Good evening, and welcome to the IDT Corporation's 4th Quarter and Full Fiscal Year 2021 Earnings Call. In today's presentation, IDT's management will discuss IDT's financial and operational results for the 3 12 month periods ended July 31, 2021. During remarks by IDP's Chief Executive Officer, Shmuel Jonas, all participants will be in listen only After the prepared remarks, Marcelo Fischer, IDT's Chief Financial Officer, will join Mr. Janus for Q and A. Any forward looking statements made during this conference call, either in Prepaid remarks or in the Q and A session, whether general or specific in nature, are subjected 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 to update the factors that may cause actual results to differ materially from those that they forecast. In the presentation or in the Q and A session, Energy Management may make reference to the non GAAP measures including adjusted EBITDA, Adjusted EBITDA Less CapEx, Non GAAP Net Income and Non GAAP Earnings Per Share. A schedule provided in the IDT earnings We lease reconciles adjusted EBITDA, adjusted EBITDA less CapEx, 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 8 ks with the SEC. I will now turn the conference over to Mr. Jonas.
Thank you, operator. Welcome to IDT's 4th quarter and full fiscal year 2021 earnings call covering results for the 3 12 months ended July 30 1st, 2021. I'm joined today on the call by Marcelo Fischer, IDT's Chief Financial Officer, and will both be available to answer questions after my remarks. Our discussion today focuses on the Q4 fiscal 2021 results. For a more detailed report and discussion on our financial and operational results For both Q4 and the full fiscal year 2021, please read our earnings release filed earlier today and our Form 10 ks.
We expect to file the 10 ks with the SEC on or about October 14. We continue to drive strong improvement in IGT's results during the Q4, powered by growth in Netafone, MRS and our mobile top up business. Let's focus first on NetFlint. NetFlint subscription revenue growth accelerated in the 4th quarter, increasing 46% year over year. Growth in our Latin American, U.
S. And Canadian markets was again very strong. Our subscription revenue margin remained robust, increasing 10 basis points to 83.5%. Net Fund's strategic focus on midsized businesses, Our multi channel go to market strategy and deeply localized in country offerings consistently generate gross margins and revenue growth metrics above UCaaS industry averages. But really, the exceptional results by Netafone are the collective efforts of the focused customer centric group of people around the globe that is Netafone.
Customers of Netafone don't hear no very often. If they want or need something to help them better communicate, we find a solution for them. Net phone is becoming a big company, but we are not becoming the kind of big company that has different departments for large enterprises and a different department for small companies. And we don't have SLAs that differ depending on what you pay us. At Netafone, no matter whether you're running a large global enterprise from Texas or a 5 person startup in Brazil, you're going to get a truly localized Custom tailored communication solution with outstanding service and reliability.
Of course, we continue to work on the spin up of NetPoint. We believe the financial and legal preparations will be substantially completed by calendar year end to enable a tax free spin off early in 2022 should our Board authorize it. Within our FinTech segment, NRS revenue increased by 76% year over year, led by increased sales of merchant services And specifically, NRS Pay payment processing, advertising and data sales at NRS were also robust in the 4th quarter. At July 31, NRS had over 14,000 active terminals and over 5,600 payment processing accounts, more than double the number of accounts a year earlier. Average revenue per terminal, exclusive of terminal Sales increased from $126 in the year ago quarter to $169 in the Q4 of 2021.
We believe that ARPU will continue to climb with the addition of new NRS Pay accounts, increased utilization of our enormously powerful advertising network and further utilization of data offerings by our consumer packaged goods partners, just to name a few. Also within our Cintech segment, Money transfer revenue decreased 49% compared to the year ago quarter. As we have discussed previously, a transitory Foreign exchange market condition materially boosted revenue and gross profit in the Q4 of fiscal 2020 and persisted through the Q2 of fiscal 2021. After that impact, Q4 fiscal 2021 revenue would have increased by 36% compared to a year ago quarter. Sequentially, money transfer revenue increased by over 6%.
