an aspirational side also we're not looking for lump. But sometimes we obviously are governed by the GAAP rules and we have to follow the GAAP rules whatever the technical accounting rules are. We're going to see as we've implement some of this. We're going to see fair consistency. You will see there will be some lumps which are unavoidable by GAAP rules, but you're going to see -- as we implement the larger part of these deals, you're going to see bigger lump in specific quarters in terms of sudden parts in revenue.

[Jeff Van Rhee:]

Okay. And then I guess secondly for me. With respect to the numbers for the quarter, you've commented to the seasonality and sort of paraphrasing, it was evident in hindsight having not had history with kind of push that you've got from some of the physician purchased products. I guess my question is on a sequential basis with down revenues, cost of goods was up, and I'm wondering if that might have to do with this new deal signed or if there is another explanation there?

[Robin Raina:]

Yes, that's the new deal signed, that's basically what it has in terms of cost of goods. But coming back to the seasonality, look it difficult, we know it's seasonal we know the area which are seasonal. And I actually talked about it in the previous quarters also I talked about continued education specifically because that's the main area where we have the bigger drop from Q4 to Q1. And it's very hard to predict because what happened in that area is that you're dealing with doctors, we're trying claim tax deductibility. Now, we don't know from a perspective of is that, how much of what you've delivered in Q4 is a part versus how much of it is consistent. The problem we have is obviously this is a relatively new business for us, continued education. And we're continuing to learn as we are implementing as we are getting into this business and we are -- obviously we have -- I think we've done valid business, and we are continuing to as we have live history behind us, we will be able to predict this a little bit better than we were able to predict because it's just -- I remember that our entire business model in continuing the education model. We are selling purely it through direct marketing in the area of continued education. So it's impossible to predict what part of it is seasonal until you have enough history behind you, which we unfortunately haven’t had. Jeff, I am quite pleased with the overall, the trend of revenue because remember I think I have been here 18 years, and I know that every quarter you're as good as what we produced in the quarter, and history doesn’t count. And having said that, when I look at -- there are two aspects to it. One, I think as the Company, we want to be fundamentally strong. We don’t run our company on a day-to day basis, we try to make sure that what we are delivering and have continual value and continue with it as on. Having said that, the key part of our thinking has always been that when you look at revenue stream, we try to find revenue streams that are consistent, that can stay, that can be prolong for every one revenue deal that we -- when we present our revenue stream, what you don’t hear about is stuff that we just ignore completely. We think, this is something -- Ebix is such a disciplined company and I feel very proud of being the CEO of such a disciplined company where when you look at our margins, most companies will be very happy that they have 33% operating margin. Here, I am sitting here as a CEO, conducting an exercise, and I am saying this openly in all transparency, conducting an exercise, looking at each and every division and trying to see maybe we need to give up on revenue sources in some division even now simply because we are -- we feel the single biggest strength that Ebix had is the benchmark we have set up is operating margin what we are able to do. So, we are going to be continually at it, trying to look at business area where we might be generating revenue, but we might not be generating -- we might be diluting our margin. And it imposes a lot of pressure on this company in terms of how we operate. But having said that, I am actually very pleased that a lot of revenue that we started getting into -- if you look at where we were last year and how we have kept ramping up the revenue a lot of the revenue that we got into our brand new opportunity all we have made some fairly consistent, all those new opportunities have started to coming very consistent. And I feel very good about it that we are able to deal with most of the seasonality, if there is any in our business. But more than that we are not just timing deal with part associated with them, we are trying to wait those deals recurring enough or trying to focus on deal that are encouraging enough. So from that perspective, I actually feel very good about where Ebix is today in terms of its momentum, in terms of its thought process, in terms of its disciplined and so on. Sorry.

[Jeff Van Rhee:]

So, one last for me, I'll let somebody else jump on. And it kind of ties to what you were just talking about. So you've got some aspirational goals out there, but with respect to margin profile talk to me about how you feel about operating margins from this level sustainable, likely the rise likely the fall and I know the obvious tie into that, that you could maybe touch is your overall pipe and convection on these e-governance deals in India. They have very different margin profiles even now themselves as well as compared to your historical margins. So based on what you see now, how do you see your overall operating margin profile? And then where is your convection and outlook on the opportunity around the e-governance deals?

