IDT Corporation

Good evening and welcome to IDT Corporation's second quarter fiscal year 2024 earnings call. In today's presentation, IDT's management will discuss IDT's financial and operational results for the three-month period ended January 31, 2024. During remarks by IDT's Chief Executive Officer, Shmuel Jones, 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. After Mr. Jonas' remarks, Marcelo Fisher, IDT's Chief Financial Officer, will join Mr. Jonas for Q&A. Any forward-looking statements made during this conference, 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. These risks and uncertainties include but are not unlimited to specific risks and uncertainties discussed in the reports that IDT files periodically with the SEC. 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. In their presentation or in the Q&A session, IDT's management may make reference to non-GAAP measures including adjusted EBITDA, non-GAAP net income, and non-GAAP earnings per share. A schedule provided in the IEDT earnings release reconciles adjusted EBITDA, non-GAAP, net income, and non-GAAP earnings per share to the nearest corresponding GAAP measures. Please note that the IEDT earnings release is available on the investor relations page of the IEDT Corporation website. The earnings release has also been filed on Form 8K with the SEC. I will now turn the conference over to Mr. Jonas.

Thank you very much. Welcome to IDT's earnings conference call. My remarks today focus on the second quarter of our fiscal year 2024, with three months ended January 31st. For a more detailed discussion of our financial and operational results for the quarter, please read our earnings release filed earlier today and our Form 10-Q that we expect to file with the SEC on Monday. The second quarter was highlighted by the continued expansion of our growth businesses, with both NRS and BOSS money surpassing the $100 million annual revenue run rate milestone. However, our expense management was not where I wanted to be for the quarter, and I expect it will get better. NRS continued to deliver robust recurring revenue per terminal. We again saw strong growth in merchant services and SAS revenues, and increased merchant services revenue per NRS pay account. We added approximately 1,500 net new terminals to the NRS network this quarter. We did have some one-time costs related to bad debt, which affected our quarter. That bought money delivered another quarter of impressive results with 42% year over year revenue growth. It's improving economics helped our FinTech segment to achieve adjusted EBITDA break even for the quarter. One key to the continued growth in this business has been our commitment to making money transfers faster, more convenient and secure for our customers. And to that end, we recently introduced an option for our US based customers to send money directly to bank accounts to the recipient's visa or MasterCard. We are seeing good customer response in the remittance corridors where we have launched this offering and will be expanding the service to many other destinations in the coming months. I am also very pleased with NetOwn increasing subscription revenue 19% year-over-year and achieving cash flow breakeven, which we measure as adjusted EBITDA less capex. Together, our combined growth segments propelled IDT to achieve another quarter of record consolidated gross profit and increased gross margin. The businesses within our traditional communications segment continue to generate strong cash flows. Over the past few months, we have been very focused on reducing our overhead and on streamlining our operations within our businesses and company-wide. You will see the benefits of these efforts in the third quarter and beyond. Now I want to provide some context to our board's decision to initiate a quarterly cash dividend. NRS, Boss Money, and Netfone no longer need new cash investments to fund their organic growth. In aggregate, they have become significant contributors to our bottom line, and we expect them to continue to increase those bottom line impacts. Meanwhile, we expect cash flows from our traditional business to continue to remain robust for years to come. The strength of our operational results and our balance sheet, including our enhanced liquidity, provides us with flexibility as we invest in the development of our next generation of exciting early-stage initiatives and scout for other growth opportunities and other countries in which to add our services. In light of our robust financial position and positive outlook, the Board felt that we should supplement our ongoing program of opportunistic stock buybacks, which can vary from quarter to quarter with regular predictable dividend payments to our stockholders. To wrap up, I want to thank our employees at all our offices worldwide for their hard work to make these results possible and thank our Board for their support. Now Marcel and I will be happy to take your questions.

Thank you. 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 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.