IDT Corporation Class B Aktie

Good evening. Welcome to the IDT Corporation's Third Quarter Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] Please note, this conference call is being recorded.

I will now turn the call over to Bill Ulrey of IDT Investor Relations. Bill, you may begin.

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 3 months, ended April 30, 2026.

After their remarks, they will take your questions. Any forward-looking statements made during this conference call, either in their 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, adjusted EBITDA margin, non-GAAP earnings per share, NRS' Rule of 40 score and adjusted net cash provided by operating activities. Schedules provided in the IDT earnings release reconcile these non-GAAP measures 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 a Form 8-K with the SEC.

And now I'll turn the call over to Shmuel for his comments on the quarter's results.

Thank you, Bill, and thanks to everyone on the call for joining us this evening. Last Friday, my father ran the opening bell at the NYSE to celebrate IDT's 25th anniversary, as a NYSE-listed company and our 30th anniversary as a public company. Over 100 employees on their own dime from all over the world made the trip into Manhattan to be part of the event. After the event, I agreed to reimburse them, but I wanted only people to come who generally wanted to be there.

I'll be honest, I wasn't sure what to expect going in. And as you can tell from my notoriously short speeches, I don't really like long-winded events. But the moment we approached the exchange and my father saw the IDT sign and smiled at me, something shifted for me. The NYSE team had done something really special. They pulled together photos and documents from our past listing anniversaries, creating a time line of the people, the document, the, I don't know if history of IDT, and it was a very proud moment. What struck me most throughout the morning was the pride of being part of an organization that has stayed relevant and innovative throughout those 30 years, including the spin-off of 5 public companies and that has consistently delivered for employees and shareholders alike, although not always in a straight line.

IDT's year-over-year revenue and earnings growth was again powered by the continued expansion and operating leverage of our 3 higher-margin businesses, paired with another quarter of steady cash generation from our Traditional Communications segment. Consolidated revenue grew 5% to $315.7 million. Gross profit grew 9% to $122.5 million, with gross margin expanding by 170 points to 38.8%, a record quarterly high. Income from operations grew 12% to $29.8 million and adjusted EBITDA grew 13% to $37.5 million.

Based on our year-to-date performance and forward visibility, we are raising our full year FY '26 adjusted EBITDA guidance to $150 million to $152 million, representing a 15% growth at the midpoint over fiscal year 2025. NRS recurring revenue grew 22% year-over-year and monthly average recurring revenue per terminal increased approximately 10%, driven by merchant services and SaaS fees. We expect both categories to continue driving growth in the coming quarters.

The terminal network now stands at over 39,000 active POS terminals and payment processing accounts are also above 29,000, up 14% year-over-year. NRS Rule of 40 score was 50 in the quarter, reflecting a healthy balance between growth and profitability. After the quarter closed, we acquired a controlling stake in OnCore Digital, a digital media brokerage. OnCore's platform, demand relationships and publisher network will be integrated with NRS' screen network and first-party transaction data to create a more competitive retail offering.

Our digital channel revenue growth rate accelerated in the third quarter compared to the second quarter. Digital transactions grew 20% year-over-year and digital send volume, the actual dollars our customers are moving grew 40%. We gained market share following the implementation of the new federal remittance tax at customers but reliable, cost-effective alternatives. Netphone continued its growth trajectory with subscription revenue up 12% and total revenue up 11%. Seats served reached 441,000, up 6% year-over-year with CCaaS seats growing faster than UCaaS, driving revenue per seat higher. Gross margins expanded 130 basis points to 80.6%. Most significantly, income from operations was up 76%.

We are gaining traction with our AI offerings and expect them to become accretive growth drivers in fiscal year 2027. All Netphone offerings will also benefit from the recent release of Integrate by Netphone, an integration layer that enables our clients to easily through straightforward no-code interface, use our offerings with the tools they already work with every day, such as popular CRMs and ERPs and much more.

