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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     For the quarterly period ended September 30, 2020

OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-15946
Ebix, Inc.
(Exact name of registrant as specified in its charter)
   
Delaware 77-0021975
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)  
   
1 Ebix Way  
Johns CreekGeorgia 30097
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 678-281-2020
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolsName of each exchange on which registered
Common stock, $0.10 par value per shareEBIXNasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Table of Contents
Large accelerated filer
 
Accelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of November 6, 2020 the number of shares of common stock outstanding was 30,962,559.



FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2020
INDEX
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Exhibit 101


Table of Contents
PART I — FINANCIAL INFORMATION

Item 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)

Three Months EndedNine Months Ended
September 30,September 30,
 2020201920202019
Operating revenue$154,305 $147,233 $403,493 $434,432 
Operating expenses:  
Cost of services provided85,976 55,171 192,526 152,054 
Product development8,775 11,245 26,530 33,884 
Sales and marketing3,375 4,284 10,637 14,898 
General and administrative, net20,888 46,900 65,596 101,210 
Amortization and depreciation3,392 3,626 10,142 10,966 
Total operating expenses122,406 121,226 305,431 313,012 
Operating income31,899 26,007 98,062 121,420 
Interest income29 99 112 578 
Interest expense(7,495)(10,970)(23,879)(32,551)
Non-operating (loss) income(4)352 95 344 
Non-operating expense - litigation settlement   (21,140)
Foreign currency exchange (loss) gain(597)(641)112 (495)
Income before income taxes23,832 14,847 74,502 68,156 
Income tax (expense) benefit152 217 (2,809)297 
Net income including noncontrolling interest23,984 15,064 71,693 68,453 
Net loss attributable to noncontrolling interest(698)(5,445)(1,187)(6,617)
Net income attributable to Ebix, Inc.$24,682 $20,509 $72,880 $75,070 
Basic earnings per common share attributable to Ebix, Inc.$0.81 $0.67 $2.39 $2.46 
Diluted earnings per common share attributable to Ebix, Inc.$0.80 $0.67 $2.37 $2.45 
Basic weighted average shares outstanding30,525 30,501 30,502 30,517 
Diluted weighted average shares outstanding30,853 30,633 30,748 30,598 

See accompanying notes to the condensed consolidated financial statements.

2

Table of Contents

Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)


Three Months EndedNine Months Ended
September 30,September 30,
 2020201920202019
Net income including noncontrolling interest$23,984 $15,064 $71,693 $68,453 
Other comprehensive income (loss):
                Foreign currency translation adjustments18,174 (18,752)(35,897)(10,859)
                                Total other comprehensive income (loss)18,174 (18,752)(35,897)(10,859)
Comprehensive income (loss)42,158 (3,688)35,796 57,594
Comprehensive loss attributable to noncontrolling interest(698)(5,445)(1,187)(6,617)
Comprehensive income attributable to Ebix, Inc.$42,856 $1,757 $36,983 $64,211 



See accompanying notes to the condensed consolidated financial statements.
3

Table of Contents
Ebix, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
September 30,
2020
December 31,
2019
ASSETS(Unaudited)
Current assets:  
Cash and cash equivalents$88,023 $73,228 
Receivables from service providers19,758 25,607 
Short-term investments24,522 4,443 
Restricted cash 7,902 35,051 
Fiduciary funds - restricted4,757 4,966 
Trade accounts receivable, less allowances of $21,908 and $21,696, respectively
132,089 153,565 
Other current assets69,917 67,074 
Total current assets346,968 363,934 
Property and equipment, net48,525 48,421 
Right-of-use assets13,604 19,544 
Goodwill938,680 952,404 
Intangibles, net52,864 46,955 
Indefinite-lived intangibles27,815 42,055 
Capitalized software development costs, net20,420 19,183 
Deferred tax asset, net66,992 69,227 
Other assets34,682 29,896 
Total assets$1,550,550 $1,591,619 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities: 
Accounts payable and accrued liabilities$68,941 $84,735 
Payables to service agents8,224 12,196 
Accrued payroll and related benefits12,079 8,755 
Working capital facility7,546 28,352 
Fiduciary funds - restricted4,757 4,966 
Short-term debt8,349 1,167 
Contingent liability for accrued earn-out acquisition consideration3,352 8,621 
Current portion of long term debt and financing lease obligations, net of deferred financing costs of $920 and $575 , respectively
23,620 22,091 
Contract liabilities27,807 28,712 
Lease liability4,392 5,955 
Other current liabilities29,341 29,335 
Total current liabilities198,408 234,885 
Revolving line of credit439,402 438,037 
Long term debt and financing lease obligations, less current portion, net of deferred financing costs of $1,293 and $1,534, respectively
237,608 254,467 
Contingent liability for accrued earn-out acquisition consideration 1,474 
Contract liabilities7,474 8,541 
Lease liability9,128 13,196 
Deferred tax liability, net1,235 1,235 
Other liabilities26,725 40,339 
Total liabilities919,980 992,174 
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Stockholders’ equity: 
Preferred stock, $0.10 par value, 500,000 shares authorized, no shares issued and outstanding at September 30, 2020 and December 31, 2019
  
