Ebix Inc (EBIX) 2009 Q3 法說會逐字稿

Good morning. My name is Felicia, and I will be your conference operator today. At this time, I would like to welcome everyone to the 2009 third- quarter investor's' 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. Raina, you may begin your conference.

Thank you very much. Good morning, gentlemen. Thank you for attending Ebix's 2009 third- quarter investor conference call. I have also here with me Ebix's CFO, Robert Kerris.

Our Q3 2009 results were announced a few hours back. Let me summarize those results for you. Third quarter 2009 results were yet again record results, the best ever in Ebix's history in terms of diluted EPS, net income and revenues. Each of the last many quarters has been a record result, with each quarter beating all the preceeding quarters in our 33-year history as a Ccompany.

As a Mmanagement team, we have believed in being consistent rather than just producing spectacular quarters. You could compare these results to Q3 of 2008 or Q2 of 2009, and all comparisons will show that the present quarter scored over all these quarters on all four key criteria -- growth in revenues, net income, diluted EPS, and net margins.

Let's delve a bit deeper into these numbers. A comparison of third- quarter 2009 numbers to the third -quarter 2008 numbers reveals that all four -- namely, revenue, income, EBITDA and diluted EPS -- grew in this quarter as compared to third quarter of 2008. Revenues in the third quarter of 2009 were $23.29 million, as compared to $20.17 million in the third quarter of 2008, a 16% increase -- a 15.5% increase. Net income after taxes in the third quarter of 2009 was $9.43 million, as compared to $7.40 million in the third quarter of 2008, a 27% increase.

EBITDA for the current quarter was $10.73 million, a 46.7% EBITDA margin, a 20% improvement over the $8.92 million EBITDA, a 44.1% EBITDA margin, in the third quarter of 2008.

The Company's operating expenses for the quarter grew by 12% to $13.51 million, as compared to $12.05 million for the third quarter of 2008. The results for the third quarter of 2009 were based on $12.61 million weighted average diluted shares outstanding, as compared to $12.17 million in the third quarter of 2008.

Diluted EPS in the third quarter of 2009 rose 23% to $0.76, as compared to $0.62 in the third quarter of 2008. Basic earnings per share in the third quarter of 2009 rose 18% to $0.91, as compared to $0.77 in the third quarter of 2008. I am pleased that our net margins after taxes grew to 41% in the third quarter of 2009, as compared to 37% in the third quarter of 2008.

Let's now compare these results to the second second-quarter 2009 results. A comparison of the third- quarter 2009 numbers to the second- quarter 2009 numbers reveals that all four -- namely, revenue, income, EBITDA and diluted EPS -- grew in this quarter as compared to the second quarter of 2009.

Revenues grew 3.9% quarter- over- quarter. Expenses grew 2.6%. EBITDA grew 6.3%. Operating income grew 5.6%. Net income grew 5.3%. Diluted EPS increased 4.1%. And basic EPS grew 3.4%.

For those of you who like to look at currency- neutral results, I have a few numbers for you. Currency-adjusted revenues for the first nine months of 2009 grew to $69.9 million, a 28% increase over the same period in 2008. Currency- adjusted net income after taxes in the first nine months of 2009 grew to $28.9 million, a 49% increase over the same period inof 2008.

Basically, what it means is that if you were to keep currency rates constant between the first nine months of 2009 and the first nine months of 2008, Ebix's revenues for the first nine months of 2009 would have been $3.5 million higher and net income would have been $2.2 million higher. "Currency- adjusted" is a non-GAAP financial measure that we use solely for comparing numbers from two different periods without the impact of foreign exchange.

Currency-adjusted revenues in the third quarter of 2009 grew to 23.72, an 18% increase over the third quarter of 2008. Currency-adjusted net income after taxes in the third quarter of 2009 grew to $9.69 million, a 31.1% increase over the third quarter of 2008. Basically, what it means is that if you were to keep currency rates constant between third quarter of 2009 and third quarter of 2008, Ebix's revenues would have been $430,000 higher and net income would have been $180,000 higher than what has been reported.

