IDT Corporation

Good evening and welcome to the IDT Corporation's Third 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 ended April 30th, 2021. During remarks by IDT's Chief Executive Officer, Joelle 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 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. IDT assumes no obligation to either 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 non-GAAP measures included adjusted EBITDA, adjusted EBITDA less capex, non-GAAP net income, and non-GAAP earnings per share. A schedule provided in the IDT 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 Corporation website. 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, Operator. Welcome to IDT's third quarter fiscal year 2021 earnings call, covering results for the three months ended April 30th, 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 filed earlier today and our Form 10-Q, which we expect to file with the SEC on or about June 9th. IDT continued to deliver strong results reflecting the sustained execution of our strategic priorities and the robust operating performances of our businesses. As a result, our top and bottom lines increased appreciably compared to the year ago and prior quarters. Even when excluding the positive impacts of a reversal of income tax valuation allowances and gains on investments recorded this quarter, Consolidated revenue increased $52 million year-over-year to $374 million. It was our fourth consecutive quarter of year-over-year revenue increases, with solid performances across the board, including an exceptional increase in mobile top-up revenue among our traditional communications offerings. Consolidated income from operations increased $10.1 million to $13.9 million this quarter, while adjusted EBITDA less capex, which is overall a good proxy for cash generation, jumped to $13.2 million and $5.7 million. Sorry, my kids just joined me. I apologize. I'm sorry, everyone. The problem was not pre-recording. I'm just going to go back and drop. I apologize. Consolidated income from operations increased $10.1 million to $13.9 million this quarter, while adjusted EBITDA less capex, which is overall a good proxy for cash generation, jumped to $13.2 million from $5.7 million. All three of our reporting segments, Net to Fill Newcastle, FinTech, and traditional communications met or exceeded our expectations. Our high-growth, high-margin businesses once again performed extremely well. Netfone delivered subscription revenue growth of 39% year-over-year. The increase reflected, in part, progress on Netfone's development roadmap. Netfone continued to add API third-party integrations and now offers integrations with Salesforce, Zoho, Purple Cloud, Slack, Zapier, and Microsoft Teams, among others. Its growing integration toolkit enhances access to new segments across its domestic and international markets. In our FinTech segment, NRS accelerated its impressive revenue growth, increasing revenue by over 120% year over year, led by payment processing and digital advertising services. This quarter, NRS announced a partnership enabling our independent retailers to ship and receive commerce packages. This deal illustrates the real strength of the NRS ecosystem, namely its ability to generate revenue from a variety of services in ways that add tremendous value to our retailers. Also within FinTech, our Boss Revolution money transfer business remains strong, generating 63% revenue growth year over year after excluding the significant positive impact of the transient FX opportunities we successfully pursued starting with the year-ago quarter, but which finally and completely ceased in the second quarter of this year. Our money transfer team has done a great job of enhancing the Boss Revolution money app, user experience, and is systematically cross-selling customers from our other BOSS offerings. In the coming months, we will continue to grow our money transfer service to new quarters, enhance our distribution network, notably in Africa, and expand it to new origination markets. These initiatives offer abundant long-term growth potential. And finally, within our largest segment, traditional communications, mobile top-up revenue jumped by $36 million sequentially and by $47 million year-over-year, underscoring the vigor of these offerings and their potential to sustain long-term cash generation. This significant revenue increase reflects our recent efforts to grow our share in the mobile top-up space. Powered by mobile top-up, adjusted EBITDA at less capex for the traditional communication segment jumped to $20.8 million, an increase of $8.7 million from the year-ago quarter. Finishing up our strong third quarter operational results enabled us to further strengthen our balance sheet with a significant improvement to available cash and current ratios this quarter. Now Marcelo and I would be happy to take your questions. And I'm sure some of my kids would love to join, but hopefully it will just be the two of us.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question will come from James Smith, a private investor. Please go ahead.