IDT - Earnings call transcript Q3 2022

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Operator

Good evening, and welcome to the IDT Corporation's Third Quarter Fiscal Year 2022 Earnings Call. In today's presentation, IDT's management will discuss IDT's financial and operational results for the three-month period ended April 30, 2022.

During the remarks by IDT's Chief Executive Officer, Shmuel Jonas, all participants will be in a listen-only mode. [Operator Instructions] After Mr. Jonas' remarks, Marcelo Fischer, IDT's Chief Financial Officer will join Mr. Q&A. for Jonas uncertainties made anticipates. prepared statements general conference either those risks call, specific to actual Any materially differ or during in the from and to subject remarks nature, the whether may the in cause in results Company forward-looking which are this that Q&A or session, periodically and in the reports These risks are but discussed include, SEC. not limited IDT uncertainties files with and uncertainties to, the specific risks that that either that to those made update results IDT they assumes statements to factors have forecast. may forward-looking the to no may or make obligation that they from or any actual differ update materially cause and in non-GAAP loss per non-GAAP In or the their to session, share. make measures, IDT's presentation EBITDA, management adjusted reference income earnings may including or Q&A net non-GAAP IDT schedule release loss or GAAP share in A EBITDA, and income non-GAAP non-GAAP measures. reconciles the corresponding earnings nearest earnings provided net to the per adjusted IDT page on Please available note is IDT the the earnings website. of that release Relations Investor the Corporation earnings The been X-K Form on the filed SEC. with has release also will over to conference now turn Mr. I the Jonas.

Shmuel Jonas

earnings operator. Officer. call. you, IDT's Chief call conference Fischer, to Welcome the I'm joined Financial by Marcelo Thank on IDT's

my both XXXX, ended the to available will questions My fiscal answer XX. on April We today discussion the focuses third after our be of months quarter remarks. year three

by we XX promising earnings value generated detailed on its inception file a to Commission our today IDT X. operational years incubating filed Since release business and and and XX-Q initiatives. expect ago, has read more Securities report please earlier that For our and June discussion financial on over growing with shareholder results, our Thursday, Exchange and the Form

fiscal levels to netXphone growth Revolution us our high-margin, Traditional third assets our had high-margin three high-growth three and EBITDA, third added simultaneously net helping operations the very solid the Transfer, businesses X,XXX and acquisitions recurring POS Communication our quarter. our significant accelerated net quarter, year. consolidated NRS are results second increased strategic the while by quarters year-over-year, of accounts core income the revenue keyed X,XXX businesses: XXX% leveraging of the to from in Each by strong again quarter, sales. maintaining adjusted from segment. these of generated achieve from benefiting nearly We of rate during a and BOSS with achieved service cash consistent scale NRS payment processing and Money first currently merchant two terminals advertising strong NRS,

political to markets growth as second of revenue execution, provider of was growth primarily year. netXphone's sustain advertising from heading SMB tailwinds half advertising NRS the Looking expect budgets and ahead, high-margin strategic increasing coming both to long-term the the small out-of-home allocation robust, including seasonal enterprise of trends as increased such expect the and advertising data we as on benefit that offerings venues, in in we will year-over-year calendar from X,XXX well during including within In particular, quarters. businesses focus American into Integra of U.S. although Seat North and Subscription markets our XX% from well our the the XX,XXX very seats almost the well. strongest and addition again increased the approximately to quarter. CCaaS growth acquisition. quarter, as due in acquisition to seats Latin contributed Integra third South solid America, efficient all performed the

increased net the quarter The quarter by progress. in already operations we both CapEx in offerings and making continuing to A postpone million year to a earlier. its volumes the business XX% the and the revenue XX% transaction segments the of quarter. netXphone, to year-ago million $X.X decision driver CCaaS derived are million become a $X in netXphone's remittance third expansion improving our a margins. to nearly Money, in We BOSS revenue conditions. robust market light exchange. to transaction can netXphone-UCaaS We of $X.X month in Segment expect from spin-off and gradually fiscal million North growth by including transfer increase driven significantly in quarter our enhance of and to of in believe in fees $XX.X million year-over-year fact, third we loss grow international And was a in announced that foreign we from decreased increase compared value good fourth selling both begin from will America ago, year and ARPU our our revenue the seat business, current expansion. key per $X.X comparably

million. to we surge impact wholesale paid retreating of for XX% $XXX.X the and our is disbursement during demand COVID build segment, The to underlying voice in declines pricing direct-to-consumer the additional that services. Communications In Africa Traditional capture and revenue decreased our to experienced and We to now the exacerbating million $XX.X networks, retail in and margins. Caribbean, in revenue particularly calling out carrier pandemic the or by revenue continue strategies fine-tune our and

