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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     For the quarterly period ended June 30, 2022

OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-15946
Ebix, Inc.
(Exact name of registrant as specified in its charter)
   
Delaware 77-0021975
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)  
   
1 Ebix Way  
Johns CreekGeorgia 30097
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 678-281-2020
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolsName of each exchange on which registered
Common stock, $0.10 par value per shareEBIXNasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Table of Contents
Large accelerated filerAccelerated filer
 
Non-accelerated filerSmaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of August 3, 2022 the number of shares of common stock outstanding was 30,906,023.



FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2022
INDEX
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Exhibit 101


Table of Contents
PART I — FINANCIAL INFORMATION

Item 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)

Three Months EndedSix Months Ended
June 30,June 30,
 2022202120222021
Operating revenue$250,781 $246,322 $537,034 $536,375 
Operating expenses:  
Cost of services provided169,330 178,203 380,173 398,561 
Product development10,223 10,142 20,481 19,687 
Sales and marketing4,511 3,392 8,276 7,219 
General and administrative, net31,736 23,335 58,649 44,672 
Amortization and depreciation4,874 3,985 9,238 7,785 
Total operating expenses220,674 219,057 476,817 477,924 
Operating income30,107 27,265 60,217 58,451 
Interest income66 17 128 25 
Interest expense(11,664)(10,462)(21,915)(18,541)
Non-operating (loss) income(408)(1,253)(1,142)(1,254)
Foreign currency exchange gain (loss) 3,229 9 4,123 (616)
Income before income taxes21,330 15,576 41,411 38,065 
Income tax (expense) benefit(2,478)(627)(4,182)(1,829)
Net income including noncontrolling interest18,852 14,949 37,229 36,236 
Net loss attributable to noncontrolling interest(491)(772)(1,305)(1,076)
Net income attributable to Ebix, Inc.$19,343 $15,721 $38,534 $37,312 
Basic earnings per common share attributable to Ebix, Inc.$0.63 $0.51 $1.25 $1.22 
Diluted earnings per common share attributable to Ebix, Inc.$0.63 $0.51 $1.25 $1.21 
Basic weighted average shares outstanding30,745 30,581 30,729 30,570 
Diluted weighted average shares outstanding30,756 30,713 30,756 30,712 

See accompanying notes to the condensed consolidated financial statements.

2

Table of Contents

Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)


Three Months EndedSix Months Ended
June 30,June 30,
 2022202120222021
Net income including noncontrolling interest$18,852 $14,949 $37,229 $36,236 
Other comprehensive income (loss):
                Foreign currency translation adjustments(43,343)(8,574)(54,627)(12,493)
                                Total other comprehensive income (loss)(43,343)(8,574)(54,627)(12,493)
Comprehensive income(24,491)6,375 (17,398)23,743 
Comprehensive loss attributable to noncontrolling interest(491)(772)(1,305)(1,076)
Comprehensive income attributable to Ebix, Inc.$(24,000)$7,147 $(16,093)$24,819 


See accompanying notes to the condensed consolidated financial statements.
3

Table of Contents
Ebix, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
June 30,
2022
December 31,
2021
ASSETS(Unaudited)
Current assets:  
Cash and cash equivalents$67,511 $99,625 
Receivables from service providers3,546 1,352 
Short-term investments19,767 16,463 
Restricted cash 9,415 9,080 
Fiduciary funds - restricted1,782 2,046 
Trade accounts receivable, less allowances of $20,312 and $19,874, respectively
161,099 153,609 
Other current assets91,527 84,389 
Total current assets354,647 366,564 
Property and equipment, net58,405 54,359 
Right-of-use assets9,753 10,051 
Goodwill906,807 939,249 
Intangibles, net40,873 46,795 
Indefinite-lived intangibles16,647 16,647 
Capitalized software development costs, net23,404 21,565 
Deferred tax asset, net105,389 84,514 
Other assets31,519 33,505 
Total assets$1,547,444 $1,573,249 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities: 
Accounts payable and accrued liabilities$90,551 $86,181 
Payables to service agents7,470 6,296 
Accrued payroll and related benefits11,991 11,360 
Working capital facility3,696 5,607 
Fiduciary funds - restricted1,782 2,046 
Revolving line of credit439,402  
Short-term debt281 1,954 
Current portion of long term debt and financing lease obligations, net of deferred financing costs of $1,910 and $1,635, respectively
196,975 28,577 
Contract liabilities39,918 33,164 
Lease liability3,361 3,173 
Other current liabilities32,276 26,837 
Total current liabilities827,703 205,195 
Revolving line of credit 439,402 
Long term debt and financing lease obligations, less current portion, net of deferred financing costs of $0 and $261, respectively
227 184,676 
Contingent liability for accrued earn-out acquisition consideration2,412 2,557 
Contract liabilities9,033 8,193 
Lease liability6,720 7,139 
Deferred tax liability, net1,150 1,150 
Other liabilities20,809 25,383 
Total liabilities868,054 873,695 
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Stockholders’ equity: 
Preferred stock, $0.10 par value, 500,000 shares authorized, no shares issued and outstanding at June 30, 2022 and December 31, 2021
  
