• With respect to Note 5 of the Condensed Notes to Consolidated Financial Statements, "Commitments and Contingencies", and "Contractual Obligations and Commercial Commitments" in MD&A, changes in the market value of our assets or the actual cost of our commitments or contingencies;

• Regarding Note 8 of the Condensed Notes to Consolidated Financial Statements related to acquired intangible assets and our ability to accurately estimate the fair value of such assets; and,

• With respect this Management Discussion & Analysis of Financial Condition and Results of Operation and the analysis of the three month revenue trend, the actual level of demand for our products during the immediately foreseeable future.

The following information should be read in conjunction with the unaudited consolidated financial statements and the notes thereto included in Part 1. Item 1 of this Quarterly Report, and the audited consolidated financial statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2008. Company Overview
Ebix, Inc. is a leading international supplier of software and e-commerce solutions to the insurance industry. Ebix provides a series of application software products for the insurance industry ranging from carrier systems, agency systems and exchanges to custom software development for all entities involved in the insurance and financial industries. Our goal is to be the leading powerhouse of backend insurance transactions in the world. The Company's technology vision is to focus on convergence of all insurance channels, processes and entities in a manner such that data can seamlessly flow once a data entry has been made. Our customers include many of the top insurance and financial sector companies in the world.
The insurance industry has undergone significant consolidation over the past several years driven by the need for, and benefits from, economies of scale and scope in providing insurance in a competitive environment. The insurance markets have also seen a steady increase in the desire to reduce paper based processes and improve efficiency both at the back-end side and also at the consumer end side. Such consolidation has involved both insurance carriers and insurance brokers and is directly impacting the manner in which insurance products are distributed. Management believes the insurance industry will continue to experience significant change and increased efficiencies through online exchanges and reduced paper based processes are becoming increasingly a norm across the world insurance markets. Changes in the insurance industry are likely to create new opportunities for the Company.

Ebix strives to work collaboratively with clients to develop innovative technology strategies and solutions that address specific business challenges. Ebix combines the newest technologies with its capabilities in consulting, systems design and integration, IT and business process outsourcing, applications software, and Web and application hosting to meet the individual needs of organizations. Over 70% of our operating revenues are of a recurring nature.
Recently, we have expanded both internally as well as through a series of acquisitions.
ConfirmNet Corporation-Effective November 1, 2008 Ebix acquired ConfirmNet Corporation ("ConfirmNet") a provider of insurance certificate creation and tracking services. The Company paid ConfirmNet shareholders $7.4 million for all of ConfirmNet's stock, and ConfirmNet shareholders earned an additional $3.1 million in additional which was paid in the first quarter of 2009 and retain the right to earn up to an additional $3.0 million at the one year anniversary date of the acquisition if certain revenue targets of the ConfirmNet division of Ebix are met. The purchase price allocation for this business combination is not complete because the Company is in the process of developing a valuation of the respective identifiable intangible and tangible assets. The results of operation for ConfirmNet, which is a component of our BPO channel, are included in the Company's reported net income starting in the fourth quarter of 2008. Ebix financed this acquisition using available cash balances. Acclamation Systems, Inc.-Effective August 1, 2008 Ebix acquired Acclamation Systems, Inc ("Acclamation") a developer of supplier software and e-commerce solutions to the health insurance industry, effective August 1, 2008. The Company acquired all of the stock of Acclamation for a payment of $22 million in cash and additional future payments of up to $3 million over a two year period subsequent to the effective date of the acquisition if certain customer revenue targets for Ebix's Health Benefits division are achieved. The Company also incurred approximately $85 thousand of costs primarily consisting of legal, accounting, due diligence, and filing fees directly related to the closing of the acquisition. Ebix financed this acquisition with a combination of the proceeds from the issuance of convertible debt and available cash reserves. The Company recorded definite lived intangible assets with respect to acquired customer relationships in the amount of $1.3 million (with an estimated useful life of 9 years), and acquired developed technology in the amount of $278 thousand (with an estimated useful life of 5 years). The operating results of Acclamation, which is a component of our Exchange channel, have been included in the Company's reported net income beginning in the third quarter of 2008. Periculum Services Group-Effective April 28, 2008 Ebix acquired Periculum Services Group ("Periculum") a provider of certificate of insurance tracking services. The Company acquired all of the stock of Periculum for a payment of $1.1 million and additional future payments of up to $200 thousand at the one year anniversary date of the acquisition if certain customer retention and revenue targets for Periculum are achieved. Ebix financed this acquisition using available cash. The purchase price allocation for this business combination is not complete because the Company is in the process of developing a valuation of the respective identifiable intangible and tangible assets. The operating results of Periculum, which is a component of our BPO channel, have been included in the Company's reported net income beginning in the second quarter of 2008.
Telstra eBusiness Services-Effective January 2, 2008 Ebix acquired Telstra eBusiness Services ("Telstra") an insurance exchange located in Melbourne, Australia. The Company purchased all of the stock of Telstra for a payment of Australian $50.0 million (US $43.9 million). Telstra was a wholly owned subsidiary of Telstra Services Solutions Holding Limited. Ebix financed this acquisition with a combination of $1.6 million of available cash reserves, $16.5 million from the Company's line of credit, $20.0 million of convertible debt, and $5.7 million from sales of the Company's common stock. The operating results of Telstra have been included in the Company's reported net income since the first quarter of 2008. The Company completed its purchase price allocation and the valuation of the respective acquired intangible assets with the assistance of independent third party valuation experts. As a result, the Company recognized an indefinite-life intangible and associated estimated fair value with respect to the contractual/territorial relationships existing with the property and casualty insurance carriers in Australia. These contractual/territorial rights are perpetual in nature and, therefore, the useful lives are considered indefinite. Indefinite-lived intangible assets are not amortized, but rather are tested for impairment annually. In summary the Company recorded an indefinite-life intangible asset with respect to the insurance carriers in the amount of $14.7 million, definite lived intangible assets with respect to acquired customer relationships in the amount of $2.6 million (with an estimated useful life of 20 years), and acquired developed technology in the amount of $523 thousand (with an estimated useful life of 3 years).

