EBIX (2019 - Q2)

Good day, ladies and gentlemen, and welcome to the Ebix Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the conference over to Darren Joseph, Corporate Vice President. Mr. Joseph, you may begin. Darren J

Thank you. Welcome everyone to Ebix Incorporated 2019 second quarter earnings conference call. Joining me today is Ebix's Chairman, President and CEO, Robin Raina; and Ebix's CFO, Sean Donaghy. Following our remarks, we will open up the call for your questions. Now let me quickly cover the safe harbor. Some of the statements that we make today are forward-looking, including, among others, statements regarding Ebix's future investments, our long-term growth and innovation, the expected performance of our businesses and the use of cash. These statements involve a number of risks and uncertainties that might cause actual results to differ materially from those projected in the forward-looking statements. Please note that these forward-looking statements reflect our opinions only as of the date of this presentation, and we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements made today is contained in our SEC filings, which list a more detailed description of the risk factors that may affect our results. Our press release announcing the Q2 2019 results was issued this morning. The audio of this investor call is also being webcast live on the web at www.ebix.com/webcast. You can look at Ebix's financials beyond what has been provided in the release on our website, www.ebix.com. The audio and the text transcript of this call will be available also on the investor homepage of the Ebix website after 4:00 p.m. Eastern Standard Time today. Let me now discuss the quarter from a numerical perspective. Revenue in Q2 2019 increased 16% from a year ago to $144.3 million. On a constant currency basis, Ebix's Q2 2019 revenue increased 18% year-over-year to $147.4 million as compared to $124.6 million in Q2 of 2018. The revenue improvements reflect the growth in the company’s EbixCash channel. In Q2, our EbixCash revenue was the largest channel for Ebix accounting for 55% of the company's revenues and our insurance exchange channel accounting for 32%. The year-over-year revenue increase was primarily driven by the growth of the financial exchange. Our explosive growth over the last 12 months has been primarily in India, driven by the growth in EbixCash financial exchange business. The Indian-led ventures including Indian-led revenues build in other Asian countries, showed 43% year-over-year growth in the three month period ending June 30, 2019 by growing to $78.9 million from $55.3 million in the same period in 2018. India is one of the emerging economists today that we intend to continue to invest in over the next three years as this is an economy with one of the largest middle classes in the world that continued to grow even in diverse economic periods. After excluding the revenues from the discontinued e-Governance business, EbixCash Q2 2019 revenues grew at 58% in Q2 2019 as compared to Q2 2018. We are pleased with the sequential growth in topline of our overall business and the various business segments. Q2 2019 revenues grew 1% by $1.4 million over Q1 2019 revenues of $142.9 million. Our financial exchange operations grew sequentially from $77.7 million to $78.9 million. Q2 2019 revenues reflected $1.4 million or 1% sequential increase from Q1 2019 and a 19.7 or 16% increase from Q2 of 2018. On a constant currency basis, Ebix’ Q2 2019 revenue increased 18% to $147.4 million compared to $124.6 million in Q2 2018. Exchanges, including the insurance and EbixCash financial exchange is accounted for 87% of Q2 2019 revenues. Also on a constant currency basis, year-to-date revenue increased 27% to $295.4 million as compared to $232.9 million during the same period in 2018. Q2 2019 diluted earnings per share increased 2% to $0.94 as compared to $0.92 in the second quarter of 2018. The non-GAAP diluted earnings per share in Q2 2019 grew 17% to $1.08 as compared to Q2 2018. Ebix's weighted-average diluted shares outstanding decreased to 30.67 million in Q2 2019 compared to 31.63 million in Q2 2018, and slightly increased from 30.60 million in Q1 2019. As of today, the Company expects the diluted share count for Q3 2019 will be approximately 30.7 million shares. Q2 2019 GAAP operating margins are at 29%, while the GAAP operating income for Q2 2019 rose 8% to $41.3 million. Non-GAAP operating margins for Q2 2019 were at 30%, while non-GAAP operating income grew 13% to $43.4 million in Q2 2019 as compared to $38.3 million in Q2 2018. GAAP net income decreased 1% to $28.9 million, compared to $29.2 million at Q2 2018. This is in spite of increased operating income principally due to increase non-operating short-term expenses associated with the Company's recent investments and growth initiatives on India, associated with servicing increased gross merchandise value. Q2 2019 non-GAAP net income increased 14% the $33.2 million after excluding certain non-recurring items. We are pleased with the fact that the Company continues to report sequential quarterly revenue growth, consistent operating income and attractive operating margins near 30%. Cash generated from operations was negative to $253,000 in Q2 2019, compared to $14.4 million in Q2 2018 and $38.5 million in Q1 2019. The operating cash in Q2 2019 reflected the $20.5 million Derivative Case Legal Settlement and other related legal fees, funding of new growth initiatives associated with increasing GMV and new receivables from executing certain new contracts in new organic areas like the Bus exchange, Trucking logistics and travel business. During Q2 2019, we invested a total of $12.7 million for the acquisition of additional shares of Weizmann, $2.3 million on dividend payments, $2.9 million on CapEx, $850,000 on capital software, $3.8 million on principal payments towards the term loan and $2.4 million on tax payments. Furthermore, our balance sheet remains healthy and our Company's financial position remains solid with the Company and in the quarter with cash, cash equivalents and short-term investments of $107.1 million, up by $10.7 million as of the 31 March 2019. Finally Ebix's Form 10-Q will be filed tomorrow. And I will now past the call on to Robin.