Ebix's business is broken into four main channels -- the carrier channel, the exchanges, the broker channel, and the BPO channel. To look at the performance of these channels, I have a few numbers for you.

Exchanges in this quarter were 61% of our revenues, BPO 15%, broker systems 13%, and carrier systems 11%. Like the second quarter of 2009, exchanges and BPO both grew this quarter in comparison to third quarter of 2008, while broker system and carrier system sales continued to be affected by delayed decisions and implementations on account of carriers and brokers having to tighten their budget and spending -- and having to tighten their spending budgets on back-end systems.

Exchanges continued to grow, as carriers see it as a way to increase productivity and margins. Reported broker system revenues derived from our foreign operations were also adversely affected by the variances in comparative currency exchange rates.

Our exchange revenues quarter over quarter grew 19%, BPO revenues grew 95%, and the broker system revenue went down 15%, and the carrier system revenue went down 11%.

Our pipeline continues to be good, with many well-awaited deals having been agreed to in the last 90 days in the area of exchanges and BPO. The economic clim- -- environment continues to create pressure on insurance companies, reducing their spending. , bBut Ebix has continued to use its cross-selling to open up new opportunities and keep revenues growing. We believe that the squeeze in the back-end area is temporary, and we are already starting to see some signs of recovery.

As regards our cash flows, we continue to generate strong cash flows that are bound to continue to grow even more with our recent acquisitions. We're also pleased to communicate that, to date, $26.6 million of the original $35 million of convertible debt issued during 2007 and 2008 to Whitebox has been paid or converted into Ebix stock, leaving a remaining balance due on those obligations of $8.4 million only.

In the last few months, Ebix has made positive strides in many areas. I will elaborate on a few of those areas. One, new substantial Ebix exchange contracts. We've been able to get commitments from many large financial institutions to adopt our Ebix exchange family of services. We are in mutual non-disclosure agreements with these organizations and cannot declare their -- disclose their names as of yet. But, I would suffice it to say that these are very large, reputableed institutions. These deals are likely to help Ebix grow organically in the year 2010 at a faster pace.

Point number two, new BPO contracts. We are the leader today in the United States in the insurance certificate issuance and tracking markets. Ebix has continued to findsign new deals in the BPO area that are likely to help us keep growing the organic revenue streams from the BPO channel.

Three --, acquisitions,. Tthe two strategic acquisitions areof Peak and E-Z Data. The acquisitions of Peak and E-Z Data are rather important events for Ebix. These are both very strategic acquisitions that allow us cross-selling opportunities and also help us take a giant leap forward in terms of making the dream of end-to-end computing possible. We intend integrating them within Ebix on a war footing and in the most sensible fashion, with the aim of leading the industry accompanied by short-term and long-term accretiveness for our shareholders.

Peak offers comprehensive end-to-end insurance software and technology solutions to insurance companies, self-insured entities and risk management organizations in the areas of Workers' Comp, claim processing, risk management, claim demonadministration, managed care tracking, and back-end policy administration. All Peak exchange products are available on an on-demand basis, while the back-end policy systems are available in an ASP and self-hosted basis. 75% of Peak revenues are recurring in nature in the form of subscription fees, application service provider fees, technical service and support fees.

Peak's combined customer base encompasses 450-plus customers, comprising 40 insurance companies, five state governments, and this risk department of a few hundred companies, with little dependence on any one large client. Peak provides us with the kind of diverse customer base that we like, with no single customer accounting for more than 10% of revenues. Peak has been a strong player in the Wworkers' Ccomp area, the risk management and managed care, and the claims processing industry area. The addition of these services to EbixExchange is likely to strengthen our position in the fast growing risk management and claims processing sector of the insurance industry.

