As used herein, the terms “Ebix”, “the Company”, “we”, “us” and “our” refer to
Ebix, Inc.a Delaware company and its subsidiaries consolidated as a combined entity.

The information contained in this section has been derived from our historical
financial statements and should be read together with our historical financial
statements and related notes included elsewhere in this document. The discussion
below contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements involve risks
and uncertainties including, but not limited to: demand and acceptance of
services offered by us, our ability to achieve and maintain acceptable cost
levels, pricing levels and actions by competitors, regulatory matters, general
economic conditions, and changing business strategies. Forward-looking
statements are subject to a number of factors that could cause actual results to
differ materially from our expressed or implied expectations, including, but not
limited to our performance in future periods, our ability to generate working
capital from operations, the adequacy of our insurance coverage, and the results
of litigation or investigations. Our forward-looking statements can be
identified by the use of terminology such as "anticipates," "expects,"
"intends," "believes," "will" or the negative thereof or variations thereon or
comparable terminology. Except as required by law, we undertake no obligation to
publicly update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise.

PREVIEW

Ebix is a leading international supplier of on-demand infrastructure software
exchanges and e-commerce services to the insurance, financial, travel, cash
remittance and healthcare industries. In the Insurance sector, the Company's
main focus is to develop and deploy globally a wide variety of insurance and
reinsurance exchanges on an on-demand basis using SaaS enterprise solutions in
the areas of CRM, front-end & back-end systems, and outsourced administrative
and risk compliance. The Company's products feature fully customizable and
scalable on-demand software designed to streamline the way insurance and
financial industry professionals manage distribution, marketing, sales, customer
service, and accounting activities. The P&C exchanges operate primarily in
Australia, New Zealand and the U.K. With a "Phygital" strategy that combines
over 650,000 physical distribution outlets in India and many ASEAN countries, to
an Omni-channel online digital platform, the Company's EbixCash Financial
exchange portfolio of software and services encompasses domestic and
international money remittance, foreign exchange ("Forex"), travel, pre-paid
gift cards, utility payments, and lending and wealth management in India and
other primarily Southeast Asian markets. The Company's Forex Exchange has the
leading market share within India's airport foreign exchange business with
operations in 16 international airports, such as Delhi, Mumbai, Hyderabad,
Chennai and Kolkata International airports, all of which combined conducting
over $4.8 billion in gross transaction value annually (pre-COVID-19). EbixCash's
inward remittance business in India conducts gross annual remittance of
approximately $5 billion annually (pre-COVID-19) and is the clear market leader.
EbixCash, through its travel portfolio of Via and Mercury, is one of Southeast
Asia's leading travel exchanges, with over 500,000 agents and approximately
18,000 registered corporate clients, combined processing an estimated
$2.5 billion in gross merchandise value per annum (pre-COVID-19). Through its
various SaaS-based software platforms, Ebix employs thousands of domain-specific
technology professionals to provide products, support and consultancy to
thousands of customers on six continents. The Company has its global
headquarters in Johns Creek, Georgia and also conducts operating activities in
Australia, Brazil, Canada, India, Indonesia, New Zealand, the Philippines,
Singapore, Thailand, the United Arab Emirates, and the United Kingdom.

Ebix provides application software products for the insurance industry,
including carrier systems, agency systems and exchanges, as well as custom
software development. Approximately 93% of the Company's revenues are either
recurring or repeating (transaction-based) in nature. Rather than license our
products in perpetuity, we typically either license them for multiple years with
ongoing support revenues or license them on a limited term basis using a
subscription hosting or Application Service Provider ("ASP") model. Combined
subscription-based and transaction-based revenues of $925 million comprised 93%
of the Company's total revenues in 2021, as compared to 88% of total revenues in
2020. In 2021, subscription-based revenues increased by approximately $5 million
to $174 million, and as a percentage of the Company's total revenues was 18% in
2021 versus 27% in 2020.

The Company's technology vision is to converge processes in a manner such that
data can seamlessly flow between entities after an initial data entry has been
made. Our customers include many of the top insurance and financial sector
companies in the world.

The insurance and financial markets continue to focus on initiatives to reduce
paper-based processes and facilitate improvements in efficiency, both on the
back end of transactions as well as at the consumer-involved front end of
transaction
                                       35
--------------------------------------------------------------------------------
  Table of Contents
processes. This drive for efficiency involves all entities and directly impacts
the manner in which insurance and financial products are distributed. Management
believes that both the insurance and financial services industries will continue
to experience significant change and increased efficiencies through online
exchanges as reduced paper-based processes are becoming increasingly the norm
across the world insurance and financial markets.