Series Y Convertible preferred stock, $0.10 par value, 350,000 shares authorized, no shares issued and outstanding at June 30, 2022 and December 31, 2021
  
Common stock, $0.10 par value, 220,000,000 shares authorized, 30,755,500 issued and outstanding, at June 30, 2022, and 30,683,393 issued and outstanding at December 31, 2021
3,075 3,068 
Additional paid-in capital16,931 15,068 
Retained earnings793,106 759,208 
Accumulated other comprehensive loss(176,649)(122,022)
Total Ebix, Inc. stockholders’ equity636,463 655,322 
Noncontrolling interest42,927 44,232 
Total stockholders’ equity679,390 699,554 
Total liabilities and stockholders’ equity$1,547,444 $1,573,249 

See accompanying notes to the condensed consolidated financial statements.
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Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)
(In thousands except for share figures)

 Common Stock   
Issued
Shares
AmountAdditional Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive
Loss
Noncontrolling interestTotal
Balance, April 1, 202230,722,267 $3,072 $15,994 $776,081 $(133,306)$43,418 $705,259 
Net income attributable to Ebix, Inc.— — — 19,343 — — 19,343 
Net loss attributable to noncontrolling interest— — — — — (491)(491)
Cumulative translation adjustment— — — — (43,343)— (43,343)
Vesting of restricted stock34,183 3 (3)— — —  
Share based compensation— — 970 — — — 970 
Forfeiture of certain shares to satisfy exercise costs and the recipients income tax obligations related to stock options exercised and restricted stock vested(950)— (30)— — — (30)
Common stock dividends paid, $0.075 per share
— — — (2,318)— — (2,318)
Balance, June 30, 202230,755,500 $3,075 $16,931 $793,106 $(176,649)$42,927 $679,390 
 Common Stock   
Issued
Shares
AmountAdditional Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive
Loss
Noncontrolling interestTotal
Balance, January 1, 202230,683,393 $3,068 $15,068 $759,208 $(122,022)$44,232 $699,554 
Net income attributable to Ebix, Inc.— — — 38,534 — — 38,534 
Net loss attributable to noncontrolling interest— — — — — (1,305)(1,305)
Cumulative translation adjustment— — — — (54,627)— (54,627)
Vesting of restricted stock74,164 7 (7)— — —  
Share based compensation— — 1,934 — — — 1,934 
Forfeiture of certain shares to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vested(2,057)— (64)— — — (64)
Common stock dividends paid, $0.075 per share
— — — (4,636)— — (4,636)
Balance, June 30, 202230,755,500 $3,075 $16,931 $793,106 $(176,649)$42,927 $679,390 

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 Common Stock   
Issued
Shares
AmountAdditional Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive
Loss
Noncontrolling interestTotal
Balance, April 1, 202130,559,324 $3,056 $12,480 $719,574 $(105,422)$46,821 $676,509 
Net income attributable to Ebix, Inc.— $— $— $15,721 $— $— $15,721 
Net loss attributable to noncontrolling interest— $— $— $— $— $(772)$(772)
Cumulative translation adjustment— $— $— $— $(8,574)$— $(8,574)
Vesting of restricted stock27,222 $3 $(3)$— $— $— $ 
Share based compensation— $— $1,359 $— $— $— $1,359 
Forfeiture of certain shares to satisfy exercise costs and the recipients income tax obligations related to stock options exercised and restricted stock vested(3,986)$(1)$(118)$— $— $— $(119)
Common stock dividends paid, $0.075 per share
— $— $— $(2,321)$— $— $(2,321)
Balance, June 30, 202130,582,560 $3,058 $13,718 $732,974 $(113,996)$46,049 $681,803 

