Ebix Inc (EBIX) 2007 Q4 法說會逐字稿

Good morning. My name is Carmen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ebix 2007 investor conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (OPERATOR INSTRUCTIONS). Thank you. Mr. Robin Raina, Ebix's Chairman, President and CEO, you may begin your conference.

Thank you. Good morning, gentlemen. Thank you for attending Ebix 2007 annual investor conference call. I also have with me today Mr. Robert Kerris, Ebix's CFO, on this investor conference call. We announced the 2007 financial results today morning and all of you must have those numbers by now. I'll take a few minutes to summarize these [numbers] for you. Each of the last few years has been a record year for Ebix in terms of beating all the results in the last 30 years. This year was no different from the last few to the extent that the financial results for the year 2007 are record results again. The best every in our 32 year young history.

Ebix 2007 fourth quarter revenue rose 31% to [$112.2 million] compared to $9.28 million during the fourth quarter of 2006. Q4, '07 net income rose 169% to over $5 million or $1.20 per diluted share versus 2006 net income of $1.67 million or $0.53 per diluted share. The fourth quarter of net income of $4.5 million is a 22% improvement over the third quarter and it presents the eighth consecutive quarter of significant net income growth. The results for Q4 2007 and Q4 2006 were based on $3.8 million and $3.2 million weighted average diluted shares outstanding respectively. Our net margins grew to 37% in the fourth quarter of 2007 with [13%] in the fourth quarter of 2006. Ebix's total revenue rose 46%, $42.84 million in 2007 compared to $29.25 million in 2006. Ebix's operating income rows 91% to $12.8 million in fiscal 2007 compared to operating income of $6.71 million in 2006.

In 2007, the company's net income rose 112% to $12.67 million or $3.61 per diluted share compared to net income of $5.97 million or $1.190 per diluted share in 2006. Our operating margins continue to improve, increasing to 30% for 2007 from 23% in 2006. This positive trend in net income and operating margins are good measures of our effort to keep growing the business profitable. In addition the company generated $14.4 million in net cash from operating activities, representing an increase of $10.2 million or 242% from the $4.2 million of operating cash flow from just a year earlier. Over the last six to seven months I have spoken to a broad spectrum of investors across the world. Based on interactions with them and the fact that we have a new -- a number of new investors on the call, I felt it important to proactively address some questions that you might have with regards to the Company.

So what did Ebix vision plan? Ebix is a rather complex company to understand. Can -- what Ebix sum up what Ebix sells in a few sentences? Ebix has shown a good amount of growth consistently over the last few years. Has Ebix reached a flat now in terms of growth? And so on and there are a number of questions. These are some of the questions that you might have in your mind. During this call I will try to answer these questions for you proactively, and once I'm done we will open it again for questioning and address any questions you might have after that.

Let's start with the first question. What is Ebix's vision plan? Ebix's goal is to be the leading back-end powerhouse of insurance transactions in the world. The company's technology vision is to focus on convergence of all insurance channels, processes and entities in a manner that data can seemingly flow once a data entry has been made. We intend to do that by designing products and services that are pioneering and at least a few years ahead of our competition. We believe that profitability and revenue growth must go hand in hand. We intend to do all this in a transparent and sincere manner while ensuring a high level of satisfaction to all entities we deal with. Our customers, employees, investors, and not to forget the society around us on whom we can have a positive influence. In the year 2007 we took some strives towards that vision plan.

Another question, Ebix is a rather complex company to understand, can Ebix sum up what Ebix sells in a few sentences? Answer: Ebix is an insurance services player that provides four different services in the worldwide insurance market, one B-to-B exchanges, two, insurance company backing systems, three broker systems, and lastly four, BPO insurances to insurance company, large corporate, etc. Another question. Over the years, Ebix has completely transformed itself from a broker systems player to an end-to-end services player. Doesn't that focus Ebix? Who does Ebix compete most of the time?

Yes. Ebix today is a complete end-to-end insurance services displayer. Our belief is that efficiencies in insurance can truly happen if a transaction can be electronically carried from one end to another with one -- with just one data entry. To do that, one have to drive paper out of the process and converge all the systems that power insurance across all entities, be it brokers, carriers, distributors, corporate or consumers. This is precisely what Ebix has set out to do. Today the need and complex for this can be best expressed by the fact that outside Ebix there is no single one entity or competitor that has tried to do this worldwide. That is a challenge and an opportunity by itself. In international markets increasingly we compete with local regional players or in-house IT department of insurance companies. There is no one company that we face across the world or for that matter there is no one company that we face across the United States on our different products.

Another question. Ebix has shown a good amount of growth consistently over the last few years. Has Ebix reached a plateau now in terms of growth? What are the chances that these results are not flash in the pan performance results? Answer: let me start by saying that the Q4 results include only two months of revenue from our BPO division, and absolutely no revenue from our recent acquisition of Telstra Ebusiness in Australia that we made in January 2008. Incidentally Telstra Ebusiness is the largest acquisition made by Ebix in its history. Those numbers will all be included in our results beginning first quarter of 2008. We have always believed in letting our past performance and numbers speak for themselves and I will sustain from issuing those guidance in numbers.