Trends and uncertainties related to the COVID-19 pandemic

In December 2019, COVID-19 was reported and has spread globally, including to
every state in the U.S. On March 11, 2020, the World Health Organization
declared COVID-19 a pandemic, and on March 13, 2020 the U.S. government declared
a national emergency with respect to COVID-19.

In response to the COVID-19 pandemic, many state, local, and foreign governments
implemented travel restrictions, quarantines, shelter-in-place orders, and
similar government orders and restrictions, in an attempt to control the spread
of the disease. Such restrictions or orders, or the perception that such
restrictions or orders could be implemented, resulted in business closures, work
stoppages, slowdowns and delays, work-from-home policies, and the cancellation
or postponement of events.

Beginning in March 2020, in an effort to protect our employees and comply with
applicable government orders, we restricted non-essential employee travel and
transitioned our employees to a remote work environment. We have not experienced
a material impact from shifting our employees to a remote work environment,
which we primarily attribute to the professionalism of our workforce and our
extensive use of technology throughout our business. However, COVID-19 could
negatively impact the productivity of our workforce if the pandemic requires
prolonged remote working conditions. While in 2021 governments have relaxed
travel restrictions, quarantines, shelter-in-place orders, and similar
restrictions, the ongoing effects of the COVID-19 pandemic on our operational
and financial performance will depend on the duration and spread of COVID-19 and
its variants.

During the fiscal years ended December 31, 2020 and December 31, 2021, we
experienced a decrease in demand for certain of our solutions and services,
particularly those related to the Company's travel, foreign exchange,
remittance, e-learning and consulting business areas, after certain government
restrictions were implemented. This decreased demand continued throughout 2020
and 2021 in varying degrees for each business area, and even persists through
the date of this filing for all of the above mentioned business areas. We expect
that demand variability for our products and services will continue as a result
of the COVID-19 pandemic, and we cannot predict with any certainty when demand
for these solutions/services will return to pre-COVID-19 levels.

We continue to monitor developments related to COVID-19 and remain flexible in
our response to the challenges presented by the pandemic. Along with the
measures mentioned above to protect the health and safety of our employees, we
took steps to strengthen our financial position in 2020 to mitigate the adverse
impact that COVID-19 has had or may have on our business and operations,
including amending our Credit Facility, reducing salaries for certain employees,
furloughing employees in the most negatively impacted business areas,
eliminating certain employee positions, and eliminating, reducing, or deferring
non-essential expenditures. In 2021 we largely returned salaries to pre-COVID-19
levels and, in the case of certain IT professionals, increased wages in reaction
to a tightening labor market in India. Additionally, we have ceased our share
repurchase program until business conditions improve globally.

Our reported results for the year ended December 31, 2021 may not be reflective
of current market conditions, or of our results for any future periods, which
may be negatively impacted by the COVID-19 pandemic to a greater extent than the
reported period. The impact of the COVID-19 pandemic may also exacerbate other
risks discussed in this Annual Report. Refer to Item 1A. "Risk Factors" in this
Annual Report on Form 10-K for a complete description of the material risks that
the Company currently faces.

Key Performance Indicators

Management focuses on a variety of key indicators to monitor the Company's
operating and financial performance. These performance indicators include
measurements of revenue growth, operating income, operating margin, income from
continuing operations, diluted earnings per share, and cash provided by
operating activities. We monitor these indicators, in conjunction with our
corporate governance practices, to ensure efficient management of our business
and maintenance of effective controls.

The MD&A discusses year-to-year comparisons between 2021 and 2020. Discussions
of year-to-year comparisons between 2020 and 2019 are not included in this Form
10-K, but can be found in "Management's Discussion and Analysis of
                                       36
--------------------------------------------------------------------------------
  Table of Contents
Financial Condition and Results of Operations" in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on
April 27, 2021.

Key performance indicators for the twelve months ended December 31, 20212020 and 2019 were as follows:

                                                     Key Performance 

Indicators

                                                  Twelve Months Ended December 31,
(In thousands except per share data)            2021             2020            2019
Revenue                                    $   994,938       $ 625,609       $ 580,615
Revenue growth                                      59  %            8  %           17  %
Operating income                           $   119,010       $ 125,802       $ 155,673
Net income attributable to Ebix, Inc.      $    68,188       $  92,377       $  96,720
Diluted earnings per share                 $      2.22       $    3.02       $    3.16
Cash provided by operating activities      $    69,471       $ 100,356       $  60,793



