Ebix Inc (EBIX) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Ebix 2014 annual results 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)

And as a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Steve Barlow, Vice President of Investor Relations. You may begin.

Thank you. Welcome, everyone, to Ebix fourth-quarter and full-year 2013 earnings conference call. Joining me to discuss the quarter is Ebix Chairman, President, and CEO, Robin Raina; and Ebix Senior Vice President and CFO, Robert Kerris. Following the 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-year 2013. However, some of our discussion or responses to your questions may contain forward-looking statements. These statements are subject to risks, uncertainties, and assumptions.

Should any of these risks or uncertainties materialize or should our assumptions prove incorrect, actual Company results could differ materially from these forward-looking statements. All these risks, uncertainties, and assumptions, as well as other information on potential factors that could affect our financial results are included in our reports filed with the SEC, including our most recently filed Form 10-K for the year ended December 31, 2012, under the heading Risk Factors, as well as in reports that we subsequently file with the SEC.

During the course of this call, we may reference certain non-GAAP financial measures to provide a greater understanding of our business or financial results. Management, at times, may review certain non-GAAP financial information and metrics in evaluating the Company's historical and projected financial performance and believe 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 fourth-quarter and full-year 2013 results was issued earlier this morning. The audio of this investor call is also being webcast live on the web on www.ebix.com/webcast.

You can look at Ebix's financials beyond what has been provided in the release on our website, www.ebix.com. The audio and the text transcript of this call will be available also on the investor homepage of Ebix's website today after 4:00.

Let's start by discussing results announced today. Bob and I will talk about the Company from a financial perspective, and Robin will sum up and provide some added color on 2013 and talk about the Company's future plans with a view into 2014.

Revenue in fourth quarter decreased by 6% from a year ago to $50.8 million, and increased 1% from Q3 2013. For the full year, revenue increased 3% to a record $204.7 million.

Foreign exchange rate declines, particularly the Australian dollar, hampered our revenue growth by $1.4 million in Q4 and $3.8 million for the year. In Q4, our exchange revenue decreased 5% over Q4 2012 to become 81% of our total revenue this quarter, compared to 80% in Q4 2012. The quarter over quarter exchange revenue drop was primarily due to the considerable strengthening of the US dollar as compared to the Australian dollar and the Brazilian real.

Our broker business revenue dropped by 8% in Q4, as compared to Q4 2012 and was essentially flat in 2013. We signed new deals with several large brokers in 2012, which created substantial professional services revenue in the first half of the year. However, once these clients were operational, recurring subscription revenue kicks in, which, while being lower than the initial revenue associated with professional services, is recurring with opportunity for higher margins.

The BPO's channel quarter over quarter revenue from its core certificate tracking and creation business increased. The overall decline in BPO business was due to the non-recurring nature of certain third-party software development activities undertaken a year ago.

Carrier systems revenue declined 12% in Q4 versus Q4 2012 and increased 36% for all of 2013. Revenue from new carriers system contracts in the implementation stage are recognized on the basis of services provided on a time and materials basis, which can cause some revenue variations quarter to quarter.

The Company's diluted EPS increased sequentially from $0.34 in Q3 of 2013 to $0.40 in Q4 of 2013. The earnings per share in Q4 2013 declined 17% year over year to $0.40, as compared to the $0.48 in the fourth quarter of 2012. For 2013, diluted EPS fell to $1.53 from $1.80.

The Company's operating margin in Q4 2013 was 35%, as compared to 37% in Q4 2012. Our gross margin was 80.2% for the fourth quarter and the full year. The Company's operating margin for the year 2013 was 37%, slightly down from the 39% realized in 2012, primarily due to the approximately $6.4 million of increased legal and associated corporate expenses related to litigation and regulatory matters.

In Q4 2013, our operating expenses declined 2.1% to $33 million, as compared to the same quarter a year earlier. Our G&A expenses including legal expenses were higher in the fourth quarter, but were more than offset by continued focus on other cost areas that declined 6.7%. For the full year, operating expenses rose only 6% to $129.7 million.

Combining all operating expenses except G&A, expenses increased 5%. G&A expenses increased by $2.9 million. The G&A line is where non-recurring operating expenses were booked. Legal costs year over year were $5.4 million higher, as noted.

Partially offsetting these G&A cost increases were $10.3 million reduction associated with the net reduction of contingent earn-out accruals. In G&A in 2012, there was a reduction of contingent earn-out accruals of $700,000 and benefit of $1.5 million related to a termination fee for a business acquisition that was not completed.

