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Edited Transcript of IDT earnings conference call or presentation 4-Dec-18 10:30pm GMT

Q1 2019 IDT Corp Earnings Call

NEWARK Jan 11, 2019 (Thomson StreetEvents) -- Edited Transcript of IDT Corp earnings conference call or presentation Tuesday, December 4, 2018 at 10:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Samuel Jonas

IDT Corporation - CEO

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Presentation

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Operator [1]

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Good day, everyone, and welcome to IDT Corporation's First Quarter Fiscal Year 2019 Earnings Call. In today's presentation, IDT's management team will discuss IDT's financial and operational results for the third (sic) [3] month period ended October 31, 2018. (Operator Instructions) After the prepared remarks, Marcelo Fischer, IDT's Senior Vice President of Finance and Principal Financial Officer, will join Mr. Jonas for Q&A. (Operator Instructions)

Any forward-looking statements made during the conference call, either in 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 the IDT files periodically with the SEC. IDT assumes no obligation to either update any forward-looking statements made, that they may 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 that will follow, IDT's management may make reference to non-GAAP measures, including adjusted EBITDA, non-GAAP net income and non-GAAP EPS. A schedule provided in the earnings release reconciles adjusted EBITDA, non-GAAP net income and non-GAAP EPS to the nearest corresponding GAAP measures. Please note that IDT earnings release is available on the Investor Relations page of IDT Corporation website at www.idt.net. The earnings release has also been filed on Form 8-K with the SEC.

With that, I would now like to turn the conference over to Mr. Jonas. Please go ahead with your presentation.

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Samuel Jonas, IDT Corporation - CEO [2]

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Thank you, operator. Welcome to IDT's First Quarter Fiscal Year 2019 Earnings Call covering results for the 3-month period ended October 31, 2018. I'm joined today on the call by Marcelo Fischer, IDT's CFO. In my remarks, I will focus on the first quarter's results as well as overall strategy. For a more detailed report on our financial results, please see our earnings release filed earlier today and our Form 10-Q, which we will file with the SEC next week.

This quarter, we are reporting revenue within our 2 operating segments and a new structure of verticals to more accurately reflect our business strategy and the way that management looks at the business units while providing investors with more clarity into our top line and operating performance. Please see our earnings release for additional details.

IDT continued to make progress in the first quarter with increasing operating income and robust investment in our exciting growth initiatives, including net2phone's UCaaS offerings, National Retail Solutions' point-of-sale network, our international money transfer business and BOSS Revolution Mobile. Net2phone's UCaaS offering doubled its revenue compared to the year-ago quarter, expanding through both the domestic channel and adding new markets in Canada, Mexico and Colombia. Looking ahead, we expect to continue to build this business through a combination of international expansion, growth in our partner channels in the U.S. and seeking out additional acquisitions focused on new markets and capability enhancements.

Net2phone released in beta its new proprietary UCaaS platform in the first quarter. The early feedback has been positive. We continue to enhance and refine the platform and will begin to enroll new customers on the platform as early as the current second quarter.

National Retail Solutions now has over 6,000 terminals active on its retailer point-of-sale network compared to 3,000 a year ago, and it is now adding about 1,000 new retailers each quarter. NRS revenue increased 69% year-over-year and has only just begun to develop promising new network-based services and offerings, including data analytics and out-of-home advertising.

Our money transfer business' direct-to-consumer channel revenue increased by over 160% driven by the expansion of our global disbursement network and the effectiveness of our app. These technology-driven initiatives are increasingly impactful, and we've only just begun to tap their respective market opportunities.

On a consolidated basis, the headwinds in the global per-minute calling sector impacted revenues from our BOSS Revolution Calling and Wholesale Carrier Services businesses. However, the impact on revenue less direct cost of revenue was entirely offset by improved margins from carrier and increased contributions from our growth initiatives.

Consolidated revenue decreased $31.2 million to $362.3 million. Revenue less direct cost, our closest proxy for gross profit, increased $578,000 to $57.6 million. SG&A increased by $481,000 to $50.6 million. Although we continue to increase investment in our growth initiatives, the additional expense has been offset by reductions in other areas of operations. Income from operations increased $1.2 million to $1.3 million, and adjusted EBITDA increased $97,000 to $7.1 million.

As previously disclosed, we purchased 729,110 shares of our Class B common stock during the first quarter for an aggregate purchase price of $3.9 million. Going forward, we will continue our opportunistic approach to repurchases as we look to increase shareholder value.

That concludes my comments on the quarter's results. Before I wrap up, I want to point out that IDT is and will continue to be focused on serving the needs of first-generation immigrants in America. For that reason and because many of our colleagues, including Marcelo, are first-generation Americans, we will be working individually and as a company to support immigration policies that recognize the enormous contributions immigrants make to our country every day.

Now Marcelo and I would be happy to take your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Okay. And there look to be no questions at this time, so this will conclude our question-and-answer session and the conference call. Thank you for attending today's presentation, and you may now disconnect your lines.