IDT Q3 2025 Earnings Call Transcript

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Operator

Evening. Welcome to the IDT Corporation's Third Quarter Fiscal twenty twenty five Earnings Conference Call. All participants are now in listen only mode.

Operator

A question and answer session will follow management's remarks. Please note this conference call is being recorded. Will now turn the call over to Bill Urie of IDT Investor Relations. Bill, you may begin.

Bill Ulrey
Bill Ulrey
VP - IR & External Affairs at IDT

Thank you, John.

Bill Ulrey
Bill Ulrey
VP - IR & External Affairs at IDT

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 month period ended 04/30/2025. After their remarks, they will be happy to take your questions. Any forward looking statements made during this conference call, either in their remarks or in the Q and 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.

Bill Ulrey
Bill Ulrey
VP - IR & External Affairs at IDT

In their presentation or in the Q and 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. Schedules provided in the IDT earnings release reconcile 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 a Form eight ks with the SEC. Now I'll turn the call over to Shmuel for his comments on the quarter's results.

Samuel Jonas
Samuel Jonas
CEO at IDT

Thank you, Bill, and thank you, John and Marcelo. IGT's third quarter was solid with strong year over year gains while slightly softer than our second quarter in part because of expected seasonal factors. Year over year revenue growth and continued expansion of each of our business segments bottom line results drove a 133% year over year increase in consolidated income from operations, a 57% increase in consolidated adjusted EBITDA, and a 290% increase in EPS. At NRS, recurring revenue increased 23% year over year, powered by a 37% revenue increase from NRS' largest vertical merchant services and a 32 3% increase in SaaS fees, which more than offset a 12% decrease in advertising and data revenue. Income from operations and adjusted EBITDA were both up 29% year over year, and the business has generated a record $32,000,000 in adjusted EBITDA over the past twelve months.

Samuel Jonas
Samuel Jonas
CEO at IDT

Looking ahead, we continue to focus on developing new offerings that leverage the NRS platform to enable retailers to compete more effectively with large retail chains. For instance, independent neighborhood retailers have not yet meaningfully benefited from consumer shift to online ordering and delivery. We are working to change that by integrating our network with online ordering and delivery platforms, enabling retailers on the NRS network to provide hyper fast local delivery of sundries and prepared foods. The 100 or so retails we have signed up so far already receiving aggregate over 2,000 delivery orders a week. BUS money, our remittance platform, increased transactions by 27% and revenue by 25%.

Samuel Jonas
Samuel Jonas
CEO at IDT

The growth rates have been impacted by the deliberate shift we made last summer to prioritize gross profit per transaction in our retail channel rather than market share, and by a recent shift in customer preferences towards larger send amounts per remittance through fewer transactions. The fintech segment, which includes Boss Money and early stage fintech initiatives, generated over $5,000,000 in adjusted EBITDA compared to 244,000 in the year ago quarter. Looking ahead, Bostman is working on initiatives to drive sustained long term growth and innovations that reduce cross border friction and increase profitability. NetSuite continued its steady progress with balanced growth in The US, Brazil, and Mexico. The team has done a great job growing its business while holding the line on overhead.

Samuel Jonas
Samuel Jonas
CEO at IDT

Adjusted EBITDA margins reached 15% in the third quarter of twenty five. Netafone began to offer its AI agents this quarter, and customers are already seeing the benefits, including enhanced efficiency. Even as we deploy AI agents refined for specific market verticals, we're preparing to launch another AI powered service, which we internally refer to as Coach. We think will be very successful. In our traditional communications segment, income from operations and adjusted EBITDA both jumped over 30% year over year to $17,300,000 and $19,300,000 respectively, underscoring that this segment continues to be a long term cash generator.

Samuel Jonas
Samuel Jonas
CEO at IDT

At IDT, on a consolidated basis, we continue to scale our three primary growth businesses and our operating leverage in combination with the resilient contributions of our traditional communications businesses are driving expansion in IDC's cash generation and earnings. As we enter our budgeting season, we are fortunate to be in a great position to pursue next generation of exciting growth initiatives. I want to wrap up by thanking the millions of customers who put some of their hard earned dollars to work through our boss offerings and the business customers around the world who rely on us to enhance their businesses and communication. Our ability to provide these services depends on the dedication of our employees who have been executing and innovating on so many fronts and our stockholders who entrust us with their capital. I'm grateful for your continued patronage and support. Thank you.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