Now, I'll talk about E-Z Data. E-Z Data is easily one of our most strategic acquisitions, since this will provide us access to a majority of the life annuity brokers' desktops in the United States. We have always had the vision to include CRM into the core fabric of the information exchanged in the and insurance business.

E-Z Data CRM, when blended into our life and annuity exchanges, provides the insurance industry with a giant leap forward in terms of making end-to-end enterprise-wide information exchange rather seamless for the majority of the industry. We believe this can also serve as a catalyst for industry-wide exchange and optionsadoption at a faster pace. And this will also help us sell CRM solutions in an enterprise manner to our existing exchange clients.

It was attractive to Ebix that E-Z Data serves and covers the full spectrum of financial services distribution. The addition of these services to EbixExchange will center our position in the global on-demand CRM market, which, according to analysts, is poised to reach $3.8 billion by 2013.

With over 20 years of successful adoption, E-Z Data has been servicing many of the top Fortune 500 life insurance companies and is a leader in the life insurance CRM market in the next phaseUnited States. E-Z Data life CRM solutions are now considered the industry leader for agency management, practice management and enterprise CRM. E-Z Data solutions cover the full gamut of financial services distribution, including insurance companies, general agents, banks, investment dealers, agents and financial advisors. 85% of E-Z Data revenues are subscription based and recurring in nature.

Further, E-Z Data has offices in California, Virginia, two development centers in India, and various offices around the world in emerging markets like China and Japan. We believe that this acquisition will open new life inand annuity channels for Ebix in international markets, including Asia, Australia, Africa, Latin America, and beyond.

Our belief has always been that we needed a cutting-edge on-demand CRM to best leverage our life and annuities exchanges across the world and the United States. We looked at many CRM vendors across the world and finally chose E-Z Data, not only because it has the majority of the market share in the United States, but also because of the technology edge that E-Z Data had over all the other players in the market.

Legacy systems and declining revenue streams, besides having a diminishing customer base, plague all E-Z Data comparativesetitors in the life markets.

Point number five, future guidance. In recent times, we have been repeatedly asked by investors for some guidance on the impact of E-Z Data and Peak on our financial results. Clearly, we remain focused on getting the same level of net margins from these two dayseals as we are used to today.

While we are not yet fully prepared to discuss the complete positive impact of the E-Z Data and Peak acquisitions on our results, yet we feel comfortable enough to define some basic floor-level metrics in terms of revenues and, the net income from these acquisitions. These fourloor metrics are basically numbers, which we feel comfortable announcing, and our goal will be to do hopefully a lot more than the numbers that we 'are going to talk about now.

We expect the two deals to contribute a combined minimum of $26 million in revenues and a combined minimum of $7.5 million in net income over the next 12 months. We believe both these acquisitions are going to be accretive in the short term beginning Q4 and in the long term., aAnd it will keep -- the margins from these deals will keep improving as the full integration sets in. Today morning, we have announced some of the press -- in a press release, we announced some of those integration efforts and what we're trying to do with E-Z Data and our exchange.

Point number six, increased focus on sales and marketing. In the last many months, we have increased our focus on growing our top line in many areas. We have made many new key hires in this area of our business. We have hired two vice presidents and above level senior managers from reputed organizations in the exchange area, namely Mike Sladek and Ken Leibow. We hired a leading senior sales executive forrom mMy- Ppipeline, [Aaron Anders], recently to help us further the exchange sales. We have hired a vice president for carrier sales, namely Rob Copenhaver, in addition to a new carrier sales executive, [Tony Vandergriff], in carrier sales.

We have made a few other hires of new sales executives in the broker systems and exchange areas. We're getting ready to hire a new senior executive to spearhead our sales group in Singapore. We're also getting ready to hire new salespeople in Australia to spearhead our life and health efforts in Australia. We recently hired an industry veteran, Steve Horneman, from Insurance Technologies, to lead our worldwide marketing and branding operations. We also created a new marketing group under Neil van Helden for external and internal communications.

