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Ebix Inc  (NASDAQ:EBIX)
Q4 2018 Earnings Conference Call
March 01, 2019, 11:00 a.m. ET

Contents:

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Ebix Inc Fourth Quarter 2018 Investor Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions). As a reminder, today's conference may be recorded.

I would now like to turn the call over to Mr. Darren Joseph, Corporate Vice President. Sir, you may begin.

Darren Joseph -- Corporate Vice President

Thank you. Welcome everyone to Ebix Incorporated 2018 fourth quarter earnings conference call. Joining me to discuss the quarter is Ebix Chairman, President and CEO, Robin Raina and Ebix CFO, Sean Donaghy. Following our remarks, we will open up the call for your questions.

Now let me quickly cover the safe harbor. Some of the statements that we make today are forward-looking including among others, statements regarding Ebix's future investments, our long-term growth and innovation, the expected performance of our businesses and our use of cash. These statements involve a number of risks and uncertainties that might cause actual results to differ materially from those projected in the forward-looking statement.

Please note that these forward-looking statements reflect our opinions only as of the date of this presentation, and we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events.

Additional information concerning the factors that could cause actual results to materially differ from those in the forward-looking statements made today are contained in our SEC filings which list a more detailed description of the risk factors that may affect our results.

Our press release announcing the fourth quarter 2018 results were issued this morning. The audio of this investor call is also being webcast live on the web at www.ebix.com/webcast.

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

Let me now discuss the quarter from our perspective. This has been a record quarter in terms of revenue, operating income and non-GAAP EPS. Revenue in the fourth quarter of 2018 increased 30% from a year ago to $136.3 million. On a constant currency basis, Ebix's fourth quarter 2018 revenue increased 34% year-over-year to $140.7 million as compared to $104.7 million in the fourth quarter of 2017.

The revenue improvements reflected growth in the Company's Exchange channel with the revenues from the EbixCash Financial Exchange service reflected in the Exchange channel. On a constant currency basis, year-to-date revenue increased 39% to $504.8 million as compared to $364 million during the same period in 2017.

Full year GAAP revenue of $497.8 million is up 37% year-over-year in 2018, as compared to 2017. In Q4 2018, our exchange revenue continued to be the largest channel for Ebix, accounting for 85% of the Company's revenues. The year-over-year revenues increased as a result of revenue growth from the life exchanges, annuity exchanges, underwriting exchanges, health content, e-learning exchanges and the EbixCash financial exchanges aided by revenue growth generated from the Company's various inward remittance, ForEx, finance, and travel businesses offset primarily by declines in the area of third-party administration exchange, EA, CRM, and the RCS strategic consulting business.

Our growth in India market continued in Q4, 2018. The Indian led ventures included -- including India led revenues from billed in other Asian countries showed 154% year-over-year growth in Q4 2018, by growing to $69.2 million from $27.3 million in the same period in 2017, and a 233% growth when comparing the full year 2018, and the India-led (ph) revenues of $218.8 million to the 2017 revenues of $65.7 million.

We are pleased with the sequential growth in the top line and our overall businesses. Q4 2018 revenues sequentially grew by 6% to $136.3 million over Q3 2018 revenues of $128.6 million. On a constant currency basis, the revenues sequentially grew by 7% to $140.7 million in Q4 of 2018 from $131.5 million in Q3, 2018.

The revenue growth was driven by growth in most of our geographical markets. We experienced sequential growth in Q4 2018 over Q3 2018 in the US, Australia, Brazil, New Zealand, Singapore, and India. Growth in India was primarily driven by the growth in the EbixCash Financial exchange businesses. Our India revenues grew 15% sequentially from $60.3 million in Q3 2018 to $69.2 million in Q4 2018 including some of the India-led revenues that got billed in other Asian countries.

On a statutory stand-alone consolidated basis, India-led revenues accounted for approximately $85.5 million in Q4 2018, translating to an annualized run rate of $362 million. We expect that this growth to continue, and have a number of organic and inorganic initiatives targeted at growing our India revenues continually in a sequential manner.

International revenues in Q4 2018 accounted for 64%, while India-led revenues accounted for 51% of the Ebix revenues in the quarter, exemplifying the tremendous growth we have experienced in our international businesses, primarily due to the EbixCash Financial Exchange business.

As we deploy our insurance exchanges in India through the new BSE Ebix venture, we expect that our insurance businesses will start to account for substantial revenue streams in India. During his talk, Robin will discuss a number of new initiatives that should contribute to our growth in 2019.

I will now turn the call over to Sean.

Sean T. Donaghy -- Chief Financial Officer, Principal Accounting Officer and Company Secretary

Thank you, Darren, and thanks to all on the call for your interest in and support of Ebix. At the outset, let me say that I am pleased to convey that the Company's consolidated auditors have concluded that the Company has successfully remediated the weakness in its internal control structure in the areas of income taxes and business combinations as of December 31st, 2018.

This follows a similar determination by a renowned third party US based firm that specializes in accounting investigations and compliance, at the Company's remediated weaknesses. The weaknesses were declared by the Company in early 2018 on announcing its 2017 fourth quarter earning results. Q4 2018 was a strong quarter in terms of not only revenues and operating income, but diluted non-GAAP EPS.

Fourth quarter GAAP earnings, diluted earnings per share was $0.27 and non-GAAP diluted earnings per share was $1.06. This compares to $0.84 in the fourth quarter of 2017. The difference between the GAAP and the non-GAAP EPS was because of a one-time effect of $24.5 million associated with the 2017 Tax Cuts and Jobs Growth transition.

Robin Raina -- Chairman of Board, President and Chief Executive Officer

I will take it from there. Sean, what line were you on? Quarter -- for the fourth fiscal year of 2000 -- Just a second, sorry. Sean is not feeling well at this minute, so I'm going to take on from there -- sorry for that. Sean, I'll speak then.

For the full fiscal year 2018, GAAP diluted earnings per share was $2.95 share and non-GAAP diluted earnings per share was $3.73, as compared to $3.17 in 2017. Ebix's weighted average diluted shares outstanding decreased to $31.2 million in fourth quarter 2018 compared to $31.7 million in Q4 of 2017. As of today, the Company expects the diluted share count for Q1 2019 will be approximately $30.7 million, operating income for Q4 2018 rose 26% to $41.5 million compared to $33.1 million in Q4 of 2017, while the operating margin stood at 30% in the quarter.

