Release Date: October 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IDT Corp (IDT, Financial) delivered a strong fourth quarter with record adjusted EBITDA, highlighting the success of NRS, BOSS Money, and net2phone.
- BOSS Money achieved over 40% year-over-year transaction volume and revenue growth, marking its first quarter of positive cash flow generation.
- net2phone added approximately 12,000 net new seats, including 2,000 CCaaS seats, and more than doubled its adjusted EBITDA margin compared to the previous year.
- The Traditional Communications segment improved its business economics and began to see benefits from cost reduction initiatives.
- IDT Corp (IDT) enters fiscal 2025 with strong momentum, with all major segments profitable and a focus on continued expansion and new growth initiatives.
Negative Points
- The Traditional Communications segment continues to experience a decline in revenue, with expectations of double-digit declines in some areas.
- Despite strong performance, IDT Corp (IDT) faces challenges in expanding margins for BOSS Money, focusing instead on customer retention.
- The company does not have a specific timeline for the full migration of net2phone customers to its own platform, which could delay potential synergies.
- Market conditions are not currently favorable for a potential NRS spinoff, limiting strategic options for that segment.
- IDT Corp (IDT) acknowledges the need for significant investment in new initiatives, which could impact short-term profitability.
Q & A Highlights
Q: Regarding the migration in net2phone from the rented platform to your own platform, how complete is the migration, and are you expecting to tap synergies there?
A: We expect to start migrating more customers over the next quarters. No new customers go onto any other platform other than our own. We hope to see savings and better user satisfaction once they're on net2phone's homegrown platform. - Shmuel Jonas, CEO
Q: On the money transfer business, now that it's EBITDA positive, how should we think about incremental margins and investments needed to support growth?
A: BOSS Money became EBITDA positive, generating about $4 million. We expect it to deliver more than $10 million of EBITDA in 2025. Our focus is on improving gross margin per transaction, even if it costs a bit in top-line growth, to yield better bottom-line cash flows. - Marcelo Fischer, CFO
Q: Can you comment on the decline in the Traditional business and expectations for revenue growth in 2025?
A: We expect the decline in Traditional segment EBITDA to be less than $11 million, possibly around $5-6 million. We anticipate a slight increase in consolidated revenue for 2025, with a goal to surpass $100 million in EBITDA. - Marcelo Fischer, CFO
Q: Where is the growth in BOSS Money coming from, and are you taking share from competitors?
A: We do surveys and find that most customers have used other services before. We focus on cross-selling and maintaining competitive pricing rather than overspending on customer acquisition. - Shmuel Jonas, CEO
Q: What are the goals for NRS in 2025 regarding terminal deployments and revenue targets?
A: We plan to grow the POS network by about 500 POS a month. We aim for a 25% net margin and expect NRS EBITDA to grow another 30% this year. New products like kiosks and Panther POS are expected to drive further growth. - Marcelo Fischer, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
