Good evening, and welcome to the IDT Corporation's Fourth Quarter and Full Fiscal Year 2023 Earnings Call. In today's presentation, IDT's management will discuss IDT's financial and operational results for the three-month and 12-month periods ended July 31, 2023.

During remarks by IDT’s Chief Executive Officer, Shmuel Jonas, all participants will be in listen-only mode. [Operator Instructions] After Mr. Jonas's remarks, Marcelo Fischer, IDT's Financial Officer, will join Mr. Jonas for Q&A.

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 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 earning or loss per share.

A schedule provided in IDT's earnings release reconcile release reconciles adjusted EBITDA, non-GAAP net income and non-GAAP earnings or loss 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 Form 8-K with the SEC. I will now turn the conference over to Mr. Jonas..

Thank you, operator. Welcome to IDT's earnings conference call. After my remarks, Marcelo Fischer will be joining me virtually.

First of all, I just want to say, it's really been a very hard week really tragic week in Israel and our thoughts and prayers are with our family, our friends, our colleagues, some of who are on the front lines and made a god-willing be safe. My brief remarks today focus on the fourth quarter of fiscal year 2023 and the three months ended July 31.

For a more detailed discussion of our financial and operational results for the fourth quarter and full fiscal year 2023. Please read our earnings release filed earlier today and our Form 10-K that we expect to file with the SEC on Monday.

Our results this quarter were highlighted by the continued expansion of our three high-growth, high-margin businesses, while our Traditional Communications segment performed as expected.

At NRS, we have ramped up our investment to accelerate the growth of the NRS terminal and payment networks, and we delivered record quarterly increases in both net new terminals and net new NRS Pay accounts. With that tailwind, Merchant Services Q4 revenue increased 79% year-over-year.

Advertising and data revenue while 40% below the year ago peak improved sequentially, and advertising and data revenue increased 7% from the prior quarter and is on track for a larger sequential increase in the current quarter.

NRS results also reflected our investment in growth initiatives, include development of new features and functionalities as well as our new tablet POS. And net2phone subscription revenue increased 19% year-over-year, powered by the increase in seats served and an increase in average subscription revenue per seat in Latin America.

Here too we are investing in initiatives to expand the business. In the coming quarters, we are preparing to roll out two exciting premium services, net2phone AI and Call Center Essentials that we expect to enhance ARPU and margins across our markets.

Within our FinTech segment, BOSS Money, our international remittance business continued to benefit from the synergies between its retail and direct-to-consumer channels and from our cross-marketing programs within the larger BOSS ecosystem. Also in our FinTech segment, we've begun enrolling customers in our new mobile banking app, Elroy.

Elroy is replete with innovative features to help underbanked and unbanked customers integrate into the U.S. financial mainstream, while appealing to anyone who despises bank fees, but appreciate financial convenience.

Within our Traditional Communications segment, we are working to further streamline the operations of our BOSS Revolution Calling and IDT Global businesses while pushing new initiatives to return our IDT Digital Payments business to growth.

Last week, the chance record in Delaware dismissed all claims against IDT in the class action lawsuit related to the Straight Path sale and found that the plaintiff and the class suffered no damage.

We appreciate the time the court invested in resolving this matter and so our legal team whose sound judgment and tireless efforts proved invaluable throughout the course of the litigation.

As we noted in our earnings release, we continue to buy back our stock in the fourth quarter and after the start of fiscal 2024, consistent with our view that the plaintiff's claims in this case were premised on flawed assumptions and the justice would prevail.

As well as the fact that we thought our stock was very undervalued, especially given the strong performance of our three high-growth businesses. Before we move on to the Q&A, I want to again thank our employees for their great work and our stockholders who are putting their faith and their capital with us.

Now, Marcel and I will be happy to take your questions..

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Alex Rohrer (ph) with [indiscernible]. Please proceed..

Hi, guys. So just quickly on mobile top-up. I was hoping you could speak to that business in particular, and if there's any hope.

It's been a while now if there's any hope for a bottoming there anytime soon?.

I think the answer is yes. In terms of our -- I will say our gross margin on it. It's actually been improving of late. We've been selling more of it through our direct-to-consumer channels. Unfortunately, the wholesale business has not come back as quickly as we would have liked or expected.

But our new platform just recently got launched, and we've actually brought on, I think, about five new customers just this week alone onto it. So we're very hopeful that we'll see some good revenue growth going forward on it..