Q4 income before income taxes was up 24% at $34.7 million from $27.9 million a year ago with a one-time transition tax of $24.5 million under the Trump tax plan, on our foreign earnings, Q4 2018 net income decreased to $8.5 million compared to $26.6 million in Q4 of '17.

We are pleased with the fact that the Company continues to report sequential quarterly revenue growth, robust cash flow from our operating activities, consistent operating income, and attractive operating margins of up 30%. As we scale our business up over the next six months, we expect our operating margins to grow by a few points. Operating income for 2018 rose 35% to $153 million as compared to $113.2 million in 2017.

Full year 2018 operating margins were at 31%. Cash generated from operations increased 17% to $89.9 million in 2018, compared to $76.8 million in 2017.

During Q4 2018, we invested a total of $2.2 million on dividend payments, $4.5 million on CapEx, $3.8 million in principal payments toward the term loan and 581,000 (ph) on tax payment. We funded these initiatives from existing cash, plus operating cash flow in the quarter, while drawing $76.1 million from our bank credit facilities to fund the closing of six of our acquisitions in Q4.

Ebix ended the quarter with cash, cash equivalents, and short-term investments of $184.6 million with available cash reserves of approximately $196.6 million, including the available borrowing capacity and the accordion available to the Company.

Furthermore, after the key balances sheet metrics, our balance sheet remains healthy, and the Company's financial position remains solid with a current ratio of 1.34, a working capital short-term liquidity position of $108.3 million, a debt leverage ratio of 3.40 and a debt to equity ratio of 1.50 as of December 31, 2018.

Finally, Ebix's Form 10-K is being filed today. This was me speaking for Sean, I'm actually concerned about Sean, his -- he had a bad voice, but apparently he isn't feeling well. So, I'm sorry for that, but I'll continue now.

Good morning everyone, that I'm speaking, I'm Robin now, I just want to start my -- by congratulating our entire Company and all of our shareholders and investors on just what has been an outstanding fourth quarter. It has capped off just a truly record year for Ebix. These are record results on many fronts.

One, record top line of $140.7 million in constant currency revenues and $136.3 million in GAAP revenues.

Record EBITDA plus stock-based compensation of approximately $45.5 million in Q4 2018 translating to an annualized run rate of $182 million. Record non-GAAP diluted EPS of $1.06 in one quarter, before taking the impact of one time transition tax. Full year 2018 operating margins were at 31%. This has been our 19th consecutive year of sequential growth.

Annualized revenue run rate is approaching $550 million for the first time. In the Q4 2017 investor call, I had also talked about getting to the stretched (ph) revenue goal of $500 million annualized revenue while retaining our operating margins of 30% or above. I'm pleased that we are now getting close to $550 million in annualized revenue, while still keeping our operating margins at 30%.

It's especially pleasing as we have done that in spite of not having had the time to put all synergies in place with respect to many of our recent acquisitions. We have always believed in letting our 80 (ph) quarters of the financial performance speak for itself and in that direction, I'm especially pleased that we were able to keep our consistency record intact as also letting our financial results speak for themselves again.

The credit for this goes to the splendid effort put in by our 10,000 plus employees worldwide. I'm incredibly humbled by their effort.

Sean and Darren have talked about the financial performance of the Company in the quarter. Let me now talk about the state of the business today from my perspective. Ebix is today set on a path to be the largest exchange in the world that would have converged insurance and finance while establishing a leading role in each segment.

We would not have got to this point without the support of all our employees, our customer, our partners and of course all our shareholders.

Ebix is today not just a great Company with an incredible culture, but a Company that's on a mission. A few days back, the Company partnered with India's Network 18 Group to host one of India's Biggest Leadership Summits in New Delhi on February 25th, 2019. Network 18 is India's largest media and Television Group that owns and operates 21 news channels, including CNBC, TV18, CNN 18, and CNBC awaaz.

The honorable Prime Minister of India, Shri. Narendra Modi delivered the summit keynote at the India Rising event presented by Ebix on February 25th, 2019. Formally titled, Ebix Presents TV18 India Rising Summit 2019, the summit was a pan-India thought leadership initiative designed to explore and celebrate the rising emergence of India as an economic superpower with the theme, Raising Above, Going Beyond. The summit, which included a wide array of leaders in India included top policymakers, Union Cabinet Ministers, Chief Ministers, entertainment Icons, global visionaries, economist, writers and corporate leaders and was nationally telecast live on CNBC, TV18, CNN 18 and CNBC awaaz.

I also participated in the group panel discussion with other business and top policy makers of India to discuss business issues and opportunities for the continued emergence of India. Let me now discuss the results of the Company geographically. In Q4 2018, the Company experienced growth in most of our key geographies, including US, India, Australia, New Zealand, Singapore and Brazil.

Ebix Q4 2018 revenues grew 6% sequentially worldwide over Q3 2018 while increasing 3.9% in the United States, our India led revenue in Q4 2018 grew 15% sequentially to $69.2 million. Our Australia and Brazil operations have achieved -- have both achieved record revenue quarters in local currency terms.

Our US revenue growth was aided by growth in the areas of underwriting, life exchanges, health content, annuities, health commerce, e- commerce, etcetera. Q4 performance was also aided by the seasonal upsurge in our continuing education business, wherein traditionally, our revenues go up every year in Q4 because of doctors wanting to claim tax deductibility on their continuing education expenses.

In Q4 , our US operations signed new contract in all facets of our business. Today our US operations have a stronger pipeline than ever and are actively involved today in closing many large deals in the traditional insurance exchange sector. We feel good about the year ahead of us and the opportunities ahead of us.

Our Australia and Brazil operations recorded their best year in local currency terms as also a record quarter in local currency terms. We have signed a number of new opportunities in both these countries, the large carriers as also are involved in creating new product lines in these markets, that will contribute to our results in the year 2019. We're very pleased with that.

Our UK operations have continued to grow from strength to strength. Our market aggregation exchange has beaten all the targets set up by PPL in terms of usage, as of now and forms the lifeline of London insurance markets now. While the Brexit confusion has not helped things in London, we expect our exchange and business operations to benefit from these increased transactions in the year 2019.

