Good evening and welcome to the IDT Corporation's Second Quarter F iscal Year 2025 Earnings Call. During management's remarks, all participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. I'll now turn the call over to Bill Ulrey of IDT Investor Relations. Thank you, John. 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 January 31, 2025. After their remarks, they will be happy to take your questions. Any forward-looking statements made during this conference call, either in the remarks or during the Q&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. In their presentation or in the Q&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. A schedule provided in the IDT earnings release reconciles 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 in a Form 8K with the SEC. Now, I'll turn the call over to Shmuel for his comments on the quarter's results. Thank you, Bill. Welcome to IDT's earnings conference call. IDT had a strong second quarter led by NRS and Boss Money and supported by robust results from our traditional communications segment, which increased its cash generation for the third consecutive quarter. On a consolidated basis, we again generated record levels of gross profit, income from operations, and adjusted EBITDA. NRS continued to deepen its penetration of the independent retailer market. We are now launching new features and functionalities that increase the value of our solution for retailers and will help us deepen market penetration and drive growth. Boss Money delivered another quarter of strong year-over-year transaction and revenue growth. In the second quarter, we continued to focus on improving the margin contribution, particularly on our retail channel, and that effort helped to boost our fintech segment's gross profit and adjusted EBITDA plus CapEx to record levels. net2phone continued its expansion, led by further growth in the U.S. market. We are especially excited about last week's launch of net2phone's Virtual AI Agent. It has been very well received by our internal BOSS and NRS teams that are using it with great success to enhance the quality and consistency of customer interactions while reducing costs. We are confident that net2phone clients will find that it provides them with great value right out of the gate. Moreover, as they build with our AI agent, it will provide clients with increasingly sophisticated, tailored solutions that add value across disparate functions within their organizations. Our traditional communications segment increased adjusted EBITDA for the third sequential quarter and surpassed $20 million for the first time since fiscal 2022. In light of our solid financial position and positive outlook, and mindful of the feedback we've received from our investors, we stepped up our repurchases of stock during the second quarter and have increased our regular quarterly dividend by 20%. Now, Marcelo will also brief you on the second quarter results, and we'll be happy to take your questions afterwards. Thank you, Shmuel. I would like to briefly provide some additional insight to our discussion of this quarter's financial results. In today's earnings release, for the first time, we are providing capital expenditures for each of our reporting segments. Segment-level CapEx gives greater clarity into the cash-generating power of our key businesses, and we hope that this additional information will be useful to you, our investors, for comparative valuation purposes. Now, turning to our second quarter results, obviously, we are extremely pleased with our performance. NRS had an exceptional quarter with 32% recurring revenue growth and adjusted EBITDA exceeding $10 million. This $310 in recurring revenue per terminal underscores NRS's ability to deliver value-added features that drive higher revenue generation. We anticipate this figure will remain around the $300 mark for the remainder of the fiscal year, reflecting continued deepening penetration of NRS Pay and migration of retailers to premium SaaS plans as we continue to add new features and functionalities. Q2 is typically one of NRS's strongest revenue quarters of the year, and we are quite pleased with the business's ability to continue to scale effectively. Boss Money also delivered a very strong quarter. Our transaction volume reached another all-time record at 5.7 million, with digital transactions through our Boss Money and Boss Calling apps representing more than 80% of all our remittances. We are seeing somewhat slower revenue growth, primarily because of our decision to optimize gross profit per transaction, particularly in our retail channel. As a result, we are quite pleased to have achieved GP growth for the larger fintech segment of 35% to a record $22 million. Boss Money has continued to grow strongly since the quarter end. During February, both transactions and revenue again increased by well over 30% compared to February of last year, despite the leap day in that same month a year ago. net2phone also grew quite nicely in Q2, even though foreign exchange translations masked