Great. And just one more. So obviously, we can see the increases in spending in NRS on the SG&A line.

Do you -- I mean, was this kind of a period of significantly increased spending and now you're going to wait and see or are you -- should we expect to see kind of similar significant year-over-year increases off of this new base in the NRS SG&A line?.

No. I expect SG&A to be much more well controlled than it has been, both in NRS and across the company..

Great. Thank you, guys..

Okay. Our next question comes from Nigel Alonzo (ph). Please state your affiliation. Your line is live..

Hello. Congrats on the strong deployments in NRS. I wanted to ask about the new tablets that you mentioned. I know that your supplier PAX Global has released these new product line called Elys.

And I was wondering if this is going to trigger you expanding into new markets, in particular, in the restaurant market and competing against the likes of those and those people.

Where are the initial results from the Elys product line?.

Well, we actually don't use that specific product from PAX. We do use other products from PAX. Although, we have looked into that product in specific. As far as your question related to restaurants, we're in the process of acquiring a company that's in that space already a very small company. And we think that, that will help us get into it.

That being said, our goal is not to be a toast competitor or it's really to be for restaurants that have a convenience store or something similar to it attached to their store. So I would say it's not going to be -- our goal is not to be a toast..

Wonderful. That's great to hear, especially considering that a lot of immigrant own businesses are restaurants, and we know how you have a brand among immigrants in the U.S. So that's great news. And you kind of answered already on the follow-up question, but it was around the capital allocation.

So after the result of the litigation, you have unlocked some capital, I assume you had as a provision in waiting for the outcome of the litigation and now that you have an outcome.

I was wondering how are you going to allocate that capital other than this acquisition that you already mentioned?.

I mean I think that we're on the lookout for smart acquisitions and investing in growth when we're getting good returns on those investments. So I don't -- I mean, again, I expect us to keep more cash on the balance sheet than some investors believe is necessary.

But at the same time, expect us to deploy some of that cash to get good returns for our investors..

Okay. So have you -- well, do you intend to proceed with repurchases once this earnings release. I mean you've been inquiring it period (ph) so far.

So is that a plan of the allocation?.

It's very possible. I mean again, you've seen -- I mean, just in the past, I don't know, a year, we've probably purchased over $15 million of stock. So yeah, I mean, I expect us to continue to purchase shares when the price is low..

Wonderful. And last question is about net2phone.

Do you have your own platform or do you use the platform of another provider?.

The answer is both. Originally, when we got into the business, we used a third-party platform. And eventually, we built our own. So today, we unfortunately have not migrated everyone off of I would call it, a rented platform, but we have people on both a rented platform as well as our own platform.

And hopefully, over time, we'll move everyone off of the rented platform and on to ours..

Thank you a lot and congratulations again..

Thank you..

The next question comes from Jason Lustig. Please announce your affiliation, then pose your question..

I know you, and I'm sure many other IDT employees have family and friends in Israel. So I just wanted to say my thoughts are with you all..

Thank you..

So we saw that in NRS a really nice step-up in Merchant Services revenue per unit.

Should we expect continued growth in that ARPU or is Merchant Services more likely to grow kind of more in line with units going forward and can you speak to some of the drivers?.

Again, it's -- I mean there's definitely been, I would say, a higher take rate for us, both in terms of new sales that are coming with Merchant Services.

So I mean, I think that we've doing a good job of incentivizing our sales organization, both distributor direct, et cetera,, to really try as much as you possibly can not to sell a POS that doesn't include merchant services and you can see that very clearly in the numbers.

So I expect there to be a higher percentage of our terminals just in general, having merchant services from them. And therefore, you're just going to see, again, less and less cash being used in stores and more and more merchant processing coming from it.

I don't know, if every quarter will have the same increase like we had this quarter, but every quarter will increase..

Okay. And you mentioned in the release a seasonal uptick you're expecting in advertising.

Is that -- how much of that is macro recovery and how much of that is kind of advertising seasonality into the holidays?.

I wish I knew the answer to that question. Again, I don't even know if it's really seasonal. I mean like we're pre the holiday season, and we've seen quite a big jump. Hopefully, the holiday season will be even better. So I wish I could answer the question better, but I don't have an answer..

All right. Thank you..

Thank you..

[Operator Instructions] As there are no more questions, this concludes our question-and-answer session and the conference call. Thank you for attending today's presentation. You may now disconnect..

Thank you..