Description of Business and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Presented in the table below is the breakout of our revenue streams for each of those product/service groups for the years ended December 31, 2018, 2017 and 2016.



	For the Year Ended
	December 31,
(dollar amounts in thousands)		2018		2017		2016
Exchanges		$	396,457	$	259,470	$	206,427
Broker P&C Systems		14,379		14,674		14,105
RCS		79,976		86,832		74,196
Carrier P&C Systems		7,014		2,995		3,566
Totals		$	497,826	$	363,971	$	298,294

isaggregation of Revenue

The following tables present revenue disaggregated by primary geographical regions and product channels for the years ended December 31, 2018 , 2017 and 2016:



	Year Ended December 31, 2018		Year Ended December 31, 2017		Year Ended December 31, 2016
	in thousands
United States	$	196,984	$	211,895	$	213,516
Canada	5,611		7,522		6,328
Latin America	19,866		21,128		8,179
Australia	35,770		34,366		31,156
Singapore*	7,674		6,330		5,848
New Zealand	2,015		1,933		1,903
India*	196,372		61,857		14,153
Europe	15,387		17,062		17,211
Indonesia*	7,482		1,055		—
Philippines*	6,483		623		—
United Arab Emirates*	1,042		200		—
Mauritius*	3,140		$	—	$	—
	$	497,826	$	363,971	$	298,294

*India led businesses, except for portion of Singapore which is not part of EbixCash and United Arab Emirate long-lived assets pertain to intellectual property research and development activities located in Dubai which is not part of EbixCash either. Total revenue in the fourth quarter of 2018 for India led businesses was $65.9 million.

The Company’s revenues are derived from four product/service groups. Presented in the table below is the breakout of our revenue streams for each of those product/service groups for the years ended December 31, 2018 , 2017 and 2016.



	For the Year Ended
	December 31,
(dollar amounts in thousands)		2018		2017		2016
Exchanges		396,457		259,470		206,427
Broker P&C Systems		14,379		14,674		14,105
RCS		79,976		86,832		74,196
Carrier P&C Systems		7,014		2,995		3,566
Totals		$	497,826	$	363,971	$	298,294

(1) Prior period amounts have not been adjusted under the modified retrospective method.

Schedule of Cash and Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows:



	For the Year Ended
	December 31,
(In thousands)	2018		2017		2016
Cash and cash equivalents	147,766		63,895		114,118
Restricted cash	8,317		4,040		—
Restricted cash included in other long-term assets	3,506		2,932		2,823
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	159,589	$	70,867	$	116,941

Business Combination, Segment Allocation

he following table summarizes the adjustments to goodwill, recorded in connection with the acquisitions that occurred during 2018 and 2017:



Company acquired	Date acquired	(in thousands)
ItzCash; final purchase allocation adjustments	April 2017	$	(15,678	)
EbixMoney (combination of YouFirst, WallStreet, Paul Merchants); final purchase allocation adjustments	September 2017-November 2017	4,736
Via; final purchase allocation adjustments	November 2017	(4,612		)
Transcorp	February 2018	7,254
Centrum	April 2018	159,647
SmartClass	April 2018	16,568
Indus	July 2018	21,501
Mercury	July 2018	16,215
Leisure	July 2018	1,707
Miles	August 2018	19,075
Business Travels	October 2018	1,102
AHA Taxis	October 2018	281
Routier	October 2018	455
Lawson	December 2018	2,379
Pearl	December 2018	3,372
Weizmann	December 2018	72,328
Total changes to goodwill during 2018		$	306,330



Company acquired	Date acquired	(in thousands)
Oakstone; final purchase allocation adjustments	December 2014	$	948
EbixHealth JV; final purchase allocation adjustments	July 2016	(7,500		)
Hope Health; final purchase allocation adjustments	November 2016	(289		)
Wdev; final purchase allocation adjustments	November 2016	(5,317		)
ItzCash	April 2017	119,766
beBetter	June 2017	447
YouFirst	September 2017	7,395
Wall Street	October 2017	6,113
Paul Merchants	November 2017	38,589
Via	November 2017	60,785
Total changes to goodwill during 2017		$	220,937

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Additional information regarding the Company's assets and liabilities that are measured at fair value on a recurring basis is presented in the following tables:



	Fair Values at Reporting Date Using*
Descriptions	Balance at December 31, 2018		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets
Commercial bank certificates of deposits ($681 thousand is recorded in the long term asset section of the consolidated balance sheets in "Other Assets")	$	26,714	$	26,714	$	—	$	—
Mutual Funds	5,159		5,159		—		—
Total assets measured at fair value	$	31,873	$	31,873	$	—	$	—

Liabilities
Derivatives:
Contingent accrued earn-out acquisition consideration (a)	24,976		—		—		24,976
Total liabilities measured at fair value	$	24,976	$	—	$	—	$	24,976

(a) The income valuation approach is applied and the valuation inputs include the contingent payment arrangement terms, projected cash flows, rate of return, and probability assessments.
* During the year ended December 31, 2018 there were no transfers between fair value Levels 1, 2 or 3.