 Common Stock   
Issued
Shares
AmountAdditional Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive
Loss
Noncontrolling interestTotal
Balance, January 1, 202130,515,334 $3,052 $11,126 $700,304 $(101,503)$47,125 $660,104 
Net income attributable to Ebix, Inc.— — — 37,312 — — 37,312 
Net loss attributable to noncontrolling interest— — — — — (1,076)(1,076)
Cumulative translation adjustment— — — — (12,493)— (12,493)
Vesting of restricted stock71,212 7 (7)— — —  
Share based compensation— — 2,717 — — — 2,717 
Forfeiture of certain shares to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vested(3,986)(1)(118)— — — (119)
Common stock dividends paid, $0.075 per share
— — — (4,642)— — (4,642)
Balance, June 30, 202130,582,560 3,058 13,718 732,974 (113,996)46,049 681,803 
See accompanying notes to the condensed consolidated financial statements.
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Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
 June 30,
 20222021
Cash flows from operating activities:  
Net income attributable to Ebix, Inc.$38,534 $37,312 
Net loss attributable to noncontrolling interest(1,305)(1,076)
Adjustments to reconcile net income to net cash provided by operating activities: 
Amortization and depreciation9,238 7,785 
Provision (benefit) for deferred taxes
(24,354)(3,175)
Share-based compensation1,934 2,717 
(Benefit) provision for doubtful accounts1,702 (2,815)
Amortization of right-of-use assets1,765 2,507 
Amortization of capitalized software development costs1,511 1,647 
Changes in assets and liabilities, net of effects from acquisitions: 
Accounts receivable(16,223)2,025 
Receivables from service providers(2,194)(8,592)
Payables to service agents1,174 (1,154)
Other assets(9,826)(10,489)
Accounts payable and accrued expenses8,525 (9,469)
Accrued payroll and related benefits1,004 (1,318)
Contract liabilities8,766 2,182 
Lease liabilities(1,670)(264)
Reserve for potential uncertain income tax return positions 334 
Other liabilities2,863 3,503 
Net cash provided by operating activities21,444 21,660 
Cash flows from investing activities:  
Capitalized software development costs(4,170)(3,106)
Maturities (purchases) of unrestricted marketable securities, net(3,214)11,250 
Capital expenditures(9,607)(1,705)
Net cash (used in) provided by investing activities(16,991)6,439 
Cash flows from financing activities: 
Principal payments of term loan obligation(15,933)(31,297)
Forfeiture of certain shares to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vested(64)(119)
Dividend payments(4,636)(4,642)
Payments of debt obligations, net(1,672)(149)
Payments of working capital facility, net(1,704)(6,886)
Payments of financing lease obligations, net(106)(48)
Net cash used in financing activities(24,115)(43,141)
Effect of foreign exchange rates on cash(11,767)(4,806)
Net change in cash and cash equivalents, and restricted cash(31,429)(19,848)
Cash and cash equivalents, and restricted cash at the beginning of the period114,764 120,213 
Cash and cash equivalents, and restricted cash at the end of the period$83,335 $100,365 
Supplemental disclosures of cash flow information:  
Interest paid$19,088 $14,065 
Income taxes paid$24,222 $12,073 
See accompanying notes to the condensed consolidated financial statements.







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Supplemental schedule of noncash financing activities:
    
During the six months ended June 30, 2022, there were 2,057 shares, totaling $64 thousand, used to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vesting.
    During the six months ended June 30, 2021, there were 3,986 shares, totaling $119 thousand, used to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vesting.


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Ebix, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements


Note 1: Description of Business and Summary of Significant Accounting Policies
    Description of Business — Ebix, Inc., and its subsidiaries, (“Ebix” or the “Company”, "we", "us", and "our") is a leading international supplier of on-demand infrastructure exchanges to the insurance, financial services, travel, and healthcare industries. In the insurance industry, the Company’s main focus is to develop and deploy a wide variety of insurance and reinsurance exchanges on an on-demand basis using software-as-a-service ("SaaS") enterprise solutions in the areas of customer relationship management ("CRM"), front-end and back-end systems, and outsourced administrative and risk compliance. The Company's products feature fully customizable and scalable software solutions designed to streamline the way insurance and financial industry professionals manage distribution, marketing, sales, customer service, and accounting activities. With a "Phygital” strategy that combines physical distribution outlets in India and many Association of Southeast Asian Nations ("ASEAN") countries to an Omni-channel online digital platform, the Company’s EbixCash financial exchange portfolio of software and services encompasses domestic and international money remittance, foreign exchange ("Forex"), travel, pre-paid gift cards, utility payments, lending, and wealth management in India and other ASEAN markets. The Company has its headquarters in Johns Creek, Georgia and also conducts operating activities in Australia, Brazil, Canada, India, Indonesia, New Zealand, the Philippines, Singapore, the United Arab Emirates, and the United Kingdom. International revenue accounted for 85.7% and 85.9% of the Company’s total revenue for the six months ended June 30, 2022 and 2021, respectively.