And finally, turning to our largest segment, traditional communications, continued to exceed our expectations. Traditional communications revenue in the 4th quarter increased 10% year over year. Within traditional communications, mobile top up revenue increased by 41%, powered by increases in sales in its B2B channel. We expect that our efforts over the past year to expand our mobile top up business into the African market, led by the recent The majority stake in mobile top up operator with an extensive footprint in Africa, our increased focus in the B2B space, as well as the growing demand for data heavy services worldwide will continue to drive mobile top up revenue growth. 4th quarter earnings per diluted share increased to 1.46 from $0.82 in the Q4 last year.
The increase reflects the positive impact of an income tax valuation allowance reversal in addition to the strong improvements in the underlying profitability of several of our business units. Cash generation during the quarter helped to drive an increase in cash and current investments of $34,000,000 during the quarter and $52,000,000 during the fiscal year to $161,000,000 as of July 31, and has no debt. Following the quarter close, our NRS business sold a 2.5 percent stake to a private investment fund for $10,000,000 implying a $400,000,000 valuation for that business. That was based on approximately 19x NRS' trailing 12 month revenue at the end of our 3rd quarter. I want to wrap up by Thank you and congratulating everyone in our organization on what was by any standard a remarkable ending to a very strong fiscal year.
We have not only endured COVID's multifaceted challenges, but over the past several quarters, we have dealt, like many other companies across the country and across the globe, with supply chain issues that impacted our inventories of phone, POS terminals and other hardware. Throughout, we have maintained our focus in succeeding and executing our key objectives. Now, Marcel and I will be happy to take your questions.
Okay. The first question is coming from Connor Haley from Alta Fox Cap, your line is live.
Hi, guys. Congrats on the great quarter. Just one quick one from me. Your international mobile Top
up business had another quarter of
very impressive growth. We noticed that a private equity firm recently bought a majority stake in a mobile top up business called Bing, Valuing it at $300,000,000 according to press reports. Can you maybe explain to investors how your international mobile top up business compares to Ding? How you think about the growth opportunity for your IMCU business going forward? Thanks.
Hey, Connor. Thank you for joining our call today. You are right. We also read about a month ago that Bing We received a valuation of about $200,000,000 on a transaction that they did. I mean, Bing is A private company, Irish company, so we don't know any of the details in terms of transaction.
But we do welcome seeing the valuation that they got given that we consider them to be a pretty good comparable To our business, like business wise, both Bing and ourselves compete in the same space. We really believe that we measure up to being quite well, both in terms of size and performance. While We are very strong in the U. S. By our top of offerings and And not too strong outside of the U.
S. We are the opposite. We have no they have very small presence in the U. S. Yes, very strong.
Outside of the U. S, their first presence is just online. We at IBP have a very robust presence, both online and in the retail channels in the U. S. Well, our mobile top up is part of our broader both evolution suite of products.
I think we are probably larger than us on the wholesale B2B channel, but that has been a channel That we have grown quite substantially in the last 6 months, and we are very focused in growing that channel as well. So that's kind of how we compare ourselves to Dink. In terms of where our mobile top up business It's heading. I mean, we are doing now north of $500,000,000 in sales for mobile top up, but we really believe there is still significant growth opportunity for us In growing that business, like, for example, if you think about from a market perspective, As I said earlier, we are generating all of our sales, both out of the U. S.
And a significant potential for us to expand To other markets like in Canada, Europe, Asia, Africa and Caribbean, as Shimon mentioned in his remarks, we quickly acquired Mobile top up operator, we have expanded footprint in Africa, and we are going to take advantage of that to expand our services And participate in that massive opportunity that Africa represents and look at Africa as the opportunity We're requiring the company to continue to grow beyond our retail channel in the U. S, now into B2B channel. And we are putting a lot of investment on our platform to provide the B2B services. And finally, I'll take the following, Right.
