Q2 2025 IDT Corp Earnings Call
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Bye.
Speaker Change: Good evening and welcome to the IDT Corporation's second quarter fiscal year 2025 earnings call.
Speaker Change: During management's remarks, 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: I'll now turn the call over to Bill Ulrey of IDT Investor Relations.
Speaker Change: Thank you, John . In today's presentation, IDT's Chief Executive Officer, Schmoole Jonas, and Chief Financial Officer Marcelo Fischer will discuss IDT's financial and operational results for the three-month period ended January 31st, 2025.
Bill Ulrey: After there are marks that will be happy to take your questions.
Speaker Change: Any Ford-looking statements made during this conference call, either in their remarks or during the Q&A that follows?
whether General or specific in nature.
Speaker Change: 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.
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 may cause actual results to differ materially from those that they forecast.
Speaker Change: Reconciles, Adjusted EBITDA, Non-GapNet 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. The Earnings release has also been filed in a Form A K with the SEC.
Shmuel Jonas: Now I'll turn the call over to Schmull for his comments on the quarter's results.
Shmuel Jonas: Thank you, Bill. Welcome to IDT's earnings conference call. IDT had a strong second quarter led by NRS and bus money and supported by robust results from our traditional communication segment which increases cash generation for the third consecutive quarter.
Shmuel Jonas: Annerists continue to deepen its penetration of the independent retailer market. We are now launching new features and functionalities that increase the value of our solution for retailers and will help us deepen market penetration and drive growth.
Shmuel Jonas: Boss Money delivered another quarter's strong year-over-year transaction and revenue growth. In the second quarter we continue to focus on improving the margin contribution, particularly on our retail channel, and that effort helped to boost our Fintech segments' gross profit and adjusted the Evedela's cat-backs to record levels.
Shmuel Jonas: Netphone continued its expansion led by further growth in the US market.
Shmuel Jonas: We are especially excited about last week's launch of Net Defones Virtual AI agent. It has been very well received by our internal boss and NRS teams that are using it with great success to enhance the quality and consistency of customer interactions while reducing costs.
Shmuel Jonas: We are confident that net phone clients will find that it provides them with great value right out of the gate. Moreover, as they build with our AI agent, it will provide clients with increasingly sophisticated tailored solutions that add value across disparate functions within their organizations.
Shmuel Jonas: Our traditional communications segment includes suggested EBDAF for the third sequential quarter and surpassed $20 million for the first time since fiscal 2022.
Shmuel Jonas: In light of our solid financial position and positive outlook, and mindful of the feedback we've received from our investors, we stepped up our re-purchases of stock during the second quarter and have increased our regular quarterly dividend by 20%. Now Marcelo will also brief you on the second quarter results.
and we'll be happy to take your questions afterwards. Thank you, Samuel.
Shmuel Jonas: I would like to briefly provide some additional insight to our discussion of these quadruple financial results. In today's early release,
Shmuel Jonas: For the first time, we are providing capital expenditures for each of our reporting segments. Segment-level capex gives greater clarity into the cash generating power of our key businesses. And we hope that these additional information will be useful to you, our investors, for comparative valuation purposes. Now, turning to our second quarter results, obviously, we are extremely pleased without performance.
Shmuel Jonas: An arrest had an exceptional quarter with 32% recurring revenue growth and adjusted EBITDA exceeding 10 million, the $310 in recurring revenue per terminal, underscores an arrest's ability to deliver value-added features that drive higher revenue generation.
Shmuel Jonas: the strongest gravity quarters of the year, and we are quite pleased with the business ability to continue to scale effectively.
Bach Money also delivered a very strong quarter.
Shmuel Jonas: Our transaction volume reached another all-time record, at 5.7 million, with digital transactions through our boss money and boss calling apps representing more than 80% of all our revidences.
Shmuel Jonas: We are seeing somewhat slower revenue growth, primarily because of our decision to optimize growth's profit-to-transaction, particularly in our retail channel.
Shmuel Jonas: Boss Money has continued to grow strongly since the quarter end. During February , both transactions and revenue again increased by well over 30 percent compared to February of last year, despite the leap day in that same month a year ago.
FGNA decreased 1.7% year over year and 1.5% sequentially.
