Samuel Jonas – Chief Executive Officer Marcelo Fischer – Senior Vice President-Finance and IDT Telecom Chief Financial Officer.

John Rolfe – Argand Capital.

Good morning and welcome to the IDT Corporation’s Fourth Quarter and Full Fiscal Year 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 questions.

[Operator Instructions] In today’s presentation, Samuel Jonas, CEO of IDT Corporation will discuss IDT’s financial and operational results for the 3-month and 12-month periods ended July 31, 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 diluted EPS. A schedule provided in the earnings release reconciles adjusted EBITDA, non-GAAP net income, and non-GAAP diluted 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..

Thank you very much. Welcome to IDT’s fourth quarter and full fiscal year 2015 earnings conference call. My remarks today will focus on key operational and financial results for the three-month and twelve-month periods ended July 31, 2015.

Throughout my remarks, unless otherwise indicated, the fourth quarter and full year financial results are compared to the comparable periods in fiscal 2014. For a more comprehensive and detailed discussion of our results, please read our earnings release issued earlier today in our Form 10-K that we will file tomorrow.

Following my remarks, Marcelo Fischer, IDT’s Senior Vice President of Finance and IDT Telecom’s Chief Financial Officer will join me and we will be glad to take your questions.

Overall, the consolidated results for the fourth quarter and full 2015 fiscal year reflected the resilience of our business and were substantially in line with our expectations and recent trends. Sales of our Boss Revolution international long distance calling service continue to grow year-over-year and sequentially.

The rate of Boss Revolution’s growth has slowed significantly in recent quarters. However, we had saturated the market with some key destinations and industry-wide rates have declined significantly in our largest corridor, the U.S. to Mexico.

Despite these trends, Boss Revolution’s growth in combination with our ongoing efforts to streamline operations and reduced costs help us to deliver healthy increases and adjusted EBITDA and income from operations compared to the year ago quarter. For the full year, adjusted EBITDA came in slightly below the fiscal 2014’s record level.

The sale of Fabrix earlier this year, pushed our full year income from operations and our earnings to their highest level in years. Turning now to revenue, fourth quarter consolidated revenue decreased to $405.8 million, a decline of $14.9 million compared to the fourth quarter of last year.

For the full year, consolidated revenue totaled $1.597 billion, a decrease of $54.8 million. But for an apple-to-apples comparison note that Fabrix, which we sold in the first quarter of fiscal 2015 generated $5.9 million in revenue in the fourth quarter of last year.

For the full year, Fabrix revenue was $4.2 million in fiscal 2015 and $16.6 million in fiscal 2014. Now let’s look at Telecom’s key business verticals. Revenue generated in our Retail Communications vertical continues to climb, increasing $1.8 million to $182.9 million for the quarter.

Within Retail Communications revenue generated by sales of Boss Revolution’s PIN-less international calling service, which accounts for the substantial majority of Retail Communications sales grew more strongly increasing 7.6% year-over-year.

I’m encouraged that Boss Revolution’s revenue continues to increase at a double-digit pace to many of our most important destinations in Latin America. The impact of these increases was partially offset, however, by a decrease in revenue from our largest corridor, the U.S. to Mexico.

Last year, the Mexican government significantly lowered termination rates. In response to the ensuing decreases and competitors calling rates to Mexico we are focused on minimizing the gross profit impact even at the expense of the top-line.

Within the Retail Communications vertical, Boss Revolution’s growth was mitigated by continued declines in conventional calling card sales both in the U.S. and overseas. These declines were exacerbated by the strength of the dollar against the euro and most other major currencies.

For the full fiscal year 2015, Retail Communications revenues increased $33.3 million to $729.1 million as Boss Revolution’s PIN-less revenue grew 12.7% year-over-year.

Looking ahead, we expect that Boss Revolution’s PIN-less revenue will continue to increase in fiscal 2016, although the year-over-year rate of growth will likely flow to single-digits. Fourth quarter revenue from our wholesale carrier services vertical decreased $11.3 million year-over-year to $153.6 million.