the strength of the underlying performance of the business. Subscription revenue increased 9% to $21 million in the quarter, but on a constant currency basis, the increase was 14%. As an example, net2phone's subscription revenue in its Mexico market increased 18% year over year in Mexican Pesos, but in dollar terms, sales actually decreased slightly. Across all of its markets, net2phone achieved its top-line growth, even while being incredibly disciplined in its spending. FG&A decreased 1.7% year over year and 1.5% sequentially to drive a 55% year-over-year increase in adjusted EBITDA to $2.9 million, and an increase in the corresponding adjusted EBITDA margins from 9% to 13% over the same period. As well as NRS and Boss Money and net2phone have performed, we have been particularly pleased by the cash flows generated from our traditional communications segment. Adjusted EBITDA for this segment has increased in each of the last three quarters to reach over $20 million in Q2, a 19% year-over-year increase, while CapEx decreased slightly. The increase in profitability reflects our continued focus on shifting our sales channel mix and our geographical corridor mix to maximize gross profit, implementing new pricing strategies, particularly in our digital payments business, and working diligently to wring even more costs from our operations and achieve greater efficiency. A special shout-out to our IDT Global hostile carrier team for continuing to deliver consistent gross profit results, notwithstanding the industry-wide ILD voice market secular decline. Consolidated adjusted EBITDA in the second quarter was a record $34 million, bringing our total adjusted EBITDA for the first half of the year to $63 million. Mindful that each of our segments has outperformed our expectations in the first half of the fiscal year, we now expect to generate at least as much adjusted EBITDA in the second half. To put it another way, IDT is on track to deliver approximately 40% adjusted EBITDA growth in fiscal 2025, on top of the record $90 million we obtained in fiscal 2024. Although we remain watchful for potential impact of the new federal immigration policies, to date, we have not seen a meaningful slowdown across any of our businesses. At NRS, as we disclosed yesterday, same-store sales at our retailers increased 3.5% year-over-year in February and increased 6% compared to January, indicating that business activity for our independent retailer customers remains healthy. At Boss Money, not only did we achieve robust transaction volume and revenue expansion in February, but this past week, Boss Money also delivered the second-highest weekly remittance transaction volume in its history, exceeded only by Christmas week last December. Last week's Boss Money transaction volume even surpassed the total from Mother's Day week last year. As such, we remain cautiously optimistic about the potential impact, if any, that the new federal immigration policies may have on our NRS and Boss businesses. Turning now to our balance sheet and our cash flow from operations, you will note that exclusive of changes in customer fund deposits, this Q2 we generated only $7 million in operating cash compared to $25 million for the same quarter a year ago. I want to point out that due to the nature of our Boss Money business, working capital levels over the course of any one week fluctuate significantly. Fridays are typically the day of the week that ends with our lowest levels of cash because we pre-fund our Boss Money Global Payout Networks wallet in order to enable our payout partners to make remittances disbursements during the weekend ahead. Heading into a routine weekend, it is not unusual for us to pre-fund $30 million-$40 million in disbursements. On the other hand, Wednesdays typically register the highest cash balance of any day of the week. This past January 31st, the last day of our fiscal second quarter, was a Friday. As such, the cash in our balance sheet at the quarter close was at its lowest for the week. Our upcoming third quarter will end on Wednesday, April 30th, and as such, I expect that we will therefore be reporting materially significantly higher levels of operating cash flow generation for Q3. Given the strength of our balance sheet and our expectations for continued robust cash generation, as Shmuel noted, our board made the decision to increase IDT's quarterly dividend, and we expect to be able to continue to increase the dividend each year for the foreseeable future. In addition, we will continue to return value to stockholders through our opportunistic approach to repurchasing shares. This quarter, we had a record level of repurchases, over 179,000 shares for $8.5 million, bringing our total for the 12-month end, January 31st, to 380,000 shares for $16 million. Now, operators, back to you for Q&A. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your headset before pressing the keys. To withdraw your question, please press star, then two. We will now pause momentarily to assemble our roster. The first question is from Anigo Alonzo. Please announce your affiliation, then pose your question. Hello. Thank you again for another quarter of great results, and also thank you for the extended remarks this time. I have questions on the three main businesses. I'll start with NRS. Earlier in Q4, you provided a soft guidance of 6,000 terminals for this year. It looks like in last week's or yesterday's report, actually, there was a neutral tendency of growth, and that was due to the seasonal churn that you mentioned in the results. I was wondering if you still are trending towards 6,000. That's one of the NRS questions. The other one is around the ad revenue. It sounds like it was a really good quarter. I assume that maybe seasonal advertising had an impact. We know that it was the elections, and maybe that was a huge driver or could have been because of the screens that you have been adding to your network. I would like to get more color on ad revenue too. Lastly, in a long-term question, are you planning on taking NRS International in the medium term? When you go overseas, there's a more fragmented market. When it comes to convenience stores, there's not that many franchises. I was wondering if that's in your plans for the medium-long term. Okay. Marcelo will answer most of your questions. If I have anything to add in, I'll add it in. No, I just wanted to say that you're right. Advertising had a nice performance during Q2. It was up about 12% year-over-year. We also saw a real nice jump in the data side of the business that grew by almost 40% versus a year ago. Yeah. In terms of international expansion, it's not something that I would say that we're looking to do organically. Frankly, we're very, very busy just dealing with the problems and the growth that we have in the U.S., and we're very optimistic about the trajectory and the opportunity here in the U.S. I think that if we end up doing something internationally, it would likely be through an acquisition. In terms of the number of units, again, I think we're slightly behind where we had thought we would be in terms of adding units, but I think that we will make it up over the course of the rest of the year is my opinion. We've had a lot of new salespeople come on recently, and unfortunately, they need to be trained and seasoned a little bit before they start to become successful, but I have high hopes that they will become very successful. That's really good color. Let me ask about net2phone. In net2phone, it looks like we had the lowest seat count addition in a while, but we also had a really nice growth on a constant basis for revenue. There are a lot of trends going on in this industry. We have the Metaswitch sale. We also have Avaya saying that they are not going to support the small and medium customers that they have. I am wondering if you have been seeing some of these trends and maybe getting higher revenue customers as a result of the industry dynamics. Yeah. I mean, I don't know if I would specifically tie our results with industry dynamics. I'll separate what you said about Metaswitch and Avaya from just what I'm seeing from the business. I would say that I'm seeing slightly larger deals come in than previously. I mean, we have a very good pipeline of deals that have already been signed but aren't online yet. I do expect that the numbers to perform better in the second half of the year than they have during the first half on net2phone. As far as the currency, I can't predict currencies any better than anybody else. Maybe currency traders do a better job than I do on it, but that has definitely been a headwind for the business. That being said, I'm very optimistic about all of the things that we're doing to increase our pool. I mean, and I'm very, very optimistic about what AI is going to do for the net2phone business. So no real concerns. If anything, we talk a lot internally about increasing our investment in AI, both in terms of development and sales, so that we can really, I'll say, compete with the big boys who have way different kinds of budgets than I can even understand, frankly. Okay. The last item around Boss Money, you provided really nice color around why you need this working capital to support Boss Money and why you hold cash. It has been maybe a criticism of some investors that you're holding so much cash. I think providing color in Boss Money like you did today, it is important to understand why IDT has the balance sheet that it has. I was wondering what's the requirement or the amount of money of cash you feel comfortable with to run Boss Money? What are those working capital requirements of Boss Money? I'll let Marcelo answer that question. Yeah. I'll say a little differently, okay? The fact that we have this very strong balance sheet that we have, we are able to fund all the working capital needs of the Boss Money business and all those businesses like our digital payments business as well. As you know, most of our competitors in the money remittance space who do not have this size balance sheet, they resort now to funding the working capital needs by taking