Series Y Convertible preferred stock, $0.10 par value, 350,000 shares authorized, no shares issued and outstanding at September 30, 2020 and no shares authorized, issue and outstanding at December 31, 2019
  
Common stock, $0.10 par value, 220,000,000 shares authorized, 30,526,793 issued and outstanding, at September 30, 2020, and 30,492,044 issued and outstanding at December 31, 2019
3,053 3,049 
Additional paid-in capital10,537 6,960 
Retained earnings683,131 618,503 
Accumulated other comprehensive loss(114,295)(78,398)
Total Ebix, Inc. stockholders’ equity582,426 550,114 
Noncontrolling interest48,144 49,331 
Total stockholders’ equity630,570 599,445 
Total liabilities and stockholders’ equity$1,550,550 $1,591,619 

See accompanying notes to the condensed consolidated financial statements.
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Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)
(In thousands except for share figures)


 Common Stock   
Issued
Shares
AmountAdditional Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive
Loss
Noncontrolling interestTotal
Balance, July 1, 202030,507,903 $3,051 $9,335 $660,767 $(132,469)$48,842 $589,526 
Net income attributable to Ebix, Inc.— — — 24,682 — — 24,682 
Net loss attributable to noncontrolling interest— — — — — (698)(698)
Cumulative translation adjustment— — — — 18,174 — 18,174 
Vesting of restricted stock18,890 2 (2)— — —  
Share based compensation— — 1,204 — — — 1,204 
Common stock dividends paid, $0.075 per share
— — — (2,318)— — (2,318)
Balance, September 30, 202030,526,793 $3,053 $10,537 $683,131 $(114,295)$48,144 $630,570 
 Common Stock   
Issued
Shares
AmountAdditional Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive
Loss
Noncontrolling interestTotal
Balance, January 1, 202030,492,044 $3,049 $6,960 $618,503 $(78,398)$49,331 $599,445 
Net income attributable to Ebix, Inc.— — — 72,880 — — 72,880 
Net loss attributable to noncontrolling interest— — — — — (1,187)(1,187)
Cumulative translation adjustment— — — — (35,897)— (35,897)
Vesting of restricted stock60,275 6 (6)— — —  
Exercise of stock options30,000 3 633 — — — 636 
Share based compensation— — 3,457 — — — 3,457 
Forfeiture of certain shares to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vested(55,526)(5)(507)(1,329)— — (1,841)
Common stock dividends paid, $0.225 per share
— — — (6,923)— — (6,923)
Balance, September 30, 202030,526,793 $3,053 $10,537 $683,131 $(114,295)$48,144 $630,570 

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Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)
(In thousands except for share figures)


