Published: 2021-08-09 00:00:00 ET

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    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 India and 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, the Philippines, Indonesia, Thailand and United Arab Emirates. International revenue accounted for 85.9% and 66.4% of the Company’s total revenue for the six months ended June 30, 2021 and 2020, 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 six months ended June 30, 2021 and 2020 are not necessarily indicative of the results that may be expected for future quarters or the full year of 2021. The condensed consolidated December 31, 2020 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, 2020.

Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and reported amounts of revenue and expenses during those reporting periods. Management has made material estimates primarily with respect to revenue recognition and contract liabilities, accounts receivable, acquired intangible assets, annual impairment reviews of goodwill and indefinite-lived intangible assets, investments, contingent earn out liabilities in connection with business acquisitions, and the provision for income taxes. Actual results may be different from those estimates.

    Reclassification - Certain prior year amounts have been reclassified to be consistent with current year presentation within our financial statements.

Cash and Cash Equivalents - The Company considers all highly liquid investments with original maturity of three months or less at the time of purchase to be cash equivalents. Such investments are stated at cost, which approximates fair value. The Company does maintain cash balances in banking institutions in excess of federally insured amounts and therefore is exposed to the related potential credit risk associated with such cash deposits.

Short-Term Investments - The Company's primary short-term investments consist of certificates of deposit with established commercial banking institutions in India that have readily determinable fair values. Ebix accounts for such investments that are reasonably expected to be realized in cash, sold or consumed during the year as short-term investments that are available-for-sale. The carrying amount of investments in marketable securities approximates their fair value. The carrying value of short-term investments was $13.9 million and $25.0 million at June 30, 2021 and December 31, 2020.

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Restricted Cash - The carrying value of our restricted cash in current assets was $8.4 million and $8.5 million at June 30, 2021 and December 31, 2020, respectively. The June 30, 2021 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 our India operations for our working capital facilities.

    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 Statements of Cash Flows:

			As of
			June 30,
			2021						2020
			(In thousands)
Cash and cash equivalents			$	85,069					$	77,315
Restricted cash			8,440						7,883
Restricted cash included in other long-term assets			6,856						4,200
Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statement of Cash Flows			$	100,365					$	89,398

Fiduciary Funds - Restricted - Due to the EbixHealth JV being a third party administrator ("TPA"), the Company collects premiums from insureds and, after deducting its fees, remits these premiums to insurance companies. Unremitted insurance premiums and/or claim funds established for the benefit for various carriers are held in a fiduciary capacity until disbursed by the Company. The use of premiums collected from insureds but not yet remitted to insurance companies is restricted by law in certain states. The total assets held on behalf of others, $2.6 million and $4.1 million at June 30, 2021 and December 31, 2020, respectively, are recorded as an asset and offsetting fiduciary funds - restricted liability.

    Advertising—Advertising costs amounted to $1.2 million and $2.8 million for the three and six month periods ended June 30, 2021, respectively, and $1.1 million and $2.6 million for the three and six month periods ended June 30, 2020, 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 — The Company follows the relevant GAAP guidance regarding the determination and measurement of the fair value of assets/liabilities in which fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exist price) in the principal or most advantageous market for the asset or liability in an orderly transaction valuation hierarchy, which requires and entity to maximize the use of observable inputs when measuring fair value. 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, and 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 June 30, 2021, 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 for mutual funds and a Level 2 instrument for certificates of deposit.

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•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 June 30, 2021 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 June 30, 2021 and December 31, 2020 approximates their carrying value as reported on the Company's Condensed Consolidated Balance Sheets.

    

    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:

						Fair Values at Reporting Date Using*
Descriptions						Balance, June 30, 2021			Quoted 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 ($7.0 million is recorded in the long term asset section of the Condensed Consolidated Balance Sheets in "Other Assets")						$	20,732		$	—		$	20,732		$	—
Mutual funds (recorded in the long term asset section of the Condensed Consolidated Balance Sheets in "Other Assets")						155			155			—			—
Total assets measured at fair value						$	20,887		$	155		$	20,732		$	—
Liabilities
Contingent accrued earn-out acquisition consideration (a)						$	2,560		$	—		$	—		$	2,560
Total liabilities measured at fair value						$	2,560		$	—		$	—		$	2,560
(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 six months ended June 30, 2021, there were no transfers between fair value Levels 1, 2 or 3.

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						Fair Values at Reporting Date Using*
Descriptions						Balance, December 31, 2020			Quoted 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 ($7.4 million is recorded in the long term asset section of the Condensed Consolidated Balance Sheets in "Other Assets")						$	32,072		$	—		$	32,072		$	—
Mutual funds						381			381			—			—
Total assets measured at fair value						$	32,453		$	381		$	32,072		$	—
Liabilities
Contingent accrued earn-out acquisition consideration (a)						$	—		$	—		$	—		$	—
Total liabilities measured at fair value						$	—		$	—		$	—		$	—
(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, 2020, 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 six months ended June 30, 2021 and during the year ended December 31, 2020:

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Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Contingent Liability for Accrued Earn-out Acquisition Consideration						June 30, 2021						December 31, 2020
						(In thousands)
Beginning balance						$	—					$	10,095
Total remeasurement adjustments:
Gains included in earnings **						—						(3,105)
Remeasurement against goodwill						2,560						—
Foreign currency translation adjustments ***						—						(537)
Acquisitions and settlements
Business settlements						—						(6,453)
Ending balance						$	2,560					$	—
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.						$	—					$	(3,105)
** 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 June 30, 2021

Valuation Technique

Significant Unobservable Input

Contingent acquisition consideration:

$2,560

Discounted cash flow

Projected revenue and probability of achievement

(In thousands)

Fair Value at December 31, 2020

Valuation Technique

Significant Unobservable Input

Contingent acquisition consideration:

$—

Discounted cash flow

Projected 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 2020 and the six months ended June 30, 2021, certain of the Company's contingent earn-out liabilities were adjusted

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because of changes to anticipated future revenues from these acquired businesses, or as a result of finalizing purchase price allocations that were previously preliminary.

