moderator: steven barlow confirmation # 57700340cash flow increasing to $19.4 million from $18.9...

EBIX INC.

Moderator: Steven Barlow

03-13-12/11:00 a.m. ET

Confirmation # 57700340

EBIX INC. Moderator: Steven Barlow March 13, 2012 11:00 a.m. ET

Operator: Good day, ladies and gentleman, and welcome to the Ebix 2011 Fourth

Quarter Annual Investors 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 follow at that time.

If anyone should require operator assistance during the program,

please press star then zero on your touchtone telephone.

I would now like to introduce your host for today's conference call, Mr.

Steve Barlow, Vice President of Investor Relations. You may begin, sir. Steven Barlow: Let me remind you that the primary purpose of today’s call is to

provide you with information regarding our fourth quarter and full fiscal year 2011 performance. However some of our discussion or responses to your questions may contain forward-looking statements. These statements are subject to risks, uncertainties and assumptions. Should any of these risks or uncertainties materialize or should our assumptions prove incorrect, actual company results could differ materially from these forward-looking statements. All these risks, uncertainties and assumptions as well as other information on potential factors that could affect our financial results are included in our reports filed with the SEC including our most recently reported Form 10-K for the year ended 31st Dec. 2010 particularly under the heading risk factors.

During the course of this call, we may reference historical non-GAAP financial measures to provide a greater understanding of our business or financial results.. The management reviews non-GAAP financial

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information and metrics in evaluating the Company’s historical and projected financial performance and believes that it may assist investors in assessing its ongoing operations. The presentation of this additional information is not meant to be considered in isolation or as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Please be advised that we may or may not update these additional metrics in the future calls. Our press release announcing the 2011 Annual results was issued a few hours ago. The audio of this investor call is also being webcast live on the web on www.ebix.com/webcast. You can look at Ebix’s financials beyond what has been provided in the release on our web site www.ebix.com. The audio and the text transcript of this call will be available also on the investor home page of the Ebix web site after 3 pm EDT.

We reported today a strong fourth quarter that capped off the strongest year in Ebix’s history on many fronts. Bob and I will talk about the Company from a financial perspective and Robin will address the business in the quarter and our strategy for 2012.

Revenue in Q4 increased by 26% from a year ago to $44.1 million. For the full year revenue increased by 28% to $169.0 million, compared to $132.2 million in 2010. Our 4Q and 2011 revenue were the highest in the Company’s history. There were several drivers to revenue growth in 2011. Our Exchange business in 2011 grew 37% in Q4 and 39% year over year to become 77.3% of our total revenue this quarter compared to 71.3% in Q4 2010. For the year, the Broker Channel increased revenue by 30% and our BPO Channel was down 4% but significantly was flat in 4Q. Our BPO channel primarily focuses on insurance certificate generation and tracking. The BPO channel has accordingly been impacted by the downturn in the construction industry as an estimated 35% of certificates in the United States, get generated in the construction industry every year. The Carrier channel was down 37% for the year. This was primarily because of three reasons – one, we decided to convert this perpetual license business to a recurring utilities business and thus had to change our business model and accordingly deal with reduced upfront but recurring revenues. Two, the property and casualty industry has still not recovered from the economic downturns and IT spending was rather limited in 2011. Three, the property and

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casualty backend business today in the United States is not our top priority today, because of traditionally low margins in this segment and Ebix’s main focus being on growing its Exchange segment. Our cash generation abilities remained intact in Q4 with Operating Cash Flow increasing to $19.4 million from $18.9 million in 4Q10, an increase of 2%. For the full year, the Company’s operating cash flow increased 35% to $71.3 million.

Q4 2011 GAAP diluted earnings per share rose 6% year-over-year to $0.44, as compared to $0.42 in the fourth quarter of 2010. Taking into consideration certain non-recurring items, adjusted non-GAAP Q4 11 EPS was $0.40 compared to $0.30 in Q4 10, an increase of 31%. For purposes of the Q4 2011 EPS calculation, there was an average of 39.4 million diluted shares outstanding during the quarter, as compared to 38.4 million diluted shares outstanding in Q4 of 2010.

For the full year of 2011, GAAP diluted earnings per share rose 15% year-over-year to $1.75 from $1.51 in 2010. For purposes of the EPS calculation, there was an average of approximately 40.9 million diluted shares outstanding during the year 2011 as compared to an average of 39.0 million diluted shares outstanding in 2010.

Moving along to income, margins and EPS year over year.

