Ebix, Inc.

Q1 2023 GAAP operating income was $30.5 million, up 2.4% sequentially from $29.8 million in Q4 2022 and up 1.2% year over year. Non-GAAP operating income was $34.8 million versus $33.8 million in Q1 2022. Operating margin was 12.6%, up 90 basis points from 11.7% in Q4 2022; excluding prepaid gift cards, operating margin was 28.7% versus 26.3% in Q4 2022. Worldwide revenues excluding prepaid gift card revenues increased 17.6% year over year, and EbixCash revenues excluding prepaid cards grew 32% year over year. Foreign exchange reduced reported revenues by $18.5 million. Cost of services fell to $56.5 million from $210.8 million a year earlier, G&A rose to $37.5 million from $26.9 million, and interest expense rose 170% to $22.3 million from $10.3 million. Cash, cash equivalents, short-term investments and restricted cash were $108.9 million at March 31, 2023, and total debt was $621.7 million, down from $643.8 million at December 2022. No formal quarterly or full-year financial guidance was given, but management said it expects travel and forex to move back toward pre-COVID levels, Q2 medical certification revenue to be higher than Q1, and the EbixCash IPO could lead to a possible listing in third quarter 2023.

Robin Raina emphasized that Ebix is making progress on its operating goals despite macro pressure, lower-margin prepaid card revenue, and debt costs. He highlighted multiple growth initiatives: new cash management and ticketing projects in India, expanded BSE Ebix activity, and the EbixCash IPO process, which he said is moving forward with a possible listing in Q3 2023. His tone was notably confident and shareholder-focused, repeatedly stressing the goal of becoming debt free in 2023 and maximizing value for shareholders.

Amit Garg said the quarter came amid inflation, higher interest rates, COVID-related effects, wage pressure, and a stronger U.S. dollar, which reduced reported revenues by $18.5 million. He highlighted sequential GAAP operating income of $30.5 million, non-GAAP operating income of $34.8 million, and operating margin of 12.6%, or 28.7% excluding prepaid gift cards. He also noted $41.9 million of cash uses during the quarter, including $17.5 million of cash interest, $3.5 million of taxes, $17.5 million of principal payments, $2.6 million of capex, and $0.9 million of software development, while still ending with $108.9 million of liquidity and $621.7 million of debt.

Analysts asked about the path for EbixCash back to pre-COVID levels, and management said the business is around 65% of pre-COVID levels, with travel and forex expected to recover first and technology taking longer. They also asked about the IPO process and whether carve-outs depend on the IPO; Robin said the company is pursuing multiple paths in parallel and that the independent board will decide what is best. On prepaid gift cards, management said it is a low-margin business and that new RBI rules may shift some revenue to net presentation, which could make the revenue line look smaller even if the business continues.