Offices and Geographic Information
The Company has its headquarters in Atlanta, Georgia, and it also has domestic operations in Walnut Creek and Hemet, California; Pittsburgh, Pennsylvania; Park City, Utah; Herndon, Virginia; and Dallas, Texas. The Company also has offices in Australia, New Zealand, Singapore, United Kingdom and India. In these offices, Ebix employs insurance and technology professionals who provide products, services, support and consultancy to our 3,000 customers across six continents. Ebix' also has established product development unit in India which has been awarded Level 5 status of the Carnegie Mellon Software Engineering Institute's Capability Maturity Model Integrated (CMMI) and ISO 9001:2000 certification in India. Information on the geographic dispersion of the Company's revenues, assets, and employees is provided in Note 7 to the consolidated financial statements, included Part 1 in this Form 10-Q. Key Performance Indicators
Management focuses on a variety of key indicators to monitor operating and financial performance. These performance indicators include measurements of revenue growth, operating income, operating margin, income from continuing operations, diluted earnings per share, and cash provided by operating activities. We monitor these indicators, in conjunction with our corporate governance practices, to ensure that business vitality is maintained and effective control is exercised.
The key performance indicators for the three months ended March 31, 2009 and 2008 were as follows:

                                                 Key Performance Indicators
                                                Three Months Ended March 31,
                                                  2009                2008
                                                   (Dollars in thousands,
                                                   except per share data)

      Revenue                                 $      20,668       $      16,639
      Revenue growth                                   24.2 %              84.5 %
      Operating income                        $       8,357       $       6,143
      Operating margin                                36.04 %             36.92 %
      Net Income                              $       8,335       $       5,670
      Diluted earnings per share              $        0.69       $        0.47
      Cash provided by operating activities   $       7,816       $       3.616

Results of Operations - Three-Months Ended March 31, 2009 and 2008
Operating Revenue
The Company's revenues are derived from four product/service groups. Presented
in the table below is the breakout of our revenue streams for each of those
product/service groups for the three months ended March 31, 2009 and 2008.

                                             For the Three Months Ended
                                                      March 31,
          (dollar amounts in thousands)       2009                2008
          Carrier Systems                 $       2,826               2,528
          Exchanges                       $      12,033               9,443
          BPO                             $       3,361               1,691
          Broker Systems                  $       2,448               2,977