The Company’s operating margin for 2011 was 41% as compared to 40% in 2010. Q4 2011 net income was $17.3 million, as compared to Q4 2010 net income of $15.9 million, up 9%. For 2011, Net Income reached a record $71.4 million compared to $59.0 million in 2010, a 21% increase.

Our Q4 operating expenses which rose 19% over 4Q10, demonstrates the commitment to our margin goals. In 4Q, our sales and marketing expense was up 154% compared to Q4 10 which follows what we have said for the past several quarters that we are investing in our sales force. For the year our Sales and Marketing expense increased 114%, and almost doubled as a percentage of revenue, from 4.8% in 2010 to 8.1% in 2011. Our sales and marketing force at year end stood at 115 compared to 72 at the end of 2010. The Company’s G&A expenses were up only 9% for 2011 which includes the addition of ADAM and HealthConnect and higher corporate and employee health costs. As percentage of revenues G&A costs have been reduced from 18.2% in 2010 to 15.5% in 2011. Ebix’s total headcount at the end of 2011 was 1,426 compared to 1,179 at the end of 2010.

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I will now turn over the call to Bob.

Robert Kerris: Thank you, Steve, and good morning, everyone. There are a few

things that have been hallmarks of our business for many years now,

specifically consistent operating margins in the 40 percent range,

significant recurring revenue streams, and the company's ability to

consistently generate increasing cash flows from our operating

activities.

Despite recent significant business acquisitions and investments in

additional sales and marketing resources, operating margins for the

year were 41 percent. In terms of cash flow, this is an extremely

strong quarter. Ebix generated $19.4 million in operating cash flow in

Q4 2011 and $71.3 million for the year 2011 which essentially means

that virtually all of the company's reported net income in these periods

has been realized in the form of positive operating cash flows

generated by our businesses.

In Q4 2011, the pace of our share repurchase has slowed as the

company spent $7.1 million repurchasing 485,000 shares of our

common stock at an average price of $14.66 per share. In the fourth

quarter 2011, our diluted share count was 39.4 million. For Q1 2012,

we expect our diluted share count to be approximately the same.

During the year 2011, we reinvested in our core businesses by

spending $2.8 million on capital expenditures, strengthened the

company's balance sheet by settling remaining convertible debt and

improved our capital structure by repurchasing 3.5 million shares of

common stock at a cost of $63.8 million which also provided return on

invested capital to our shareholders.

Finally, in 2011, we paid our first quarterly dividend of $0.04 a share,

$0.16 annually, and today as you know, our board of directors

authorized an increase in the dividend to $0.05 per quarter with the

next payment being due in May of 2012. In addition, we closed the

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acquisition of A.D.A.M. in February 2011 and bought HealthConnect for

$18 million in November of 2011.

Our leverage ratio, i.e., debt over trailing 12 months EBITDA remains

low and well within our covenants at only 0.6 and our debt to equity

ratio also continues to be very low at 0.15 consistent with a year ago.

Our accounts receivable day’s sales outstanding declined to 64 days

from 68 days a year ago.

Finally, as of year-end 2011, the company has $57.5 million of

remaining domestic NOLs available to offset future U.S. taxable

income. Ebix's annual report on Form 10-K will be filed this Thursday,

March 15. Thank you for your attention, and I will now turn the call

over to Robin.

Robin Raina: Thank you, Bob. Good morning, everyone, and thank you for joining

us today. I'm pleased to report that Ebix has delivered a very strong

finish to the year. The year 2011 was another superb year for Ebix on

all fronts with record revenues, net income, cash flows and diluted

earnings.

I have always believed in simplification in my life. More than a decade

back, we set out to build a company that could possibly be a leading

player in the insurance exchange markets worldwide. In the early

days, when I used to be asked about the technology vision of the

company, my answer used to be summed up in one word,

convergence.

When I used to be asked about our financial vision, I used to say,

selling price has to be consistently a lot higher than the cost price. If I

had to evaluate the company's performance on these two simple

yardsticks, then the year 2011 was another great year for the

company.

Let's now evaluate the company on certain other metrics that are

important in our line of thinking. Cash – the company continued to

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churn out great cash flows, as covered in Bob and Steve's

presentations. That in our book is a single biggest metric that we

monitor at all times.

We believe that if the company can keep generating increased cash

flows then that by itself becomes a catalyst for funding future growth.

Recurring revenues – subscription and transaction revenues in 2011

grew to 83 percent versus 75 percent in the year 2010. Subscription

revenues grew from 56 percent in 2010 to 65 percent of our total

revenues in the year 2011. We like this trend as increase in

subscription revenues can translate into higher income streams.

