Good evening, and welcome to the IDT Corporation's Fourth Quarter and Full Fiscal Year 2024 Earnings Call. In today's presentation, IDT's management will discuss IDT's financial and operational results for the three- and 12-month periods ended July 31, 2024. During prepared remarks by IDT's Chief Executive Officer, Shmuel Jonas, all participants will be in listen-only mode. After Mr. Jonas' remarks, Marcelo Fischer, IDT's Chief Financial Officer, will join Mr. Jonas for Q&A with investors. 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 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 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, operator. Welcome to IDT's earnings conference call. My remarks today will focus on the fourth quarter and full fiscal year 2024, the three and 12 months ended July 31. 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-K that we expect to file with the SEC next Tuesday. IDT delivered a strong fourth quarter, highlighted by record adjusted EBITDA to cap off our 2024 fiscal year. NRS, BOSS Money and net2phone all performed well, while our Traditional Communications segment businesses delivered solid cash flows. At NRS, we continued to make good progress on our strategic priorities, expanding our customer base in the large independent retailer market, increasing the penetration of NRS Pay, developing point of sale solutions for new verticals, and building out our advertising tech, all while deploying hundreds of new locations every month. At BOSS Money, we again achieved year-over-year transaction volume and revenue growth of over 40% during the fourth quarter. BOSS Money's economics continue to improve as the business scales, which enabled our Fintech segment to achieve its first quarter of positive cash flow generation. net2phone is steadily building its customer base, again adding approximately 12,000 net new seats, including 2,000 CCaaS seats, in the fourth quarter, while also doing a good job of controlling its costs. As a result, net2phone's adjusted EBITDA margin more than doubled compared to the year-ago quarter. We are focused on further improving net2phone's bottom-line through continued volume growth and increasing revenue per user, driven by expansion of our higher-revenue, higher-margin CCaaS offering and by migrating customers to premium plans and features, including plans with new AI-powered functionalities. In our Traditional Communications segment, we significantly improved the economics of our business, and began to see the expected payoff from cost reduction initiatives we implemented throughout fiscal year 2024. In fiscal 2025, we will continue to pursue opportunities to improve the performance of our business and lower costs while maximizing cash flows and reinvesting in customer acquisition. IDT enters fiscal 2025 with strong momentum. NRS, BOSS Money and net2phone are all profitable and each has a long growth runway. In the year ahead, we will drive their continued expansion and invest in new, exciting growth initiatives that leverage our strategic assets and expertise. We remain committed to maximizing the cash generation from each of our segments, building dynamic businesses for long-term value creation, and returning value to our stockholders through our investments in new initiatives, share buybacks and dividends. Lastly, I'd like to thank everyone at IDT who has really worked very, very hard to deliver the numbers that we deliver to you today. Oftentimes, it just looks like numbers on a paper, but it's really a lot of work. Now, Marcelo and I will be happy to take your questions. Thank you.

We will now begin the question-and-answer session. Okay. Our first question comes from Inigo Alonzo with Moram Capital. Please proceed.

Hello. Congratulations once again on the amazing results. I had a question first. Well, a couple of questions on net2phone. I wanted to ask about the MetaSwitch end-of-life. Is this going to be a tailwind for your business, or you don't really share the platform that you own with other UCaaS players?

It's not, as far as I know, it has no effect on our business.

Okay. And then, regarding the migration in net2phone from the rented platform to your own platform, how in a percentage how complete are you with the migration? Are we expecting to tap synergies there?

Yeah, I mean, we expect to actually start migrating more customers over the next quarters. Basically, no new customers go on to any other platform other than our own. And we hope to see savings from it and better satisfaction from our users once they're on net2phone's homegrown platform.

Do you have any hard timeline on when you would like to see the full transition into your own platform?

No.

Okay. And the last question is about NRS. In previous calls, you have talked about a potential future NRS spin-off. Obviously, market circumstances are not the best today, but what type of circumstances would you like to see in the market and in your own business in order to do the spin-off?