Our Traditional Communications segment continued its role as a reliable cash generator. SG&A declined $2.6 million year-over-year, as we continue to rightsize the cost structure and adjusted EBITDA was essentially flat at $19.7 million. IDT's global revenue grew 11%, partially offsetting the expected decline in BOSS Revolution calling.

Across all our business segments, we are integrating machine learning and AI tools to better understand and meet the expectations of our customers, develop and provide new features faster, better and cheaper. Additionally, we are enhancing customer service refined pricing strategies, accelerating product launches, creating marketing campaigns and streamlining back-office operations, to name just a few. We expect that our AI efforts, in some cases, will serve as the basis for AI offerings that we can sell to our customers. 30 years ago, IDT was a scrapping long-distance phone company. Today, we operate a POS network serving nearly 40,000 independent retailers, a growing digital remittance business, gaining market share in real time and a cloud communications platform with AI capabilities and a traditional communication segment that continues to generate meaningful cash. Thank you all for your continued confidence in IDT.

Marcelo will now walk through the financial details.

Thank you, Shmuel. My remarks on our third quarter fiscal '26 results will focus on year-over-year comparisons in order to set aside the seasonal impacts on our business.

As a reminder, our fiscal third quarter, February through April have just 89 days, roughly 3% fewer days than our other fiscal quarters. With that as context, we were very pleased with our consolidated performance. The third quarter extended the trajectory that we have been on for several years. The underlying growth dynamic at IDT remains in force. Our consolidated results increasingly reflect the growing contribution of our 3 higher-margin growth segments, NRS, FinTech and net2phone, even as our large traditional communications segment becomes relatively less impactful. That location again produced record consolidated gross profit and a record consolidated gross profit margin in the quarter. Gross profit increased 9% to $122.5 million, and our gross profit margin expanded 170 basis points to 38.8%.

Let me put that rotation in number terms. Our 3 growth segments contributed $107 million of revenue in the quarter, about 34% of our consolidated total, up from 30% a year ago. Because the combined gross margin is far higher than that of traditional communications, that shift continues to generate substantial operating leverage as the revenue scales. In the third quarter, our growth businesses gross profit contribution increased to 67% from 61% a year earlier. The combined adjusted EBITDA from NRS, Fintech and net2phone grew 27% year-over-year to $20.5 million. In aggregate, our 3 growth segments generated 55% of IDT's consolidated adjusted EBITDA in the third quarter, up from 29% in the year ago quarter. Because these segments still account for only about 1/3 of our revenue, that rotation has a long way left to run.

I also want to call your attention to the consistent profitability of traditional communications, which slightly increased its adjusted EBITDA contribution year-over-year this quarter, even as its revenue edged slightly lower. This segment will remain a reliable contributor to our cash generation for many years to come. On the balance sheet, we ended the quarter with $251 million in cash, cash equivalents and current debt and equity securities exclusive of restricted cash.

Last week, our Board declared a quarterly cash dividend of $0.07 per share. We also continued to repurchase shares opportunistically during the quarter, repurchasing approximately 84,000 shares for $4 million. Our growing free cash flow and debt-free balance sheet let us keep investing in our growth initiatives while returning cash to stockholders, and we expect to continue doing both.

In terms of our outlook, given our results through the first 9 months of the year and our visibility into the fourth quarter, we are again raising our full year fiscal '26 guidance for consolidated adjusted EBITDA from the $147 million to $149 million range, we provided last quarter to a new range of $150 million to $152 million. At the midpoint, this $3 million increase represents 15% growth over our fiscal 2025 adjusted EBITDA of $131.7 million. This latest guidance raise reflects both the increasing operating leverage we are seeing in our growth segments and the resilience of traditional communications contribution.