We are quite excited by all of this, as these are investments in the future of Ebix and spell out our efforts to grow sales substantially and also evolve a common worldwide brand.

Point number seven, increased focus on research and development. Ebix today is one of the few organizations that can not only boast of operating its development unit at Carnegie Mellon's highest quality level, CMMI-5, but also boasts -- but can also boast about focusing as much as 60% -- 6-0 -- 60% of its employee count on software development.

I have had many investors ask me about our low spend on R&D. While our spending on R&D is low, our percentage of manpower focusing on R&D is one of the highest in the industry. We have 601 employees in Ebix focused on R&D operations. Our cost is lower than others in the space, as we made the intelligent decision of creating a knowledge, brain and a learning center, a brain trust -- a learning center in India, which has a lower cost base than in the United States. Not only has that given us a cost valueedge over others, but it has also allowed us to experiment a lot more than others.

Today, Ebix's basic technology philosophy is to be a few years ahead of its competition at all times. All our services are cutting-edge, and we have undertaken large projects to realize many products and services from scratch, imbibing new technology concepts. Each time, Ebix India has delivered in time and kept the Company ahead of all our competition in terms of expansive functionality, e-commerce framework architecture, and the most current technology concepts.

Over the last few months, we have increased our expanse in India quite a bit, and resultantly, we have increased our infrastructure for R&D quite a bit. We recently purchased a few days back -- we purchased yet another building in a tax-free zone in India, adjoining our existing building that we had purchased in the year 2009 in a tax-free zone. This is our second building purchase in India in 2009, and that's in the SEZ tax-free zone.

Point number eight, functional SEZ units in India with tax-free status until 2014. Our SEZ operations became functional in India, and with the recent purchase of another new building in the SEZ area, we will now have the capacity to have at least 620 software software developments -- developers in the SEZ units in India. The SEZ, the Software Export Zone Act of the government of India, is meant to offer tax-free status for five years and 50% tax-free status for five years after that, with a fewview to encourage software exports.

In recent times, the government of India has taken many steps to keep encouraging exports in the software sector. One of them was to expand the tax-free status of the Software Technology Parks aAct, STP Act, until 2011. The Software Technology Parks aAct offers tax-free status to software exporters who operate outside the confines of the government bonded SEZ area until 2011 now. The STP aAct asks for prepayment of possible future taxes after 2011 in the form of 16.3% prepayments for future taxes that a company might have to pay for income after 2011. The calculation for the prepayment is based on present income, while the payment is for future taxes that might be due after 2011 provided the company was profitable at that stage.

This prepayment has nothing to do with income at the present time, except for using the present income as a guideline for prepayment of future taxes. Thus the STP Aact offers tax-free status until 2011 to all software companies that operate outside the government bonded area until 2011.

Ebix decided not to wait until 2011 and, instead, took -- sought government approval to get into the bonded export area, called the Software Export Zone, SEZ. We received all the government permissions and are today fully functional in the tax-free SEZ area, and that will[does] have a tax-free status until 2014 and 50% tax-free status after that. That's a rather important development for Ebix, as it allows us the benefit of having hundreds of people operating out of (inaudible) and allows us a low tax jurisdiction in addition to access to duty-free imports for hardware and infrastructure in that area.

Ebix's CEO, namely myself, was recently invited by the SEZ dDirectorate in India to be honored in a public function for Ebix's accomplishments and also to extepand the Software Export Zone department's support to our efforts to grow in the SEZ area.

Point number nine, recently three-for-one3-for-1 stock split. We recently announced a three-for-one3-for-1 split of the Company's common stock. The Company expects -- anticipates a record date of approximately November 30, 2009. Each shareholder of record at the close of business on such date will receive two additional shares for every outstanding share held on the record date, and trading is likely to begin on a split- adjusted basis on or about December 10, 2009.