[Robin Raina:]

Yes. So, I feel actually very good about the margin profile of the e-governance deal. We have continued to ramp up that margin profile. Where we margins are not as good as where we should be today is the business of consulting, strategic consulting. What has happened in the recent times also is that with Mr. Trump taking over, it has obviously created a bit of flurry of activity in the consulting arena. That point to hopefully we think, we'll have to be prepared for it and we have to accordingly deal with it and see how we can improve our margin. So, we're taking various steps internally to make sure that our margins are not as low as where they were, those consulting margins I've heard of as on today. So, we feel that there is ways to improve that. The second aspect of it, acquisition, now one request that I'm going to make to each one of you is that as Ebix get into acquisition, we're now, Ebix has a goal of -- we're drawing to become a much larger company and we know what our goals are. We definitely want our operating margins to be 30% or above. But when you're trying to do that, you're going to make some decisions in terms of we might get into an acquisition in a particular phase there we might decide, this time we're going to take big expenses or expenses in one quarter, one-time. And try to clean the balance sheet, clean the ongoing P&L and so on. So, basically, our goal is rather simple. Our simpler goal is, we absolutely want to be 30% or above, that’s the basic goal. Now, can we be at 33% or can we be at 35%? I will not comment right now and at all I will tell you is that, we just reduced the 33% quarter and we're absolutely in the midst of an exercise, trying to improve our efficiency, trying to look at each and every part of our business as to what we can do better and how we can improve our margin and so on. Our margins also frankly were hurt by some of the A.D.A.M. drop, because remember when that drop has basically being all come out of our margin and that we had to make it for that. So, if you look at it, our remaining margin profile kept growing up because if I take the for example the A.D.A.M. revenue out the top that we had, we translated into big -- which basically went to take our income down. If let's say that was taken out, our margin profile is actually going to be a lot higher as been in the past. So, we're also dealing with some of these more things that we weren't predicating, basically frankly for more of a better world and we're being transparent about it and that’s the learning for us, we're trying to improve in those areas. So good news is it's typically happened in one area most of the effect and then we were obviously hit by simple things like, margin business. To give you a simple example, the London deal, majority of what you see in the London deal that the exchange rate that drop, meaning that’s a $5 million drop. When we signed the deal, we had guaranteed revenue of $17 million plus. Today, that is translating into $12.3 million or something like that, which means we had a $5 million drop and it clearly will impact our margins to a pretty good level. So, we have to deal with those kinds of things. Good news is, Ebix made up for it, and I think we're going to continue to be focused at the same time we are trying to blend our desire to be a high growth company with our desire to be a high margin company. Now as you know that's not easy, at the same time we're committed, we are confident we can do it and we're trying to -- we're not trying to follow another company that we can just follow and copy what they did because nobody else has really done that in our industry. So, we're having to create our own path and charter our own path, so we are continuing to deliver I feel good about with respect to the operational goal or the margin levels or the revenue numbers that we want to get to, I feel good about it. I think to -- I would rather have investors in their own mechanism in their own map take the worst case scenario and say look, maybe the margin profile I should count on is 30% or 31% or something like that. And I'm comfortable with that as a CEO because my job is here is not to hike the Company, my job is to let the investors themselves draw the range of what they think the Company is worth and also draw -- take from scenarios then it. And from my perspective, if we do a lot better than that, we'll make all the investors a lot more happier. So having said that, I think the Company is today very focused and we believe that we have the ability to be larger insurance software players in the world, we're already the largest insurance software exchange in the world. We believe we can be the largest, and we can be a lot larger than where we are, but we don't want to just to operate in a manner we have operated in the past. There is and there is nothing bad to think about what we did in the past, it's not that I am meaning, we might have made our series of mistakes or positive things in the past and we're going to learn from them. At the same time, I think our thinking is, we need to be a company that can blend this high growth with high margin structure, and that will take a little bit of innovativeness, a little bit of chartering our own path. When I was trying to build this company and I remember early day when we were doing $40 million of revenue and I started talking about 35% margins and people said, wow, that's good for you to say that because you're running a $40 billion company, you're not running a $100 million company. Here, we are running at a run rate of $320 million and we're still at those market level. But one thing which I've learned over these 18 years is you don't run a company for from a quarter-to-quarter. An investor who is short term and is looking for great, I'm going to just -- they did amazingly well this quarter or they didn't do amazingly well that quarter. To me that's not the best investor for Ebix. For best investor for Ebix is somebody who looks at the 18-year history the consistently of it, where this company heading, is this company really, are they giving better rate or does this company really have the ability to get there? Do they have the product? Do they have the strength to get there? And I think I would rather have investors create a SWOT analysis of their own, the negative and positive and take analysis of, hey, the operating margin can be 30% possible or it can be 35%. Let me draw range of it still what's an investment. And from my perspective that’s what investor for Ebix and that what I may have to do. My job is to deliver and my team's job here is to deliver continued value. But we want to do it by not thinking on a daily basis or trying to be -- trying to just be sensitive to making people happy on a daily basis. What we want to is, we want to deliver really solid long-term value and hopefully in the process create one of the best options to insurance market place or in the financial market place. So, I think that’s what just we're focused on. And I feel good about where we are. I feel fantastic about our product. I have been here 18 years and after 18 years I will tell you one statement that I can stand on our roof top and make is, every product of Ebix is cutting edge, leading work, love of our half clients, that’s not easy for people to say who are running 270 different kind of products and that’s what we do. And so IPO today we as a company, we have set up the basics right. Our margin structure is right. We are headed in the right direction. We have a fantastic management team in place who I give them absolute credit for sticking to the Company. And we have this new bunch of energy now coming in the Company. We have all these technical guys who have stayed there for a decade. Who in my view can be our well ready in terms of our technical management that people that we have I feel there are number of folks who could be the future CEO of Ebix. And to me, that’s the basic value of Ebix today that we are creating people who have been here with energy who understand the basic thoughts of Ebix, who understand the basic adherence to customer values, the basic adherence to investor values, consistent delivering of value and have that technology excellence associated with them. To me when you have those kinds of basics right you are setting up the foundation of a very strong company in the future, and that’s what -- till the day I am here I am going to be absolutely focused on making this company a leader in where it was and where it is headed. I know I gave you a very long answer but I wanted to do this simply because I wanted to make sure you understand the passion behind what we have built now at Ebix. And where Ebix is headed and what is trying to think of.

