Q2 2022 IDT Corp Earnings Call

Good afternoon, ladies and gentlemen, please continue to hold your conference will begin momentarily. Please continue to hold thank you.

[music].

Good evening and welcome to the IDT Corporation's second quarter fiscal year 2022 earnings call in today's presentation, Idt's management will discuss Idt's financial and operational results for the three months period ended January 31, 2022 <unk>.

During prepared remarks by Idt's, Chief Executive Officer, Shmuel Jonas all participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after Mr. Jonas remarks, Marcelo Fischer Idt's, Chief Financial Officer, and John <unk>, Chief Executive Officer of Idt's net.

Two phone business will join Mr. Jonas for Q&A and.

Any forward looking statements made during this conference call either in the prepared remarks or in the Q&A session, whether general or specific in nature are subject to risks and uncertainties that may cause actual results to differ materially from those which the company anticipates.

These risks and uncertainties include but are not limited to specific risks and uncertainties discussed in the reports that IDT files periodically with the SEC.

<unk> assumes no obligation either to update any forward looking statements that they have made or may make or to update the factors that may cause actual results to differ materially from those that they forecast.

In their presentation or in the Q&A session Idt's management may make reference to the non-GAAP measures, including adjusted EBITDA non-GAAP net income and non-GAAP earnings or loss per share.

Schedule provided in the IDT earnings release reconciles adjusted EBITDA, non-GAAP net income and non-GAAP earnings or loss per share to the nearest corresponding GAAP measures.

Please note that the IDT earnings release is available on the Investor Relations page of the IDT Corporation website. The earnings release has also been filed on a form 8-K with the SEC I will now turn the conference over to Mr. Jonas.

Thank you operator, welcome to <unk> earnings Conference call I'm joined on the call by Marcelo Fischer Idt's, Chief Financial Officer, and Joseph <unk>, who is prepared to do these calls on the zone. The three of US will be available to answer questions. After my remarks, my discussion today will focus on the <unk>.

<unk> quarter of our fiscal year 2022, the three months ended January 31 2022.

For a more detailed report and discussion on our financial and operational results. Please read our earnings release filed earlier today and our Form 10-Q that we expect to file with the Securities and Exchange Commission on Monday March 14th.

Our second quarter financial results were highlighted by year over year improvements in gross profit income from operations and adjusted EBITDA driven by the continued expansion of our growth businesses.

And our Fintech segment <unk> accelerated the growth of its customer base activating nearly 1400 unique new <unk> units and 1200 Mris pay accounts during the quarter.

As of January 31 <unk>.

Served 16500 active Pos terminals and 8000 <unk> pay accounts.

<unk> recurring revenue increased 118% from the year ago quarter to $9 million.

Led by Triple digit gains from advertising in merchant services revenue for purposes of sequential comparison keep in mind that our second fiscal quarter includes January which variably the slowest months of the year by far for advertising revenue.

We are still in the early stages of <unk> development in terms of our addressable markets New service offerings in months to <unk> of our current offerings.

<unk> subscription revenue increased 32% year over year to $12 5 million in the second quarter of 2022.

Growth was strong in our Latin American markets, particularly in Mexico, where we continue to find success with larger customers.

Net funds reach into the mid enterprise market will expand significantly in the coming quarters as we leverage the integra acquisition that closed just last week.

Integrity with SaaS growing sekos provider with an entrepreneurial team we are delighted to welcome them to the ICT family, we will incorporate integra <unk> service with <unk> solutions to create a higher value integrated offering that we expect will drive growth and significantly enhanced net defense unit economics, as we become as we become more competitive of Mark.

<unk>.

We expect to pay a total of approximately $15 million in cash and stock for Integra inclusive of an earn out of approximately $3 $5 million. If the business grows as we expect it will in the next few years.

In calendar 2021, Integra generated a little over $3 million in revenue and $1 $2 million in EBITDA and.

Integra Sekos ARPA was approximately twice that of metals ucas offerings.

Our goal is to complete the spinoff by the end of the current fiscal year on July 31 should our board authorized it also within our Fintech segment boss Revolution money transfer transactions increased 21% year over year, while revenue decreased 6% to $12 5 million.