RESULTS OF OPERATIONS

                                                               Year Ended December 31,
                                                         2021           2020           2019
                                                                   (In thousands)
Operating revenue:                                    $ 994,938      $ 625,609      $ 580,615
Operating expenses:
Costs of services provided                              705,390        343,262        205,165
Product development                                      40,015         35,267         45,302
Sales and marketing                                      14,434         13,835         19,578
General and administrative, net                         100,911         87,537        140,429
Amortization and depreciation                            15,178         13,738         14,468
Impairment of intangible asset                                -          6,168              -
Total operating expenses                                875,928        499,807        424,942
Operating income                                        119,010        125,802        155,673
Interest expense, net                                   (41,287)       (31,411)       (41,703)

Other non-operating (loss) income                        (3,766)           153            337
Non-operating expense - litigation settlement                 -              -        (21,140)
Foreign currency exchange loss, net                        (434)          (387)        (2,376)
Income before income taxes                               73,523         94,157         90,791
Income tax provision                                     (6,584)        (5,330)          (220)
Net income including noncontrolling interest          $  66,939      $  88,827      $  90,571
Net loss attributable to noncontrolling interest         (1,249)     $  (3,550)     $  (6,149)
Net income attributable to Ebix, Inc.                 $  68,188      $  

92,377 $96,720

TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020

Operating revenue

The Company derives its revenues primarily from subscription and transaction
fees pertaining to products or services delivered over our exchanges or from our
ASP, fees for business process outsourcing services, and fees for software
development projects, including fees for consulting, implementation, training,
and project management provided to customers with installed systems,
e-governance solutions to governmental agencies in the health and education
sectors, as well as foreign exchange, remittance (both inward and outward) and
travel services from our financial exchanges.

Ebix’s revenue streams come from three product/service channels. The table below presents the breakdown of our revenues for each of these product/service channels for the years ended. December 31, 2021 and 2020.

                                       37

————————————————– ——————————

  Table of Contents

                                  For the Year Ended
                                     December 31,
(In thousands)                     2021           2020
EbixCash Exchanges                749,774        386,564
Insurance Exchanges               174,193        178,111
Risk Compliance Solutions          70,971         60,934
Totals                          $ 994,938      $ 625,609




In the table above for the year ending December 31, 2021 and 2020 there are $9.6
million and $13.1 million, respectively, of Insurance Exchange revenues derived
in India that are being reported within the EbixCash Exchange channel above.
Additionally, for 2021 and 2020, there is approximately $12.5 million and $1.7
million, respectively, of EbixCash Exchange revenues that are being reported
within the Risk Compliance Solutions channel above due to the nature of the
revenues (primarily international consulting and BPO revenues within India).

During the twelve months ended December 31, 2021, our total revenue increased
$369.3 million, or 59%, to $994.9 million compared to $625.6 million in 2020.
The growth in revenues was due primarily to strong demand for the Company's
payment solutions business in India (primarily prepaid gift cards). The Company
also experienced year-over-year increases in revenues in international insurance
exchange revenues and the EbixCash BPO business, offset, in part, by declines in
the COVID-19 affected business areas of travel, remittance, e-learning,
financial technologies and global product consulting businesses. The payment
solutions revenues increased year-over-year by approximately $374 million
year-over-year to approximately $630 million, or 146% year-over-year growth.

The impact from fluctuations of the exchange rates for the foreign currencies in
the countries in which we conduct operations also affected reported revenue.
During 2021 the change in foreign currency exchange rates increased reported
consolidated operating revenue by $3.5 million and in 2020 decreased reported
consolidated operating revenue by $(21.9) million. Thus, on a constant currency
basis total revenue for the fiscal year 2021 increased approximately 58%
year-over-year.

The specific components of our revenues based on our three main lines of business and changes over the past year are discussed immediately below.

Overall stock market revenue increased $359.3 millioni.e. 64%, as explained below:

•EbixCash Exchange division revenues increased $363.2 million, or 94%, due to
continued growth in the EbixCash payment solutions (mostly prepaid gift cards),
foreign exchange, and bus exchange businesses, offset by continued COVID-19
impacted revenue decreases within our travel, remittance, financial technology
and e-learning businesses. The impact from foreign exchange changes within
EbixCash had an immaterial impact on reported revenues.

• Revenues from the Insurance Exchange division decreased by $3.9 millionor 2%, primarily due to lower year-over-year revenue in life insurance consulting/implementation, CRM, continuing medical education and Ebix Health Administration joint venture businesses, partially offset by higher year-over-year revenue across the company’s major life insurance and annuity exchanges, Ebix Australia exchange income, and Ebix Europe.