For those of you who have been investors in Ebix stock for some time you have heard me say this many times earlier. I am not going to depart from that process and ensure future guidance. Instead I will lay out a few metrics from the past two years for you to discover an answer for yourself. Ebix [2000 fourth] quarter revenue rose 31% to $12.2 million compared to $9.2 million in 2006 and $6.16 million during fourth quarter of 2005. Our revenues grew -- if you were to compare revenues over the last three years to get a perspective of how we have performed our revenues have grown 46% annually in 2007 as compared to 2006, 78% as compared to 2005 and 114% as compared to 2004. Ebix 2007 net income grew 112% year-over-year, 193% as compared to 2005 and 466% as compared to 2004. Ebix's value to EPS for 2007 grew 90% year-over-year to $3.61, 161% as compared to 2005 and 401% as compared to 2004 diluted EPS. If you look at the year 2007 itself, each sequential quarter was an improvement over the previous quarter in the year. We believe that these numbers speak for themselves.

Another question: Ebix's margins of 30% plus seem rather high as compared to the industry. Are these margins sustainable? This is a question I hear all the time. And answer: our belief has always been that a business in which the selling price is a lot higher than the cost price is probably a viable business. A few years back, we publicly announced our goal of getting to a net margin level of 30% plus. Consequently these margins today are a result of meticulous planning, centralized cost control processes, effective utilization of off-shore services and a rather simple approach to business that requires income growth to be directly proportional to revenue growth. Our next margin of 11% in 2004, 18% in 2005, 20% in 2006, 22% -- 2006, and 30% in 2007 in the year 2007, our net margins were 22% in Q1, 26% in Q2, 31% in Q3 and 37% in Q4. These numbers being -- show you a trend. These numbers show a sequential improvement and speak for themselves why we cannot guarantee that these margins are sustainable, yet our attempt is certainly going to be to live up to the benchmarks defined by us.

Another question: Ebix has made a number of acquisitions over the years. How successful has Ebix been with these acquisitions and their integration within Ebix? What division of Ebix are growing and are expected to grow in the future of any growth? And answer: a quick measure of Ebix success would be acquisitions could be revenue growth in these divisions since acquiring them, considering that within our philosophy income growth will anyway be automatically proportional to revenue growth. When we acquire EbixLife a few years back, it's quarterly run rate was $1.3 million. This had been achieved over 15 years of its existence, in the last three years, under Ebix's, that run rate as of fourth quarter of 2007, had increased 62% to approximately $2.1 million per quarter. When we acquired [Hox] Consulting its quarterly run rate was of $.75 million. This has been achieved over 18 years of its existence. In the next three years under Ebix, that run rate as of fourth quarter 2007 had increased 67% to approximately $1.25 million per quarter.

When we acquired INFINITY consulting it's quarterly revenue run rate was $1.27 million. This had been achieved over approximately of 15 years of its existence. In the next two years under Ebix that run rate as of fourth quarter of 2007 had increased 50% to approximately $1.9 million per quarter. This trend has continued with all of our acquisitions including the new one like Finetre where the quarterly run rate at the time was $1.675 million as of fourth quarter of 2007, that revenue has increased approximately 55% to $2.6 million per quarter. Today, all these acquisitions are fully integrated. (inaudible) technology platform and cross selling to a much wider customer base, the art in acquisition in our viewpoint like integrating these acquisitions in an expeditious manner that allow Ebix to cross sell product in a wide manner. Those -- that -- besides their ability to introduce efficiencies, cutting the technology, increase marketing efforts and economy of scale into a health system, each of these acquisitions into an intrinsic internal service that will continue to grow organically and we have proven.

With regard to our divisions and their associated growth, the fact remains that all Ebix divisions are growing today with the exception of legacy support, where we had a pronounced philosophy that legacy support (inaudible) and at some point has to go away. Our largest source of revenue today are exchanges and broken systems. Exchanges account for approximately 40% of our revenues in 2007, broker systems accounted for 32% of our revenues in 2007. Carrier systems came third with approximately 17% in terms of revenues, while BPO services accounted for the remaining 11% of revenues. We expect this trend to continue and strengthen further with exchanges growing to more than 50% of our 2008 revenues. That's our projection. We are projecting that exchanges -- that our exchange business will grow to more than 50% of our revenue stream in 2008. We are projecting that our broker systems will grow to around 23% of our revenues in 2008, and we are projecting that our carrier systems and BPO services will grow to approximately 13% each in 2008. We expect all our divisions to continue growing to the pace of growth in the exchange sector is expected to be a lot more than others.

Another question: how key is Ebix in the insurance industry today? Our solutions replaceable? And answer: Ebix remains committed to converging any items that exists in insurance today. Converging the consumer, broker, insurance company items, converging B-to-C and B-to-B processes and insurance, converging front end and back end processes in insurance. Our goal remains to be the Cisco of the insurance industry in terms of powering transaction as a back end player. Today our exchanges power transaction between hundreds of brokers and carriers in B and C insurance, our life exchange powers close to $10.2 million life sale illustration every year. The power and annuity exchange on which close to $15 billion annually. We just acquired an exchange in Australia that powers the majority of the property and casualty insurance transactions in that country. For a company our size, we have a rather large global reach and domain knowledge. Power businesses in more than 50 countries today, across all continents. We have in excess of 16 offices worldwide. We provide a multinational broker or carrier -- we provide to a multinational broker or a carrier a common cord base worldwide, and frankly we do not know of a vendor who has a geographical reach and provide a common cord base around the industry. Our systems are multilingual, multicurrency, work in French, Portuguese, Spanish, Japanese, and of course English, besides a few other languages.