And I
think this is proppantially a mobile top up operator, so are we today. But we view this business to be much more broader than just mobile products. We think of it ourselves as a company, which is facilitating all kinds of prepaid payments across the world. So not only do we have an active catalog right now of thousands of mobile top ups, but we also have grown our offering To include now gift vouchers and data packages and content subscriptions. So we really want to become a global hub For all things that are prepaid or digital prepaid, and again, and we welcome the fact that
Investors
are assigning valuations now into companies playing in this space.
I mean, I think Marcel said enough, I don't really need to add much to To what he already said, but I guess, I mean, the only bad part I can see is it's always better when your competitors have less money And we may have more money. But on I think I think Marcel hit on this, but I think that really what Differentiates us more than anything is we really are the only company of our kind that really competes in every vertical Of mobile pop up, both from being a wholesaler to being a retailer to being direct to consumer. And I think that that's really another feature that makes us unique is we're not a one trick pony. Wherever you need it, we are. And again, there's more to come.
We'll expand on that in further quarters. Yes. I
would just add one more thing, Conor. As you know, we have been in the telecom Space for now almost 3 decades. And because of that, we have been able to establish very strong, robust Direct connections with most of the leading mobile operators globally. And therefore, today, about more than 90% of our sales volumes in mobile top up comes from those direct Collection with direct deals we have in 1 on 1, we use very little in terms of aggregators in this space. And that, I believe, definitely gives us a significant edge in our cost structure and margin for this business.
Okay. The next question is coming from Hassan Elsali from Research. Your line is live.
Hey, guys. Just a quick question on the BOSS Revolution Money Transfer business. How do you think about comps like TransferWise RTGS, Who all are talking about like kind of losing their bets off their take rates, international money transfer fees going to 0%. What are you seeing some of that And Boss Revolution? And if so, are you kind of just running that as a loss leader for the mobile pop up?
Or how do you think that's impacting like Boss Revolution On a bigger scale, I'll start in this one and answer.
I definitely don't see the headwinds that you're referring to. I mean, I haven't, to be honest, heard Ben's Remark that. I will say that, I mean, I think that over time, the way people make money on money transfer will change. I think that more of it is going to be made on the spend of the money that's sent rather The fee that's paid or the FX margin that's made like you have today. And we intend on being in that space to make money in country, I'll call it, rather than just On the Send side, you'll see our the beginnings of our foray into that With our own neo banking products here, which we intend to offer launch outside of the U.
S, Including some other things that I don't really feel like I can talk about that much yet. But I don't view it as a gateway to IMQ at all. I view it as business On to its own, that's going to be substantial. It happens to be that a lot of the same customers do also buy IMCU. I will agree with that.
Okay, thanks. And maybe one more quick one. You a couple of quarters ago, you guys Working on a lot of businesses in the background, I guess we kind of just heard a little bit about some of the neo banking that you've got going on. Are these mostly in that Same kind of like end markets, banking, payments, telecom stuff that you guys are working on? Or can you maybe give some more color on some of the Maybe not specifically businesses, but just end markets in general that you're working on with the businesses you're working on in the background?
Yes. I mean, again, I would Most of the things that we're working on in the background are somewhat related to things we already do, Communications, payments, FinTech in general, again, I could Go on and on for hours about it. But yes, the very simple answer is most of them are related to
Okay. The next question is coming from Matthew Urbanki from Visa. Your line is live.
Hey, guys. So my question is kind of pertaining to how IDT looks like a business that has a lot of Exposure to various components or segments of the telecommunications space. How do you see these companies Segments growing given their lack of individual scale and ability to differentiate their product or service?
I don't know. I mean, again, I think we continue to scale every one of our businesses. I'm not sure where that question comes from, but Maybe you want to elaborate?