Since the Company presently does not have sufficient number of authorized shares required to effectuate the increase inof authorized shares after the split, the Company Board has authorized increasing the authorized share number to 60 million to handle the split and any possible future capitalization or growth needs. The Company will be holding a special meeting of shareholders so that the increase in authorized shares can be ratified. The Company anticipates holding this meeting during the last week in November.

This stock split is intended to further improve our liquidity and to make our shares more accessible, both to institutions and to the individual shareholders.

Last point, point number 10, further strengthening of the Mmanagement team. We at Ebix have continued to add bench strength to our senior management team across the world. Shareholders often ask me about the strength of our management team. Sometimes that question is necessitated by the false notion that I, Robin Raina, the CEO, seem to be afraid forfor the face of the Company and seem to be critical to Ebix's success. Nothing could be further from the truth.

Since I have been here for many years, from the days when Ebix had $19 million in losses to now, and have been the main Company spokesperson for the last 10 years, it has led some investors to the wrong notion that the success of Ebix is directly associated with me. While I thank those investors for their trust in me, yet the fact remains that it is just not true.

My biggest success point as the CEO of this Ccompany is that the Company today has a very solid senior management team that has the empowerment, vision, day-to-day knowledge, initiative, and independent thinking to lead the Company in its growth efforts. The Company today has 63 -- I repeat, 63 -- senior executives who have the bench strength to make Ebix a very large player worldwide. Each of these senior executives are responsible for the Company's growth today.

While I have no desire to leave Ebix in the foreseeable future, yet if that was to happen any time, Ebix's Board will have the difficult job of choosing a successor out of at least 14 senior people who, in my viewpoint, have the energy, drive and ability to be the CEO of Ebix. I see that as my biggest accomplishment at Ebix.

00 p.m. EST today. Also, I would encourage you to visit the comprehensive investor home page on the Ebix site with a view to providing you a one-stop place to analyze Ebix from an investor perspective.

With that, I'm going to hand it over back to the moderator to open the call for questions. Thank you.

(Operator instructions). Your first question comes from the line of James Behre with Perimeter Capital Management.

Hi. We're hearing a lot, of course, about healthcare exchanges and how that's going to be necessary to move around the patient information records and all the other various healthcare information. Now, you already have a great position in exchange and insurance. How are you going -- what's your strategy to move that and gain some of that healthcare exchanges that are going to be needed going forward after healthcare reform?

Thank you. This is a great question, incidentally, and I'm glad you asked that question. I thinkYou see, health exchange -- as President Obama puts his policy in place or as the negotiates the takeover at (inaudible) over a period ofthe time, I think what is going to be critical to this policy is that we -- the country will need a backbone, a health exchange, as you rightly said, a B2-to-B exchange, which should basically have hooks into all the back-end carriers and possibly have hooks into all the different entities who basically could be involved in a (inaudible)health insurance transaction.

Having said that, it's easier said than done. For the government to go out and try to do this is going to be almost impossible, because it could take them umpteen number of years. There are a few players who have taken some strategic positions in terms of (inaudible) very small players who have individually gone in and taken strong positions in the back-end area.

I think Ebix is watching this market pretty carefully. We have a plan in mind. I wouldn't want to talk about that plan per se, because that would be letting the cat out of the bag. I think what we plan to do, we clearly want to be a player in that market. We believe that for us to be a player, it is quite critical for us to own some of those existing back-end relationships with the top end carriers. If you have those relationships, if you have the exchange in the middle, which can basically take data from one end to another, I think that could be a huge win inas thean industry. So, I couldn't tell you more than that at this minute. As I said, it would be premature for me to talk about it now. But, thank you for the question. It's a great question.

Your next question comes from the line of Mike Latimore with Northland Securities.

Yes, good morning. Robin, you mentioned some cross selling that you think -- that you said has occurred in the last 90 days. I guess have you cross sold LifeSpeed and employee benefit services? And also you mentioned some BPO wins, insurance in terms of certificate tracking wins, and were those in the Fortune 500 category?

