Ebix Inc (EBIX) 2011 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Ebix 2011 fourth-quarter annual investors conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions)

I would now like to introduce your host for today's call Mr. Steve Barlow, Vice President of Investor Relations. You may begin, sir.

Thank you, Kevin. Welcome everyone to Ebix's fourth-quarter 2011 earnings conference call. Joining me to discuss the quarter is Ebix's, Chairman, President and CEO, Robin Raina, and Ebix's SVP and CFO, Robert Kerris. Following our remarks, we will open up the call for your questions. Let me remind you that the primary purpose of today's call is to provide you with information regarding our fourth quarter and full fiscal year 2011 performance.

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

During the course of the call we may reference historical non-GAAP financial measures to provide a greater understanding of our business or financial results. The Management review is non-GAAP financial information and metrics in evaluating the Company's historical and projected financial performance and believes that it may assist investors in assessing its ongoing operations.

The presentation of this additional information is not meant to be considered in isolation or as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Please be advised that we may or may not update these additional metrics in future calls.

Our press release announcing the 2011 annual results was issued a few hours ago. The audio of this investor call is also being webcast live on the web, www.ebix.com/webcast. You can look at Ebix's financials beyond what has been provided in the release on our website www.ebix.com. The audio and the text transcript of this call will be available also on the investor homepage of the Ebix's website after 3.00 PM Eastern daylight time.

We reported today a strong fourth quarter. The capital is the strongest year in Ebix's history on many fronts. Bob and I will then I will talk about the Company from a financial perspective and Robin will address the Business in the quarter and our strategy for 2012.

Revenue in Q4 increased by 26% from a year ago to $44.1 million. For the full year, revenue increased by 28% to $169 million compared with $132.2 million in 2010. Our 4Q and 2011 revenue were the highest in the Company's history. There were several drivers to the revenue growth in 2011. Our Exchange business in 2011 grew 37% in Q4 and 39% year-over-year, to become 77.3% of our total revenue this quarter compared to 71.3% in Q4 2010.

For the year, the Broker channel increased revenue by 30% and our BPO channel was down 4%, but significantly was flat in 4Q. Our BPO channel primarily focuses on insurance certificate generation and tracking. The BPO channel has accordingly been impacted by the downturn in the construction industry as an estimated 35% of certificates in the United States get generated in the construction industry every year.

The Carrier channel was down 37% for the year. This was primarily because of three reasons. One, we decided to convert this perpetual license business to recurring utilities business and thus had change our business model and accordingly deal with reduced upfront but recurring revenues.

Two, the property and casualty industry has not recovered from the economic downturns and IT spending was rather limited in 2011. And three, the property and casualty backend Business in the United States is not our top priority. Because of traditionally low margins in this segment and Ebix's main focus being on growing it's Exchange segment.

Our cash generation abilities remained intact in Q4 with operating cash flow increasing to $19.4 million from $18.9 million in 4Q '10, an increase of 2%. For the full year, the Company's operating cash flow increased 35% to $71.3 million. Q4 2011 GAAP diluted earnings per share rose a 6% year-over-year to $0.44, as compared to $0.42 in the fourth quarter of 2010. Taking into consideration certain nonrecurring items, adjusted non-GAAP Q4 '11 EPS was $0.40 compared to $0.30 in Q4 '10, an increase of 31%.

For purposes of the Q4 2011 EPS calculations, there was an average of 39.4 million diluted shares outstanding during the quarter, as compared to 38.4 million diluted shares outstanding in Q4 2010. For the full year of 2011, GAAP diluted earnings per share rose 15% year-over-year to $1.75 from $1.51 in 2010. For purpose of the EPS calculation, there was an average of approximately 40.9 million diluted shares outstanding during the year of 2011, as compared to an average of 39.0 million shares outstanding in 2010.

Now looking at income margins and EPS year over year, the Company's operating margins for 2011 was 41%, as compared to 40% in 2010. Q4 2011 net income was $17.3 million as compared to Q4 2010 net income of $15.9 million, up 9%. For 2011, net income reached a record $71.4 million compared to $59 million in 2010, a 21% increase. Our Q4 operating expenses, which rose 19% over 4Q '10, demonstrates the commitment to our margin goals.

