EBIX - Ebix Inc

[SFValue]

for tax purposes, at what price the shares are exercised matters

[Liberty]

http://www.marketwatch.com/story/ebix-acquires-sydney-based-fintechnix-2012-06-01

 

Ebix, Inc. EBIX, a leading international supplier of On-Demand software and E-commerce services to the insurance industry, today announced that its Australian operation has acquired Fintechnix, a leading supplier of web based straight through processing solutions to the Australian Life Insurance and Wealth Management sectors.

 

Ebix expects the transaction to be immediately accretive to Ebix Earnings per Share (EPS). Ebix disclosed that it funded this transaction completely in cash. No Ebix shares were issued and no investment bankers were involved in the transaction.

 

Stock is down of course. It always is on days with good news (with that high a short interest, not surprising). But it sounds like a good strategic fit and should be nicely accretive over the long-term.

 

EBIX is extremely strong in the P&C market in Aus. and NZ. Good to see them expand in Life and financial.

[mankap]

Ebix has monoply in P&C market in Australia.I think they will try to get Life exchange and CRM through this acquisition.

It is good that Ebix is continuing to execute on their strategy of expanding their footprint .

[Liberty]

http://www.marketwatch.com/story/ebix-acquires-planetsoft-for-40-million-and-adds-underwriting-claims-compensation-producer-appointment-epolicy-delivery-services-to-its-life-annuity-exchanges-2012-06-05

 

Ebix, Inc. EBIX, a leading international supplier of On-Demand software and E-commerce services to the insurance industry, today announced that it has signed an agreement to acquire PlanetSoft, Inc. effective the 1st of June 2012. The acquisition is expected to be immediately accretive to Ebix Earnings per Share (EPS). The closing is expected to be completed in the next week, subject to fulfillment of all regulatory and fiduciary approvals on both sides.

 

With over 14-years of successful experience, PlanetSoft currently services many of the top 20 Life insurance companies in the United States and India, including industry leaders such as Swiss Re, MassMutual, Liberty Mutual, Manulife Financial, Sun Life Financial, Desjardins and New York Max Life. With approximately 575 employees spread across India and the United States, PlanetSoft is in the business of powering data exchanges that streamline core insurance operations in the areas of client acquisition, underwriting, and distribution management.

 

Under terms of the agreement, Ebix has acquired all of the outstanding capital stock of PlanetSoft for a purchase price payable as follows: $35,000,000 paid in cash at closing, and $5,000,000 payable in the form of 297,265 shares of the common stock of Ebix issued at the time of closing. The deal will also involve earn-out cash payments to PlanetSoft shareholders, based on specific revenue numbers that are achieved in the next twenty-four (24) months. Ebix funded the purchase using a mix of internal cash reserves and the Bank credit line available to Ebix at Libor plus 1.5%. No financial advisors were involved in the transaction from the Ebix side.

 

[...]

 

With 90% of its employees based in four offices in India, PlanetSoft has built a strong mix of offshore and onsite staff with core knowledge of insurance, while providing world-class solutions to its insurance company clients.

 

Robin Raina, Chairman, president and CEO of Ebix, said, "This is a very strategic acquisition for us since the combination of PlanetSoft and Ebix exchange products will give us the unique ability to converge insurance and investment operations from front end to back end while converging lead generation, CRM, quoting, illustration, research, underwriting, compliance, policy issuance, claims, reinsurance, compensation management, agent appointment etc in an end-to-end transaction enabling straight through processing. That simply has never been done earlier across the world by any software vendor in our industry."

 

"Ebix and PlanetSoft shared the common goal of end-to-end processing for the insurance industry. Both the companies are committed to SaaS based exchange services targeted at automating the entire process of insurance across all entities. Both Companies have made strong investments in building world class development & intellectual property rights facilities in India." PlanetSoft Founder and CEO Sudhir Bajaj said. "With all these commonalities between the two companies, and the fact that our services complemented each other, we felt that PlanetSoft combining with Ebix has the potential of providing the insurance industry with a giant leap forward in the area of straight through processing."

 

Raina had said that they had a strong acquisition pipeline, but I didn't quite expect 4 of them within like 6 months (Healthconnect, Taimma, Fintechnix, and now PlanetSoft). Knowing how they never overpaid for any acquisition in the past, how they always had strategic importance and allowed them to cross-sell tons of existing products, how they gave them important customer relationships ina conservative industry, how they can usually cut costs rapidly (though most employees here are already in india, so maybe less cost cutting, but an easier integration) and maintain/expand their margins, etc... I feel pretty good about seeing this bigger one right in their core area.