The Company derives its revenues from professional and support services, which includes revenue generated from software development projects and associated fees for consulting, implementation, training, and project management provided to customers with installed systems, subscription and transaction fees related to services delivered over our exchanges or on an application service provider ("ASP") basis, fees for hosting software, fees for software license maintenance and registration, business process outsourcing revenue, and the licensing of proprietary and third-party software.
During the three months ended March 31, 2009 our operating revenue increased $4.0 million or 24%, to $20.7 million in the first quarter of 2009 compared to $16.6 million during the first quarter of 2008. The increase in our first quarter 2009 revenue as compared to the first quarter of 2008 is a the result of a $2.6 million increase in our health insurance exchange division revenues, a $1.5 million increase in our annuity and life insurance exchange division revenues , and a $1.7 million increase in BPO division revenues, partially offset by a $1.5 million decrease in our property and casualty insurance exchange revenues primarily due to the effect of fluctuation in foreign currency exchange rates effecting reported results. Cost of Services Provided
Costs of services provided, which includes costs associated with support, call center, consulting, implementation and training services, increased $1.2 million or 44%, from $2.8 million in the first quarter of 2008 to $4.1 million in the first quarter of 2009. This increase is attributable to additional personnel and facility costs in our BPO division in the amount of $808 thousand primarily associated with our recent acquisitions of Periculum and ConfirmNet, and $602 thousand of similarly related cost increases in support of our health insurance exchange division operations. As a percentage of revenues, our costs of services provided increased to 19.8% in the first quarter of 2009 from 17.1% in same period of 2008.
Product Development expenses
Product development expenses increased $334 thousand or 15%, from $2.2 million during the first quarter of 2008 to $2.5 million during the first quarter of 2009. This increase is primarily due to costs associated with new product development activities in support of our health insurance exchange division operations. Overall our consolidated product development expenses, as a percentage of revenues, increased to 12.1% in the first quarter of 2009 from 13.0% in the same period of 2008.
Sales and Marketing Expenses
Sales and marketing expenses increased $287 thousand or 34%, from $847 thousand in the first quarter of 2008 to $1.1 million in the first quarter of 2009. This increase is primarily attributable additional personnel and commission related costs in our BPO division in the amount of $196 thousand, and $106 thousand of similarly related cost increases in support of our health insurance exchange division operations. As a percentage of revenues, our sales and marketing costs increased slightly to 5.5% in the first quarter of 2009 from 5.1% in the same period of 2008.
General and Administrative Expenses
General and administrative modestly increased by $27 thousand from $3.82 million during the first quarter of 2008 to $3.84 million during the first quarter of 2009. $546 thousand of net reductions in administrative personnel and consulting related expenses, were offset by a $344 thousand increase in fees for audit and legal services and $193 thousand of increases in discretionary share-based and performance related compensation costs. Overall our consolidated general and administrative expenses, as a percentage of revenues, decreased to 18.6% in the first quarter of 2009 from 22.9% in the same period of 2008. Amortization and Depreciation Expenses
Amortization and depreciation expenses decreased $75 thousand or 9.2%, from $819 thousand in the first quarter of 2008 to $744 thousand in the first quarter of 2009. This net decrease in amortization and depreciation expenses is primarily due to the completion of the amortization of the customer relationships intangible asset in connection with our acquisition of Heart in July 2004 which reduced amortization expense by $61 thousand, and in connection with our January 2008 acquisition of Telstra, the reclassification of a portion of the purchase price associated with the contractual/territorial relationships existing with the property and casualty insurance carriers in Australia to an indefinite life intangible asset which reduced amortization expense by $122 thousand; partially offsetting these amortization expense reductions is a $96 thousand increase in amortization expense related to intangible assets associated with our April 2008 acquisition of Periculum, August 2008 acquisition of Acclamation, and November 2008 acquisition of ConfirmNet.

Income Taxes
The income tax provision for the three months ended March 31, 2009 was $196 thousand which is a $116 thousand or 37% decrease compared to the $312 thousand recognized in the same period in 2008. The Company's interim period income tax provisions are based on our estimate of the effective income tax rates applicable to related annual twelve month period, after considering discrete items uniquely related to the respective interim reporting period. The effective tax rate utilized in the first quarter of 2009 was 4.7% which is slightly down from the 5.2% for the same period in 2008 due to the change in the mix of taxable income amongst the various domestic and foreign countries, including certain low tax rate foreign jurisdictions, in which the Company conducts operations. Reported income tax expense for the three months ended March 31, 2009 are also lower due to a $249 thousand reduction in the provision for unrecognized tax benefits.
Liquidity and Capital Resources
Our ability to generate significant cash flows from operating activities is one of our fundamental financial strengths. Our principal sources of liquidity are the cash flows provided by our operating activities, our revolving credit facility, and cash and cash equivalents on hand. Due to the effect of temporary or timing differences resulting from the differing treatment of items for tax and accounting purposes and minimum alternative tax obligations in India, future cash outlays for income taxes are expected to substantially exceed current income tax expense but will not adversely impact the Company's liquidity position. We intend to utilize cash flows generated by our ongoing operating activities, in combination with renewing our revolving credit facility and the issuance of equity securities to fund capital expenditures and organic growth initiatives, to make acquisitions, and to retire outstanding indebtedness. We believe that anticipated cash flows provided by our operating activities, together with current cash and cash equivalent balances and access to our credit facilities and the capital markets, if required and available, will be sufficient to meet our projected cash requirements for the next twelve months, and the foreseeable future thereafter, although any projections of future cash needs, cash flows, and the condition of the capital markets in general, as to the availability of debt and equity financing, are subject to substantial uncertainty. In the event additional liquidity needs arise, we may raise funds from a combination of sources, including the potential issuance of debt or equity securities.
Our revolving line of credit, which had a current balance of $24.9 million, will mature in August 2009, and the first convertible note with Whitebox VSC, Ltd., which has current balance of $5.9 million as of May 7, 2009, will mature in December 2009. We expect to renegotiate a new revolving credit facility with a major commercial banking institution at relatively favorable market terms during the 2nd quarter. We expect that Whitebox will continue to convert principal balances on the convertible note into shares of our common stock as the year progresses. If favorable terms can be negotiated and if the capital market conditions are appropriate, we may seek to pre-pay any remaining balance on the Whitebox convertible notes prior to their maturity.
Our cash and cash equivalents were $11.8 million and $9.5 million at March 31, 2009 and December 31, 2008, respectively. Our cash and cash equivalents balance increased during the quarter primarily as a result of the cash generated from our operating activities.
Operating Activities
During the three months ended March 31, 2009 the Company generated $7.8 million of net cash flow from our ongoing operating activities. The primary components of the cash provided by operations for the quarter consisted of net income of $8.4 million, net of $743 thousand of depreciation and amortization, $(1.5) million of working capital requirements, and $243 thousand of non-cash compensation.
For the three months ended March 31, 2008, the Company generated $3.6 million of net cash flow from operating activities. The major sources of cash provided by operating activities for during the first quarter of 2008 was net income of $5.7 million, net of $819 thousand of depreciation and amortization, $(3.0) million of working capital requirements $100 thousand of non-cash compensation. Investing Activities
Net cash used for investing activities during the three months ended March 31, 2009 totaled $3.8 million, of which $1.0 million was used to fulfill an earn-out payment obligation to the former shareholders of IDS (a November 2007 business acquisition), $3.1 million was used to fulfill an earn-out payment obligation to the former shareholders of ConfirmNet (a November 2008 business acquisition), and $727 thousand was used for capital expenditures pertaining to the enhancement of our technology platforms and the purchases of operating equipment. Partially offsetting these uses of cash resources for investment related purposes was the $1.1 million of cash provided from the maturities of marketable securities (specifically bank certificates of deposit).

