管理層發言
Good evening. Welcome to the IDT Corporation's Third Quarter Fiscal Year 2026 Earnings Conference Call. Operator instructions were provided to participants. Please note, this conference call is being recorded. I will now turn the call over to Bill Ulrey of IDT Investor Relations. Bill, you may begin.
Thank you, John. In today's presentation, IDT's Chief Executive Officer, Shmuel Jonas, and Chief Financial Officer, Marcelo Fischer, will discuss IDT's financial and operational results for the three months ended April 30, 2026. After their remarks, they will take your questions. Any forward-looking statements made during this conference call, either in their remarks or during the Q&A that follows, 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, adjusted EBITDA margin, non-GAAP earnings per share, NRS' Rule of 40 score and adjusted net cash provided by operating activities. Schedules provided in the IDT earnings release reconcile these non-GAAP measures 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 a Form 8-K with the SEC. And now I'll turn the call over to Shmuel for his comments on the quarter's results.
Thank you, Bill, and thanks to everyone on the call for joining us this evening. Last Friday, my father rang the opening bell at the NYSE to celebrate IDT's 25th anniversary as a NYSE-listed company and our 30th anniversary as a public company. Over 100 employees, on their own dime, from all over the world made the trip into Manhattan to be part of the event. After the event, I agreed to reimburse them, but I wanted only people to come who generally wanted to be there. I'll be honest, I wasn't sure what to expect going in. And as you can tell from my notoriously short speeches, I don't really like long-winded events. But the moment we approached the exchange and my father saw the IDT sign and smiled at me, something shifted for me. The NYSE team had done something really special. They pulled together photos and documents from our past listing anniversaries, creating a timeline of the people and the history of IDT, and it was a very proud moment. What struck me most throughout the morning was the pride of being part of an organization that has stayed relevant and innovative throughout those 30 years, including the spin-off of five public companies and that has consistently delivered for employees and shareholders alike, although not always in a straight line. IDT's year-over-year revenue and earnings growth was again powered by the continued expansion and operating leverage of our three higher-margin businesses, paired with another quarter of steady cash generation from our Traditional Communications segment. Consolidated revenue grew 5% to $315.7 million. Gross profit grew 9% to $122.5 million, with gross margin expanding 170 basis points to 38.8%, a record quarterly high. Income from operations grew 12% to $29.8 million and adjusted EBITDA grew 13% to $37.5 million. Based on our year-to-date performance and forward visibility, we are raising our full year FY '26 adjusted EBITDA guidance to $150 million to $152 million, representing 15% growth at the midpoint over fiscal year 2025. NRS recurring revenue grew 22% year-over-year and monthly average recurring revenue per terminal increased approximately 10%, driven by merchant services and SaaS fees. We expect both categories to continue driving growth in the coming quarters. The terminal network now stands at over 39,000 active POS terminals and payment processing accounts are also above 29,000, up 14% year-over-year. NRS Rule of 40 score was 50 in the quarter, reflecting a healthy balance between growth and profitability. After the quarter closed, we acquired a controlling stake in OnCore Digital, a digital media brokerage. OnCore's platform, demand relationships and publisher network will be integrated with NRS' screen network and first-party transaction data to create a more competitive retail offering. Our digital channel revenue growth rate accelerated in the third quarter compared to the second quarter. Digital transactions grew 20% year-over-year and digital send volume, the actual dollars our customers are moving, grew 40%. We gained market share following the implementation of the new federal remittance tax, as customers sought reliable, cost-effective alternatives. Net2phone continued its growth trajectory with subscription revenue up 12% and total revenue up 11%. Seats served reached 441,000, up 6% year-over-year with CCaaS seats growing faster than UCaaS, driving revenue per seat higher. Gross margins expanded 130 basis points to 80.6%. Most significantly, income from operations was up 76%. We are gaining traction with our AI offerings and expect them to become accretive growth drivers in fiscal year 2027. All net2phone offerings will also benefit from the recent release of Integrate by net2phone, an integration layer that enables our clients to, through a straightforward no-code interface, use our offerings with the tools they already work with every day, such as popular CRMs and ERPs, and much more. Our Traditional Communications segment continued its role as a reliable cash generator. SG&A declined $2.6 million year-over-year, as we continue to rightsize the cost structure and adjusted EBITDA was essentially flat at $19.7 million. IDT's global revenue grew 11%, partially offsetting the expected decline in BOSS Revolution calling. Across all our business segments, we are integrating machine learning and AI tools to better understand and meet the expectations of our customers, develop and provide new features faster, better and cheaper. Additionally, we are enhancing customer service, refining pricing strategies, accelerating product launches, creating marketing campaigns and streamlining back-office operations, to name just a few. We expect that our AI efforts, in some cases, will serve as the basis for AI offerings that we can sell to our customers. Thirty years ago, IDT was a scrappy long-distance phone company. Today, we operate a POS network serving nearly 40,000 independent retailers, a growing digital remittance business gaining market share in real time, and a cloud communications platform with AI capabilities, and a traditional communications segment that continues to generate meaningful cash. Thank you all for your continued confidence in IDT. Marcelo will now walk through the financial details.
