Ebix posted a 14% YoY increase to $147.2 million in revenue for Q3FY19. This increase would be 17% YoY if revenues from the discontinued e-governance business with BSNL were excluded. The company had booked a bad debt reserve of $12.1 million against receivables from BSNL. Although the Indian government has approved funding for BSNL, Ebix still expects the accounts to be recoverable only after the funding reaches BSNL. The BSNL venture earned EbixCash $2.4 million in revenue in Q3FY18.
Growth was driven by EbixCash — Ebix’s India subsidiary which accounts for over half of Ebix’s revenue — that grew at 36% YoY to $82 million, and 42% YoY excluding its e-governance business with BSNL.
IRDAI approval for BSE-Ebix insurance exchange: Ebix and BSE have secured IRDAI’s in-principle approval for the insurance exchange joint venture to be deployed in India. Ebix expects this to be a “real big opportunity in insurance” and will handle insurance distribution and back-end insurance processing “in a manner and scale that has never been attempted in India”. The business model will have a pure commission-based model — “since it is the most lucrative financially” — with transaction and subscription fees in addition. The exchange will sell life, property and casualty, equipment, travel, and health insurance.
An overview of EbixCash: The business showed strong growth in remittance, lending technology, travel wealth and asset management technology and e-learning, generating 40% plus operating margins.
- EbixCash began wealth management services, which grew 82% YoY in Q3FY19 primarily due to sale of wealth management products in the Middle East, Africa, Asia and India
- E-learning business fell by $4.1 million QoQ
- Travel business grew 62% YoY
- Financial technology division grew by 144% YoY
- Payments solutions grew 31% YoY
- E-learning revenue fell 52% YoY, primarily because of some one-time revenue contracts in Q3FY18
Ebix is targeting June-July 2020 for the IPO, and has onboarded ICICI Bank, Axis Capital and Edelweiss as investment banks. It plans to reach the 70% of India’s population through its physical locations, which can provide digital services such as insurance purchasing, setting up bank accounts etc. The real money in India lies in B-grade, C-grade, and D-grade cities, and not in A-plus or big metropolitan cities, according to Ebix CEO Robin Raina.
Raina said something he has said in previous earnings calls, that EbixCash can provide a customer with every service they may need for travel: it can get a customer’s flight tickets booked, get a visa, handle airline tickets, travel tickets, hotel, local cabs, rental cars, adventure sports in the destiny, foreign exchange, travel and health insurance, providing an “end-to-end” travel service.
Developments in international business
Ebix is working on creating a AI-powered B2C marketplace which offers insurance products to consumers, with services such as straight-through processing and instant underwriting enabled by its reinsurance partners. Ebix would be an intermediary that earns commissions. The exchange would include wellness content, assessment tools, education material, Ask A Doctor, etc. It’s in the middle of onboarding two carriers to this exchange, and expects to add more in the coming quarters.
- Ebix’s insurance exchange channel accounted for 32% of the company’s revenue.
- Worldwide insurance exchange business grew 6% YoY to $51.2 million.
- US exchange business revenue grew 4% YoY, it is at the end stages of finalising 18-20 exchange deals in the US
- Ebix’s life and annuities exchanges, health e-commerce exchanges, P&C business and the insurance certificate business in the US grew. Gains from these were offset by decreases in the consulting business, health content business and the TPA (third party administrator) business.