Thank you, Shmuel. My remarks on the third quarter financial results will focus on the year over year comparisons in order to set aside seasonal impact on our business. As Shmoop just mentioned in his remarks, our third quarter was slightly softer than our second quarter and seasonality does factor in our results. For one thing, our fiscal third quarter had just eighty nine days in use like this one, roughly 3% fewer than the ninety two days in our other fiscal quarters.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

In addition, our February through April fiscal third quarter is typically the lowest revenue quarter for NRS advertising as advertising budget spend by our customers trends higher over the course of the calendar year. Given that, we are extremely pleased with our consolidated financial performance in the third quarter. We again grew revenue year over year. Expansion of our FinTech and SaaS businesses more than offset the expected top line decline of Bot Revolution Calling. Gross profit increased 15% year over year, reflecting increased contribution from each of our four reporting segments and was just under last quarter's record level.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

Our gross profit margin reached another record high of 37.1. The robust year over year increases in our income from operations, adjusted EBITDA and earnings resulted from the expanding operational leverage of our three high growth businesses and from a positive contribution from our traditional communications segment. Traditional communications adjusted EBITDA margin for Q3 grew to 9.2% from six point seven percent one year ago. NRS had solid third quarter results. Merchant services revenue increased 37% year over year and set fees increased 33%, powering increases of 29% in both income from operations and adjusted EBITDA.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

And our asset financial results would have been even stronger had it not been for a few proactive steps we took during the quarter. Advertising and data revenue decreased $821,000 or 12% year over year, largely because of our decision to limit sales to one of our larger programmatic platform clients in order to manage our receivables exposure with them. Exclusive of sales to that partner, the underlying advertising business grew nicely compared to the year ago quarter. We also decided in an abundance of caution to set up a bad debt expense provision of $1,400,000 relating to amounts due from this client. And finally, IDT exercised its right to purchase certain disposed stock units from NRS employees during the third quarter.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

This was a win win deal. It provided NRS employees with access to liquidity while enabling IDT to slightly increase its majority stake in NRS at an attractive valuation. The details of this exchange offer have been fully disclosed in our previously filed 10 Q report. As part of this transaction, NRS incurred additional compensation costs of approximately $500,000 during Q3. At BOSS Money, remittance transactions reached another record, 6,000,000, with digital transactions through our BOSS Money and BOSS Evolution apps, again, constituting more than 80% of our remittances.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

We did see a reduction in the rate of transaction growth, primarily because of our decision to optimize gross profit per transaction in our retail channel, but also because our customers are now sending more money per transaction while cutting back on the frequency of those transactions. So while transactions and revenue increased 3231%, respectively, digital spend volume increased at an even higher rate, 40% year over year. Adjusted EBITDA margin for the FinTech segment continued to expand during q three to 13%. As the remittance business continues to grow into scale and as we continue to improve operational efficiencies, we expect adjusted EBITDA margins for both money when considered as a stand alone business to reach 15% to 20% comparable to other industry players. Netafone continued on its steady growth trajectory, although foreign exchange translation once again matched the strength of the underlying performance of the business on a year over year basis.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

Subscription revenue increased 7% to 21,500,000 in the quarter. However, on a constant currency basis, the rate of increase was higher at 11%. Netafone continued to be disciplined in cost management and in customer acquisition spending. As they did last quarter, the NetoPhone team was able to decrease SG and A spend year over year again this quarter, even as its revenue continued to grow, thus enabling a 188% increase in income from operations to $1,400,000 and a 50% increase in adjusted EBITDA to 3,200,000.0 At our traditional communications segment, gross profit increased 5% year over year, powered by IDT digital payments and supported by strong results from our IDT global wholesale carrier business. SG and A expense decreased 9.5% year over year or 2,200,000.0 as we continue to benefit from previously announced and ongoing cost reduction initiatives and that helped drive a 39% increase in income from operations and a 30% increase in adjusted EBITDA.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

The strong growth and net margin results confirm our conviction that traditional communications will be a robust and resilient contributor to our long term profitability. Our balance sheet saw a sequential lift in cash, cash equivalents and current investments to $224,000,000 from 171,000,000 at January 31. This quite large 53,000,000 increase is highly impacted by our Bost Money weekly working capital cycle. On any given week, most of the weekly remittance volumes typically take place over the course of the weekend. In anticipation of this, ahead of each weekend, we must prefund the wallet of our disbursement payers, and we gradually recover the proceeds from the weekend transaction at the beginning of the following week.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