Summary of Significant Accounting Policies
    Basis of Presentation — The accompanying unaudited condensed consolidated financial statements and these notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") with the effect of inter-company balances and transactions eliminated. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP and SEC rules have been condensed or omitted as permitted by and pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements contain adjustments (consisting only of normal recurring items) necessary to fairly present the consolidated financial position of the Company and its consolidated results of operations and cash flows. Operating results for the three and six months ended June 30, 2022 and 2021 are not necessarily indicative of the results that may be expected for future quarters or the full year of 2022. The condensed consolidated December 31, 2021 balance sheet included in this interim period filing has been derived from the audited financial statements at that date, but does not necessarily include all of the information and related notes required by GAAP for complete financial statements. These condensed interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and reported amounts of revenue and expenses during those reporting periods. Management has made material estimates primarily with respect to revenue recognition and contract liabilities, accounts receivable, acquired intangible assets, annual impairment reviews of goodwill and indefinite-lived intangible assets, contingent earn out liabilities in connection with business acquisitions, and the provision for income taxes. Actual results may be different from those estimates.
    Reclassification — Certain prior year amounts have been reclassified to be consistent with current year presentation within our financial statements.
Cash and Cash Equivalents — The Company considers all highly liquid investments with original maturity of three months or less at the time of purchase to be cash equivalents. Such investments are stated at cost, which approximates fair value. The Company does maintain cash balances in banking institutions in excess of federally insured amounts and therefore is exposed to the related potential credit risk associated with such cash deposits.
Short-Term Investments — The Company's primary short-term investments consist of certificates of deposit with established commercial banking institutions in India that have readily determinable fair values. Ebix accounts for such investments that are reasonably expected to be realized in cash, sold or consumed during the year as short-term investments that are available-for-sale. The carrying amount of investments in marketable securities approximates their fair value. The carrying value of short-term investments was $19.8 million and $16.5 million at June 30, 2022 and December 31, 2021, respectively.
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Restricted Cash — The carrying value of our restricted cash in current assets was $9.4 million and $9.1 million at June 30, 2022 and December 31, 2021, respectively. The June 30, 2022 balance consists of fixed deposits (many in the form of certificates of deposit) pledged with banks for issuance of bank guarantees and letters of credit related to our India operations for our working capital facilities.

    The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:
As of
June 30,
2022
2021
(In thousands)
Cash and cash equivalents$67,511 $85,069 
Restricted cash9,415 8,440 
Restricted cash included in other long-term assets6,409 6,856 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows$83,335 $100,365 


Fiduciary Funds - Restricted — Due to EbixHealth JV being a third party administrator ("TPA"), the Company collects premiums from insureds and, after deducting its fees, remits these premiums to insurance companies. Unremitted insurance premiums and/or claim funds established for the benefit for various carriers are held in a fiduciary capacity until disbursed by the Company. The use of premiums collected from insureds but not yet remitted to insurance companies is restricted by law in certain states. The total assets held on behalf of others, $1.8 million and $2.0 million at June 30, 2022 and December 31, 2021, respectively, are recorded as an asset and offsetting fiduciary funds - restricted liability.

    Advertising — Advertising costs amounted to $2.4 million and $4.3 million for the three and six month period ended June 30, 2022, respectively, and $1.2 million and $2.8 million for the three and six month period ended June 30, 2021, respectively. The costs are included in sales and marketing expenses in the accompanying condensed consolidated statements of income. The Company expenses advertising costs as incurred.
    Fair Value of Financial Instruments — The Company follows the relevant GAAP guidance regarding the determination and measurement of the fair value of assets/liabilities in which fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction valuation hierarchy, which requires and entity to maximize the use of observable inputs when measuring fair value. This guidance establishes a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The hierarchy reflects the degree to which objective data from external active markets are available to measure fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable. The classifications are as follows:
Level 1 Inputs - Unadjusted quoted prices available in active markets for identical investments to the reporting entity at the measurement date.
Level 2 Inputs - Other than quoted prices included in Level 1 inputs, which are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 Inputs - Unobservable inputs, which are used to the extent that observable inputs are not available, and used in situations where there is little or no market activity for the asset or liability and wherein the reporting entity makes estimates and assumptions related to the pricing of the asset or liability, including assumptions regarding risk.