Again, I mean, right now we're focused on building NRS into a multibillion-dollar company. And when the time is right, we will have the ability to spin-off or do some other type of transaction. However, at the moment, we're very happy with how it's doing internally.

Okay. The next question comes from Greg McKinley. Please announce your affiliation and pose your question.

Yeah. Good afternoon. Greg McKinley with Asymmetric Management. A couple of questions. First of all, on the money transfer business, it looked like we crossed the threshold there and we're now EBITDA and operating income positive. Can you help us understand how we should think about sort of incremental margins there now that we've crossed that line? We're growing very rapidly on the top-line. What's your view for margin expansion there? And what kind of big investments, if any, do you need to make there to continue to support growth, or is it more of a margin leverage business now?

I'm going to let Marcelo address most of the question, but I want to emphasize that our primary focus isn't on significantly increasing margins on a per transaction basis. Our main objective is to ensure that our customers remain with us for the long term. This may result in slightly lower margins than we could potentially achieve if we chose to do so. For us, it's about increasing the number of customers and making certain that whenever they consider sending a money transfer, they think of us first.

Yeah, thanks. And just to clarify my question, I wasn't really asking so much from a customer standpoint. I was thinking more of the business unit. It looks like it now flipped to EBITDA positive. So, anyway, just wanted to make sure I was clear on that.

Yeah. Hi, Greg. It's Marcelo.

Hi.

I think 2024 was a fantastic year for BOSS Money in many ways. We crossed the $100 million revenue mark and are now processing over 20 million transactions annually. It's also the first year we became EBITDA positive, generating about $4 million in positive EBITDA, which has boosted the entire Fintech segment, including other businesses that are still in the investment phase and some pre-revenue. BOSS Money has driven both top-line and bottom-line growth. We completed our budgeting for 2025, and our fiscal year just started a month ago. We expect BOSS Money to deliver over $10 million in EBITDA for 2025, more than double what we achieved in 2024. This growth is fueled by around 40% increases in transactions and revenues from both digital and retail channels. We are seeing that momentum continue into Q1 during August and September. With the leadership of Shmuel and Bill Pereira, we are focusing on improving operational efficiencies and increasing automation, which is positively impacting our bottom line by managing SG&A and enabling faster scaling. As we start the new year, our focus will shift slightly from maintaining 40% growth to improving our most important metric, gross profit margin per transaction, which we refer to as GMPT. We are making adjustments in pricing to increase GMPT, even if it slightly affects top-line growth, as this will lead to stronger bottom-line cash flows.

Yeah. I mean, the one thing I would say is I think Marcelo might be being a little bit conservative on his projection, but again, as I said in the beginning, it's really a question of whether or not you want to have expanded GMPT or a longer lifetime value of every customer. We try to balance that both having good profitability as well as many happy customers that stay with us for a very long time.

Right. In relation to that, we view our mobile top-up business as similar to our MTU business, which is the largest revenue driver for our Traditional segment. Alongside this, you will start to see significant growth in our top-line revenue. We have implemented some pricing adjustments to our portfolio, which will help reduce the overall decline in Traditional Communications significantly compared to what you have experienced in the past year.

Great. Thank you. And this is my first time dialing in for this call, so I'm not sure historically what topics you guys are willing to comment on from a forward outlook standpoint, but you just mentioned the decline in the Traditional business, and you think maybe that the client rate of decline will moderate. I'm wondering, could you comment a little bit on that, and then set how much of an improvement in the rate of decline. And then, it also looked like the high-growth businesses more than offset the decline in the mature business. So, can you talk a little bit about what that means in your view for revenue growth, if you expect that in 2025, and EBITDA, if you do provide forward commentary on that, I'm not sure? Thank you.