•Risk Compliance Solutions division revenues increased by $10.0 million, or 16%,
primarily due to an increase in revenues within the EbixCash BPO and Australian
broker systems businesses, offset in part by declines in U.S. consulting
revenues and year-over-year declines in Ebix Latin America revenues, which are
heavily consulting oriented and were negatively impacted by COVID-19 in 2021.


International revenues represented 84.4% and 73.4% of the Company’s total revenues for the years ended December 31, 2021 and 2020, respectively.

Costs of services provided

Costs of services provided, which includes costs associated with product sales,
customer support, consulting, implementation, and training services, increased
$362.1 million, or 105%, from $343.3 million in 2020 to $705.4 million in
                                       38

————————————————– ——————————

Contents

2021, and the Company's gross margin decreased to 29.1% in 2021 from 45.1% in
2020. The increase in costs of services provided and the decrease in gross
margin from fiscal year 2020 to 2021 is directly related to the increase of over
$370 million in revenue within the Company's payment solutions business
(primarily gift card revenue) in fiscal years 2021 versus 2020. Payment
solutions gross margins are significantly lower than other solutions and
services the Company provides its customers. In fiscal years 2021 and 2020, the
payment solutions gross margins for the Company were approximately 0.5% and
1.1%, respectively. Excluding the payment solutions business, gross margins for
the Company in fiscal years 2021 and 2020 were approximately 78% and 76%,
respectively. The increase in gross margins, excluding the payment solutions
business, in fiscal year 2021 versus 2020 was driven by the revenue mix
differences for the Company, with the Company's highest margin
solutions/services (e.g. insurance exchange software and services) experiencing
less relative negative impact from COVID-19 during 2021 versus other
solutions/services (e.g. travel, remittance, financial technology and e-learning
businesses).

Product Development Expenses

The Company's product development efforts are focused on the development of new
technologies for insurance carriers, brokers and agents, and the development of
new data exchanges for use in domestic and international insurance markets, as
well as the Forex and travel sectors. Product development expenses increased
$4.7 million, or 13%, from $35.3 million in 2020 to $40.0 million in 2021. The
increase is due to increased personnel costs experienced in India as a result of
both returning reduced salaries to pre-COVID-19 levels and inflationary
pressures on wages due to a tight labor market for skilled IT professionals in
India.

Sales and Marketing Expenses

Sales and marketing expenses increased $0.6 million, or 4%, from $13.8 million
in 2020 to $14.4 million in 2021. This increase is primarily due to a
reclassification of certain expenses in 2021 that were recorded to general and
administrative expenses in 2020 to sales and marketing expenses in 2021, as well
as an increase in advertising and marketing expenses to continue to build our
EbixCash brand in India and other Southeast Asian markets. The total of these
impacts were an increase in year-over-year expenses of approximately $1.2
million, which was offset in part by total personnel costs decreasing by over
$0.4 million.

General and administrative expenses

General and administrative ("G&A") expenses increased $13.4 million, or 15%,
from $87.5 million in 2020 to $100.9 million in 2021. In 2020, the Company
reduced its acquisition earn-out contingent liability by $3.1 million, which
served to reduce overall 2020 G&A expenses. Net of the change in the acquisition
earn-out contingent liability, G&A expenses increased by $10.2 million in 2021
versus 2020. This increase was driven by increased personnel costs, including
insurance and other benefits, which increased approximately $11 million in 2021
as compared to 2020. Additionally, professional fees increased by approximately
$2 million, office-related expenses increased by approximately $1 million, and
stock-related compensation increased by approximately $0.6 million in 2021 as
compared to 2020. Other items impacting the year-to-year comparison of G&A
expenses include a reduction in rent in 2021 versus 2020 of approximately $3.2
million and a decrease in bad debt expense of approximately $4 million in fiscal
year 2021 as compared to 2020 due to reductions in the $12.1 million customer
specific accounts receivable reserve recorded in 2019 in regards to receivables
that are due from a public sector entity in India as positive collection trends
continued in 2021.

Amortization and depreciation charges

Amortization and depreciation expenses increased $1.4 million, or 10%, to $15.2
million in 2021 from $13.7 million in 2020 primarily due to increased fixed
asset depreciation (increased capital expenditures over the past two fiscal
years as compared to 2019) and increased amortization in 2021 versus 2020
related to definite-lived intangibles resulting from prior acquisition activity,
primarily in India.

Interest Income

Interest income decreased $84,000or 50%, from $167,000 in 2020 for
$83,000 in 2021.