Low customer concentration – our top client accounts for

approximately three percent of our revenues, while the top 25 clients

account for 15 percent of our revenues. Today, we have little

dependence on any one client or a short list of clients. We deal with

thousands of clients across many channels and products today rather

than focusing on a few large clients.

Margins – we continued to do well in terms of gross margins and

operating margins both, with gross margins at 80 percent and

operating margins at 41 percent for the year 2011.

Consistency – with these results Ebix now has a track record of having

delivered more than a decade of sequentially improving financial

results in terms of cash, net income, EPS and revenues.

Adapting to change – we believe that continuously adapting to the

changing technology, global and regulatory trends is important if we

are to establish ourselves as a change leader in the industry. Year

2011 saw us launch many new firsts for the industry in terms of

breaking new frontiers on all these fronts. This was made possible by

our continuous investment in people and research and development.

People – our single biggest asset is our employee force across the

world that at year-end stood at 1,426 people strong. We have been

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extremely successful at retaining and grooming people from within the

organization to take up bigger challenges. The year 2011 was a great

year in terms of employee retention and learning multiplication.

We continued to invest in building a world class sales force which at

the end of the year stood at 115 people. By no means are we done on

that front. We intend to continue investing in creating a strongly

diversified sales organization across the world.

In the year 2011, we made a lot of progress in terms of setting the

basics of where we would like to take Ebix. We invested in emerging

markets like Brazil and Africa. We invested in building new services in

many sectors like health and life insurance.

The Obama administration announced yesterday that the new

interstate online health exchanges to be implemented by each state

across the country would cost state and federal governments $800

million in the aggregate. We see healthcare as a big opportunity for

the Company in the next few years.

Accordingly, we have continued to invest in creating end-to-end health

exchanges that cover the expanse of consumers, brokers, employers,

search engines, large media outlets, hospitals, HMOs, PPOs, and

providers, et cetera.

This investment makes us the most comprehensive end-to-end player

in the health exchange arena and opens the possibilities for us to do

business with state governments and large providers besides a wide

array of other entities. Year 2011 was a watershed year in this regard.

In the year 2011, we continued to invest in mobile computing as also

building new mobile apps. We intend to continue pursuing those

initiatives in the year 2012 with a view to becoming a comprehensive

provider of insurance services on a wide variety of mobile platforms in

a technology-agnostic manner.

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In the year 2011, we continued to expand on the core focus area of

exchanges, both in terms of newer customers and newer

functionalities. As the insurance industry recovers, we expect to see

increased transactions from existing clients. That should also

contribute to further revenue growth.

Two areas outside insurance, where you could see Ebix play a lot in

the year 2012 and beyond are healthcare and finance. To date, Ebix

has been branded primarily as an insurance services player. Today,

we are set to further expand our horizons into new areas outside

insurance. I prefer to discuss that at a later stage, as and when we

make some key announcements related to that.

Ebix today is thinking at a different level in terms of it’s future growth

opportunities. We believe that we can use our present expanse and

customer depth to be a much larger player. We intend to do that both

from within and through the route of accretive acquisitions in the near

and long-term future both.

As Bob explained, today the Ebix Board sanctioned a 25 percent

increase in the dividend. This is another sign of our efforts to

maximize shareholder value. We see ourselves as a growth story that

can do both, use it’s cash to spur growth, as also pass some of this

cash to our shareholders.

In summary, I'm very pleased with the strong finish we delivered to

our fiscal year and the continued growth momentum for years to

come. We have a focused simplified business model with a strong P&L

and a strong balance sheet, which will continue to catalyze our growth.

We are in the lead position to enable and power some of the world's

largest insurance exchanges, all of this translates into a tremendous

growth opportunity for us, and I'm very pleased with how our journey

continues to progress.

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To conclude, I would like to thank all of the Ebix employees across the

world for helping produce record sales and earnings for the company,

as well as advancing our dominant competitive position in our

businesses. Thank you.

Kevin, we're ready for questions now.

Operator: Ladies and gentlemen, if you have a question or a comment at this

time, please press the star then the one key on your touchtone

telephone. If your question has been answered, you wish to remove

yourself from the queue, please press the pound key.

Our first question comes from Jeff Van Ree with Craig Hallum.

Jeff Van Ree: Great. Thank you. Hey, guys. A couple of questions for you, maybe

Robin would you just talk to, obviously with the recurring revenue

streams, we don't get as clear a picture about the quarterly business

trends in terms of bookings.