Thank you, Shmuel. My remarks on our third quarter fiscal '26 results will focus on year-over-year comparisons in order to set aside the seasonal impacts on our business. As a reminder, our fiscal third quarter, February through April, has just 89 days, roughly 3% fewer days than our other fiscal quarters. With that as context, we were very pleased with our consolidated performance. The third quarter extended the trajectory that we have been on for several years. The underlying growth dynamic at IDT remains in force. Our consolidated results increasingly reflect the growing contribution of our three higher-margin growth segments, NRS, FinTech and net2phone, even as our large Traditional Communications segment becomes relatively less impactful. That rotation again produced record consolidated gross profit and a record consolidated gross profit margin in the quarter. Gross profit increased 9% to $122.5 million, and our gross profit margin expanded 170 basis points to 38.8%. Let me put that rotation in number terms. Our three growth segments contributed $107 million of revenue in the quarter, about 34% of our consolidated total, up from 30% a year ago. Because the combined gross margin is far higher than that of Traditional Communications, that shift continues to generate substantial operating leverage as the revenue scales. In the third quarter, our growth businesses' gross profit contribution increased to 67% from 61% a year earlier. The combined adjusted EBITDA from NRS, FinTech and net2phone grew 27% year-over-year to $20.5 million. In aggregate, our three growth segments generated 55% of IDT's consolidated adjusted EBITDA in the third quarter, up from 29% in the year-ago quarter. Because these segments still account for only about one-third of our revenue, that rotation has a long way left to run. I also want to call your attention to the consistent profitability of Traditional Communications, which slightly increased its adjusted EBITDA contribution year-over-year this quarter, even as its revenue edged slightly lower. This segment will remain a reliable contributor to our cash generation for many years to come. On the balance sheet, we ended the quarter with $251 million in cash, cash equivalents and current debt and equity securities exclusive of restricted cash. Last week, our Board declared a quarterly cash dividend of $0.07 per share. We also continued to repurchase shares opportunistically during the quarter, repurchasing approximately 84,000 shares for $4 million. Our growing free cash flow and debt-free balance sheet let us keep investing in our growth initiatives while returning cash to stockholders, and we expect to continue doing both. In terms of our outlook, given our results through the first nine months of the year and our visibility into the fourth quarter, we are again raising our full year fiscal '26 guidance for consolidated adjusted EBITDA from the $147 million to $149 million range we provided last quarter to a new range of $150 million to $152 million. At the midpoint, this $3 million increase represents 15% growth over our fiscal 2025 adjusted EBITDA of $131.7 million. This latest guidance raise reflects both the increasing operating leverage we are seeing in our growth segments and the resilience of Traditional Communications' contribution. To sum up, this was another quarter of disciplined, profitable growth, and we are carrying real momentum into the close of our fiscal year. Just to finish up on a nostalgic note, as Shmuel mentioned, this year is our 30th year as a public company. So naturally, I had to take a look at IDT's first annual 10-K report from 30 years ago, 1996. That year, IDT reported revenue of $58 million and a net loss of $16 million. Today, even after spinning off five public companies, we are generating 22 times the revenue and over $100 million more in net earnings. I am especially pleased by our performance over the past few years. In fiscal 2021, just five years ago, IDT reported $75 million in adjusted EBITDA. In fiscal '26, we are now on track to more than double that amount. So indeed, there was much to celebrate at the New York Stock Exchange last Friday. We are proud of all that we have accomplished and excited by the opportunities ahead. Now Shmuel and I will do our best to answer your questions. Operator, back to you for Q&A.
