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Ebix 3Q20 results +3

12:01 09-Nov-20


The Ebix conference call is ongoing in typically long-winded fashion.  Although the CEO personally lost his mother to the pandemic and had two sisters in the ICU, he still uses phrases like, "Once the COVID-19 impact subsides in 2021...", and "we're keeping our fingers crossed" with regard to EbixCash IPO, "until the impact ... blows over."  I would agree with him that India remains a key investment market, with plenty of interest.  However, I have to reiterate that time of the essence for Ebix, and add that many of the effects that management is characterizing as temporary may be sustained.  For instance, electronic payment solutions have lower margins for Ebix than other products.  The company is also benefiting from rent reductions at airports, and I question whether or not those reductions will outlast a decline in travel, especially given my notes on vaccine availability in early 2021. 

The only quantified guidance from management was the statement that the EbixCash IPO will not happen before 2H21.  I was already assuming that much, the question is how much longer than that might it take.  If we go through 2022 without that happening, I think EBIX is likely to be negatively impacted in ways that would be hard to recover from.  I think the following points support that view:
Despite these considerations, Ebix just signed a new call center acquisition and is pursuing new Bus exchange opportunities.  Even the JP Morgan contract that was touted last quarter is sounding like a loss leader, and has no quantified timeline for turning in the results that were cited.  Currency is the only potentially positive and underappreciated factor going forward, and I don't see that as outweighing the concerns.  EBIX got close to $24 in the early going this morning.  While I can't predict what it will do in the short term I would be happy to take short-term profits anywhere above where the stock opened this morning.  I'll update again in the unlikely event that I hear anything else of interest, but I wanted to get this out before the call finishes.

On 11/9/20 8:36 AM, Esekla wrote:
Ebix has reported its third quarter results:
  • 93 cents of EPS beats by 12 cents
  • from $154.3M of revenue, which beats by $35.3M
  • still declining to provide guidance
EBIX is up almost 8% in the pre-market to just under $21, and the move looks sustainable to me, despite the lack of guidance.  Samsung is moving ahead with plans to shift its AMOLED production from China to India with the newest plant to open by the middle of next year.  EbixCash is still being impacted by the pandemic though and there is no word on IPO plans.  Thus, while I was willing to take a chance on EBIX ahead of earnings, I'm not willing to chase it at this point.  The conference call is at 11am and I may or may not write further depending on what I hear.