Would you talk about the environment now as you see it in terms of,

how did you do in bookings in Q1 compared to Q4 or maybe the year

earlier, improving steady, by segment, some color around the bookings

environment would be a good start.

Robin Raina: Well, I think, sequentially, our bookings continue to improve and some

of it is purely, because we're adding a lot in our sales force, as the

expanse of our sales force is increasing our bookings are continuing to

improve.

I think in our scheme of things, what you traditionally see is, we don't

book any upfront revenue with any of these deals and most, all of it

comes in – majority of it happens as the clients go live and as they

start processing transactions. Our key goal is to let them process

transactions, make subscription revenues out of them, make

transaction revenues out of them and so on.

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So, having said that, if you sequentially look at Q1 versus Q2 versus

Q3 versus Q4, there has been absolute improvement, sequentially, in

terms of the number of deals that we're booking, and today one of

things that has changed for us is that we've hired very high quality

senior sales people and we're trying to go after much larger deals,

which will obviously have a longer time span and with this as a

paradigm shift in terms of our thinking, we believe for example that, if

we are dealing with – let's take the example of health exchanges.

Earlier we were not a player in terms of bidding, for example, for a

$20 million deal or a larger deal. Today, Ebix is at least starting to play

in those deals. It doesn't mean that there's a guarantee, we're going

to get those deals, but we are a player. Now that by itself is a very

focused effort going on.

Now, as we go into those kinds of deals and any of those deals as they

start happening, I think, they will by itself be a catalyst for a paradigm

shift in the way Ebix operates.

And I think we are trying to heavily focus today, internationally, on

some of these, the larger play that is happening, which it means

providing, for example, exchanges to governments and countries,

providing exchanges to HMOs, providing solutions to HMOs, providing

exchanges to state governments, providing backend solutions and

exchanges to really large insurance companies.

So, I think that's the kind of stuff that we were not involved in earlier,

and that is starting to change. And a lot of our focus with the new or

senior enterprise salespeople is on making those kinds of things

happen.

But overall, to give you a simple answer to that,– bookings have

sequentially kept improving per se. But now, to give you a color on

where the macro environment overall in the industry - there is

improvement in certain sectors but I would not say that there is a

huge improvement in the industry per se.

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It is a bit sluggish but it continues to improve. I think from our

perspective, we believe that with or without economy getting into a

fast gear, we should be able to keep improving our numbers simply

because, we believe that we are at a point where the kind of expanse

we've been able to build, the kind of network we have been able to

build.

This network by itself should help us bring the next client in, simply

because ultimately, as some of these players are struggling in

insurance in this kind of an economy, we as a company can help them

become more effective, more productive, increase their margins. So,

that's part of our big thought process right now.

Jeff Van Ree: I think at the Analyst Day, you had given a sort of an apples-to-apples

same-store volume growth in terms of customers you've had on your

exchanges to help quantify the headwind or tailwind, sort of the

overall environment. Do you have a comparable number?

Robin Raina: No, I don't have a comparable number. I think we just talked about at

that time, was that I was responding to a question and I had

responded about the number of contracts.

I will just tell you, rest assured, that the number of deals we had

talked at that time and the number of deals has grown quite a bit in

terms of where we are. And so, we'll continue to improve those

numbers.

Jeff Van Ree: OK. Then just two other – two other quick ones, just (beyond),

obviously, some pretty aggressive hiring on the sale side. How, as you

enter '12, do you look at the – what is the outlook for additional heads

on the sales side entering '12?

Robin Raina: Well, Jeff, we're pretty pleased with our hiring on the sales side and

you see, we're in a highly domain specific industry, meaning, what are

we getting paid for.

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We're getting paid for not just for providing technology, we're getting

paid for providing very high quality insurance knowledge to lead the

industry in a way and define certain directions. So which means, our

sales people need to be highly domain specific, and need to be very

knowledgeable.

They have got to be trained very well. So, we have spent a lot of time

training these people because these people are selling at the level of

vice president, senior vice president, CEOs, typically, because when

you sell an exchange, basically the decision is being made at the

highest level in the insurance company or a distributor, or a wire

house and so on, or a bank.

So, having said that, we made those investments, we're really pleased

with the quality of people we have hired and the kind of people we've

been able to hire. So, today, are we done with this? Absolutely not. I

think 2012, we will continue to hire people and improve the number of

salespeople we have.

We believe that one of the things that we indeed can do a better job

at is to further strengthen our sales organization in international

markets. We want to create a solid sales organization across the

world. We feel we have a bit of catching up to do in international

markets.