    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 services, including services such as transferring or exchange money. 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 several 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:

Gift Cards

    EbixCash sells general purpose prepaid gift cards to corporate customers and consumers that can be later redeemed at various merchants. The gift cards are co-branded between EbixCash and its card-issuing banking partner(s) and are affiliated with major payment associations such as Visa, Mastercard, and Rupay. The gift cards are sold to a diversified set of corporate customers from various industries. The gift cards are used by corporate customers to disburse incentives to the end users, which are primarily their employees, agents and business associates. The gift cards sold by EbixCash are not reloadable, cannot be used at ATMs or for any other cash-out or funds transfer transactions, and are subject to maximum limits per card (currently 10,000 INR or approximately $140). Gift cards issued by EbixCash are valid for a period of 15 months from the date of issuance for virtual cards and three years for physical cards. EbixCash has entered into arrangements with banks and financial institutions to settle payments to merchants based on utilization of the gift cards.

The Company has end-to-end responsibilities related to the gift cards sold, from the activation and ongoing utilization of the gift cards to customer service responsibilities to risk of loss due to fraud on the gift cards sold. EbixCash acts a principal in the sale of gift card and, thus, gift card revenue is recognized on a gross basis (full purchase value at the time of sale) with the corresponding cost of the gift cards recorded as cost of services provided. Unredeemed gift cards at June 30, 2021 are recorded as deferred revenues in the financial results.

EbixCash Travel Exchanges

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    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.

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 Outward Remittance 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 potential consumers, or only to those for EbixCash has a relationship with the biller and 3) 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 - collecting money from the consumer and processing the bill payment transaction. This service provides the billers real-time or near real-time information regarding their customers’ payments, thus simplifying the billers’ collection efforts. 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.

EbixCash Technology Services

    

    EbixCash also offers on-demand technology to various providers in the area of lending, wealth and asset management, and travel across the world.    

Insurance Exchanges

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    Insurance Exchanges revenues are primarily derived from consideration paid by customers related to our SaaS platforms, related services and the licensing of software. A typical contract for our 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 our SaaS platforms are not considered to be distinct from the usage fees associated with the 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. Our 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

    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. Our 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 our 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 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")

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    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.

COI Creation and Tracking

    The Company provides services to issue and track certificates of insurance in the U.S. 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 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 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 six months ended June 30, 2021 and 2020:

						Three Months Ended June 30,												Six Months Ended June 30,
Revenue:						2021						2020						2021						2020
						(In thousands)
India*						$	188,612					$	52,635					$	420,153					$	126,550
United States						37,722						41,714						75,788						83,626
Australia						8,688						7,399						18,372						15,585
Latin America						3,095						3,577						6,193						7,814
Europe						4,064						3,249						8,168						6,530
Canada						1,595						1,119						2,745						2,233
Singapore*						1,125						795						2,194						2,048
Indonesia*						459						179						864						2,321
United Arab Emirates*						28						10						28						134
Philippines*						383						253						827						1,529
New Zealand						551						382						1,043						818
						$	246,322					$	111,312					$	536,375					$	249,188
*Primarily India led businesses for which total revenue was $189.9 million and $422.5 million for the three and six months ended June 30, 2021, respectively, and $53.2 million and $131.1 million for the three and six months ended June 30, 2020, respectively.

    

The Company’s revenues are derived from three product/service channels: EbixCash Exchanges, Insurance Exchanges, and Risk Compliance Solutions ("RCS").

    Presented in the table below is the breakout of our revenue streams for each of those product/service channels for the three and six months ended June 30, 2021 and 2020.

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			Three Months Ended												Six Months Ended
			June 30,												June 30,
			2021						2020						2021						2020
			(In thousands)
EbixCash Exchanges			189,947						53,240						422,499						131,095
Insurance Exchanges			41,916						42,959						85,151						86,960
Risk Compliance Solutions			14,459						15,113						28,725						31,133
Totals			$	246,322					$	111,312					$	536,375					$	249,188

Costs to Obtain and Fulfill a Contract

    The Company’s capitalized costs are primarily derived from the fulfillment of SaaS-related setup and customizations, from which the customer receives benefit through continued access to and use of the SaaS product platforms. In accordance with the guidance in ASC 340-40-25-5, we capitalize the costs directly related to the setup and development of these customizations, which satisfy the Company’s performance obligation with respect to access to the Company’s underlying product platforms. The capitalized costs primarily consist of the salaries of the developers directly involved in fulfilling the project and are solely based on the time spent on that project. The Company amortizes the capitalized costs ratably over the expected useful life of the related customizations, matching our treatment for the related revenue, and the capitalized costs are recoverable from profit margin included in the contract. At June 30, 2021 and December 31, 2020, the Company had $554 thousand and $646 thousand, respectively, of contract costs in “Other current assets” and $1.0 million and $1.0 million, respectively, in “Other assets” on the Company's Condensed Consolidated Balance Sheets.