Shmuel Jonas: and Bosmerny and Nathaphone have performed. We have been particularly pleased by the cash flows generated from our traditional syndication segment. Adjusted EBDA for this segment has increased in each of the last three quarters to reach over 20 million in Q2, a 19 percent year-over-year increase while care pets decrease slightly. The increasing profitability
Shmuel Jonas: Notwithstanding the industry-wide, ILD Voice Market, Stackle of the Blind Consolidated Adjusted EBITDA, in the second quarter, was the record 30-4Mision?
Shmuel Jonas: bringing out total adjusted EBITDA for the first half of the year to 63 million.
Shmuel Jonas: We now expect to generate at least as much adjusted EBITDA in the second half.
Shmuel Jonas: To put it another way, IDT is on track to deliver approximately 40% adjusted EBITDA growth in fiscal 25, on top of the record 90 million we attained in fiscal 24.
Shmuel Jonas: To date, we have not seen a meaningful slowdown across any of our businesses.
SEMPESTOS SEUS
Shmuel Jonas: at our retailers increased 3.5% year-over-year in February and increased 6% compared to January , indicating that business activity for our independent retail customers remains healthy.
Shmuel Jonas: At Boss Money, not only did we achieve robust transaction volume and revenue expansion in February , but this past week.
Shmuel Jonas: Boss Money also delivered the second highest weekly remittance transaction volume in its history.
Shmuel Jonas: Compared to 25 million for the same quarter a year ago. I want to point out that due to the nature of our boss money business.
Shmuel Jonas: Walding Capital Labels over the course of any one week fluctuates significantly. Friday's
Shmuel Jonas: specifically the day of the week that ends with our lowest levels of cash because we present our boss money, global payout naturals, wallets.
Shmuel Jonas: On the other hand, Wednesdays typically register the highest cash balance of any day of the week.
given the threat of our balance sheet.
Shmuel Jonas: and our expectations for continued robust cash generation have shown or noted our both made the decision to increase IDT's quarterly dividend, and we expect to be able to continue to increase the dividend each year for the foreseeable future.
Shmuel Jonas: In addition, we will continue to return value to stockholders through our opportunistic approach to repurchasing shares. This quarter will be had a record level of repurchases.
Shmuel Jonas: over 179,000 shares for 8.5 million bringing out total for the 12 months and the January 31st to 380,000 shares for 16 million.
Now, Operator, back to you for Q&A.
Speaker Change: We will now begin the question and answer session. To ask a question you may press star, then one on your touch tone phone.
Shmuel Jonas: If you are using a speaker phone, please pick up your headset before pressing the keys. To withdraw your question, please press star then two. We will now pause momentarily to assemble our roster.
The first question.
Speaker Change: Is from Enigo Alanzo, please announce your affiliation, then pose your question.
Speaker Change: Hello, thank you again for another quarter of great results and also thank you for this extended remarks this time.
Speaker Change: I have questions on the three main businesses. I'll start with NRS.
Speaker Change: Earlier in Q4 you provided a soft guidance of 6,000 terminals for this year. It looks like in last weeks or yesterday's report actually there was a neutral.
Speaker Change: a tendency of growth, and that was due to the seasonal churn that you mentioned in there.
Speaker Change: I was wondering if you still are trending toward $6,000. That's one of the NRS questions. The other one is...
around the ad revenue. It sounds like...
Speaker Change: It was a really good quarter. I assume that maybe seasonal advertising had an impact. We know that it was the elections and maybe that was a huge driver or could have been because of the experience that you have been adding to your network.
Speaker Change: So I would like to get more color on ad revenue too. And lastly in a long term question.
Speaker Change: When you go overseas, there's a more fragmented market. When it comes to convenience stores, there's not that many franchises, so I was wondering if that's in your plans for the medium long term
Speaker Change: No, I just wanted to say that you're right. Advertising had a night performance during Q2. It was up about 12 percent year over year, but you also saw a real nice jump.
Speaker Change: in the data side of the business that grew by almost 40% years ago.
Speaker Change: through an acquisition. But, you know, and in terms of the number, you know, of units, again, I think we're, you know, we're slightly behind, you know, where we had...