Their Mobile performance. Communications' sales, improve in to Traditional Top-Up sales lower income operations decreased from lost revenues high-growth income this from $XXX,XXX we while strong wrap-up, businesses minute-based decreased basis, $X investing increased million. $XX $XX.X Traditional segment. On high-margin, million adjusted a low-margin, continues its a Because offset of three marketing, to from struggled overall within To to to Our revenue of our quarter, but and all our EBITDA margin $XXX,XXX had the million and year-over-year business this Communications are skewed the expansion segment decline technology was quarter. operations to consolidated million. $XX.X to

to continue as quarters bottom in increasingly coming contributions. our that line We consolidated expect reflect will businesses results the their expand, our growth

the of of help spin-off assets our be to continue from readily spin-offs can appropriate from netXphone, and those operations the the of strategy postponed have other attractive to benefit and we directly promising believe we whose more businesses Although shareholder young that separable businesses. are expansion

Marcelo to be happy Now, and will your questions. I take

Operator

question first [Operator The comes now will from Polansky begin Investments. We Immersion Instructions] David session. with the question-and-answer

line Your is live.

David Polansky

with Can what Is of been great you've talk bit especially you to – usual through direct doing seeing my a installs, Hey quarter previously. is channels wanted you're ask kind from for rate is you're X,XXX job NRS. second up as NRS question. about this putting which the I consecutive please? Obviously, guys. which Thanks you it Could accelerated that an center? distribution little growth? call that taking discuss

Shmuel Jonas

enhanced of It's segments. the in really basically sales each

So it's an not having particular, coming from they're sales. all rate one in of increased

David Polansky

think the side rather side. Okay. equation NRS seems new from coming time which before, asked like your commentary know And fact it explicitly given press but first this the I've I I giving release, is unit any – that than it's about forward-looking the a this in of the ARPU you

I on ask think go have ARPU where So for any here? again, wanted you to could from do updated NRS thoughts we

Shmuel Jonas

specific mind, go that but a have up. I in I believe don't ARPU do number will

David Polansky

Okay. new as units And reason a normal, about thinking we see any think per should business? X,XXX to a we be still this installs per quarter that can or quarter X,XXX as

Shmuel Jonas

I we personally was think new back of But And above I mean, the equipment. – that shortages X,XXX particular this per things were we grow one quarter the units of we spent that really can good quarter. held now again. money that we And lot of bring so a shape been deploy of not issue deploying. and to than we're equipment in a that more will we have a lot think we've that inventory in to us

David Polansky

your on more so all us to you able there you've update to that installs? give Because C-store from in said can initiatives know than X,XXX. the past market. about be can you that? you get, Do you talked outside any that of Is coming you do bodega traditional I think sell Is might

Shmuel Jonas

et of I don't had have primary tip we I in from at anything quick from. areas, the percentage really what came cetera. a service from like, of of kinds the my sales different fingertips lots Obviously at the stores – what about to market. stores anything to moment dollar large liquor sales stores call, our But this would came restaurants,

David Polansky

a To new quick think that's restaurants, service one. I

Shmuel Jonas

be… That might

David Polansky

– Have you you have how installed been the serve? quick long

Shmuel Jonas

I we've past, adding since months would restaurants. don't been XX know. rolled The modifiers, I out we say,

David Polansky

meaningful. in I is that? you – business? is putting focused Okay. mean, just to Or the you material that a still that extra bodegas? That's and C-store going Are resources portion very on of solely be are

Shmuel Jonas

say we're do the like benefits focused is build I we then primarily don't think that primarily it, also same we're I Again, on would it. features have see new in our functionality know, we you market. that and features, customers solely When development who, but towards definitely on other core focused we in that those But target if mind, our great.