 Common Stock   
Issued
Shares
AmountAdditional Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive
Loss
Noncontrolling interestTotal
Balance, July 1, 201930,529,840 $3,053 $5,189 $582,913 $(55,484)$51,882 $587,553 
Net income attributable to Ebix, Inc.— — — 20,509 — — 20,509 
Net loss attributable to noncontrolling interest— — — — — (5,445)(5,445)
Cumulative translation adjustment— — — — (18,752)— (18,752)
Repurchase and retirement of commons stock (45,000)(5)— (1,975)— — (1,980)
Vesting of restricted stock6,558 1 (1)— — —  
Share based compensation— — 1,029 — — — 1,029 
Forfeiture of certain shares to satisfy exercise costs and the recipients income tax obligations related to stock options exercised and restricted stock vested(191)— (9)— — — (9)
Noncontrolling interest— —  — — 2,710 2,710 
Common stock dividends paid, $0.075 per share
— — — (2,299)— — (2,299)
Balance, September 30, 201930,491,207 $3,049 $6,208 $599,148 $(74,236)$49,147 $583,316 
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 Common Stock   
Issued
Shares
AmountAdditional Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive
Loss
Noncontrolling interestTotal
Balance, January 1, 201930,567,725 $3,057 $3,397 $535,118 $(63,377)$66,242 $544,437 
Net income attributable to Ebix, Inc.— — — 75,070 — — 75,070 
Net loss attributable to noncontrolling interest— — — — — (6,617)(6,617)
Cumulative translation adjustment— — — — (10,859)— (10,859)
Repurchase and retirement of common stock(95,000)(10) (4,142)— — (4,152)
Vesting of restricted stock19,144 2 (2)— — —  
Share based compensation— — 2,451 — — — 2,451 
Forfeiture of certain shares to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vested(662)— (36)— — — (36)
Noncontrolling interest— — 398 — — (10,478)(10,080)
Common stock dividends paid, $0.225 per share
— — — (6,898)— — (6,898)
Balance, September 30, 201930,491,207 $3,049 $6,208 $599,148 $(74,236)$49,147 $583,316 

See accompanying notes to the condensed consolidated financial statements.

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Ebix, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended
 September 30,
 20202019
Cash flows from operating activities:  
Net income attributable to Ebix, Inc.$72,880 $75,070 
Net loss attributable to noncontrolling interest(1,187)(6,617)
Adjustments to reconcile net income to net cash provided by operating activities: 
Amortization and depreciation10,142 10,966 
Provision (benefit) for deferred taxes
987 (5,880)
Share based compensation3,457 2,451 
Benefit for doubtful accounts424 10,580 
Amortization of right-of-use assets4,644 5,167 
Unrealized foreign exchange loss 321 
Amortization of capitalized software development costs2,493 1,931 
Reduction of acquisition accruals(3,308)(17,124)
Cash paid for acquisition earn-out(2,881) 
Changes in assets and liabilities, net of effects from acquisitions: 
Accounts receivable13,999 (22,052)
Receivables from service providers5,849 9,012 
Payables to service agents(3,972)(12,688)
Other assets(7,988)(5,947)
Accounts payable and accrued expenses(10,620)(4,062)
Accrued payroll and related benefits3,316 (607)
Contract liabilities(1,591)(9,126)
Lease liabilities(4,317)(5,056)
Other liabilities(10,563)33,844 
Net cash provided by operating activities71,764 60,183 
Cash flows from investing activities:  
Cash paid for acquisitions, net of cash acquired(12,480)(104,026)
Cash paid to from Paul Merchants for 10% stake in MTSS combined business
 (4,925)
Capitalized software development costs(4,617)(4,126)
(Purchases) maturities of marketable securities(20,609)25,686 
Capital expenditures(1,464)(5,869)
Net cash used in investing activities(39,170)(93,260)
Cash flows from financing activities: 
Proceeds from revolving line of credit, net1,364 13,500 
Principal payments of term loan obligation(15,063)(11,298)
Repurchases of common stock (12,952)
Proceeds from the exercise of stock options636  
Forfeiture of certain shares to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vested(1,841)(36)
Dividend payments(6,923)(6,898)
Payments on short-term notes, net 6,023 
Proceeds (payments) of debt obligations7,187 (962)
(Payments) proceeds of working capital facility, net(19,945)31,120 
Payments of financing lease obligations(158)(200)
Net cash (used) provided by financing activities(34,743)18,297 
Effect of foreign exchange rates on cash(7,222)(2,397)
Net change in cash and cash equivalents, and restricted cash(9,371)(17,177)
Cash and cash equivalents, and restricted cash at the beginning of the period111,369 149,681 
Cash and cash equivalents, and restricted cash at the end of the period$101,998 $132,504 
Supplemental disclosures of cash flow information:  
Interest paid$22,237 $31,787 
Income taxes paid$8,019 $7,406 
See accompanying notes to the condensed consolidated financial statements.