Well, Mike, basically cross-selling is an ongoing process, it's not a one day process, and you don't really arrive at large deals overnight. Yes, we have taken up and clearly meshed up the sales groups completely. We have -- today, there was a press release out, for example, talking about how we have integrated exchanges with LifeSpeed, with AnnuityNet, with WinFlex and so on, and we're going very -- we're drilling down very deep into it.

What we are trying to do, rather than go to one player at a time, we're trying to almost create an industry movement. We're trying to bring the key players together into the room with us, and that's where our cross selling really starts. We don't think at this point -- clearly, we will go one by one with each of these guys, but we also feel that at this point we do have a winner in our hands, which clearly has value for the industry per se, not just for any one player only.

So, what we are trying to do, our way of cross selling is to almost try to create a movement around it by bringing all the larger players together in (inaudible)[common forums] with us, and that has happened on a very aggressive level as of now. In all areas, whatever it is, whatevether we talk about, cross selling with respect to CRM or exchanges. Many -- in coming days, you could see us bundling exchanges with CRM. What I mean by that is it will make it very attractive for CRM players to use exchanges. We'll make it attractive for exchangers to use our CRMs because it willwe'll make it economically attractive. Of course, it's -- on a technology basis and a functionality basis. Wwe are the only player who can make the end-to-end dream possible.

So, then you can walk into the other areas, like employee benefits, for example, you talked about. Clearly, there is cross selling. We are today -- to give you some examples, we're interfacing employee benefits into our P&C carrier system. We are right now working on something, an enterprise-wide project. We're trying to create a system which will have a P&C back-end system, a health system, a life system, a CRM, exchanges all interfaced together. Now, I will tell you that is one of the most ambitious [drives] that anybody has seen in the industry. Nobody has tried to do anything like this. Clearly, we think we have all the right pieces. We clearly think we have common architecture around all of this. We feel we have the best chance to make that happen.

We're also taking cross selling into international areas. I mean, let'sThaink -- take a simple example of trying to sell employee benefits to our Middle Eastern customers or our customers in Australia or our customers in Singapore and so on.

So, clearly, whether it is the area of risk exchanges --, a very simple -- another example of how we cross sell, we sell [service gate] processing to a lot of Fortune 500 companies. Almost 75 of them are using our service gate exchange. Now, those are risk managers.

On the other side, Peak was selling risk management solutions to risk managers also in almost 450 companies. What we did, today, an integrated sales team is going out and selling risk management solutions to our existing service gate clients and service gate solutions to the existing risk management clients, because the end customer remains the same.

So, all of that is happening today, and this will be an ongoing process, and it will continue at a very brisk pace now. Thank you.

(Operator instructions). Your next question comes from the line of [Vincent Coppazi] from Kovack Securities.

Yes. Hi, Robin.

Hi, Vincent.

Very nice quarter. I'd like to ask you, when you bought especially the E-Z Data, could you tell me how much debt that you had to accrue for that?

Bob, do you want to answer that?

Yes. In connection with the E-Z Data acquisition, we surelyshortly before that, in August, executed $25 million of convertible notes, $20 million with Whitebox and $5 million with [Rennis]. That $25 million was essentially used to satisfy the cash consideration portion of the approximate $50 million acquisition price for E-Z Data.

Your next question comes from the line of Harry Long.

Hi, guys. How are you doing? Great numbers.

Hi, Harry. How are you?

Great. Quick question. Can you guys give me a little bit of color here on the accounts receivable? It looks like they're increasing a little bit. I mean, is it related to your acquisitions or just the normal billing cycle?

Yes, it is, and I'll let Bob explain that further, but it is. It's purely a timing issue. Clearly, when you make these acquisitions, I mean, you'll have some tinytiming differences that will happen, and that's all you're seeing.

Bob, do you want to add to it?

Yes. Our DSO at the end of the quarter stood at 63 days, but since the end of the quarter, we've collected sufficient sums of funds from our foreign customers and our DSO has come down. We look at this as strictly a timing issue and are not concerned about any ongoing issues there.