Below the operating line is where extraordinary costs, including a $4.2 million charge to settle all claims in the shareholders securities class-action suit. The total legal expense, therefore, in 2013 was the $6.4 million and the $4.2 million for a total of $10.6 million.

The Company's income tax expenses were significantly higher in 2013 as a result of increase in our reserve for potential uncertain income tax positions by $6.8 million in 2013, compared to $2.7 million of increases as reserve recognized in 2012. Total headcount for the year was 1,927, a 1% increase from 1,903 at the end of 2012.

That's the operational side. I will now turn the call over to Bob.

Thank you, Steve, and thanks to all on the call for your interest in Ebix. One of our main financial goals in 2013 was to further strengthen our balance sheet. To that end, the Company's working capital position increased by 45% in the year to $35.7 million from $25 million a year in 2012, due to higher cash balances and increased trade receivables.

The Company's current ratio stood at 1.54 at year-end 2013, up from 1.44 from a year earlier. Furthermore, the Company continues to hold substantial cash, cash equivalent, and short-term investments, which in the aggregate had a combined balance of $57.5 million at year-end 2013, up $20 million, or 54%, as compared to $37.4 million held a year earlier.

Also, the Company's net debt position for year end, was only $179,000, essentially, zero, as compared to $22.4 million on September -- at the end of the third-quarter 2013 and $44.3 million at the end of 2012. At year-end 2013, the Company's debt leverage ratio was only 0.69, and our fixed charge coverage ratio was 2.44.

All of these attractive liquidity positions were achieved while the Company had the following major cash outflows during 2013. We reduced debt by $25 million; we paid $14 million in taxes; we spent $4.7 million on a strategic business acquisition; we paid $3 million for earn-out obligations in connection with prior business acquisitions; we used $2.5 million to repurchase 251,000 shares of our common stock; and finally, we paid $2.8 million in dividends to our shareholders.

Presently, the Company's bank debt with Citibank stands at $52.4 million, consisting of a $22.8 million balance on a revolving line of credit and a $29.5 million balance on our term note. Furthermore, Ebix has access to approximately $32.2 million additional borrowing capacity from its financing facilities with Citibank, which is unused at present.

As we stand today, we are in a net cash position, i.e, being debt net of cash balances of approximately $7.1 million. After having recently paid also during this time frame, $4.2 million in connection with the settlement of the federal shareholder securities class-action complaint.

Cash generated from operations, a key financial measure for our business, during Q4 2013 was $19.3 million, up 49% from $12.9 million in Q3, and up $1 million from Q4 of 2012. During the full-year 2013, the Company generated $57.1 million of net cash flow from operating activities, a decrease of $15.2 million, or [21%], as compared to the $72 million in 2012. This decrease is primarily due to lower net income, net of non-cash items; and furthermore, 2013 operating income was adversely affected by certain extraordinary legal and associated corporate expenses, primarily related to litigation and regulatory matters.

In 2014 as we look forward, we will continue to strengthen our financial position by also focusing on the profitable growth of the Company, and thereby, generating increased shareholder value for our investors. Of note is the fact that today, March 14, the Company is paying a dividend of $0.075 per share to our common stockholders on record as of February 20. Finally, EBIX's Form 10-K will be filed this coming Monday, March 17.

I will now pass the call on to Robin.

Thank you, Bob. Good morning to all of you. The year 2013 was filled with the usual challenges of growing revenue, maintaining high operating margins, and driving cash flow.

In 2013, we increased revenue 3% to $204.7 million, achieved operating margins of 37%, and generated $57.1 million of operating cash flow. The revenue was a record for the Company, but we fell short of our goals in terms of operating cash flow and operating margins. The revenue growth was somewhat curtailed because of currency declines, but was likely more affected by a number of unforeseen events beyond our control in 2013.

From my perspective, 2013 was a good test of the inherent, fundamental strength of Ebix strong network of clients, products, and client relationships. We did extremely well on all these fronts. As discussed in Bob's talk, we closed the year 2013 with net debt approaching zero. We are quite pleased with that.

In the year 2013, the Company continued to pursue a few key initiatives that are evolutionary in our viewpoint, in terms of moving the insurance industry forward. We continued development of our end-to-end, health e-commerce exchange, EbixEnterprise. The effort has been to build an enterprise end-to-end SaaS solution that can be used by all kinds of health insurance entities involved in the health insurance chain, be it carriers, brokers, third-party administrators, health administration, claims agencies, et cetera, across 50 states in the United States, besides the international market.