I'll give you an example, in 2011, we made forays into Africa. If you

look at our pipeline today in Africa, we started this group which was

starting to handle Africa, it is extremely strong, and it has given us a

lot of reason to believe that we should get more aggressive about

these kinds of markets.

And so today, we're starting to think through how can we invest more

in these markets, because some people would say why get out of the

U.S., why go to these countries, does the U.S. not have enough

opportunity? Well, it's a question of being a leader in the early days.

It's about mind positioning.

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In some of these markets, the competition is not strong enough or

isn't there. We believe if we can be the first ones to get there and to

start defining and be the first mover in those markets, we believe that

we can make a pretty strong position in the market and build an early

network.

So we intend investing in Asia Pacific. In our viewpoint, we are weak

in Europe today and we really need to strengthen our sales force in

Europe. We need to strengthen our sales force in some of the Latin

American markets. And, of course, U.S. will continue to be a good

focus for us and we will continue enhancing.

One of the areas you will see us hire a lot more sales people is in the

health arena, in the health exchange arena. You will also see us

getting into newer areas of health insurance. Healthcare is becoming

a large play now. And we believe that we intend entering some newer

areas.

As we get into those, we'll talk about those. And when we get into

those, we intend to take that knowledge set and expand it

internationally and create more sales people around the world to focus

on those kind of areas.

The other area you could see us hire a lot more people is CRM, CRM

systems. One of the reasons for it is we are today taking our CRM

systems from life and annuities into P&C, into health, into different

other markets.

So take that example as we take CRM. We've spent a lot of time

customizing our CRM system and customizing it to a P&C market. We

interfaced it with our broking solutions to make it an absolutely

seamless experience for our clients.

Today, we have opportunities. Look at a market like Australia. In

Australia, an estimated 85 percent of the broker desktop in P&C is with

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Ebix, and when you consider that, that's ready a market for Ebix for

CRM systems.

And so we need to put in focused sales people to make that market

and exploit our reach that we already have the dominant position we

have in the market. Similarly, take the area of health. In the area of

health, we have been customizing our CRM into a health CRM also.

Now, that's a completely different market for us, completely new

market for health CRM for us.

So we intend to put in focused sales people on it, we need to have

sales people divided by the kind of product, by the kind of channel,

whether it's health or life or P&C and so on. And so you would see us

make a lot of hiring in that area.

Jeff Van Ree: Thank you. Just a couple other ones and I'll let somebody else jump

on. On the margin front, coming in sub 40 percent certainly for year,

pretty healthy margins. You have the HealthConnect transaction in the

quarter, which I suspect had some impact. But how do you think

about operating margins in general for 2012?

Robert F. Kerris: This is Bob. We would expect our operating margins to continue in the

40 percent range in 2012.

Jeff Van Ree: OK. And the tax rate for the quarter was higher, how do you think

about that for '12?

Robert F. Kerris: We expect our effective tax rate will continue to rise as we create or

generate greater amounts of taxable income in jurisdictions with

higher statutory tax rates.

Jeff Van Ree: Is the level that you posted for Q4 a good baseline to think of for

2012?

Robert F. Kerris: I think it will increase from there.

Jeff Van Ree: It will go up from the Q4 level?

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Robert F. Kerris: Correct.

Jeff Van Ree: OK. And then last one, the organic growth rate, obviously, you don't

break it out. But as you look at 2012 directionally based on pipeline

visibility and the quite a bit of subscription revenues, can you give us a

sense of least magnitude, of acceleration, you look for similar growth

rates until second half it accelerates? How should we think about

organic growth over '12?

Robin Raina: Well, first of all, you see this question of organic growth becomes a

rather complicated question.

So all of these taxes and organic revenue you will see enhanced

disclosures in our K that is just coming out and pretty much a lot of

detail, especially on taxes and so on. You will also see specific

paragraphs and specific wording on organic growth and so on.

Having said that, the way our business model is, as you read the K, we

have tried, taken pains to explain why it is so difficult for us to start

breaking up the organic growth versus inorganic because of how we

function, how we integrate. To give you an example, we might

basically get rid of a particular product on their side, on our side, or if

they are selling our product, that product revenue might be attributed

to them and so on.

So, we integrate very tightly. As you'll read that, you'll understand

that more. But having said that, I can answer it more on an overall

basis in terms of overall revenue growth, we clearly are investing in

these salespeople with the basic belief that we can generate a lot more

momentum in terms of sales.