We have the domain knowledge of insurance that spreads across the world today with our fully-owned facility in India we have the ability to make an acquisition, bring in the (inaudible) to reduce their debt cost structure and make them a bit more efficiency. Our center in India has Carnegie Mellon's highest CMMI 5 rating, and that establishes the quality of operations to any of our prospective customers. We are one of the few companies in insurance industry today that can provide solutions across the world for a customer while keeping the core the same. Having said that, that fact by itself besides the fact that our retention rate on existing customers is almost perfect over the last five years in the international market, and when you couple that with the fact that our solutions are designed to be a few years ahead of our competition in terms of technology design and functionality, that all has led Ebix today to a position where we have a who's who customer base and an order base products implementation across 20 or more countries at this time.

Last question: do we intend to pursue acquisitions in the acquisition in the long term future? We believe in growing the company avenues of income proportionate and have sustained from growing opportunities that provide us market share and the cost of profitability. We intend to pursue acquisitions that help us sell or cross-sell our existing products. For an acquisition to interest Ebix, as I have always said, that acquisition must deliver convergence with our technology, convergence with our existing platform, cross selling opportunities and finally, most importantly be accretive for our shareholders, either immediately or in the near future. Lastly, let me say that we have recently launched a new comprehensive investor home page on the Ebix's site with a view to providing a one stop place to analyze Ebix from the investor perspective. The audio and the text transcript of this call will also be available on the investor home page after 2:00 PM eastern standard time at the Ebix site located on www.ebix.com. With that, I'm going to hand it over back to the moderator to open the call for questions. Thank you

(OPERATOR INSTRUCTIONS) We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Simon Theeuwes.

Good morning. Is there any seasonality in your business or in the Telstra Ebusiness that you're acquiring?

Good morning Simon. No, I would like to say that we don't believe that there is seasonality to our business and I think the answer is too complex. We are not a B-to-C player, we don't provide services to consumers. So let's say we provide services to back provider who provide services to back -- mainly to insurance company and brokers. When you look at that, what is the business we are in, and we are in the business of increasing efficiency. We are in the business of increasing profitability of these companies. The more -- what are we doing, we are driving paper out of the process. We are putting things in an electronic fashion and making it very seamless for any entity that works with this company or brokerage to be able to work with them.

Having said that, the more the involvement the more efficient they become the more margins improve. So when an insurance companies business for example when they go into bad time, chances they are going to pick up the phone and call us more, and the reason is they start thinking how do we improve our cost structure and to improve their cost structure chances are they need to drive paper out of the process. As you know insurance is still an out dated industry in many ways in the terms of amount of paper that exists in insurance. So having said that we don't believe that there is any seasonality to our business even when there are exceptional circumstances like the disasters that have happened across the world, we have seen that if anything people come back to us can you set up a disaster recovery, can you set up multiple sites, multiple hosting facilities and so on, I would like to say that we do not believe that it is seasonality to our business.

Okay. Great. Also as far as Telstra Ebusiness, your press release didn't mention what their revenues are. Is that something you are keeping private or are you willing to disclose it? Whatever is best.

Telstra Ebusiness, as of now we haven't really disclosed any revenues. In the coming days, part of our discomfort with showing the revenues (inaudible) it would have seen, and part of our discomfort is that we are supposed to get a two year audit done on their numbers and our lawyers have always told us that we must announce only once we have gotten the two-year audit done. We are in the process of getting the audit done. We are probably a week away from getting it done. Once we have gotten that done we are going to declare the past revenue. Right now it won't be important on our part, because if I declare -- if I tell you some revenue and after audit the revenue comes up slightly lower or higher we would have to make a change and we don't feel comfortable doing that. But you are soon going to get the revenue numbers.

Okay. And also the revenues of Telstra Ebusiness look like they are already the large majority of the Australian market. Am I correct that is not likely to increase in itself, but rather cross selling is likely to provide energy synergies?

Not really. Let me explain to you. Telstra focus on the largest tier insurance company, property and casualty larger tier companies, and so, for example, they would not provide solutions at the lower level to the underwriters or to the distributors and so on in the sense that their solutions tended to be a bit more expensive, so you have the elite carriers who would tend to use those services. We intend to change that trend. And even before we bought Telstra Ebusiness we had been working on our strategy to launch something called [iClose]. Now as we -- [iClose] is basically going to address the lower tier of the market and there's a large market there. And just on PNC, even on PNC, there are other products. They only -- they have launched two or three different products.

There is a lot of ability to launch. To give an example while there is an exchange for PNC there is a need for example for rating functionality, there is a need for premium funding interfaces and so on, I can go on and on and there is a need for product build up functionality, where carriers can launch their own products on the net in a very standardized manner. Having said that, all that is being presently taken up. So we do not -- we think that all Telstra has done is Telstra has done -- Telstra Ebusiness did a phenomenal job of making their services very -- the leading services -- making them the leading services player. However, there is a market where there is an immense need for a lot of other products, there is a need for -- just on PNC, forgetting right now the fact that we can launch the annuities new life insurance BPO exchanges and so on. Even if I just focused on PNC, there is a lower tier of the market, there is a mid tier of the market, there are newer products that have not being launched. So there is still a lot of room still to grow.