In 4Q, our sales and marketing expense was up 154%, compared to Q4 '10, which follows what we have said for the past several quarters, that we are investing in our sales force. For the year our sales and marketing expense increased 114%, and almost doubled as a percentage of revenue from 4.8% in 2010 to 8.1% in 2011. Our sales and marketing force at year end stood at 115, compared to 72 at the end of 2010.

The Company's G&A expenses were up only 9% for 2011, which includes the addition of ADAM and HealthConnect and higher corporate and employee health costs. As a percentage of revenue, G&A costs have been reduced from 18.2% in 2010 to 15.5% in 2011. Ebix's total headcount at the year end 2011 was at 1426, compared to 1179 at the end of 2010.

I will now turn the call over to Bob.

Thank you, Steve and good morning, everyone.

There are a few things that have been hallmarks of our business for many years now, specifically consistent operating margins in the 40% range, significant recurring revenue streams and the Company's ability to consistently generate increasing cash flows from our operating activities. Despite recent significant business acquisitions and investments in additional sales and marketing resources, our operating margins for the year were 41%.

In terms of cash flow this was an extremely strong quarter. Ebix generated $19.4 million in operating cash flow in Q4 2011, and $71.2 million for the year 2011, which essentially means that virtually all of the Company's reported net income in these periods has been realized in the form of positive operating cash flows generated by our Businesses. In Q4 2011, the pace of our share repurchases slowed, as the Company spent $7.1 million repurchasing 495,000 shares of our common stock at an average price of $14.56 per share. In the fourth quarter 2011, our diluted share count was 39.4 million. For Q1 '11 we expect-- for Q1 2012 we expect our diluted share count to be approximately the same.

During the year 2011 we reinvested in our core Business by spending $2.8 million on capital expenditures to strengthen the Company's balance sheet by settling the remaining convertible debt, and improved our capital structure by repurchasing 3.5 million shares of common stock at a cost of $63.8 million, which also provide a return of invested capital to our shareholders. Finally, in 2011 we paid our first quarterly dividend of $0.04 a share, $0.16 annually. And today as you know our Board of Directors authorized and increased the dividend to $0.05 per quarter, with the next payment being due in May of 2012.

In addition, we've closed the acquisition of ADAM in February 2011 and bought HealthConnect for $18 million in November of 2011. Our leverage ratio i.e. debt over tailing 12 months EBITDA remains low, and well within our covenants at only 0.6. And our debt to equity ratio also continues to be very low at 0.15, consistent with the year ago.

Our accounts receivable days sales outstanding declined 64 days-- declined to 64 days from 68 days a year ago. Finally, as of year end 2011, the Company has $57.5 million of remaining domestic NOLs available to offset future US taxable income. Ebix's annual report on Form 10-K will be filed this Thursday, March 15.

Thank you for your attention and I will now turn the call over to Robin.

Thank you, Bob.

Good morning, everyone, and thank you for joining us today. I'm pleased to report that Ebix has delivered a very strong finish to the year. The year 2011 was another superb year for Ebix on all fronts with record revenues, net income, cash flows and diluted earnings.

I have always believed in simplification in my life. More than a decade back, we set out to build a Company that could possibly be a leading player in the insurance exchange markets worldwide. In the early days, when I used to be asked about the technology vision of the Company, my answer used to be summed up in one word, convergence.

When I used to be asked about the financial vision, I used to say selling price has to be consistently a lot higher than the cost price. If I had to evaluate the Company's performance on these two simple yardsticks, then the year 2011 was another great year for the Company.

Let's now evaluate the Company on certain other metrics that are important in our line of thinking. Cash. The Company continued to churn out great cash flows as covered in Bob and Steve's presentation. That in our book is the single biggest metric that we monitor at all times. We believe that if the Company can keep generating increased cash flows, than that by itself becomes a catalyst for funding future growth.

Recurring revenues. Subscription and transaction revenues in 2011 grew to 83% versus 75% in the year 2010. Subscription revenue grew from 56% in 2010 to 65% of our total revenues in the year 2011. We like this trend as increase in subscription revenues can translate into higher income streams.