Speaker Change: So we would be in terms of adding units, but I think that we will make it up over the course of the rest of the year is my opinion. We've had a lot of new sales people come on.
Speaker Change: You know recently and you know unfortunately you know that they need to be trained and you know seasoned a little bit before they start to become successful but I have high hopes that they will become very successful.
Speaker Change: A really nice growth in constant basis for revenue. So there's a lot of trends going on in this industry. We have the methods which sail. We also have a buyer.
Speaker Change: saying that they are not going to support the small and medium customers that they have, so I'm wondering if you have been seeing some of these trends and maybe getting a higher revenue customers as the results of the industry dynamics.
Speaker Change: You know, anybody else, maybe currency traders do a better job than I do on it, but
Speaker Change: Arpo, you know, I mean, and, you know, I'm very, very optimistic about, you know, what AI is going to do for, you know, the net phone business.
Speaker Change: You know, no real concern. If anything, you know, we talk a lot internally about, you know, increasing our investment.
Speaker Change: in AI, both in terms of development and sales so that we can really, I'll say, compete with the big boys who have way different kinds of budgets than I can even understand, frankly.
Okay.
Speaker Change: And the last item around boss money, you provided a really nice color around why you need this working capital to support boss money and why you hold cash.
Speaker Change: It has been maybe a criticism of some investors that you hold in so much cash and I think providing color in boss money.
Speaker Change: Like you did today, it is important to understand why IDT has the balance sheet that he has. I was wondering what the
Speaker Change: requirement or the amount of money of cash you feel comfortable with to around boss money. What are those working capital requirements of boss money?
Speaker Change: I'll let Marcelo answer that question. Yeah, I'll think a little differently, okay. The fact that we have the very strong balance sheet that we have
Speaker Change: from financial institutions, and in the course of doing so, obviously, they incur costs that we are able to avoid in terms of interest, etc. So, as long as we do not deploy the cash in our balance sheet,
towards new initiatives, towards building new businesses, re-backing current businesses, returning that
Speaker Change: Opportunistic, and we're able to support the working capital needs of the bus money business does generate higher returns on our investment because we are avoiding the financing cost involved.
Thank you for the wonderful research once again.
Speaker Change: Okay, your next question comes from William Vaughn with Coriants, please proceed.
William Vaughn: Congrats, Samuel and Marcelo on another great quarter. My question surrounds the boss money. You mentioned
William Vaughn: You know, the trade-off in terms of thinking about profitability and trading of profitability for a little bit of growth and focusing on that, the boss money business. My question is, you know, profitably is very important, and we always want to be as profitable as we possibly.
William Vaughn: Prioritizing short-term profits and for going some long-term profits by not investing more and being more aggressive in customer acquisition.
William Vaughn: as a team-balanced profitability with growth in this business, especially with, you know, other competitors and I think at one specific larger competitor that's spending a lot on marketing. You know, it has a team think about that.
William Vaughn: Um, so I'll try to answer you a little generally. I mean, I would say that, you know, I'm probably a little bit too conservative of a person in general. Um, and I'm not, you know, a swing for the fences.
William Vaughn: You know, type of a person in general. I like to hit, you know, singles and doubles and, you know, and, you know, get the batter's home.
But...
William Vaughn: You know, insane amounts of money are completely crazy. You know, I don't think that they're completely crazy
William Vaughn: You know, we could obviously, you know, increase growth by, you know, by investing more. And, you know, I think that we are, you know,
William Vaughn: You know, keep towing, I'll say, into, you know, investing more, not, you know, you know, you know, not...
William Vaughn: Again, you know, you're not going to see us go, you know...
William Vaughn: You know, successful run so far and I don't want to, you know, mess with it too much by, you know, by, by starting, you know, to invest in, you know, and maybe an irresponsible way.
William Vaughn: and most of our effort in terms of improving growth profit and growth profit but transaction is happening really on the video.
William Vaughn: channel, part of the business. And he has paid off thus far, you know, by us trying to raise that GP in that channel while the same time freeing up a lot of capital to continue to invest heavily on the digital side.
William Vaughn: Yeah, and we had some really like, you know, nice tricks about our sleeve that we expect to really, you know, help growth without, you know, supercharging the spending.
