Release Date: December 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• IDT Corp (NYSE:IDT) achieved record levels of gross profit, gross profit margin, and adjusted EBITDA in Q1 2025.
• The fintech segment, powered by Boss Money and Netone, showed robust increases in revenue, gross profit, and adjusted EBITDA.
• Boss Money's decision to enhance margins led to a significant expansion in gross margin and a $4.6 million year-over-year increase in income from operations.
• Netone increased its seats served to over 400,000, driving a 13% increase in subscription revenue despite negative FX impacts.
• IDT Corp (NYSE:IDT) is on track to significantly exceed its previous EBITDA projections for the fiscal year.

Negative Points

• Boss Money experienced a slowdown in transaction growth due to enhanced margins, although it rebounded post-quarter.
• Netone's operations in Latin America were negatively impacted by a strong US dollar, affecting revenue growth.
• The traditional communications segment saw a 4% year-over-year revenue decrease.
• NRS experienced seasonal churn and lower terminal sales, partly due to a focus on new product launches.
• The strengthening US dollar poses ongoing challenges for Netone's revenue growth in Latin American markets.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Sign with IDT.

Q: How confident are you in maintaining growth for Boss Money given potential changes in U.S. immigration policies? A: (CEO) It's too early to predict the impact of new immigration policies. However, we focus on improving our product daily, which drives results more than immigration trends. We believe in the importance of immigration for America's growth, but our strategy remains product-focused regardless of policy changes.

Q: With the U.S. dollar strengthening, how confident are you in achieving double-digit revenue growth for Net2Phone, especially given the forex impact in Latin America? A: (CFO) The exchange rates are challenging, with significant impacts from the Brazilian real and Mexican peso devaluation. Despite this, our subscription revenue grew by 13% in Q1, which would have been 16% without forex impacts. We are monitoring costs and focusing on growth in local currencies, which remain strong.

Q: Can you explain the seasonal churn and lower terminal sales for NRS this quarter? A: (CEO) We experienced seasonal churn due to a large fireworks business customer. Terminal sales were affected by a kiosk run-out and new product launches, which shifted sales focus. However, we are back on track now.

Q: What categories of businesses are you targeting for new advertisement screens, and how many were placed in Q1? A: (CEO) We ordered over 3,000 new screens, primarily for hotels and entertainment attractions, which are high-traffic areas. I don't have the exact number placed in Q1, but these locations are strategically chosen for maximum exposure.

Q: How are you addressing the cost implications and growth rates for Net2Phone given the strong U.S. dollar? A: (CFO) We are focusing on offsetting cost implications and maintaining growth by investing more in the U.S. market, where profitability is highest. This strategy allows us to leverage our strengths despite forex challenges.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.