 

This also explains why buybacks had stopped in the past quarter... Building up cash.

 

Here's their website: http://planetsoft.com/index.html

[Liberty]

http://www.ebix.com/pressrelease_text.aspx?artid=239

 

ATLANTA, GA – June 05, 2012 – Ebix, Inc. (NASDAQ:EBIX), a leading international supplier of On-Demand software and E-commerce services to the insurance industry, today announced that it expects to generate annualized run rate of approximately $100 million in EBITDA, after recent acquisition synergies have been completed. EBITDA, a non-GAAP term, is defined as net income before the impact of GAAP interest expense, tax expense and depreciation/amortization expenses.

 

In the last 2 months, Ebix has expanded its On-Demand product portfolio in the area of Life insurance, wealth management, annuities and Medical M-Learning with the acquisitions of PlanetSoft, Fintechnix and Taimma. Each of these acquisitions provides Ebix with added technology and functionality further facilitating the complete realization of end-to-end insurance computing and reaffirms Ebix’s unique position as the Global leader in the insurance software industry.

 

“In the last investor call, I indicated our short term goal of reaching annualized revenue run rate of $200 million in 2012 and an aspirational goal of $500 million of revenue in five years. I am pleased to convey that we are now on the path to exceed the first goal of $200 million in annualized revenue run rate.” Ebix President & CEO Robin Raina said, “Our ability to generate an annualized EBITDA run rate of approximately $100 million, is clearly a landmark event in the company’s history. We are committed to using our free cash flow to grow Ebix through reinvestment in the core business and acquisitions as well as return capital to shareholders through stock repurchases and dividends.”

[mankap]

EBITDA for 2011 was $75m.If the EBITDA for 2012 is $100m i.e. 33% jump over 2011.

I remember a analyst said in the last qtrly call that revenue for 2012 will be around 180m.RR said that is your number and not my or Ebix's number.I think at that time the negotiation was probably in final stages.

 

[Liberty]

So back when EBIX acquired Taimma I didn't have an iPad, so I couldn't check out their stuff..

 

Last night I got:

 

http://itunes.apple.com/ca/app/physiology-respiratory-system/id449415152?mt=8

 

A free 'lite' version of one of their courses. Very well done, I learned a bunch and can see how this would be the way things are done in the future rather than paper courses.

 

I also got the two EBIX apps that are available in the app store. iEmployee requires a login/pass, so I couldn't try it, but the other quoting app had a demo mode. Seems well made, intuitive and fast. As tablets become a lot more popular with brokers, this should make their lives much easier and increase productivity.

[mankap]

I will check this out.

Who is the target customer for these apps

IS it medical students

[Liberty]

I will check this out.

Who is the target customer for these apps

IS it medical students

 

I think they are targetting many people. Most of what I know about them comes from:

 

http://www.ebix.com/pressrelease_text.aspx?artid=227

 

http://www.taimma.com/

 

But I think they are now mostly an addition to EBIX's existing health stuff (mostly ADAM), and a way to get a foot in the door to sell exchanges (ie. Here's what we have to offer, from back-office to exchanges to ways to train your salesforce, informs insurees for legal purposes, etc). Just a more complete offering than the competition, but probably not where most of the money will come from (at least not at first).

[Liberty]

Nothing surprising, but it's official now, PlanetSoft deal closed:

 

http://www.ebix.com/pressrelease_text.aspx?artid=240

 

 

[biaggio]

Liberty, is there any concerns at all with all the acquisitions?

 

i.e EBIX being a "serial acquirer"-does this concern you or anyone else on board.

 

Personally I have been burned by my holdings doing very large acquisitions ("empire building"), so I try to avoid these.

 

This situation may be different- they are smaller acquisitions, though more in number + perhaps they are acquiring business that can t be replicated (building out their network, increasing there moat, etc).

 

I was looking at there 10k

                     

                            2011        2010        2009

Owner earnings $75,204    $46923      $3507

Acquisitions      $105,000    $15200      $65,530

 

The risk I see is that they will need ever increasing acquisitions to maintain growth + the difficulty in valuing business.

 

 

[Liberty]

I've explained elsewhere in this thread why I think these make a lot of sense for EBIX. Can't seem to find the exact message right now, but it's there if you want to look.