Low customer concentration. Our top client accounts for approximately 3% of our revenues, while the top 25 clients account for 15% of our revenues. Today we have little dependence on any one client or a short list of clients. We deal with thousands of clients across many channels and products today rather than focusing on a few large clients.

Margins. We continue to do well in terms of gross margins and operating margins both. With growth margins at 80% and operating margins at 41% for the year 2011. Consistency. With these results, Ebix now has a track record of having delivered more than a decade of sequentially improving financial health in terms of cash, net income, EPS and revenues.

Adapting to change. We believe that continuously adapting to the changing technology, global and regulatory trends is important if we are to establish ourselves as a chain leader in the industry. Year 2011 saw us launch many new firsts for the industry in terms of breaking new frontiers on all these fronts. This was made possible by our continuous investment in people and recent development.

People. Our single biggest asset is our employee force across the world that at year end stood at 1426 people strong. We have been extremely successful at retaining and grooming people from within the organization to take on bigger challenges.

The year 2011 was a great year in terms of employee retention and learning multiplication. We continue to invest in building a low-cost sales force, which at the end of the year stood at 115 people. By no means are we done on that front. We intend to continue investing and creating a strongly diversified sales organization across the world.

In the year 2011, we made a lot of progress in terms of setting the basics of where we would like to take Ebix. We invested in emerging markets like Brazil and Africa. We invested in building new services in many sectors like health and life insurance. The Obama administration announced yesterday that the new interstate online health exchanges to be implemented by each state across the country would cost state and federal governments $800 million in aggregate.

We see healthcare as a big opportunity for the Company in the next few years. Accordingly, we have continued to invest in creating end-to-end health exchanges that cover the expanse of consumers, brokers, employers, search engines, large media outlets, hospitals, HMOs, PPAs and providers, et cetera. This investment makes us the most comprehensive end-to-end player in the health exchange arena and opens the possibilities for us to do business with state governments and large providers besides a wide array of other entities. The year 2011 was a watershed year in this regard.

In the year 2011, we continued to invest in mobile computing as also building new mobile apps. We intend to continue pursuing those initiatives in the year 2012 with a view to becoming a comprehensive provider of insurance services on a wide variety of mobile platforms in a technology agnostic manner. In the year 2011, we continue to expand on the core focus area of exchanges both in terms of newer customers and newer functionalities. As the insurance industry recovers, we expect to see increased transactions from existing clients that should also contribute to further revenue growth.

Two areas in insurance-- two areas outside insurance where you could see Ebix play a lot in the year 2012 and beyond are healthcare and finance. To date, Ebix has been branded primarily as an insurance services player. Today we are set to further expand our horizons into new areas outside insurance. I prefer to discuss that at a later stage as and when we make some key announcements related to that.

Ebix today is thinking at a different level in terms of its future growth opportunities. We believe that we can use our present expanse and customer depth to be a much larger player. We intend to do that both from within and through the route of accretive acquisitions in the near and long-term future both.

As Bob explained, today the Ebix Board sanctioned a 25% increase in the dividend. This is another sign of our efforts to maximize shareholder value. We see ourselves as a growth story that can do both, use its cash to spur growth as also pass some of this cash to our shareholders.

In summary, I'm very pleased with the strong finish we delivered to our fiscal year and the continued growth momentum for years to come. We have a focused simplified business model with a strong P&L and a strong balance sheet which will continue to capitalize our growth. We are in the lead position to enable and power some of the world's largest insurance exchanges.

All of this translates into a tremendous growth opportunity for us, and I'm very pleased with how our journey continues to progress. To conclude, I would like to thank all of the Ebix employees across the world for helping produce record sales and earnings for the Company as well as advancing our dominant competitive position in our businesses.

Thank you. Kevin, we're ready for questions now.

(Operator Instructions) Jeff Van Rhee with Craig-Hallum.

Great, thank you. Hello, guys. Couple questions for you. Maybe Robin would you just talk to obviously with the recurring revenue streams, we don't get as clear picture about the quarterly business trends in terms of bookings. Would you talk about the environment now as you see it in terms of how did you do in bookings in Q1 compared to Q4 or maybe the year earlier? Improving steady by segment, some color around the booking environment would be a good start.