This has been a very large initiative, to have been conceptualized [design developed], and then, thoroughly tested in collaboration with key insurance clients who would choose to go with this initiative. I'm pleased to report that after all the effort put in over the last few years, including the testing phase for the last six months or so, this enterprise exchange solution is expected to go live with two of our large carrier clients by the end of March.

Over the next few quarters, both these carriers will continue to move their clients onto the platform. We are excited about this, as it means two things: one, this will establish EbixEnterprise as a working enterprise, end-to-end health-exchange solution being used successfully by two large carriers, an initiative that many in the industry would have called a simple dream till now; two, it finally provides us with a working solution that allows us to get in the race for large value enterprise health deals across the world. In view of the importance of this initiative for Ebix and the industry as a whole, we intend to announce the deployment of both these carrier implementations after seeking dual approval from these clients to disclose their names.

In the year 2013, we also interfaced our multi-[coding] health exchange solutions with the federal exchange has also complied with the ACA initiative. That by itself was a key exercise that we have already accomplished successfully.

With regards to our health content exchanges, we converted the ADAM solution from being the provider of a number of focused health-content multimedia exchange solutions to a solution provider who could build infinite permutations of custom health content products for a market segments entity or region automatically. We did that by converting our technology to a [Lego]-block technology, and using all our thousands of content assets as building blocks to create solutions that allows us now to bid for health-content solutions with governments of countries providing education portals on all e-learning [mix] solutions for their constituents, custom solutions for hospitals, EMR providers, pharma companies and (inaudible) et cetera.

We used the reach of Ebix in the life sector to build tightly integrated health-content guides for life underwriters who could now do a much better job at underwriting risk. This has allowed us to be in contention for deals in Europe, Latin America, Middle East, and Asia, besides the United States. We expect the health business to do well in the year 2014.

One of our key initiatives being launched soon is SmartOffice Anywhere. As announced earlier, this initiative is targeted at allowing us to generate increased recurring revenue streams from our existing large customer base of tens of thousands of clients, while providing their advisors to use a CRM solution across any mobile hand-held or desktop device or browser in a mode that can be highly targeted for a particular kind of user. For example, a salesman in the field now has a mobile solution to access client data while on the road.

We are very encouraged by the response of our existing large network of CRM clients to this initiative, but also looking to build a strong partner network of paid CRM vendors who can interface to our open source-code smart integrator solution to provide a variety of complementary solutions to our clients, once they contractually agree to share a part of their revenue stream with Ebix. With that in mind, we are presently conceptualizing a partner portal for CRM partners.

In the year 2013, many of our key initiatives on annuities went live, like the AN4 initiative and the annuity maintenance platform, AMP; both these are initiatives that are targeted at moving the annuity industry forward. We are pleased to report that AMP and AN4 both have successful live implementations now. We expect both these initiatives to start generating increased returns for Ebix in 2014 and beyond.

One of our important initiatives in the year 2013 was to take our life underwriting solutions to the bank to allow them to write life insurance business in minutes, rather than in weeks and months. Our [BPP] underwriting solution and the Ebix Straight-Through Processing solution had to be conceptualized and built to provide a complete solution to all the (inaudible) involved in the life insurance chain.

Recently, we deployed our underwriting solution in a record time of three months for one of the largest life carriers in the United States, proving the versatility and success of our technology. We are actively marketing this solution at present to the banking sector. A few weeks back, our exchange sales team presented the solution to a focused audience of 130 banking professionals at the [Bistra] Banking Conference.

We are undertaking many similar initiatives in the life sector. One of the initiatives that we are presently in the process of conceptualizing is an insurance lead exchange for life insurance and annuity, whereby, we can sell insurance leads to our existing network of tens of thousands of brokers by interfacing these live leads prospects to flow into our CRM systems and our illustration exchange solutions. This is a 2014 initiative targeted at generating increased recurring revenue streams from our existing network of clients. Another initiative in the life insurance area is to deploy 24-by-7 support, 7 days a week for our clients at incremental, recurring, bundled prices.

In the BPO arena, we had talked about the implementation of a vendor-pay model for tracking certificates of insurance for large retailers. We are pleased to report that we are expecting to soon go live on this technology and business model with one of the largest retailers in the world for their operation in Canada. This is a new win for Ebix that we are quite excited about.