On an apples to apples basis adjusting for the impact of transitory foreign exchange that improved second quarter fiscal 2021 results transactions in the second quarter of fiscal 2022 would have increased 36% and revenue would have increased by 48% from the year ago quarter.

We continue to invest in the long term growth of our payments business with the acquisition of leaf global Fintech startup with an innovative mobile wallet platform operating in Rwanda, Uganda, and Kenya leaf was designed to help traders refugees and other vulnerable populations store value and conduct financial transactions.

Roughly on securely by leveraging the stellar blockchain network to track balances and activity.

We've also uses U S. S. D Communications protocol. It's also a viable option for $2 4 billion people worldwide, who use feature phones rather than smartphones.

We're excited to work with leaf and hope that their team at lots of stuffs to IDT over the coming years.

Finally in our traditional communications segment revenue decreased three 2% year over year to $300 $4 million. However, revenue less direct cost of revenue for the segment increased 6% led by the expansion of our mobile top up business, while still growing 20% year over year mobile top up revenue has declined over the past three quarters the <expletive> .

Klein was predominantly in our lower margin wholesale <unk> channel, where we capitalize on the large opportunity during the third quarter of fiscal 2021 that significantly boosted mobile top up revenue, but which since has narrowed considerably. We continue to believe that there is large opportunity in mobile top up and we expect to return to that channel to growth mode. Soon.

Also within our traditional communications segment, both boss, calling in IGT global which is our wholesale carrier services business experienced an acceleration in the rate of revenue decline reverting back to the levels, we were experiencing before the COVID-19 pandemic.

Wrap up we continue to allocate capital to accelerate the development of our growth businesses, but through R&D and acquisitions concurrently our traditional communications segment continues to generate increasing margins and robust cash flow across all our businesses. We remain focused on creating value for our stockholders and expect that the spinoff of net phone will be exceptional in that regard now Marcello.

John and I will be happy to take your questions.

We will now begin the Q&A session.

To ask a question you May Press Star then one on your Touchtone phone.

If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press star two.

This time, we will pause momentarily to assemble our roster.

Our first question comes from Brian Warner.

Private Investor Your line is live hi.

Hi, Thanks, Thanks for taking my questions.

Three if I could.

First one is on <unk>.

You've done a great job with advertising.

And frankly I'm sick.

How well it's done.

Congratulate you, but I'm wondering a couple of things are you surprised how well it's done.

I'll give a little color.

How you are selling it and if there's anything.

Changing and your plans there and are you selling direct to.

Large advertisers now and just sort of maybe you can give your thoughts around that.

The second question relates to your <unk>.

<unk> business I'm just wondering.

If there is pricing pressure that you're seeing in that business.

Maybe you can contrast that question in both.

<unk> International operations.

And then also.

It could.

Give us a sense of where you're trending in terms of maybe average account size to a number of lines and stuff like that.

And lastly, there if there are any material hurdles.

The spin off in your mind.

And then finally.

The money transfer business, just a little confusing for me to sort of try and reconcile all of the various numbers that I realize there was a very unusual transactions a year ago.

But can you give us a little bit sort of the puts and takes on.

You pointed out the revenue would have been up.

I believe its 48% and the units would have been up maybe 36%.

I'm wondering if you can sort of reconcile the difference between those two numbers and maybe just give a little color around the calculations.

Okay.

I'm going to try to answer your questions in order as I remember them.

As far as the.

Advertising sales for IRS.

I don't believe that anything has changed in the way that we sell it.

Or are expected.

Growth for that business.

So there is no material change.

As we said in the earnings release, there is some seasonality to advertising in general.

That's why our year over year comparison is better.

Then a comparable.

Quarter over quarter comparison.

However.

We are making an attempt to I would say.

Increase Howard our direct to brand.

Salesforce, so we hope that we will.

Increase the advertising sales over the coming quarters as more brands here about us.

I'm actually going to <unk>.

Joe to take your question on net to phone so.

We'd like to welcome Jonathan to our earnings Conference call.

