IDT Corporation (IDT)

IDT 
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IDT (IDT)

Q2 2012 Earnings Call

March 12, 2012 6:00 pm ET

Executives

Howard S. Jonas - Founder, Chairman, Chief Executive Officer, Chairman of Nominating Committee and Chairman of Genie Energy Ltd

Samuel Jonas - Chief Operating Officer

Marcelo Fischer - Senior Vice President of Finance

Analysts

Jay Srivatsa - Chardan Capital Markets, LLC, Research Division

Presentation

Operator

Good day, and welcome to the IDT Corporation's Second Quarter Fiscal 2012 Earnings Conference Call. [Operator Instructions] In this presentation, IDT's management team will discuss financial and operational results for the 3 months ended January 31, 2011. Any forward-looking statements made during this conference call, either in the prepared remarks or in the Q&A session, either general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those which 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, IDT's management may make reference to the non-GAAP measures, adjusted EBITDA, non-GAAP net income and non-GAAP EPS. A schedule provided in the earnings releases reconciles adjusted EBITDA, non-GAAP net income and non-GAAP EPS 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, www.idt.net. The earnings release has been filed on Form 8-K with the SEC. Finally, please note this is being recorded. I would now like to turn the conference over to the IDT management team. Please go ahead.

Howard S. Jonas

Thank you. I'm delighted to be speaking to you, our shareholders, today. As you know, we are once again hosting a live call and our management team will be taking your questions following our prepared remarks.

A number of our shareholders felt we should go back to this format given the growing interest in our various businesses, and we listened. But more importantly, I'm delighted to discuss the major changes that have taken place at IDT. Not counting the Genie operations that we recently spun off, IDT had, for some years, been basically a prepaid calling card company. The world was changing. But to a large degree, we stuck to our legacy market.

But over the past several years, we have transformed IDT, and I am especially excited to be here telling you about it because you are the owners and you are the ones who will reap the benefits for this transformation. Today, we are a profitable company. This quarter, we're reporting positive net income of over $19 million in cash flow from operations, and we have a strong and strengthening balance sheet.

But more important, we have recaptured our innovations spirit, with some sensational products and services that will become leaders in their respective industries.

Let me start with IDT Telecom. We launched Boss Revolution in late 2008. It was a very new concept back then, a very convenient, very inexpensive but also a very high quality service for making prepaid international phone calls from anywhere. You can use it in your home, at your office or from your mobile phone. Boss Revolution started off slowly. As recently as fiscal 2009, we realized less than $1 million a month in revenue. But then it caught fire. Today, Boss Revolution's annual run rate is over $200 million a year. And year-over-year, aggregate revenue from sales via Boss Revolution grew by better than 350%. Just as Amazon digitized retail, we have digitized calling cards. And because of that, we have tremendous economies of scale.

We've changed the playing field from a traditional calling card competition, the same guys were cheating people by offering more minutes on their card than they delivered. Now, they're trying to catch up and copy our new digital model. We'll see if they can compete. Those competitors, however, are under the illusion [Audio Gap] solution platform positions us to be a leader in providing mobile transaction and financial services, to underserved immigrant communities around the world. Because it is very convenient for the customer, very sticky, very slick, very affordable, very accessible and very versatile, we're devising many products and services that will make Boss Revolution the transaction platform of choice for a lot of people around the world during lots of kinds of transactions.

In the coming quarters, we'll be putting additional payment and value transfer services on Boss, and as I've said before, we are working on providing a strong and dynamic money remittance service.

Now once we add that offering to the platform, we'll be going head to head with the leading international money remittance players. We'll beat them at their own game because of our innovative spirit, our presence in the immigrant market and our highly scalable approach to serving these communities.

At the same time, we're expanding the scope of Boss' platform, we're also expanding Boss Revolution's geography. This quarter, we launched Boss Revolution in the U.K. Later this year, we plan to roll it out in other European countries, then we'll take it to Latin America and Asia. The end result will be a global platform for communications and financial services that will be cheap, reliable and convenient.

Read the rest of this transcript for free on seekingalpha.com