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 Jonas, all participants will be in listen-only mode. After Mr. Jonas’s remarks, Marcelo Fischer, 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 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 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 IDT 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 IDT earnings release is available on the Investor Relations page of the IDT Corporation website. The earnings release has also been filed on Form 8-K 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 stay focused on the second quarter of our fiscal year 2024, the 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 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 SaaS 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. BOSS Money delivered another quarter of impressive results with 42% year-over-year revenue growth. Its improving economics helped our Fintech segment to achieve adjusted EBITDA breakeven 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. To that end, we recently introduced an option for our U.S.-based customers to send money directly to bank accounts through the recipient’s Visa or Mastercard. We are seeing good customer response in the remittance corridors where we have launched this offering and we’ll be expanding the service to many other destinations in the coming months. I am also very pleased with net2phone 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 net2phone 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, Marcelo and I’ll be happy to take your questions.

Thank you. We will now begin the question-and-answer session. We have the first question coming from William Wathon with Coriant. Please proceed.

Hi, gentlemen. Congratulations on the great quarter. I just wanted to ask about what you’re seeing in terms of the consumer base for the NRS business? What trends are you seeing in that type of consumer, in terms of spending, in terms of inflation? And a follow-up question would be, what are you seeing in terms of acquisition opportunities for expanding to different businesses or different business segments out in the marketplace?

Those are good questions. First, we have a monthly report called NRS Insights that our data team puts together, and I recommend looking it up if you haven't already. I don’t want to reveal too much before the report is published, but I can share a couple of highlights. Overall, our stores are performing quite well. From an inflation perspective, it has moderated significantly; average price increases for February were 1.2% year-over-year, and same-store sales for February this year compared to February last year increased by 3.5%. However, that percentage includes an extra day, so we might need to normalize for that, making it 3.5% once adjusted. In January, there was also a notable increase, with sales up around 7.4%. Those are the key numbers from our insights. When the report is released on Friday, you can read further details. Regarding the direction of our business and potential acquisitions, in net2phone, we’re not pursuing any major acquisitions as we are busy with many internal projects that we are pleased with. In the remittance segment, we have considered adding certain channels or countries where we lack presence to establish a footing for expansion. However, one or two recent opportunities did not meet our criteria, so we opted not to pursue them. We are consistently looking for acquisitions that can positively impact our bottom line and facilitate growth in new countries and sectors. In the case of NRS, we are considering a few small acquisitions. We recently acquired a company in the restaurant technology sector to enter that market. Overall, our primary focus remains on organic growth. While that may not sound as thrilling, we believe it’s a solid strategy, and we plan to continue pursuing organic development.

Okay. The next question comes from Jason Lustig. Please announce your affiliation, then pose your question.

Hey guys. Just curious how you’re thinking about the spinoffs or potential spinoffs of net2phone and NRS in light of them both being free cash flow breakeven or better going forward?

I would say that we’re not looking to do anything imminently. I mean, as I talked about on the Investor Day, I think a big piece of that is how the market perceives things, particularly in the net2phone area. The market has still really not been particularly strong for companies, I’ll say, in our verticals, even though I think we’re by far the best. So when you’re in a weak vertical, you get judged amongst them as well. As for NRS, I think one day it’s going to make a great independent company. I think that when that right time to spin-off is, I can’t comment on that today, but we continue to build it to become much more valuable than it is now.

Okay, thank you.

Thank you, Jason.

We have a follow-up coming from William Wathon with Coriant. Your line is live.

Hi, again. So I just thought of a follow-up. You mentioned this might have been during the Annual Meeting that in the BOSS Money business or the Money Transfer business, the key is getting to scale. So getting to a scale where you can reach profitability and getting that transaction volume through. So with the reaching of, I think, adjusted EBITDA breakeven this quarter, do you feel like you’ve reached that point of scale where you’re going to get future profitability in that business? And can you talk a little bit more about the trends you’re seeing there and what you think the long-term profitability could be of the Fintech side?

It’s not as simple of a question to answer as you would think. I mean, what I would say is, we sort of said that if we continue to grow the business at sort of like half the pace that we’ve been growing it at, we could see it getting to, I think you said, $14 to $15 million of profitability from that part of the business over the next two to three years. The one thing I would say is, it’s all depending on how much you want to invest back into acquiring more customers and growing verticals that you’re not as strong in. So I mean, you can pick any country, but pick Vietnam. Today, we have no volume to Vietnam. If we wanted to get into Vietnam, there are really two ways of doing it. You can either acquire another company that has volume to Vietnam or you can spend a lot more than you have to, acquiring customers and sort of overpaying on the payout side and hope that once you get to a larger base of customers, you’ll then figure out how to maximize the profits on it. So we’ve taken the approach of really trying to be much more focused on verticals that we already had penetration on in our Calling business or in our Top-Up business, and really trying to move customers from one place to another. But it’s definitely going to be a profitable and growing part of our business. So I mean, I don’t know if that answers your question, but Marcelo, do you have anything to add maybe?

I would say, William, just to put a little more context, is that, obviously the Money Transfer business, BOSS Money is the lion’s share of the Fintech segment in terms of revenue, and that part of the business, BOSS Money, has been generating positive EBITDA now for the last two quarters, and I think it did more than $1 million in positive EBITDA in the last six months. So it’s doing well, and that EBITDA will continue to grow at its scales, but to some extent, BOSS Money now growing EBITDA is funding other investments in that segment. We have our Gibraltar Bank, which is at the cusp of receiving a full license to operate as a full bank. We have our initiatives in online banking, online bank Elroy, or Neo-Bank. So Gibraltar and the Neo-Bank are mostly pre-revenue at this stage, and it requires investment. So we're kind of investing in those initiatives now with the cash flows from Money Transfer at this point. But going back to the Money Transfer topic, a lot of the acquisitions that we have looked at in the last few months are focused on the Money Transfer space. We do believe that scale matters hugely in terms of getting to higher profitability in that industry, and growing organically has been good for us. We’ve been growing at around a 35% to 40% clip, which is excellent, better than others in this industry. However, being able to supplement that with an acquisition will probably make a lot of sense in reaching scale. We’ve looked at a few of them. As Shmuel mentioned, the ones we looked at so far have not met our criteria, and we’re going to maybe continue to look at some future opportunities in that area.

Okay. Thanks, guys.

We have a question coming from Bill Monet with – he is a Private Investor. Bill, please proceed.

Hi, guys. Just a question. I see cash balances are building fairly rapidly. You guys have stated that big acquisitions do not seem to be part of the plan now. And your businesses are self-funded. I know you put in a small dividend, I guess about $5 million a year that’ll be at this point. Do you have any plans for the cash? It seems to be building up fairly rapidly, and it doesn’t seem that there are many uses for it?

I mean either acquisitions or stock buybacks—that's really the two main places.

Got it. Thank you.

Yeah, thank you.

It looks like we have no further questions in queue. As there are no more questions, this concludes our question-and-answer session and conference call. Thank you for attending today’s presentation. You may now disconnect.