Uh huh.

Thank you and take it away before I respond to the question Firstly I just want to thank small marcello.

For inviting me on today's earnings call I'm honored to introduce myself formally to our valued <unk> communities. I'd also like to take this opportunity of thinking what we've coined internally net phone world net to phone is now successfully launched our ucas product line in nine markets around the world and it's due to the <unk> employees that have real.

He brought us to this point and as we can discuss shortly a big welcome and virtual hug to our new members in Montevideo, Uruguay at Integra.

To answer the two questions specifically in terms of number one pricing pricing pressure, we are not and what we've been able to do is really maintain and sustain RP levels for net phone for next phone Ucas, we look at our from very very carefully as an operational kpis in our dashboards and like I said, we've been able to maintain a sustained pricing <unk>.

Round the world in terms of user size currently today average user side for Ucas, Nat Deponent set to 11, but we do expect because of the <unk> offering that <unk> will not only create a value ended up itself. We also expect a lift right into our UK business as we have an experience for our customers to get.

One bill at the end of the month for both Ucas telephony and fee caps.

What was your third question before I turn it over to Marcel to answer your money transfer question.

I think you have to have your question was regarding the timing of the spinoff impact any of our those around that so <unk> know obviously.

Wanted to start the process of being odier, but because of the Integra acquisition, which is material for <unk> on a standalone basis, we had to wait until that acquisition process, which completion now make sure that we get audited financial statements for the Standalone Integra.

Business, which will be incorporated into a registration statements. So now that that's behind us because now refocus and try to get the spinoff done by the end of the fiscal year.

Alrighty.

Okay. It sounds like.

I believe I have question about money transfer.

Indeed.

Q2, one year ago, as we had mentioned.

I mentioned multiple times before benefited significantly from special FX opportunities.

Particularly in Africa.

Those opportunities that we have naturally in the past.

Behind us so when we look.

More apples to apples.

What would have been.

In the Philippines.

Now.

You will see.

Revenues growing about 48% year.

Fee revenues growing up around 55% to 60%.

FX revenues growing around 45% ramp rates on a blended basis that 48% rate that we shared with you obviously our D to C money transfer business is growing at a much faster clip than our retail channel DTC is growing at around the 50.

5% rate year over year, whereas retail growing around 35% 40%.

Great. Thanks, so much.

Thank you.

Okay. The next question is coming from Jason Lustig with J Goldman Jason Your line is live.

Hey, guys. Thanks for taking the questions.

John It's nice to have you on these calls.

To start out can I start out by asking you a little bit about the integra acquisition with.

The strategic rationale and how you how it folds into and that's a Paul on your strategy.

Yes, Jason absolutely hope all is well.

Trilled to announce the.

The acquisition of Integra by not to phone just in terms of the what let's start with a wide net to phone integra is not only a complete modern and robust cloud based contact center solution. Integra is also a developer platform that will allow for.

Items, such as customization and integrations and I NII more for the modern global contact Center workspace. So really net phone is getting into the foray Jason I'm selling experiences the acquisition in general made a ton of sense for us for a variety of reasons, one and most importantly, our ucas customers and partners are asking for a cloud based <unk>.

<unk> sensor solution hosted by next phone.

Feels almost on a daily basis, our customers love the idea of having a single invoice at the end of the month for all of their cloud based communication needs Ucas, plus <unk> all under net to phone just as businesses across the globe have migrated and are migrating their on premise communication systems net phone over the cloud.

To contact centers and enterprise based call centers will be migrating to net the phone via the cloud as well on a single bill to our valued customers net of phone will be serving the complete enterprise needs for ucas telephony and see Cas and Jason too as you know over the past five years <unk> has built.

One of the most efficient you cash distribution businesses in the World next phone continues to act global and think local and we've deployed talented teams locally in these markets to now have conversations around a go to market for C caps.

Net phone is also forged over the past five years significant partnerships with leading master and direct agencies for our cloud communication services <unk> continues to onboard new partnerships in this space with leading master agencies, such as advance based in Chicago that has a wonderful.