The model works out as follows: each retailer vendor pays a fixed annual fee to Ebix directly into a PayPal account. Ebix receives the insurance certificate, validates it for retailer requirements, and the vendor is now able to do business with the retailer. Ebix BPO interfaces with the retailer through the cloud to the retailer's desktop.

The benefit to the retailer is that Ebix does the entire insurance certificate tracking work, and the payments are made directly and safely without the retailer having to be in the middle. Ebix receives a fixed price per vendor, making billing easier from our side as well.

In the exchange business, we continue to sign new deals with large insurance carriers and underwriters, financial advisory firms, hospitals and pharmaceutical companies, to name some of the client segments. Last quarter, I reeled off a long list of new deals that were signed in that quarter; I'll tell you that the fourth quarter was no different. Ebix does not traditionally (inaudible) announcing deals with clients, unless our clients allow us to disclose their names or the subject, and if the deals have some strategic or material value associated with them.

We are continuing to pursue certain large-value deals that's going to have a material positive impact on the Company in terms of recurring revenues and margin growth. While the signing of any of these deals cannot be taken for granted, we are actively pursuing such efforts that can be confirmational for us. We will keep you posted and will declare the finding of a deal like this, if and once accomplished.

We have had a number of investors ask us questions about the recent press generated regarding the so-called breakdown of discussions between Ebix and a broker association in Australia. Let me clarify that Ebix is used by a vast majority of data associations' users for a variety of activities including broker system. The so-called breakdown is related to the quantum of new revenues being asked for by Ebix for a new interfacing service.

We are confident that both sides will come to an amicable agreement involving a new revenue source for Ebix in Australia in 2014. Incidentally, our business in Australia had revenue of $38.3 million in 2013, up over 5% on a reported basis and up 13% on a constant-currency basis. Revenue increased going to the creation and implementation on new exchanges, as well as a 10% increase in the number of transactions flowing through our software.

We are pursuing a few key exchange deals across the world that can be not only strategic, but also be material for Ebix. One of the deals that we are pursuing is to deploy a market-utility solution for the entire market in a Western country with a large insurance sector in a niche area; another deal we are pursuing is a joint venture with the government of a country to deploy an exchange in a niche market segment. We are excited about these possibilities for Ebix in 2014 and beyond.

In summary, 2013 was a good year, with its own set of challenges, known to all of you. In 2014, I believe we have regained our momentum; this is not to say, it's going to be easy. We remain focused on trying to make 2014 a record year for Ebix.

Over the last decade, Ebix has been consistent in terms of its financial discipline. I would like Ebix to get back to a zero debt level sooner than later. One of our initiatives this year is going to be to get towards that level, while also getting back into making accretive acquisitions. ¶ Insurance industry is one industry that is best suited for acquisitions because of the nature of opportunities that are available. With the industry being resistant to change, client relationships tend to be quite sticky, and sometimes the only practical, expeditious way to enter in a particular insurance market.

Ebix is good at buying companies at fast, effective prices, generating accretive return on investments, using that new asset to pay down its debt and increase its cash flows. We feel that Ebix has every reason to be proud of its successful record on that front in terms of speed of integration, return of investments, financial discipline, customer attention, and ability to generate increased cash flows at our levels. We intend to use that as another possible vehicle of growth, both in the short and long term.

Lastly, I would like to thank our almost 2,000 employees for rising to the challenges, and also ensuring that Ebix continues to move the industry forward. I am very proud of all of them.

With this, I will hand over the call to the operator to open it up for questions. Thank you.

(Operator Instructions)

Jeff Van Rhee, Craig-Hallum.

Can you hear me, Robin?

I can hear you, Jeff.

Okay. Great. Thank you. A number of questions, first, maybe for Bob to start with, the cash position as of March 14, $7.1 million. Can you -- I think you touched on it in the script, but can you revisit that? The $7.1 million is obviously net of a number of larger sources and uses, and can you just talk to me about what's in that $7.1 million, namely -- paid dividends and there's a few other things.

Yes. The $7.1 million is simply our net cash position, i.e., it's all of our debt less cash. And in this case, where we stand today, I am glad to say that we actually have more cash than debt by $7.1 million.

No. I understand the calculation. What I'm saying is, in the course of the quarter to date, what have been the uses or sources of -- particularly uses of cash? Have there been earn-outs? Have there been dividends, walk me through what other uses went into that. Obviously I'm trying to get a sense of cash flow from ops quarter to date. This is cash balance, but I'm trying to work the cash from ops.