India continues to be a strong area of growth for the Company today. We have momentum on our side and we are fast emerging as the largest financial exchange in the country and the subcontinent already. Considering that we expect 2019 to be a momentous year for the Company with respect to India, I will discuss our business there in some details as also what is ahead of us possibly this year.

We see India as a very large business opportunity and honestly believe that the India operations can be many times larger than our existing operations in the US. We see India as a multi-billion dollar opportunity, possibly in the short term depending on how we execute in the short and long-term in India.

Let me discuss what we're trying to do in India. We're trying to build a -- we are trying to build an India-based knowledge center for financial services, travel distribution and travel technology, insurance distribution and e-learning that can then be deployed across the world. We've branded the entire India based global operation as EbixCash to encapsulate that effort of ours.

EbixCash operation in India today is 9,000 plus people strong and is divided into many divisions each managed by a Managing Director. All the core services like HR, finance, IT, development, admin, legal etcetera are centralized and are under a corporate management team primarily based in Noida.

We also run two start-ups managed by erstwhile founders and Director level people besides our EBIT BSE insurance operation. Besides that, we run a number of healthcare-related services, managed out of the corporate and international sales teams, in India that's managed finally by the US senior sales management.

Each of these divisions has the manpower, expertise and growth prospect to continually grow at 20% growth rates year-over-year. Let me discuss each one of them and their prospects for 2019 and beyond. Division one managed by a Managing Director level person includes all our retail finance operations, inward and outward remittance and foreign exchange operations.

This division have created end-to-end integrated financial products, common retail and corporate sales teams, common operational backbone, interfaced and integrated technology and of course, ample opportunities for cost selling.

In the area of domestic remittances, this division has led EbixCash to become one of the largest domestic remittance exchanges in India with domestic remittance volume of approximately $1.2 billion annually. In the area of gift cards, EbixCash is now recognized as the leader in the gift card space with branded gift cards across all categories at 100-plus brand co-partners.

In the area of utilities payments, EbixCash today is a leading domestic payment exchange enabling consumer payment for large utility providers. In the area of international inward remittances, EbixCash now has an estimated 90% share of Western Union inward remittances business in India with growth merchandise value approximately $5 billion annually, while having an undisputed leadership position in the Indian market.

In the area of outward remittance and foreign exchange, EbixCash now has an undisputed dominant leadership position in the outward remittance and foreign exchange markets in India with gross merchandise value of $4.8 billion plus annually.

In recent times, we made two acquisitions, namely Weizmann and Essel Forex that will both fall under this division. The complete impact of that -- of these two acquisitions should be visible in the first quarter of 2019 and beyond.

We are in the midst of many large business opportunities in this division, both in domestic markets and outside India. For example, the Dubai Airport, foreign exchange contract would fall under this division. That by itself is a very large revenue opportunity for 2019 and beyond and are recurring one of that, with us (ph) handling VAT refunds at the airport besides foreign exchange conversion for 80 plus currencies at the busiest airport in the world in terms of international travelers.

We are at the last stages of another international airport deal in the Middle East, more on that when we sign the agreement.

We see tremendous opportunities for all these services in key markets like Singapore, Australia, Philippines, Indonesia, GCC Countries, London, Brazil, Thailand and of course the US. Recently, we agreed to partner with a large household named MNC in Singapore to use all their high street locations in Singapore to sell our services in a closed partnership with them.

We also are exploring many new large business opportunities at present in Hong Kong, London, Canada et cetera, besides of course, India. We dominate the Indian market with respect to this division, placing us in a strong position to further grow the business in India, and also abroad as our numerical and functional strength competes with anybody across the world today in these areas. We're also pursuing some acquisition opportunities in the sector in international markets outside India.

In Q4, all these businesses grew sequentially with respect to Q3 of 2018. The second division is a Travel division that encompasses diverse area of like airline ticketing, domestic and international ticketing, hotels, trains, buses, cabs, sports and business events, etcetera. EbixCash travel portfolio of two travel brands, Via and Mercury today have second largest position in India's B2B and corporate markets in terms of net revenues.

With an estimated gross merchandise value of around $2.5 billion, EbixCash today is among the top few named travel players in terms of GMV. The 2,200 plus employees, and an agent network in excess of 212,450, 25 branches and 9,800 plus corporate clients. Via is a retail and SME brand while Mercury is a luxury, corporate and mice brand. Both have independent sales team and Senior Managing Director and chief operating level people managing the business.

They both run on a common technology backbone, common procurement, negotiation with airlines, hotels et cetera and have a common executive team driving their business convergence.

In Q4, both these businesses grew sequentially, with respect to Q3 of 2018. We continue to add new corporate and consumer clients and -- we continue to add new corporate and consumer clients in the fourth quarter. I see travel as one of the fastest growing area for EbixCash and an opportunity to lead India's fast growing travel markets.

India's travel markets are growing at the rate of 27% to 30% annually and it is important that we take a leading position in this market.

We are second today in B2B oblique consumer, oblique retail markets behind NASDAQ listed Yatra Today. And we are focused on being number one by the end of the year. I see this as a 20% growth business organically, we're also pursuing a number of opportunities that can fast forward our attempt to dominate India's travel markets.

We recently took a 80% controlling stake in India based Zillious Solutions Private Limited. Zillious is an on-demand SaaS travel technology solution with market leadership in the corporate travel segment in India. The Zillious exchange processes over 8 million travel bookings annually, while conducting growth merchandise value of approximately $1.4 billion per annum.

We intend to keep Zillious as a non-aligned technology platform that we intend to promote internationally in key markets like the Middle East, United States and Asia besides further establishing it as a pure play on-demand travel technology exchange within India.

We see opportunities to white level the platform and allow various international travel aggregators to sell the platform to their corporate clients and in continents like the United States and Europe. In the area of transport management systems, EbixCash Bus exchange technology initiative is focused on deploying end-to-end bus exchange solutions for bus roadway companies in India while powering integrated transport management systems across their entire portfolio of buses and bus depos.

Recently, Ebix Bus Exchange Division won the build, own operate order to deploy and maintain one such solution across more than 4,500 buses and 50 bus depos involving an estimated count of approximately 300 million passengers, traveling annually for the Rajasthan Public Roadways Corporation.