As a result, for fiscal quarters ending on Thursdays, Fridays and Mondays, we will typically show significantly less cash at quarter end than those ending on Tuesdays or Wednesdays. Such was the case with this quarter's April 30 quarter end that happened on a Wednesday as compared to the previous quarter's January end that happened on a Friday. One final point on capital allocation this quarter. While IT repurchased just a few thousand shares on the open market in q three, the company did purchase 6,000,000 of employee owned shares that vested during the quarter in order to satisfy tax obligations triggered by the vest. I want to wrap up today's remarks by confirming our guidance for the full year fiscal twenty twenty five.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

Last quarter, I said that we expected to double our first half '60 '3 million dollars adjusted EBITDA total for the full year to $126,000,000 Given our results to date, we remain fully on track to meeting that goal. We are now in the midst of our fiscal twenty twenty six budgeting process and I look forward to providing guidance for our next fiscal year during our fourth quarter earnings call in late September. Now operator, back to you for Q and A.

Operator

The question and answer session will now begin. A confirmation tone will indicate your line is in the question queue.

Operator

You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Once again, please press star one if you have a question or a comment. First question comes from Anigo Alonzo with Morum Capital. Please proceed.

Iñigo Alonso
Equity Research Associate at MORAM Capital

Hello, Estmo. Hello, Martello. If I may, I would like to ask a question of each of the fast growing businesses and another one in Capital allocation. I'll start with NRS.

Iñigo Alonso
Equity Research Associate at MORAM Capital

Last quarter, you mentioned the additions of the salespeople. There's really interesting numbers in the report today. There is someone in record terminal revenue when it comes to only the purely purely the product, the terminal itself. And we also see that that happened despite a lower addition of net terminals. So if you could provide more color on this item and the go to market strategy, how you're leveraging your agents versus the third party distributors now that you have increased the staff? I would really appreciate that.

Samuel Jonas
Samuel Jonas
CEO at IDT

No problem. I think it's to say that more effort was put on, you know, bringing both new as well as existing retailers that don't yet have our merchant processing to take it this quarter, and that was definitely helped by many of the new salespeople that we brought on.

Iñigo Alonso
Equity Research Associate at MORAM Capital

Okay. And are you switching towards higher sales cost terminals, maybe kiosk, or how would you explain the increase over the the terminal additions?

Iñigo Alonso
Equity Research Associate at MORAM Capital

And, also, I mean, can I add more color on on the NRS pay account? That was the record number for q three two.

Samuel Jonas
Samuel Jonas
CEO at IDT

Yeah. I mean, again, as I said, it's mostly related to, you know, to to just, you know, good sales. You know, it wasn't really anything particularly, that's typically interesting that I could tell you other than that, you know, all around both from distributors, our existing sales base, as well as our new salespeople.

Samuel Jonas
Samuel Jonas
CEO at IDT

You know, they they all they all had strong numbers this past quarter. In terms of, you know, the, you know, the other the other types of, I'll call it, form factors, you know, that that we provide in this store, I don't think that those had a material impact this particular quarter.

Iñigo Alonso
Equity Research Associate at MORAM Capital

Okay. And let me move to Nextiva phone. So you launched the AI agent and you are probably seeing the first customers on that end.

Iñigo Alonso
Equity Research Associate at MORAM Capital

And I would like to know more about what type of customers you're seeing. Are those already NetSuite phone customers or you're, like, getting customers outside of that outside of those existing clients?

Samuel Jonas
Samuel Jonas
CEO at IDT

The most of the customers right now are are existing at the phone customers. There's a couple exceptions to that rule, but but we are trying to make sure that, you know, that it works perfectly for our existing customers, and then we will eventually add on, you know, outside parties as well.

Iñigo Alonso
Equity Research Associate at MORAM Capital

Can you provide some color on what type of businesses are purchasing this AI agent?

Samuel Jonas
Samuel Jonas
CEO at IDT

We we really I mean, all different types of of customers, everything from, you know, call centers to doctor's offices to accounting firms to collection companies. There's a bunch of others. You know, again, we're making a bigger effort in the future to sort of, you know, verticalize it, you know, into some of those areas. You know, we believe accounting, you know, have a need for it. We believe that, you know, doctors' offices have have have a have a need for them that, you know, we could build similar functionality for each of those ones.