Good morning, everyone. Let me now try to detail out the various qualitative and exceptional aspects of the results that were announced today. I'm overall pleased with the continued topline growth in second quarter of 2019 in spite of having a very strong first quarter 2019 with a number of one-time revenues. We were able to beat Q1 2019 number in Q2 2019. Q2 2019 revenue rose 16% to $144.3 million compared to $124.6 million in Q2 of 2018 and increased 1% sequentially over Q1 2019 revenue of $142.9 million. After excluding the revenues from the discontinued e-Governance business, Q2 2019 revenues grew 21% in second quarter of 2019 as compared to second quarter of 2018. Our constant currency year-to-date revenues are at $295.4 million, and we expect to continue the revenue growth in coming quarters. We have signed a number of new large insurance related contracts in the U.S. and EbixCash related contracts in the international markets that should provide us the momentum for further growth. Let me describe the performance of the insurance and financial exchanges, both in the quarter. The exceptional areas for the Insurance segment in the quarter, but the areas of Brazil, Singapore, A.D.A.M continuing medical education and the areas of the underwriting exchanged. Our revenues in Brazil grew sequentially almost 30% in the second quarter or the first quarter of 2019, 20% in Singapore and 7% in the A.D.A.M CME area. On the flip side, our underwriting revenues decreased 11% in the second quarter of 2019 as compared to the first quarter 2019, primarily because of certain project delays. We expect underwriting revenues in the third quarter to come back to the growth trajectory again have they have traditionally done. With these exceptions the revenue in all other insurance, functional and geographical areas are essentially flat in the second quarter of 2019 sequentially. The Government of India recently approved 100% foreign investment in the insurance distribution sector. We expect the regulatory approval of our BSE Ebix insurance venture through now and are ready to deploy immediately across India to the strong BSC financial institution network as also our own franchisee network. BSE and Ebix are also exploring setting up a reinsurance exchange and Prime Minister Modi Home State Gujarat on the lines of the PPL reinsurance initiative in London. The aim of the proposed venture is to set up a reinsurance hub that can gravitate Asian, ASEAN, African and Pacific reinsurance business to India. More on that later. In the second quarter of 2019, we added many new revenue sources organically while consolidating our revenue base in the traditional insurance and financial exchange areas. We grew EbixCash business by 58% in the second quarter of 2019 as compared to the second quarter of 2018 after excluding the revenues from the discontinued e-Governance business line and 43% even if were to include the e-Governance business line. We are very pleased with that. We also grew the EbixCash business approximately 2% sequentially. As of the six-month period ending June 2019, our core EbixCash dividends, EbixCash payments division, which includes remittance payments and ForEx in the second quarter of 2019 grew 52% year-over-year. While our financial technologies division that includes technologies for travel, insurance, finance, and other technologies grew 118% year-over-year. The travel division grew 125% year-over-year, while our trucking logistics startup grew organically to 3.5 million from zero last year. The e-learning division in the six-month period of 2019 decrease in revenue by approximately 43% due to certain one-time revenues in 2018, e-Governance revenue came down from $10.2 million in 2018 to almost 200,000 in 2019 as the company took a conscious public decision of not servicing the e-Governance business until BSNL the largest telecom player that we used to do business with had been adequately funded by the government. Let me now discuss progress on some of the key initiatives that we announced earlier. A few months back, we announced the signing of the Dubai Airport contract. The contract involved a number of obligations on our iPod, including certain financial deposits to be made by us with Airport authority. We are pleased to say that we have fulfilled all the financial formalities required from EbixCash to execute the multimillion dollar contract, including depositing a few million dollars of deposits as mandated in the contract. The project is still not live in spite of the contract signing many months back. Since foreign exchange are highly regulated subject in United Arab Emirates and requires Central Bank approval for foreign companies like us. We are in the process of securing the traditional financial regulatory approvals required by foreign companies from the Central Bank in that country. After Central Bank approval, we will immediately go live at the Dubai Airport adding a new revenue line to our foreign exchange business. I'm also pleased to convey that we have fully executed our first bus exchange initiative for the State of Rajasthan successfully. This will now emerge as the recurring revenue source for us across 5,800 plus buses in the state with a sale of every bus ticket generating transaction