    A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

    As of June 30, 2022, the Company had the following financial instruments to which it had to both consider fair values and make fair value assessments:

Short-term investments (commercial bank certificates of deposits and mutual funds), for which the fair values are measured as a Level 1 instrument for mutual funds and a Level 2 instrument for certificates of deposit.
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Contingent accrued earn-out business acquisition consideration liabilities, for which fair values are measured as Level 3 instruments. These contingent consideration liabilities were recorded at fair value on the acquisition date and are re-measured quarterly based on the then assessed fair value and adjusted if necessary. The increases or decreases in the fair value of contingent consideration can result from changes in anticipated revenue levels and changes in assumed discount periods and rates. As the fair value measure is based on significant inputs that are not observable in the market, they are categorized as Level 3.

Other financial instruments not measured at fair value on the Company's unaudited Condensed Consolidated Balance Sheet at June 30, 2022 that require disclosure of fair values include: cash and cash equivalents, restricted cash, fiduciary funds, accounts receivable, receivables from service providers, accounts payable and accrued expenses, accrued payroll and related benefits, payables to service agents, finance lease obligations, working capital facilities, the revolving line of credit, and term loan debt. The Company believes that the estimated fair value of such instruments at June 30, 2022 and December 31, 2021 approximates their carrying value as reported on the Company's condensed consolidated balance sheets.
    
    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*
DescriptionsBalance, June 30, 2022Quoted 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 ($6.6 million is recorded in the long
term asset section of the condensed consolidated balance sheets in "Other assets")
$26,311 $ $26,311 $ 
Mutual funds (recorded in
the long term asset section of the condensed consolidated balance sheets in "Other assets")
91 91   
Total assets measured at fair value$26,402 $91 $26,311 $ 
Liabilities
Contingent accrued earn-out acquisition consideration (a)$2,412 $ $ $2,412 
Total liabilities measured at fair value$2,412 $ $ $2,412 
(a) The income valuation approach is applied and the valuation inputs include the contingent payment arrangement terms, projected revenues and cash flows, rate of return, and probability assessments.
* During the six months ended June 30, 2022, there were no transfers between fair value Levels 1, 2, or 3.
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Fair Values at Reporting Date Using*
DescriptionsBalance, December 31, 2021Quoted 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 ($6.3 million is recorded in the long term asset section of the condensed consolidated balance sheets in "Other assets")
$31,676 $ $31,676 $ 
Mutual funds167 167   
Total assets measured at fair value$31,843 $167 $31,676 $ 
Liabilities
Contingent accrued earn-out acquisition consideration (a)$2,557 $ $ $2,557 
Total liabilities measured at fair value$2,557 $ $ $2,557 
(a) The income valuation approach is applied and the valuation inputs include the contingent payment arrangement terms, projected revenues and cash flows, rate of return, and probability assessments.
* During the year ended December 31, 2021, there were no transfers between fair value Levels 1, 2, or 3.

    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 six months ended June 30, 2022 and during the year ended December 31, 2021:
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Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Contingent Liability for Accrued Earn-out Acquisition ConsiderationJune 30, 2022December 31, 2021
(In thousands)
Beginning balance$2,557 $ 
Total remeasurement adjustments:
       Remeasurement against goodwill 2,560 
       Foreign currency translation adjustments **(145)(3)
Acquisitions and settlements
       Business settlements  
Ending balance$2,412 $2,557 
The amount of total (gains) losses for the period included in earnings or changes to net assets, attributable to changes in unrealized gains relating to assets or liabilities still held at period-end.$ $ 
** recorded as a component of other comprehensive income within stockholders' equity

Quantitative Information about Level 3 Fair Value Measurements
    The significant unobservable inputs used in the fair value measurement of the Company's contingent consideration liabilities designated as Level 3 are as follows:
        
(In thousands) 
Fair Value at June 30, 2022
 
Valuation Technique
 Significant
Unobservable
Input
Contingent acquisition consideration: $2,412Discounted cash flowProjected revenue and
probability of achievement
        
