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Ebix 1Q21 results ?3

11:51 17-May-21

The Ebix conference call has just concluded.   The CEO opened his comments by mourning 11 employing deaths in the past 30 days.  Though tragic and not statistically significant, I note this actually represents a decline in the previously noted rate.  It's too soon to say for sure if this is the nadir for India, but I do think we must be close.  I am also encouraged to hear that there will be no further M&A in India in advance of the EbixCash IPO, as this tells me that management is serious about the schedule.  The next steps are to announce an "internationally renowned" auditor and banker in the coming weeks or months.

In the meantime, the current quarter was affected by staffing disruptions in Hyderabad, continued growth in the lower margin Payments business, and currency effects.  The CEO expects no travel improvement this quarter, but some FX improvement due to better conditions elsewhere.  A cessation of new bank deals is also a drag results that should eventually abate.

In North America, the insurance business has also been down due to similar decision delays.  However, the JP Morgan platform should launch this quarter, which is significant.  Longer term, though now is clearly not the time for it, direct to consumer marketing is in the works.

Like Taiwanese stocks including HIMX, EBIX was initially trading lower on pandemic news.  India also has a cyclone to deal with, but I maintain a positive outlook for both EBIX and HIMX.  I think what the market has been struggling to grasp here is the more markedly two-tiered economic differences between the haves and have nots in such countries.  The anecdotal reports that I am getting from India indicate the usual disparity in healthcare for well-off families with expats.  Since financial markets only track that strata of societies, conditions remain quite suitable for Ebix to execute on its growth and IPO an plans.  I wish the real world news was less dire, but the investment thesis for both HIMX and EBIX is still clearly intact.

Ebix has reported its first quarter results:

• 84 cents of EPS misses by 2.5 cents
• from $290M of revenue, which beats by 87.5M

Not much has changed since the annual report a few weeks ago.  The growth is there as shown by Ebix paying down $10M in debt during the quarter, but bottom line results are continuing to be impacted by the pandemic.  As expected, it looks like the accounting difficulties resulted in a one-time charge of 2 cents per share, which was excluded from the adjusted results. 

EBIX has traded higher in the pre-market but the bid-ask is not indicative of any direction.  I still expect it to trade higher over time.  The conference call is at 11am and I will write again if any guidance is provided or there is something else worth reporting.

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