fee for us. Q2 revenues had approximately $1.5 million the revenues from this project. One of our key initiatives is to grow our trucking logistics division Routier. In Q2 of 2018 we had no revenue from this business. In Q2 of 2019 we had $2.5 million of revenue from this division. We are targeting $5 million of quarterly revenues from this division by the year-end of 2019. We are currently deep into negotiating contracts in all phases of our business in the area ForEx, payments, travel, bus exchange, lending and wealth management technologies, travel technologies, trucking logistics area and of course many deals in the bus exchange arena. All of these are organic areas of growth for us and we feel that we have well situated with momentum on our site. Let me give you a few examples to explain what we have been able to do in terms of growth and momentum. In the area of lending and wealth management technologies at the time of acquisition of two of these companies, the combined revenue run rate of these acquisitions was approximately $7.1 million a quarter. We did $11 million in second quarter 2019 from lending and wealth management, all organic growth to winning international deals in the Middle East, Africa, ASEAN n region and India. Another example, we acquired Zillious in the area of travel technologies and they had a run rate of approximately $1.7 million a year. In the last six months we've already done revenue $1.6 million from Zilliious. We acquired Mercury and Leisure travels in area of travels and they had a run rate of approximately $6 million a year from corporate and non-mice business lines. In the last six months we have already done revenues of $9 million from Mercury travels. We'll give you another example of growth. Let me say that we have secured new travel contracts in the area of mice at Mercury that I've already generated $12 million of revenue for us in the last six months, in addition to the $9 million non-mice business revenue. On the same token, we go pragmatic to take a $22 million annual revenue line in 2018 from e-Governance basically in 2019 as we wanted to ensure that our largest client BSNL in that area. Well adequately funded first by the government. In coming days, we will make tough revenue related decisions regarding Yatra as we will be willing to give up revenue streams that are unprofitable and we will be later focused on carving out good revenues that can generate 30% or so in operating margins. In the area of acquisitions, we have a number of key opportunities that we are pursuing that are being played out in the public eye. One, the Yatra acquisition and the second is the acquisition of Trimix. We believe that the acquisition of Yatra will lend itself to significant synergies and the emergence of EbixCash is India's largest and most profitable travel services company besides being the largest enterprise financial exchange in the country. Over the last few months, we have evolved details logistic plan that once fully executed can provide between $0.40 to $0.75 of accretion to the Ebix non-GAAP EPS, we had clearly excited by the cross selling opportunities that this combination for whiteness white further strengthening our future EbixCash IPO offering. We also pursuing a number of other opportunities including the asset purchase of India’s leading bus exchange company Trimix from the Indian Bankruptcy Codes. Trimix either 35% margin business today with possible revenues between $25 million to $30 million a year, besides Tirmix we are pursuing a number of high-margin opportunities in various geographies in the U.S. and Abroad in terms of acquisitions. More on that later when we close on them. As always, I, along with my management humbly are here to serve your interest and do what we can with utmost integrity to maximize value for you. I've lived through many misinformation campaigns over the last two decades and always put my money where my mouth is. When a misinformation campaign is done, I typically advise my management to answer that through fundamentals results, and we will continue to do that. If someone tries to spread misinformation by reaching out to banks and clients then in my view, that's crossing the lifeline. In recent times, we have secured black and white coat toolings banning any such misinformation campaign and prepare to take it to the next level. It pulls to do so. As for me, I typically respond to misinformation by just investing more in the Ebix stock when others are driving it down. I presently take all my salaries and stock from the company beside the fact that I'm the largest shareholder in Ebix today holding stock all the way from 1999 to 2000. Finally, a small brief on the proposed EbixCash IPO next year We will soon be announcing the engagement of four to five leading investment banks to lead out EbixCash IPO targeted for the second quarter of 2020. We have made substantial progress in that direction and we'll be updating our investor soon on the names of each of these leading investment bankers. We believe that EbixCash has all the ingredients to be a blockbuster IPO, though nothing can be guaranteed about what valuations we commend in the market once EbixCash goes public. Thank you. With that, I'll hand over the call to the operator.