David Polansky

Great. Okay.

base? existing So disclose substantially proportion you are the On payment customers? quarter new last new think What progress of penetrating X,XXX, was on processing, you Was from Or now you the new – making that I percentage installs? of have have so can your X,XXX. payment it customers? you side,

Shmuel Jonas

existing I the But of making would going progress in say substantially new are POS customers. also we customers. after some base

David Polansky

in in an about I Great. percentage – I we should inflationary particular I how a a business swipe, NRS think of environment? mean, taking as mean, your I the think and payments that how mean, environment? kind I would economic mean, about given do inflation. we think least basis, you current think up on with I a would keep at that, dollar of the

Shmuel Jonas

our that has you I or ticket inflation have an the have But to maybe with Their that. grown you. has check credit been real don't specific expect that. would call material happening, has don't average along size say answer. give well. on to have by that to doing has card And add a a that. in average, I more I stores answer What although answer, Marcelo affects do volume I'll I to can't it, that grown. with

Marcelo Fischer

Hi, David. It's Marcelo.

payment now headline, perspective. inflation more from a I okay, really are of our protected, variable of kind cost that – of mean, total charge, total Your the processing component okay, is that being we the

from away So this. the we write inflation

David Polansky

to accelerate Great. fantastic, acquisition NRS Last on IDT growth? NRS data still space, at the of make the to an something looking obviously me. there payment Is your just I'm in mean, for growth house, sort the larger maybe is any something but side, right. one I space, within your desire

people and and think piece. would of NRS it's traditional, – on your like trying that EBITDA growth, want to I really with growth this but about is great, looking flat down at people kind and focusing it's attracts I'm to So year-on-year stock to with fine the see – what want going I

are accelerate I'm way you what curious any there's And anything we of just thinking so that? do can or about if in to kind that that

Shmuel Jonas

two at I things. say look mean, lots mean, one is, I of things. I'll we

would for reason alone, are do conservative do zone. Some of our outside of that I are nature. comfort not them, them And we like say that we by

bit On that, is your from hesitant time to and organic does management hand, going little very And I into working to growth take something into acquisition acquisition, well. the monkey when of integrating an I a of you that be effort And that's strong. throw wrench believe it do very, would lot other say we're a business. a that

So if areas would I us in in means along, that both we're for to ARPU. continue by to not but say opportunity and are comes NRS, particular definitely any the help stores grow of we acquisition an to need acquisitions open right

David Polansky

I'll All guys. right. sign-off. Great. Thanks

Operator

question next Wilk coming Capital is Adam The Okay. from Greystone with Management.

is live. line Your

Adam Wilk

Hey Thanks Great my taking guys. strong for are questions. Really quarter. How you? job.

for Mobile update on be me. Top-Up one An Just would helpful.

talked last little I that. and about competition potential from you quarter, think especially as the in wholesale I negative believe effects bit a

anything be would Thank So like add you. really to you'd helpful.

Shmuel Jonas

to maybe I of the to say a our But give listen, that, gotten competitors bunch our listen competitors calls. anything don't also have would want investments away I Top-Up to into large businesses. that growth both. please on to Mobile And profitable I we their into their growth. try to And investors, on more revenue they're think on focus – than focusing them

therefore from job believe do the do enough business. good to going are we quarter, predictable offerings This them more on of much unfortunately, the that But that focusing a revenue revenue make the stickier have didn't and much in of products our I side profitable. a the we and lot pipeline maybe the

Adam Wilk

I Okay. the Thank That Great. appreciate me. for Yes. it it. you was for color.

Operator

The Okay. Sean from next question Retirement. Berger with Adirondack is coming

is live. line Your

Sean Berger

One ones. to great just expansion have a – quarter about possibility. question with the on and NRS, I other I've and NRS. got actually two Congratulations or is one wondering quick regard I'm and particularly Hi.

NRS time services So and and about you then have giving XXth that I it on get the to too you July again, – wise. been land new the this have like the it's on active then expansion, But target by happen I you that? or question was a having kind that expand I date given NRS to new regard Marcelo you think the more to because adoption I away a netXphone regard quick spin-off, the more have postponed to on with the thought going market have much not strategy if pay And a and other target so of services. quarter guess sell And terminal wondering side, it's I'm side. as about, for date without to wondering well. talked been know which was postponed. just conditions, with if

Shmuel Jonas

question your guess well we second release a new target our it yet. I I'll delaying as as answer Again, in in We first. as not So today, remarks press do date of in, stated both the spin-off. my as related to on have