Well, I think our -- sequentially our bookings continue to improve and some of it is purely because we're adding a lot -- add a sales force -- the expanse of our sales force increases, meaning our bookings are continuing to improve.

I think in our scheme of things, what you traditionally see is we don't obviously book any upfront revenue with any of these deals and most all of it comes in, majority of it happens as the clients go live and as they start processing transactions. Our key goal is to let them process transactions, make subscription revenues out of them, make transaction revenues out of them and so on.

So having said that, if you sequentially look at Q1 versus Q2 versus Q3 versus Q4 there's been absolute improvement sequentially in terms of the number of deals that we are booking. And today, one of the things that has changed for us is that we've hired very high-quality senior salespeople and we're trying to go after much larger deals, which will obviously have a longer time span. And this is a paradigm shift in terms of our thinking.

We believe, for example, that if we are dealing with let's take the example of health exchanges, earlier we were not a player in terms of bidding, for example, for a $20 million deal or a larger deal. Today, Ebix is at least starting to play in those deals. It doesn't mean that it's a guarantee we're going to get those deals, but we're a player. Now that by itself is a very focused effort going on.

Now as we go into those kind of deals and any of those deals as they start happening, I think they will by itself -- they be capitalized for a paradigm shift in the way Ebix operates. And I think we are trying to heavily focused today internationally on some of these -- the larger play that is happening.

Which means providing for example exchanges to governments and countries providing exchanges to HMOs, providing solutions to HMOs, providing exchanges to state governments, providing back-end solutions and exchanges to really large insurance companies. So I think that's the kind of stuff that we were not involved in earlier and that is starting to change. And a lot of our focus with the newer senior enterprise salespeople is on making those kind of things happen.

But overall to give you a simple answer to that, bookings have sequentially kept improving per se. Now to give you a color on where the macro environment overall in the industry, the macro environment there is improvement in certain sectors but I would not say that there is a huge improvement in the industry per se.

There is -- it's a bit sluggish, but it continues to improve. I think from our perspective, we believe that with or without the economy getting into a fast gear, we should be able to keep improving our numbers simply because we believe that we are at a point where with our --

The kind of expanse we've been able to build, the kind of network we have been able to build, this network by itself should help us bring the next client in simply because ultimately we're in -- as some of these players are struggling in insurance in this kind of an economy, you -- we as a Company can help them become more effective, more productive, increase their margins, so that's part of our big thought process right now.

I think at the analyst day you had given an apples-to-apples same-store volume growth in terms of customers you've had on your Exchanges to help quantify the headwind or tailwind, sort of the overall environment. Do you have a comparable number?

No, I don't have a comparable number. And I don't have a comparable number to give you meaning in terms, I think we just talked about at that time, I think it was -- I was responding to a question and I had responded about the number of contracts. I will just tell you rest assured that the number of deals -- I think we had just talked about the number of deals at that time, and the number of deals has grown quite a bit in terms of where we are and so we'll continue to improve those numbers.

Okay then just two other quick ones. Just some -- obviously some pretty aggressive hiring on the sales side. How as you enter '12 do you look at the -- what is the outlook for additional heads on the sales side entering '12?

Well we, Jeff, we're pretty pleased with our hiring on the sales side. And we've been able to -- you see we're in a highly domain-specific industry, meaning what are we getting paid for? We're getting paid not just for providing technology, we're getting paid for providing very high-quality insurance knowledge and leading -- to lead the industry in a way and define certain direction. So which means, our salespeople need to be highly domain-specific and need to be very knowledgeable. They've got to be trained very well.

So we have spent a lot of time training these people because these people are selling at the level of Vice President, Senior Vice President, CEOs typically because when you sell an Exchange you're basically -- the decision is being made at the highest level in the insurance Company for example, or a distributor or a wire house for one, or a bank.

So having said that, we made those investments. We're very pleased with the quality of people we have hired, and the kind of people we've been able to hire. So today, we feel that are we done with this? Absolutely not. I think 2012 we will continue to hire people and improve the number of salespeople we have.

We believe that one of the things that we can do a better job at is to further strengthen our sales organization in international markets. We want to create a solid sales organization across the world. We feel we have a bit of catching up to do in international markets.