Samuel Jonas
Samuel Jonas
CEO at IDT

Same thing for call centers. So we expect it to get a little bit more verticalized over the next, you know, year or so. But, you know, the the sales are are are really starting to to pick up quite a lot, and and we're we're very excited about where it's gonna go.

Iñigo Alonso
Equity Research Associate at MORAM Capital

Is the focus going to be a small, medium enterprise?

Samuel Jonas
Samuel Jonas
CEO at IDT

No.

Samuel Jonas
Samuel Jonas
CEO at IDT

It's gonna be both. I mean, we we're you know, we have, you know, users who are who obviously are going to be, you know, smaller businesses, and and we have users that are, you know, talking about using, you know, millions of interactions a month.

Iñigo Alonso
Equity Research Associate at MORAM Capital

Wow. Okay. Then on BotMoney, you started this quarter a beta program of the earnings program for the owners in the stores.

Iñigo Alonso
Equity Research Associate at MORAM Capital

I think you kicked it in some of your higher traffic stores in the southern part of the country. How did that go? How was the start of that program?

Samuel Jonas
Samuel Jonas
CEO at IDT

I'm not I'm not honestly sure about the results of the program so far, so I don't feel comfortable commenting.

Iñigo Alonso
Equity Research Associate at MORAM Capital

Okay.

Iñigo Alonso
Equity Research Associate at MORAM Capital

And then on the last conference that you attended, you mentioned that m and a evaluations are attractive. I saw that you recently acquired a really small company for NRS called EG or something like that. I'm not sure how it is pronounced. The would we expect any more transactions in the remaining of the year or more bigger transactions, or is this the one you were referring to in that conference?

Samuel Jonas
Samuel Jonas
CEO at IDT

No.

Samuel Jonas
Samuel Jonas
CEO at IDT

That that was not the one I was referring to in that conference. But, I mean, you know, we are definitely, you know, looking at at acquisitions. You know, we we believe that you have to pay the right price, you know, to really extract the most value out of out of an acquisition. So, know, we don't we don't chase things at any price. But if we think that there's good value to be created by, you know, by having it inside of IDT, we definitely, you know, pursue it, and and and we are pursuing a couple of different, you know, acquisitions.

Iñigo Alonso
Equity Research Associate at MORAM Capital

What type of technology did this last acquisition bring to the table?

Samuel Jonas
Samuel Jonas
CEO at IDT

You see, if you're referring to the small one, Leachie, it's a restaurant technology company.

Iñigo Alonso
Equity Research Associate at MORAM Capital

Okay. And one last one, if I may. And your stock price is slightly higher and you've been repurchasing a lot.

Iñigo Alonso
Equity Research Associate at MORAM Capital

Would you still be keen to repurchase shares, or are you going to consider a one off dividend in view that you are going to exceed the targets for the year most likely?

Samuel Jonas
Samuel Jonas
CEO at IDT

I would hand that question off to Marcelo. I mean, what I would say is that, you know, I I think that, you know, it's you know, not as cheap as it was, you know, when we were buying back earlier. I still think it's a great value. But, you know, our, you know, our capital allocation, you know, is also dependent on, you know, whether or not we're doing, you know, you know, acquisitions or or not doing acquisitions.

Samuel Jonas
Samuel Jonas
CEO at IDT

And, you know, we'll know more on that over over, hopefully, the next quarter.

Iñigo Alonso
Equity Research Associate at MORAM Capital

Yeah. Hey, Shmuel. As you as you just mentioned, we believe that repurchasing our stock is a good way of allocating our capital, and we have been doing so. At the same time, okay, we protect our cash to be able to deploy it towards growing the business, towards acquisitions.

Iñigo Alonso
Equity Research Associate at MORAM Capital

As Shimu mentioned, the M and A environment right now is quite attractive, and we have been looking at a variety of opportunities in each one of our segments. So to the extent that we decide to deploy that cash in ways to create a lot of value to our shareholders, we will deploy the cash into our growth and M and A. If not, we'll continue to repurchase stock.

Samuel Jonas
Samuel Jonas
CEO at IDT

Yes. One thing I can tell you for sure is we will not take on debt like some other companies do to take buy back shares.

Samuel Jonas
Samuel Jonas
CEO at IDT

Like we buy back shares with excess cash, not with borrowed cash.

Iñigo Alonso
Equity Research Associate at MORAM Capital

Really good. Thank you.