Sure. Let me address one thing at a time. First, let's focus on the Traditional segment and then look at the overall picture. This isn’t a new development; in our Traditional segment, the majority of the businesses consist of our legacy long-distance voice operations, which have been declining for several years. We anticipate that both the BOSS Revolution calling business and wholesale carrier revenues will continue to shrink at a double-digit rate. We are managing these businesses for maximum efficiency and strong cash flow generation, without allocating significant capital towards them. In fiscal 2024, the Traditional segment saw its EBITDA decline by about $11 million. Looking ahead to fiscal 2025, due to the significant cost-cutting measures we implemented during 2024, which were challenging but necessary, we expect to see the benefits of those cuts beginning in Q4 and beyond. Additionally, the mobile top-up business and the IDT Digital Payments business, which is part of that segment, are now in a faster growth phase due to increased volume and strategic pricing changes. Consequently, we anticipate that the decline in Traditional EBITDA for the coming year will be considerably less than $11 million, likely around $5 million or $6 million instead. Therefore, we estimate about $16 million in EBITDA from the Traditional businesses. Regarding the overall picture, I believe we may see a slight increase in consolidated revenue for fiscal 2025, as the growth from new businesses will likely outpace the decline from the Traditional segment. More significantly, we have focused on demonstrating our ability to increase bottom-line consolidated EBITDA every year, despite the decrease in our core business EBITDA. For roughly five or six years now, we have grown EBITDA on a consolidated basis. We ended 2024 with a record $90 million in EBITDA, and our Q4 EBITDA, which we just announced today, reached $25 million, marking the highest EBITDA ever in IDT's history over my more than 20 years with the company. Looking into 2025, with all businesses now being EBITDA positive, we believe we could exceed $100 million in EBITDA as a preliminary estimate.

Yeah. Great. Thank you.

Okay. We have a couple of questions in queue. The first coming from Will Carter, private investor. Please proceed.

Yes. On BOSS Money, obviously, really strong growth again this quarter and continues really strong year. Where are you guys seeing a lot of this growth from? Are you taking share from competitors? Is this a growth pocket within the market? Interesting to just understand where that's coming from within the larger kind of competitive space.

I don't really know for certain. We conduct surveys with our customers to identify who they have used for money transfers in the past, and it's clear that most have utilized other services. So, to some extent, we are capturing market share from competitors. We effectively cross-sell our range of services and ensure customer satisfaction, which encourages our customers to recommend us to their friends. Unlike some competitors who spend excessively on acquiring customers, we are cautious with our spending. Our main focus is on building profitable and long-term customer relationships. We strive to ensure our services work well for our customers and that our pricing is competitive, if not superior, to that of our rivals. That's the straightforward explanation.

I believe the BOSS Money brand is becoming more prominent with the customers we aim to attract for this service. Until recently, we often heard comments about how people recognized IDT for BOSS Revolution calling, not realizing we also had a money transfer service called BOSS Money. However, recently we've noticed a shift where customers are now aware of BOSS Money for money transfers and are surprised to learn we also provide international long-distance calling. This indicates that BOSS is strengthening its position in the market.

Yeah. Are there certain payment corridors where you guys feel you have outsized share, or is it sort of across the different corridors between the US and other countries?

Well, I mean, again, we today are almost 100% US outbound. I mean, we do it from Canada as well, but it's a small percentage. And I would say that again we have some countries that we have a high share of transactions to and our goal is to try to make every country a country that we have a high share transaction. So, obviously, you get to a certain scale and it becomes more, I'll say, self-fulfilling. You have a big enough share and customers start telling each other about it and we definitely have reached that in one or two of the markets, but hopefully we'll get to a couple more this year.

Yeah. I mean part of the irony is that most money transfer operations made in the US, for them, the largest corridor obviously is Mexico. And for us, at IDT, actually, Mexico is not yet a very large corridor; it's not one of the top three corridors. We are growing our presence in Mexico. So, we actually view Mexico as an opportunity at this point now to try to get even more market share from some of our competitors.

Got it. That's really helpful. And then my last question is on NRS. Another amazing year. Congratulations, guys. It would be helpful just kind of maybe similar to the overview that Marcelo gave on what you're thinking about 2025. Any goals around terminal deployments, kind of revenue targets and then maybe SG&A levels that will be required to get there?