For example, I'll give you an example in 2011, we've made forays into Africa. If you look at our pipeline today in Africa, we started this group which was starting to handle Africa. If you look at our pipeline today in Africa, it is extremely strong. And it has given us a lot of reason to believe that we should get more aggressive about these kind of markets.

And so today, we're starting to think through how can we invest more in these markets because some people would say, why get out of the US? Why go to these countries? Does the US not have up enough opportunity? Well it's a question of being a leader in the early days. It's about mind positioning. In some of these markets, the competition is not strong enough or isn't there.

We believe if we can be the first ones to get there and to start defining and be the first mover in those markets, we believe that we can make -- we can take a pretty strong position in the market and build an early network. So we intend investing in Asia-Pacific. We are, in our viewpoint we are weak in Europe today. And we really need to strengthen our sales force in Europe. We need to strengthen our sales force in some of the Latin American markets.

And of course US will continue to be a good focus for us and we will continue enhancing. One of the areas you will see us hire a lot more salespeople is in the health arena, in the health exchange arena. You will also see us as we get into -- you will see us getting into newer areas of health insurance. Healthcare is becoming a large player now.

And we believe that we intend entering some newer areas as we get into those, we'll talk about those. And when we get into those, we intend to [state] that knowledge set and expand it internationally and create more salespeople around the world to focus on those kind of areas.

The other area you could see us hire a lot more people is CRM, CRM systems. One of the reasons for it is we are today taking our CRM systems from life annuity into PMC, into health, into different other markets. So take that example as we take the CRM, we've spent a lot of time customizing these into for example into taking our CRM system and customizing it to a PMC market. We interfaced it with our Brokering solutions to make it an absolutely seamless experience for our clients.

Today, we have opportunity. Look at a market like Australia. In Australia, an estimated 85% of the broker desktop in PMC is with Ebix. And when you consider that, that's a ready market for Ebix on -- for CRM systems. And so we need to put in focused salespeople to make that market and exploit our reach that we already have, the dominant position we have in the market.

Similarly take the area of health. In the area of health, we have been customizing our CRM into a health CRM also. Now that's a completely different market for us, completely new market for health CRM for us. So we intend to put in focused salespeople on it so we did have salespeople divided by the kind of product, by the kind of channel. Whether it's health or life or PMC or so on. And so you would see us make a lot of hirings in that area.

Thank you. Just a couple other ones and I'll let somebody else jump on. On the margin front, the -- coming in sub 40% certainly for the year, pretty healthy margins. You had the HealthConnect transaction in the quarter which I suspect had some impact, but how do you think about operating margins in general for 2012?

This is Bob. We would expect our operating margins to continue in the 40% range in 2012.

Okay. And the tax rate for the quarter was higher. How do you think about that for '12?

Our -- we expect our effective tax rate will continue to rise as we create, or generate greater amounts of taxable income in jurisdictions with higher statutory tax rates.

Is the level that you posted for Q4 a good baseline to think of for 2012?

I think it'll increase from there.

It will go up from the Q4 level?

Correct.

Okay. And then last one, the organic growth rate, obviously you don't break it out. But as you look at 2012 directionally based on pipelines visibility into quite a bit of subscription revenues, can you give us a sense of at least magnitude of acceleration? You look for similar growth rates until second half it accelerate -- I mean how should we think about organic over '12?

Well first of all I mean you think this question of organic growth becomes a rather complicated question, so if you go through our K, first of all you were asking Bob about taxes then of our organic, so all of these you'll see enhanced disclosures in our K that is just coming out and pretty much a lot of detail especially on taxes and so on. You also see specific paragraphs and specific wording on organic growth and so on.

Having said that, the way our business model is as you read the 10-K we have taken pains to explain why it is so difficult for us to start breaking up the organic growth versus inorganic because of how we function, how we integrate, how we virtually make sure that if we make that particular acquisition, to give you an example we might basically get rid of a particular product on their side, on our side, or we might make -- if they are selling our product, that product revenue might be attributed to them and so on.

