IDT CORP Q4 FY2025 earnings call

NRS

• Merchant services and SaaS fee revenue drove top line growth. Began integrating select retailers with DoorDash and preparing to integrate with another large delivery service. NRS Insights signed deal with large coupon provider.

Fintech

• Digital channel expansion continued, with digital transactions making up 83% of remittances in Q4. New 1% federal tax on remittances may accelerate migration to digital channel.

net2phone

• Progress in developing and deploying AI agentic offerings, with approximately 1 in 10 sales conversations including an AI agent. Focus on building out AI Agent and Coach product and deploying tailored solutions for industry verticals.

Traditional Communications

• Efforts to streamline operating costs continued, helping expand margins. BOSS calling and IDT Global operated for maximum cash flow efficiency.

NRS

• Fourth quarter adjusted EBITDA increased 32% to $9.3 million, and full year adjusted EBITDA increased 37% to $34.2 million. Recurring revenue in Q4 increased 22% to $32.6 million, and full year recurring revenue increased 27% to $122.6 million. Monthly average recurring revenue per terminal reached $299 in Q4. Revenue contribution: Merchant services and SaaS fee revenue drove growth.

Fintech

• Fourth quarter income from operations increased 88% to $4.8 million, and adjusted EBITDA climbed over threefold to $5.5 million. Full year adjusted EBITDA increased over 16-fold from $1.1 million in fiscal '24 to $18.4 million in fiscal '25. Digital transactions contributed 83% of remittances in Q4. Revenue contribution: BOSS Money international remittance business is a key driver.

net2phone

• Fourth quarter income from operations increased 74% to $1.5 million, and full year income from operations increased 194% to $4.9 million. Subscription revenue in Q4 increased 8% to $22.2 million. Revenue contribution: Growth from AI Agent and Coach product development.

Traditional Communications

• Fourth quarter income from operations increased 11% to $15.4 million, and full year income from operations increased 18% to $66.5 million. SG&A and technology and development expenses decreased due to cost-cutting initiatives. Revenue contribution: IDT Digital Payments and BOSS calling benefit from cost optimization.

2026 Fiscal Year

• Expected consolidated adjusted EBITDA range: $141 million to $145 million, representing a 7% to 10% increase from fiscal 2025.
• NRS expected 20%-25% revenue growth and faster adjusted EBITDA growth.
• Fintech budgeted high single-digit growth in revenue and adjusted EBITDA.
• net2phone focusing on AI investment but adjusted EBITDA growth expected to be slower in high single digits.
• Traditional Communications expected single-digit percentage decline in gross profit and adjusted EBITDA.

• Competition from new and legacy players leading to churn.
• Card schemes potentially affecting merchants and causing churn.
• Technical issues with equipment leading to temporary churn.
• Immigration policy impacts on remittance business.
• Uncertainty from new 1% federal tax on remittances originated with cash or money orders.

Q: What's the progress with stablecoins and WhatsApp launch date for BOSS Money?

A: Wallets are in beta phase. WhatsApp is launching in the next couple of days, starting with existing customers and expected to launch to new customers within 30 to 45 days. Stablecoins will be allowed in the app in the future.

Q: Do you think the acquisition of Intermex by Western Union will have regulatory concerns and could be halted?

A: I can't comment on that. I'm not a regulatory expert. Suggest asking attorney.

Q: What's causing churn in NRS terminals?

A: Factors include store closures due to immigration enforcement, competition from new and legacy players, card scheme impacts on merchants, and technical issues with equipment.

Q: Do you think BOSS Money's strong growth can be sustained?

A: Immigration policy has an impact. Expected growth to slow a bit but has short-term factors like new tax to support it. Budgeted high teens revenue growth for 2026.

Q: Where do you lean more towards in terms of acquisitions, small or large?

A: Less large acquisitions meet qualifications, so likely to go for smaller acquisitions rather than larger ones, but also focusing on internal development