Our pipeline continues to improve. We believe 2012 can be a much

better year. Overall, in terms of the second half of the year, we clearly

believe that you're going to see more acceleration in the second half of

the year, and that is simply because of the fact that as you hire these

salespeople, there's a training time, you know, because of the domain

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specific nature of our business and then there is a cycle to a sales, you

know. And then we put both these things together, you end up with,

clearly second half of the year being a lot better than the first half of

the year. Having said that, we signed a lot of deals in '11 and a lot of

those deals will start generating revenue this year.

So, overall, we have never given guidance in terms of revenues, and

we will stay away from issuing guidance in terms of revenue or our

earnings and so on. I think over the last decade or so, we have

always stayed away from trying to getting into guidance side. I would

rather have numbers speak for themselves as we go forward.

Jeff Van Ree: Thank you.

Robin Raina: Thank you.

Operator: Our next question comes from Mark Rye of Singular Research.

Mark Rye: Hi, Robin. I wonder if you could comment a little bit more about the

HealthConnect Solution's acquisition in terms of the cost selling

opportunities, cost synergies, product synergies that that's providing.

Robin Raina: Fantastic. Great question, Mark, and hello to you. So, Mark, in terms

of HealthConnect, it's a pretty strategic acquisition for us, meaning

what it gave us, it gave us the interfacing, it gave us the connection

between brokers and insurance companies.

And their solution is being used at the front end virtually which could

be exposed to a consumer, to a broker, to an MGA (Managing general

Agents), it could be anybody, you know, and of course, the insurance

company at the backend.

When you consider that, what pieces does Ebix already have? Let's

start at the basics and what I talked about is health exchanges.

Where does a transaction start in health insurance?

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The transaction can start possibly on a search engine. It could start

on a media outlet Web site. It could be on a New York Times Web site

or a Boston Globe or a Reuters Web site. And you might be thinking

about health – maybe I need to research health insurance. Maybe you

see an ad and you start going in into health insurance, you know,

quoting tool. That's where the transaction starts.

So now if you go to the front end, you have on one side the

consumers, the brokers, the search engines, these portals, and so on.

And then on the other, you have the employers. You have the

employers, you have TPAs providing employee benefit systems to the

employer. You have brokers providing employee benefit systems, the

benefit portals to the employer.

When I gave this example, in the front end, we're providing all these

health content exchanges wherein you can research our content across

on hospital Web sites, to portal Web sites, to search engines like

Yahoo!, or Google or, you know, Reuters Worldwide and so on, or

Boston Globe, or New York Times and so on.

On the other side, you have an employer whose employees want to

enroll into a benefit system. And from there, you have the data

moving from an enrollment system into maybe a broker system.

From there, the data could move – when it gets into a broker system,

a broker would need a CRM, a Health CRM, for example. Again, Ebix

can provide that Health CRM. From there, that data could move now

to a TPA or it could move to a carrier, depending on what is required.

So, let's take the HealthConnect example. Now, there is a consumer

seeking a quote or there is a broker seeking a quote. All of that would

be done using our quoting exchanges. So now you created multiple

quotes using one entry at the front end, wherever the entry is.

Now, from there onwards, as you are processing that health insurance,

you will have a policy being generated. You would have the policy

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being serviced. You would have claims being filed. You would have

claims being adjudicated across different bodies. You could have

COBRA being involved. You could have HMOs being involved. You

could 24 hourglass accounting being involved. You could have claims

accounting being involved. You could have a general ledger at the

backend. There will be a backend system for the carrier.

Now, when you consider all of these and now you embed content

around all of this as this transaction is moving, as the data is moving

seamlessly incidentally, with no multiple data entry at different points,

that's what an exchange does. This is what Ebix is trying to do.

In this example, everything I defined in this example, Ebix does today.

HealthConnect was a missing piece for us. We didn't have the quoting

piece in the middle. That's what it gave us. So it's fitted in beautifully

into that entire mix. And did I answer your question?

Mark Rye: Yes. A couple points on the cost synergies. The software

development is now being moved to your India development facility.

Robin Raina: Yes.

Mark Rye: So whether you're getting some costs synergies there?

Robin Raina: Well, we haven't done anything new in terms of moving development

to India. As you know, India has been a core development center for

many years now.

So as we continue to make newer acquisitions, of course, we move a

lot of the development to India. But it's a strategy that is old and we

have been always consistent with that. So, it's not anything new for

us.