And current might I add foray into the Ucas and now see gas market segments. The above stated allows for quick and efficient go to market sales teams are in place support teams are in place.

And the customers and partners are eager to adopt our net to phone technologies.

I'll just add two things to it is one is that we did business with integra before.

We entered into a transaction with them. So we had some firsthand.

Dealing with them.

Partner before they became part of the <unk> team.

And from everything I heard directly from the team using them they were really.

Great partners before they became part of the team.

The second thing that debt.

I think that's important to add is that.

The buses.

<unk> everything internally so besides this being.

No.

A talented sales organization.

It's also very talented development team that we think we can leverage to enhance net the phone overall.

It's.

There's it's multifaceted and in my opinion.

Not just from a.

Not just from being a call center solution, but from also being a general technology solution for net to phone.

Okay, Great and I guess moving to to Mris.

Just a few questions about you guys have given great disclosure about revenue and the various line items over time can you talk a little bit about how we should think about gross margin.

And maybe also the difference between the hardware gross margin in the recurring revenue gross margins.

Hi, Jason It's Marcello So you hit the nail right when you think about.

And the rest is recurring revenues, whether its a SaaS fees advertising and data while merchant services for all of those revenue streams.

<unk> approximately close to a 100%.

When we talk about the margins on the path of the.

Pos sales.

Obviously, our goal is not to achieve high margin goes down.

Two no distributor assets.

In strategic ways.

Pricing differently, depending on different opportunities, but historically the margins on the Pls dominoes have ranged anywhere between 10% to 20%. So know so when you add the two.

Multiple products together.

Obviously, a blended rate.

About 80.

85% to 90% and obviously that blended rate will continue to move forward towards a 100% after becoming rapidly technological solution.

Yes.

However, we intend to sell lot more so.

So that might pull us down a little bit.

Can you talk about.

I mean, it seems like it was.

No.

The net adds for pls seem to have taken.

Large tick up in the quarter, which is very nice to see.

Can you talk about some of the changes that have gone on in the business that have allowed for.

That step up.

I think the two things I mean, one is it an increase in sales.

That has definitely helped the other thing is in terms of.

Making sure that.

We don't have any churn.

There is nothing we can do about a store going out of business.

But we really have put an emphasis on the service that we provide.

The stores and that's really been.

<unk> been helping keeping.

Churn to as low of a level as it has and we continue to.

Make improvements when a business is in.

As in rapid growth mode, it's sometimes hard.

No.

I'll say solve every every piece of the puzzle.

But I really give the interesting credit because they've really put a big emphasis on making sure.

The service levels are.

Where they need to be considering the growth.

Great and then.

Just lastly, what was the adjusted EBITDA for us in the quarter.

Oh.

And the rest.

Did I.

Around that is more than $2 million.

EBITDA for the quarter solid showing pretty nice growth and thats about one and a quarter lesion in Q1. So the trajectory is good and obviously that EBITDA may vary up and down depending on.

Whether we accelerate investment or not but all else being equal we should see that EBITDA trends continue to move upwards.

Great. Thank you very much for the questions.

Yes.

Thank you. Thank you. The next question. The next question is coming from David Polanski from immersion investments your line is live.

Hey, guys. Thanks for taking my questions and really appreciate I think everybody else does appreciate you putting a hard date around the net two phone spend but I actually want to talk about traditional a little bit and I think you almost answered my question in.

<unk> commentary do you anticipate being able to grow traditional EBITDA on a go forward basis.

I mean, I would say that different parts of the.

Traditional are growing in different parts of it are contracting.

Carrier is not in growth mode.

We definitely intend to be able to squeeze out.

More profit from.

Pin less.

Then we have been and.

And <unk> continues to grow.

So I would say that net net we do intend to be able to continue to grow.

EBITDA, whether or not we can.

Do that for years and years to come I can't tell you at this point.

But maybe I'll, let myself elaborated drops yes, I mean, David as you know traditional consists of three.

<unk> primary business right.

When we think about the wholesale carrier business.

Business revenues.

The.

Operational margins have been.

Challenged I think for quite.