			June 30, 2021						December 31, 2020
			(Unaudited)
			(In thousands)
Balance, beginning of period			$	1,630					$	1,897
Costs recognized from the beginning balance			(342)						(743)
Additions, net of costs recognized			294						476
Balance, end of period			$	1,582					$	1,630

Contract Liabilities

    Contract liabilities include payments or billings that have been received or made prior to performance. In certain cases, cash collections pertain to maintenance and support fees, initial setup or registration fees under hosting agreements, software license fees received in advance of delivery and acceptance, and software development fees paid in advance of completion and delivery. Approximately $7.4 million and $7.2 million of contract liabilities were included in billed accounts receivable as of June 30, 2021 and December 31, 2020, respectively.

    The Company records contract liabilities when it receives payments or invoices in advance of the performance of services. A significant portion of this balance relates to contracts where the customer has paid in advance for the use of the Company's SaaS platforms over a specified period of time. These advanced payments are recognized as the related performance obligation is fulfilled (generally less than one year). Part of our performance obligation for these contracts consists of the requirement to provide customers with continued access to, and use of, the SaaS platforms and associated customizations. Without continued access to the SaaS platform, the customizations have no separate benefit to the customer. Our customers simultaneously receive and consume the benefits as we provide access over time. The remaining portion of the contract liabilities balance consists primarily of customer-specific customizations that are not distinct from related performance obligations that transfer over time. This portion is recognized over the expected useful life of the customizations.

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			June 30, 2021						December 31, 2020
			(Unaudited)
			(In thousands)
Balance, beginning of period			$	40,930					$	37,253
Revenue recognized from beginning balance			(20,866)						(32,783)
Additions from business acquisitions			—						—
Additions, net of revenue recognized and currency translation			22,982						36,460
Balance, end of period			$	43,046					$	40,930

Accounts Receivable and the Allowance for Doubtful Accounts—As of June 30, 2021, reported accounts receivable of $142.4 million (net of $19.4 million allowance for doubtful accounts receivable) includes $46.1 million of contract assets. As of December 31, 2020, reported accounts receivable of $142.8 million (net of $22.7 million allowance for doubtful accounts receivable) includes $45.2 million of contract assets. The Company records a contract asset when revenue recognized on a contract exceeds the billings. The contract asset is transferred to receivables when the entitlement to payment becomes unconditional. These contract assets are primarily related to project based revenue where we recognize revenue using the input method calculated using expected hours to complete the project measured against the actual hours completed to date. Management specifically analyzes accounts receivable, historical bad debts, write-offs, customer concentrations, customer credit-worthiness, current economic trends and changes in our customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. The Company recognized bad debt (benefit) provision for doubtful accounts in the amount of (755) thousand and ($2.8) million for the three and six month period ended June 30, 2021, respectively, and $568 thousand and $(50) thousand for the three and six month period ended June 30, 2020, respectively.

Capitalized Software Development Costs — In accordance with ASC 350-40 "Internal-Use Software" and ASC 350-985 "Software" the Company expenses costs as they are incurred until technological feasibility has been established, at and after which time those costs are capitalized until the product is available for general release to customers. Costs incurred to enhance our software products, after general market release of the services using the products, are expensed in the period they are incurred. The periodic expense for the amortization of previously capitalized software development costs is included in costs of services provided. See Note 10 "Capitalized Software Development Costs" for further details.

Goodwill and Indefinite-Lived Intangible Assets—Goodwill represents the cost in excess of the fair value of the identifiable net assets from the businesses that we acquire. In accordance with ASC 350, “Goodwill and Other Intangible Assets" and ASU No. 2011-08, “Testing Goodwill for Impairment”, goodwill is tested for impairment at the reporting unit level on an annual basis or on an interim basis if an event occurred or circumstances change that would indicate that fair value of our reporting unit decreased below its carrying value. Potential impairment indicators include a significant change in the business climate, legal factors, operating performance indicators, competition, customer retention and the sale or disposition of a significant portion of the business. The Company applies the accounting guidance concerning goodwill impairment evaluation, whereby the Company first assesses certain qualitative factors to determine whether the existence of events or circumstances would indicate that it is more likely than not that the fair value of a reporting unit was less than its carrying amount. If after assessing the totality of events and circumstances, we were to determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we would perform quantitative impairment testing.

    We perform our annual goodwill impairment evaluation and testing as of October 1st of each year or, when events or circumstances dictate, more frequently. No goodwill impairments have occurred nor recognized in 2020 or through June 30, 2021.

    The Company has considered the guidance within ASC 350 “Goodwill and Other Intangible Assets” and ASC 280 “Segment Reporting” in concluding that Ebix effectively operates as one operating and reportable segment and one reporting unit.

    The Company’s indefinite-lived assets are primarily associated with the estimated fair value of the contractual customer relationships existing with the property and casualty insurance carriers in Australia using the Company's property and casualty ("P&C") data exchange. Indefinite-lived intangible assets are not amortized, but rather are tested for impairment annually and tested on an interim basis if a triggering event has occurred. 

    Finite-lived Intangible Assets—Purchased intangible assets represent the estimated acquisition date fair value of customer relationships, developed technology, trademarks, non-compete agreements and other intangibles described below

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obtained in connection with the businesses we acquire. We amortize these intangible assets on a straight-line basis over their estimated useful lives, as follows:

Category						Life (yrs)
Airport contracts						9
Backlog						1-1.5
Brand						15
Customer relationships						7–20
Database						10
Dealer networks						15-20
Developed technology						3–12
Non-compete agreements						5
Store networks						5
Trademarks						3–15

    Foreign Currency Translation—The functional currency is the U.S. Dollar for the Company's foreign subsidiaries in Dubai and Singapore, because the intellectual property research and development activities provided by its Dubai and Singapore subsidiaries are in support of the Company's operating divisions across the world, which are primarily transacted in U.S. Dollars.