[Operator:]

[Operator Instructions] Our next question comes from the line of Allen Klee with Sidoti.

[Allen Klee:]

Good morning, you talked about a deal that you won with Arthur Gallagher in Australia and you've made some comments that to be a catalyst to other super brokers and also your attractiveness of the Australian market. Could you maybe expand on that a little bit target, if I can understand what you are doing for them and how this could be an additional opportunity with other people? Thank you.

[Robin Raina:]

Thank you Alan, So good morning first of all. So, that’s a great question, so let me answer that. When you look at the Australian P&G market, there are close to 900 grocers is in that market. Today, if you look at around 864 and somewhere around 864 are using Ebix for their backend systems, which means we already have majority of the market and I'll talk through that, we did not have Arthur J. Gallagher as you know he is a very large broker and has a very large presence in Australia itself, but is a very large broker across the world. What we were trying to do, a lot of these brokers in Australia and across 50 countries, that the 50 plus countries that we're in six continents actually in 19 different languages, a lot of these brokers are using what we call a system called eGlobal. eGlobal is basically our system that considered a catalyst by the super brokers, it’s a system which is multi-lingual, which is multi-currency it’s a complete backend system for a broker. It does everything from underwriting to general idea to policy admin to claims administration to CRM to sales. It does virtually everything. It got its own word processor built in, it got report writer, it interfaces all kind of stuff, interfaces exchange and stuff like that. So, we sold eGlobal to them over the years. And good or bad news is, the good news is that they all love it, the bad news they all love it and I said that the bad news because we would like to move them to the next generation of product. And the next generation of the product is we've over the last many years spent a lot of effort and built a progress about Ebix Evolution. Ebix Evolution is basically we don’t call it a broker backend system, it's an e-commerce frame work for a broker, it does everything exchanges, backend system but more important it’s the latest, it’s a thin technology, it’s a thin client technology you can for example a large super broker for hosted in Eastern Europe in one country and then have drop of their other subsidiary run off that system they stay one all the licenses because of their big cost is all these Oracle licenses and Microsoft licenses and so on. So we been building this App and we've worked with a lot of these larger brokers to build that system up. And what has started to happen is that as we deploy this, now the difficult task we obviously have is they all are clients, we want to move them into Evolution. Now, the good news for us is, if we move them, we can actually multiply our revenue threefold fourth on the broker system business. And I mean it threefold simply because that’s how the Ebix Evolution model is. The Ebix Evolution model, we make get everything, from hosting to backend systems to virtually being the server from kind of a provider. So what we’ve done is we been in front of all these super broker, our first step was to try and show them evolution and continue to work with them to see what they want. What basically happen is as we start working with these larger brokers all these larger will need customization. So we think we can generate substantial amount of consulting dollars and then we can generate a lot of license. Now when I say a subscription revenue its continued monthly revenue and it's pretty substantial and it's basically have very high operating margins for us with those products. So good news is we created the entire Ebix Evolution technology out of India, so that entire design knowledge, entire intellectual property knowledge all the codings, taxing, the support will come out of the India which means the margins are going to be phenomenal out of this. so what we were doing when you drop, when you deploy a product like that you're always looking you need one large super broker, but everybody is wanting, they don't say listen I am going to just say. Everybody will take on day one. That's not how unfortunately they show as market work there always have to be a guinea pig kind of a player. And this is too differently every product that we have done. So what happens is as you have to deploy across it one if expect there is a broker who have site, because when you have site people understand the complication of a larger broker, and if that's if they deployed it that's become the catalyst to other broker saying, great. I am now ready and it's also confident in our aspect that you want to be ready that. So --deals was very important deal for us because they decided to go with this evolution. Now they were a brand new client, and they were not have client in the past, what that does for ourselves now we're going to start organizing all these user group conference and start pushing people and stating end of life on some of our products, we obviously that there is a we can also as a company we could have also use the pressure tactic which is particularly end-of-life on our previous product. And if so happens the most of our clients are completely dependent on this. We have tried not to misuse our strength in any area. We'll see that they're very sincere company, so we're going to try and be very collaborative with our clients and working through it. So, we feel that this us was excited because Evolution, Ebix evolution is basically going to replace eGlobal across the world in 50 plus countries, which means when you look at all these large brokers whether it is AON, whether it is a Marsh, whether it's Willis or whether it s a Lofton. All of them are using our products in multiple countries where somebody using it in 45 countries somebody in 18 countries and so on. And we feel that by itself is a big opportunity for us and this, what it has done is, it has proven that the product is real. Now, our job will be to make sure that we implement it property and we can create a strong reference out of Gallagher. So that's going to be our next step as we go into it from that perspective.