So we are very, very -- we integrate very tightly as you read that you'll understand that more. But having said that, I can answer it more on an overall basis in terms of overall revenue growth. Meaning we clearly are investing in these salespeople with the basic belief that we can generate a lot more momentum in terms of sales. Our pipeline continues to improve. We believe 2012 can be a much better year.

Overall in terms of the second half of the year, we clearly believe that you're going to see more acceleration in the second half of the year and that is simply because of the fact that as you hire -- as we've hired these salespeople there's a training time, because of the domain-specific nature of our business. And then there is a training time and then there is a cycle to our sales and as we put both these things together, you end up with clearly second half of the year being a lot better than the first half of the year.

Having said that, meaning we signed a lot of deals in '11 and a lot of those deals will start generating revenue this year. So overall as we've always believed, you see we don't make all these -- we have never given guidance in terms of revenues, and we will stay away from issuing guidance in terms of revenue, lower earnings and so on. I think over the last decade or so, we have always stayed away from trying to get into guidance. I would rather have numbers speak for themselves as we go forward.

Great, thank you.

Thank you.

Mark Rye with Singular Research.

Hi, Robin, I wonder if you could comment a little bit more about the HealthConnect solution acquisition in terms of the cross-selling opportunities, the cost synergies, product synergies that's providing?

Fantastic. Great question, Mark, and hello to you. So, Mark, in terms of HealthConnect, it's a pretty strategic acquisition for us, meaning what it gave us, it gave us the interfacing, it gave us the connection between brokers and insurance companies. And their solution is being used at the front end, virtually, which could be exposed to a consumer, to a broker, to an MGA, it could be anybody. And of course insurance company at the back end. So when you consider that, what pieces does Ebix already have?

Let's start at the basics and what I talked about in health exchanges. Were does the transaction base start in health insurance? The transaction can start possibly on a search engine. It could start on a media outlook website. You could be on a New York Times website or a Boston Globe or a Reuters website and you might be thinking of, well, maybe I need -- research health insurance. Maybe I need to get it into -- you see an ad and you start going into health insurance quoting tool. That's where the transaction starts.

So now if you go to the front end, you have on one side the consumers, the brokers, the search engines, the portals and so on. And then on the other you have the employers. You have the employers, you have PPAs providing employee benefits systems to the employer. You have brokers providing employee benefit systems, the benefit portals to the employers.

So Ebix first of all when I gave this example, in the front end, we're providing all these health content exchanges. Wherein you can research our content across on hospital websites to portal websites to search engines like Yahoo or Google or Reuters worldwide and so on, or Boston Globe or New York Times and so on.

On the other side, you have an employer whose employees want to enroll into a benefit system. And from there, you have the data moving from an enrollment system into maybe a broker system. From there, that data could move -- when it gets into a broker system, a broker would need a CRM, a health CRM for example, again, Ebix can provide that health CRM. From there onwards, that data could move now to a PPA or it could move to a carrier, depending on what is required.

So let's take the HealthConnect example. Now there is a consumer seeking a quote or there is a broker seeking a quote. All of that would be done using our quoting exchanges. So now you created multiple quotes using one entry at the front end wherever the entry is.

From there onwards, as you are processing that health insurance, you will have a policy being generated. You would have the policy being serviced. You would have claims being filed. You would have claims being adjudicated across different bodies, you could have COBRA be involved, you could have HMOs being involved, you could have -- so you could have union 24 hour hourglass accounting being involved. You could have claims accounting being involved, you could have a general ledger at the back end. There will be a backend system for the carrier.

Now when you consider all of these, and now you embed content around all of this as this transaction is moving, as the data is moving, seamlessly incidentally, with no multiple data entry at different points, that's what and exchange does. This is -- that's what Ebix is trying to do. In this example everything I defined in this example Ebix does today. HealthConnect was a missing piece for us. We didn't have the quoting piece in the middle. That's what it gave us. So it's fitted in beautifully into that entire mix. And that's -- did I answer your question?

Yes. A couple points on the cost synergies. Is the software development now being moved to your India development facility?

Yes.

So whether you're getting some cost synergies there, cost savings?

Well, we haven't done anything new in terms of moving development to India. We've always been -- as you know, India has been our core development center for since many years now. So we are continuing to -- as we make newer acquisitions, of course, we make -- we move a lot of the development to India. But it's a strategy that we hold and we have been always consistent with that, so it's not anything new for us.

