IDT Corporation

Good evening and welcome to the IDT's Corporation Second Quarter Fiscal Year 2021 Earnings Call. In today's presentation, IDT's management will discuss IDT's financial and operational results for the three-month period ending January 31st of 2021. During 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 the prepared remarks, Marcelo Fisher, IDT's Chief Financial Officer, will join Mr. Jonas for Q&A. Any forward-looking statements made during this conference call, either in the prepared remarks or in the question-and-answer 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. These risk and uncertainties include but are not limited to Specific risk and uncertainties discussed in the report that IDT files periodically with the SEC, IDT assumes no obligation either to update any forelooking statements that have made or may make or to update the factors that may cause actual results to differ materially from those they forecast. In their presentation or in the question and answer session, IDT's management may take reference to non-GAAP measures, including adjusted EBITDA, adjusted EBITDA-less CAPEX, non-GAAP net income and non-GAAP earnings per share. A schedule provided in IDT's earnings release reconciles adjusted EBITDA, adjusted EBITDA-less capex, non-GAAP net income and non-GAAP earnings 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's Corporation website. The earnings release has been filed also on the Form 8K with the SEC. I would now like to turn the call over to Mr. Jonas. Please go ahead.

Thank you, Operator. Welcome to IDT's second quarter fiscal year 2021 earnings call, covering results for the three months ended January 31st, 2021. I'm joined today on the call by Marcella Fisher, IDT's Chief Financial Officer. For a detailed report on our financial and operational results, please read our earnings release file earlier today and our Form 10-Q, which we expect to file with the SEC on or about March 12th. IDT delivered another strong quarter, including significant year-over-year increases in consolidated revenue, income from operations, and EPS. Consolidated revenue increased $16 million to $340 million. It was our third consecutive quarter of year-over-year increases in revenue. and our sixth consecutive quarter of year-over-year increases in revenue less direct cost of revenue. Consolidated income from operations increased $11.6 million to $12.9 million this quarter, powered by $9 million year-over-year increase in revenue less direct cost of revenue. Consolidated SG&A expense meanwhile was substantially unchanged year-over-year. We are successfully reducing the overhead in our traditional communication segments and redeploying those resources support and accelerate the growth of our higher margin businesses in the FinTech and Nexflin UCAS segments. Fully diluted EPS increased to 51 cents from 4 cents in the year-ago quarter. The quarter's results were highlighted by year-over-year revenue expansion from our three higher margin businesses, National Retail Solutions, Foster Volution Money Transfer, and Nexflin UCAS. Within our FinTech segment, NRS added over 1,300 units to its PLS terminal network this quarter. In the year-ago quarter, we added less than 800 units. We've picked up the pace of network expansion significantly. On January 31st, NRS had over 13,700 billable units in the network. NRS's quarterly revenue increased by over 150% year-over-year to $5.2 million, led by growth in payment processing services and in digital out-of-home advertising sales. Although we are in the early stages of monetizing both of these offerings, They helped to drive a 50-plus percent increase in revenue per PLS terminal over the past year. Also within FinTech, our Boss Revolution money transfer service increased revenue 73% to $13.3 million. We continue to build out our global dispersion network, and this quarter passed an important milestone, opening corridors to Southern Asia with the addition of Pakistan and Nepal. Looking ahead, we are laying the groundwork for the first expansion of our origination markets. The reach of our disbursement network and significant transaction volumes into key destinations enable us to provide a highly competitive T2C service from a number of countries. We expect to launch our expansion by offering bus revolution money transfer in Canada and the UK in fiscal 2022. As we noted in our earnings release, our money transfer business continues to benefit from the unusual foreign exchange market conditions that drove strong growth in the second half of last year, but which diminished in the first two quarters of fiscal 2021 before dissipating by the end of the second quarter. In our net to phone UCAS segment, subscription revenue climbed 36% to $10.1 million. Growth has been solid in all of our markets, the U.S., Canada, South America, and Spain. Our continued growth validates our geographic strategy, but also reflects the accelerated rate at which we have been able to develop and deploy enhancements to the offering itself. most notably adding integrations with some leading CRMs and communications platforms. In the second quarter, we launched our integration with Slack, the leading channel-based messaging platform, building on previous integrations with Zoho and Microsoft Teams. More recently, we launched a powerful integration with Salesforce, the world's largest CRM. These integrations enable Metaphone to approach higher seat count customers and position us to strengthen per seat revenue without sacrificing growth. The increasing sophistication of our feature set and adaptability of our offerings prompted CIO Review, a publication for technology leaders, to name NetPhone as one of its top 20 companies providing transformative solutions for retail businesses. In our traditional communications segment, aggregate adjusted EBITDA less capex increased to $18.2 million, $4.6 million more than in the year-ago quarter. Strong year-over-year growth in international mobile top-up sales in combination with stable Boss Revolution calling revenue more than offset a decline in carrier students' revenue. Looking beyond our established businesses to new opportunities, we are preparing to relaunch the Boss Revolution mobile initiative. Our initial MVNO effort in partnership with Sprint struggled, but we are confident that this time around we will do much better. Across our businesses, the entrepreneurial spirit drives everything we do and will be a powerful source of value creation as we continue to build IGT. Now, Marcel and I would be happy to take your questions.

We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Brian Warner, investor. Please go ahead.