    During the three months ended June 30, 2021, the net change in the cumulative foreign currency translation account, which is a component of accumulated other comprehensive loss within stockholders’ equity, was an unrealized loss of $8.6 million, of which $11.0 million was caused by the 1.3% weakening of the Indian rupee.

    During the six months ended June 30, 2021, the net change in the cumulative foreign currency translation account, which is a component of accumulated other comprehensive loss within stockholders’ equity, was an unrealized loss of $12.5 million, of which $13.2 million was caused by the 1.7% weakening of the Indian rupee.

    The functional currency of the Company's other foreign subsidiaries is the local currency of the country in which the subsidiary operates. The assets and liabilities of these foreign subsidiaries are translated into U.S. dollars at the rates of exchange at the balance sheet dates. Income and expense accounts are translated at the average exchange rates in effect during the period. Gains and losses resulting from translation adjustments are included as a component of accumulated other comprehensive income in the accompanying Condensed Consolidated Balance Sheets, and are included in the Condensed Consolidated Statements of Comprehensive Income. Foreign exchange transaction gains and losses that are derived from transactions denominated in a currency other than the subsidiary's functional currency are included in the determination of net income.

    Income Taxes—Deferred income taxes are recorded to reflect the estimated future tax effects of differences between the financial statement and tax basis of assets, liabilities, operating losses, and tax credit carry forwards using the tax rates expected to be in effect when the temporary differences reverse. Valuation allowances, if any, are recorded to reduce deferred tax assets to the amount management considers more likely than not to be realized. Such valuation allowances are recorded for the portion of the deferred tax assets that are not expected to be realized based on the levels of historical taxable income and projections for future taxable income over the periods in which the temporary differences will be deductible.

    The Company applies the relevant FASB accounting guidance on accounting for uncertainty in income taxes positions. This guidance clarifies the accounting for uncertainty in income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. In this regard we recognize the tax benefit from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

    Recent Relevant Accounting Pronouncements—The following is a brief discussion of recently released accounting pronouncements that are pertinent to the Company's business:

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In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): "Simplifying the Accounting for Income Taxes". ASU 2019-12 is expected to reduce the cost and complexity related to the accounting for income taxes by eliminating the need for an entity to analyze whether the following apply to a given reporting period:

• Exception to the incremental approach for intra period tax allocation;

• Exceptions to accounting for basis differences when there are ownership changes in foreign investments; and

• Exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses.

    For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The adoption of ASU 2019-12 has not had a material impact on the Company’s operations. The Company continues to periodically assess the impact of this new pronouncement on its ongoing operations.

    Recently-issued accounting guidance not discussed above is not applicable, is immaterial to our unaudited condensed consolidated financial statements, or did not or is not expected to have a material impact on our business.

A reconciliation between basic and diluted earnings per share is as follows:

			Three Months Ended												Six Months Ended
			June 30,												June 30,
			2021						2020						2021						2020
			(In thousands, except per share data)
Net income attributable to Ebix, Inc.			$	15,721					$	23,475					$	37,312					$	48,198
Basic weighted average shares outstanding			30,581						30,504						30,570						30,490
Dilutive effect of stock options and restricted stock awards			132						204						142						206
Diluted weighted average shares outstanding			30,713						30,708						30,712						30,696
Basic earnings per common share			$	0.51					$	0.77					$	1.22					$	1.58
Diluted earnings per common share			$	0.51					$	0.76					$	1.21					$	1.57

The Company seeks to execute accretive business acquisitions (which primarily targets businesses that are complementary to Ebix's existing products and services), in combination with organic growth initiatives, as part of its comprehensive business growth and expansion strategy.

    During the six months ending June 30, 2021, the Company completed no business acquisitions.    

    During the twelve months ended December 31, 2020, the Company completed two business acquisitions, as follows:

Effective May 4, 2020, Ebix acquired from bankruptcy India-based Trimax IT Infrastructure & Services Ltd ("Trimax"), which provides IT and integration services to state-owned transport corporations, operates data centers, and is an IT infrastructure solution provider, for approximately $9.9 million of upfront consideration. Additionally, Ebix issued preferred shares in Trimax to the selling shareholders that can be sold five years from the closing of the acquisition based on an independent valuation performed by a Big 4 valuation firm. The maximum value of the preferred shares upon sales is approximately $9.9 million. The valuation and purchase price allocation was finalized during the second quarter of 2021.

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On October 1, 2020 the Company acquired a 70% interest in AssureEdge Global Services ("(AssureEdge") for a total purchase price of approximately $5.0 million, including net working capital acquired. AssureEdge is a pan-India based BPO company, with a variety of BPO offerings via six contact centers across the country. It serves a number of industries and clients that have cross-selling value for EbixCash services. The valuation and purchase price allocation remains preliminary and will be finalized as soon as practicable, but in no event longer than one year from the effective date of this transaction.

A significant component of the purchase price consideration for many of the Company's business acquisitions is a potential subsequent cash earn-out payment based on reaching certain specified future revenue targets. The terms for the contingent earn out payments in most of the Company's business acquisitions typically address the GAAP recognizable revenues achieved by the acquired entity over a one-, two-, and/or three-year period subsequent to the effective date of their acquisition by Ebix. These terms typically establish a minimum threshold revenue target to achieve over the agreed upon period post acquisition to earn the specified cash earn out payment. The Company applies these terms in its calculation and determination of the fair value of contingent earn out liabilities for purchased businesses as part of the related valuation and purchase price allocation exercise for the corresponding acquired assets and liabilities. The Company recognizes these potential obligations as contingent liabilities and are reported as such on its Condensed Consolidated Balance Sheets. As discussed in more detail in Note 1, these contingent consideration liabilities are recorded at fair value on the acquisition date and are remeasured quarterly based on the then assessed fair value and adjusted if necessary. As of June 30, 2021, the total of these contingent consideration liabilities was $2.6 million, while at December 31, 2020, the total of these contingent consideration liabilities was $0.