[Allen Klee:]

Okay, thank you. And then just somewhat similar on PPL and the Reinsurance market, you're mentioned you were in London and felt quite good about that. Can you give us some kind of updates on, if there is any expansion of insurance lines that are being used and other opportunities rather to expand it? Thank you.

[Robin Raina:]

Thank you, Allen. So, Allen, PPL Exchange is ultimately we got to look at what is PPL first all. PPL is a body formed at all the market players, virtually everybody in the market all the large, all the brokers, all the underwriters, all the reinsurers, lawyers, all the association whether it is a underwriter association or a broker association. Everybody teamed up and start closing body while PPL and this body basically, they funded all of them and ultimately a majority of the funding right now is coming from Lloyd, but ultimately all of them have to do -- have to fund it. And this is part of what is our project TOM. Project TOM is an initiative in London by led by Lloyd. It’s a £215 million initiative to modernize the London market. It so happened that this exchange is the center of that as of that TOM, project TOM initiative. It is worked. What it does it that it first of all meaning, if you look at -- I don’t want to say anything positive or negative about project TOM, it’s a great initiative which will basically -- it is having the series of hiccups as normal, but it is also -- Lloyd is very strongly backing it. There is a lot of effort and hard work behind it. Having said that, when you put an exchange at the middle of it and if that exchange works the way was supposed to, and if that exchange can deliver cutting edge technology and drive paper out of the process, it’s a big win for Lloyd, it’s a big win for the London marketplace for project TOM. To that extent, this exchange is a very watch and a very critical kind of an exchange. What we have been able to do is not only having kept delivery in business lines, so there is -- we have get delivering and we are on schedule with all the business lines that we were to deliver. There is another large business line coming I think in June that’s going to be deliver and after that is one more and we could have basically implemented -- they wanted to be -- it could basically take care of most of broker than the market, once we have deployed these additional two lines. Having said that when you consider the overall impact of it from our London market perspective they want to make sure that this exchange and not only interface with all the other entities but a technologically far ahead in terms of what it delivered how it the center mediate paper and so on. From our perspective, the goals that they had set up in terms of where we needed to be in 2018 June, I'll give you a very simple statistic, what as -- why are they -- why are people are so appreciative about Ebix has done. What we were supposed to as on the technology side in June of or July of 2018, we fast forwarded it and decided that we are going to deliver it in June or July of 2017, one year ahead. That doesn’t happen in the insurance market, that vendors our over there they said no, no, no I am going to fast forward base and our fast forward base and so what has happened is its one of the a lot of happy patients and when you say happy patents who is running PPL who is on the board of PPL who are the people we are going to work with, we are going to work with the largest of the brokers that who is who of the market, the largest insurance companies Lloyd of course the largest association so we can do a good job on this and show that Ebix is way ahead of the curve. What we have done is we have done shown that Ebix is ready for the next big challenge and what should be the next big challenge that is the lot that have to be happen as part of project done. And we would like to be a key player in project done. We would also like to be a key players to all these large players, whether it is a ABC broker because I don’t want to just spell out name there, if there is a large ABC super broker and many of them Jeff, when they have the requirement and each of them have bit IT budget, we would like to be a player there because of what we’ve done it has probably won us a lot of-- its one of the lot of respect and transparency and deeper believe in us. So I would like to say that that what I was trying to reference. So we're doing extremely well I just came of spent a week in London, looking at what we did and I'm extremely pleased with where we're with an effect to the London marketplace, I am actually headed back in the second week of June again to London. Because we feel it’s not a question of this $12 million or $18 million or whatever, there is a much larger evolved here you're talking about modernizing the London market and there is a lot that have to happen. But Ebix there is a sincere player, we don’t just go and say, listen we want everything right now because we're so good at it, we just like to pace up stack, we like to people to believe in us, we like people to understand Ebix delivered, that Ebix is not going to it's not another aggressive sales machine, Ebix delivers. And so, I think that’s our basic-- right now, we're making absolutely, systematically, we have put in the best talent across the world. To tell you the value of how much we value this reach of exchange, I have folk from the U.S. involved. I have folk from Australia involved. Of course, there is a large team of people India that is involved because we truly value what can happen out of this not only in term of project now, which is by itself very large but then, the entire world ratio market is watching it. If London succeed that base and London can show what it does, it's going to give London almost an unfair edge with respect to all that in meaning reinsurance hubs and that by itself is a huge opportunity for us because we negotiated a good agreement with PPL. So, their credit, they were fair with us, they allowed us to -- we have basically have the ability to take reinsurances stages and deploy them in various other places as long as we don’t just replicate what we just said in PPL exactly.

[Allen Klee:]

And lastly, can you go through the major opportunities that you see over the next couple of years in India?

[Robin Raina:]

