• Gross Profit: Record levels achieved.
• Income from Operations: Record levels achieved.
• Adjusted EBITDA: Record $34 million in Q2; total $63 million for the first half of the year.
• NRS Revenue Growth: 32% increase in recurring revenue.
• NRS Adjusted EBITDA: Exceeded $10 million.
• Boss Money Transaction Volume: Record 5.7 million transactions.
• Fintech Segment Gross Profit: 35% growth to a record $22 million.
• Nettaphone Revenue: Increased 9% to $21 million; 14% increase on a constant currency basis.
• Traditional Communications Segment Adjusted EBITDA: Over $20 million in Q2, a 90% year-over-year increase.
• Operating Cash Flow: $7 million in Q2, compared to $25 million in the same quarter last year.
• Dividend Increase: Quarterly dividend increased by 20%.
• Share Repurchases: 179,000 shares for $8.5 million in Q2; 380,000 shares for $16 million over the past 12 months.

• Warning! GuruFocus has detected 3 Warning Sign with IDT.

Release Date: March 06, 2025

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

Positive Points

• IDT Corp (NYSE:IDT) reported record levels of gross profit, income from operations, and adjusted EBITDA for the second quarter.
• The company's NRS segment achieved a 32% revenue growth and exceeded $10 million in adjusted EBITDA.
• Boss Money experienced strong year-over-year transaction and revenue growth, with digital transactions representing over 80% of remittances.
• The traditional communications segment increased adjusted EBITDA for the third consecutive quarter, surpassing $20 million.
• IDT Corp (NYSE:IDT) increased its regular quarterly dividend by 20% and repurchased a record level of shares, demonstrating strong shareholder returns.

Negative Points

• Operating cash flow generation was significantly lower compared to the same quarter last year, primarily due to the timing of cash balances.
• The company is experiencing slower revenue growth in Boss Money due to a focus on optimizing gross profit per transaction.
• NRS is slightly behind its target for adding new terminals, attributed to the need for training new salespeople.
• Foreign exchange fluctuations negatively impacted Net2Phone's revenue growth in dollar terms.
• Concerns were raised about IDT Corp (NYSE:IDT)'s conservative approach to investing in growth, particularly in the competitive Boss Money segment.

Q & A Highlights

Q: Can you provide an update on NRS's terminal growth and advertising revenue? Are there plans for international expansion? A: Advertising revenue increased by 12% year over year, with a significant 40% growth in the data side of the business. Regarding international expansion, it's not a current focus due to the growth opportunities in the U.S. However, if pursued, it would likely be through acquisitions. Terminal growth is slightly behind expectations, but efforts are being made to catch up with new salespeople being trained.

Q: How is Net2Phone performing, and are there any industry trends affecting it? A: Net2Phone is seeing slightly larger deals and has a strong pipeline, expecting better performance in the second half of the year. Currency fluctuations have been a headwind, but the company is optimistic about increasing ARPU and the impact of AI on the business. Industry trends like the MetaSwitch sale and Avaya's changes are noted, but not directly tied to current results.

Q: What are the working capital requirements for Boss Money, and how does IDT manage its cash balance? A: IDT's strong balance sheet allows it to fund Boss Money's working capital needs without incurring financing costs. The company avoids interest expenses by not relying on credit lines, unlike competitors. Cash is used opportunistically for investments, shareholder returns, and potential acquisitions.

Q: How does IDT balance profitability and growth in Boss Money, especially with competitors spending heavily on marketing? A: IDT focuses on both profitability and growth, with digital channels contributing significantly to profits. The company is cautious about spending but is exploring ways to increase growth without excessive spending. The retail channel's profitability is being improved, freeing up capital for digital investments.

Q: What prompted the decision to increase share repurchases, and how does investor feedback influence capital allocation? A: Investor feedback frequently highlighted the large cash balance, prompting IDT to increase share repurchases and dividends. The company aims to be shareholder-friendly and saw a good opportunity to buy back shares.

Q: Are there any specific growth trends or opportunities for NRS, particularly in terms of geographic or vertical expansion? A: NRS is experiencing growth across all channels, with new initiatives like integrated delivery services through DoorDash and liquor company integrations. These efforts aim to enhance inventory management and expand service offerings, contributing to revenue growth.

Q: Will IDT disclose the number of screens added to NRS locations, and could this become a significant revenue stream? A: While specific numbers aren't disclosed, IDT is optimistic about the potential of screens as a revenue stream. As the number of screens becomes more material, it may be reported separately. The company is exploring advertising expansion opportunities.

Q: How are new market expansions for Boss Money, such as Venezuela and Brazil, performing? A: New market expansions are generally performing better than expected, though scale is necessary to fully realize benefits. Venezuela is doing well, while Brazil is not yet live. Each new country presents an opportunity for growth.

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