Okay. Thank you, and keep up the good work.

Thank you very much.

Your next question comes from the line of John [Reardon].

Hi. Good morning, and congratulations on another great quarter. When I show the Ebix story to my customers one of the things that they talk about is the trading liquidity, and I was wondering if there might be some thoughts about maybe splitting the stock to improve the daily trading liquidity.

John, good morning, and good to have you on the call. We -- it's a great question. It's a question that we think about every other day, and at this minute I am not at liberty to talk too much about it except to tell you it's always an option, but we haven't made a decision as of yet.

Okay. Thank you, and carry on.

Thank you.

Your next question comes from the line of Dave Heger.

Yes. One question I had was looking at the income statement, it look like R&D expense had dropped off versus the third quarter, and was curious what had caused that drop and the amount for fourth quarter was more of an ongoing rate, or if you expect that to rebound to a rate more in line where it had been in the third quarter?

I think the R&D rate in Q4, as we -- this is basic -- as we get into -- initially -- keep in mind that Ebix has made a number of acquisitions over the years and we have been -- it's been a moving target for us. Anytime we get into a newer acquisition you are going to see a slight up surge in R&D expenses for a few quarters simply because we are making a few -- we are making investment. We don't capitalize anything as such, so you are going to see some expenses and then at times if we don't make acquisition for some time, you are going to see those expenses come down and that's all you are seeing right now. So initial expenses tend to go up and then go down as you stabilize and you have -- you put the economy to scale in place.

Okay. And so evidently it would seem if they'll probably move back up with the Telstra acquisition sort of thing?

They will go up a little bit, I think you are correct in that. At the same time you are going to see a drop on other side. So it's not going to make a huge difference in terms of -- at the end of the day, meaning clearly our R&D expenses are going to go up simply because of the fact that Telstra is a larger acquisition we made, and so it will end up in the first quarter costing us doing some work, but again you are going to see some up surges and you will immediately see it going down as you see. So it's going to be proportionate to dropping to a percentage of the revenue and something like that.

I'm not sure I'm making sense, but basically, Dave, what I'm saying is you will see like any other acquisition, you are going to see in the fourth quarter the expense going up and then in the as you go forward into future quarters you will start seeing the expense going down. It's still obviously higher than what it is today, but that's normal because the proportionate increased based on the revenue increase that is happening.

Right. So you absorb a new business,s a higher level of revenue, and there will be some dollar increase of R&D, but you'll try to keep it within your previous range in terms of percent of revenue.

Yes. Absolutely. And to give you an example, this much I can tell you, that on Telstra, for example, we have one of the things we always do is we jump into off-shore services immediately. So we acquired Telstra Ebusiness and we have already set up our whole India off-shore team. There are people flying in and out and basically today we made already we have done a lot of restructuring. And so this is always work in progress so you are going to see the effect of that as we go forward.

Okay. And then one other question on the tax rate. You all have not been a big taxpayer and I know you still have a lot of NOLs. But there are situations where the company has been profitable consistently for some time period where you may have to do some type of reverse on valuation allowance and start booking a higher tax rate, even if you are not paying a high rate on cash basis. And I was curious if you all will be in that situation anytime soon of having to start booking a higher rate.

Yes. This is Robert Kerris I'll respond to that. The company has a substantial amounts of net operating loss carry forwards that we'll be able to utilize for some time in the future.

Yes. I think, Dave, to add to that, as you know tax is something that of course we have a (inaudible, as Bob said, but as we go forward, this is work in progress. Meaning, we are an international company we are looking at all possibilities in terms of how we can rationalize our tax structure sensibly. We are always looking at that. It's always a work in progress. I woudn't say that there's any -- at this minute you are seeing what you should be seeing in terms of tax rate.

Okay. Thank you.

Thank you.

Your next question comes from the line of Carlos [Ryerson].

Hi, guys, thanks for taking my call.

Thank you, Carlos.

Just going back to the NOL, can you tell us the size of the NOL at the current time?

Not at this point. We're not ready to disclose that. That will be disclosed in our Form 10K later this month when it's filed.

Okay. But just has there been any material adjustment in it since the last disclosure?

No there's not a material adjustment since the last disclosure. No. You are obviously going to see the impact of the profitability in the U.S., which will impact -- bring the NOL a bit down but that's about it. If you are asking if there has been a material adjustment, no.

Okay. And then can you talk about what the revenue and earnings growth is in the IDS business you guys acquired in November?

IDS we acquired, we only disclose two months of their numbers and which accounted for almost I would say two months accounting for almost $1.1 million more or less in terms of revenue for two months. It's a very profitable business. It's a business that is growing. It's a 100% recurring business. It's a business where we are dealing with the cream of the customer base in the U.S., from the Home Depot to the Lowe's to the virtually -- and the Costco of the world, and big real estate. We see we are bullish about the business. We think that this business can grow. We like the recurring nature of this business. We feel that one, in this business the good news is that every time, if you look at the history -- as we reviewed ideas, as we were looking at ideas for the Target, one of the things we liked about it was over the last 16 months, -- 60 they have had a one blip in terms of one month revenue being sequentially out of sync. Otherwise 59 months their revenue had just been up because it's a recurring business and we feel with our cross-selling opportunities to the brokers that we deal with, to the entities we deal with, we can make an impact on this business. So we feel good about the business.