I think in India I see opportunities in three areas. One is clearly governance, I think there is a reason that Indian currency is doing so well, its stability in the government and there is as lot of effort that is happening in the digitization of the country. So I feel that there is going to be opportunity, when we say e-governance, e-governance can be across insurance, can be across finance, can be across other industry. But basically you're building infrastructure to digitize the country to convert people into -- if I'm a medical patient let's say, you're converting me into a digital patient that's basically the vision of the Primes Minister of India. That you're digitizing, you're creating the digital human being in a way that that's human being is being connected digitally across from a government perspective from e-commerce perspective. You can do transactions and so on. Because India doesn't have existence of what in terms of there was till now till recently, there few years back, they didn't have any system of social security number and now they have something called Aadhar card and stuff like that. So they're taken a huge step ahead. And so that’s one e-governance so there is a large opportunity and the continued opportunity because India is very diverse country, well it's now going to reach a stage in her next decade or two decade where they will suddenly say, our infrastructure is very good. As you know, India needs a lot of infrastructure. And so, we think we want to be a player there and take a strong position there. The second area is the area I feel of exchanges. India doesn't really have an insurance exchange, India doesn't have a reinsurance exchange, but it's a country where there a lot of youth 65% of the people are approaching the age of 35, they're creating -- this is going to be the largest middle-class in the world, you're going to have a middle-class of 400 million people which infinitely will be larger than the population of U.S. All of these guys that 400,000 people are creating wealth, when you create wealth. You preserve that wealth out that's where insurance comes in. There is a need to standardize. When the government talks about all the standardization and providing better healthcare, providing some conformance, they're not able to do any of that today. Simply because they haven't really created insurance exchanges, until you do that they're not going to have any control over or predictability on anything. You want to predict, governments say that they want to launch crop insurance, but how do you do that without having some infrastructure to do that. Then you going to financial exchanges, I am a huge proponent in the area of financial exchanges. I believe that where Ebix needs to have. I don't know whether you're in recent time read The Wall Street, there was a story in Wall Street almost a week and half back about a company who -- I let you do your research, but this company basically for want a better number numbers, I'll tell you their revenue is around $120 million, their losses this year were approximately $260 million, they were valued at $9 billion, it was $8 billion or $9 billion somewhere in between. And recent example large infusion outs DuPont decided to invest $1.8 billion in it. Now, why did they value it at $9 billion, what is so great about it, if they have only $120 million in revenue and $260 million losses with 14,000 employees. Because the opportunity, they're looking at opportunity of 1.3 million people and they're saying this is a business of financial exchanges where if you can be a player in moving money and providing people the ability to do what Apple paid out or what PayPal paid out, making payment like taking a Uber car. You're in a Uber car and you want to make a payment or buying prepaid car or providing ATM machines because the length and breadth of the country, the country doesn't have ATM machine. You need to get to work where people can walking into brick-and-mortar shop and basically have these mobile wireless machine where they can walk in and say great I have this security code, I need to draw some money and the shopkeeper pays them the money, while they run their security code through that small wireless device. The whole concept of bill payment, in India it's not like the U.S. In India, you don’t just go and make a bill payment, you want to make 30 different bill payments, you either walk up to the shop to the powerhouse or to the gas company or whatever and make your bill payment, it’s a very complicated country. So, there is a