(In thousands) Fair Value at December 31, 2021 
Valuation Technique
 Significant
Unobservable
Input
Contingent acquisition consideration: 
$2,557
Discounted cash flowProjected revenue and
probability of achievement
Sensitivity to Changes in Significant Unobservable Inputs
    As presented in the table above, the significant unobservable inputs used in the fair value measurement of contingent consideration related to business acquisitions are projected revenue forecasts, as developed by the relevant members of Company's management team and considers the probability of achievement of those revenue forecasts. The Company applies these inputs in its calculation and determination of the fair value of contingent earn-out liabilities for purchased businesses. During 2021, certain of the Company's contingent earn-out liabilities were adjusted because of changes to anticipated future revenues from these acquired businesses or as a result of finalizing purchase price allocations that were previously preliminary.
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    Revenue Recognition and Contract Liabilities — The Company derives its revenues primarily from software subscription and transaction fees, software license fees, financial transaction fees, risk compliance solution services fees, and professional service fees, including associated fees for consulting, implementation, training, and project management provided to customers with installed systems and applications. Sales and value-added taxes are not included in revenues, but rather are recorded as a liability until the taxes assessed are remitted to the respective taxing authorities.
    The Company determines revenue recognition by applying the following steps:
identification of the contract, or contracts, with a customer;
identification of the performance obligations in the contract;
determination of the transaction price;
allocation of the transaction price to the performance obligations in the contract; and
recognition of revenue when, or as, we satisfy a performance obligation.
    The Company analyzes its different services individually to determine the appropriate basis for revenue recognition, as further described below. Additionally, certain services exist in multiple channels. As Ebix derives revenues from three product/service channels, EbixCash Exchanges, Insurance Exchanges, and Risk Compliance Solutions, for policy disclosure purposes, contracts are discussed in conjunction with the channel to which they are most significant.
    The Company assesses the terms of customer contracts, including termination rights, penalties (implied or explicit), and renewal rights.
EbixCash Exchanges ("EbixCash")

    EbixCash revenues are primarily derived from the sales of prepaid gift cards and consideration paid by customers for financial transaction services, including services for transferring or exchanging money. The significant majority of EbixCash revenue is for a single performance obligation and is recognized at a point in time. These revenues vary by transaction based upon channel, send and receive locations, the principal amount sent, whether the money transfer involves different send and receive currencies, and speed of service, as applicable.

EbixCash also offers several other services, including payment services and ticketing and travel services, for which revenue is impacted by various factors. EbixCash acts as the principal in most transactions and reports revenue on a gross basis, as EbixCash controls the service at all times prior to transfer to the customer, is primarily responsible for fulfilling the customer contracts, has the risk of loss, and has the ability to establish transaction prices. The main services from which EbixCash derives revenue are as follow:

Gift Cards

    EbixCash sells general purpose prepaid gift cards to corporate customers and consumers that can be later redeemed at various merchants. The gift cards are co-branded between EbixCash and its card-issuing banking partners and are affiliated with major payment associations such as VISA, MasterCard, and Rupay. The gift cards are sold to a diversified set of corporate customers from various industries. The gift cards are used by corporate customers to disburse incentives to the end users, which are primarily their employees, agents, and business associates. The gift cards sold by EbixCash are not reloadable, cannot be used at ATMs or for any other cash-out or funds transfer transactions, and are subject to maximum limits per card (currently INR10,000 or approximately $130). Gift cards issued by EbixCash are valid for a period of 15 months from the date of issuance for virtual cards and three years for physical cards. EbixCash has entered into arrangements with banks and financial institutions to settle payments to merchants based on utilization of the gift cards.

The Company has end-to-end responsibilities related to the gift cards sold, from the activation and ongoing utilization of the gift cards to customer service responsibilities to risk of loss due to fraud on the gift cards sold. EbixCash acts a principal in the sale of gift cards, and, thus, gift card revenue is recognized on a gross basis (full purchase value at the time of sale) with the corresponding cost of the gift cards recorded as cost of services provided. Unredeemed gift cards at June 30, 2022 totaled approximately $13.4 million and are recorded as deferred revenues in the financial results.



EbixCash Travel Exchanges

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    EbixCash Travel revenues are primarily derived from commissions and transaction fees received from various travel providers and international exchanges involved in the sale of travel to the consumer. EbixCash Travel revenue is for a single performance obligation and is recognized at a point in time. Travel revenues include: (i) reservation commissions, segment fees from global travel exchange providers, and transaction net revenues (i.e., the amount charged to travelers less the amount owed to travel service providers) in connection with our reservation services; (ii) ancillary fees, including travel insurance-related revenues and certain reservation booking fees; and (iii) credit card processing rebates and customer processing fees. EbixCash Travel services include the sale of hotel rooms, airline tickets, bus tickets, and train tickets. EbixCash Travel revenue is also derived from ticket sales, wherein the commissions payable to EbixCash Travel, along with any transaction fees paid by travel providers and travel exchanges, is recognized as revenue after completion of the service. The transaction price on such services is agreed upon at the time of the purchase.