The Company maintains a senior secured syndicated credit facility, dated August 5, 2014, among Ebix, Inc., as borrower, its subsidiaries party thereto from time to time as guarantors, Regions Bank (as administrative agent and collateral agent) and the lenders party thereto from time to time (as amended from time to time, the "Credit Facility") that provides a $450 million revolving line of credit (the "Revolver") as well as a term loan (the "Term Loan"), which at June 30, 2021 had a balance of $224.2 million. The Credit Facility matures in February 2023.

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

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

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

On March 30, 2020, the Company and certain of its subsidiaries entered into a waiver related to the Credit Facility (the "Waiver"). The Waiver provided that so long as the Company’s leverage ratio is below 5.0 to 1.0 for the Company’s fiscal quarter ending March 31, 2020 pursuant to the terms of its compliance certificate required by the Credit Facility, the existing leverage ratio requirement of 3.5 to 1.0 was waived.

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At June 30, 2021, the Company's Condensed Consolidated Balance Sheets include $6.2 million of remaining deferred financing costs in connection with the Credit Facility, which are being amortized as a component of interest expense through the maturity of the Credit Facility in February 2023. $3.7 million of such deferred financing costs pertain to the Revolver, and $2.5 million pertains to the Term Loan, of which $1.5 million is netted against the current portion of the Term Loan and $986 thousand is netted against the long-term portion of the Term Loan as reported on the Condensed Consolidated Balance Sheets. At December 31, 2020, the Company's Consolidated Balance Sheets included $4.9 million of remaining deferred financing costs in connection with the Credit Facility, with $2.9 million pertaining to the Revolver, and $2.0 million pertaining to the Term Loan, of which $919 thousand was netted against the current portion of the Term Loan and $1 million was netted against the long-term portion of the Term Loan as reported on the Condensed Consolidated Balance Sheets.

    At June 30, 2021, the outstanding balance on the Revolver was $439.4 million and the facility carried an interest rate of 5.50% at June 30, 2021, an increase from 3.50% at the closing of Amendment No. 12 to the Credit Facility. The balance on the Revolver is included in the long-term liabilities section of the Condensed Consolidated Balance Sheets. During the six months ended June 30, 2021, the average and maximum outstanding balances of the revolving line of credit component of the credit facility were $439.4 million and $439.4 million, respectively. At December 31, 2020, the outstanding balance on the revolving line of credit with Regions was $439.4 million and the facility carried an interest rate of 3.50%. This balance was included in the long-term liabilities section of the Condensed Consolidated Balance Sheets. During 2020, the average and maximum outstanding balances on the revolving line of credit were $438.9 million and $439.4 million, respectively.

    At June 30, 2021, the outstanding balance on the Term Loan was $224.2 million, of which $24.5 million is due within the next twelve months. $31.3 million of principal payments were made during the six months ended June 30, 2021, of which $11.3 million were scheduled amortization payments. This term loan also carried an interest rate of 5.50% at June 30, 2021, subject to the same above mentioned increase in interest rate as the Revolver. The current and long-term portions of the Term Loan are included in the respective current and long-term sections of the Condensed Consolidated Balance Sheets, the amounts of which were $24.5 million and $199.7 million, respectively at June 30, 2021. At December 31, 2020, the outstanding balance on the Term Loan was $255.5 million, of which $22.6 million was due within twelve months. The Term Loan also carried an interest rate of 3.50% during the quarter ended December 31, 2020.

    The Company maintains working capital debt facilities with banks in India for working capital funding requirements to support our foreign exchange and payment remittance businesses. We are required to extend short term credits to franchisee networks (B2B) and corporate customers. Additionally we are required to maintain minimum levels of foreign currency inventory across branches and airport operations. Typically, these facilities carry interest rates of 6.75% to 9.45%, are rupee-denominated working capital lines, and are collateralized against the receivables of these businesses and existing foreign currency inventory on hand.

Contingencies — On February 22, 2021, Christine Marie Teifke, a purported purchaser of Ebix securities, filed a putative class action in the United States District Court for the Southern District of New York, captioned Teifke v. Ebix, Inc., et. al., Case No. 1:21-cv-01589-JMF, on behalf of herself and others who purchased or acquired Ebix securities between November 9, 2020 and February 19, 2021. The complaint asserts claims against the Company, Robin Raina, and Steven M. Hamil, for purported violations of Section 10(b) of the Securities Exchange Act of 1934, alleging that Ebix made false and misleading statements and failed to disclose material adverse facts about an audit of the company's gift card business in India and its internal controls over the gift and prepaid card revenue transaction cycle. The complaint alleges that Ebix's stock price fell as a result of the revelation that Ebix's independent auditor, RSM US LLP (“RSM”), had resigned, citing concerns with the company's internal controls and disagreements over other accounting issues. The complaint also asserts a claim against Robin Raina and Steven M. Hamil for purported violations of Section 20(a) of the Exchange Act arising out of the same facts. The complaint seeks, among other relief, damages and attorneys' fees and costs. On May 11, 2021, the court issued an order appointing Rahul Saraf, another purported purchaser of Ebix, Inc. securities, as lead plaintiff in the action, and the caption in the action was changed to Saraf v. Ebix, Inc., et. al., Case No. 1:21-cv-01589-JMF (the "Class Action").