Our wholesale carrier services revenue declined as minutes of use increased 6.6% year-over-year to 5.04 billion minutes. The decrease in average revenue per minute of use reflects the continued decline in termination rates globally and in the U.S. to Mexico corridor in particular.

Reflecting the same trend, wholesale carrier service revenue for fiscal 2015 decreased $75.5 million compared to fiscal 2014 to $596.8 million, while minutes of use increased 1.4% to 19.47 billion. I want to emphasize, as we have in the past, that we managed our wholesale business to maximize gross profit, not revenue.

This strategy can result in considerable top-line volatility. It’s also worth mentioning that payment services revenue during the fourth quarter grew 4.7% to $55.7 million, and for the full year increased 3% to $208.3 million, primarily because of stronger sales of our international airtime top-up offerings.

Before moving down to the income statement to discuss SG&A expense I want to mention several of the most important strategies we are employing to spur long-term Retail Communications revenue growth.

At Boss Revolution Pinless, we are diversifying our sales and marketing programs to focus on ethnic communities outside of our traditional stronghold in the Hispanic market. Immigration into the U.S. continues to be robust. However, the times of immigration are changing rapidly.

Although, more immigrants still arrive to Mexico than any other country, a number of Mexican immigrant arrivals is decreasing. Meanwhile, the proportions of immigrants from Asia notably China and India and Africa are increasing. Today immigrants from Asia comprised about 40% of new immigrants.

There are abundant opportunities to grow our market share in these serving foreign-born communities and we intend to pursue them more aggressively. Looking beyond Boss Revolution, PIN-less, our growth initiatives include exiting new offerings on the Boss Revolution retail portal.

We’ve recently added domestic and international gift cards from dozens of popular retailers, enabling our customers to send gifts instantly to the recipient’s mobile phones both here and in the USA and overseas.

We’ve also begun data testing online money remittance, which allows customers to use their bank account, credit card or debit card to send money to friends and family. [Technical Difficulty].

Pardon the brief pause while we attempt to reconnect our speaker. [Technical Difficulty] We will put the call on brief hold, while we reconnect our speakers. Thank you for your patience. [Technical Difficulty].

Thank you for that brief break. Our speaker has been reconnected. Mr. Jonas, you may please continue..

Sorry, I apologize. We have also began beta testing online money remittance, which allows customers to use their bank account, credit card or debit card to send money to friends and family from around the world directly from their computer, tablet, or smartphone.

And finally, over the next few months, we’ll be incorporating messaging with our Magic Words, contextual search capability inside Boss Revolution’s app, while messaging is not intended to generate revenue directly. In the near-term, it will drive further adoption of the Boss Revolution app. [Technical Difficulty].

Please bear with us while we take a short intermission. Thank you. [Technical Difficulty] Mr. Jonas, you may continue. I’m sorry. We are going to have Marcelo Fischer to continue. Mr.

Fischer would you like to continue the call?.

Yes, sure. I apologize for the difficulty. We have also begun beta testing online money remittance, which allows customers to use their bank accounts, credit cards or debit cards to send money to friends and family from around the world directly from their computer, tablet or smartphone.

And finally over the next few months, we will be incorporating messaging with our MagicWords contextual search capability into Boss Revolution’s app. While messaging is not intended to generate the revenue directly in the near-term, it will drive further adoption of the Boss Revolution app and other Boss Revolution services.

So to wrap up the discussion of revenue, it is important to consider the impact of the sale of Fabrix earlier this year for the purposes of year-over-year comparison. We continue to increase Retail Communications revenue powered by Boss Revolution PIN-less growth, though the rate of growth is slow.

And while revenue from our wholesale carrier vertical declined, the decrease had a limited impact on gross profit. Maintaining fiscal disciplines have been a strategic focus at IDT in [Audio Dip] and in this quarter that discipline was again apparent.