To sum up, this was another quarter of disciplined profitable growth, and we are carrying real momentum into the close of our fiscal year. Just to finish up on a nostalgic note, as Shmuel mentioned, this year is our 30th year as a public company. So naturally, I had to take a look at IDT's first annual 10-K report from 30 years ago, 1996. That year, IDT reported revenue of $58 million and a net loss of $16 million. Today, even after spinning off 5 public companies, we are generating 22x the revenue and over $100 million more in net earnings. I am especially pleased by our performance over the past few years. In fiscal 2021, just 5 years ago, IDT reported $75 million in adjusted EBITDA. In fiscal '26, we are now on track to more than double that amount. So indeed, there was much to celebrate at the New York Stock Exchange last Friday. We are proud of all that we have accomplished and excited by the opportunities ahead.

Now Shmuel and I will do our best to answer your questions. Operator, back to you for Q&A.

[Operator Instructions] Our first question is from [indiscernible] Capital.

First, congratulations on the 25 years, and thank you for sharing the touching words. I'm happy you spent some money fighting people over to New Stock Exchange, knowing how tightly you manage money. So I'm glad you are celebrating how it is worth it.

So the first -- that was not the only milestone this quarter. And I have a question on another milestone, which was NRS having the first terminal in non-North American country. So this year -- this quarter, sorry, Colombia was the first country where you had an NRS terminal. I'm wondering why you selected that country? And is it beta testing? How should we think about the growth of NRS in that country?

The real answer is we could have selected a bunch of different countries to have an expansion, and we have some partners there that suggested that we try it there and we decided why not.

Okay. I would like to ask another question on OnCore and the acquisition. We know that advertisement has been a challenging industry in the last few years with so many streaming services offering screen time, and you have suffered those consequences. Now with this acquisition, how should we think about advertisement in NRS? What can we expect of it?

I mean, listen, we definitely think that they are going to be a help to our advertising group. I mean they have a lot of expertise internally that we as a company didn't have. They have a lot of relationships that we as a company didn't have, and they're very good guys to work with. And we've worked with them as partners for a number of years already. So this is sort of a long-term relationship already. And we expect it to be an accretive acquisition. Okay.

In terms of net2phone, a couple of years ago, you went through the process of getting those papers ready to do the spin-off. That was canceled. Now we are in an environment where IPOs are the topic of the hour again and valuations are stretched. I'm looking at one of your peers in the segment that is growing organically less than you has literally the same amount of revenue, and they're trading at 3x sales plus. Is this enough of valuation for you to spin off netsphone or in view of the excitement that you have around the new AI offerings, you would like to keep it close to your chest for a longer time?

It's a good question. I'm not prepared to really give an answer on today's call. I mean, I would definitely say that it's becoming more appealing to possibly do something. That being said, I'm very, very confident that Netphone is going to do much better than our investors think it's going to do and much better than some of the competitors that you mentioned without mentioning. So yes.

Okay. And one last question on BOSS Money. The performance this quarter has been impressive. You are acquiring customers like -- I mean, like I haven't seen in a long time. And I'm wondering, you expanded margin despite the customer acquisition costs. If we think about BOSS Money in a steady state, what kind of EBITDA margins do you think it can produce? I mean less marketing expenses.

Yes. I don't know the answer to the question. I mean we have relatively good margins, I agree. We try to be opportunistic when we can be. And by the same token, we're very I'll say, sensitive to the fact that we want to continue to have our customers for a long time and continue to attract new customers. And to do so, you cannot have prices that aren't correct in the market. But Marcelo has a couple of things that you'd like to say about it as well.

Okay, I mean, indeed, this was a real good quarter for us. It's kind of a continuation of what we started to see already in the beginning of the year. Our digital channel is really doing very, very strongly as you saw in the numbers. Our digital channel, as I've mentioned before, those command much higher margins than our retail channel. And that shift in channel continues, it adds to the total margin, the net margin. But the story is not just that. We're doing a better job understanding our customer, understanding how to price the service better, how to manage the FX that we go to our customers for the various corridors, like managing the entire cost structure, taking advantage of AI features to make our workflows and processes more efficient.