[biaggio]

I've explained elsewhere in this thread why I think these make a lot of sense for EBIX. Can't seem to find the exact message right now, but it's there if you want to look.

 

will have a look around, thanks

[Liberty]

I've explained elsewhere in this thread why I think these make a lot of sense for EBIX. Can't seem to find the exact message right now, but it's there if you want to look.

 

will have a look around, thanks

 

If I remember correctly, most of my thinking about EBIX's acquisitions was laid out previously in this thread, and the only thing that I would add to that old message now is that there's a big difference between an acquirer with slim margins and one with big margins. EBIX generates tons of cash that can be reinvested in growth, and as long as they make good decisions (strategic acquisitions, not overpaid, worth more to EBIX because of cross-selling, buying relationships that would be very hard to create organically, integrate them well, only buying if they can get the margins they want, etc), it should be very accretive.

 

Other companies with small margins must constantly borrow or increase their share count to make acquisitions, and as if that wasn't bad enough, they often buy the wrong things for too much and then integrate them badly. No wonder these acquisitions destroy value...

 

As with most things, there's a right and a wrong way to do it. So many do it badly that I understand that it raises red flags, but after digging around I've become pretty comfortable with EBIX's acquisitions. In fact, more than that: I'm happy when they announce a new one, because I trust management's judgement on them.

[mankap]

Liberty

 

Do you know what is Planetsoft's revenue.

I think Finetechnix has 14m annual revenue.

[Liberty]

Liberty

 

Do you know what is Planetsoft's revenue.

I think Finetechnix has 14m annual revenue.

 

I don't. Hoping for more details in next 10Q or CC.

[Liberty]

They sure close them fast. Now Fintechnix's turn:

 

http://www.marketwatch.com/story/ebix-completes-acquisition-of-sydney-based-fintechnix-2012-06-13

 

ATLANTA, Jun 13, 2012 (GlobeNewswire via COMTEX) -- Ebix, Inc., a leading international supplier of On-Demand software and E-commerce services to the insurance industry, today announced that the acquisition of Sydney based Fintechnix has been completed successfully.

 

At the closing, Ebix paid a total amount of AUD 5.25 million in cash for the acquisition. The acquisition is expected to be immediately accretive to Ebix Earnings per Share (EPS). No financial advisors were involved in the transaction from the Ebix side.

[Fairfaxnut]

Been buying more at these ridiculous prices.  I think Robin's background goes against him with first time lookers, but when you dig into this company (all conference calls are posted on their website), and read the 10k's, go over the acquisitions, look at the net margin growth, it becomes an easier decision.  I have watched the "exchange" channel blossom over the past few years....this is what gets me excited.

[DCG]

Any of you guys want to get together and start an insurance software company to sell to Ebix in a few weeks?

[alpha231616967560]

Any of you guys want to get together and start an insurance software company to sell to Ebix in a few weeks?

 

Seems like we would have to be Aussies and in the life insurance biz.

[Liberty]

http://www.ebix.com/pressrelease_text.aspx?artid=242

 

ATLANTA, GA – June 22, 2012 – Ebix, Inc. (NASDAQ:EBIX), a leading international supplier of On-Demand software and E-commerce services to the insurance industry, today announced that it has signed a contract with a US mutual insurance company to provide its Ebix Advantage Web Enterprise SaaS platform to the insurance company, for all its back end system needs such as rating, underwriting, policy administration, accounting, general ledger, billing and claims management. For confidentiality reasons, Ebix did not reveal the name of the insurance Company.

 

The contract mandates Ebix to support the insurance company’s current business and future product development as also to provide enhanced operational efficiencies for their growing agency distribution channel.

 

Ebix Advantage Web is a modern and powerful pure SaaS-based, multi-lingual, multi-currency system, designed to cater to the complete range of general insurance activities such as Clients Management, Policy Administration, Dynamic rating and quoting, Claims management, Accounting, Document Management while providing an option to do comparative quoting for direct broking operations of Insurance Carriers, MGA’s and Brokers.

 

Jon Mayo, Senior Director- Ebix, US P&C Operations said, “This is a large win for us. This deal will start contributing strongly to our carrier division revenues this year. We are going to continue to strive to grow our Property & Casualty (P&C) carrier division revenues at double-digit percentage growth rates annually over the next few years. This deal is a big positive step forward in that direction.”