Yes. Just looking at what they've done in the last couple of months and extrapolating for 2008 it should contribute a significant amount of growth for you guys going forward.

Yes. I would say that, yes.

Okay. That's great. And one last question. In 2007 you guys announced some big contract wins for the INFINITY business. We haven't seen much on that recently. Can you give us a sense as to whether you've been able to sign new contracts and more generally what the growth rate is for that business?

Okay. First of all I must tell you that you see, we don't have a practice of announcing every contract in the market. We don't just do that. As a company we are running divisions across the world now and every other day somebody, some division is signing some deal and we don't like to just announce these deals. We only announced INFINITY simply because it was a material enough deal and we felt that it had to be disclosed for disclosure purposes.

Now coming back to INFINITY per se, the -- you are correct in saying that you have only seen some of the license revenues out there from INFINITY and some of the professional services revenue. The way the revenue -- the numbers that you've seen in that 8K are related to 30 month period, and it talks about basically we are going to pick up revenue on an actually -- on a service perform basis on a professional perform basis, so you are obviously going to see it as we ramp it up, as we basically period of providing licenses. There is a period of design and then you are going into period of real, hard core business (inaudible) and that's the phase we have entered into now. So you will start seeing revenue on INFINITY simply based on the timing material work that we are putting in because we are putting in -- we are putting in a lot more people onto the job and we are going to bill for a lot more people, so you are going to see revenue increase, and that revenue is going to happen over the next 30 months, and we are only going to recognize it or show it to you on a service performed basis.

Right. Okay. And can you give me generally the percentage growth rate that is growing at?

Are you talking about the INFINITY business?

Yes. Exactly.

Well, I just talked about carrier business in my last talk, going back to that. If you look back at INFINITY, one very simple measure is that we acquired I think in -- on June 1st of 2006, the vendor revenue was approximately $1.275 million in the preceding quarter at that time. If you look back at the fourth quarter of 2007, that revenue had grown to approximately $1.9 million a quarter, and clearly that trend will hopefully should continue.

-- seeing very, very robust growth in that business.

It has been a very robust growth. And also as we line up larger clients we are going to see the -- the INFINITY business is a licensing business and then a lot of professional services, and then as we get into the insurance company, insurance company kind of gets married to us and they need us and as we like like thousands of lines of code as they need more services, once they deploy they keep coming back to us. Now, however, it's a big decision for insurance companies, but it's not like every other day we get a client saying, well, get me a system. However, what is -- what happens is every time you get a carrier you are going to see big increases of revenue and you are also going to see a lot of recurring revenue streams come out of that insurance company for many many years. So we feel good about this business.

Okay. All right. Terrific. Thank you. Thanks so much for your time.

Thank you.

Your next question comes from the line of Dave [Covis].

Hey, guys, great quarter again. I just had a few questions for you. You spoke additionally generally about margins and then talked about the R&D line. Can you walk me through if I look at this quarter, it shows a nice sequential improvement, just what specifically led to that and what your outlook is? I know quarter to quarter it fluctuates a bit, so maybe as we finish up 2008 just compared to where we finish this year, I think the 30%.

Especially when you speak about margins, I think we have a announced that we would like our margins to be 30% or more. Now we've obviously defined a newer benchmark every quarter and it becomes tougher day by day. And we realize that. When you are at the point of 37% in net margin, it's not -- it's -- you have to make a lot of efforts to sustain it, and so you have to create your infrastructure in that manner to be able to sustain that structure and that is what we are trying to do. I think our intention clearly is to at least meet the benchmark of 30% or more, and we will try to grow this number, and again I'm not in a position to tell you whether it will be 37% or 40% next year or are we going to beat the 30%.

I think time will tell, and it is also a factor of a few things that we go into the next year in terms of some of the acquisitions we have made. We are making initial investments. So some of that -- So you will always see that there will be some drop in particular quarters, but again when I say drop, you might see a 37% becoming slightly more than 30%, but still less than 37%, and then you start seeing consistent increases back again, which is normal as you invest in services. But again I think I would suffice it to say that clearly our intention is, our big goal is to make sure that our margins continue to -- we would like to see our margins be where they are today or more. We are -- we definitely we are not saying that our goal is 30%. We would like our margins to go up beyond that, but could be, I think, like I have said in the past, one assurance that we have is that we've always said that it's been a pronounced philosophy to be at 30% less level.

Okay. Great. And another question, do you disclose what organic growth was in the quarter? I know there's a lot of moving parts here.

Actually everything -- Dave, everything I told you was organic growth. In our company, this is one thing which some of our older investors understand it a lot more now. This company was a broker systems company, and this company primarily had -- the products that this company had a few years back, we don't sell them at all, which means how did we -- what we have done over a period of time is we have actually reengineered this company. Everything we acquire, we basically are replacing our existing services. It is not that we are just complimenting something we had in the past because what did we have in the past, a few years back. We just had legacy support. This company just had just legacy support. So we have -- and a lot of domain knowledge.