So -- and the business, obviously, as it grows, it continues to scale quite nicely to the bottom line. I mean we put that release a few weeks ago about how modest day was a record weekend for us now that we have seen the May results, the month of May that just finished now and our first month into Q4 is our strongest transaction month ever. It's going to be our strongest gross profit month ever. And I think that's the reason. We're not just trying to grow transactions or revenue, we trying to do so, okay, with a very large focus into making that to be higher gross margin, higher gross profit. So I think we're in a real good situation, well positioned, gaining market share. And if this continues that way, obviously, we're going to continue to invest behind acquiring customers. But I do expect to see margin expansion as the year go by.

Our next question comes from William Vaughan with Corient.

Congrats on the great quarter. Awesome anniversary as well. So once again, congratulations. I have a couple of questions. First one on the OnCore Digital acquisition. Is there any color you can give on the price paid or any multiple of whatever it is EBITDA, income from operations or anything like that?

Yes. I mean we're going to have to put a little more detail when we file the 10-Q next week, right? But note this company is a small tuck-in acquisition. As Shmuel mentioned earlier, this is a relationship that we have had for many years. Now the company carries a lot of media for CTV or our advertising screens. We took a majority 80% controlling position in the company, valuation of about $6 million, now some earn-outs, et cetera. We believe that the price is basically an excellent price. And again, the focus is to have them be able to better monetize our screen inventory. And now that we are part of the family, we will be able to work better together to maximize that opportunity.

Awesome. Are there any other types of acquisitions or different places within your 3 growth businesses that you're looking and you're seeing attractive, if there are some tuck-ins or bolt-ons or other things you could do in that space, that would be attractive to you? And it could be in any one of them, NRS, BOSS Money or net2phone.

We always have our ears open, and we've done some successful acquisitions and some not as successful acquisition. So we -- and we might have dodged the bullet with some of our acquisitions, too, but it didn't happen. So I don't know. We keep our eyes open and remain cautious and prudent.

Okay. Staying opportunistic. So I guess just a question on net2phone AI. You brought up in the release. It seems like it's something that is gaining a lot more traction. What features of you're offerings do you find your clients are liking or excited about using the most?

It's a good question. I mean my first suggestion always is you should go and use the product yourself, become a customer. We always want more customers. And again, what I think is really exciting is really -- first of all, like for everyone, there's continuous advancements in it. And again, we use a lot of the products inside of IDT. And we're probably one of the biggest customers, we'll call it, of our own products. And I mean, already, we're handling probably 30% of our customer service calls using our own product, we'll call it. Obviously, they're not our own models, but our own products. And on chat it's, I think, above 50% at this point that's being handled by our products again.

And all of those interactions are having to dip into our systems and provide real-time information to customers. It's not just like, hi how are you? Just call to say, hi, no, they want to know like I sent $200 to my brother in Mexico, and he still hasn't received it and they want to know where it is, is there an issue? When will it be available. And it's able to give as accurate answers as any one of our customer service reps would be able to give that customer. And it does it perfectly every time. And again, those same kinds of integrations are what we're providing to our customers in a way that they don't even have to be able to code anything. So I'm very excited about that. We have a premium product that we're starting for businesses so they could try it out called Flex. You can check it out on our website.

Yes, I mean, I think they're doing great things, and I think it's really, really like not even early innings, it's like pre-innings, but the warm-ups are super impressive. And already, we're selling tens of thousands of dollars a month of products to customers outside of IDT, besides what we're using ourselves here.

To see that in the numbers, right, at this point. I mean, net2phone is doing really great right now, right? They just crossed the $100 million MRR revenue barrier. So we are pleased about that. The month of May for them was the best month ever in terms of new sales. And they are going to show that the AI element is becoming a larger portion of those new sales, still small relatively, but becoming a bigger portion. So we are looking forward. Going back to the previous question about monetizing Netphone at some point. I think we are building the right assets and features to make the net2phone attractive -- a lot more attractive than people believe it is.