On May 14, 2021, Javier Calvo, a purported shareholder of the Company, filed a derivative action in the United States District Court for the Southern District of New York on behalf of Ebix captioned Calvo v. Raina, et. al., Case No. 21-cv-4380-JMF (the "Calvo Action"), against individual defendants Robin Raina, Steven M Hamil, Hans U. Benz, Rolf Herter, Neil D. Eckert, Pavan Bhalla, Hans Ueli Keller, and George W. Hebard, and nominal defendant Ebix asserting claims related to the

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RSM resignation. The complaint asserts claims of breach of fiduciary duty against all of the individual defendants, and also asserts claims under Sections 10(b) and 21D of the Securities Exchange Act of 1934 for contribution against Robin Raina and Steven M Hamil. On July 7, 2021, the court granted a stipulation and order staying the Calvo Action pending the resolution of any motion(s) to dismiss the Class Action.

On July 13, 2021, Peter Votto, another purported Ebix shareholder, filed an additional derivative action in the United States District Court for the Southern District of New York on behalf of Ebix, captioned Votto v. Raina, et. al., Case No. 21-cv-5982-JMF (the "Votto Action"), asserting claims against the same defendants as the Calvo Action. The complaint asserts claims relating to the RSM resignation against all of the individual defendants for breach of fiduciary duties, unjust enrichment, waste of corporate assets, and rescission under Section 29(b) of the Securities Exchange Act of 1934, and claims for contribution under Sections 10(b) and 21D of the Securities Exchange Act of 1934 against Robin Raina and Steven M Hamil. On July 23, 2021, the court granted a stipulation and order consolidating the Calvo and Votto Actions. The July 7, 2021 order staying the Calvo Action pending the resolution of any motion(s) to dismiss the Class Action remains in effect for the consolidated Calvo and Votto Actions.

On July 16, 2019, Yatra Online, Inc. ("Yatra"), Ebix, Inc. ("Ebix"), and EbixCash Travels, Inc. ("Merger Sub") entered into a Merger Agreement. On May 14, 2020, Yatra entered into an agreement with Ebix and Merger Sub extending the outside date of the Merger Agreement (the "Extension Agreement"). On June 5, 2020, Yatra terminated the Merger Agreement and filed a complaint in the Delaware Court of Chancery against Ebix and Merger Sub (the "Complaint"). On September 25, 2020, Yatra amended the Complaint and added as a defendant each financial institution (each, a “Defendant Lender”) party to that certain credit facility between them and Ebix, most recently amended on May 7, 2020 (the “Credit Facility”). The Complaint, as amended, alleges that Ebix and Merger Sub breached certain representations, warranties, and covenants contained in the Merger Agreement and the Extension Agreement and that Ebix negotiated in bad faith. The amended Complaint also alleges fraudulent actions by Ebix and the Defendant Lenders arising from certain terms of the Credit Facility and tortious interference with the closing of the Merger Agreement by Ebix and the Defendant Lenders. The Complaint seeks, among other relief, damages, pre-judgment and post-judgment interest, and attorneys' fees and costs. Ebix and Merger Sub deny any liability and intend to defend the action vigorously.

On May 12, 2017, Ebix Software India Pvt. Ltd. (“Ebixcash”) entered into several agreements with the most prominent shareholders of Itz Cash Card Limited (“Itz”), the most relevant among these a stock purchase agreement (the “SPA”), to purchase a majority ownership stake in Itz. Further, as part of the overall purchase of Itz, a share purchase agreement between Ebixcash and individual ESOP holders of Itz was entered into on July 7, 2017 (the “ESOP SPA”) (with the SPA, the ESOP SPA and the other purchase documents, collectively, the “Transaction Documents”). Part of the consideration for Ebixcash’s purchase of Itz consisted of two individual potential earn-out payments, the first for the year ended March 31, 2019 (the “First Earn-Out”) and the second for the following year, ending on March 31, 2020 (the “Second Earn-Out”). Neither the First Earn-Out nor the Second Earn-Out were achieved pursuant to the terms of the SPA. After correspondence between the parties between September 2019 and May 2020, the former shareholders of Itz (“Sellers”) sent Ebixcash notices of arbitration (“NOAs”) under which they were availing themselves of the arbitration dispute provisions set forth in the Transaction Documents. Apart from the amounts claimed owed under the earn-out provisions, the Sellers also alleged in the NOAs other violations of the terms of the Transaction Documents, including, certain non-competition and restricted matter approval violations. The matter is under arbitration in accordance with the rules of the Singapore International Arbitration Centre. The Company believes that each of the Sellers claims is without merit and continues to defend its position vigorously. The Company believes that Ebixcash has several viable counterclaims related to improper termination of the Transaction Documents and violation of non-compete provisions.

The Company is involved in various other claims and legal actions arising in the ordinary course of business, which in the opinion of management, the ultimate likely disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

    The Company recorded a net income tax expense of $627 thousand (4.03%) and $1.8 million (4.80%) during the three and six months ended June 30, 2021, respectively, which included tax expense of $358 thousand and $696 thousand from certain discrete items related to stock compensation and uncertain tax positions during the three and six months ended June 30, 2021, respectively. The income tax expense, exclusive of discrete items, was $269 thousand (1.73%) and $1.1 million (2.98%) for the three and six months ended June 30, 2021, respectively. The Company expects its full year effective tax rate to be in the range of 2.5% to 3.5%.