Well, I would say one of the most significant uses of cash to date this quarter has been the payment of the $4.2 million as a settlement for the shareholder class-action suit. We've -- other than that, there's really nothing unusual, and the fact that our operations have continued to produce generate -- generous amounts of cash.

So Jeff, is your question regarding -- between December 31 to now, you are trying to understand that. Clearly meaning, I think to add to what Bob said, there would have been some buybacks also that would have also reduced the cash.

Okay. And then this dividend, I'm assuming that was not already paid. And I'm also -- any other earn-outs or other material payments that are worth calling out there?

Dividends were already paid out.

Dividends were in that number.

Dividend were in this number. Yes.

Okay. All right. Okay. Great. That's helpful. And then, Robin, at a high level, give me your sense of -- obviously, since we don't have a guidance to build off, it's hard to get a sense of your satisfaction with the sales execution. You touched on margins and some of the things that have been weighing on them, and obviously, generated great cash flow this quarter. But as you look forward, give me a sense of your satisfaction with sales at this point.

And then going into 2014,you mentioned a lot of things in the hopper. Are we going to see more of an investment in sales. Do you intend to see significant bumps in spend there? How should we think about your push?

You, in the script, talked about wanting to get back to the acquisitive side, which you've done successfully for a very long time, but right now, I'm specifically just talking about the organic side. Give me your sense of satisfaction with sales execution and then also some color on thoughts on investment there going forward.

I think first of all, in terms of sales execution, if you look at where we are today, we're -- I think the momentum, as I said in my call, I believe is starting to gain some momentum on that side. So I think -- we don't have -- in the past we've never given guidance. I want to stay away from that again.

But having said that, I have talked about quite a few deals which can be transformational for the Company. I think if we get some of those deals, clearly our numbers are going to look a lot better. But again, until we get those deals, they are not our deals. So I'm not going to talk too much about them until we have gotten those inked.

Having said those, the good news is that our prospect base is extremely strong. We are very advanced stages with lots of deals that can have a material impact on the Company across the world. I think in terms of sales execution, I am quite pleased with what we've been able to do in terms of building a very strong sales force.

You are going to see more investments in international sales as we go along. Our intention is to increase our presence in a lot of countries, diversify our sales force on the ground in many of these places. For example, we want to expand more in Latin America; we would like to expand more in Europe; we would like to expand more in Asia -- in the [Austrian] zone and Asia-Pacific zone. So you are going to see increased sales spend there.

Other than that, I think we are continuing to -- we feel that we are reasonably adequately staffed right now, in terms of sales. As we continue to build momentum, we will accordingly keep increasing our sales force.

Okay. And then last quarter you touched on two five-year contracts you had signed that held the potential to take that customer to be the largest customer that Ebix has. Have those -- where are we in terms of rev rec on those contracts? Namely, are those at their full run rate now? How do those flow into revenues?

Yes. Both of them are not at their full run rate, but both of them are live, both of them are flowing through the revenue run rate. In terms of 2014, we will get a full year from those two contracts, for both those contracts.

Having said that, meaning these contracts have -- to give you an example, one of those contracts has values associated with it in regards to adding more countries. The intent is to roll out products across different countries, so as we keep adding those countries and we keep adding newer licenses, you are going to see increased recurring revenue streams come out of those, that's one contract.

The second contract is -- the first one was a subscription-based contract more in terms of back-end systems across the world. The second one is related to exchange. In that area, as they keep ramping up their business, and as they start rolling out more of their business through it, it will keep ramping up. But overall, both clients are fully live; the revenue is flowing through.

All right. Thank you. And then back to you Bob, the tax rate, the FIN 48 adjustment, can you expand on that a little bit just in the sense of what is the catalyst for it? Obviously, you have been going through a process and the curious -- the obvious question is does this have to do with any feedback you've received thus far from the IRS in terms of the audit, and what's driving that right now? That's the first part of the question.

And then the second part is, we've got a tax-rate model in the forward year of 15%, and at least can you give us some semblance of how to think about tax rate for the forward year?

As far as the tax rate for the forward year is concerned, I think the 15.5% that we are at now is consistent with the rough guidance, if you will, that we have talked about in the past. And I think that that guidance would -- you would expect it to continue from there, as we've indicated.

In terms of our tax reserves, FIN 48 and otherwise, the Company, as any company should, is constantly looking at our tax reserves, our income tax positions, and adjusting the reserves as needed and when and necessary, and we will continue to do that as we go forward.