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Supplemental schedule of noncash financing activities:
    
    As of December 31, 2018 there were 200,000 shares totaling $8.8 million of share repurchases that were not settled until January 2019.

     During the nine months ended September 30, 2020, there were 55,526 shares, totaling $1.8 million, used to satisfy exercise costs and the recipients' income tax obligations related to stock options exercised and restricted stock vesting.

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Ebix, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements


Note 1: Description of Business and Summary of Significant Accounting Policies
    Description of Business— Ebix, Inc., and its subsidiaries, (“Ebix” or the “Company”) is a leading international supplier of on-demand infrastructure exchanges to the insurance, financial, travel, payment remittances, and healthcare industries. In the insurance sector, the Company’s main focus is to develop and deploy a wide variety of insurance and reinsurance exchanges on an on-demand basis using software-as-a-service ("SaaS") enterprise solutions in the areas of customer relationship management ("CRM"), front-end and back-end systems, and outsourced administrative and risk compliance. The Company's products feature fully customizable and scalable software solutions designed to streamline the way insurance and financial industry professionals manage distribution, marketing, sales, customer service, and accounting activities. With a "Phygital” strategy that combines physical distribution outlets in many Association of Southeast Asian Nations ("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, lending, and wealth management in India and other Southeast Asian markets. The Company has its headquarters in Johns Creek, Georgia and also conducts operating activities in Australia, Canada, India, New Zealand, Singapore, the United Kingdom, Brazil, Philippines, Indonesia, Thailand and United Arab Emirates. International revenue accounted for 69.3% and 68.7% of the Company’s total revenue for the nine months ended September 30, 2020 and 2019, respectively.

Summary of Significant Accounting Policies
    Basis of Presentation—The accompanying unaudited condensed consolidated financial statements and these notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") with the effect of inter-company balances and transactions eliminated. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP and SEC rules have been condensed or omitted as permitted by and pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements contain adjustments (consisting only of normal recurring items) necessary to fairly present the consolidated financial position of the Company and its consolidated results of operations and cash flows. Operating results for the three and nine months ended September 30, 2020 and 2019 are not necessarily indicative of the results that may be expected for future quarters or the full year of 2020. The condensed consolidated December 31, 2019 balance sheet included in this interim period filing has been derived from the audited financial statements at that date, but does not necessarily include all of the information and related notes required by GAAP for complete financial statements. These condensed interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

    Reclassification - There were certain prior year amounts that have been reclassified to be consistent with current year presentation within our financial statements, specifically with respect to the presentation of receivables from service providers and payables to service agents.

    Restricted Cash - The carrying value of our restricted cash in current assets was $7.9 million and $35.1 million at September 30, 2020 and December 31, 2019, respectively. The September 30, 2020 balance consists of fixed deposits (many in the form of certificates of deposit) pledged with banks for issuance of bank guarantees and letters of credit related to its India operations.

    The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated statement of financial position to the amounts shown in the Condensed Consolidated Statement of Cash Flows:
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Nine Months Ended
September 30,
20202019
(In thousands)
Cash and cash equivalents$88,023 $107,698 
Restricted cash7,902 18,240 
Restricted cash included in other long-term assets6,073 6,566 
Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statement of Cash Flows$101,998 $132,504 


    Advertising—Advertising costs amounted to $0.8 million and $3.4 million for the three and nine month periods ended September 30, 2020, respectively, and $2.0 million and $7.6 million for three and nine month periods ended September 30, 2019, respectively. The costs are included in sales and marketing expenses in the accompanying Condensed Consolidated Statements of Income. The Company expenses advertising costs as incurred.
    Fair Value of Financial Instruments—Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction. This guidance establishes a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The hierarchy reflects the degree to which objective data from external active markets are available to measure fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable. The classifications are as follows:
Level 1 Inputs - Unadjusted quoted prices available in active markets for identical investments to the reporting entity at the measurement date.
Level 2 Inputs - Other than quoted prices included in Level 1 inputs, which are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 Inputs - Unobservable inputs, which are used to the extent that observable inputs are not available. Unobservable inputs, are used in situations where there is little or no market activity for the asset or liability and wherein the reporting entity makes estimates and assumptions related to the pricing of the asset or liability, including assumptions regarding risk.