	Fair Values at Reporting Date Using*
Descriptions	Balance at December 31, 2017		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets
Commercial bank certificates of deposits ($2.19 million is recorded in the long term asset section of the consolidated balance sheets in "Other Assets")	$	22,293	22,293		—		—
Mutual Funds ($785 thousand recorded in the long term asset section of the consolidated balance sheets in "Other Assets")	$	6,278	6,278		—		—
Total assets measured at fair value	$	28,571	$	28,571	$	—	$	—

Liabilities
Derivatives:
Contingent accrued earn-out acquisition consideration (a)	37,096		—		—		37,096
Total liabilities measured at fair value	$	37,096	$	—	$	—	$	37,096

(a) The income valuation approach is applied and the valuation inputs include the contingent payment arrangement terms, projected cash flows, rate of return, and probability assessments.
* During the year ended December 31, 2017 there were no transfers between fair value Levels 1, 2 or 3.

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

For the Company's assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balances for each category therein, and gains or losses recognized during the year.



Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Contingent Liability for Accrued Earn-out Acquisition Consideration	Balance at December 31, 2018			Balance at December 31, 2017
	(in thousands)

Beginning balance	$	37,096		8,510

Total remeasurement adjustments:
(Gains) or losses included in earnings **	(1,391		)	(164		)
Reductions recorded against goodwill	(13,718		)	(4,007		)
Foreign currency translation adjustments ***	(1,620		)	522

Acquisitions and settlements
Business acquisitions	8,440			34,156
Settlements	(3,831		)	(1,921		)

Ending balance	$	24,976		$	37,096

The amount of total (gains) or losses for the year included in earnings or changes to net assets, attributable to changes in unrealized (gains) or losses relating to assets or liabilities still held at year-end.	$	(1,391	)	$	—

** recorded as a component of reported general and administrative expenses
*** recorded as a component of other comprehensive income within stockholders' equity

Fair Value, Significant Unobservable Inputs Used in Measurement of Contingent Consideration Liabilities

The significant unobservable inputs used in the fair value measurement of the Company's contingent consideration liabilities designated as Level 3 are as follows:

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

he cumulative effect of applying Topic 606 to all contracts was recorded as an adjustment to retained earnings as of the adoption date. As a result of applying the modified retrospective method to adopt the new revenue guidance, the following adjustments were made to accounts on the condensed consolidated balance sheet as of January 1, 2018:



	Impact of Change in Accounting Policy
(In thousands)	As Reported December 31, 2017	Adjustments			Adjusted January 1, 2018
Other Current Assets	33,532	$	898		$	34,430
Current Assets	252,932	898			253,830
Deferred tax asset, net	43,529	2,843			46,372
Other Assets	11,720	1,502			13,222
Total Assets	1,113,013	5,243			1,118,256
Current Deferred Revenue	22,562	5,124			27,686
Current Liabilities	146,932	5,124			152,056
Long Term Deferred Revenue	1,423	8,921			10,344
Total Liabilities	579,254	14,045			593,299
Retained Earnings	510,975	(8,802		)	502,173

The following tables present the impact of adopting Topic 606 on the Company’s unaudited consolidated financial statements as of and for the year ended December 31, 2018:



	Impact of Change in Accounting Policy
	As Reported For the Year Ended December 31, 2018			Adjustments			Balances without adoption of Topic 606
Condensed Consolidated Statement of Income	(In thousands)
Operating Revenue	$	497,826		$	(538	)	$	497,288
Costs of Services Provided	168,415			(134		)	168,281
Total Operating Expenses	344,847			(134		)	344,713
Operating Income	152,979			(404		)	152,575
Income before income taxes	125,582			(404		)	125,178
Income tax (expense) benefit	(32,501		)	99			(32,402		)
Net income including non-controlling interest	93,081			(305		)	92,776
Net income attributable to Ebix, Inc.	93,139			(305		)	92,834
Basic earnings per common share attributable to Ebix, Inc.	2.97			(0.01		)	2.96
Diluted Earnings per common share attributable to Ebix, Inc.	2.95			(0.01		)	2.94