    EbixCash Travel revenue for the corporate meetings, incentives, conferences, and exhibitions ("MICE") packages is recognized at full purchase value at the completion of the obligation, with the corresponding costs recorded under cost of services provided. For MICE revenues, EbixCash Travel acts as the principal in transactions and, accordingly, reports revenue on a gross basis. EbixCash Travel controls the service at all times prior to transfer to the customer, is responsible for fulfilling the customer contracts, has the risk of loss, and has the ability to establish transaction prices.

EbixCash Money Transfer

    For the EbixCash money transfer business, EbixCash has one performance obligation whereupon the customer engages EbixCash to perform one integrated service. This typically occurs instantaneously when the beneficiary entitled to receive the money transferred by the sender visits the EbixCash outlet and collects the money. Accordingly, EbixCash recognizes revenue upon completion of the following: 1) the customer’s acknowledgment of EbixCash’s terms and conditions and the receipt of payment information, 2) the money transfer has been processed, 3) the customer has received a unique transaction identification number, and 4) funds are available to be picked up by the beneficiary. The transaction price is comprised of a transaction fee and the difference between the exchange rate set by EbixCash to the customer and the rate available in the wholesale foreign exchange market, as applicable, both of which are readily determinable at the time the transaction is initiated.

Foreign Exchange and Outward Remittance Services

    For EbixCash’s foreign exchange and payment services, customers agree to terms and conditions for all transactions, either at the time of initiating a transaction or signing a contract with EbixCash to provide payment services on the customer’s behalf. In the majority of EbixCash’s foreign exchange and payment services transactions, EbixCash makes payments to the recipient to satisfy its performance obligation to the customer, and, therefore, EbixCash recognizes revenue on foreign exchange and payment when this performance obligation has been fulfilled.

Consumer Payment Services

    EbixCash offers several different bill payment services that vary by considerations, including among other factors: (i) who pays the fee to EbixCash (consumer or biller); (ii) whether the service is offered to all consumers; (iii) whether the service is restricted to existing biller relationships of EbixCash; and (iv) whether the service utilizes a physical agent network offered for consumers’ convenience. The determination of which party is EbixCash’s customer for revenue recognition purposes is based on these considerations for each of EbixCash’s bill payment services. For all transactions EbixCash’s customers agree to EbixCash’s terms and conditions, either at the time of initiating a transaction (where the consumer is determined to be the customer for revenue recognition purposes) or upon signing a contract with EbixCash to provide services on the biller’s behalf (where the biller is determined to be the customer for revenue recognition purposes). As with consumer money transfers, customers engage EbixCash to perform one integrated service - collecting money from the consumer and processing the bill payment transaction. This service provides the billers real-time or near real-time information regarding their customers’ payments and simplifies the billers’ collection efforts. The transaction price on bill payment services is contractual and determinable. Certain biller agreements may include per-transaction or fixed periodic rebates, which EbixCash records as a reduction to revenue.

EbixCash Technology Services
    
    EbixCash also offers on-demand technology to various providers in the area of lending, wealth and asset management, and travel across the world. Additionally, EbixCash provides IT and call center outsourcing services to companies in a variety of industries, both in India and globally. The EbixCash technology software solutions are generally delivered on a SaaS subscription and/or transaction based pricing model. Please see below under "Insurance Exchanges" a description of revenue
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recognition policies for SaaS, Subscription and Transaction Fees, which are similar to how EbixCash technology software solutions revenues are recognized. For IT and call center outsourcing services provided by EbixCash businesses, revenues are generally recognized on a time and materials or fixed fee basis. Revenues for time and materials are recognized as such services are rendered, while fixed fee revenues are recognized based on the input method driven by the expected hours to complete the project measured against the actual hours completed to date.    
Insurance Exchanges
    