Each of these deals tend to be multimillion dollar recurring revenue opportunities. We are presently in the midst of many deals that can contribute strongly to our numbers in 2019. We expect good returns from this business segment in terms of revenues and operating income, beginning Q1 of 2019.

In the area of cab travel, EbixCash AHA Taxis asset like venture with a network of more than 15,000 registered AHA Taxis and growing, focuses on an on-demand intercity cab market in India.

AHA Taxis has pioneered in offering a one-way fare for hiring taxis for outstation trips whereas the trade norm has charged a return fare. AHA solved this problem while managing its proprietary technology algorithm and network. We see this as a perfect complement to our airport exchange business and our corporate travel and foreign exchange business and also our retail operations.

We are working on launching a countrywide campaign to make AHA a household name in India. We expect strong revenues from this segment in 2019. We are presently working on deals, wherein we would possibly brand a luxury train as an EbixCash train while having a dominant share of the tickets in the train reserved by EbixCash.

We are already a large e-ticketing player for Indian Railways. We today are blending our travel exchange with our Himalayan expedition venture that is focusing on adventure travel, Himalayan expos, helicopter rides, et cetera as part of our travel portfolio. Towards that extent, EbixCash now owns a property that is used for Himalayan expos for our international adventure friendly travel clientele.

We recently created a new EbixCash Financial Technology division under the leadership of a Managing Director that focuses on enterprise technology, backend and exchange needs of clients in the area of lending, assets and wealth management and stock trading.

In fourth quarter, all these businesses grew sequentially as compared to Q3 of 2018. Our clientele in this area includes leading banks and financial institutions in Europe, Asia, Middle East, Africa and India with approximately 50% of the business coming from India.

For example, in the last quarter, we started implementing a new enterprise contract for video insurance in Philippines. We are also presently in the midst of a large implementation for India's largest bank, State Bank of India wherein we have around 200 technology folks working on the implementation of a lending enterprise solution, that encompasses all its aspects of lending.

In coming days, we are looking to add stock broking technology solutions to this division, where in we would like to become the desktop and the enterprise solution for stockbrokers powering their CRM broking functionality, interfacing with stock exchanges, et cetera. This will allow us to cross-sell various solutions like lending, insurance, wealth management, mutual funds et cetera by interfacing them tightly with the stockbrokers platform.

We are at fairly advanced stages of getting to that end-to-end play. Our digital e-learning business has the EbixCash, SmartClass e-learning venture, which is again led by another Managing Director. This business today has more than 70,000 content classrooms contracted and is one of India's fastest growing and leading e-learning companies catering to the fast-growing K-12 education sector in India.

With 500 plus sales staffs out of a total of 1,100 plus employees dedicated to this venture, the Company caters to accredited school education through rich media like 2D, 3D, virtual reality, animation, et cetera.

We believe that this division will continue to contribute strongly to our top line and bottom line in 2019. Another stock (ph) effort that we expect to start contributing strongly in 2019 is trucking logistics. EbixCash's Routier venture strives to be the Uber of trucking logistics with a focus on an asset lite model that brings an aggregation of truckers across the country to top logistics driven businesses that depend on timely and efficient freight movement. With committed clients today like Coca-Cola, Escorts, Asian Paints, Jio, Samsung, et cetera, the Routier's marketplace is likely to be a significant contributor to EbixCash growth in 2019 and beyond.

In the area of insurance distribution, Ebix joint venture initiative with Bombay Stock Exchange has positioned us as a gateway for insurance carriers to sell insurance to India's vast population combining EbixCash's 320,000 plus phygital outlets across the country, with BSE's strong network. While the technology and functionality is ready, we await approval on our license application from the insurance regulatory body.

We expect the regulatory license anytime now and believe that this is one of the biggest opportunities that we are pursuing. We are endeavoring to do something that has never been done earlier in any part of the world. Traditionally across the world, insurance is only sold by insurance agents, brokers or directly by carrier salespeople, who have to be like agents (ph).

We want to do something completely different. We're trying to sell insurance in every nook and corner of India, through distribution outlets, that one example could be a grocery shop, or a mobile phone outlet, or a financial outlet, travel outlet.

Basically, we want to sell insurance through any distribution outlet that has a relationship with the consumer and the last mile reach even if they have never sold insurance before. We feel that we can make it succeed as we have the three key ingredients already required for it to succeed.

One, the backing of our joint venture partner, Bombay Stock Exchange with their reach of 300,000 plus terminals and financial brokers and institutions, all across the country, who can now sell insurance. Two, EbixCash already has an existing outlet base of 320,000-plus distribution outlets across thousands of cities ready to sell insurance, as it gives these outlets a new tool to maximize their income. Three, insurance technology and functionality is in Ebix's DNA. I'd like to say it's an integral part of our DNA helical structure.

Overall, EbixCash ventured India on a stand-alone basis, generated $88 million of revenue in fourth quarter of 2018, implying an annualized revenue run rate of $352 million. These numbers only included 800,000 of revenue from e-governance in fourth quarter of 2018. That number is important -- the number of $88 million is important as that would be a number that investors in India would evaluate the EbixCash venture in India on, in case we go for an IPO for EbixCash.

Sean talked about the successful remediation of the material weakness and if successful, confirmation by two agencies, an outside renowned US accounting firm and a consolidated auditors both, I congratulate our finance staff and Sean as regards to that. We agreed to pay $24.5 million in transition tax on our accumulated foreign earnings as per the Trump Jobs Act and tax plan over a period of eight years, while expensing it in one goal in the fourth quarter of 2018.

We like the overall impact of the Trump tax reform as it reduces the corporate tax rate going forward to 21% while opening up tremendous possibilities for American companies to do business globally and keeping the US at the center of their growth activity. It also in my view will allow US companies to be more competitive abroad and also allow US companies to repatriate money a lot more easily from abroad. These are all good things in my view, as they finally translate to putting more money in the pockets of our investors, through enhanced net income, enhanced EPS, higher dividends and higher valuations for the stock.

Let me now summarize my talk today and essentially layout our financial vision for 2018. When I gave my fourth quarter 2017 investor talk, I said and I quote, we believe that by the time we finished 2018, India could be at a run rate north of $200 million with profitability levels that will be north of 30%, un-quote.