What we have done is we came up with this strategy. We said, we have the knowledge to build all these cutting edge products, but why not add up, we will keep building these cutting edge products, but it might be a lot smarter if we can acquire technology from outside, re-engineer those technology, find an entry point through these acquisitions into these carriers, provide our domain knowledge, provide our formality to improve the margin and then provide the technology excellence, so-called technology excellence, provide a infrastructure and try to grow the business and that's what we precisely have done. Each of the so-called acquisitions, meaning for example, if we talk about INFINITY, meaning this was an acquisition -- I would call it an acquisition two years back but today is an organic growth for us. The same is true for any of these acquisitions because if I were to take these four, five -- four acquisitions out and you ask me what is Ebix doing outside that, and we would have bit of a laugh, because it is a pronounced philosophy that we came up with many years back saying the only thing we will continue to do from the past is broker system. And in the broker system that you can see in spite of making acquisition, that is the only thing that we are carrying from the past, broker systems, in the broker system market as I took you through our growth has been broker system account today for approximately 32% of our revenues.

That by itself tell you that we have grown our old broker business quite a bit. The fact that our revenues have grown, the fact that we have brought new acquisition, and we still have kept the broker system business at 32%. That tells you there's been a lot of growth internationally in the products that we used to sell which is broker system. But outside that this company had nothing else. Everything that we acquired, it becomes intrinsic. We put it on a common core base, we link these products to each other, we converge them all the time so that you can have interphasing of data through and through. So we hate to differentiate and say, well, we made an acquisition and so it does not organic growth because in our scheme of things it doesn't work that way.

Yes. No. I understand that and I can see the growth has been impressive from the run rate of where you acquired them to where you are today. That's fine. Thank you.

Thank you.

Your next question comes from the line of [Sun Tah].

Hi, guys, congratulations on the great quarter.

Thank you.

I know you guys have already fielded many questions on the margins and the costs. In particular I'd like to focus additionally on the sales and marketing in the G&A line items which were flat to down on a quarter to quarter basis. It's very unusual in the organic growth and given some contribution from the Jenquest acquisition that you guys were able to achieve this. Can you elaborate a little bit more on how you achieved this and whether there's anything unusual or temporary that might be accounting for this?

Nothing temporary that you have seen why our marketing of G&A line item has gone down. There is nothing temporary, there is nothing seasonal, there is nothing that we did in one particular quarter that should brought it down. I think you are seeing the simple impact of -- there is always -- when we -- part of what you are seeing is when we acquire a company there are redundancies in place, that are put in place. Which means you could have multiple people who worked for some time and then you actually get a few of them that are not employed for some time because of simply -- we centralize things. To give an an example, so we centralize HR. We centralize legal. We centralize legal. We centralize IP. Everything is done in that fashion, so as you go from one quarter to another, that is why I said, you are going to see some increases and then you will start seeing the drop and then consistency of those costs, and that is because what is happening is we have a plan in place. It took us a few months to implement that plan. That is all that you are seeing.

Got it. It's clear that these acquisitions have been exceptional successful. You elaborated on the revenue synergies and also from a cost perspective as you just said they are also extremely synergistic. To what extend can we extrapolate to the level of success you've had in the past with this most recent acquisition?

With Telstra?

Yes.

I think I would suffice to say at this minute, as I said, we hate to issue guidance, but I would tell you this that we officially said in our -- I'll stop at that. We believe -- this is our first of all our largest acquisition that Ebix has ever made and we clearly see this as being quite accretive to our results and which we have publicly announced. And having said that there will be top-line growth and bottom line growth and this will be accretive in the short-term and long term for shareholders. The quantum of it we are not at liberty to talk about.

Got it. Thank you.

Thank you.

Your next question comes from the line of Vincent Capote.

Yes. Hi. Thanks for taking my call.

Thank you.

Just want to ask you, how many employees do you have?

I think the last, as of December 31, it was I think 369 or something like that, 369 or so. However, this number keeps changing, as you know. That in generally we acquire another company and we have added quite a few people both in India and in Australia, so this number will be quite different at the end of the March period.

Sure. Alright. Can you tell me how much of your total business is from recurring income?

Today almost 80% of our business is recurring.

Very good. And could you tell me, how much of your stock do the insiders hold?

How much do insiders hold?

Yes.

They hold more than 25%.

Isn't it quite a bit more than that.

I said more that that.

It is quite a bit more in the sense that we have -- as you know, we have traditionally anybody who is more than 10% is an insider, the way I would see it. And when you look at that, you could possibly add up to close to 40% almost now.

Okay. And just a couple more things. Can you give me an idea -- do you have any idea what the size of the market is that you are in?

Well, the market size is pretty large. Just to give you an idea, just on the BMC side, if you just look at the -- if you have to believe these analysts that come up with the report. [Forest] came up with a report talking about just $59 billion of paper processes of insurance in the U.S. And that is the size just in you can write the paper out that is the size of business that is there. Again our -- the business -- I think the size of business -- the opportunity size is not something that is worries us by any means because we are still a small player and there is a lot of room to grow. I think our biggest challenge will be we are still a smaller company and to become a large company we have to do it very sensibly and that is our biggest challenge.