[Operator Instructions] And our first question comes from Jeff Van Rhee with Craig-Hallum. Please proceed.

Great. Thanks. A couple from you, Robin. First, maybe just touch on the legacy business. It looks like it bottomed. It grew a little bit here sequentially. How do you think about the growth rates over the next few quarters there? You talked about some big signs, but just sort of level set for us. What do you think would be a reasonable outcome over the next 12 to 24 months in terms of growth there?

Well, look, I think first of all I want to say I don't call it a legacy business. It's a fundamentally strong business for us, insurance. Meaning, I'm sure you saw today the announcement that came out regarding one of our competitors who is way smaller than us and got sold at 20x that it been done multiple. And if you look at the revenue stream, we pretty much have a way bigger revenue stream and we have 3x their profitability. Coming back to it, we as a business are looking at insurance as a fundamental strength for us. We're going to continue to grow our insurance business. We've spent decent amount of time trying to ensure that we took a few hits. And I've talked about in the previous calls with respect to insurance in the area of health, A.D.A.M which we have stabilized now and we believe A.D.A.M has completely bottomed out and that's why you're seeing improvements. And for example, in today's call I talked about improvement in A.D.A.M CME area where we showed 7% growth. So the second area has been consulting where we are still not there in terms of the – we are kind of bottoming out there. We are trying to grow that business in fact in the consulting arena. This quarter we had basically flat performance in terms of – in one of our consulting arena, we showed actually substantial growth in another area, we showed a little bit of a decline, but they'd find a balance features each other off. So having said that, we spent a decent amount of time stabilizing our business. In this particular quarter, this quarter would have looked a lot better from an insurance perspective. For example, if our underwriting revenues had been at the same level as last quarter. Now our underwriting revenues are very strong that are market leader in the market in U.S. and Canada, meaning every deal that comes out, if we are in the race, nine out of 10 times, we're winning the deal. However, our revenue is a function of percentage completion. And we had some project delays which associated with which we couldn't pick up revenue, as much revenue in the quarter, but that revenue is not going anywhere. We're going to get that revenue. So I expected that to be back on that side. And we are targeting a lot of wins right now in the underwriting site. So we think that business will continue to grow. If you look at the annuity business, annuity business actually grew nicely this quarter. So we have the – if you look at the markets in Australia, we did relatively flat and goes a little bit higher than what we normally do, but relatively flat I would say. Brazil was very strong performance. I talked about Brazil. I think Singapore was actually higher, a lot higher than what we normally do, which was 20% higher. New Zealand is a much smaller economy. So our numbers would essentially basically where we used to be and we tell you it doesn’t the delta for us. London, more essentially flat. So coming back to it, the value of our insurance business is that it is continuing to deliver its margins and it will continue to believe as we peak that business into a growth mode. We are going to see all of these numbers will add. One of the strengths we have with respect to – as compared to our competition, anybody in the market and insurance says, our revenue sources in insurance tend to be highly recurring. We did not focus our energies in insurance, aren't trying to generate perpetual licenses. We didn't spend this time to say, listen, we're going to tell the license book the deal of revenue and then next quarter look for new revenue. We have always focused on recurring revenue sources, which incidentally is not the case for the other companies that we are out there in the market, at least in the insurance business. So coming back to it, we feel that in insurance business will continue to grow. We've actually stabilized our business pretty well. We have taken a lot of hits in the business in terms of – for example, we under exchange, we call it A.D.A.M area comes under exchange. We've had two big some hits in the claims area, for example, and all of that had to be substituted to growth in other areas. So essentially when you look at insurance and when you look at relatively flat performance, it is because – it means that actually many sectors have done very well and have compensated for some of the other decline. So we actually feel that the declines that we have had in some of those areas are bottoming out now. So we actually think our insurance in this are going to grow. We’re also going to see us make acquisition in the insurance arena, besides organically growing our business in the insurance arena.