分析師問答
Operator instructions were provided to the participants for the question-and-answer session. Our first question is from an analyst at a capital firm.
First, congratulations on the 25 years, and thank you for sharing the touching words. I'm happy you spent some money flying people over to the New York Stock Exchange, knowing how tightly you manage money. So I'm glad you are celebrating and that it was worth it. That was not the only milestone this quarter. I have a question on another milestone, which was NRS having its first terminal in a non-North American country. This quarter, Colombia was the first country where you had an NRS terminal. I'm wondering why you selected that country? And is it beta testing? How should we think about the growth of NRS in that country? I would also like to ask another question on OnCore and the acquisition. We know that advertising has been a challenging industry in the last few years with so many streaming services offering screen time, and you have felt those consequences. Now with this acquisition, how should we think about advertising in NRS? What can we expect of it? In terms of net2phone, a couple of years ago, you went through the process of getting those papers ready to do a spin-off. That was canceled. Now we are in an environment where IPOs are the topic of the hour again and valuations are stretched. I'm looking at one of your peers in the segment that is growing organically less than you, has literally the same amount of revenue, and they're trading at 3x sales plus. Is this enough of a valuation for you to spin off net2phone, or in view of the excitement that you have around the new AI offerings, would you like to keep it close to your chest for a longer time? And one last question on BOSS Money. The performance this quarter has been impressive. You are acquiring customers like I haven't seen in a long time. I'm wondering, you expanded margin despite the customer acquisition costs. If we think about BOSS Money in a steady state, what kind of EBITDA margins do you think it can produce with less marketing expense?
The real answer is we could have selected a bunch of different countries to expand into, and we have some partners in Colombia that suggested that we try it there, so we decided, why not? Regarding OnCore, we definitely think they are going to help our advertising group. They have a lot of internal expertise that we didn't have, a lot of relationships that we didn't have, and they're very good people to work with. We've worked with them as partners for a number of years already, so this is really formalizing a long-term relationship. We expect it to be an accretive acquisition. On the question about net2phone and a potential spin-off, it's a good question. I'm not prepared to give an answer on today's call. I would say it is becoming more appealing to possibly do something. That being said, I'm very confident net2phone is going to do much better than our investors think it's going to do and much better than some of the competitors you referenced. So yes. On BOSS Money, I don't have a specific steady-state EBITDA margin number to give you right now. We have relatively good margins, and we try to be opportunistic when we can be. At the same time, we're sensitive to the fact that we want to continue to have our customers for a long time and continue to attract new customers, and to do so, pricing has to be correct in the market. Marcelo has a couple of things he'd like to add as well.
Indeed, this was a really good quarter for us; it's a continuation of what we started to see earlier in the year. Our digital channel is doing very, very strongly, as you saw in the numbers. The digital channel commands much higher margins than our retail channel, and that shift in channel adds to the total net margin. But the story is not just that. We're doing a better job understanding our customer, understanding how to price the service better, managing the FX we pass through to our customers for various corridors, and managing the entire cost structure. We're also taking advantage of AI features to make workflows and processes more efficient. The business, as it grows, continues to scale nicely to the bottom line. We released a note a few weeks ago about how Mother's Day was a record weekend for us; now that we have seen the May results, the month of May that just finished and our first month into Q4 was our strongest transaction month ever. It's going to be our strongest gross profit month ever. So the reason is we're not just trying to grow transactions or revenue; we're doing so with a very large focus on making that higher gross margin and higher gross profit. I think we're well positioned and gaining market share, and if this continues, we will continue to invest behind acquiring customers. I do expect to see margin expansion as the year goes by.
Our next question comes from William Vaughan with Corient.
Congrats on the great quarter. Awesome anniversary as well. I have a couple of questions. First one on the OnCore Digital acquisition. Is there any color you can give on the price paid or any multiple of EBITDA, income from operations, or anything like that?
Yes. We'll provide a little more detail when we file the 10-Q next week, but note this company is a small tuck-in acquisition. As Shmuel mentioned, this is a relationship we've had for many years. The company carries a lot of media for CTV on our advertising screens. We took an 80% controlling position in the company, with a valuation of about $6 million plus some earn-outs, et cetera. We believe the price is an excellent one. The focus is to have them better monetize our screen inventory, and now that we are part of the family, we will be able to work better together to maximize that opportunity.