Yeah, I mean, NRS continues to be very robust. We expect and we have budgeted to continue to grow the network, the POS network by roughly about 500 POS a month, right, 6,000 POS a year, which is what has been the trend for the past few years on a net basis. That's objective going forward. That's going to be driven by the growth in merchant services, by selling more NRS Pay accounts together with our POS service, continue to increase the operating leverage of the business. I think right now, we're doing about 24% net margins, probably growth will be 25% net margins this coming year. It's always a balancing act of how much you want to be increasing that margin and the top-line, bottom-line growth. So, I think we have gotten a good balanced level of investment and growth at the same time. So, I will not be surprised if EBITDA for NRS grows another 30% this coming year on top of the record $25 million that we delivered for this year.

I would add that we have some products we recently launched, and we’re still figuring out their long-term impact on our numbers. For instance, we’ve introduced kiosks for self-ordering in our stores and have already sold out of them. We expect to have more available soon. There are many growth opportunities that I believe will increase the volume in each store significantly. It’s interesting to note that kiosks actually boost the amount of in-store transactions because customers are more likely to use cash when paying at a register rather than at a kiosk. A couple of months ago, we launched our Panther POS, our tablet-based point-of-sale system, which is performing very well. We’re also planning to release it in different form factors and are developing it for iOS. We anticipate launching Pay-on-the-Tablet by the end of the fiscal year. There is a strong demand for this, and it will offer self-signup options through our website or via the App Store, allowing users to fill out a form and start transacting. This product has also been valuable for our existing retailers, helping them speed up service during busy days by using a tablet to reduce wait times. Those are some of the new developments happening.

Okay. Our next question comes from Max Martinuk, private investor. Max, please proceed.

Hi, everyone. First of all, congratulations on the quarter. My question relates to your comments about deploying hundreds of screens in new locations beyond your independent retail market. You mentioned the kiosks and Panther tablets. Are all these screens related to point of sale, or are you considering screens for pure digital out-of-home advertising? Additionally, regarding the new locations, what verticals are you targeting? Do you still see many brands in your core market, or are you looking to expand into new verticals? Thank you.

Okay, there are several questions, so I’ll do my best to address them all. Currently, we are focusing heavily on placing screens in hotel lobbies. In fact, we installed several hundred screens in the last quarter and have ordered another 1,000 specifically for that segment. Regarding new market segments, we are targeting areas closely related to our existing markets, such as hardware stores and quick-service restaurants, with an emphasis on SKU-based businesses. We are particularly focused on liquor stores and have recently employed someone to lead our efforts in that division to ensure we meet their specific needs. We are also pursuing opportunities in gas stations and exploring other verticals. However, quick-service restaurants remain our largest adjacent market, and while we currently have a shortage of kiosks, we expect to receive more soon.

Okay. We have a follow-up coming from Inigo Alonzo with Moram Capital. Please proceed.

Hey again. I wanted to ask about BOSS Money. It looks like you have a way of stronger presence in the Northeast with more retailers. I was wondering what's the strategy to grow nationwide, and if you have considered tracking in the public information that you released the number of retail locations that you have over the country and maybe the areas just like you do in NRS. Thank you.

Okay. I don't know if we released that information or not. I mean, I don't consider it to be a state secret, but we're slightly under 2,000 retailers that we do retail money transfer at. Again, similar to the comments that I made about lifetime customer value and GMPT, we're not focused on the number of locations that we have, but we're focused on making sure that the locations that we have are profitable and are doing a lot of transactions. That's really our goal. We don't want retailers that do a handful of transactions; they cost us more to have than they're worth the effort in having. So, we do open and close a lot of locations for that reason. However, what I would say is that we are definitely focused on growing our retailer base, but the majority of the growth that you're seeing is really in the digital verticals and that continues to be our main focus and that continues to be where we're having solid profitability from.

That's it.

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.