Operator

The next question comes from William Vaughan with Grant. Please proceed.

William Vaughan
Associate Partner & Wealth Advisor at Corient

Hi, Stuart, Marshall. Thanks for taking my question. And also congrats on the quarter. Really good growth in NRS. It does look like the pace of POS terminal additions, payment processing accounts, merchant service revenue is slowing down a little bit.

William Vaughan
Associate Partner & Wealth Advisor at Corient

What would you diagnose for the cause of this? Is it economy, industry dynamics, competition? Just any comments that you have on just the slowing pace would be helpful.

Samuel Jonas
Samuel Jonas
CEO at IDT

Yeah. I think no. I I don't know if I would agree that that it's a slowing pace. I mean, I I think that the numbers might not have been, you know, quite as strong as, you know, we had hoped as I sort of indicated in our our release. But I I think that the numbers are still very strong.

Samuel Jonas
Samuel Jonas
CEO at IDT

And I actually I mean, again, just from, you know, being closer to, like, what's happening, a lot of the accounts that that we, you know, recently signed signed on, what so what I'll call is, like, the benefit that you're seeing from added accounts don't really hit us in the past quarter. They hit us in, you know, in future quarters. So, I mean, I expect the fact that we've been growing, you know, better than than previously actually to to help us more in in in, you know, current quarters as well as upcoming quarters after that. So I I don't actually think that it's slowing down at all.

William Vaughan
Associate Partner & Wealth Advisor at Corient

Okay. Thank you. That's that's good color. Couple of follow ups. Can you just describe how, you know, the food delivery, you know, the DoorDash and other services, how that actually works with the point of sale system.

William Vaughan
Associate Partner & Wealth Advisor at Corient

Is it, you know, something with display where drivers can pick things up easier? I'm just trying to kinda just walk through how that goes around.

Samuel Jonas
Samuel Jonas
CEO at IDT

It's it's a variety of different, you know, elements to it. You know, it's it's not a it's not a it's not a very simple product. But, again, just because this is a call, I'm more than happy to have a, you know, have a call with you after the call to explain it in in more detail. But, I mean, just because this is an earnings call to give you a very brief description of it, basically, all the orders come in to our order management system, and then those are, you know, placed into queue, you know, on the POS or in the kitchen.

Samuel Jonas
Samuel Jonas
CEO at IDT

And then, you know, as things are being, you know, either worked on or filled, those notifications are then going back to, you know, the the different delivery companies and or somebody who's picking up an order saying, hey. You're you know, the order is ready, you know, or the order is in process or etcetera, you know, then come and get it. I mean, also, on on the pricing side, it allows retailers, you know, to have different pricing, you know, for you know, when you use delivery services or when you don't use delivery services, it allows them to, you know, price it higher, you know, in, you know, the afternoon hours when, you know, people might be less sensitive to pricing than in the morning when they're more sensitive to pricing. There there's a lot of features and functionalities that that that it has that that help, you know, get more orders.

William Vaughan
Associate Partner & Wealth Advisor at Corient

Thank you. That's that's helpful color. Just a question on Boss Money. The the the rate of growth is slow overall, but you had a really good growth in the digital channel in terms of remittances. And you mentioned profit mass maximization in terms of proving profit per transaction.

William Vaughan
Associate Partner & Wealth Advisor at Corient

So I'm just wondering if those profit maximization efforts were really only on the retail side versus the digital side. Okay. So it's on both.

Samuel Jonas
Samuel Jonas
CEO at IDT

It's on both. Mean, what I would say is, like, listen, you know, there there is a dynamic happening and and, you know, we we it's in our earnings release and, you know, you know, where, you know, transactions are are starting to become larger. So where somebody might have sent, let's say, four transactions, you know, a month previously, they're now sending three transactions a month. The the amount per transaction has actually grown, you know, quite a lot. As as we said, year over year, but this our send volume is up 40%.

Samuel Jonas
Samuel Jonas
CEO at IDT

Mhmm. So if you had, you know, if you had if that had been, oh, you know, in our call, standard size of transactions a year ago, that would have been 40% growth. Because it's being put into larger transactions, you know, I I don't think that we completely optimize our pricing to sort of take into account that people are are sending fewer transactions of larger volumes. So, you know, we are we are testing, you know, different pricing in in different regions to, you know, to help, I'll call it, improve the profitability. And, you know, again, assuming that it doesn't, you know, hurt growth or retention, you know, in in the markets that we're testing, it will, you know, we'll roll it out, you know, in in all of our markets across the country.