	As Reported December 31, 2018			Adjustments			Balances without adoption of Topic 606
Condensed Consolidated Balance Sheet	(In thousands)
Other current assets	$	59,274		$	(862	)	$	58,412
Total current assets	427,380			(862		)	426,518
Deferred tax asset, net	54,629			(1,811		)	52,818
Other assets	26,714			(1,376		)	25,338
Total assets	1,610,947			(4,049		)	1,606,898
Current Deferred Revenue	35,609			(4,792		)	30,817
Total current liabilities	317,428			(4,792		)	312,636
Long Term Deferred Revenue	9,051			(7,530		)	1,521
Total liabilities	1,066,510			(12,322		)	1,054,188
Retained earnings	535,118			8,273			543,391

	As Reported for the Year Ended December 31, 2018			Adjustments			Balances without adoption of Topic 606
Condensed Consolidated Statement of Cash Flows	(In thousands)
Net income attributable to Ebix, Inc.	$	93,139		$	(305	)	$	92,834
Other assets	(8,486		)	(134		)	(8,620		)
Deferred Revenue	(8,740		)	1,723			(7,017		)
Net cash provided by operating activities	89,869			1,284			91,153

Disaggregation of Revenue

The following tables present revenue disaggregated by primary geographical regions and product channels for the years ended December 31, 2018 , 2017 and 2016:



	Year Ended December 31, 2018		Year Ended December 31, 2017		Year Ended December 31, 2016
	in thousands
United States	$	196,984	$	211,895	$	213,516
Canada	5,611		7,522		6,328
Latin America	19,866		21,128		8,179
Australia	35,770		34,366		31,156
Singapore*	7,674		6,330		5,848
New Zealand	2,015		1,933		1,903
India*	196,372		61,857		14,153
Europe	15,387		17,062		17,211
Indonesia*	7,482		1,055		—
Philippines*	6,483		623		—
United Arab Emirates*	1,042		200		—
Mauritius*	3,140		$	—	$	—
	$	497,826	$	363,971	$	298,294

*India led businesses, except for portion of Singapore which is not part of EbixCash and United Arab Emirate long-lived assets pertain to intellectual property research and development activities located in Dubai which is not part of EbixCash either. Total revenue in the fourth quarter of 2018 for India led businesses was $65.9 million.

mpact of New Revenue Recognition Standard on Financial Statement Line Items

The cumulative effect of applying Topic 606 to all contracts was recorded as an adjustment to retained earnings as of the adoption date. As a result of applying the modified retrospective method to adopt the new revenue guidance, the following adjustments were made to accounts on the condensed consolidated balance sheet as of January 1, 2018:



	Impact of Change in Accounting Policy
(In thousands)	As Reported December 31, 2017	Adjustments			Adjusted January 1, 2018
Other Current Assets	33,532	$	898		$	34,430
Current Assets	252,932	898			253,830
Deferred tax asset, net	43,529	2,843			46,372
Other Assets	11,720	1,502			13,222
Total Assets	1,113,013	5,243			1,118,256
Current Deferred Revenue	22,562	5,124			27,686
Current Liabilities	146,932	5,124			152,056
Long Term Deferred Revenue	1,423	8,921			10,344
Total Liabilities	579,254	14,045			593,299
Retained Earnings	510,975	(8,802		)	502,173

The following tables present the impact of adopting Topic 606 on the Company’s unaudited consolidated financial statements as of and for the year ended December 31, 2018:



	Impact of Change in Accounting Policy
	As Reported For the Year Ended December 31, 2018			Adjustments			Balances without adoption of Topic 606
Condensed Consolidated Statement of Income	(In thousands)
Operating Revenue	$	497,826		$	(538	)	$	497,288
Costs of Services Provided	168,415			(134		)	168,281
Total Operating Expenses	344,847			(134		)	344,713
Operating Income	152,979			(404		)	152,575
Income before income taxes	125,582			(404		)	125,178
Income tax (expense) benefit	(32,501		)	99			(32,402		)
Net income including non-controlling interest	93,081			(305		)	92,776
Net income attributable to Ebix, Inc.	93,139			(305		)	92,834
Basic earnings per common share attributable to Ebix, Inc.	2.97			(0.01		)	2.96
Diluted Earnings per common share attributable to Ebix, Inc.	2.95			(0.01		)	2.94