    A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

    As of September 30, 2020, the Company had the following financial instruments to which it had to both consider fair values and make fair value assessments:

Short-term investments (commercial bank certificates of deposits and mutual funds), for which the fair values are measured as a Level 1 instrument.
Contingent accrued earn-out business acquisition consideration liabilities, for which fair values are measured as Level 3 instruments. These contingent consideration liabilities were recorded at fair value on the acquisition date and are re-measured quarterly based on the then assessed fair value and adjusted if necessary. The increases or decreases in the fair value of contingent consideration can result from changes in anticipated revenue levels and changes in assumed discount periods and rates. As the fair value measure is based on significant inputs that are not observable in the market, they are categorized as Level 3.

Other financial instruments not measured at fair value on the Company's unaudited Condensed Consolidated Balance Sheet at September 30, 2020 that require disclosure of fair values include: cash and cash equivalents, restricted cash, fiduciary funds, accounts receivable, receivables from service providers, accounts payable and accrued expenses, accrued payroll and related benefits, payables to service agents, finance lease obligations, working capital facilities, the revolving line of credit and term loan debt. The Company believes that the estimated fair value of such instruments at September 30, 2020 and December 31, 2019 approximates their carrying value as reported on the unaudited Condensed Consolidated Balance Sheet.
    
    Additional information regarding the Company's assets and liabilities that are measured at fair value on a recurring basis is presented in the following tables:
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Fair Values at Reporting Date Using*
DescriptionsBalance, September 30, 2020Quoted Prices in Active Markets for Identical Assets or Liabilitie
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
(In thousands)
Assets
Commercial bank certificates of deposits ($381 thousand is recorded in the long
term asset section of the Condensed Consolidated Balance Sheets in "Other Assets")
$24,903 $24,903 $— $— 
Mutual funds (recorded in
the long term asset section of the Condensed Consolidated Balance Sheets in "Other Assets")
564 564 — — 
Total assets measured at fair value$25,467 $25,467 $— $— 
Liabilities
Contingent accrued earn-out acquisition consideration (a)$3,352 $— $— $3,352 
Total liabilities measured at fair value$3,352 $ $ $3,352 
(a) The income valuation approach is applied and the valuation inputs include the contingent payment arrangement terms, projected revenues and cash flows, rate of return, and probability assessments.
* During the nine months ended September 30, 2020, there were no transfers between fair value Levels 1, 2 or 3.
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Fair Values at Reporting Date Using*
DescriptionsBalance, December 31, 2019Quoted Prices in Active Markets for Identical Assets or Liabilities
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
(In thousands)
Assets
Commercial bank certificates of deposits ($50 thousand is recorded in the long term asset section of the Condensed Consolidated Balance Sheets in "Other Assets")
$4,493 4,493 $— $— 
Mutual funds1,058 1,058 — — 
Total assets measured at fair value$5,551 $5,551 $— $— 
Liabilities
Contingent accrued earn-out acquisition consideration (a)$10,095 $— $— $10,095 
Total liabilities measured at fair value$10,095 $ $ $10,095 
(a) The income valuation approach is applied and the valuation inputs include the contingent payment arrangement terms, projected revenues and cash flows, rate of return, and probability assessments.
* During the year ended December 31, 2019, there were no transfers between fair value Levels 1, 2 or 3.
    For the Company's assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balances for each category therein, and gains or losses recognized during the nine months ended September 30, 2020 and during the year ended December 31, 2019:
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Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Contingent Liability for Accrued Earn-out Acquisition ConsiderationSeptember 30, 2020December 31, 2019
(In thousands)
Beginning balance$10,095 $24,976 
Total remeasurement adjustments:
       Gains included in earnings **(3,308)(16,543)
       Foreign currency translation adjustments ***(554)(260)
Acquisitions and settlements
       Business settlements(2,881)1,922 
Ending balance$3,352 $10,095 
The amount of total (gains) losses for the period included in earnings or changes to net assets, attributable to changes in unrealized gains relating to assets or liabilities still held at period-end.$(3,308)$(16,543)
** recorded as a reduction to general and administrative expenses
*** recorded as a component of other comprehensive income within stockholders' equity