So if I sum all that up, I mean, it sounds like you would expect him, you showed some modest sequentials here, some putting all of that together. Is it likely or the expectation is over the next to call, two quarters that we would continue to see sequential growth even if it's just modest?

I wouldn't believe, so, yes.

Yes. Okay. And then flip to the other side. The EbixCash business on a sequential basis, I think you commented it was up 1% or 2%. And I think longer-term you've talked about how growth rates north of 20% on a year-over-year basis. So I know you called out some, particular strengths seasonally in Q1, but maybe just a little more expansion on the sequential growth. If it was up modestly 2% overall, some things would seem to have been down, so maybe what was down, and then in that same vein. How do you think about EbixCash on its own in terms of sequential growth in the coming quarter or two?

Yes. Actually we had a very strong Ebix. We did very well this quarter in EbixCash. There is a – why does the growth is not showing as much we're showing 2% growth, and the number would have looked a lot better because in the last quarter, we had very – we had bit of one-time revenue in the EbixCash business that one-time revenue – they're not that many one-time revenue though also for EbixCash. But this was one of those quarter, which we had a one-time revenue. Now that one-time revenue once that goes away, we have to make up for that one-time revenue through our transaction-related services, which we did. So when you look at the overall growth, if I pick that one-time, revenue outclassed quarter, sequentially the revenue went up by more than $6 million, this quarter in Ebix’s cash. So it looks like more or like to do and change only because there is that $4 million one-time revenue that was there in the previous quarter. So having said that, we believe EbixCash is absolutely right path. I kind of detailed it out in terms of, for example, I just talked about Routier. Last quarter in Q1, we did around $960,000, this quarter we did $2.5 million already from the Routier business. We had no – we had zero bus exchange revenue last quarter, this quarter we have $0.5 million of bus exchange revenue and so on I can go on into each area and detail it out for you. But basically what – they are about one-time revenue that was there in previous quarter. And that was part of why we had a very strong – we were very pleased with Q1 revenue results and the part of it was that one-time revenue of $4 million that we had in it.

And so yes, then just to complete the question the thinking on the forward quarters, I mean, is it your expectation? We'll get back to a 5% plus type sequential run, some better, some worse, but something that maps to that 20% plus growth right there.