While even during the pandemic.

Also gives us.

Quite a bit.

Have been maximizing that business in terms of generating maximum gross profit.

On the bus evolutions painless business.

We've got a fairly nice lift.

And the reversal of the trends during the pandemic.

The trends of towards revenue start to decline again have come back again that being said gross profit for <unk> have not been impacted.

Significantly at all.

That's both because of cost optimization have improved as well as a mix.

Our revenues shifts.

Shifting more.

Towards our DTC channel, which is higher margin helps helps mitigate the revenue decline so and at the same time no.

Mobile top up continues to grow quite nicely up 20% year over year.

Nice growth in our specifically in the DTC channel, we've seen mobile top up so.

<unk>.

It will keep pressure on revenue I think there'll be tremendous focus on trying to maintain the gross profit around current levels and as we continue to be the greater focus on reducing the cost structure, both SG&A and Capex, we may be seeing.

I wouldn't say that the Saudi improvement in EBITDA, perhaps we will get so what topics that's going a little faster, but certainly we should be.

We hope to maintain that.

The current EBITDA levels.

Mobile top up and they'll start showing walking to bottom line.

Yes.

Okay, So basically a five flat wine EBIT.

EBITDA for the remainder of the year I have traditional EBITDA at about $100 million business.

I have syntax, which is roughly breakeven.

To follow on that negative $15 million in EBITDA, which is going to be gone and several months. So pro forma I'm looking at a business that today, including that two phone is.

$700 million in enterprise value.

$100 million in EBITDA, because I'm getting rid of not to phone.

Then I have mras, which as you just disclosed in the previous question is actually EBITDA positive.

And growing a 100% year on year and quickly on its way.

Towards $75 million to $100 million in IRR.

I mean, you can kind of put whatever valuation multiple you want on Srs and basically the pro forma value for all of <unk> key post spin that's like three or four times. So.

Yes.

Mike how like how low does the stock have to go before there's like some action like you you do a buyback you accelerate the NRL spend and you pulled forward a little bit and say you know the stock's too low it's too cheap.

We need to realize some value here because it.

The stock fell like 10% the other day on the Integra acquisition on some ridiculous beliefs that.

You wouldn't be able to affect a spin because all while theyre doing an acquisition so they're not going to do the spin you clearly just told everyone that youre doing the spin.

So I guess, where I'm going with my question, it's like the market doesn't care right.

The market clearly doesn't care, they're not willing to give you credit for anything so.

At what point do we just say screw it let's just gobble up all of our shares.

Or or accelerate and pull forward. The IRS, So I guess, that's where I'm coming from so.

Appreciate an answer on that.

Yes, I mean, I don't think that we have.

A definitive answer on that I mean again as you know we have purchase back shares before we pay dividends before.

And all options are always on the table.

At this moment in time, we are laser focused on.

Completing the previously announced net to phone spin.

And making sure that.

That investment.

<unk> continues to do really well, even when it's no longer under <unk>.

IDT anymore and.

We're also laser focused on making sure that <unk> continues to grow even more than that than it has previously and that also takes.

Additional investment in both time and resources.

If our stock continues to.

Perform.

As poorly as it's done over the past couple of months.

It's definitely not out of the question that at some point.

We would we would start to either.

Buy back shares or.

Some other idea, but again I don't want to say that we're going to do it.

Because we haven't discussed it with our board and we do not have a plan in place at.

At this particular moment.

Yes, that's okay, I guess, where I'm coming from is just.

Clearly the execution is there.

Youre doing well Youre performing.

More importantly, youre doing what you say you're going to do.

Switches effect right now at least it's effective spinoff that to Foton and Youre doing so that's why I asked and we think we're also putting <unk> on a really great foot with this with this acquisition I mean again entering.

A space that arguably is.

Significantly sexier.

The new cast is at the moment.

I think as a major.

Net benefit to our shareholders that unfortunately, they didn't see in the release I mean again I was going to.

Say that actually before I forgot.

When Jason asked this question.

About Integra is we looked at there.

At their at their business model I would say like without net to phone and it was an amazing business model even before.