Quantitative Information about Level 3 Fair Value Measurements
    The significant unobservable inputs used in the fair value measurement of the Company's contingent consideration liabilities designated as Level 3 are as follows:
        
(In thousands) Fair Value at September 30, 2020 
Valuation Technique
 Significant
Unobservable
Input
Contingent acquisition consideration:
(Miles acquisition)
 $3,352Discounted cash flowProjected revenue and
probability of achievement
        
(In thousands) Fair Value at December 31, 2019 
Valuation Technique
 Significant
Unobservable
Input
Contingent acquisition consideration:
(Wdev, Miles, Zillious, and Essel
acquisition)
 $10,095Discounted cash flowProjected revenue and
probability of achievement
Sensitivity to Changes in Significant Unobservable Inputs
    As presented in the table above, the significant unobservable inputs used in the fair value measurement of contingent consideration related to business acquisitions are projected revenue forecasts, as developed by the relevant members of Company's management team and considers the probability of achievement of those revenue forecasts. The Company applies these inputs in its calculation and determination of the fair value of contingent earn-out liabilities for purchased businesses. During 2019 and the nine months ended September 30, 2020, certain of the Company's contingent earn-out liabilities were adjusted because of changes to anticipated future revenues from these acquired businesses, or as a result of finalizing purchase
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price allocations that were previously preliminary. The Company paid $2.5 million in September 2020 and $3.6 million in October 2020 to satisfy the Miles earn-out liability.

    Revenue Recognition and Contract Liabilities—The Company derives its revenues primarily from software subscription and transaction fees, software license fees, financial transaction fees, risk compliance solution services fees, and professional service fees, including associated fees for consulting, implementation, training, and project management provided to customers with installed systems and applications. Sales and value-added taxes are not included in revenues, but rather are recorded as a liability until the taxes assessed are remitted to the respective taxing authorities.
    The Company determines revenue recognition by applying the following steps:
identification of the contract, or contracts, with a customer;
identification of the performance obligations in the contract;
determination of the transaction price;
allocation of the transaction price to the performance obligations in the contract; and
recognition of revenue when, or as, we satisfy a performance obligation.
    The Company analyzes its different services individually to determine the appropriate basis for revenue recognition, as further described below. Additionally, certain services exist in multiple channels. As Ebix derives revenues from three product/service channels, EbixCash Exchanges, Insurance Exchanges, and Risk Compliance Solutions, for policy disclosure purposes, contracts are discussed in conjunction with the channel to which they are most significant.
    The Company assesses the terms of customer contracts, including termination rights, penalties (implied or explicit), and renewal rights.
EbixCash Exchanges ("EbixCash")

    EbixCash revenues are primarily derived from consideration paid by customers for financial transaction (foreign exchange, remittance, other payment solutions) and travel transaction services. The significant majority of EbixCash revenue is for a single performance obligation and is recognized at a point in time. These revenues vary by transaction based upon channel, send and receive locations, the principal amount sent, whether the money transfer involves different send and receive currencies, and speed of service, as applicable. EbixCash also offers other services, including payment services and ticketing and travel services, for which revenue is impacted by various factors. EbixCash acts as the principal in most transactions and reports revenue on a gross basis, as EbixCash controls the service at all times prior to transfer to the customer, is primarily responsible for fulfilling the customer contracts, has the risk of loss, and has the ability to establish transaction prices. The main services from which EbixCash derives revenue are as follow:

EbixCash Travel Exchanges

    EbixCash Travel revenues are primarily derived from commissions and transaction fees received from various travel providers and international exchanges involved in the sale of travel to the consumer. EbixCash Travel revenue is for a single performance obligation and is recognized at a point in time. Travel revenues include reservation commissions, segment fees from global travel exchange providers, and transaction net revenues (i.e., the amount charged to travelers less the amount owed to travel service providers) in connection with our reservation services; ancillary fees, including travel insurance-related revenues and certain reservation booking fees; and credit card processing rebates and customer processing fees. EbixCash Travel services include the sale of hotel rooms, airline tickets, bus tickets and train tickets. EbixCash’s Travel revenue is also derived from ticket sales, wherein the commissions payable to EbixCash Travel, along with any transaction fees paid by travel providers and travel exchanges, is recognized as revenue after completion of the service. The transaction price on such services is agreed upon at the time of the purchase.