     As of June 30, 2021 and December 31, 2020 a liability of $8.9 million and $8.3 million for uncertain tax positions is included in other long-term liabilities of the Company's Condensed Consolidated Balance Sheets. The Company increased this liability reserve by $227 thousand and $561 thousand, respectively, during the three and six months ended June 30, 2021 and

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    The Company operates within one reportable segment whose results are regularly reviewed by the Company's CEO, its chief operating decision maker as to performance and allocation of resources. External customer revenues in the tables below are attributed to a particular country based on whether the customer had a direct contract with the Company which was executed in that particular country for the sale of the Company's products/services from an Ebix subsidiary located in that country.

    The following enterprise-wide information relates to the Company's geographic locations, with almost all geographies being impacted in varying degrees by the COVID-19 pandemic:

						Six Months Ended						As of						Six Months Ended						As of
						June 30, 2021						June 30, 2021						June 30, 2020						December 31, 2020
						External Revenues						Long-lived assets						External Revenues						Long-lived assets
						(In thousands)
India*						$	420,153					$	706,516					$	126,550					$	698,936
United States						75,788						378,486						83,626						381,782
Australia						18,372						3,152						15,585						3,581
Latin America						6,193						14,219						7,814						13,723
Europe						8,168						24,450						6,530						22,900
Indonesia*						864						117						2,321						139
Singapore*						2,194						19,241						2,048						19,336
Philippines*						827						667						1,529						661
Canada						2,745						6,026						2,233						6,930
New Zealand						1,043						436						818						513
United Arab Emirates*						28						54,499						134						54,789
Mauritius*						—						4,663						—						4,665
						$	536,375					$	1,212,472					$	249,188					$	1,207,955
*Primarily India led businesses for which total revenue was $189.9 million and $422.5 million for the three and six months ended June 30, 2021, respectively, and $53.2 million and $131.1 million for the three and six months ended June 30, 2020, respectively.

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from BSNL, a public-sector entity in Indian, against which an estimated allowance for doubtful accounts of $7.6 million has been made as of June 30, 2021 ($11.7 million as of December 31, 2020).

    Effective September 2015, Ebix and IHC formed the joint venture EbixHealth JV. This joint venture was primarily established to promote and market an administrative data exchange for health insurance lines of business nationally. Ebix has a 51% equity interest in the joint venture and IHC has a 49% equity interest the joint venture. Ebix is fully consolidating the operations of the EbixHealth JV into the Company's financial statements and separately reporting the EbixHealth JV non-controlling interest in the joint venture's net income and equity. IHC is also a customer of the EbixHealth JV, and during the three and six months ended June 30, 2021 the EbixHealth JV recognized $378 thousand and $796 thousand, respectively, of revenue from IHC. During the three and six months ended June 30, 2020 the EbixHealth JV recognized $487 thousand and $1.0 million, respectively, of revenue from IHC. As of June 30, 2021 and December 31, 2020, the EbixHealth JV had $185 thousand and $63 thousand of accounts receivable from IHC, respectively. Furthermore, as a related party, IHC also has been and continues to be a customer of Ebix, and during the three and six months ended June 30, 2021 the Company recognized $20 thousand and $43 thousand of revenue from IHC, respectively. During the three and six months ended June 30, 2020 the Company recognized $42 thousand and $71 thousand of revenue from IHC. As of June 30, 2021 and December 31, 2020, Ebix had $22 thousand and $2 thousand of accounts receivable with IHC. The EbixHealth JV has a $1.8 million note due to IHC. Additionally, based on the final purchase price allocation valuation report for the EbixHealth JV it was concluded that the customer relationship with IHC, our joint venture partner, to be by its nature, an indefinite-lived customer relationship. For the year ended December 31, 2020, as a result of the annual impairment analysis performed, the Company concluded that the IHC customer relationship indefinite-lived intangible asset had been impaired. The Company recorded a $6.2 million impairment charge during the fourth quarter of 2020. In addition, the Company has concluded that the IHC customer relationship intangible is no longer considered indefinite-lived and will be amortized over the estimated remaining life of 10 years.

    Changes in the carrying amount of goodwill for the six months ended June 30, 2021 and the year ended December 31, 2020 are reflected in the following table.

			June 30, 2021						December 31, 2020
			(Unaudited)
			(In thousands)
Beginning Balance			$	949,037					$	952,404
Additions			—						11,241
Purchase accounting adjustments			1,687						725
Foreign currency translation adjustments			(8,662)						(15,333)
Ending Balance			$	942,062					$	949,037

    The carrying value of finite-lived and indefinite-lived intangible assets at June 30, 2021 and December 31, 2020 are as follows:

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			June 30, 2021						December 31, 2020
			(Unaudited)
			(In thousands)
Finite-lived intangible assets:
Customer relationships			$	102,009					$	96,616
Developed technology			20,300						19,867
Dealer network			6,544						6,653
Airport contracts			4,446						4,523
Trademarks			2,705						2,700
Store networks			2,398						2,440
Brand			881						896
Non-compete agreements			724						759
Database			212						212
Backlog			140						140
Total intangibles			140,359						134,806
Accumulated amortization			(89,049)						(83,926)
Finite-lived intangibles, net			$	51,310					$	50,880
Indefinite-lived intangibles:
Customer/territorial relationships			$	16,647					$	21,647

As a part of the 2009 acquisition of E-Z Data Ebix recognized a $14.2 million indefinite-lived intangible asset associated with acquired corporate customer relationships. During the third quarter 2020, the Company identified a potential indicator of impairment and performed a quantitative analysis to test for impairment. The Company determined the fair value of the intangible assets exceeded its carrying value, however the Company determined that the intangible asset no longer had an indefinite life. The Company has reclassified the $14.2 million to finite-lived and will amortize the value of this intangible over an estimated remaining useful life of 15 years.