The currency depreciated by 10%, I mean the Indian currency depreciated by 10% as compared to the US dollar and we still clearly beat that aspirational number of $200 million run rate by a wide margin.

So what should be the new aspirational goal worldwide? For the fourth quarter of 2019, today as I talk in front of you, I'd like to set up an aspirational annualized revenue run rate goal of $750 million by the fourth quarter of 2019, implying $187.5 million in quarterly revenue that quarter.

I would like to get to that aspirational goal while having 30% or more in operating income. Let me add that we are seriously contemplating the possibility of a public IPO for our Indian operations in 2019 or early 2020 and are in active discussions with a few private equity players to see if we can set up a pre valuation benchmark.

Our ultimate goal is to ensure that Ebix, Inc. should hold a large stake in the IPO. We see that as a possible multi-bagger opportunity for the shareholders of Ebix Inc, as all other financial exchange sector companies in India, with billion of dollars in valuation do not have the strong financial metrics that our EbixCash operation in India has today.

Great companies do more than just create great products and great services. They establish integrity, transparency and trust as their prime values. We have always endeavored to do that to the shareholders, our customers, our partners and our most priced asset, our employees.

It has translated into Ebix having the unique distinction of featuring in Fortune's list of fastest growing companies, five times in the last decade, including in the year 2017, that's incredibly humbling for us.

In closing, I want to thank our customers, our partners and our employees, for their continued trust in us and for contributing to an outstanding Q4 and just an exceptional and for exceptional full year results.

Thanks everybody for that. That brings me to the end of my talk. I'll now hand it over to the operator to open it up for questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions). Thank you. And our first question comes from the line of Jeff Van Rhee with Craig-Hallum. Your line is open.

Jeffrey Lee Van Rhee -- Craig-Hallum Capital Group -- Analyst

Great, thanks, good morning. Congrats sir, Robin and team, numbers look really good. Number of questions from me, I'm going to start with the travel side Robin, obviously just massive demographic waves coming your way in India, and I think you talked a little bit about your relative positioning, but I wonder if you could expand a little bit more. So, a couple of questions in here, one, you sort of broke it down B2B, B2C. Which is the priority? How do you think about the balance between the B2B, B2C travel markets? And then as you address those, could you just touch maybe a bit more on the peer landscape and what ultimately, what is your competitive advantage to win that battle?

Robin Raina -- Chairman of Board, President and Chief Executive Officer

Thanks, Jeff. So, let me start with the positioning in travel. I think you had a three (ph) question actually later as I see them, you're talking about positioning, you're talking about B2B versus B2C and then the landscape. So let's start with the landscape first. The landscape of the market is on one side you have consolidators who have a lot -- who conduct big GMV, some players like the Ria and Akbar, they conduct a lot of GMV at the same time, what they do, they are in consolidation, air ticketing business, they basically pass on most of their margins to their agents to the thousands of agents that work under them and they end up with much lower revenue ultimately.

So, in net revenue terms while these guys have pretty high GMV, Gross Merchandise Value at times in $2 billion plus, but when you look at their net revenue, their net revenue are a lot lower because they tend to share most of their margins with the smaller agents.

So that's the consolidated on one side, then on the other side, you can divide the market into two main parts. The B2B side of the business and then the B2C side of the business. So, if I start with the B2C side of the business, there is one established player who's a leader in the market and that player is MakeMyTrip. MakeMyTrip is a publicly traded Company. I think they have $3.5 billion or somewhere around that or more in market cap today.

The Company basically has around $200 million of losses (ph), I believe around $0.5 billion in revenues, but their main focus has been on domestic and International travel. In the B2C area, most of their losses originate out of the hotel subsidies and the subsidies that they provide to their consumers.

So it's a different approach from ours in terms of winning business, they -- they're keen to win the business and they're using marketing and subsidy as a way of winning the business. Then you go to the second-largest player who tries to compete with MakeMyTrip and that is Yatra who's also publicly traded and is in the NASDAQ, both MakeMyTrip and Yatra are on the US exchange.

Yatra basically is a number one player in the B2B side of the business. Number two player in the B2C side of the business. Yatra thus tend to subsidize, a lot of their hotel rates, so if you look at their B2B business, it's fairly profitable, the B2C business is not profitable and they'll lose a lot of money in that and overall lose a lot of money, mainly because of the subsidies they tried to, because they're trying to compete with MakeMyTrip.

Then you go to the third largest player which is us. If you look at the B2B business, we are second largest. Our focus from a perspective of looking at the market, our focus has not necessarily been going to the B2C market, we want to reach the B2C market, but we want to reach the B2C market through the B2B market, what we want to do is, we want to sell into the consumer through retailers, through our phygital outlets.

We want to sell to the consumers who are employees of corporate, so we want to go through the corporate channel per se and of course we have online forums wherein we sell directly, whether it is on via.com, whether it is on sastiticket.com; sastiticket mean cheapticket.com basically in India -- in Hindi sasti means cheap.

So we have a lot of these branded players and we have a lot of co-branding relationship on the B2C side. But if you look at it, we took a very emphatic decision that we will not subsidize anything. We made a very simple decision that we absolutely want to make 30% plus operating margin in the travel business. Now having said that, the business characteristic is such, the business will require cash.

As you grow the business and some of it gets reflected in the cash flows, you will see in this quarter as Ebix we are continually trying to invest in our business, whether we invest in foreign exchange, whether we invest in travel or both and we do invest in bus exchange initiatives and so on with coming up with money upfront, you pay on airlines upfront, then you do the business though your agents and ultimately, you're going to create a cycle of 15, 30 days in which the money will roll over.

Having said that, you have to keep coming as you grow your business, you have to keep coming up with the cash and continuing to grow the business. So that's what you see reflected in the cash flows, but coming back to your question on landscape, we made a notional and a very simple decision. We want to dominate the B2B market.

Our simple goal this year is to be the number one player beyond Yatra in the B2B market in terms of both metrics. We want to be number one in gross merchandise value, we want to be number one in net revenues and of course, if you look at the top three MakeMyTrip, Yatra and ourselves we're the only ones who make money, none of them makes money.

So having said that, our positioning is rather clear, we want to first be the number one in B2B, we want to parallelly use that our marketing strength, the financial strength that we acquire in the B2B place market to enter the B2C market without subsidizing.