Are there any other types of acquisitions or different places within your three growth businesses that you're looking at? Are there tuck-ins or bolt-ons in NRS, BOSS Money, or net2phone that would be attractive to you?
We always have our ears open. We've done some successful acquisitions and some that were less successful, and we might have avoided some wrong bets as well. So we keep our eyes open and remain cautious and prudent.
So staying opportunistic. I have a question on net2phone AI. You brought this up in the release; it seems like it's gaining a lot more traction. What features of your offerings do clients like or get excited about using the most?
It's a good question. My first suggestion always is you should go and use the product yourself; become a customer. We always want more customers. What's really exciting is the continuous advancements in the space. We use a lot of the products inside IDT; we're probably one of the biggest customers of our own products. Already, we're handling probably 30% of our customer service calls using our product; on chat it's above 50% at this point. All of those interactions need to dip into our systems and provide real-time information to customers. It's not just casual conversation; customers want to know, for example, 'I sent $200 to my brother in Mexico and he still hasn't received it—where is it, is there an issue, when will it be available?' The system can give accurate answers comparable to our customer service reps and does it consistently. Those same kinds of integrations are what we're providing to our customers in a way that doesn't require coding. We have a premium product called Flex for businesses to try; you can check it out on our website. I think the warm-ups are super impressive, and already we're selling tens of thousands of dollars a month of products to customers outside of IDT in addition to what we use internally.
To see that in the numbers, net2phone is doing really well. They just crossed the $100 million ARR revenue barrier. The month of May for them was the best month ever in terms of new sales, and the AI element is becoming a larger portion of those new sales—still small relatively, but growing. We are building the right assets and features to make net2phone a lot more attractive than people might currently believe.
On NRS, in the past you mentioned you don't see much competition in terms of U.S. systems for single-store operators like bodegas and convenience stores. We're following other players and I'm starting to see others expand into different segments; specifically, Toast is starting to expand into convenience stores. Are you seeing more competition in point-of-sale operators, with bigger players entering? Or is competition still mainly from smaller guys?
I definitely think we are seeing more competition at NRS, and it has affected new sign-ups. In terms of bigger players, Toast is a great company, and I own shares personally, but for the offerings we provide to convenience stores and liquor stores, I believe we're a much better value and a much more purpose-built product for those markets. If you were starting a sit-down restaurant, I wouldn't suggest NRS for the restaurant; similarly, if you're starting a convenience store, I don't think you would be best off choosing a competing generalist product. We're focused on strengthening the product for the verticals we're in rather than expanding into many new verticals, and we believe that continued focus will make it hard for others to compete with us.
I think focus and a solution tailored to a specific vertical is important. Switching to BOSS Money, great to see growth and the shift from retail to digital with a healthy investment in marketing and new customer acquisition. Other digital players spend a lot more in marketing. Do you think it makes sense to be more aggressive in verticals where you're on the precipice of high market share, or does it make more sense to attack specific verticals in countries where you have low market share and broaden reach? How do you think about that dynamic?
We, to some degree, try to do a bit of both. In terms of send countries, right now we are primarily focused from the U.S., whereas some competitors are much more global. Over time, we'd like to expand into other send-out countries. For penetration into destination countries, we take a market-by-market approach. We offer better pricing and more incentives in certain destinations either because there's more profitability there or because we're trying to reach a critical mass to gain the benefits of being a larger player. We have good competitors in that business, so every day we have to win customers with honest pricing and great service. That's our main focus, and so far, it seems to be working.
Last question: I was happy to see the buyback this quarter. Do you foresee a similar pace of buybacks going forward? Was this more taking advantage of an attractive stock price, or will you maintain this pace?
I have discussed this on one or two calls previously, so you can refer back to those for additional color. In general, I will continue to buy back stock opportunistically. If the price were to fall significantly, we would buy more aggressively; if the price goes up a lot, we may buy less. That said, we are trying to stay on pace to continuously buy our stock, and this quarter was no exception.
If I look at the EBITDA guide and where the business is headed on a consolidated basis, once you back out the enterprise value, you're probably trading around 6x EBITDA, which seems very low in my view. So I like to see the buyback. I appreciate the color.
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.