    EbixCash Travel revenue for the corporate MICE (Meetings, Incentives, Conferences, and Exhibitions) packages is recognized at full purchase value at the completion of the obligation with the corresponding costs recorded under direct expenses. For MICE revenues, EbixCash Travel acts as the principal in transactions and, accordingly, reports revenue on a gross basis. EbixCash Travel controls the service at all times prior to transfer to the customer, is responsible for fulfilling the customer contracts, has the risk of loss, and has the ability to establish transaction prices.

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EbixCash Money Transfer

    For the EbixCash money transfer business, EbixCash has one performance obligation whereupon the customer engages EbixCash to perform one integrated service. This typically occurs instantaneously when the beneficiary entitled to receive the money transferred by the sender visits the EbixCash outlet and collects the money. Accordingly, EbixCash recognizes revenue upon completion of the following: 1) the customer’s acknowledgment of EbixCash’s terms and conditions and the receipt of payment information, 2) the money transfer has been processed, 3) the customer has received a unique transaction identification number, and 4) funds are available to be picked up by the beneficiary. The transaction price is comprised of a transaction fee and the difference between the exchange rate set by EbixCash to the customer and the rate available in the wholesale foreign exchange market, as applicable, both of which are readily determinable at the time the transaction is initiated.

Foreign Exchange and Payment Services

    For EbixCash’s foreign exchange and payment services, customers agree to terms and conditions for all transactions, either at the time of initiating a transaction or signing a contract with EbixCash to provide payment services on the customer’s behalf. In the majority of EbixCash’s foreign exchange and payment services transactions, EbixCash makes payments to the recipient to satisfy its performance obligation to the customer, and, therefore, EbixCash recognizes revenue on foreign exchange and payment when this performance obligation has been fulfilled.

Consumer Payment Services

    EbixCash offers several different bill payment services that vary by considerations such as: 1) who pays the fee to EbixCash (consumer or biller), 2) whether or not the service is offered to all consumers, 3) whether the service is restricted to existing biller relationship of EbixCash, and 4) whether the service utilizes a physical agent network offered for consumers’ convenience, among other factors. The determination of which party is EbixCash’s customer for revenue recognition purposes is based on these considerations for each of EbixCash’s bill payment services. For all transactions, EbixCash’s customers agree to EbixCash’s terms and conditions, either at the time of initiating a transaction (where the consumer is determined to be the customer for revenue recognition purposes) or upon signing a contract with EbixCash to provide services on the biller’s behalf (where the biller is determined to be the customer for revenue recognition purposes). As with consumer money transfers, customers engage EbixCash to perform one integrated service, collect money from the consumer and process the bill payment transaction, thereby providing the billers real-time or near real-time information regarding their customers’ payments and, thus, simplifying the billers’ collection efforts. EbixCash’s revenues from bill payment services are generated from contracts to process transactions at any time during the duration of the contract. The transaction price on bill payment services is contractual and determinable. Certain biller agreements may include per-transaction or fixed periodic rebates, which EbixCash records as a reduction to revenue.

Gift Cards

    EbixCash sells gift cards to corporate clients and consumers that can be later redeemed at various merchants. A majority of gift card sales are virtual card sales versus physical card sales. EbixCash acts a principal in the gift card sales transactions. The Company has the risk of loss, the ability to set transaction prices and end-to-end customer care responsibilities from the time of the sale to the utliization of the gift cards by the end user. Gift card revenue is recognized at the full purchase value at the time of sale with the corresponding cost of vouchers recorded as cost of services provided. Unredeemed gift cards at September 30, 2020 are not significant to the financial results of the Company.