We don't believe that we need to subsidize if we have a strong enough network. What these companies are lacking, they don't have a phygital network, they're not there in a C-grade city or D-grade city. They don't have 320,000 retail outlets sitting in every nook and corner of India, which we have, which means, I don't need to go to a remote corner on Nagpur, let's say, in India and try and compete with anybody in that business which necessarily means that if we can establish our business, if we can be in every side of the business, if we are in the last mile, and we have -- and we have great technology, if you have great technology to convert that phygital outlet into a digital outlet where in a consumer can walk in, and that business can happen or if the consumer wants to do that business over a mobile phone or through any other means whether they're traveling in a bus and they want to book their next bus ticket or their next train ticket or their next airline ticket, we want to facilitate all of that and we are trying to do that through the corporate channel, through the retail outlet and also the B2C, but without subsidizing the consumer.

So that's where our differentiation lies with the absolute detailed retail network chain that we have built, the greatest technology we have created, remember in travel we have two things that nobody has. One, we have the retail technology available which is deployable internationally and today works internationally, that's a Via's technology. The second thing we have -- we have the backbone of travel which is Zillious. Zillious is today being used by the who's-who of the travel market in India, our competitors tend to use it and today we own Zillious which means we have an edge in terms of if we wanted tomorrow to provide a self booking tool to a large corporate, we have that ability.

If I want to go into Bahrain and provide a travel solution, I could do that, I can convert a D-grade in a C-grade or a D-grade city, I can -- we can convert a small outlet into a digital outlet simply because we have On-Demand technology that would downside today's. Now, that's not the positioning of any of these players. All these players are distribution players. They are involved in distribution, they are like agents, they're trying to be super agents, whereas Ebix is investing heavily in technology and Ebix is putting technology at the center of all our travel initiatives, so that's the big difference that we have.

Jeffrey Lee Van Rhee -- Craig-Hallum Capital Group -- Analyst

Got it. Okay, and then just couple of particulars, the EbixCash business, I mean obviously big numbers there in terms of the overall aspirational goal $750 million, Q4 of '19. What's implicit in there for the EbixCash business, and then along those same lines, you had laid out, Q4 '19, Q1 '20 timeline for IPO just sort of the -- the over under -- sort of the puts and takes on what would -- what would have to happen to have it in '19 versus '20 how that plays?

Robin Raina -- Chairman of Board, President and Chief Executive Officer

Well, I think that that's -- these are two separate questions. One on the IPO and then on the EbixCash, what do we believe EbixCash can get to. So, look, we are -- we want to be on a -- when we look at the IPO market in India, we're going to consider that a part of that would be our inter-company revenue in EbixCash because EbixCash also does work for some of the other companies outside India.

So if I include that revenue in that because that would generate real cash for our investors in India and that is like, like I said, (inaudible) that India exchanging in India now those are publicly traded corporations in India, but they are basically working for their sister companies. If I include that revenue, you're basically talking about -- we would like to see revenue Q4 of '19, we would like to see India being at $125 million of revenue run rate, which means around $0.5 billion in revenue, annualized revenue by the end of this year.

So in our math, we're basically thinking that the transfer pricing revenue might translate to around $50 million, so you could, if you want to subtract that, you'll basically say they were basically targeting an aspirational goal in India for $450 million to external customers.

So I think that's what we're looking for from an India perspective, and again, we want to have 30% or more in operating income from India when we get to that, if we get to that aspirational goal. With respect to the IPO, look, meaning, we are looking at the IPO as a two-step process.

One is, we could just go straight into an IPO or we might take an interim step, we might pickup up 5% or possibly 10% of the EbixCash operations in India and establish a pre-valuation benchmark by involving a large private equity group.

We are in discussions, we have -- we're basically -- we're getting a lot of invert request from the who's-who of the private equity world, if we are -- if we are successful with that, I think our investors are going to be extremely happy because, we think our Company today, forget '19 or '20, we think our Company, we believe and we believe that Ebix India valuation should be at least two times more than what Ebix is trading at in the US today.

Now that's our belief, we have to see whether the -- whether the outside investors believe in that belief or do not or recognize that, but we are today in active discussions with a private equity group, if assuming that some of that works out, then you're going to see, you know, we'll publicly obviously announce that and we will take it up from there, but having said that, if we do that, why would we do that, we might do that simply to establish a pre-valuation benchmark, simply to ensure that -- when we go for an IPO there is already a pre-valuation benchmark that's already established with respect to the Indian IPO.

Now with respect to when do we go for an IPO, the IPO could be toward the end of '19 depending on the political climate in India, we would like to see how the election pans out, we don't want to hurry up before that, we'd like to see how it goes, it's a very involved process in India, the elections, I would like to play -- or let that play out. We also want to see how our private equity discussion go and so on -- from there onwards if as things play on, we would either do an IPO toward the end of '19 or we might take that IPO into early 2020, but we will keep you informed as we make those decisions.

Jeffrey Lee Van Rhee -- Craig-Hallum Capital Group -- Analyst

Okay, good. And two last brief ones, I'll let somebody jump on here. The cash flow statement references a third party loan just fill in the gaps on that and then domestically, you called out the growth rate rebound there but what's the expectation for 2019 domestically, just growth-wise, how do you -- how do you view the year at this point?

Robin Raina -- Chairman of Board, President and Chief Executive Officer

Sorry, the first question I heard that, but I did not understand the second one. Can you repeat that, I'll lost you in between on that...

Jeffrey Lee Van Rhee -- Craig-Hallum Capital Group -- Analyst

The domestic business, thoughts on growth rates for '19.

Robin Raina -- Chairman of Board, President and Chief Executive Officer

Got it. So let me start with the first one, you talked about a short-term loan, I believe what that is -- that refers to -- sometimes when we are making these acquisitions, we tend to loan money to third party sellers, only to ensure that before we acquire this -- we don't want -- we want to make sure there is sometimes an overlap in dates we want to make sure that, we are not acquiring any overdraft costs or interest cost. So we tend to sometimes loan them the money to ensure that they can pay off all of that before we acquire the business and then we offset that money, the loan with the money we all have to pay to them for the purchase of the business. I believe that's what you're referring to.

With respect to your second question, I think you -- you talked about, sorry I didn't take the notes. Can you just tell me the topic and I'll...