Even before the phone got involved and I would say that over the course of the next five years.

Is it going to look like a homerun irrespective of how well it gets integrated into internet telephone.

So I think it's actually a very very exciting.

<unk>.

Piece of news that was unfortunately.

Not.

Not loved by the markets, but markets are weird I don't know what else to tell you I mean listen and frankly speaking we're also going through.

Crazy time in the World right now that I think is.

Is putting a lot of pressure on.

A lot of companies.

We're very lucky that we don't have.

Are those kind of.

Financial pressures affecting our decisions.

And that we can.

Stay the course and make sure that we do do.

What we told our investors and we were going to do.

We think that.

It will.

We will be handsomely rewarded for that.

And David to take equity.

I agree with your calculation that you provided before.

I remind that we do also have about $10 million of corporate costs, Okay, which is a negative.

The EBITDA number that you gave me pause.

Yes of course still I can split the million different way to ask this is an incredibly cheap stock the company management team, that's executing and there are catalysts and there are a lot of valuable assets in here. So.

I can I can spin it a million different ways for you.

It's still cheap, but I appreciate the clarification I I do want to ask a follow up on Integra small did you say that the revenue was $3 million or 30 million was that three or 303 million.

I wish it.

It will be one way, yet, but right now its great.

Okay, but its doing 1.2 and positive EBITDA right.

Correct, yes.

And we bought for $15 million.

Yes.

All of that is paid upfront.

That includes a large earn out.

That's great Paul I love seeing it.

Keep doing what you're doing.

Talk to you next quarter. Thank you. Thank you.

Okay. The next question is coming from Sean Burger with Adirondack retirement your line is live.

Hi, Marcellus Schmuhl, congratulations on a good mris quarter.

Yes.

Question two things is one is I'm wondering if there's any material impact from eastern Europe as far as disruption of any.

Tech support or employees or anything like that.

And then the other question is.

Yes.

If any if there's been any change in the reserves for any possible legal settlements with regard to the straight path.

Litigation that's it.

So I mean the answer is.

Unfortunately, like we always joke that whatever happens in the world somehow.

Somehow it affects IDT.

And.

Listen we have a very large office in Belarus.

We have some really.

Amazingly talented employees.

Who work for us there.

And I can I can tell you from speaking to many of them directly.

How they feel about Ukraine, and how their government feels about Ukraine are completely different.

However that being said it does.

Create a very.

Unstable environment for them to live in and we are relocating many of them.

Outside of the country. However, many of them do not want to be relocated.

It has not affected.

Our deliverables or.

Our ability to pay people, but.

It's definitely.

I am moving target I'll say it like that.

And.

Depending on what happens with sanctions that could eventually affect us at this moment in time it doesn't.

I'm going to let Marcelo answer your second question.

No we have not had any changes.

In terms of I guess type of provisions or anything like that as it relates to end about litigation.

And I will say that we also have a <unk>.

Number of employees in Ukraine and.

We really feel for what's what's going on there obviously.

No.

Personal level. These are these are our colleagues but also from.

Uh huh.

Just.

Watching the news is just terrible so our prayers are with them.

And then.

Okay, Sean do you have a follow up question.

No that was it thank.

Thank you my prayers go out to the people as well and I'm just wondering if there was any.

Known business impact at this time that was it thank you.

Okay. The next question is coming from Adam work with Greystone capital.

Your line is live.

Hey, guys. Thank you very much for taking my questions.

My condolences to your employees, who are having to deal with this situation.

Hopefully everything is okay.

I guess one of the pitfalls of going going last start toward the end of the line here is that most of that most of my questions have been asked some really good ones about.

That's a follow on in the acquisition and buybacks et cetera.

I guess I just have a couple of hopefully quick ones I may have missed this so I'm sorry, if it's repetitive, but I'd like to dig in a little bit more to mobile top up obviously still showing impressive growth numbers and I'm wondering where you see things shaking out in a few years the tool.

Wholesale versus a direct opportunity and the revenue split there.

My my sort of aim my direction and asking that is.

I think the.