Samuel Jonas
Samuel Jonas
CEO at IDT

As far as, you know, new technologies, I mean, again, there's many different things that that we're doing. I don't wanna as I said, this is an earnings call. I don't wanna, you know, spend a lot of time talking about it. But, you know, everything from, you know, stable coin transfers to wallets in country, you know, that we'll be able to, you know, have a Visa card link to so people can, you know, spend money in country and make money on interchange. So there's, again, variety of different things being worked on that we think will, you know, both add to the profitability as well as really improve the user experience.

William Vaughan
Associate Partner & Wealth Advisor at Corient

Okay. Thanks, guys. Appreciate it.

Operator

Next question comes from Alex Rohr with Emmett Investment Management. Please proceed.

Alexander Rohr
Founder & CIO at Emmett Investment Management

Hi, guys. On the on the NRS ad business, now that that one partner has been turned off, what what does the ad business look like on a run run rate basis? Can you can you backfill that demand that was turned off, or or or we can sort of be declining year on year for a little bit here? Thank you.

Samuel Jonas
Samuel Jonas
CEO at IDT

Yeah. Yeah. It's it's too soon for us to give you, like, you know, a % answer to that question. I mean, I would say that we're definitely seeing, you know, better numbers so far this quarter than than, you know, we did last quarter. So, you know, our our, I'll call it, our other ad partners are are making up, you know, quite a fair share of it.

Samuel Jonas
Samuel Jonas
CEO at IDT

It hasn't quite, you know, filled the the total gap yet, but I'm I'm hoping that, you know, before quarter's end, you know, we we will have filled it back up. At the same time, we're up there, you know, expanding our our direct ed team, but I think Marcelo wants to say something. I apologize.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

Yeah. Hi, Alex.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

How are you? So just to correct, we have not completely shut down the program already to our partner. Okay? We have just deliberately reduced significantly the amount of sales we do to them because of the current situation. Now that partner was a very large partner.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

A year ago, probably represented more than 20% of our total advertising revenue. Currently, it represents probably about 5%. No. A much, much, much smaller number. And the fact that the advertising revenues, excluding that partner, have been have been growing quite nicely about 10% or so for all the other product partners, we are almost there about being able to completely cover for that decline on that one partner by the growth in the other relationship.

Alexander Rohr
Founder & CIO at Emmett Investment Management

Thank you.

Operator

Mhmm. Okay. We have a follow-up coming from William Vaughan with Coriant. Please proceed.

William Vaughan
Associate Partner & Wealth Advisor at Corient

Hello again. Just had a follow-up on NetSuite phone. Where do you guys think that the EBITDA margins on that business can get to over time, like, in terms of a mature steady state?

Samuel Jonas
Samuel Jonas
CEO at IDT

You know, it it's not a simple question to answer because, you know, again, we have a lot of new initiatives, you know, particularly, you know, with with AI agents and and our coach product that, you know, should be launching this quarter. And, you know, those have you know, we don't have a history, I'll say, of, you know, of running those programs to sort of know, you know, where exactly the margins are gonna shake out. My my my own personal opinion is that they should, you know, be accretive by, you know, a substantial amount, but it might take, you know, a year or two because there's, you know, a lot of, you know, cost in setting up those programs that that don't necessarily, you know, I'll say, you know, hit the bottom line in a positive way. You know, even though we we charge for implementation, we charge a very, very low price for implementation. If you were to go and get, you know, IT help, you know, at Best Buy, you know, it might cost, you know, more money than what we charge for, you know, for for AI help.

Samuel Jonas
Samuel Jonas
CEO at IDT

And so, essentially speaking, like, we we are subsidizing the the launch of the product by by lowering the cost of of implementing it for our customers. And, you know, that will, over time, probably, you know, increase in price, you know, once we have more, you know, once we have more scale. And at the same time, you know, once the once the customers have been implemented, you know, the the usage, you know, will hopefully go up, you know, quite substantially, and that will obviously add to our, you know, margins over time. So I know it's not a very quick answer to your question, but that's with more color.

William Vaughan
Associate Partner & Wealth Advisor at Corient

Awesome. Thanks, man. And it's it's another one circling back to the boss money. I know that, you know, we're focused on profitable growth, and and we always want it to be profitable. I do want to hear your thoughts on you know, with the digital channel, and it is it is a scale business, so profitability increases as you get more users and customers.