Interest Expense

Interest expense increased $9.8 million, or 31% from $31.6 million in 2020 to
$41.4 million in 2021, primarily due to increased borrowing costs associated
with the Company's primary corporate credit facility. The Company's LIBOR spread
                                       39

————————————————– ——————————

Contents

increased from 3.50% at the beginning of 2021 to 5.00% in April 2021 as a part
of an amendment to the corporate credit facility. The Company also incurred
approximately $3.2 million of expenses associated with the 2021 amendments to
the corporate credit facility that have been capitalized and increase interest
expense as the costs amortize over the remaining life of the credit facility.
Finally, the Company paid a commitment fee to the banks equal to 20 basis points
on the total facility size on December 31, 2021, which has been recognized as
interest expense in the fourth quarter of 2021. Additionally, the Company's
working capital facilities in India had average balances that were essentially
flat year-over-year from 2020 to 2021. These working capital facilities
generally carry interest rates of between 9% and 10%.

Exchange loss

Net foreign exchange loss of $434 thousand in 2021 which consisted of net losses
realized and unrealized upon the settlement of receivables or payables and
re-measurement of cash balances denominated in currencies other than the
functional currency of the respective operating division recording the
instrument. In fiscal year 2020, a net foreign currency exchange loss of $387
thousand was recorded.

Income Taxes

The Company recognized income tax expense of $6.6 million in 2021 compared to
$5.3 million of income tax expense in 2020, representing an increase of $1.3
million. Our effective tax rate increased to 9.0% in 2021, compared with 5.7% in
2020. The increase in the effective tax rate in 2021 is primarily due to the
release of valuation allowance on expired domestic loss carryforwards and
greater impact of GILTI related items.

Pre-tax income and applicable statutory tax rates in each jurisdiction in which the Company carried on business for the financial year ending
December 31, 2021 are the following:

                (In thousands)        Pre-tax income       Statutory tax rate
                United States           (33,311)                       21.0  %
                Canada                      242                        26.5  %
                Brazil                    2,246                        34.0  %
                Australia                 3,304                        30.0  %
                Singapore                (2,585)                       17.0  %
                New Zealand               1,318                        28.0  %
                India                    68,292                        34.6  %
                Mauritius                 4,612                        15.0  %
                United Kingdom            7,116                        19.0  %

                Thailand                    (33)                       20.0  %
                Dubai                    22,322                           -  %
                Total                    73,523



CASH AND CAPITAL RESOURCES

Our primary sources of liquidity are cash flow generated by our operating activities and available cash and cash equivalents.

We intend to continue to utilize cash flows generated by our ongoing operating
activities, in combination with the possible issuance of additional debt or
equity, to fund capital expenditures and organic growth initiatives, to make
strategic business acquisitions, to retire outstanding indebtedness, and to
repurchase shares of our common stock if and as market and operating conditions
warrant.

The Company's current corporate credit facility, which is a syndicated credit
facility with a group of domestic U.S. banks, will mature on February 5, 2023.
Currently, there is $652.3 million borrowed under this credit facility. The
Company is in compliance with its covenants as of December 31, 2021. The pending
EbixCash initial public offering of common stock ("EbixCash IPO") could provide
material proceeds that the Company can use to reduce its outstanding debt. The
Company
                                       40

————————————————– ——————————

Contents

intends to refinance the credit facility during the fiscal year 2022 with debt
and/or equity securities. While there are no assurances that the EbixCash IPO
will be executed on terms acceptable to the Company, the Company is likely to
evaluate refinancing alternatives in combination with and based on the results
of the EbixCash IPO process.

We believe that anticipated cash flows provided by our operating activities,
together with current cash balances and access to the debt and/or equity capital
markets, if required, will be sufficient to meet our projected cash requirements
for the next twelve months, although any projections of future cash needs, cash
flows, and the general market conditions for debt and equity securities is
subject to substantial uncertainty. In the event additional liquidity needs
arise, we may raise funds from a combination of sources, including the potential
issuance of debt or equity securities. However, there are no assurances that
such financing will be available in amounts or on terms acceptable to us, if at
all. In addition, the covenants in our Credit Facility could adversely affect
our ability to obtain such financing and our ability to make strategic
acquisitions, fund investments, repurchase shares of our common stock or engage
in other business activities that could be in our interest.

We regularly evaluate our liquidity requirements, including the need for
additional debt or equity offerings, when considering potential business
acquisitions, or the development of new products or services. During fiscal year
2022, the Company intends to utilize its cash and other financing resources to
fund organic growth initiatives, strategic business acquisitions, and new
product development initiatives and service offerings.