Sure. Obviously, you have kind of 4 main business segments. Obviously, I think you're not the largest competitor within those segments. How do you see your products, Specifically, are services growing given that lack of scale? Well, I mean,
again, I like to believe like the real thing that makes IDT better than everyone else, in my opinion, is grit. Like We're scrappier. We work harder. We fight harder than And I think for every competitor that we've got, we have some great competitors in lots of businesses. And there's some great products That aren't Allo products.
That being said, I think that like we really try harder. We spoke for in the service that we give to our retailers and the products we give to our consumers. We focus on the details. We really try to get all of Our customers have great experience with us, and I think that that's what has helped us achieve Continued growth in all of the different segments that we're in. Yes, we're not the biggest UCaaS player, but you try to get The biggest new gas player, engineering department on the phone when you have an issue and you're a 9 person Law office in Brazil, I can pretty much guarantee you that you're going to wait on the phone That 9 hours and then they're going to hang up on you.
And we service our customers day in, day out, Like our tickets that get opened get closed. And that's really what differentiates us Our customer focus.
Yes. If I could just add to that, right, in all the businesses that we have chosen, we have chosen to compete in very Unique niche categories, looking for opportunities in each one of those segments, for example, in case of MRS, We really are dominating the Bodega independent retailer market. We have huge distribution into that space and now becoming the primary provider of POS systems and leveraging everything we can out of that network. Similarly, in the case of Netafone, we have chosen to compete primarily small, medium sized F and B business With that multichannel offering, choosing the right geographies where we see above average growth and opportunities, Which differentiates us a lot with some of the larger number 1, number 2 players in each one of these categories. Although we talk myself To be the 1 level 2 player, but to be the best player in the categories and in which market that we choose.
When you think about our International long distance voice businesses, Pingless carrier, I think that we are probably the best operator on the international business. And no other company draws more economics and better economics As of our mid top views, then we do.
Awesome. Second question here. You appear to have made several new hires in the sales space as of late. Could you just kind of walk us through your thought process behind that and how you see that accelerating growth?
Hiring more salespeople means you're going to have more sales. I think that it's really very simple. Like if we're getting good economics or good returns on investment, we invest more.
Your next question is coming from David Pulaski from Immersion. David, your line is open.
Hey, guys. Thanks for taking my question. I want I want to talk about NRS. I mean, I'm really impressed with that business, particularly the monthly average revenue per terminal Expansion from $131,000,000 to $169,000,000 a month. I mean that's 29% in just 1 quarter.
So I guess I'd like a high level. Can you talk about the drivers for continued growth in that number? And can you do you think that you can continue that performance?
I mean, probably not indefinitely. But yes, I mean, I do think that we can continue that performance. I mean, we're the A, on the merchant processing side of the business, we really We don't have anywhere near the penetration that we believe that we can get to. On the advertising side, I don't We have even scratched the surface of where we can get to. On the data, The same.
I mean, on again, we just started lending money to stores this past quarter. Like the business, I mean, I know it's crazy to talk about it like that This is like it's completely nascent, but it's really completely nascent. I mean, we're going to I mean, we're going to show remarkable growth in NRS that I think everyone will be very happy with. In terms of the amount we get for store, I mean, again, I think as we do a better job of signing up stores for more services And more products when we acquire them at first, probably over time, the number will somewhat stabilize. But we believe there's lots of areas that we can add revenue from, everything from selling them curated list of products, which we just started doing to managing their delivery services for them, which We'll be rolling out over the next couple of months.
And each one of these services are things that our stores need to compete And that we can make money on. And we think we're and yes, we're driving a lot of incremental revenue for We're driving way more incremental revenue for them from the product insurances that we're bringing to them.
Yes. And as a benefit to our investors, As we have noticed, this is the first earnings release that we have started to include a breakdown of the NRS, Different revenue streams now, the advertising of data, the factories, the merchant services. And we hope that by having given that visibility Now to investors, you could see the potential for growth from those revenue streams and how they will have significantly to leverage How do you think BRS Network?