Consolidated SG&A expense in the fourth quarter was $54.1 million, a $12.3 million decreased from the year-ago quarter. For the full year SG&A expense totaled $222.2 million, a $6.7 million decreased compared to fiscal 2014.

Looking ahead, we expected the headcount reduction implemented earlier this calendar year and other cost control initiatives instituted will help us to achieve a modest reduction in full year SG&A expense for 2016 compared to 2015.

In this fourth quarter, this fiscal discipline helps us to deliver $12.4 million in adjusted EBITDA, compared to $10.4 million in the fourth quarter of 2014. For the full year, we delivered adjusted EBITDA of $44.5 million, compared to $45.3 million in fiscal 2014.

Turning now to the consolidated bottom line, fourth quarter fully diluted EPS was $0.05 per share, compared to $0.33 in the fourth quarter last year. The declines primarily reflect a shift in our tax obligations.

The provision for income taxes was $3.8 million in the fourth quarter compared to a net benefit from taxes of $3.9 million in the year ago quarter, when IDT recorded a gain on the reversal of evaluation allowance applied again an overseas subsidiary deferred income taxes.

For the full year, the sale of Fabrix help to boost fully diluted EPS to $3.63 per share from $0.82 per share in fiscal 2014. All in all, it was a very good quarter, in line with recent results and consistent with our commitment to maintain or improve current levels of adjusted EBITDA.

Before I turn the call back to the operator, I want to touch on strategic reorganization recently announced by our Board. Zedge, which reported a very strong quarter including revenue nearly 40% to $2.4 million, while contributing $0.5 million in adjusted EBITDA will be spun off the stockholders.

In addition, we will also separate and spin off to our stockholders, a second entity comprised of real estate and some small business holdings as well as a significant portion of our cash assets. IDT Telecom will, following the spin-off operate as we more focused standalone company.

These spin-offs that are to subject to final approvals, are designed to achieve several complementary objectives that with the lead will increase overall stockholder value.

Spinning off Zedge, will position that Company to capitalize on its abundant growth opportunities, while likely resulting in a more favorable valuation than it receives within IDT.

The cash that will be held by the second spun-off entity will be utilized, in part to fund promising business initiatives such as our nascent Retail Solutions business that will hopefully become the spin-off of tomorrow. Nevertheless, we expect this business will be managed to carefully preserve and protect shareholder value.

And finally, IDT Telecom will become a pure play. And as such will be significantly easier for investors to understand and to value. We are currently doing the considerable work required for the spin-offs, including the preparation of audited financial statements for each entity.

This work will take sometime, so that the spin-offs nicely will be completed next year. We will keep you updated on our progress in these quarterly calls. All-in-all we think this moves will end-up being very accretive to shareholder value.

Just as our prior spin-offs including Straight Path Communications, Genie Energy and IDW Media which was formerly known as CTM Media have been. That wraps up our discussion of the quarter and full year results. And now, we’ll be happy to take your questions. Operator, back to you for Q&A..

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from John Rolfe of Argand Capital. Please go ahead..

Hi, guys, few questions for you. I was hoping you could give me the share count at quarter end. It looks like you had repurchased about $10 million worth of stock in quarter.

And as an additional bit of color there, could you may be give a little bit of detail around the decision to repurchase 7.5 million shares from Howard?.

Hi, John, this is Marcelo. First of all let me apology for the fact that Samuel’s got cutoff from the line. He’s actually traveling to the West Coast today. So he’s on West Coast. I’m actually in headquarters, so I don’t even know what happened to his connection. So you’re right. IDT did repurchased in Q4 roughly about $10 million worth of shares.

Our share count at the end of July 31 was 23.3 million shares. And the reason why IDT bought back the shares from Howard is because we want to make sure that keep selling of shares would not impact now the volumes and the prices of stock.

So we structured it as a private purchase not to create too much of a large number of shares being sold at the same effecting the stock price in a visible way..

