Transcript of the 2007, Q3 Investor Conference Call

Date: 5th November 2007 @ 11am EST
Speaker: Robin Raina, Ebix Chairman of the Board, President & CEO

Good morning Gentleman. Thank you for attending Ebix’s 2007 Q3 Investor Conference call. I have also here with me Ebix’s CFO Robert Kerris who recently joined us.

Our Q3 2007 results were announced a few days back. Let me summarize those results for you from our perspective.

Q3 results were yet again record results – the best ever in Ebix’s history in terms of diluted EPS. To compare these results to the same quarter last year or to the second quarter in 2007 would reveal to you that the company has shown consistent growth over the last one year. Each of the three quarters in the year 2007 have been record results – with each quarter beating all the preceding quarters in our 31 year history as a company.

On the face of it, these results might look great to a new investor but probably not to an Ebix investor who has followed this company for the last eight years or so. In the last eight years, Ebix has shown a slow and steady improvement in its results with each quarter being a bit better than the previous one. Our model of management has been to create a fundamentally strong company that has recurring revenues, good margins and good cash flows while avoiding a high risk strategy, even if at times it meant settling for lower top line growth.

From my perspective, Q3 2007 has been a good quarter since it marks the first time that Ebix has reported more than 30% net margins. In Q3 of 2007, Ebix reported 32% net margins the highest ever in its history. Again, while Ebix has a history of not issuing guidance, yet we have always publicly stated our desire to grow our net margins to 30% and more. So, towards that extent, this has been a good quarter.

The company reported total revenue of $11.81 million for the third quarter of 2007, compared to $7.30 million for the third quarter of 2006, marking a sixty two percent increase in revenues.

Net income after taxes for the quarter rose one hundred twenty three (123 %) percent to $3.69 million, or $1 per diluted share, up from $1.66 million, or $0.53 per diluted share, in the third quarter of 2006— an earnings per share growth of eighty nine (89 %) percent. Results for the third quarter of 2007 were based on 3.68 million weighted average diluted shares outstanding, as compared to 3.12 million in the third quarter of 2006. The company also reported basic earnings per share in the third quarter of 2007 of $1.13 as compared to $0.60 in the third quarter of 2006.

The company’s operating expenses for the quarter grew by forty eight percent to $8.09 million as compared to $5.47 million for the third quarter of 2006. The company attributed the increase primarily to the acquisition of Finetre in October 2006 and its hiring of more resources across the world to support servicing its top line growth.

Our year-to-date net income thru September 2007 grew by ninety (90) percent to $ 8.17 million as compared to $ 4.29 million for the same period in 2006. The nine month cumulative diluted EPS for 2007 grew by seventy four (74 %) percent to $2.39 as compared to cumulative diluted EPS of $1.37 for the same period in 2006.

So, what caused the margin growth in this quarter? As said earlier in previous investor calls, in the Ebix model of keeping a tight control on costs, increased revenue is likely to result in increased margins as is evident in this quarter. Revenues grew to $11.81 million in Q3 of 2007 as compared to $9.82 million in Q2 2007 (20% growth) or $9.02 Million in Q1 2007 (31 % growth) or $ 7.3 million in Q3 2006 (62% growth). As revenues grew, Net margins in Q3 2007 grew to 32% from 26% in Q2 of 2007 and 22% in Q1 of 2007 and 22% in Q3 of 2006.

What resulted in top line growth in Q3 of 2007? It was simply normal organic growth with each of our divisions contributing to the increased revenue in the quarter.

On 2nd November, Ebix announced the acquisition of California based Insurance BPO Insurance Data Services. IDS is a leader in the certificates of insurance backend space. With a base in Hemet and 105 employees, IDS complements our back end BPO facilities in India. We expect the acquisition of IDS to be accretive to our results in the near and long term future. We funded this acquisition completely with cash generated from internal sources.

While we are pleased with the results of this quarter, we see this quarter simply as another step forward rather than our destination. We are focused today on many opportunities – cross selling our products across different markets, growing our presence in international markets, identifying newer acquisition in markets where we want back door entries to establish ourselves, increasing our leadership space in certain areas to help launch newer products and services to that market. While doing all this, we are continually strengthening our resource base around the world in addition to designing newer cutting edge products that can keep us a few years ahead of our competition.

As always, the audio transcript of this and any of our previous calls can be heard and downloaded from the investor home page on the Ebix site www.ebix.com. Also, I would encourage you to visit the comprehensive Investor home page on the Ebix site with a view to providing a one stop place to analyze Ebix from an investor perspective.

With that, I am going to hand it over back to the moderator to open the call for questions.

Thank you.
Robin Raina