Yes, that's great. I mean, yes, we all I'm sure everyone really appreciates the disclosure. I mean, it's You know, highlighting what is going to be one day a super, super valuable asset. I guess if you could just highlight a little one this is my last Question. Could you talk a little bit about the data opportunities, so the data that you're selling?
I feel like when I talk to other investors, they don't Really understand just how lucrative that could be. So could you talk, I guess, at a high level just on the data opportunity Specifically within NRS?
Yes. I mean, at a very high level, and again, it's been a year or 2 since I've had to like Pitch it to a company on my own. I think the people that are there do it really, really well. But I would say, if you're Procter and Gamble, you really want to know what Unilever is doing In the same stores that you are, you want to know how the products that are In each of your categories, you're doing compared to them. You want to know if the companies that you hire to make sure that the products are on the shelves We're actually putting those products on the shelves.
You want to know how many are moving when you lower the price or when you offer incentives. I mean, there's Literally 100 different data points on, I mean, say, on any Product category that's important to a consumer packaged goods company to figure out what their next move should be. And frankly, the independent convenience store market has been a complete black hole for them. And we really are the 1st company that has ever come in and been able to give them A real understanding of what's happening in that market, the good, the bad and the ugly. I mean, And we think that over time that data has only become significantly more valuable.
And as we Grow our network and go into larger stores and larger chains, it becomes even more valuable. So it's kind of a self fulfilling prophecy just based on the way the business is growing.
So you're able to sell data to individual CPG companies, not just the 3rd party data So there's a lot of customers.
That's correct. I mean, when you're buying the data from the 3rd party aggregators, who today are probably our largest So the revenues you're getting much, much more wide spectrum, like a shotgun approach To the date, I'll call it. As opposed to when you're buying it Tailored to you, you're getting the data in exactly the way that you want and the reports that you want It's just a completely different product. I mean, one gives you general information, one gives you like The absolute most minute amount of information you would want to be like how are the stores in the southern half of the The city doing versus the western half of the city versus our 2 zip codes right next to each You can really scrub it any way you want.
So this and you're operating in basically, like said like a black box. So this is really valuable data that nobody else has aggregated. So this is in truth because people want this?
100%. I mean, again, like this is the type of data that a Walmart can offer At CPG, but again, it's only they sell stuff for a fixed price. So it doesn't they don't have the ability to see If you price
it at $1 less or if you
give an incentive $1 more or if you put it on promotion in this area, not in this area, what will That kind of there's also some, I'll say, test and learn that they're able to do in our markets But they're not able to do even in bigger chains. I think that they're using that to really drive their business in other areas besides in our own area.
That's great. And I guess what I kind of meant by that was like in terms of markets Like the bodega communities, like nobody else has eyeballs in that market. That's what I was asking.
I mean, I'm sure there's somebody else that has some eyeballs in Bodegas, but there is no one that has anywhere near The amount of data and the granularity and the systems to process it that we do.
Awesome. All right. Thanks, guys. I'll hand it over.
Okay, we have a follow-up from Hassan Alsawi from Research. Hassan, your line is open.
Hey, guys. I just wanted to hop back in line and follow-up on something David asked about. You mentioned when you're deploying these NRF terminals, the stores are actually seeing Their own revenues get a little bit of an uplift. Can you just, A, explain really like how that's working? And then, B, if you have like any idea direction on what the magnitude of that revenue uplift for the stores that you're deploying in terminals then?
Again, on the magnitude, We don't break it out. And frankly speaking, like it varies a lot from retailer to retailer. I mean, we have Retailers that have seen 80% to 100% increases in their business after deploying our system. But we really give them the management tools to see how their business is doing, to see what their gross profit is on items, what their out of stock Levels are which are the top 50 items in their area that they're not carrying, Etcetera, etcetera. And again, like any tool, the tool is only as good as the person who is using it.