Is it -- is there anything implicit in there, though, that is related to the ongoing audit? Or is there any other specific adjustments you've made, either geographically or the other areas where you are accruing at a higher rate?

Yes. I think, Jeff, let me answer that. First of all, I think it's important to -- I think your question is regarding FIN 48. FIN 48 is a judgment call the Company makes in terms of certain tax position and so on. And it's -- having said that, when you -- if I go back, take a step back on your question on the tax rate, I wanted to add something there.

I think one factor that we sometimes forget when we talk about the tax rate is the fact that Ebix also pays minimum alternate tax in India, which is not a part of our expense, but is ultimately 20% of the income in India. That's how the local statutory rules work, and from a GAAP perspective, that's how it works.

But that's an advanced tax we are paying for the future, and last year there was a very substantial amount in 2013 that was paid in terms of MAT. That's on top of what you see, the 15% or 15.5% rate that we talked about here, because that's not an expense but it's a cash item.

And so coming back into it, I would honestly rather have investors factor in -- I feel that Ebix needs to be evaluated for its operating strength, rather than just on the global tax rate. It's a nice thing that we have a reasonable tax rate.

At the same time, going forward, I would rather have an investor discount the tax rate, say what if Ebix was paying 35% tax rate, or is this company still a good investment? If I am an investor, that's what I would be doing.

Having said that, I think we are, as a company, we -- if we had anything in terms of anything -- I think your question was related to is there anything that we have gotten from anywhere in terms of tax ruling on anything like that? No. Absolutely not. We have anything like that, we would absolutely be disclosing it.

Okay, and last one from me, and I'll let somebody else jump on here. Longer term, Robin, as you look at the next 3 to 5 years and you look at growth, you talked about and have a track record, as we discussed, of acquiring and doing accretive acquisitions. When you think about the growth in front of the Company in the next three to five years, how do you think about that incremental revenue?

Namely, do you envision 80% of it coming from acquisitions? Do you envision 80% of it coming from core business growth? Do you think it's may be a 50%/50%? Obviously it's not guidance, but it's a crude swing at giving us a sense of how you are thinking about forward 3- to 5-year opportunity.

Well, clearly a lot of it is going to come out of our acquisitions, and I actually feel -- I am not defensive of making acquisitions; I actually feel that's a fantastic way of growing the Company. If you look at my -- our own track record over the last -- all I know is that 1999 when I walked in, this Company's size was $12 million and $19 million in losses, and from there, the acquisition strategy has gotten us to where we are with respect to $204 million in revenue, and we've been able to work today at a net debt -- we basically are in a net positive position in terms of debt, as Bob explained.

And all of that we have done with respect to making acquisitions, being able to get increased cash flows out of those acquisitions, integrate them tightly, put them on our technology, take them over and into a SaaS syndrome, make it into a recurring revenue stream, make the client stick. And all of that we've been able to do, and then we are able to use the cash coming out of that acquisition to pay back the debt and make another acquisition.

I don't see any reason why I should change from that. I feel one of the roles of Ebix senior management has to be capital allocation. We got to make sure -- what is a better use of our cash than to make acquisitions and increase our cash flow on a continual basis? So you are going to see a fair mix of that. I think we're pretty focused on both.

We would like to the Company to grow organically, and this year we are focusing a lot on some of the larger deals; the smaller deals will continue happening, but we feel we now have products like EbixEnterprise. We have some of these market-leading exchanges that can allow us to get in the midst of larger deals now.

So that is where I think this is -- hopefully, it's slightly different for us from our perspective. We feel that we, with a little bit of luck, we could possibly sign some large deals.

So having said that, when I come back into the organic -- (inaudible) organic in terms of acquisition growth over the next five years. I think you are going to see a fair bit of both. Meaning -- I don't know whether I want to give any guidance and tell you whether 50% is going to come out of organic or 50% will come out in organic. I will just stop at that by saying it's going to be a fair mix of both; that's going to be our intent. Okay, got it. Thank you. Real nice quarter. Thanks. That's it for me. Thank you.

(Operator Instructions)

I am showing no further questions at this time. I would now like to turn the call back over to management for closing remarks.

Thank you, John. Since there are no more questions right now, I think we will close the call. And thank you, everybody, for participating in the call and we look forward to speaking to you again at the end of the first quarter. Thank you.

Thank you.

Thank you, ladies and gentlemen. Thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a good day.