We expanding And at when be reoccurs, we that focused next one point their line right on think bottom much are as very the that will, will as improving more time. that in netXphone's customers. company base valuable which of a time well it

we a I into would existing offer didn't stores, good have of expanding into have stores. – And the to merchant relating into new definitely expanding As quarter did a into stores. stores the question I'll into not – expanding far the great side well We we quarter big would existing that as – services say part very that your expand that strategy. and of we is had offerings new a software new business our I say, land regarding say software NRS,

from going switch merchant customers services our of and to and been so upselling is retelling services have our in merchant solutions lower the you of software why actually our them reasons the And higher programs of software take aligned and merchant a now to why stores many to reason to service software significantly services, also good that if take back do you out on beginning are we to from job And So our merchant that get us. them pricing some our they fact into our our more need the services. need definitely programs a taken software programs. and

So we that continue will doing coming in quarters. the

Sean Berger

on congratulations and you, great a quarter. Thank Okay.

Shmuel Jonas

Thank you.

Operator

is Immersion question coming The Okay. Delaney next Investments. with from Tim

Timothy Delaney

guys. going The so. growth America? that, there. absolute and so forward happening for It's about taking the Give America – color us obviously, My netXphone. your North any Hey, Thanks North with particularly nice is call. see expectations to NRS, is beast question in around that around

Shmuel Jonas

to I that that also the would adding remarks, forward, higher. remarked if least in that through I a pretty are sales some solutions prepared that quarter, margins. higher during that we And can to quarter sales and level – achieve at America, our say from higher that CCaaS we bit as levels I of as this as feel achieved those we will sales beginning I'm quite confident North see of and well both lead again, already going think coming starting this we ARPU not

Timothy Delaney

That's awesome. Great. so you Thank much.

Operator

from Goldman. coming Okay. J. The Lustig is with next question Jason

Your line is live.

Jason Lustig

adds Hey, X,XXX? by X,XXX NRS, net question. earlier – guys. start-off it, to the from the Thanks get just on to, like David asked for I'd but to would it take building what call on current

Shmuel Jonas

good two or months. One

Jason Lustig

three quarter. like or four months Looks

Shmuel Jonas

say I be believe to But I don't we to we relatively I that, are get guidance and careful give forward kind want soon. numbers Yes. forward I give again, those mean, we to of I that not guidance. can't that No. going are think do to –

Jason Lustig

Okay.

Shmuel Jonas

sell through. it that the channel. comes not having from channels, again, different success specific It from we it's all comes And any from channels multiple from one

Jason Lustig

in what And Okay. Marcelo? was quarter, the NRS EBITDA

Marcelo Fischer

non-cash items for EBITDA The if you one-time $X.X exclude million compensation was some NRS. EBITDA about was

Jason Lustig

Okay. just line And plan a bottom for netXphone. the there? improving little the bit to you on switching elaborate Can

Shmuel Jonas

deals about only which I guess careful things. you more marketing customers decide focusing – being being after, mean, Marcelo with go what spend, on it's add. It's of a it's lot sales being has variety size think productive to keeping really the I you on I would of careful a people, more say Yes. and And it's it's work careful on to details. something I more

Marcelo Fischer

number we in operate Yes. also focusing you of know, it's I geographies, right? countries. a As mean, on

at Some are others. growing clip faster the than countries much

acquisitions Mexico way exploding all return. geography highest in that looking are the example, more at growing. much is that customer the growth a the of our to now, are are for markets in right allocating disciplined although getting We terms capital

was more the continues structure so generating – significantly, we core So continue for at they're to EBITDA the great be and you're if customer scale get the see is strong, let which very, in next capital a getting look QX a grow acquisitions, that to topline. And now business still going to going and focus going profitability, at a highest tell perhaps would quarter being cost to and scale not I hope on the really way. I going as business netXphone deep very targeted and matters XX%, IRR investments, the year close netXphone accretive. very this now topline the already grow, to the time, to same continued think that more the growing to in to you, us me it

Jason Lustig

Thank for Okay. questions. the you

Marcelo Fischer

Yes.

Operator

more questions, Thank Instructions] this presentation. [Operator call. are for there question-and-answer and no today's concludes our conference As session attending you

may You disconnect. now

IDT (IDT) 3 Jun 222022 Q3 Earnings call transcript