That's very good. And let me ask you this, why would these people sell you their businesses? Why aren't they keeping it themselves?

That's a good question that I don't want to ask them. I mean, having said that, I think it is different in every case. To give you an example if we are talking about Telstra Ebusiness this is not a core business for them and they experimented and it did quite well for them, and then they realized that it might be -- what is the goal of a telecom player when you go into insurance and trying to set something. You are thinking it will help me, allow me to sell a lot of telecom boxes, telecom services to the insurance industry. You are looking for entry point and they used that entry point probably for four, five years and milked it to the extent they could and maybe the thinking after that comes back to is this our core business. We wanted an entry point. We did that. At this point is going to defocus us from our other business.

And so you kind of decide, and finally it is still not a large business in the sense that you know how big these players are like Telstra. So it varies in every case. In another case if you are talking to single loaners, principals, that issue their retirement. They are people at a particular age who are thinking we worked our life, maybe it is time to cash out and enjoy our money, and at that time times there are people who feel I could have the best of both. I can enjoy my money and they are looking at the good salary they are thinking also that maybe I want to continue. There are people who say I want to continue. I can have the best of both. I can come into a public company, get a bit of stock, get a bit of say in the ongoing business and on top of it have a decent amount of money in the bank. So a mix of all kinds of reasons.

But clearly when you are looking at an acquisition these are the questions we definitely want to ask them and we definitely want to probe in the sense that it is something that you want to figure out, why are they selling, but again the answers come rather easily as you start looking at the company's past history and you look at their last three, four years five years, and if you see absolute consistency, it's not very hard to tell if you have not lost -- you are not losing customers and your business is growing every day and your income stream is good and you have a sense of what profits mean, those are the kinds of acquisitions we like.

Last question. Do you have any idea of the rate of growth of your business? Not your business, of the businesses that you are going to acquire, the whole business itself, all different parts of it. Do you have any idea what the rate of growth is?

Well, in the sense, we have already said, if you look at last years versus this year we grew our business 46%, meaning whichever way you look at it. At the end of the day, we are -- our goal -- something we have publicly said that we would like to -- our short-term goal is to get to a run rate of $25 million a quarter. Now when do we get there? We would like to get there sooner rather than later, but I'm not at liberty right now to predict that whether it's going to happen in one year or one and a half year or two years or what that number is.

Did you say $125 million a quarter?

No. I said our short-term -- the we the way we work internally, we've have long term objectives but we evolve, plus we evolve our goals and then we build those goals into these long-term objectives. We are into the (inaudible) kind of a thought process. We like to have short-term goals. Our short-term goal is to first get to a $25 million run rate in the quarter. When we get to that then we are going to worry about then whether we can grow into a $50 million run rate and so on. But, yes, the long-term goals are very simple. We would like to be -- we believe there is an opportunity to become the CSC of insurance market, the computer science of the insurance market, and we think the opportunity's large and there is a need for one large global entity who can basically be the player in the market and that's the opportunity that we are trying to go after.

Right. One thing. What I meant to say is how big the market growing not just your business the market itself?

Well, market is growing every day in the IT insurance sector. The market is continuously growing every year, and it depends on every sector. It's a complex answer because if you look at the carrier business for example, the market has grown 15% year over year. You go into the broker business it's almost a similar number. In exchanges, it depends on what exchange we are discussing but again you will see 70% increases also in particular exchanges because what is happening is as there is more realization coming that -- to give you an example there are countries who don't have an exchange today and they need one. They are working towards it and they are starting to look at the developed world and saying we can get there. There are lots of opportunities which can move from almost binary, they go from a zero to a one could happen in one year. And so those are the kinds of opportunities that we are after.

All right. Thank you very much.

Thank you.

(OPERATOR INSTRUCTIONS). You have a follow-up question from the line of Simon Theeuwes.

Hi. This is a question about the long term. Robin, I know you've done amazing work not just with Ebix but also in the philanthropic world. I'm looking at an interview with you that I found on the internet, and I'm going to quote, "he adds that Ebix is doing very well, but being as restless as he is he doesn't see himself being in the insurance industry's wiz kid all his life." I'm wondering as a long-term holder whether you are comfortable to say whether or not you are planning to be with Ebix for quite a while and of course if you prefer not to answer the question, I completely understand.

No. Simon, I would like to answer that and I do know the interview that you are referring to. Basically I think what I meant was slightly different. What I meant to say was that -- actually, she didn't put the whole context out of the interview. What I basically meant was first of all, I can be very frank answer on that. I am here until I'm [required]. I do not have an exit strategy plan whatsoever at this point because this is my baby. I have seen this company grow from heavily losses to a stage of we are today. I don't rate ourselves two out of 10. I don't rate ourselves very strongly in terms of where we are today. This result for example is just one small step forward. This is not a giant step forward in my book.

So the way I see it the opportunity large, unless I am told to leave by the investors or the board, which is understandable at some point when I'm not delivering. My intention is to stay and make the business the leading player -- the leading business in the world. At this point you talked about my philanthropic work and what I do, I think at this point I'm at a stage where there is -- it is -- while it is all about growing shareholder value, about the money associated with it, it is also the dream of making this company the largest player in the insurance services market. Given a choice, I would like to be there to see that happen. But again that is something that I can't mandate. But if you ask me that wish that is my wish is. I do not have any plans to leave. Once I have achieved that and this company becomes the largest player, well that's a different discussion. At that stage I might want to look at moving out and possibly concentrating more on my philanthropic work.