William Vaughn: Okay, awesome. Thank you. Thank you for the detail answer.
Speaker Change: The second question is also on box money. You all expanded into...
William Vaughn: You know, some more verticals and I appreciate, you know, the color and, you know, it's a vertical by vertical business in terms of profitability for boss money. Can you talk a little bit more about the reasons for expanding to Venezuela, Brazil, or Austria and how those initiatives are going so far?
William Vaughn: I mean, I would say just from what I've heard generally on update calls is that they're going better than we expected at this particular time.
You know...
William Vaughn: You know, market for you to really start to reap the benefits of it.
William Vaughn: You know, to turn it into something, you know, much larger and, you know, but it takes months to get, you know, you know, traction. I mean, you know, as I said, Venezuela, you know, generally is going well.
William Vaughn: You know, Brazil isn't even live yet, you know, so it's hard for me to, you know, say, you know how well it will do, but I'm optimistic.
Okay, awesome, thanks guys.
Speaker Change: The next question is from Eric Branley. Please announce your affiliation and pose your question.
Speaker Change: Thanks, guys. Just one question really from me. Could you give a little more color around the decision to ramp share repurchases back up? Just curious kind of what investor feedback and particular change you're thinking on capital allocation.
Speaker Change: I don't know, you know, sometimes you get like worn down by people, you know, and they, you know, that changes your, no, I mean, in all honesty, I mean, on almost every investor call that we have, you know, you know, we're told, you know, why do you guys have?
Speaker Change: I think our shareholder friendly company, I at least try to be when I wake up in the morning every day And you know that you know we thought you know that it was a good opportunity to buy
Thank you for watching!
Thank you.
Speaker Change: Once again, if you have a question or a comment, please indicate so by pressing star 1 on your touch tone phone.
Speaker Change: Again, if you have a question or a comment, please press star one on your touch-tone phone.
We have a follow-up coming from William Vaughn.
Let's proceed.
Speaker Change: is a follow-up. So on NRS, are you seeing any trends in terms of growth, you know, geographically, any types of verticals or customers that you're seeing more growth or specifically, more opportunities. And just any color you get out on NRS and growth opportunities would be helpful.
I mean...
Speaker Change: I would say in general that we are seeing growth across all of our channels.
Speaker Change: You know, delivery service through DoorDash, like directly integrated into the POS and you know we have you know all the other ones coming online over the next couple weeks.
Speaker Change: The integrations we're doing with liquor companies to have orders ship automatically is going to be a huge thing that will help stores make sure that they keep the correct inventory on their shelves.
Speaker Change: I saw it, but you know there's other ones that are doing you know
Speaker Change: You know, the, you know, the SaaS revenue to grow, you know, tremendously, you know, with all these new, you know, features. I mean, again, I think almost every store needs delivery nowadays.
Again, lots of opportunity.
Awesome. Thanks, guys. Once again, great quarter.
Bye-bye.
Speaker Change: Once again, if you have a question or a comment please press star one on your touchtone phone.
Okay, we will follow up from Enigo Alanzo, please proceed.
Yeah, this is a follow-up on NRS.
Speaker Change: You have been talking about the screens that you are adding on different locations.
Speaker Change: Are you planning on disclosing the account anytime soon and not in this as a KPI to your metrics?
Speaker Change: I don't know. I mean, we don't usually disclose like, you know, which accounts we do business with. But I mean, again, it's, you know,
Speaker Change: In terms of what what are you trying to gather I'm not maybe maybe you can explain a little better. Yeah, I think I think I think that
at the number of screens.
Thanks, everyone.
Speaker Change: Well, I don't know you, I mean, you know, when it starts to get there, you know, you'll you'll see them, we'll probably be breaking it out.
Speaker Change: you know, our own stores, I'll call them. But, you know, we're optimistic about it and, you know, we'll have more to talk about, you know, on the advertising front and what we're doing to expand it in the future.
Speaker Change: Yes, that's a benchmark. What was the number of screens added of that type, this quarter?
Speaker Change: I don't have the numbers that were added to this quarter in front of me. I know that we just ordered another 1,500 screens, but I'm not 100% sure how many were actually put on this quarter.
Thank you.