It's just that we continue to invest more in the number of people,

more in creating, converting India into a learning organization,

because we keep multiplying the number of people we have in India,

more in our infrastructure in India and so on, and as you know India is

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Carnegie Mellon Level 5 certified in quality and so on, but there is

really no change from our perspective of India, that remains at the

core of the Company in terms of our development facilities.

Mark Rye: Right. I Just meant they weren’t already having their software piece

to India that's – if such is the case with A.D.A.M, where they obviously

had?

Robin Raina: Yes, you're right. Taking A.D.A.M. for example, A.D.A.M. actually had

made the futuristic decision of taking their development to India,

except that A.D.A.M. has hired Indian software companies to do that.

They were paying them time and material dollars to get that work

done.

So, for us it was a natural progression to take A.D.A.M. to India

because they already were committed to doing it, they already had

hired companies. All that changed was rather than hire an outside

company, we moved it in-house into the Ebix Development Center in

India.

Mark Rye: OK, very good. And you talked about the, the opportunity for health

exchanges in the U.S. from the recent legislation. Can you tell us if

you expect to see any of that next year in terms of revenue potential

or is that further out?

Robin Raina: Mark, we absolutely would like to see it this year. We are at fairly

advanced stages in lots of deals across the U.S. These are deals

where we would like to believe that in many deals, we're a

frontrunner, and we believe that as we go forward, you'll understand

our health strategy a lot more.

You possibly will see, rather than Ebix talking about it’s own health

strategy. In coming days, we would like to see large players in the

U.S., large household names in the industry start talking about

possibly teaming up with Ebix, and saying that, that's the solution

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we're promoting. So as I said, there is a paradigm shift in terms of

our thinking, we're going after larger deals.

We're planning it in a different manner. We are teaming up with really

large players who have a say in some of these deals and so on. So,

yes, meaning, we would like to see some of this happen in 2012. Is

there a guarantee? No, I couldn't guarantee you but at the same

time, if I look at the queue that we have or the deals we're working

on, can they happen in '12, yes, they are supposed to happen in '12

actually. But you never know, we'll keep you updated as things flow.

Mark Rye: Can you comment on some of the, you know, the competition that

you're going to be facing in those RFPs?

Robin Raina: Well, the competition is very different, meaning these are very large,

players who at times play in those deals, what is happening in these

exchanges, where we are standing a bit differently or competitively

from others is, most of the time there is a potpourri of five or six

vendors who are teaming up.

I hate to give names there, but basically you will see some large

players, just for the sake of a name, you could see a McKesson team

up with, somebody out there, a big large system integrator, a large

systems integrator worldwide teaming up with another content player

on the health side teaming up with a claims player on the other side,

teaming up with a backend systems player on the other side to create

a solution.

When Ebix walks into these situations, Ebix says, we don’t really need

any of these, and so at times, I can give you an example of who could

be our possible partners, and I'm not saying anything in this call right

now, but our possible partners could be a Microsoft, it could be large

players, you know, big system integrators, household names in terms

of system integration effort world-wide, and why choose those

partners, because sometimes some of those partners are already doing

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business with state governments, they are already they are the chosen

player.

Let's say a large insurance carrier has chosen a particular system

integrator and outsourced majority of their IT to them, therein it

makes perfect sense for Ebix to team up with them, and so I think

that's what is happening, but the beauty of this is from a solution set

perspective, from a services perspective, from a product set

perspective, Ebix is the only one who can provide all this and is the

only one vendor who says I don't really need these six vendors that

you're trying to choose, and I'll give you one solution, one

architecture, one-end to end solution, and carry data. That kind of

puts us in a slightly different, I would say, in a better position

comparatively.

Mark Rye: All right, pretty good. And looking at the other lines of insurance, can

you talk about, the market for the life annuities, P&C business in terms

of, you know, transaction volumes, what you're seeing as far as that,

that business is growing in today's economic environment?

Robin Raina: Well, if you look at the macro trends, meaning, in the life and annuity

side of the business, it has been impacted. If it hadn’t we would have

expected the transaction numbers to grow from the same existing

client, that hasn't really happened, meaning, we're seeing ups and

downs here and there.

And the main reason for it, there are so many things that are

happening in the macro environment, meaning there are some of the

interest rate issue has started impacting the carriers. Again, this is a

cycle internationally.

Overall in the life insurance industry, there is reason for hope, and at

the same time, it's not really, we haven't seen any marked change in

the overall macro environment. Having said that, we have continued

to invest in bringing new customers to the exchange, so we're

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continually bringing larger players to our exchange and as we bring

some of these larger players, we should see growth.