EbixCash Technology Services
    
    EbixCash also offers on-demand technology to various providers in the area of lending, wealth & asset management, travel and logistics across the world.    
Insurance Exchanges
    
    Insurance Exchanges revenues are primarily derived from consideration paid by customers related to the Company's SaaS platforms, related services, and the licensing of software. A typical contract for a SaaS platform will also include services for setup, customization, transaction processing, maintenance, and/or hosting. Determining whether products and services are considered distinct performance obligations that should be accounted for separately may require significant judgment. Set-up and customization services related to SaaS platforms are not considered to be distinct from the usage fees associated with the
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SaaS platform and, accordingly, are accounted for as a single performance obligation. These services, along with the usage or transaction fees, are recognized over the contract duration, which considers the significance of the upfront fees in the context of the contract and which may, therefore, exceed the initial contracted term. A customer's transaction volume tends to remain fairly consistent during the contract period without significant fluctuations. The invoiced amount is a reasonable approximation of the revenue that would be allocated to the related period under the variable consideration guidelines in ASC 606-10-32-40. To the extent that a SaaS contract includes subscription services or professional services, apart from the upfront customization, these are considered separate performance obligations. The Company also has separate software licensing (on premise/perpetual), unrelated to the SasS platforms, which is recognized at a point in time when the license is transferred to the customer.
    Contracts generally do not contain a right of return or refund provisions. The contracts often do contain overage fees, contingent fees, or service level penalties that are accounted for as variable consideration. Revenue accounted for as variable consideration is recognized using the “right to invoice” practical expedient when the invoiced amount equals the value provided to the customer.
Software-as-a-Service ("SaaS")

    The Company allocates the transaction price to each distinct performance obligation using the relative stand-alone selling price. Determining the stand-alone selling price may require significant judgment. The stand-alone selling price is the price at which an entity has sold or would sell a promised good or service separately to a customer. The Company determines the stand-alone selling price based on the observable price of products or services sold separately in comparable circumstances, when such observable prices are available. When standalone selling price is not directly observable, the Company estimates the stand-alone selling price using the market assessment approach by considering historical pricing and other market factors.

Software Licenses
    Software license revenues attributable to a software license that is a separate performance obligation are recognized at the point in time that the customer obtains control of the license.
Subscription Services

    Subscription services revenues are associated with performance obligations that are satisfied over specific time periods and primarily consist of post-contract support services. Revenue is generally recognized ratably over the contract term. The Company's subscription contracts are generally for an initial three-year period with subsequent one-year automatic renewals.

Transaction Fees
    
    Transaction revenue is comprised of fees applied to the volume of transactions that are processed through SaaS platforms. These fees are typically based on a per-transaction rate and are invoiced for the same period in which the transactions were processed and as the performance obligation is satisfied. The amount invoiced generally equals the value provided to the customer, and revenue is typically recognized when invoiced using the as-invoiced practical expedient.

Professional Services

    Professional service revenue primarily consists of fees for setup, customization, training, or consulting services. Professional service fees are generally on either a time and materials basis or a fixed fee basis. Revenues for time and materials are recognized as such services are rendered, while fixed fee revenues are recognized based on the input method that is driven by the expected hours to complete the project measured against the actual hours completed to date. Professional services, particularly related to SaaS platforms, may have significant dependencies on the related licensed software and may not be considered a distinct performance obligation.

Risk Compliance Solutions ("RCS")

    RCS revenues consist of two revenue streams - Certificates of Insurance (COI) and Consulting Services. COI revenues are derived from consideration paid by customers for the creation and tracking of certificates of insurance. These are transactional-based revenues. Consulting Services revenues are driven by distinct consulting service engagements rendered to customers, for which revenues are recognized using the output method on a time and material basis as the services are performed.

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COI Creation and Tracking

    The Company provides services to issue and track certificates of insurance in the United States and Australian markets. Revenue is derived from transaction fees for each certificate issued or tracked. The Company recognizes revenue at the issuance of each certificate or over the period the certificate is being tracked.


Consulting Services

    The Company provides consulting services to clients around the world for project management and development. Consulting services fees are generally on either a time and materials basis or a fixed fee basis. Revenues for time and materials are recognized using an output method as the services are rendered, while fixed fee revenues are recognized based on the input method that is driven by the expected hours to complete the project measured against the actual hours completed to date.

Disaggregation of Revenue
    The following tables present revenue disaggregated by primary geographical regions and product/service channels for the three and nine months ended September 30, 2020 and 2019:
Three Months Ended September 30,Nine Months Ended September 30,
Revenue:2020201920202019
(In thousands)
India*$93,403 $77,145 $219,953 $223,962 
United States40,124 45,038 123,750 136,181 
Australia8,187 8,643 23,773 25,997 
Latin America3,633 5,400 11,447 14,397 
Europe3,306