If you don't you could have an iPhone and you could only make phone calls and then you might have a flip phone. On the other hand, you can probably do everything from the iPhone that you can do from your desktop computer, which makes it like a really powerful tool. So I think that It really obviously depends on the retailer how much of a benefit they're going to see from it. But almost all retailers are seeing a benefit from it, both from the fact that merchant processing is very low fee, very simple and it makes people use their credit card more than they have been before. And that in and of itself drives Sales.
The advertising in stores for products that they're selling in those stores drive sales for those products. Again, the fact that we give them the data tools themselves to see how they're doing in each of these categories, let them figure out what they should be doing in their business to drive sales. We tell them which are their busiest hours. So maybe they're opening an hour Earlier than they need to be or closing an hour earlier than they should because they're close and those types of decisions really let them Make more intelligent choices for their business.
That makes a lot sense. That's interesting. It's like a little like business intelligence To wrap into a payment system. I'm not sure if I missed this in some of your filings, but could you just like directionally walk us Through the economics of like deploying a single terminal, just thinking about like cost to deploy. I imagine like coming in at the top line because you've got data, you've got the payments processing It gets a little bit messy, but if you could just like directionally guide us and like how you guys think about like the per terminal returns as you start to deploy these in more stores?
Well, I mean, I think that we've sort of got a similar question earlier. We both got the ARPU Per terminal this quarter. So again, as I said, I believe that we're going to continue to see Good improvement on that ARPU for a significant period of time. As I said, I don't think It expands at the same rate that we've been doing it forever. Like, I wish I could do that, but I don't think that's reality.
That being said, as I said, I think the penetration in stores of all of our services is still very low. So you're going to see massive improvement from Just better penetration in general. And again, we are adding lots and lots of features. I mean, essentially like NRS, to a degree, It's one business, but it's also many different businesses all in one. So the funding is one business All onto itself.
The data is one business onto itself. The payments is one business onto itself. The software is one business onto itself. Delivery in e commerce is a business unto itself. The core of that product Is the POS and the great user experience and the great service that we and price, Frankly speaking that we give our customers for this product.
I mean, you can get a POS that probably Doug, some of the things that we do, it's just going to cost you probably 8 to 10 times as much upfront and probably 20 to 30 times as much on a monthly basis. I mean, SAP and any major Company sells fancier Yes, I'll say equivalents. But for an independent store, this is really an amazing deal besides everything else.
Awesome. And just one more quick one before I'll maybe hop back in line again. So it sounds like you're using the POS almost like a land and expand Same with your customers. How successful are you finding that? Like are many of the customers coming just to the terminal and then like Over a few months, a year, they're starting to you're starting to monetize them through some of the other services?
Or it's more like you have the ability to do that and it's only now starting to John?
I mean, it's both. I mean, I think that, A, like things always take time Until they improve to a point where the ball really starts rolling quickly. By the same token, there's also a lot of new products that we've barely introduced already and You're not going to see those in our results for a couple of quarters, but they're going to be huge.
Okay, awesome. Thanks, Ed.
Okay. We have a question coming from Private investor, Chikau, your line is live.
Hello? Yes. You're here. We hear you. Do you hear us?
Yes, yes, yes. I had a question about the multi asset revenue Terminal, could you talk more could you tell us the difference between the average revenue for NRS Pay and then the regular Just a regular term, the law.
We don't break it up specifically. But I mean, again, The price that we charge for our terminal and the price we charge for our service as well as our merchant processing is all very, very simple and easy to find. Go to nrs Plus.com and the pricing is right there.
Okay. And then I have another question about Just the penetration of NRSPACE, because it seems that you have 900 more terminals for this quarter And $900,000,000 new NRSPADE terminal, was it mainly from NRSPADE or the new
I'm not 100% sure I understand your question, but about 2 thirds of the new terminals are taking NRS pay.
Yes, that was my question. Yes. Okay. Thank you.
This concludes our question and answer session and conference call. Thank you for attending today's presentation. You may now disconnect.