The economics could improve materially for both mobile top up and traditional as a whole if you kind of push toward that direct channel and please correct me if I'm wrong. Thank you.

Hello.

I'm going to let Marcello also talked to it a little bit, but I mean, I will say that listen to direct definitely has higher.

Gross profit.

Then wholesale that being said you know there is cost of acquisition.

And and.

And that is usually in the I'll call. It in the early years or months, depending on how lucky we are in terms of cost of acquisition.

That can effect.

The ability to acquire customers that at the at the rate that we would.

One for direct to consumer.

Over.

Really where we've seen pressure of late is really in the wholesale business not in the in.

In the direct to consumer business.

And I think Thats, a large part of that is based on some of the competitors that we've talked about recently getting.

Large investments in them.

Spending that money to try to make sure that we don't.

Steel all of their business.

And that definitely has affected.

<unk>.

The wholesale business in the short term.

However that being said we have some very exciting.

Product launches that we think are going to really differentiate our wholesale business.

Over the next couple of months and we think that we're going to get.

<unk> back a lot of that business.

Marseille you have anything to add.

I think that.

Our strategy for mobile top up under.

Under the guidance of under the leadership of Emilio is to continue to focus on growth both the b to b.

Channel as well as the direct to consumer channel does not independent of each other.

I think that we.

We have made large strides in.

Improving our b to B wholesale platform.

Acquisition of social <unk>.

Most recently.

It helps us towards that they have a very robust platform for it to be deleveraging.

Leveraging on that platform to position of products.

Better and faster growth in that space and to take market leadership space.

Position in that area and at the same time.

Amelia continues to be very focused on trying to grow.

To grow the.

The catalog of products trying to compete to leverage.

Our offerings in the <unk>.

As well as trying to penetrate further.

Especially into the African continent.

Great. Thank you that's helpful.

And then John answered some questions about conference center services of demand drivers.

There and somewhat the opportunity set.

And I guess I'm wondering kind of as a follow on to that.

I heard when the question was asked about three or $30 million in revenues I think I heard China, China and when the background. When you said it will be 30 someday so.

Maybe you can talk a little bit about I guess, just the conference center.

<unk> as a whole.

It is not a fad that everybody's piling into and there is real demand there and then maybe it looks like I guess you paid around four times revenue excluding the earn out for Integra, how did you kind of drive that multiple.

Is that kind of like.

Is that kind of like correlated to market conditions or any detail there would be helpful. And then maybe when we can see an impact to the P&L for that Dupont. Thank you.

I mean, just in terms of the opportunity again, the same ways that net phone Ucas has successfully migrated professional businesses over to the cloud.

We see that opportunity now is the right time in the world that we live in for cloud based for contact centers to move from on premise to the cloud as well as I mentioned before we have sales teams and partnerships in place to cater towards that.

The benefit down to the contact center is not only just the cost savings, but being able to modify and configure and edit any type of settings for the contact center and the cloud instantaneously is a major value add for these call centers to move over and might I add it's not just contact centers, but if you think.

Larger enterprises and this is why we're very hopeful that our average user per account will increase with sea gas.

These are we have a large enterprises with call center functionality residing within the enterprises for call Q support billing sales. So that can also layer in very nicely to our ucas customers in terms of our partners as well in terms of the acquisition and the price and the valuation right now I can say that on our side and our teams we're laser focused.

On the plant, where I'm laser focused on the go to market. We're laser focused on defining the offer and introducing this into the channel. So at this point I will reserve.

Discussions around the economics in terms of right now the go to market channel adoption the business integration between the two firms us getting out there into Uruguay, a very energetic and passionate team waits us and we're going to focus mainly on the go to market.

In terms of the valuation I mean again I don't think.

No.

I don't think that we paid the lowest priced ever for <unk>.

Call Center company, but I think.

The fact that.

They have such a such a good.

Software and B that they were already EBITDA positive was real.

Really.

Two driving forces that made us pay what we paid.

As you know we don't.

Write checks easily and we really thought that this was a great opportunity for net one and Thats why we went ahead with it.