lines of credit from financial institutions. In the course of doing so, obviously, they incur costs that we are able to avoid in terms of interest, etc. As long as we do not deploy the cash in our balance sheet towards new initiatives, towards building new businesses, reinvesting in current businesses, returning that cash to shareholders in the form of repurchases and dividends, or finding good, attractive, value-attractive acquisitions, we will continue to leverage the balance sheet to support the working capital needs that we have. It is not that we maintain the balance sheet because of the Boss Money business. It is rather the other way around. It is because we have not yet found the right opportunity to deploy our cash in full. We are opportunistic, and we are able to support the working capital needs of the Boss Money business, thus generating higher returns on our investment because we are avoiding the financing costs involved. Okay. Thank you for the wonderful research once again. Thank you. Okay. Your next question comes from William Vaughan with Corians. Please proceed. Congrats, Shmuel and Marcelo, on another great quarter. My question surrounds Boss Money. You mentioned the trade-off in terms of thinking about profitability and trading in profitability for a little bit of growth and focusing on that, the Boss Money business. My question is, profitability is very important, and we always want the business to be profitable. Are we possibly prioritizing short-term profits and foregoing some long-term profits by not investing more and being more aggressive in customer acquisition? How does the team balance profitability with growth in this business, especially with other competitors? I'm thinking of one specific larger competitor that's spending a lot on marketing. How does the team think about that? I'll try to answer you a little generally. I mean, I would say that I'm probably a little bit too conservative of a person in general, and I'm not a swing-for-the-fences type of a person in general. I like to hit singles and doubles and get the batters home. It's not to say that I think that the competitors of ours who swing for the fences and spend insane amounts of money are completely crazy. I don't think that they're completely crazy. I think that if you get a good return on your investment, you should probably spend more. I think that we've tried to, I'll say, be a little bit of both in the sense that we are both profitable and growing over 30%. We could obviously increase growth by investing more. I think that we are tiptoeing, I'll say, into investing more. Again, you're not going to see us go crazy tomorrow and say we're going to spend $5 million more a quarter on customer acquisition or expanding our retail footprint by double or anything like that. I think that we are trying to increase the verticals that we serve customers in, and we're trying to make each one of those verticals profitable on their own. I mean, this business has had a very, very successful run so far, and I don't want to mess with it too much by starting to invest in maybe an irresponsible way. Yeah. If I can just add, the overwhelming majority of the profitability that we are now generating from Boss Money is coming from our digital channel, which is about 80%+ of our total transactions. The profits there are significantly higher in terms of unit economics. It is in the retail channel that unit economics are lower, and most of our effort in terms of improving gross profit and gross profit per transaction is happening really on the retail channel part of the business. It has paid off thus far by us trying to raise that GP in that channel while at the same time freeing up a lot of capital to continue to invest heavily on the digital side. Yeah. We have some really nice tricks up our sleeve that we expect to really help growth without supercharging the spending. Okay. Awesome. Thank you. Thank you for the detailed answer. The second question is also on Boss Money. You all expanded into some more verticals, and I appreciate the color. It is a vertical-by-vertical business in terms of profitability for Boss Money. Can you talk a little bit more about the reasons for expanding to Venezuela, Brazil, Eritrea, and how those initiatives are going so far? Yeah. I I don't have the numbers in front of me to give you country by country how they're doing. I mean, I would say just from what I've heard generally on update calls is that they're going better than we expected at this particular time. The one thing I would say is that you need to have scale in every market for you to really start to reap the benefits of it. Today, we don't have scale in that many countries, but every time we open up a new country, it's a new opportunity to see if we have the, I'll say, the veracity to turn it into something much larger. It takes months to get traction. I mean, as I said, Venezuela generally is going well. Brazil isn't even live yet, so it's hard for me to say how well it will do, but I'm optimistic. Okay. Awesome. Thanks, guys. The next question