William Vaughan
Associate Partner & Wealth Advisor at Corient

What are your thoughts on actually increasing investment just to get more customers? You know, just thinking about the landscape of how there's a lot of white space with these legacy players that are mostly retail, like Western Union and others. There's just a lot of customers to grab there.

Samuel Jonas
Samuel Jonas
CEO at IDT

Yeah. I I think that's a very fair I think it's a it's it's a very fair point. And, again, you know, it's it's budget season, and we're definitely, you know you know, looking at, you know, our our unit economics, our cost of acquisition, you know, all all the types of fun things that you get to, you know, to try to figure out, you know, the season. And what I would say is that, like, you know, if if we don't make any, you know, acquisitions in any of these businesses, like, we will definitely, you know, grow organically at a much faster pace by by by investing more, you know, in in in acquisitions. And sometimes I have to say that that, you know, to you know, even though it's a slower and we'll call it, you know, harder grind, I I actually think that, you know, sometimes it's better to to grow things organically than than do acquisitions, you know, because acquisitions gonna always, you know, have, you know, things that go wrong as opposed to, like, when you're doing it yourself, you kinda know, you know, what you're comfortable with and how and how to do it.

Samuel Jonas
Samuel Jonas
CEO at IDT

So yeah. I mean, if budget season, then I would say that that is definitely gonna be part of our plan into next year.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

And just to go back a little bit on your comment about net margin growth for NetoPhone, I think it's just important to bear in mind as you do your models that, for the past few years, we have been investing roughly about $20,000,000 to $25,000,000 each year in customer acquisitions for Netafone. And most likely, against budget season, but most likely, we will continue to deploy those types of dollars as long as the IRRs for every one of our markets continue to be very attractive. And as we continue to grow with that type of investment, we have we have seen over the past few quarters how rigid we are in terms of maintaining our fixed cost, you know, in steady state.

Marcelo Fischer
Marcelo Fischer
CFO at IDT

So the business really scales nicely as it continues to grow. A few other things to bear in mind is that as the mix of UCaaS and CCaaS continues to change, that would affect the operating margins as CCaaS customers and CCaaS businesses operate at much higher margin than do our UCaaS businesses. And finally, as we hope to introduce and launch and grow AI agents and other AI initiatives, all of those things could make a big difference in terms of account ARPU growth that could lead again now to enhancing the growth in the net margin.

Samuel Jonas
Samuel Jonas
CEO at IDT

I mean I'll just add one last thing to what Marcelo already said, which is like I think we're much more focused on net to phone going forward on revenue and gross profit and bottom line profitability than we are you know, seat growth and and what have you. And and it's and even though you need both to, you know, to get those results, like, remote it's a change in mindset, and I think that it will be a you know, it will be reflected positively, you know, in the business over the next year.

William Vaughan
Associate Partner & Wealth Advisor at Corient

Awesome. Thank you, gentlemen. Appreciate all the color answering my questions.

Operator

Again, if you have a question, please press star then 1. 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.

Executives
Analysts
    • Iñigo Alonso
      Equity Research Associate at MORAM Capital
    • William Vaughan
      Associate Partner & Wealth Advisor at Corient
    • Alexander Rohr
      Founder & CIO at Emmett Investment Management

Key Takeaways

  • IDT achieved a 133% year-over-year increase in consolidated income from operations, a 57% rise in adjusted EBITDA, and a 290% jump in EPS in Q3.
  • The NRS segment saw recurring revenue up 23% year over year—driven by 37% growth in merchant services and 32.3% SaaS fees—resulting in a record $32 million in adjusted EBITDA over the past 12 months.
  • NRS advertising and data revenue declined 12% year over year due to reduced sales to a key programmatic platform client, prompting a $1.4 million bad-debt provision.
  • The Boss Money remittance platform delivered 27% transaction growth, 25% revenue growth, a 40% increase in digital spend volume, and boosted fintech segment adjusted EBITDA to over $5 million versus $244,000 a year ago.
  • Netafone subscription revenue rose 7% (11% in constant currency) with adjusted EBITDA margins at 15% in Q3, and the launch of AI-powered agents aims to further drive efficiency and customer engagement.
AI Generated. May Contain Errors.
Earnings Conference Call
IDT Q3 2025
00:00 / 00:00

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