EbixCash Financial Exchange reported revenue of $11.1 million for the quarter ended September 2017 (Q3 2017). In Q2 2017, EbixCash Financial exchange reported revenues of $8.4 million. Nasdaq-listed Ebix, which provides software for the insurance, financial, e-governance and healthcare industries, renamed ItzCash as EbixCash after it bought the company for $120 million in August. Ebix said that it wanted to build a financial exchange following the deal and has been on an acquisition spree in India and has been stepping up its operations.

– It bought three cross-border money transfer companies – YouFirst Money Express, Wall Street Finance, and Paul Merchants within one month.
– It acquired online travel agent (OTA) Via.com for $74.9 million.
– It started a joint venture with the Bombay Stock Exchange for setting up an insurance distribution network.

The money transfer businesses and Via will be under the umbrella of EbixCash along with ItzCash’s operations. At the time of acquisition, Ebix said that the revenues would be accretive immediately to the company. Accordingly, in Q3, YouFirst reported revenues of $540,000. “Revenues from the acquisition of Paul Merchants, Wall Street Finance and Via will be reflected in the Q4 2017 results,” Darren Joseph, corporate VP of finance said in a call with analysts.

“Our explosive growth over the last nine months has been in two key markets, India and Latin America. The Indian venture showed 271% year-over-year growth in the nine-month period ending September 30, 2017, by growing to $37.5 million from $10.1 million in the same period in 2016,” Joseph added in the call.

“Over the next 6 months, we expect the combined remittance business under our EbixCash Financial Exchange to deliver 35% to 40% operating margins,” CEO Robin Raina said. He added that the travel exchange (through Via.com) to deliver 30% plus in operating margins over the next 6 months.

E-governance contract

Ebix’s management said that it has an e-governance contract with public sector undertaking in India but the company did not disclose the nature of the contract or which PSU it is working with. However, the company said that it is expecting the contract to generate significant revenues for the company.

“We accepted an e-governance contract recently, which has to be executed over the next 7 months. So we should see substantial revenue come out of that contract over the next 7 months. But we expect these contracts to keep flowing. We are in the midst of many such deals, many such bids in India. So we should see a, hopefully, a continual pipeline of e-governance contracts,” Raina mentioned. “For us, it’s very important that we want to try and keep our operating margins above 30%. And any e-governance deals, at best, will have an operating margin level of 20%, 23% and, most of the time, at operating margin levels between 15% and 20%,” he added.

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Financials

  • Q3 2017 revenue rose 24% to $92.8 million compared to $74.6 million in Q3 2016 and increased 6% over Q2 2017 revenue of $87.4 million
  • Q3 2017 operating margins decreased to 30% as compared to 33% in Q3 2016. Excluding the impact of the ItzCash acquisition, Q3 2017 operating margins would have been 33%, the company said.
  • Operating income for Q3 2017 rose 15% or $3.6 million to $27.9 million compared to $24.3 million in Q3 2016.
  • Net profit for Q3 2017 was $24.2 million, a slight increase over $24.1 million in Q3 2016.
  • Revenue from Exchanges stood at $64.13 million up 23% from $52.01 million in the same quarter last year.
  • Revenue from Risk Compliance Software (RCS) stood at $24.27 million up 34% from $18.08 million in Q3 2016
  • Revenue from broker solutions stood at $3.715 million up 4% YoY
  • Carrier systems revenue stood at $690,000 a decline of 28% YoY.

Download: Press release | Transcript