Okay, okay. And I guess you’ve given a bit of a few data points around the expectations for fiscal 2016. And if I’ve got these right, you’re expecting Boss Revolution to continue to grow somewhere in the single digits. And I guess that now accounts for most of your Retail Communications piece.

On the wholesale side, it seems like your – you said you’re continuing to manage that for gross margin. So I guess I would assume that to mean sort of stability in terms of gross margin contribution from wholesale and then layered on top of that, you said that you expected continued modest reduction in the SG&A line.

So when I kind of put all those pieces together, is it fair to assume then that you would expect continued stability or even sort of modest growth in your EBITDA for the full fiscal year compared to the year that you just finished, again ignoring the spin-offs for now, just looking at the business on a consolidated basis?.

Yes. You always [indiscernible] accurate, let me just now take them one at a time with a little more detail. In terms of Retail Communications, yes, we are seeing the deceleration of Boss Revolution growth because of the maturity of that business. We do still expect to achieve single-digit growth of Boss Revolution as we go into 2016.

One of the biggest solvencies that we are still facing as we have commented on our earnings release is the fact that we have seen a decline on one of our peak corridor, the U.S. to Mexico corridor. And because of that it’s a little more difficult to forecast exactly the rate of growth of Boss Revolution as a result of that.

Despite of the fact that we have seen a decline on that corridor, here at IDT, we are doing a lot of different things in plans to mitigate the impact of that decline to Mexico by making changes in other parts of the Boss Revolution and retail business in terms of our price deck, in terms of cost savings to other areas of cost, cost of sales et cetera.

We did have a goal of trying to preserve the margins and the gross profits that our retail segment generates.

In terms of the wholesale channel business, as we had mentioned earlier, our goal have always been to manage our wholesale business towards maximization of gross profit and utilizing it as a vehicle for purchasing minutes in the most effective manner, and taking advantage of some of those purchase prices to sell some of that into the wholesale marketplace.

And that continues to be growing and managing that business and synerizing our wholesale operation with our retail operations. We did accomplish significant SG&A savings during 2015, the fiscal year and the areas of compensation and some areas. We are still going to see benefits from those initiatives now during fiscal 2016.

And we have other initiatives in terms of cost management being contemplated all the time. Our goal, as we have said earlier, is to indeed try to manage our adjusted EBITDA number, so that it can continue to deliver similar EBITDA to what we have been delivering – close to what we have been delivering in the past two quarters..

Okay.

And any expectations, I know CapEx was elevated this year for a number of reasons, any expectations on CapEx for the coming year?.

Yes. CapEx was unusually high in fiscal 2016 because we invested close to $10 million to refurbish our headquarters building here in Newark. That cost obviously will not repeat itself as we go into 2016. So for fiscal 2016, our CapEx will be roughly about $10 million less than what you’ve saw in 2015..

Okay, great.

And my last question, can you give an update; I mean in terms of the money remittance? Have your expectations regarding the potential of that business changed at all? Have your expectations on timing changed at all? I guess when do you think we might start to see that become something meaningful from a revenue standpoint?.

Sure. We expected at this point to probably we will be growing one of the remittance business at a faster clip than what we have been doing for the past few years. Unfortunately, we have had a little bit of a challenge in hiring some of the retail salespeople to go out and sign-up productive agencies. Now that has been – precess have been remediating.

But that doesn’t change our prospects for the long-term, we still feel that this is going to be a growth business, a business that will be accretive in a few years from now.

On the product side, we are just beta testing right now and getting ready to launch not enough on a full-scale, our online direct-to-consumer offering, so that our consumer could initiate and complete [indiscernible] directly from their computer devices as opposed to having to go to a retailer agent.

So we are still very much focused as needed on to growing that business..

Okay, great. Thanks very much. I appreciate it..

Sure..

[Operator Instructions] Seeing no further questions, this concludes our question-and-answer session and the conference call. Thank you for attending today’s presentation. You may now disconnect your lines. Have a great day. Thank you very much..