Well, look, I couldn't tell you. I haven't run the maps on telling you what it's a 5% or it's a 3% or whether it’s a 7% rate. I think a lot will depend on how we on some of these businesses and how we move forward. Part of it is all of these benefits demand GMV funding. So our attempt, we can grow this business as fast as we want to. But you also have to remember, Ebix as a company has to also make sure of two things. We don't have the luxury of doing what other companies can, which is to bring free money and basically not worry about profits. What we are doing with - we are generating our own money. We have to fund the GMV. If that's not very easy. I will give you a simple example. If I have to get $10 million of new ForEx revenue, I need to fund close to $100 million of ForEx transaction. That means I need more GMV. So we have a lot of business opportunities in front of us. This is part of the reason we are going for an IPO because we do want to raise and rate money because we see the value of what we can do with this business. But we are also being very calculated because we kind of go crazy on funding GMV. So when you look at the growth in the financial business, you have to grow in a bit of a cautious manner in the sense because you are also funding your way to have to put that much extra money on the table to fund your GMV. So for example, this quarter you are seeing the cash flow was basically zero. And the reason was first of all we made that $20.8 million payment. But then beyond that you got to look at the funding we had to do any business that we are growing right now, we're going to have to fund many times over for that business to be funded in terms of GMV, for example, what our business for example, we added the Routier business where the cycle of money is 70 days. For example, we added the bus exchange business where initially the cycle of money is 90 days, right? So we have to be very calculated with respect to the usage of our money as to how we grow this business can we managed up cash properly. So we're trying to keep our feet on the ground and not get guided away because growth in EBIT cash if we had substantial amount of money, you could basically see where higher growth rates in terms of year-over-year we have more than 20% in this business. So I know I gave you a long answer Jeff, but this is very critical to understand that in the financial services business and when you have to be very careful with your money spending to ensure that you doing – you have to be careful with effective we do want to grow our business and we are sequentially going to continue to grow our business, but we have to be a bit careful and cautious to ensure that we are spending money wisely to ensure that we are not taking extract that that we can’t handle. Right, so this is a little bit of balance you have to write, when you're funding GMV, because I don't have a private equity group today coming in, funding the way my competitors have it. So we are today funding in all as a company.

Got it. Last one for me, just as it relates to the overall strategy then in India with respect to EbixCash. So digital has been the word that you've used. You've got a really potent physical distribution network. I'm curious from sort of a tracking is a metrics standpoint? What have you observing with respect to the customer base, namely the foot traffic in those units? How are you measuring and tracking the ability to take that foot traffic and upsell and cross-sell them? You've added a lot of products, a lot of capabilities. Just kind of talk about that EbixCash business, and I'm thinking particularly of the physical side of the overall piece, but you could also incorporate the online travel component. So just curious, what are the core metrics in terms of how you're tracking the customer stickiness and the customer cross-sell in the EbixCash side of the business?

Jeff, that's a good question. So obviously that's a very critical part of what we are trying to do in terms of cross-selling. You're going to see in coming days, we're working on a major marketing effort. We want to further elaborate what we do with respect to the footprint that we have created. You're going to see a full blown effort in terms of branding where our goal over the next – over the next 12 months, our goal is to become a household name in India. In India, the way people would talk about Coke or a Pepsi, for example, Paytm for that matter, we would like to be seen in that life. And so we intend to go very aggressive on marketing. We believe when we do that aggressive marketing and have a physical footprint and the size of the physical footprint that we have, it plays extremely well. So what we are doing today with respect to that footprint is, I'll give you a recent example of two deals that we just did using that footprint. So one of those deals is with Adonis. This is for Adonis finance. And what we basically did is we're using that entire digital network to be able to collect loan money for them. When they issue loans across the country, when they have to collect that money, our digital network would work like an exchange to collect that money from them. Now, second one that we recently did, I can't give you the name right on that company for confidentiality reasons. It's a very large health insurance company in India who basically approached us for telemedicine, but ended up doing using our footprint. And we believe as we go live with this, we are presently working with them to go live. We believe that will become our largest client in India with respect to simply collection of insurance premiums. So this is the kind of cross selling that we do. So I could give you a lot of examples of how for example, I talked about Routier. How are we spreading Routier? How are we organizing that asset-lite trucking model because what is the Routier? Routier is an asset-lite trucking model like a Hoover. Somebody wants trucks, Coke wants trucks and we want to be able to give them 250 trucks, but it would be – what we'd have done. We have used that entire franchisee network by enabling them, by incentivizing them. And today our franchisee network across the nation is actually sourcing these trucks for us, is actually doing the fulfillment of the entire business in the asset-lite model. So again, this is – we are interfacing our trucking logistics division with a payments division for that matter. So I could walk you through so many of these examples of how are we issuing travel card, how we are issuing ForEx cards at the franchisee level today while sitting in there. So we have thought of it and integrated in such a manner that you have all of these different groups under common Managing Director, common Vice President and all of the metrics are driven in such a manner that our senior folks are – they see everything as one straight through processing and kind of a solution. So we're not necessarily trying to sell these as individual products per se today. We tried to couple it up in many, many forms. And we believe as we’re going into a full-fledged marketing campaign and we believe we can multiply our rate further and as compared to the footprint we have today, which is incidentally very, very strong.