Our cash and cash equivalents were $99.6 million and $105.0 million at
December 31, 2021 and 2020, respectively. The decrease in our short-term
liquidity position is primarily due to the following factors: (a) reduced net
income in 2021 of $68.2 million as compared to $92.4 million in 2020; (b)
corporate credit facility term loan repayments in 2021 of $42.6 million versus
$20.9 million in 2020; (c) capital expenditures and capitalized software costs
of approximately $13.2 million in 2021 as compared to $9.6 million in 2020; (d)
increased accounts receivable and receivables from service providers of
approximately $7.5 million; (e) changes in other assets, primarily prepaid
expenses, of approximately $17.3 million in 2021; and (f) offset in part by an
increase in accounts payable and accrued expenses of approximately $18.5
million, reduction of marketable securities in 2021 of $8.6 million (source of
cash) as compared to an increase in marketable securities in 2020 of $21.0
million (use of cash), and a decrease in the cash used for business acquisitions
in 2021 ($0) as compared to 2020 ($14.3 million).

Our current ratio decreased from 1.89 at December 31, 2020 to 1.79 at
December 31, 2021, and our working capital position decreased to $161.4 million
at December 31, 2021 as compared to $170.5 million at the end of 2020. We
believe that our ability to generate sustainable robust cash flow from
operations will enable the Company to continue to meet its debt obligations and
to fund its current liabilities from current assets, including available cash
balances.

The Company holds material cash and cash equivalent balances overseas in foreign
jurisdictions. The free flow of cash from certain countries where we hold such
balances may be subject to repatriation tax effects and other restrictions.
Furthermore, the repatriation of earnings from some of our foreign subsidiaries
would result in the application of withholding taxes at source and taxation at
the U.S. parent level upon receipt of the repatriation amounts. The approximate
cash, cash equivalents, restricted cash, and short-term investments balances
held in our domestic U.S. operations and each of our foreign subsidiaries as of
February 28, 2022 is presented in the table below (figures denominated in
thousands):


                                       41

————————————————– ——————————

  Table of Contents
                                                      Cash,
                                                    Restricted
                                               Cash and Short-Term
                                                   Investments
                   India                      $             60,170
                   United States                            18,076
                   Philippines                               9,195
                   Australia                                 5,606
                   Canada                                    4,889
                   United Arab Emirates                      4,813
                   Latin America                             3,766
                   Singapore                                 1,646
                   Europe                                    1,410
                   New Zealand                               1,408
                   Indonesia                                 1,170
                   Mauritius                                    13
                   Total                      $            112,162



Business Combinations

The Company seeks to make accretive business acquisitions in combination with organic growth initiatives as part of its overall business growth and expansion strategy. The Company is seeking to acquire businesses complementary to Ebix’s existing products and services.

During the twelve months ending December 31, 2021the Company has not made any business acquisitions.

During the twelve months ending December 31, 2020, the Company completed two
business acquisition as follows:
Effective May 4, 2020, Ebix acquired from bankruptcy India-based Trimax, which
provides IT and integration services to state-owned transport corporations,
operates data centers, and is an IT infrastructure solution provider, for
approximately $9.9 million of upfront consideration. Additionally, Ebix issued
preferred shares in Trimax to the selling shareholders that can be sold five
years from the closing of the acquisition based on an independent valuation
performed by a Big 4 valuation firm. The maximum value of the preferred shares
upon sale is approximately $9.9 million. The valuation and purchase price
allocation was finalized during the second quarter of 2021.

On October 1, 2020 the Company acquired a 70% interest in AssureEdge Global
Services ("AssureEdge") for a total purchase price of approximately $5.0
million, including net working capital acquired. AssureEdge is a pan-India based
BPO company, with a variety of BPO offerings via six contact centers across the
country. It serves a number of industries and clients that have cross-selling
value for EbixCash services. The valuation and purchase price allocation was
finalized during the third quarter of 2021.

A significant component of the purchase price consideration for many of the
Company's business acquisitions is a potential subsequent cash earn-out payment
based on reaching certain specified future revenue targets. The terms for the
contingent earn-out payments in most of the Company's business acquisitions
typically address the GAAP recognizable revenues achieved by the acquired entity
over a one-, two-, and/or three-year period subsequent to the effective date of
their acquisition by Ebix. These terms typically establish a minimum threshold
revenue target to achieve over the agreed upon period post acquisition to earn
the specified cash earn-out payment. The Company applies these terms in its
calculation and determination of the fair value of contingent earn-out
liabilities for purchased businesses as part of the related valuation and
purchase price allocation exercise for the corresponding acquired assets and
liabilities. The Company recognizes these potential obligations as contingent
liabilities and are reported as such on its consolidated balance sheets. As
discussed in more detail in Note 1 to the consolidated financial statements,
these contingent consideration liabilities are recorded at fair value on the
acquisition date and are re-measured quarterly based on the then assessed fair
value and adjusted if necessary. As of December 31, 2021, the total of these
contingent liabilities was $2.6 million. As of December 31, 2020, the total of
these contingent liabilities was $0.

