Q1 2025 IDT Corp Earnings Call

Speaker Change: Good evening and welcome to the IDT Corporation's first quarter fiscal year 2025 earnings call. In today's presentation, IDT's management will discuss IDT's financial and operational results for the three-month period ended October 31, 2024.

Speaker Change: During prepared remarks by IDT's Chief Executive Officer, Shmuel Jonas, all participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: After Mr. Jonas remarks, Marcello Fisher IDT's Chief Financial Officer will join Mr. Jonas for Q&A with investors.

Speaker Change: Any forward-looking statement 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 risk and uncertainties that may cause actual results to differ materially from those which the company anticipates.

Speaker Change: 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.

Speaker Change: IDT assumes no obligation either to update any forward-looking statements that they have made or may make or to update the factors that they may cause that may cause actual results to differ materially from those that they forecast

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

Speaker Change: A schedule provided in the IDT earnings release reconciles adjusted EBITDA, non-GAAP net income, and non-GAAP earnings per share to the nearest corresponding GAAP measures.

Speaker Change: Please note that the IDT earnings release is available on the investor relations page of the IDT Corporation website.

Speaker Change: The earnings release has also been filed on a Form 8K with the SEC. I will now turn the conference over to Mr. Jonas.

Thank you for watching!

Thank you, John.

Speaker Change: I apologize for my voice. Welcome to IDT's earnings conference call. My remarks today focus on the first quarter of our fiscal year 2025. The 3 and 12 months ended October 31st.

Speaker Change: For a more detailed discussion of our financial and operational results for the quarter, please read our earnings release held earlier today and our Form 10-K that we expect to file with the SEC next Tuesday.

Speaker Change: Building on our momentum from fiscal 2024, IDT delivered strong financial results in the first quarter of fiscal 2025.

Speaker Change: Consolidated revenue has now increased sequentially for three consecutive quarters. NRS, along with our fintech segment powered by boss money and Netfone, each achieved robust increases in revenue, gross profit, and adjusted EBITDA.

Speaker Change: At NRS, we are focused on providing solutions to address the needs of our independent retailer market while heavily investing to develop new products and services to broaden our addressable markets.

Speaker Change: In Q1, we continue to achieve increased adoption rates on our payment processing offerings and SAS feature plans. We look forward to continuing this momentum through the remainder of the fiscal year.

Speaker Change: BossMoney's Q1 results reflected our decision to enhance margins, particularly within our retail channel. As a result, BossMoney's gross margin expanded significantly and transaction growth slowed somewhat.

Speaker Change: The enhanced margins boosted Fintech's Q1 income from operations by $4.6 million year-over-year. And in November, following the quarter's close, transaction growth rebounded, led by D2C.

Speaker Change: Net phone increase heat served over 400,000 driving a 13% increase in subscription revenue despite the negative FX impact to its Latin American operations from a strong US dollar.

Speaker Change: NetFund's financial discipline also contributed to healthy increases in income from operations and adjusted EBITDA.

Speaker Change: In the traditional communication segment, our computers are extremely important units.

Speaker Change: In light of the strong financial performance across our key businesses this quarter, we are now in

Speaker Change: I'll wrap up by wishing the entire ID team, including all of our colleagues across the globe, retail partners and investors, a very joyous holiday season.

Speaker Change: shared with family and friends. We very much appreciate your support and hard work. I look forward to sharing more good IDT news with you in 2025. Now Marcel and I will be happy to take your questions.

Speaker Change: We will now begin the question-and-answer session. To ask a question, you may press star, then 1, on your touch-tone phone.

Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the star keys. To withdraw your question, please press star, then two. We will now pause momentarily to assemble our roster.

Speaker Change: Okay, your first question comes from Inigo Alonso. Please announce your affiliation then pose your question.

Inigo Alonso: Hello, thank you for the great results again. I have questions on the three growing businesses. I'll start with a double question on Netto Phone and Boss Money. Boss Money has had extraordinary growth in the last couple of years and a lot of that growth has been driven by the mass immigration into the U.S.

Inigo Alonso: during the last presidential term. So how confident do you feel on your ability to keep growing at those rates and stealing market share from your competitors if immigration policies into the U.S. tighten?

And then the second question about Netsu phone is...

Speaker Change: We have over 50% of the revenues coming from Latin America and with the strengthening of the USD We are seeing the forex impact

Speaker Change: Last week, we had a huge event in the Brazilian real with devaluation on that currency where you're really strong. I was wondering on your confidence level to achieve double-digit revenue growth this year. Thank you.

Speaker Change: Okay, so I'll try to answer your question on immigration first. You know, it's really, in my opinion, too early to tell, you know, what will really

be the end result of the new administration's policies.

Um...

Speaker Change: Tariffs, you need immigrants to work hard and help build America like they always have.

Speaker Change: That's my personal opinion. But as for, you know, what really happens, I don't know.

Um...

Speaker Change: You know, one thing I would say is that, you know, we continue to focus on improving the product, you know, every day, and that that is, you know, in my opinion, what really drives success.

Speaker Change: You know, the results, not, you know, how many people, you know, cross the border on a daily basis, but that's my own opinion.

Speaker Change: The exchange rates are not helping Nato phone right now. As you know, a significant portion of the business comes from Latin American countries, Brazil and Mexico in particular. When you look about year-over-year...

The Mexican price was down about 11 percent.

Speaker Change: the U.S. dollars. Our subscription revenue growth was 13 percent for Q1. If not for this effect, in fact, it would have been 16 percent.

Speaker Change: So, we are looking at it carefully, we keep on monitoring that. And also, some of the cost inputs in operating the business in Latin America are really U.S.-packed.

Speaker Change: for the foreseeable future. That being said, those markets in local currencies are really doing very well and continue to grow at a real nice pace, and we feel very positive about their long-term success and growth.

Speaker Change: You know put more investment into the US market where we already have You know, you know by far the best profitability So if anything it gets us to focus our our energies in the places where you know, we get the most payoff from it

So not a completely bad story in my opinion.

Okay.

quarter that was a seasonal churn.

Speaker Change: I would appreciate if you can provide a little bit of color on that seasonality of the terminal deployments. And I also noted that the terminal sales were lower. And I wonder if this is due to the kiosk runout that you mentioned last quarter or there's different impacts here.

Speaker Change: Yeah, I mean, we have a large seasonal customer in the fireworks business that comes and goes. They were larger this year than they have been previously, which is both good and bad.

Speaker Change: So that's really, you know, the seasonal impact as far as your questions related to the kiosk, it definitely did have.

You know in effect

Speaker Change: I think, you know, unfortunately I'll say shifted some of the salespeople's attention to educating customers on those new plans and away from, you know, pushing out, you know, more units, but, you know, we're back on track.

Okay.

And one final question on NRS.

Speaker Change: In the last few quarters, you have mentioned how you are offering new forms of advertisement beyond the initial customer-facing checkout screens. I was wondering what categories or real estate of businesses you are targeting for these new screens.

Speaker Change: Are these screens located in outdoors high-traffic areas or are they inside businesses? How many of these screens did you place in Q1, for example?

Speaker Change: you know attractions and all of them are pretty highly trafficked.

Okay, thank you a lot.

Speaker Change: Once again if there are any remaining questions please indicate so by pressing star 1 on your touchtone phone.