And I think from the perspective of Integra, and though they see the combination with ucas and that the phone as a great way for them to expand.

<unk> product portfolio.

In that the phone to allow them to grow in a way to be honest.

Standalone basis cannot do so Tao so D. C is a great opportunity to partner with us.

Pick a pushout.

The purchase price in equity that you want to be able to write on the opportunity together with us.

Yes. That's helpful. Thanks, I certainly wasn't implying that the price paid was too high just curious behind the drivers there. So I appreciate that.

I guess a quick follow on to your commentary is can we maybe expect moving forward a little bit of that.

Sort of buy and build or buy and integrate.

Excuse me as part of the strategy.

On either.

I guess post spin or is it just kind of like a one off for you guys listen I think we're always browsing new technologies I think the Integra acquisition is a great.

Use case, where <unk> wants to go to market with new modern technologies in the cloud communications space nothing prevents us from routing I think the fact that I had noted before in my remarks that we built this really efficient global Ucas distribution team and now we're layering in <unk> I think there's other experiences that we could focus and concentrate on but again our number one focus right now is.

To continue growing our ucas business in our <unk> business and I actually think that <unk> been the top of the spear of new conversations that we have with enterprise will actually provide a lift right for our <unk> business as well.

And our history in medical and Thats been a combination of both we have made expeditiously catheter.

Our acquisitions team.

Spain and growing the business.

Our technology.

Lisa.

Right now and we always have to measure whether we are able to continue to be.

Build versus buy so we've got to get into a mix that makes sense. So.

Inc to seek ft building at <unk>.

<unk> reported total devaluation and speed to market as well as the fact that our technology roadmap is pretty full right now.

Great. That's really helpful. Thanks last one for me maybe from ourselves or whomever.

I'm going to push on this a little bit more nothing no changes with the straight path litigation I am just kind of curious where you guys stand on wanting.

Maybe wanting to get this thing resolved and put behind you.

Obviously it would benefit.

Both parties.

To come to some sort of settlement.

Is there an element of like stubbornness on any one of the sides are where do you guys kind of stand on that in terms of.

I'm trying to get it resolved.

So.

The trial is scheduled for may of this year.

That timing holds you will probably expect a decision later into the year.

People will see defending ourselves and we are optimistic about achieving a favorable resolution.

Welcome to read our disclosures on now.

All of our brands.

Legal matters.

The 10-Q, but beyond that that's a matter of policy, we really cannot comment on pending legal matters.

GE around it.

Okay, Yes fair enough. Thank you very much great great job and I appreciate it.

Thank you.

Up next we have Daniel coach from Alta Fox Capital Daniel.

Hey, guys. Thanks for taking the question just quickly on Integra can you share a little more color on the growth profile of that business is it.

Long term accretive to the growth profile of netted zone and then.

Is all of that revenue outside of the U S. Today.

Yes.

$3 million in change is pretty much all outside of the U S. They do have a few U S customers down, but pretty much in central and South America, where the $3 million sits today theyre already accretive to your question I think we made reference to the $1 $2 million EBITDA.

And as you know Theres really two pronged to the acquisition approach one is integra being able to continue to grow.

Put together some interesting projection discussions there and now integra, serving the markets the service provider aspect to it of being able to go and serve the markets that we're in today as well.

Got it.

Sorry, if I wasn't clear the growth profile of Integra is that a <unk>.

30, plus percent topline grow or how should we think about the growth profile of the business.

Yes, I think north of that but yes, Oh, great and then one last quick one.

Historically that Dupont have you all lost out on converting leads in deals because you did not have the offering that integra brings to you.

Yes, as I mentioned in my earlier remarks, first and foremost, we're taking the temperature of our customers and partners and we're getting active requests.

Net phone to add cash to our product before the portfolio. So absolutely from a win loss perspective, we have the dashboards and we understand where we missed out on a few accounts and we certainly will start reaching back but absolutely that's a driving force for.

Why we're adding this product to our to our portfolio.

Great. It sounds like it sounds like a really nice transaction and thanks for taking the questions and good luck in the quarter.

Thank you.

Okay.

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Yeah.