Operational activities

For the twelve months ended December 31, 2021the Company has generated $69.5 million net cash flow from operating activities compared to $100.4 million
for the year ended December 31, 2020representing a decrease of $30.9

                                       42

————————————————– ——————————

Contents

million, or 31%. The major sources and uses of cash provided by our operating
activities during 2021 included net income of $68.2 million, adjusted for $1.2
million of net loss attributable to noncontrolling interest, $15.2 million of
depreciation and amortization, $4.3 million of amortization of right-of-use
assets, $5.4 million of non-cash share-based compensation, $3.3 million of
amortization expense for capitalized software development costs, and
approximately $(12.2) million of asset/liability changes year-over-year within
the operating activities section of the consolidated cash flow statement. The
decrease in our operating cash flow in 2021 as compared to 2020 is primarily due
to a decrease in net income year over year of $24.2 million and a change in the
cash flow impact of deferred taxes year-over-year from $5.1 million in 2020
versus $(11.1) million in 2021. Net changes in operating assets and liabilities
was $(12.2) million in 2021 versus $(19.9) million in 2020. Lastly, the impact
on cash flow from operating activities of changes in the allowance for doubtful
accounts was $(2.3) million in 2021 versus $1.7 million in 2020.

For the twelve months ended December 31, 2020, the Company generated $100.4
million of net cash flow from operating activities compared to $60.8 million for
the year ended December 31, 2019, representing an increase of $39.6 million, or
65%. The major sources of cash provided by our operating activities during 2020
included net income of $92.4 million, adjusted for $3.6 million of net loss
attributable to a noncontrolling interest, $13.7 million of depreciation and
amortization, $6.1 million of amortization of right-of-use assets, $6.2 million
related to a non-cash intangible impairment loss, $4.8 million of non-cash
share-based compensation, $3.4 million of amortization expense for capitalized
software development costs, $(19.9) million of working capital requirements,
$(6.5) million of cash used to pay the Miles acquisition earn-out, and $(3.1)
million of non-cash gains recognized when reducing certain earn-out contingent
liabilities. The increase in our operating cash flow in 2020 as compared to 2019
is primarily due to increased cash flow from reductions in accounts receivable
from trade and service providers as COVID-19 reduced revenues and resulted in
comparatively more accounts receivable conversion to cash in 2020 versus 2019.
Additionally, in 2019 the acquisition earn-out accrual was reduced by $16.5
million (primarily related to the ItzCash acquisition earn-out accrual) as
compared to a reduction of the same accrual in 2020 of $3.1 million (primarily
related to the Miles and Zillious acquisitions), both of which served to reduce
operating cash flow given the non-cash nature of the gains from earn-out
adjustments.

Investing activities

Net cash used for investing activities during the twelve months ended
December 31, 2021  totaled $4.6 million, primarily related to $7.5 million of
capital expenditures to support our operations and $5.7 million used and
capitalized in connection with the development of software to be sold/marketed
or used internally, offset in part by $8.6 million provided by a decrease in
marketable securities (specifically bank certificates of deposit).

Net cash used for investing activities during the twelve months ended
December 31, 2020 totaled $44.8 million, primarily related to a $21.0 million
increase in investment in marketable securities (specifically bank certificates
of deposits), $14.3 million used for acquisitions during the year (net of cash
acquired), $5.3 million of capital expenditures to support our operations, and
$4.2 million used and capitalized in connection with the development of software
to be sold/marketed or used internally.

Fundraising activities

Net cash used by financing activities during the twelve months ended
December 31, 2021 was $63.2 million, and primarily consisted of a $10.9 million
decrease in the year-end balances in our working capital facilities in India,
$42.6 million used to make payments against the Company's outstanding Credit
Facility term loan, $22.6 million of which were scheduled amortization payment,
and $9.3 million used to pay quarterly dividends to the holders of our common
stock.

Net cash used by financing activities during the twelve months ended
December 31, 2020 was $42.0 million, and primarily consisted of a $10.9 million
decrease in the year-end balances in our working capital facilities in India,
$20.7 million used to make scheduled payments against the Company's outstanding
Credit Facility term loan, and $9.2 million used to pay quarterly dividends to
the holders of our common stock.