I'm very glad to hear that. Thank you very much.

Thank you, Simon.

Your next question comes from the line of Rick Bates.

Yes, I just -- you've already said that you are going to post a transcript in audio form on your website. I wanted to ask you to also to post a written transcript for those of us who read better than we hear. That's all.

We are definitely going to do both of them.

Okay. Thank you.

Thank you.

Your next question comes from the line of John [Mitchum].

Mr. Raina --

Hi, John.

As a long time shareholder I'm thinking a lot better of you guys the last couple of years. I want to congratulate you on a terrific job, and tell you it looks to me like you are about to move from first gear to second gear. The context of my question is this, that we are continuing to see the dollar weaken against major currencies around the world, and my assumption is that that will continue at least for the intermediate term. What percentage of your revenues come from outside of the U.S., and what -- as well as profits, and what is the rate -- relative rate of growth U.S. versus your other major markets that is in your revenue stream?

Bob, I'll let you first tell them the percentage of international revenue and then I'll address the remaining part of the question.

28% of our revenues come from foreign jurisdictions.

And the major elements are?

And the major elements -- this is as of 31st of December. The major element are the broker system, today. That's pretty much it, that you're looking at, the 28% that he talked, that is the broker systems business outside the U.S.. Having said that, there is -- it tends to get a bit complicated because there are some times -- we have master contracts signed with the broker business in the U.S., where we might be billing on the U.S. to their U.S. entity whereas the businesses being deployed, let's say in Botswana or (inaudible) or Nigeria or Leningrad, it gets a bit complicated, so -- in terms of how we report that possibly. Having said that, our -- we are sensitive to the issue of the dollar weakening. At the same time we did -- it kind of -- it first of all hurts our perspective of cost of India going up. The Indian currency strengthens and the dollar keep weakening we tend to spend more dollars in India, so that part does hurt. At the same time, it overall kind of balances itself in terms of the way our business has grown in different places.

Now we are also starting to think about trying to be a bit more -- as you know, this is a moving target and one has to be a bit more innovative in it. We are starting to think through when we -- for example, when we build in different places, we are starting to think to do contracts in local currency versus doing it in U.S. dollars, which means if you are doing a contract with a British company, maybe there is now increasingly what we are doing is starting is signing contracts in British pounds. Again, as you know, it's not something we can foretell. Right now it seems the British pound has done very well, and so we feel that's the way to go. But again this is something we'll have to be a bit flexible on and keep thinking intelligently about, because it could go either way. So in the short term, we obviously agree with you that the perspective for the next year or so seems to be that the dollar probably continues to weaken.

So it's fair to say that perhaps 28% of your revenue foreign, the greater percentage of that is or smaller percentage of that is in nondollar denominated currencies?

Yes, it is. That is absolutely true because we are building in Australia, New Zealand, Singapore, London, and those are places you are billing in local currency.

Yes. I think you ought to give serious thought to being exposed to something besides the dollar, but thank you very much for taking the question.

Thank you. Thank you.

Your next question comes from the line of Richard Linhart.

Hi, Robin, congratulations. Congratulations on another great performance. I joined a little late so I apologize if you've addressed this. But you are reaching the point where you could have some research analyst coverage in terms of market cap and also in terms of the visibility in the industry, and I'm wondering if one of the goals for this year might be to try to attract some coverage.

Well, Richard, as you know, you already know my views on this, but I'll again repeat that, and that is, we are not hyper about getting analyst coverage right now, meaning it -- I wouldn't say this is one of our goals right now. If we -- if somebody initiates analyst coverage and as long as we don't have to spoon feed them, we are happy with that. We want transparency. And we want people to do what they want to. At the same time we find it a bit of a distraction for ourselves right now. Right now our strong belief is we just want to focus on our business, we want to focus on our fundamentals. We believe if our fundamentals are strong if your selling price is a lot more than the cost price, you know what, everything will take care of itself. The results need to speak for themselves and the market will take notice.

We as you know are not a team which like to hide. It will be a lot easier for me to throw out the press leads and telling the market all the nice deals we signed and all the five year deals and 10 year deals and so on, and there are easier ways to do that rather than just having analysts writing those reports for us. We feel that right now with a company -- the rate we have established the growth rate we have established for ourselves, if we have to sustain that or beat that growth rate in terms of revenues or in income, we need to focus on our business and absolutely make this a solid business, and I prefer to have my finance group focus on that and build transparency and build a system that works rather than worry about analysts right now. But having said that, if there is an analyst who initiates coverage and is a seasoned analyst, well respected, as long as we don't have to spoon feed them, we are going to be happy with that, but we are not going to proactively go out and seek analyst coverage.

Got it. Okay. Thank you.

Thank you.

There are no further audio questions at this time.

I think I will summarize. I think, thank you everybody for participating in the call. We appreciate that, and look forward to speaking to you again as we announce our first quarter results. Thanks again.

Thank you.

This concludes today's conference call. You may now disconnect.