	As Reported December 31, 2018			Adjustments			Balances without adoption of Topic 606
Condensed Consolidated Balance Sheet	(In thousands)
Other current assets	$	59,274		$	(862	)	$	58,412
Total current assets	427,380			(862		)	426,518
Deferred tax asset, net	54,629			(1,811		)	52,818
Other assets	26,714			(1,376		)	25,338
Total assets	1,610,947			(4,049		)	1,606,898
Current Deferred Revenue	35,609			(4,792		)	30,817
Total current liabilities	317,428			(4,792		)	312,636
Long Term Deferred Revenue	9,051			(7,530		)	1,521
Total liabilities	1,066,510			(12,322		)	1,054,188
Retained earnings	535,118			8,273			543,391

	As Reported for the Year Ended December 31, 2018			Adjustments			Balances without adoption of Topic 606
Condensed Consolidated Statement of Cash Flows	(In thousands)
Net income attributable to Ebix, Inc.	$	93,139		$	(305	)	$	92,834
Other assets	(8,486		)	(134		)	(8,620		)
Deferred Revenue	(8,740		)	1,723			(7,017		)
Net cash provided by operating activities	89,869			1,284			91,153

Disaggregation of Revenue

The following tables present revenue disaggregated by primary geographical regions and product channels for the years ended December 31, 2018 , 2017 and 2016:



	Year Ended December 31, 2018		Year Ended December 31, 2017		Year Ended December 31, 2016
	in thousands
United States	$	196,984	$	211,895	$	213,516
Canada	5,611		7,522		6,328
Latin America	19,866		21,128		8,179
Australia	35,770		34,366		31,156
Singapore*	7,674		6,330		5,848
New Zealand	2,015		1,933		1,903
India*	196,372		61,857		14,153
Europe	15,387		17,062		17,211
Indonesia*	7,482		1,055		—
Philippines*	6,483		623		—
United Arab Emirates*	1,042		200		—
Mauritius*	3,140		$	—	$	—
	$	497,826	$	363,971	$	298,294

*India led businesses, except for portion of Singapore which is not part of EbixCash and United Arab Emirate long-lived assets pertain to intellectual property research and development activities located in Dubai which is not part of EbixCash either. Total revenue in the fourth quarter of 2018 for India led businesses was $65.9 million.



	For the Year Ended
	December 31,
(dollar amounts in thousands)		2018		2017		2016
Exchanges		396,457		259,470		206,427
Broker P&C Systems		14,379		14,674		14,105
RCS		79,976		86,832		74,196
Carrier P&C Systems		7,014		2,995		3,566
Totals		$	497,826	$	363,971	$	298,294

(1) Prior period amounts have not been adjusted under the modified retrospective method.

Costs to Obtain and Fulfill a Contract

The Company capitalizes certain costs in order to maintain the ability to obtain and fulfill new contracts and contract renewals. These costs are primarily related to the setup and customization of our SaaS based platforms and such costs are amortized over the benefit period. Under our treatment prior to implementing Topic 606, these costs were expensed as incurred. As of December 31, 2018 the Company had $862 thousand of contract costs in “Other current assets” and $1.4 million in “Other Assets” on the Company's Condensed Consolidated Balance Sheets.



(In thousands)	December 31, 2018
Balance, beginning of period	$	—
Topic 606 adjustment	2,401
Adjusted beginning balance	$	2,401
Costs recognized from adjusted beginning balance	(898		)
Additions, net of costs recognized	735
Balance, end of period	$	2,238

Deferred Revenue

The Company records deferred revenue when it receives payments or invoices in advance of the performance of services. A significant portion of this balance relates to contracts where the customer has paid in advance for the use of our SaaS platforms over a specified period of time. This portion is recognized as the related performance obligation is fulfilled (generally less than one year). The remaining portion of the deferred revenue balance consists primarily of customer-specific customizations that are not distinct from related performance obligations that transfer over time. This portion is recognized over the expected useful life of the customizations.