Credit facility

The Company maintains a senior secured syndicated credit facility, dated August
5, 2014, among Ebix, Inc., as borrower, its subsidiaries party thereto from time
to time as guarantors, Regions Bank (as administrative agent and collateral
agent) and the lenders party thereto from time to time (as amended from time to
time, the "Credit Facility") that provides a $450 million revolving line of
credit as well as a term loan, which at December 31, 2021 had a balance of
$212.9 million. The Credit Facility matures in February 2023.

                                       43
--------------------------------------------------------------------------------
  Table of Contents
On April 9, 2021, The Company entered into Amendment No. 12 to its Credit
Facility. Amendment No. 12 provided for, among other things, a waiver of any
potential event of default arising under the Credit Facility from the failure to
timely deliver the Company's audited consolidated financial statements and
related compliance certificate for the year ended December 31, 2020, provided
that there is no good faith determination by the requisite lenders under the
Credit Facility of a "Material Circumstance" (as defined and further described
in Amendment No. 12), which determination (if any) may only be made within a
specified period described in Amendment No. 12 and is subject to certain cure
rights of the Company. Amendment No. 12 also modified the applicable margin that
applies from the date of the amendment forward, modified certain mandatory
prepayment provisions, as well as certain other covenants related to restricted
payments, investments and certain reporting requirements.

On March 31, 2021, Ebix entered into Amendment No. 11 to the Credit Facility.
Amendment No. 11 provided, for, among other things, a limited waiver through
April 10, 2021, of any potential event of default arising under the Credit
Facility from failure to deliver the Company's audited consolidated financial
statements and related compliance certificate for the year ended December 31,
2020. Amendment No. 11 also modified certain covenants contained in the Credit
Facility, including with respect to certain permitted restricted payments and
investments.

On May 7, 2020, Ebix entered into Amendment No. 10 to the Credit Facility.
Amendment No. 10 provided for, among other things, increased flexibility under
financial maintenance covenants, which the Company sought in part due to the
unforeseen negative effects of the COVID-19 pandemic.

On March 30, 2020, the Company and certain of its subsidiaries entered into a
waiver related to the Credit Facility (the "Waiver"). The Waiver provided that
so long as the Company's leverage ratio is below 5.0 to 1.0 for the Company's
fiscal quarter ending March 31, 2020 pursuant to the terms of its compliance
certificate required by the Credit Facility, the existing leverage ratio
requirement of 3.50 to 1.0 was waived.

At December 31, 2021, the outstanding balance on the revolving line of credit
under the Credit Facility was $439.4 million and the facility carried an
interest rate of 5.50%. The outstanding balance is included in the long-term
liabilities section of the consolidated balance sheets. During 2021, the average
and maximum outstanding balances on the revolving line of credit were $439.4
million and $439.4 million, respectively, and the weighted average interest rate
was 5.20%.

At December 31, 2021, the outstanding balance on the term loan was $212.9
million, of which $28.2 million is due within the next twelve months. $42.6
million of principal payments were made on the term loan during 2021, of which
$22.6 million were scheduled amortization payments. This term loan also carried
an interest rate of 5.50% at December 31, 2021. The current and long-term
portions of the term loan are included in the respective current and long-term
liabilities sections of the consolidated balance sheets, the amounts of which
were $28.2 million and $184.6 million, respectively, at December 31, 2021.
During 2021, the weighted average interest rate on the term loan was 5.12%

Contractual obligations and commercial commitments

The following table summarizes our known contractual debts and lease obligations as of December 31, 2021. The table excludes commitments that depend on events or factors that are uncertain at the time.

                                                                                         Payment Due by Period
                                                                        Less Than                                                       More than
                                                       Total              1 Year            1 - 3 Years           3 - 5 Years            5 years
                                                                                            (In thousands)
Revolving line of credit                            $ 439,402          $       -          $    439,402          $          -          $        -
Short and long-term debt*                             216,594             31,969               184,625                     -                   -
Operating leases                                       11,363              3,583                 5,013                 1,688               1,079
Capital leases                                            517                207                   291                    19                   -
Non-Cancellable operating leases                       34,402             17,406                16,996                     -                   -
Total                                               $ 702,278          $  

53,165 $646,327 $1,707 $1,079
*Excluding amounts related to deferred financing fees

                                       44

————————————————– ——————————

Contents

Off-balance sheet transactions

We do not engage in off-balance sheet financing activities.

Inflation

We do not believe that the rate of inflation has had a material impact on our results of operations. However, inflation could adversely affect our future results of operations.

                                       45

————————————————– ——————————

Contents

© Edgar Online, source Previews