The Company recorded a $6.2 million impairment charge in the fourth quarter of 2020 related to the IHC customer relationship indefinite-lived intangible asset associated with the Company's EbixHealth JV. In addition, the Company concluded that the remaining IHC customer relationship intangible was no longer indefinite-lived. The Company amortizes this intangible over the remaining estimated useful life of ten years.     

    In accordance with ASC 350-40 “Internal-Use Software” and/or ASC 350-985 “Software”, the Company has capitalized certain software and product related development costs associated with the Company’s continuing medical education service offerings, development of the Property and Casualty ("P&C")underwriting insurance data exchange platform servicing the London markets, development of EbixCash’s single sign on agent and customer portal, including mobile application, and content development work related to the E-Learning business of EbixCash. During the three and six months ended June 30, 2021, the Company capitalized $1.4 million and $3.1 million, respectively, and during the three and six months ended June 30, 2020, the Company capitalized $1.2 million and $3.3 million, respectively, of such development costs. At June 30, 2021 and December 31, 2020, a total of $20.7 million and $19.4 million of remaining unamortized development costs are reported on the Company’s Condensed Consolidated Balance Sheets, respectively.

    

    During the three and six months ended June 30, 2021, the Company recognized $834 thousand and $1.6 million, respectively, of amortization expense with regards to these capitalized software development costs, which is included in cost of services provided in the Company’s Condensed Consolidated Statements of Income. During the three and six months ended June 30, 2020, related amortization expense was $837 thousand and $1.7 million, respectively. The capitalized continuing

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    Other current assets at June 30, 2021 and December 31, 2020 consisted of the following:

			June 30, 2021						December 31, 2020
			(Unaudited)
			(In thousands)
Prepaid expenses			$	68,402					$	57,017
Sales taxes receivable from customers			4,734						4,588
Other third party receivables			4,333						3,530
Credit card merchant account balance receivable			862						848
Short term portion of capitalized costs to obtain and fulfill contracts			554						646
Accrued interest receivable			74						355
Other			2,427						4,677
Total			$	81,386					$	71,661

    The Company has operating and finance leases for office space, retail, data centers and certain office equipment with expiration dates ranging through 2028, with various renewal options. Only renewal options that were reasonably assured to be exercised are included in the lease liability. At June 30, 2021, the maturity of lease liabilities under Topic 842 "Leases" are as follows:

Year						Operating Leases						Financing Leases						Total
						(in thousands)
2021 (Remaining six months)						$	1,944					$	115					$	2,059
2022						3,591						199						3,790
2023						3,205						139						3,344
2024						1,858						114						1,972
2025						1,236						4						1,240
Thereafter						1,566						—						1,566
Total						13,400						571						13,971
Less: present value discount*						(1,361)						(47)						(1,408)
Present value of lease liabilities						12,039						524						12,563
Less: current portion of lease liabilities						(3,249)						(200)						(3,449)
Total long-term lease liabilities						$	8,790					$	324					$	9,114
* The discount rate used was the incremental borrowing rates respective to the country where the assets are located.

    The Company's net assets recorded under operating and finance leases were $12.0 million and $12.9 million as of June 30, 2021, and December 31, 2020, respectively. The lease cost is recognized in our Condensed Consolidated Statement of Income in the category of General and Administrative and is summarized as follows:

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			Three Months Ended												Six Months Ended
			June 30,												June 30,
			2021						2020						2021						2020
			(in thousands)												(in thousands)
Operating Lease Cost			$	1,325					$	1,770					$	2,764					$	3,849
Finance Lease Cost:
Amortization of Lease Assets			59						43						98						87
Interest on Lease Liabilities			12						10						19						21
Finance Lease Cost			71						53						117						108
Sublease Income			(187)						(113)						(225)						(225)
Total Net Lease Cost			$	1,209					$	1,710					$	2,656					$	3,732

    

    Other information about lease amounts recognized in our Condensed Consolidated Statement of Income is summarized as follows:

			June 30, 2021
Weighted Average Lease Term - Operating Leases			4.4 years
Weighted Average Lease Term - Finance Leases			3.0 years
Weighted Average Discount Rate - Operating Leases			7.2		%
Weighted Average Discount Rate - Finance Leases			6.7		%

    

    At June 30, 2021, our lease liability of $12.6 million does not include certain arrangements, which are primarily airport leases, that do not meet the definition of a lease under Topic 842. Such arrangements represent further commitments of approximately $44.3 million as follows:

Year						Commitments
						(in thousands)
2021 (Remaining six months)						$	9,351
2022						17,751
2023						17,244
Thereafter						—
Total						$	44,346

    Finance leases range from three to five years and are primarily for office equipment. Rental expense for office and airport facilities and certain equipment subject to operating leases for the six months ended June 30, 2021 and 2020 was $5.4 million and $8.4 million, respectively. During the second quarter of 2021, each of these airport leases remains subject to force majeure provisions resulting from COVID-19 and the cessation of the Company's airport operations. These monthly rent payments have been temporarily waived until the Company restarts airport operations. It remains uncertain when and under what conditions each payment abatement will end.

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    Other current liabilities at June 30, 2021 and December 31, 2020 consisted of the following:

			June 30, 2021						December 31, 2020
			(Unaudited)
			(In thousands)
Customer advances (deposits)			$	28,525					$	25,043
Acquisition obligations (upfront purchase and contingent consideration)			2,343						2,443
Total			$	30,868					$	27,486

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