Jeffrey Lee Van Rhee -- Craig-Hallum Capital Group -- Analyst

Just the domestic, the non-India, the non-EbixCash business, the domestic business, I know you put Ash Sawhney in place. You know the...

Yeah, so the domestic, the US business sorry. So the domestic US business, we expect anywhere between 5% to 10% growth this year, with respect to US, if that's what you're referring to in terms of insurance and so on. So Ash is in charge, we have a fantastic group of people leading it, we're in the midst of lots and lots of deal, we'll keep announcing them, we'll keep telling you about anything material, but we some times have to be very sensitive to the carriers, not wanting to make announcements with their names in it, so some times we don't go for the juggler.

But having said that, the business is on the right path and we think we're absolutely well situated to grow that business. So right now, I would, if I had to place my bets on that, I would basically say that we are targeting anywhere between 5% to 10% kind of a growth rate this year in the US.

Sounds good. That's it from me. Congrats on an outstanding '18 year. So thanks again.

Robin Raina -- Chairman of Board, President and Chief Executive Officer

Thank you.

Operator

(Operator Instructions). Our next question comes from the line of Allen Klee with Maxim Group. Your line is open.

Allen Klee -- Maxim Group -- Analyst

Yeah, so well. It would be -- could you help us understand for your aspirational goal of $750 million of annualized revenue run rate by 4Q of '19, is there a way to think of how much of that is coming from businesses that you already own and how much is coming from acquisitions that have not yet been announced?

Robin Raina -- Chairman of Board, President and Chief Executive Officer

Well, I hate to give you that number, but I would -- I kind of answered that in a way that -- we're expecting US to -- we would like to see US do between 5% to 10% growth. We'd like to see India basically growing at 20% plus, in terms of growth and the remaining can come possibly through acquisitions. Again that's the extent the detail that I could go into, I think but that's primarily what we are thinking.

Allen Klee -- Maxim Group -- Analyst

Okay, great. And then you said that you thought that as you get some synergies from some of the acquisitions that as the year goes, operating margins could improve by a few points, could you drill down into that a bit, in terms of how you think about how that progresses, and just kind of what you have set up to try to get those synergies given you have a lot of companies that you acquired, and just trying to have the discipline to be able to get it. Thank you.

Robin Raina -- Chairman of Board, President and Chief Executive Officer

Well, I think the synergies are going to happen, as a public Company, you're always under a pressure because investors expect you to deliver each and every quarter, but basically, what happens is, when you make an acquisition, you need time to really to synergize, right.

If you -- if you're going to buy a Company and you want to get X number of employees up, or you want to synergize the businesses, you want to centralize HR, finance, meaning admin and so on, it takes you a little bit of time, but having said that, we feel that if we are able to do 30% plus today, with some of the synergies that we have not put in place, we think we should be doing a lot better.

So our focus is rather simple. We are not happy with 30% in operating margin. We'd like to get -- we want to inch it up to 35%, at the same time, that's not going to be our goal for 2019. In 2019, we would be happy just being above 30%, purely, frankly because, we're investing very heavily right now in the business. We're trying to grow our business, we're trying to invest in -- as you invest in your business. You have to -- you're also, for example, if you are thinking of an IPO in India, we're also going to invest in branding, we're going to be all across trying to put the message out there and so on, and we're also trying to invest a little bit in B2C also. So these are some of the investments that you have to continue making, but again there are substantial synergies that will keep happening, at the same time, if you're not making any new acquisitions, then you will see the impact of those synergies, pretty quick.

But if you're making newer acquisitions all the time, what's going to happen is some of that impact goes away, because some of your newer acquisitions, don't have that much of synergy value yet, because it takes you time and you're also expensing out a lot of one-time costs, as you're doing that, and so until that, until you come to a period where you haven't really made acquisitions, any new acquisitions, and you're stable for a 12 month period, you're not really going to see the entire impact of those synergies.

But in any case, considering our goal to invest in the business and to grow our revenues, I think our goal in 2019 will be to be at 30% plus in operating margins and work on synergies continually, but then we are now going to go heavy on trying to go crazy on getting to this 35% of margin level.

Yes, I think there's another time for that. Sean, do you want to add something to this?

Sean T. Donaghy -- Chief Financial Officer, Principal Accounting Officer and Company Secretary

No, one of the things we're looking at is we're looking at -- the accounting systems globally for the Company over the next year, and we think that will give us what (inaudible) cost structures across the globe, and I'd like to apologize to everyone on call. I've been traveling a bit lately and I'm (inaudible) to weather, I just lost my breath. Thank you.

Robin Raina -- Chairman of Board, President and Chief Executive Officer

No issues, John, so Allen. I think the -- you should see substantial synergies emerging out of the business as we continue to move forward, I think the challenge comes in, I'll give you a very simple example, this is -- we just reported 30%, but then we just bought Weizmann, we have very aggressive goals out of the Weizmann and the Essel Forex acquisition, in terms of operating margins, way beyond 30%. But to get to that margin level, we will have to take some one-time decisions, we'll have to make and that's going to take us another quarter, to just -- into just expense out those things, right.

So what will happen is, you're not going to see those synergies so quickly. So that's the challenge, as you are making newer acquisitions, you have to continually keep thinking about it and if you get too short sighted about wanting to get your margin levels up, you can hurt your business and not do the right thing and we want to do the right thing, so I think that's going to be one of the challenges.

So if you buy a Company with let's say 1,400 employees and you only want to keep 600, because you think the synergy is going to be fantastic, now you are going to take the cost of those 800 employees, and that's going to impact your margin in the short term, but ultimately you might get 50% margin out of that business, if you really do the right thing and synergize properly, it might take you six months to get there, but you have to take those steps and that's what Ebix likes, tries to do and sometimes we do get short sighted and that's something that I'm very scared of that in our bid to get investor friendly and try to give the investors higher margins we'll make short term decisions and I don't think that's right for the business, you have to be smart in making synergistic decisions.

Allen Klee -- Maxim Group -- Analyst

Thank you. My last question is, is there any update on the Educomp bankruptcy process?