is from Eric Brantley. Please announce your affiliation and pose your question. Thanks, guys. Just one question really from me. Could you give a little more color around the decision to ramp share repurchases back up? Just curious kind of what investor feedback in particular changed your thinking on capital allocation. I don't know. Sometimes you get worn down by people, and that changes your no, I mean, in all honesty, I mean, on almost every investor call that we have, we're told, "Why do you guys have so much cash on the balance sheet? You guys need to be out there purchasing more stock and increasing the dividend and so on." I think our shareholder-friendly company, I at least try to be when I wake up in the morning every day. We thought that it was a good opportunity to buy. Got it. Thank you. Once again, if you have a question or a comment, please indicate so by pressing Star 1 on your touch-tone phone. Again, if you have a question or a comment, please press Star 1 on your touch-tone phone. We have a follow-up coming from William Vaughan. Please proceed. Hey. Just a follow-up. On NRS, are you seeing any trends in terms of growth geographically? Any types of verticals or customers you're just seeing more growth or specifically more opportunities in? Any color you could add on NRS and growth opportunities would be helpful. I mean, I would say in general that we're seeing growth across all of our channels. I really, there's not one part of the business that isn't seeing growth. I have my own, I'll call them pet projects that I'm particularly excited about. We just launched delivery service through DoorDash directly integrated into the POS, and we have all the other ones coming online over the next couple of weeks. I think that that's going to be a huge success for retailers. I mean, today, you can't get accurate inventory on any of these delivery platforms. When pricing changes for you, you don't necessarily update it into those platforms because it's cumbersome and complicated, etc. You're not sure when the driver is arriving. You're not sure when the delivery was. I mean, there's all sorts of issues by it being disconnected from the POS. I'm very excited about that. I continue to be very excited about our QSR business. I think the integrations we're doing with liquor companies to have orders ship automatically is going to be a huge thing that will help stores make sure that they keep the correct inventory on their shelves. There's a lot of different things that are going on that I think are exciting. Some of them have had much more success than others. We launched Lotto Shield and sort of automatic cash taking through a separate machine called the PayPod. Those two have not flown off the shelf as fast as I thought. There's other ones that are doing tremendous numbers. Again, we expect the SaaS revenue to grow tremendously with all these new features. I mean, again, I think almost every store needs delivery nowadays. There's, again, lots of opportunity. Awesome. Thanks, guys. Once again, great quarter. Once again, if you have a question or a comment, please press Star 1 on your touch-tone phone. Okay. We have a follow-up from Anigo Alonzo. Please proceed. Yeah. Just a follow-up on NRS. You have been talking about the screens that you are adding on different locations. Are you planning on disclosing the account anytime soon and adding this as a KPI to your metrics? I don't know. I mean, we don't usually disclose which accounts we do business with. I mean, again, in terms of what are you trying to gather? Maybe you can explain a little better. Yeah. I think that as the number of screens start to become more material, we obviously are not going to include those customers together with our count for POS, Domino's customers. Those are going to be advertising only, right? Once those things start happening, depending how large it gets, we'll start showing that most likely as a separate KPI, okay, so that you could easier track and calculate the amount of advertising revenue that's generated by. Third parties. By third parties, yeah. Yeah. What I'm thinking or trying to gather, it feels like this could be another hidden gem in your portfolio. The potential of having screens out there is pretty big. There are publicly traded companies out there making more than $50 million a year just from having screens in Canada. I am wondering if this could scale that far. That is why. I don't know yet. I mean, when it starts to get there, you'll see them. By then, we'll probably be breaking it out. Again, third-party ones come with obviously a revenue share that we don't have in the case of our own stores, I'll call them. We are optimistic about it, and we'll have more to talk about on the advertising front and what we're doing to expand it in the future. Just as a benchmark, what was the number of screens added of that type this quarter? I don't have the numbers that were added this quarter in front of me. I know that we just ordered another 1,500 screens, but I'm not 100% sure how many were actually put on this quarter.