need to digitize, there is a need to create exchanges which can be -- which can link the consumer, zip the banks and with the retailers and with the larger providers. So what I mean by that is the power companies, the dish network, the direct TVs of the world you name it, you know the all the big players out there, connecting them with and connecting them with the banks and launching and providing all kinds of range of financial services that are available to people on their phone, are available ideally in brick-and-mortar set up, not only on the phone because India, you have villages, people want to be able to -- you want people to be able to walk in at some time when they even want to make a digital payment they have cash, they don’t have digital money to send that money. So in a country in a third-wall country like that what really happens is they will take cash into a play and make a payment and if they could take that cash and convert that into digital money and then do a transaction over the next at a brick-and-mortar set up in the shop for example digitally that’s another way of doing things. So, there is a lot of possibilities in that market and so the particular company that I talked about incidentally does not do all of this. All they do is they basically a PayPal kind of a player who basically goes in and makes a lot of transactions happen. But they spent a lot of money in branding and trying to be in the midst of it. And from my perspective, I love that play. I feel it’s a perfect fit into insurance exchanges because it’s the same consumer who is running the financial transaction is going to be buying insurance, is going to be buying telemedicine that we provide and so on. And needs the health content, needs the knowledge of health reporting for example, or could be doctor who want continued education and stuff like that. So having said that to me that was third opportunity in India, that’s out there and that’s a really large opportunity and you can sense from this $8 billion or $9 billion valuation that was reported in wall street I think it was a pretty decent story you can have on this back on this company. So I think those are the three areas that we feel are going to be important in India. And there is a fourth area with we are -- we would like to explore and I'll stop it that for now, but its whole area of e-learning, I kept talking about it in previous calls that’s the area that comes naturally to us. We understand the whole concept of e-learning, I like the e-learning area simply because countries like India they are trying to educate the entire population their $1.3 billion people majority of them young all of them need to be educated and you want to provide, government wants to provide standardize education, majority of the schools and government schools and then you have private school. And how do you provide standardize education, you can only provide standardize education digitally if you -- and to provide digital education, if you can do that its same asset that is key when you deliver an asset that asset keeps generating more and more on a every month basis and the scope of that asset doesn’t change that much, it's not that in school, you walk in and you basically say that look every three years I'm going to change the syllabus or I'll change the entire course list, it doesn’t happen, the government doesn’t change that of easily. So which means that’s a huge opportunity in that area and again how do we get there clearly we will chose, if we have to into opportunities like e-learning or financial exchanges. We will clearly have to do things like acquisitions, partnering and stuff like that. And there has to be -- because I feel that big place, it actually is also equal and to creating another Ebix, what Ebix has today, I'm very bullish about those kind of opportunities. So, I will basically once we get to something that is we can talk about, we will obviously discuss this in a little bit more detail at that time.

[Operator:]

I'm showing no further questions in queue at this time. I'd like to turn the call back over to Mr. Raina for any closing remarks.

[Robin Raina:]

Thanks, Liz. I think we have had a decent call and we'll -- I'd like to thank everyone for participating in the call and look forward to speaking to you again at the end of the second quarter. Thanks everyone. And with that, I'll close the call.

[Operator:]

Ladies and gentlemen, thank you for your participation in today conference. This concludes the program. You may now disconnect. Everyone, have a good day.