Harry, we have not had AR/R issues over the last (inaudible) this Company over the last five years. We have no real A/R issues, so I think it's purely a timing issue.

Your next question comes from the line of [Simon Baroche], private investor.

Good morning. I believe you put in some hedges against the Indian rupee. Are those still in place? Do you have any hedges against the Australian or New Zealand currency?

Yes, we do have hedges against -- it's primarily a hedge between the Indian rupee and the U.S. dollar, and basically that hedge is still in place. We have an $8 million hedge that we have in place today.

Your next question is a follow- up from the line of Mike Latimore with Northland Securities.

Yes, hi. On the acquisitions, did you get any NOLs with those acquisitions?

Bob, do you want to answer that?

The answer to that question is no. We don't have NOLs with these acquisitions.

Okay. And Robin, you mentioned new exchange customers as point number one. Were those the annuity ones that you had a press release around, or are there other ones?

A lot of them are annuity ones, let's put it that way. A lot of them are annuity ones. We have a few in the employee benefit area, we have a few in the life area, so it's kind of all quite widely spread out. And some of them are names that we are quite pleased about. These are large names that we would -- anybody would like to have, and we've been courting them for a long time. What we are also eq- -- more excited about, we've stolen them from our competition. , aAnd that we believe would be a very strong blow to our competition, and so we kind of like that.

Your next question is a follow up from the line of Vincent Coppazi, Kovack Securities.

Yes, hi. I got inadvertently cut off before when I was talking, so I'm back again. I was asking about the -- how much debt was used to buy the E-Z Data, and you werehe was telling me about -- that you had the convertibles that you used. But, was -- now, is that in addition to the debt that was done -- I mean, to the convertibles that wereas paid off in August?

These are new converts. Yes.

Oh, these are new converts.

Correct.

These are new converts. As we said today in the call, the previous converts that we had in place -- first of all, they're all counted in our diluted share count. Secondly, the $35 million converts that we had with Whitebox are now down to $8.4 million, as --. Is it 8.6, Bob, or 8.4?

8.4.

$8.4 million now. So, that's pretty much where we are. , sSo you canould look at theit $25 million plus $8.4 million. So Tthat's the two converts we have total open versus $35 million that we used to have in the past.

Your next question comes from the line of [Ronald Smith], private investor.

Hello. Good morning. For the bottom line for the small basic investor here as far as guidance, which I understand you're kind of shy about, but can you tell us for the next couple of months what we may be looking at?

I think over the next couple of months, we have already talked about -- I've issued some kind of guidance in this call in terms of at least the E-Z Data and the Peak part of the deal, in terms of the impact that they could have on our results. Now, again, we -- I must repeat that, again, that's a base number. It does not mean that's the number we would like to report. We would like to work at the normal margin levels. And we believe that both these deals will be accretive in the short term.

Now, I've only addressed these two deals per se in some of the guidance, but then we have our existing businesses and so on. We feel good about the future. We feel good about the short-term future of the Company and the long-term future of this Company. And we do not have a tendency of issuing more guidance than this, and we felt that we had to issue something about E-Z Data and Peak simply because these are slightly -- two deals done at the same time, slightly strategic, and we had lots of calls from people trying to understand, a"At least what is the base level that weyou think these deals contribute?". So, we felt it was fair for us to go out and at least define some fourloor metrics. , aAnd if we can beat those metrics by whatever percentage, I think that would all be very -- it would be all good.

Your next question is a follow up from the line of Simon Baroche, private investor.

Hi, Robin. First of all, the interest costs that are associated with those two acquisitions. -- I'm guessing that the debt that you've taken on, that you wouldn't have taken on if not for those two acquisitions, would be about $33 million, if I'm calculating correctly. Is the interest cost on that $33 million included in that $7.5 million net income base calculation?