In the meanwhile, we might not see increased revenue from a

particular exchange, from a particular client, existing client, but at the

same time since we would have added another new client to the

network that by itself would bring in a whole network, when we say

one client, you bring in a distributor, you bring in a lot of carriers with

it.

Meaning, it's a network that we bring every time, we sign up a larger

client, and some of those can by itself spur growth because of the

network effect of bringing larger distributors and how one distributor

leads to many more deals for us automatically.

So, did I answer your question? Overall the macro environment is still

not stable enough, or is not growth oriented right now in the life of

annuity sector.

Mark Rye: OK, thanks for that commentary. Just a couple of more questions and

I'll get off. I wonder if you could tell us about some of the new

products and services that you launched in Q4 and perhaps so far this

year. You mentioned EbixEnterprise going...?

Robin Raina: Yes, meaning that you see a lot of these are very evolving products

and services. For example, we just talked of EbixEnterprise. Now,

EbixEnterprise looks like one service, but EbixEnterprise is the most

ambitious project that Ebix has undertaken in a decade or so.

What are we trying to do with EbixEnterprise? We're trying to create

one system that can virtually replace everything from end-to-end for a

carrier, which means, we're trying to create a solution where a carrier

can say, I can deploy EbixEnterprise to do all my backend work,

incidentally handle all my exchange work, and also have CRM interface

still or built into it and so on.

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So, there is so much more we're trying to do which carriers would

have used tens of systems for. So, when we say EbixEnterprise, the

word, this will keep getting refined. There is so much more we are

adding. We're right now starting for example with health, but health

alone is such a huge area. So, in health alone, every quarter, there

will be newer things happening in EbixEnterprise.

But then, we will keep adding newer functionality, newer product set,

newer lines of business, and so on. So, it gets a bit more complicated

than that, but then we continue to launch mobile applications. There's

lots of apps we're continuing to launch. In coming days, you're going

to see Ebix launch services on iTunes, start selling a lot of more

commodity kind of products on iTunes.

So, we have lots of thought processes in terms of taking our products

in very different ways across the world. For example, one of the areas

we believe we would like to invest in 2012 is the whole area of social

media. Social media is a very emerging area.

Again, it depends on how you use that social media from a productivity

perspective and how do you really generate revenue from it. And you

know we have a strategy around social media, which you will start

seeing happen in 2012. But having said that, there is so much more

going on, just from a Q4 perspective.

For example, one of the products that we made live in the Q4 was a

product we internally code-named Brave New World, BNW. That's

basically our annuity exchange, replacement of our existing exchange,

AnnuityNet, and we are gradually rolling it out with our larger

distributors and as we roll it out, you're going to see that ultimately

replace everything in annuity.

So, there is are many things because of the number of products we

have, but I don't think in this call, I could walk through each and every

product, because we do lots of stuff and there's lots of change coming

in into it, but I think on a macro environment level – on a larger level,

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in summary, I will tell you that everything is fast, we're very focused

on cloud computing, we're very focused on software-as-a-service,

we're very focused on utilities-based businesses.

We're not really interested in this business of trying to book quick

revenue or going after perpetual license sales. We're more interested

in passing some of the professional services to the clients. We're

trying to build open architecture technologies, wherein our clients can

interface and build their own solutions if need be, wherein our

competitors can interface with our platforms if need be, we're not

scared of that.

We're creating these open architecture solutions, whereby people can

interface with our solutions, and we believe that will help generate a

bigger network. As more companies interface, more software

providers interface, more competitors interface, it will ultimately grow

our position in the market, help our network grow, having said that

that's one of the key focus areas for us to evolve these open

architecture standards and to keep growing our network volumes in

the markets.

Mark Rye: OK, well, thank you for those answers and congratulations on a very

good quarter and I'll try to call over to Robin

Robin Raina: Thank you, Mark.

Operator: Again ladies and gentlemen if you have a question or a comment at

this time please press the star then the one key on your touchtone

telephone. And I'm not showing any further questions at this time. I'd

like to turn the conference back over to the host for closing comments.

Robin Raina: Thank you, (Kevin). I think we're towards the end of the call. So,

thank you all for participating in the call, and we look forward to our

next conference call, and announcing our first quarter results soon.

Thanks again for participating.

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Operator: Ladies and gentlemen, that does conclude today's presentation. You

may now disconnect and have a wonderful day.

END

moderator: steven barlow confirmation # 57700340cash flow increasing to $19.4 million from $18.9...

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