 

Finally good news for the carrier channel.

[alpha231616967560]

Interesting step. It must be a fairly large carrier re: "This deal will start contributing strongly to our carrier division revenues this year".

[Liberty]

Interesting step. It must be a fairly large carrier re: "This deal will start contributing strongly to our carrier division revenues this year".

 

In the last CC they talked about how challenging that channel was (P&C have small margins, are used to buying perpetual licenses and keeping them for decades, etc), but that they felt they were about to start making significant progress there. I guess they were foreshadowing this deal. Hopefully what it does is show other P&C carriers that it's a good idea to go with this model and snowball into something big over time. In any case, this announcement does seem to validate the switch to a SaaS approach in that area.

 

btw, interesting trading activity today. There was a block of over 325k shares, which is about a day's average volume.

 

Update: Here's the part of the CC that I was referring to:

 

Steve has already talked about the Broker and BPO channels of our business. 

I will talk only about exchanges and the B&C Carrier channel.  Our Carrier

channel which basically represents our Property and Casualty carrier back end

systems revenues reported a 44 percent decline in revenues over the last year. 

While that has hurt our overall revenue numbers in the quarter, we have

reason to believe that we with can get this channel to start delivering better

performance to the Company.  Our revenue model in this channel has

dramatically changed from a perpetual license based model to an annuity

recurring revenue model.

 

The P&C business remains a highly competitive business in the US.  This is

an industry wherein carriers are used to buying perpetual licenses, and then

holding onto that system for decades without paying much, contrary to what

you might have heard recently, the P&C insurance industry constituents in the

US have been suffering from a margin crunch.  Commissions are traditionally

low in P&C, as compared to say the life insurance industry.  Overall the

industry has struggled a bit over last few years.  We saw this trend early and

thus decided not to focus as much on the P&C industry in the US.  We are

focused today on selling in P&C industry at our terms, which means that

unlike our competitors, we do not sell intellectual property.  We provide our

customers access to our intellectual property for a recurring fee. 

 

This model has worked for us in other lines whereas Property & Casualty

business in the US was the only channel where we until recently used to sell

perpetual rights, and we recently had a change of model.  Our sales pipeline is

good in this area, and we expect a gradual rather than an overnight increase in

our numbers in this area.

[Liberty]

Raina selling some shares to pay income taxes due because of vested stock options that he has exercised during 2012.

 

http://atlanta.citybizlist.com/3/2012/6/22/Ebix-CEO-Robin-Raina-Enters-Plan-to-Sell-400K-Shares.aspx

[Liberty]

http://www.ebix.com/pressrelease_text.aspx?artid=243

 

ATLANTA, GA – July 09, 2012 – Ebix, Inc. (NASDAQ:EBIX), AAA Mid-Atlantic Inc. (AAA) and Ebix, Inc. (NASDAQ: EBIX), a leading international supplier of On-Demand software and E-commerce services to the insurance industry, today announced that AAA has successfully adopted Ebix’s SaaS based agency management system EbixASP.

 

EbixASP is an On-Demand Agency Management System designed to handle the property and casualty operations of small to large size agencies and brokerage houses in the United States. The system provides a comprehensive set of insurance-specific, automation solutions for independent agencies, brokerages, managing general agencies, insurance wholesalers and excess/surplus lines brokers. With functions ranging from sales administration, policy management, underwriting, claims administration, a detailed general ledger accounting system to an exhaustive collection and payment system, EbixASP automates the front and back end systems across multiple geographies & departments while exchanging data with insurance carriers in an intelligent bidirectional manner, on an anytime, anyplace, anywhere basis.

 

Lou Pisano, Managing Director of Insurance Agency Operations for AAA Mid-Atlantic said, “With ultimately more than 250 users, this was a complex project involving our end-to-end operations. We are very pleased with the timely and efficient manner in which Ebix handled the project from understanding our needs, system study, design, conceptualization, customization, data conversion and finally getting us in production. We are excited to be taking this technology leap forward in terms of having implemented EbixASP - a cutting edge SaaS based system, targeted at driving large efficiency gains across our organization.”

 

Robin Raina, President & CEO, Ebix, Inc. said, “AAA is a highly respected brand in the United States and strives to be world-class in how it runs its business. AAA’s top priority is servicing their members. We are honored to have been selected by AAA Mid-Atlantic as their policy administration system vendor.”