It's just that we continue to invest more in the number of people, more in creating converting India into a learning organization because we keep multiplying the number of people we have in India. More in our infrastructure in India and so on. And as you know in there is Carnegie Mellon Level 5 certified in quality so on. So that's -- but there is really no change from a perspective of India. That remains at the core of the Company in terms of our development facilities.

Right. Yes I just meant they weren't already having their software produced in India that's such as the case with ADAM where they always had --

Yes, you're right. Many -- well actually, the Company is taking ADAM for example, ADAM actually had made the futuristic decision of taking their development to India except that ADAM had hired Indian software companies to do that. They were paying them time and material dollars to get that work done.

So for us it was a natural progression to take ADAM to India because they already were committed to doing it, they already had a hired company -- all that change was rather than take-- hire an outside company we moved it in-house into the Ebix development center in India.

Okay, very good. And you talked about the opportunity for health exchanges in the US from the recent legislation, can you tell us if you expect to see any of that next year in terms of revenue potential? Or is that --

Mark, we absolutely would like to see it this year. We are at fairly advanced stages on -- in lots of deals across the US. These are deals where we would like to believe in many deals we're a front runner. And we believe that as we go forward you'll understand our health strategy a lot more. You possibly will see rather than Ebix talking about its own health strategy in coming days, we would like to see large players in the US, large household names in the industry start talking about possibly teaming up with Ebix and saying that's a solution we are promoting.

So we are -- as I said there's a paradigm shift in terms of our thinking. We're going after larger deals, we're planning it in a different manner, we are teaming up with the really large players who have a say in some of these deals and so on.

And so yes, meaning we're not -- we would like to see some of this happen in 2012. Is there guarantee? No, I couldn't guarantee you. But at the same time if I look at the queue that we have, or the deals we're working on, can they happen in '12? They're supposed to happen in '12 actually. So -- but you never know. We'll keep you updated as things flow.

Can you comment some of the competition that you're going to be facing in those RFPs?

Well, the competition is very different. Meaning these are very large players who at times play in those deals. Many people -- what is happening in these exchanges, where we are standing a bit differently or competitively from others is most of the time there is a potpourri of five or six vendors who are teaming up.

I hate to give names there but basically you will see some large players just for the sake of a name, you could see a McKesson team up with somebody out there with another three -- a big, large system integrator, a large systems integrator worldwide teaming up with another content player on the health side teaming up with a claims player on the other side teaming up with the back end systems player on the other side to create a solution. When Ebix walks into these situations, Ebix walks in and says, we don't really need any of these.

And so at times I can give you an example of who could be our possible partners. Could be and I'm not saying anything in this call right now, but our possible partners could be a Microsoft, it could be large players, big system integrators. Household names in terms of system integration efforts worldwide. And this is -- that's -- wherein sometimes some of these partners why choose those partners?

Because sometimes they already have -- some of those partners are already doing business in state governments, they're already working on some of their -- they are the chosen player. Let's say a large insurance carrier has chosen a particular system integrator and outsourced majority of their IT to them. Therein it makes perfect sense for Ebix to team up with them. And so I think that's what is happening.

But the beauty of this is, from a solution set perspective, from a services perspective, from a product set perspective, Ebix is the only one who can provide -- is the only one vendor who says I don't really need these six vendors that you're trying to choose and I will give you one solution, one architecture, one end-to-end solution and carry data. That puts us in a slightly different -- in a more I would say in a better position competitively.

All right. Very good. And looking at the other lines of insurance, can you talk about the market for the life annuities PMC business in terms of transaction volumes, what you're seeing as far as that business is going in today's economic environment?

Well in the macro -- if you look at the macro trends, meaning in the life annuity side of the business, meaning that it's being impacted. It's -- haven't we would have expect the transaction numbers to grow from the same existing client, that hasn't really happened. Mainly we're seeing ups and downs here and there.

And the main reason for it is, there so many things that are happening in a macro environment. There are some of interest-rate issues have started impacting the carriers. And again, this is a cycle internationally. There is overall in the life insurance industry, there is reason for hope and at the same time, it's not really -- we haven't seen any marked change in the overall macro environment.

