Ebix, Inc. :EBIX-US: Earnings Analysis: Q3, 2016 By the Numbers : November 11, 2016

Ebix, Inc. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of Ebix, Inc. – Ultimate Software Group, Inc., Majesco, Benefitfocus, Inc., Computer Sciences Corporation and Thomson Reuters Corporation (ULTI-US, MJCO-US, BNFT-US, CSC-US and TRI-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 74.61 million, Net Earnings of USD 24.07 million.
  • Gross margins narrowed from 69.21% to 66.27% compared to the same period last year, operating (EBITDA) margins now 34.60% from 34.72%.
  • Year-on-year change in operating cash flow of 42.34% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2015-09-30 2015-12-31 2016-03-31 2016-06-30 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 66.81 70.2 71.07 72.57 74.61
Revenue Growth (%YOY) 31.5 15.79 11.47 12.15 11.67
Earnings (mil) 20.23 21.93 22.16 22.99 24.07
Earnings Growth (%YOY) 12.31 32.53 20.85 20.78 18.96
Net Margin (%) 30.28 31.24 31.18 31.68 32.26
EPS 0.59 0.65 0.67 0.7 0.74
Return on Equity (%) 19.58 21.68 21.46 22.18 22.59
Return on Assets (%) 12.52 12.98 12.66 13.09 13.11

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Market Share Versus Profits

Revenues History
Earnings History

EBIX-US‘s change in revenue this period compared to the same period last year of 11.67% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that EBIX-US is holding onto its market share. Also, for comparison purposes, revenues changed by 2.80% and earnings by 4.68% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings rose year-on-year. But this growth has not come as a result of improvement in gross margins or any cost control activities in its operations. Gross margins went from 66.27% to 69.21% for the same period last year, while operating margins (EBITDA margins) went from 34.60% to 34.72% over the same time frame.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

EBIX-US‘s decline in gross margins has not produced any significant offsetting improvement in its working capital . This leads Capital Cube to conclude that the decline in gross margins are likely from operating issues and not trade-offs with the balance sheet. Working capital days are currently 122.48 days, compared to last year’s level of 53.38 days.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

EBIX-US‘s change in operating cash flow of 42.34% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 30.59% to 30.93% and (2) one-time items. The company’s pretax margins are now 33.17% compared to 33.09% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Ebix, Inc. is a supplier of software and e-commerce solutions to the insurance industry. It provides a series of application software products for the insurance industry ranging from carrier systems, agency systems and exchanges to custom software development for all entities involved in the insurance and financial industries. Ebix was founded in 1976 and is headquartered in Atlanta, GA.

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