Robin Raina -- Chairman of Board, President and Chief Executive Officer

Unfortunately Allen, I don't have an update on it. Last I knew, because it's a court bound process, so everything gets dictated by the court, last time you were -- they had given another date. So I couldn't really tell you, since it's a subjudice matter, last time, we were the lowest and the courts were opining on what to do and how to do, but the MCLP (ph) process is fairly complicated, frankly the question now is, let's say, some time from now, if the courts come in and say, yes, we want to move, want you to ahead, look Ebix will have to reconsider the entire asset base now, because one year is a very long time.

We need to look at -- (inaudible) have still the same value, which we build on. It's not so simple that, you know, after 12 months, if the court now says, look, we love your offer, please go ahead. We'll have to start, we have to rethink about it, is that's in our interest, because depending on what the business is doing today, depending on the asset base, how can I know, how do we know today how good or bad the business is, because when a matter is subjudice, they don't share any thing with you.

So I think we'll almost have to press the reset button once the legal process goes through assuming that it goes in the way that, they say that please, we'd like to move ahead with you, I think we will have to press the reset button and really request them to share a little bit more data, the current value versus 12 months back values, because for all you know, the business might have, not have as much value, we're hoping that the business would have still that much value, but I couldn't confirm to you without looking at it. So we will ask all the right questions and ensure and try to do the right thing at that point.

Allen Klee -- Maxim Group -- Analyst

Okay, great, thank you so much.

Robin Raina -- Chairman of Board, President and Chief Executive Officer

Thank you.

Operator

Thank you. And I'm showing no further questions at this time, I'd now like to turn the call back to Robin Raina, CEO for closing remarks.

Robin Raina -- Chairman of Board, President and Chief Executive Officer

Thank you. So I'm going to ask myself a question, because as I was talking to you guys, I saw an email pop up and from one of our investors, another question they had was, why is your cash flow lower than your operating income, why was it not as good as cash flow quarter, I think that I partly answered that question, when Jeff was asking me that question, but I want to elaborate more on it.

I think in our businesses, what we are focusing on, we're trying to grow our business today in India, so all our businesses, I'll give you two examples of the businesses that we are involved in. So take the core businesses in India, whether it is, let's start with travel. As we grow our travel business, we have to invest more money, we have to pay the airlines in advance, then we go out and sell the inventory and that inventory in turn basically we get paid for by the agents, by the consumers and so on. There's a timing difference between the two in terms of buying the inventory and going with the agent, which is our prime source of differentiation for the market.

And so that's one, and in Q4 in Via alone, we had $12 million in new investments, with respect to investing in the business, then we go into the area of foreign exchange, in foreign exchange there are many factors in which you have to invest money, if you want to -- either we decide we are not going to grow the business, then our cash flow will start looking more positive. What we are doing today, we're investing our own capital into growing the business.

So in foreign exchange, for example, we are continuing to have to invest in buying more currency, we're going to -- we have to put in money into airports. So to give you a simple example, we talked of one the international airport deals that we had announced, we had to deposit $2.5 million in advance with that particular airport simply because that's a requirement in each airport now you multiply that by all the new airports that we are continuing to sign and that will give you a feeling on what we're doing, also all these acquisitions, we are making, when we make these acquisitions, whether it is the travel acquisition or whether it is Essel Forex, or whether it is Weizmann, in all these acquisitions, they have, the fellows are going to take out as much cash as possible, because they're going to hand over a debt free company to us, they're going to take most of the cash out, so now, we have to fund all the new cash to fund the operating cash flows of the business.

What I mean by that is, if we buy Weizmann or we buy Essel Forex, or we buy (inaudible) or we buy (inaudible) there's an immediate requirement for us, now to come up with the cash to fund the business, to buy the inventory from the foreign exchange, we're holding at any point of time to give you a number, at any point of time in a pre-Weizmann exchange, foreign exchange model, we were holding cash results -- cash of somewhere around $15 million, just in cash, currency at any point of time, you add to that all the airport money that you're going to handle, all the corporates you're funding, because corporates will have a delay in paying you for foreign exchange, for travel, you're going to pay that money in advance to the airlines, take the remittance business, in remittance business, we are shuttling our money five times a day with our agents.

So we need cash, as we grow the business, if we keep the business at a particular level, then we won't need additional cash, simply because we will keep rotating the cash, but if you're going to, if you're going to invest more in the business and you're investing in the operations of the business, you're going to have to put in more cash to grow the business.

So we have a good problem to have -- but the good problem to have is if we go into Rajasthan roadways, in a build-operate-transfer model and, let's say, we think the deal will give us X millions of dollars a year, you have to now come up and invest, for example in 5,000 firmware devices, invest in -- installing all of them, and then you're going to ultimately get paid once you've installed all of them, now you're ultimately -- you have a transaction model in some businesses like in some of these bus exchange initiatives, we actually own the hardware.

We actually own the firmware. So, now you're getting transactions, every ticket you're getting money for, it's a much more, it's highly profitable model, but in that particular model, you're first coming up with all the cash to fund all those initiatives, but today we are in the midst of so many such initiative where we are having to come -- we're having to fund all of these new initiative and that's resulted in a temporary operating cash flow drop, but that's something that, we're going to continue doing in the business simply because we want to grow our business.

So I think that's a question that I just saw, so I thought I'll refer, I'll kind of talk about it. But having said that, we think that if we -- if we decided we're not going to invest more in the business or we started taking overdraft, you might see a possible different answer and again we use minimal overdraft, we are using our own money, and we are continuing to invest in the business and that will always result in some of these differences in terms of operating cash versus operating income.

But I believe this is a nice problem to have as we move ahead, simply because we are part of a fast growing Company right now.

So having said that since there are no further questions, I going to close the call now. I thank each one of you for coming in onto the call, we'll speak to again at the end of Q1. I apologize for -- the temporary drop in the call when Sean was speaking. I'm just glad that he feeling well now. So having said that, we'll close the call now and thank you. Thanks everyone.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect. Everyone have a great day.

Duration: 76 minutes

Call participants:

Darren Joseph -- Corporate Vice President

Sean T. Donaghy -- Chief Financial Officer, Principal Accounting Officer and Company Secretary

Robin Raina -- Chairman of Board, President and Chief Executive Officer

Jeffrey Lee Van Rhee -- Craig-Hallum Capital Group -- Analyst

Allen Klee -- Maxim Group -- Analyst

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