Having said that, we have continued to invest in bringing new customers to the Exchange. So we are continually bringing larger players to our Exchange. And as we bring some of these larger players we should anyways see growth, we might not see -- in the meanwhile we might not see increased revenue from a particular exchange from -- from a particular client who -- existing client -- and but at the same time since we would have added another new client to the network, that by itself would bring in a whole network.

When we say one client, you bring in a distributor, you bring in a lot carriers with it. Meaning it's network that we bring every time we sign up a larger client, and some of those be -- can by itself spur growth because of the network effect of bringing larger distributors and how one distributor leads to many more deals for us automatically. So I think overall meaning the macro environment is still not stable enough or is not growth-oriented right now in the life annuity sector.

Okay. Thanks for that commentary.

Thank you.

Just a couple more questions and I'll get off. But I wonder if you could tell us about some of the new products and services that you launched in Q4 and that's so far this year? You mentioned EbixEnterprise --

Yes, meaning you see a lot of these are very evolving products and services. For example you just talked of EbixEnterprise. Now, EbixEnterprise looks like -- we say EbixEnterprise looks like one service. But EbixEnterprise is the most ambitious project that Ebix has undertaken in a decade or so.

What are we trying to do with EbixEnterprise? We're trying to create one system that can virtually replace everything from end to end for a carrier. Which means we're trying to create a solution where a carrier can say, I can deploy EbixEnterprise to all my backend work. Incidentally handle all my exchange work, I can't -- and also have CRM interface or built into it.

And so there is so much more we are trying to do with carriers would have used tens of systems for. So as we -- when we say EbixEnterprise, the word, this will keep getting refined. There is so much more we are adding.

We're right now starting for example with health. But health alone is such a huge area. So in health alone, every quarter there will be newer things happening in the EbixEnterprise, but then we will keep adding newer functionality, newer products set, newer lines of business and so on. So it gets a bit more complicated than that. But then we continue to launch mobile applications, there's lots of apps we're continuing to launch.

In coming days you're going to see Ebix launch services on iTunes, start selling a lot of more commodity kind of products on iTunes. So we have a lot of part processes in terms of taking our products in very different ways across the world. For example one of the areas we're now -- we believe we would like to invest in 2012 is a whole area of social media.

Social media is a very emerging area. Again, it depends on how you use that social media from a productivity perspective and how do you really generate revenue from it? And again, we have a strategy around social media, which you will start seeing happen in 2012.

But having said that, there is so much more going on just from a Q4 perspective. For example, one of the products that we got live -- made live in the Q4 was a product we internally code-named Brave New World, BNW, that's basically our annuity exchange, replacement of our existing exchange AnnuityNET. And we are gradually rolling it out with our larger distributor and as we roll it out you're going to see that ultimately replace everything in annuity.

So there is so many things I could because of the number of products we have -- I don't think on this call I could walk through each and every product because we do lots of stuff and there's lots of change coming in into it. But I think on a macro environment level -- on the larger level, in summary I will tell you that everything is SaaS. Everything today we're very focused on cloud computing, we're very focused on software as a service. We're very focused on utilities-based businesses.

We're not really interested in this business of trying to book quick revenue or going after perpetual licenses. We're more interested in passing some of the professional services to the clients. We're trying to build open architecture technologies wherein our clients can interface and build their own solutions if need be, wherein our competitors can interface with our platforms if need be. We're not scared of that.

We're creating these open architecture solutions whereby people can interface with our solutions and we believe that will help generate a bigger network. As more companies interface, more software providers interface, more competitors interface, it will ultimately grow our position in the market, help our network grow. And so having said that, that's one of the key focus areas for us to evolve these open architecture standards to keep growing our network volumes in the markets.

Okay. Well thank you for those answers and congratulations on a very good quarter. I'll turn the call over to some other people.

Thank you, Mark.

(Operator Instructions) And I'm not showing any further questions at this time, I'd like to turn the conference back over to the hosts for closing comments.

Thank you, Kevin. I think we've -- we're towards the end of the call, so thank you all for participating in the call and we look forward to our next conference call and announcing our first-quarter results soon. Thanks again for participating.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.