Great. That’s it for me. Thank you.

[Operator Instructions] Our next question comes from Allen Klee with Maxim Group. Please proceed.

Yes. Hello. You talked about underwriting revenue being down due to some project delays that you think will be coming back? Can you help us quantify how much that would be?

Well, from a quarterly perspective, I think it was $1.2 million or something that it went down for what we expected it to be at in the quarter.

Okay, great. And then can you just give us an update on your borrowing capacity that it's still available?

Well, I think from a borrowing capacity perspective, we have what's the word for it? Sean, Darren, would you – I'm forgetting the word for it.

The accordion features still available to us. That's anywhere from $50 million to $75 million. We have $12 million available under the base agreement.

Thank you, Sean. So that sounds, Allen. So for look, we can grow this further. We can go in and take an additional line. We have lots of different possibilities available, but we are right now being very, very careful what we want to do. Part of it is, we believe that as we head into this IPO, we believe and we hopefully out here we are, right. We believe this is going to be a very strong IPO. Our metrics are strong. So we believe that we shouldn't go overboard on raising that because we believe that we can raise very strong amount of money through our IPO.

Okay. And then just so that I understand what they e-Governance business in India, I think I heard you say it's around a $10 million headwind in the sense that it was $10.2 million last year and so far, $200,000…?

Now it was almost $22 million last year. It was $10.2 million just in six months. So we have taken this business down to zero from $22 million a year, last year.

Okay. And it's going to stay if you're…?

It was $10.2 million only in the first six months of 2018.

And the plan is to keep that zero basically?

Breath and cleat for now, part of it frankly is that the largest player. You see, we didn't want to deal with the central government. So what we did in – when we started in e-Governance in India, we chose we will do business with and we decided to do business with the public sector undertakings, the autonomous public sector undertakings, which are basically the largest, one of the largest most cash rich organizations in India used to be BSNL. BSNL was India's largest telecom player. Five years back, they had cash with $10 billion in their bank. So we went in and decided the viewable could be BSNL rather than the central government because central government, there's the money takes so much longer time to come. So we thought, if we work with public sector undertakings, they're very professional, BSNL has a fantastic track record of paying all of vendors. It's a very large undertaking, 200,000 employees and so on. BSNL, over the last 12 months, first of all, we executed in the – if I take a step back, we executed four projects very successfully for BSNL. Regionally, we quoted to BSNL through an entity called Ebix Way. So what we did, we were of vendor of them of BSNL, how had all the – who met all their tender conditions. So what we did, we formed the JV with that vendor, and that vendor would pick up the orders and we end immediately that because they met the conditions. It's hard for a new vendor for us – we were a vendor for BSNL. So the order would come through Vayam to us. So we implemented four deals very, very successfully. In the meanwhile, since we met – now we meet the tender conditions Ebix alone. So we went in and we started – we went into BSNL and now BSNL based on the successful record that Ebix has had then worked in us into a partner, a national certified partner, a national certified partner means, I can today go hand in hand. Ebix can go with BSNL, bid on very large deals and get the money in escrow. Get it directly from a third-party rather than through BSNL. That's a fantastic status to have. Having said that, what changed was that in the last 18 months, BSNL landing into a few money issues because of Jio. Jio came in into India. Jio has emerged as a giant and Jio has basically created couple for that telecom players including BSNL, Vodafone, Bharti everybody has start of it. BSNL controls all the land line phones in India, controls all the – border areas controls half fiber in India and so on. 200,000 employees, but we made a conscious decision, we said until BSNL has the financial stability and has the cash. We don't want to be bidding on any BSNL business until we feel comfortable that BSNL have all the cash in spite of having a very good status now in BSNL. A few weeks back, Government of India, Prime Minister of India spoke in Congress and basically talk about the importance of BSNL and talked about the fact that they will be - the Government of India basically in the proving $10.4 billion of funding into BSNL. Now, if that happens, that we might be back in that business. Because I don't feel it's a prudent decision to be going in and doing projects until we feel that they have all the funding that is required, no it’s a government undertaking and India, no government undertaking has ever gone down in the history of India. But having said that, we want to make sure that when we do the work we get paid quickly. And so to that extent we decided that we will discontinue doing business on e-Governance with BSNL until the BSNL has strong amount of cash in the business. Now if they do, which have been talked about in the progress and it's being played in the public eye in India. So it's basically I believe that 90 days away from being a funded to the tune of anywhere between $5 billion or $10 billion. If that happens Ebix might be back in business. We will go back to BSNL and would like to again stop picking up their other deals. But in the meanwhile, until that happened and we made a conscious decision that we will stay out of it. Now we could have been on other central businesses and other central government business e-Governance projects, or state e-Governance projects. We made a conscious decision that we don't want to bid on state government projects and on central government projects because they tend to have longer payments cycles associated with them and we did not feel comfortable going with those projects. So that's why we made this decision.