Net cash used for investing activities totaled $47.4 million for the three months ended March 31, 2008, of which $43.0 million was used for the January 2008 acquisition of Telstra (net of $944 thousand of cash acquired), $4.3 million was used to purchase marketable securities (principally certificates of deposit with a major commercial banking institution), and $181 thousand was used for capital expenditures pertaining to the enhancement of our technology platforms and the purchases of operating equipment. The Telstra acquisition was financed with a combination of $1.6 million of available cash reserves, $16.5 million from the Company's line of credit, $20.0 million of convertible debt, and $5.7 million from sales of the Company's common stock. Financing Activities
During the three months ended March 31, 2009 the Company used $1.1 million for financing activities. This financing outflow for the quarter was comprised of $507 thousand used to complete open market repurchases of our common stock and $623 thousand was used to service existing long-term debt and capital lease obligations.
Net cash provided by financing activities for the three months ended March 31, 2008 totaled $4.1 million. During the first quarter of 2008 the Company borrowed $4.3 million from its revolving line of credit for operating and working capital needs. Also during the quarter the Company used $495 thousand to service existing long-term debt and capital lease obligations, and received $271 thousand from the exercise of outstanding vested common stock options. Revolving Credit Facility
The Company has maintained a $25 million revolving line of credit facility with Bank of America Corporation that matures on August 31, 2009. The interest rate on the credit facility is Libor plus 1.30%. At March 31, 2009 the balance on the line of credit was $24.9 million with an effective interest rate was 1.8%, thereby leaving $100 thousand available under the facility. The underlying loan and security agreement contains certain financial covenants related to profitability, current assets, and debt coverage to which the Company is in compliance. There have been no events of default. Off-Balance Sheet Arrangements
We do not engage in off -balance sheet financing arrangements. Contractual Obligations and Commercial Commitments The following table summarizes our significant contractual purchase obligations and other long-term commercial commitments as of March 31, 2009. The table excludes obligations or commitments that are contingent based on events or factors uncertain at this time.

                                                                    Payment Due by Period
                                                      Less Than                                              More than
                                        Total          1 Year          1 - 3 Years        3 - 5 Years         5 years
                                                                        (in thousands)

Long-term debt                         $ 51,612      $    36,612      $      15,000      $           -      $         -
Operating leases                       $  6,657      $     1,981      $       2,688      $       1,731      $       257
Capital leases                         $    469      $       170      $         228      $          71      $         -

Total                                  $ 58,738      $    38,763      $      17,916      $       1,802      $       257

Recent Accounting Pronouncements
For information about new accounting pronouncements and the potential impact on our Consolidated Financial Statements, see Note 1 of the Notes to Consolidated Financial Statements in this Form 10-Q and Note 1 of the Notes to Consolidated Financial Statements in our 2008 Form 10-K.