    Insurance Exchanges revenues are primarily derived from consideration paid by customers related to our SaaS platforms, related services and the licensing of software. A typical contract for our SaaS platform will also include services for setup, customization, transaction processing, maintenance, and/or hosting. Determining whether products and services are considered distinct performance obligations that should be accounted for separately may require significant judgment. Set-up and customization services related to our SaaS platforms are not considered to be distinct from the usage fees associated with the SaaS platform and, accordingly, are accounted for as a single performance obligation. These services, along with the usage or transaction fees, are recognized over the contract duration, which considers the significance of the upfront fees in the context of the contract and which may, therefore, exceed the initial contracted term. A customer's transaction volume tends to remain fairly consistent during the contract period without significant fluctuations. The invoiced amount is a reasonable approximation of the revenue that would be allocated to the related period under the variable consideration guidelines in ASC 606-10-32-40. To the extent that a SaaS contract includes subscription services or professional services, apart from the upfront customization, these are considered separate performance obligations. The Company also has separate software licensing (on premise/perpetual), unrelated to the SaaS platforms, which is recognized at a point in time when the license is transferred to the customer.
    Contracts generally do not contain a right of return or refund provisions. Our contracts often do contain overage fees, contingent fees, or service level penalties which are accounted for as variable consideration. Revenue accounted for as variable consideration is immaterial and is recognized using the “right to invoice” practical expedient when the invoiced amount equals the value provided to the customer.
Software-as-a-Service

    The Company allocates the transaction price to each distinct performance obligation using the relative stand-alone selling price. Determining the stand-alone selling price may require significant judgment. The stand-alone selling price is the price at which an entity has sold or would sell a promised good or service separately to a customer. The Company determines the stand-alone selling price based on observable price of products or services sold separately in comparable circumstances, when such observable prices are available. When standalone selling price is not directly observable, the Company estimates the stand-alone selling price using the market assessment approach by considering historical pricing and other market factors.

Software Licenses
    Software license revenues attributable to a software license that is a separate performance obligation are recognized at the point in time that the customer obtains control of the license.
Subscription Services

    Subscription services revenues are associated with performance obligations that are satisfied over specific time periods and primarily consist of post-contract support services. Revenue is generally recognized ratably over the contract term. Our subscription contracts are generally for an initial three-year period with subsequent one-year automatic renewals.

Transaction Fees
    
    Transaction revenue is comprised of fees applied to the volume of transactions that are processed through our SaaS platforms. These fees are typically based on a per-transaction rate and are invoiced for the same period in which the transactions were processed and as the performance obligation is satisfied. The amount invoiced generally equals the value provided to the customer, and revenue is typically recognized when invoiced using the as-invoiced practical expedient.

Professional Services

    Professional service revenue primarily consists of fees for setup, customization, training, or consulting services. Professional service fees are generally on a time and materials basis or a fixed fee basis. Revenues for time and materials are
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recognized as such services are rendered, while fixed fee revenues are recognized based on the input method that is driven by the expected hours to complete the project measured against the actual hours completed to date. Professional services, particularly related to SaaS platforms, may have significant dependencies on the related licensed software and may not be considered a distinct performance obligation.


Risk Compliance Solutions ("RCS")

    RCS revenues consist of two revenue streams - certificates of insurance ("COI") and consulting services. COI revenues are derived from consideration paid by customers for the creation and tracking of certificates of insurance. These revenues are transaction-based. Consulting services revenues are driven by distinct consulting service engagements rendered to customers, for which revenues are recognized using the output method on a time and material basis as the services are performed.

COI Creation and Tracking

    The Company provides services to issue and track certificates of insurance in the U.S. and Australian markets. Revenue is derived from transaction fees for each certificate issued or tracked. The Company recognizes revenue at the issuance of each certificate or over the period the certificate is being tracked.

Consulting Services

    The Company provides consulting services to clients around the world for project management and development. Consulting services fees are generally earned on a time and materials basis or a fixed fee basis. Revenues for time and materials are recognized using an output method as the services are rendered, while fixed fee revenues are recognized based on the input method that is driven by the expected hours to complete the project measured against the actual hours completed to date.

Disaggregation of Revenue
    The following tables present revenue disaggregated by primary geographical regions and product/service channels for the three and six months ended June 30, 2022 and 2021:
Three Months Ended June 30,Six Months Ended June 30,
Revenue:2022202120222021
(In thousands)
India*$188,808 $188,612 $414,697 $420,153 
United States37,943 37,722 76,796 75,788 
Australia7,906 8,688 16,948 18,372 
Europe3,902 4,064 8,107 8,168 
Latin America5,027 3,095 8,953 6,193 
Canada*1,702 1,595 2,875