(In thousands)	December 31, 2018
Balance, beginning of period	$	23,985
Topic 606 adjustment	14,045
Adjusted beginning balance	$	38,030
Revenue recognized from adjusted beginning balance	(21,697		)
Additions from business acquisitions	16,273
Additions, net of revenue recognized and currency translation	12,054
Balance, end of period	$	44,660

Revenue Allocated to Remaining Performance Obligations

The following table presents our estimated revenue allocated to remaining performance obligations for contracted revenue that has not yet been recognized, representing our “contractually committed” revenue as of December 31, 2018 that we will transfer from deferred revenue and recognize in future periods:



Estimated Revenue (in thousands):
For the year ending December 31, 2019	4,865
For the year ending December 31, 2020	3,586
For the year ending December 31, 2021	2,385
For the year ending December 31, 2022	1,180
For the year ending December 31, 2023	592

	$	12,608

Our contractually committed revenue, for purposes of the tabular presentation above, is generally limited to service customer contracts with significant programming, setup, and implementation activities related to our SaaS offerings. Our contractually committed revenue amounts generally exclude, based on the following practical expedients that we elected to apply, remaining performance obligations for: (i) contracts with an original expected duration of one year or less; and (ii) contracts for which we recognize revenue at the amount for which we have the right to invoice for services performed.

Contract with Customer, Asset and Liability

osts to Obtain and Fulfill a Contract



(In thousands)	December 31, 2018
Balance, beginning of period	$	—
Topic 606 adjustment	2,401
Adjusted beginning balance	$	2,401
Costs recognized from adjusted beginning balance	(898		)
Additions, net of costs recognized	735
Balance, end of period	$	2,238

Deferred Revenue



(In thousands)	December 31, 2018
Balance, beginning of period	$	23,985
Topic 606 adjustment	14,045
Adjusted beginning balance	$	38,030
Revenue recognized from adjusted beginning balance	(21,697		)
Additions from business acquisitions	16,273
Additions, net of revenue recognized and currency translation	12,054
Balance, end of period	$	44,660

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction

he following table presents our estimated revenue allocated to remaining performance obligations for contracted revenue that has not yet been recognized, representing our “contractually committed” revenue as of December 31, 2018 that we will transfer from deferred revenue and recognize in future periods:



Estimated Revenue (in thousands):
For the year ending December 31, 2019	4,865
For the year ending December 31, 2020	3,586
For the year ending December 31, 2021	2,385
For the year ending December 31, 2022	1,180
For the year ending December 31, 2023	592

	$	12,608

Schedule of Goodwill

hanges in the carrying amount of goodwill for the years ended December 31, 2018 and 2017 are as follows:



	December 31, 2018			December 31, 2017
	(in thousands)
Beginning Balance	$	666,863		$	441,404
Additions for current year acquisitions	317,410			233,095
Purchase accounting adjustments for prior year acquisitions	(11,080		)	(12,158		)
Foreign currency translation adjustments	(26,508		)	4,522
Ending Balance	$	946,685		$	666,863

Schedule of Finite-Lived Intangible Assets by Major Class, Estimated Useful Lives

e amortize these intangible assets on a straight-line basis over their estimated useful lives, as follows:



	Life
Category	(yrs)
Customer relationships	7-20
Developed technology	3-12
Airport Contract	9
Store Networks	5
Dealer networks	15-20
Brand	15
Trademarks	3-15
Non-compete agreements	5
Database	10

Schedule of Intangible Assets, Excluding Goodwill

ntangible assets as of December 31, 2018 and December 31, 2017, are as follows:



	December 31,
	2018			2017
	(In thousands)
Finite-lived intangible assets:
Customer relationships	$	80,070		$	73,725
Developed technology	19,176			15,076
Dealer networks	6,315			10,581
Airport Contract	4,752			—
Store Networks	821			—
Trademarks	2,677			2,698
Brand	864			—
Non-compete agreements	764			764
Backlog	140			140
Database	212			212
Total intangibles	115,791			103,196
Accumulated amortization	(64,343		)	(57,485		)
Finite-lived intangibles, net	$	51,448		$	45,711

Indefinite-lived intangibles:
Customer/territorial relationships	$	42,055		$	42,055

Useful Lives of Property and Equipment Used in Computation of Depreciation

he estimated useful lives applied by the Company for property and equipment are as follows:



	Life
Asset Category	(yrs)
Buildings	39
Building Improvements	15
Computer equipment	5
Furniture, fixtures and other	7
Software	3
Land Improvements	20
Land	Unlimited life
Leasehold improvements	Life of the lease

(in thousands)

Fair Value at December 31, 2018

Valuation Technique

Significant Unobservable
Input

Contingent acquisition consideration:
(Wdev, ItzCash, Indus and Miles acquisitions)

Discounted cash flow

Expected future annual revenue streams and probability of achievement