Well, I think first of all, I want to understand -- yes, all interest costs will be included in the calculations. And again, like I said, that $7.5 million is a base number, so this number could be anything. It could be a $9.5 million, it could be a $8 million, it could be a $10 million number. And again, we wanted to define some basic numbers here.

Having said that, the first thing is I don't know where you got the $33 million from. Maybe Bob can comment on it. The way I understand it, we took a $25 million line, $25 million converts -- $20 million from Whitebox, $5 million from Rennis. Both of them were issued at a premium at that time to the market. , aAnd there's a particular way you handle that calculation in terms of there's an imputed interest cost you've got to take on each of these deals even though both of these deals had a real(inaudible) interest.

However, FASB 14-1 talks about some imputed interest rates, which we had to compute, and we have -- we are going to be doing that, and that starts beginning October 1, and that's how we're going to treat it. But, yes, all the numbers that we're talking about have -- we're not talking about non-GAAP numbers. Anything we have always talked about typically is GAAP numbers, and we're talking about everything with all costs being -- already being imputed.

And Simon, I understand your $33 million is nothing more than the $8.4 million remaining off the original $35 million of convertible GAAP plus the two new instruments of $25 million.

Understood. Okay, great.

There are no further questions at this time.

Okay. I think that's pretty much all for the call that we had today. Thank you very much for being on the call, and we look forward to meeting all of you and speaking to all of you pretty soon.

We -- I must say something here. We're also -- I want to end the call by saying two things. One, I want to say that at Ebix, we are planning some kind of a meet- the- analysts, meet- our- management team kind of a trip somewhere in New York over the next few months, where we can bring all the senior managers in the room, bring analysts and key investors who want to ask questions for the next [three] -- as a Ccompany, we've always believed in focusing on our work. , aAnd I think it also helps us in trying to deal with investors in a more organized fashion, giving them a very fair look into the Company.

We'll give a demo of all the products that we have. We will walk people through any questions they want to ask. We will expose them to most of our -- at least the senior management. Now, we can't bring 63 people out there, but we can possibly bring 14 or 15 of our senior managers out there. And so we're virtually planning to do that.

The second thing is I've been repeatedly asked over the last many months, so I thought I should briefly touch on it. Whenever a price goes down, a stock price goes down, I get a lot of calls from shareholders asking me, "The price is down. What's the Company's response?" And I always tell them I don't think I -- the Company had to respond when the price went downup.

This is part of as a Company, and we do not look at stock prices and run the Company. We run the Company based on fundamentals, based on integrity, based on consistency. We want to deliver whatever we can deliver in the best possible manner and the most -- with the utmost integrity. Having said that, if the price goes down, we all feel a bit sad about it, but at the same time, I don't think that deters us from doing anything. We don't make decisions based on stock prices.

I personally, as a shareholder, as an investor, as the CEO of this Ccompany, have shown enough faith in the stock and the Company. I think I'm a living example of somebody who has seen the stock go from -- when I joined in, the stock was probably less than $3, and so pretty flat. , aAnd today the price is -- or actually, close to $3 or $5 at that time, pretty fla-splitt, and obviously it's at a different price right now. Having said that, it's almost -- when you compare the $3 or $5, you're comparing it to almost $180(inaudible).

At the same time, I as a shareholder have retained my stock, held onto it, barely sold anything, and sold -- whatever was left, sold at different points for tax reasons. As an invest- -- as a shareholder, as a CEO, I've always felt the best job for a CEO has to be to just deliver and let the numbers do the talking and not really get worried about -- get excited about the increases in stock value or get disappointed with the drop.

So, I wanted to say this in this call simply because I've had so many questions and so many calls at different points, that I feel that I wanted to address that issue once and for all, that we will do what is best for this Company and while keeping our heads high. If that means the stock price -- if our results lead to the price going down, then that's what we deserve. If it leads to the price going up, that's what we deserve. And we're going to just do our business in the best possible manner, and we allwill have faith in the Company and will stick to our basics.

So, having said that, I will end the call. Thank you all for being here. Thanks a lot.

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