Samuel Jonas - CEO Bill Pereira - CEO, President and Co-Chairman of IDT Telecom Marcelo Fischer - SVP, Finance.

Analysts:.

Good day, and welcome to the IDT Corporation's Third Quarter Fiscal 2015 Earnings Conference Call. During management's prepared remarks all participants will be in listen-only mode. [Operator Instructions]. After today's presentation by IDT's management there will be an opportunity to ask a question. [Operator Instructions].

In today's presentation, Shmuel Jonas, CEO of IDT Telecom will discuss IDT's financial and operational results for the three month period ended April 30, 2015.

Any forward-looking statements made during this conference call, either in the prepared remarks or in the Q&A session, 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 that will follow, 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 release 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 also been filed on a Form 8-K with the SEC. Finally, please note this event is being recorded. I would now like to turn the conference call over to Mr. Jonas. Sir, the floor is yours..

A $6.2 million charge for severance associated with the workforce headcount reduction and a $1.6 million accrual from legal matters, partially offset by a $1.2 million gain on a sale of interest in Fabrix, from adjustments to Fabrix working capital and transaction costs.

The one-time charges drove reduction of income from operations to $2.5 million from $9.2 million in the year ago quarter. Net income attributable to IDT this quarter was $0.02 a share or $600,000 compared to $0.22 a share or $5 million a year ago.

Non-GAAP EPS, which excludes depreciation and amortization and non-cash compensation as well as non-routine gains and losses including severance, the legal accrual on the gain the sale of Fabrix increased to $0.43 per diluted share from $0.37 per diluted share in the year ago quarter.

In light of these results the Board has declared a $0.18 per share dividend for the third quarter. One final note, after the quarter close we received $23.2 million in cash from the sale of Fabrix that was included on our balance sheet at April 30 as a receivable from the sale of interest in Fabrix Systems Limited.

That concludes my remarks for the quarters. We will be happy to take your calls right now. Thank you. .

Thank you sir. We will now begin the question-and-answer session. [Operator Instructions]. The first question we have comes from Jay Srivastav of Southern Capital Markets [ph]. Please go ahead..

Yes, thanks for taking my question. Shmuel on the money remittance business, can you expand on what your plans are to get beyond the 10 states that you've initially started within.

When do you expect some of the ramps to dig in and the contribution to start flowing through?.

We're starting to expand to states that we're going to beyond the 10 states very soon. We are having additional ramps for a bunch of areas. I would say that by the end of the calendar year we should be in over 20 states. .

Okay, and then in terms of revenue, I know you don't provide guidance but Q4 has tended to be relatively strong quarter in the past three years, roughly about 4% sequential growth.

Is that something you would expect this quarter or is there anything to be otherwise?.

Yes, hi Jay. It's Marcelo. As you know our Q3 usually has 3% less days than the other quarters. I would guide you to assume that Q4 will be 3% higher in revenues at least. .

Okay and then in terms of margins looks like you've got both gross margins and the gross profit line being higher and then I think Shmuel you referred to that being sustainable.

So is that just the trend you see going forward over the near term or is it more of a longer term margin profile that you would expect?.

I mean, I think it's a little bit of both. I mean we definitely expect this to continue for some time. Again the margins have been strong in both retail and wholesale and we expect them to stay strong..

Okay.

And then a last question from me in terms of the cost reductions efforts, is it all done and you will see the full effect in Q4 or is there more retrenchment still going through this fiscal?.

We try to be very cost conscious in general. We don’t have any large scale plans but we always try to stay cost conscious as well as also grow the business. I mean to roll out to additional 10 states will be additional headcount to grow out the ramp [ph] base in those areas as well as services required to add more customers..

Okay maybe one last question. As you look beyond just this year to next year, I mean this year just by what you’ve guided for Q4 it’s going to be down roughly about 4% year-over-year.

Looking ahead to 2016 where do you see the growth coming from for the business?.

I didn’t exactly understand the question, I apologize..

The question is if you look forward toward 2016 where do you see -- which segments or aspects of the business do you see contributing to revenue growth for the next year?.

I see a lot of growth from BR overall and I see a lot of growth in money remittance as well. Again I do believe that some of our products that are little bit delayed, like the new version of our app is going to be a tremendous success and I think money remittance direct to consumer is going to be a very large success.

That’s obviously not only being rolled out to 10 states but entire United States. So we are very optimistic that things are going to do quite a bit better..

All right maybe one follow-up on the money remittance side, looks like some of your competitors are lining up to do similar types of offerings.

What is your read on the overall business? Do you think there is enough consumer interest for several players to play in and be successful?.

Yeah, hi Jay. Yeah I mean there is a lot out there in terms of new players coming into the industry. You have to realize that we are also new player in the industry. So for us every market share point that we get is new market share for us. We closed the month of May, which we think is a strong month for us. We did more than 50,000 transactions in May.

So we continue to ramp up our business. A lot of what’s on the news in terms of digital remittances will lead to domestic remittances. We are focusing a lot more on international remittance.

We are focusing a lot more on our niche customer base, which still is predominantly a cash-to-cash type of customer base that not necessarily has access for digital remittances. So I think there is room and opportunity for us to take away share from some of the more entrenched players in the market right now..

Thank you..

Next we have Louis Moser of Mayfax [ph] Investors..

Hi, I am sorry. I caught you just at the end of your remarks and I heard you mention, was it $300,000 figure or a figure from trade receivables or something of that nature, I didn’t quite get it.

Could you repeat that, it was the last thing you said in your closing remarks?.

The last thing I said, let me -- I can’t recall [ph] right now. I’m sorry. Yes, we received $23.2 million in cash from the sale of Fabrix. That was included in our balance sheet at April 30th as a receivable from the sale of interest in Fabrix Systems..

Okay.

So that’s not a non-GAAP earnings, that figure?.

No..

No and was it, once again I apologize, was there anything in terms of forward guidance that you gave during your presentation?.

We don't give forward guidance per se. I mean if you listened to Jay questions, I mean our answer I think that we guide towards the fact that things are going well and continue to go well. .

Right, okay, thanks. Those are all the questions, appreciate it. .

Thanks. .

[Operator Instructions]. So with no further questions this will conclude our question-and-answer session and conference call. We would like to thank the management team for their time today and we thank you all for attending today's presentation. At this time you may disconnect your lines. Thank you. Take care and have a great day everyone..