Okay, thank you. And then maybe just finally, I had seen the news about iPipeline and multiple being paid. A little surprising at the company that bought them most. I was – why they would be buying a software company, but the evaluation implies some pretty good things for yourself. Do you think that them getting acquired by who they are is changing their competitive position?

Not clearly. Look, I wouldn't say anything negative. I feel that iPipeline is a great company. They did a tremendous job of being there. Again, we feel that our revenue source is a way stronger than iPipeline purely because of simple reason. Our revenue sources are more recurring. Is that simple. Our revenue sources are more recurring, our business model is different. They have gone in. They have a lot of these. They do a lot of the engine work with respect to illustration engine. And in that business, I call it digging a well every year and taking water out. We don't do that. In our businesses, we create very recurring businesses. So having said that, iPipeline, Thoma Bravo basically did a great job of creating a business, taking the cost out of the business, creating a business which basically – as you saw in the press release, they talked about close to $200 million revenue with I think approximately $80 million of EBITDA and ultimately they got $1.6 billion for that. Having said that, look, private equity will always value you a little bit with higher, meaning frankly, we get approached every day by private equity. What this has done, we even fully aware that this was going to happen with respect to iPipeline in the sense that meaning these things leak out in the market. But basically, we have had so many inroads from private equity or especially over the last – as our stock price has come down, you become very attractive to private equity. Private equity feels, look, we can pay a decent premium and possibly get this asset and ultimately have, uh, you know – even if when you look at the multiples of what people are willing to pay, Ebix obviously is steel and you can afford to pay a lot more and still it would be a steel. Having said that, I personally have been up the opinion the time to do that is probably not now, because I strongly believe we've set up the basic, ground rules where we are headed or we're stronger than any of these companies. What we are creating is an international giant, I think time tell what we are doing. So having said that, meaning again, at the end of the day we are out there and when you're a public company, you're out there for an offer and anybody can make an offer. And finally it will be the board's decision to take with – if something like that happens. But I think overall for the industry, it's good that a pipeline basically has gotten a reasonable multiple, I think the Purchaser is a software company, not necessarily in the insurance arena. No, I could say it would defocus them, but I think it's too early for me to say it would defocus them. We would have to see how they conduct themselves, how they run it, per se. So I wouldn't comment as yet on it simply because I think I'd rather give them time to see how they pursue it. All I could tell you is that, we have got very strongly in the area that we compete with iPipeline on. We don't easily lose business to them. So we do extremely well in the business area, and there are business area, where we didn't enter. They are the palms business. But one of the biggest businesses they have is the illustration engine business, where they create, they tell you the basic toolkit of illustration engine and then they configure that engine for you. We have not been in that business and we've stayed away from that business. So I think, overall, I think it's a good deal for – I think it's ultimately going to play itself out in terms of it does for the market and for the insurance industry.

Okay. Thank you so much.

Thank you.

Thank you.

Thank you. And I am showing no further questions in queue. I'd like to turn the call back over to Robin Raina for closing remarks.

Well, thank you very much. I think I'll take the opportunity to thank all my employees. I believe for having – taken us through these fantastic results. Thanks, Sean; thank you, Darren, for being on the call. And I appreciate all of you investors being on the call and we look forward to trying to improve on where we are and continuing to make our results better by the January quarter that happens from hereon. Thanks for a patience, and thank you. With that, I'll end the call.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone have a great day.