Awesome. Excited to see how that progresses over time. Switching to NRS. I know in the past, you guys have mentioned you don't see too much competition in terms of U.S. systems, in terms of single store operators for Bodegas and convenience stores. We're following other players in the space. I'm starting to see other players start to expand into different segments, specifically Toast. I was shocked to see that they're thinking about or actually starting to expand into convenience stores. And so I'll just ask the question again, are you guys seeing any more competition coming into the space in terms of point-of-sale operators and bigger players coming in? Or is it still sort of kind of not white space, but not as much competition as more from smaller guys?

I definitely think that we are seeing more competition at NRS, and it's definitely affected the new sign-ups. In terms of some of the bigger players, I mean, again, I think Toast is a great company. I must buy some for my personal portfolio as -- but in terms of like the offerings that we provide to convenience stores, liquor stores, I really think that we're a much better value and a much more purpose-built product for those markets. I mean the same way if you were starting a nice sit-down restaurant in your neighborhood, I wouldn't suggest you come to NRS to have us do your restaurant. I basically would tell you like the same thing if you were starting a convenience store, like I don't think you would be best off financially or otherwise from choosing anyone NRF.

And again, it's only going to get better. In terms of our own road map for NRS, it's really going back and strengthening the product even more. We're not nearly as focused about expanding into new verticals, but more about just continuing to improve the verticals that we're in so much that nobody will be able to compete with us.

Okay. I think focus and solution to a specific vertical is really important in this space. So I appreciate that color. Moving to our BOSS Money. Love to see the growth, love to see the increased gross profit and the shift from retail to digital. I also saw that with a healthy investment in marketing and new customer acquisition. There are other digital players in the space I brought up before, who are growing as well. They spend a lot more in marketing. And I think -- I mean, I agree with your assessment that probably shouldn't be spending nearly as much as those players.

But I guess I'm curious to hear your thoughts on maybe not spending a ton in terms of marketing, just in general customer acquisition and new customer acquisition, but let's say, for specific verticals, does it make sense to be more aggressive in verticals where you are on the precipice of high market share and gaining dominance in those verticals, specific countries? Or do you think it makes more sense to try to attack specific verticals in countries where you have a very low market share, sort of broaden the reach to more and more countries? Like how do you guys think about that dynamic?

It's a good question. I mean, again, I think we, to some degree, try to do a little bit of both, if I understand your question correctly. I wouldn't say in terms of like send countries, right now, we're really obviously only from the U.S.A. as opposed to some of our larger competitors who are really much more global in terms of send out countries. I think that over time, we would like to expand into other countries on a send-out basis as well. In terms of in terms of like our penetration into, we'll call it, countries that you send to, we definitely take a market-by-market approach to it. And we do offer better pricing, more incentives, et cetera, to customers in certain destinations than we do to others, either because there's more profitability to that country over time or because we're trying to get to a certain critical mass, we'll call it, inside of that country so that we get the benefits of being a larger player.

Again, we have really good competitors in that business as well. So every day, we have to come in and win customers over with honestly pricing and great service, because if we don't do that, like we won't have a business. So that's really our main focus. And thoughtfully speaking, it seems to be working.

Awesome. Great color. Last question. So I was happy to see the buyback this quarter, which was about $19 million. Do you foresee a similar pace of buybacks going forward? Was this more taking advantage of maybe more attractive stock price? Or do you think based on where we are, we'll probably more or something close to it.

I mean, I have a lot of color on this 1 or 2 calls ago. So you can go back and listen to that rather than be like sort of repeating redundant information. But I mean, in general, I will continue to buy back stock. Obviously, we're opportunistic. If the price for some reason to fall a lot, like we would be buying like crazy. And if the price goes up a lot, we'll probably buy a little less. That being said, we are trying to stay on pace to continuously buy our stock, and this quarter was no exception.

Yes. Awesome. I mean if I'm looking at the EBITDA guide and where the business is headed on a consolidated basis, once you back out the enterprise value, we're probably trading at around 6x EBITDA, which is very, very low, at least in my opinion, in terms of where the value in the company. So love to see the buyback. I appreciate the color.

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

Good evening. Welcome to the IDT Corporation's Second Quarter Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] Please note, this conference call is being recorded. I will now turn the call over to Bill Ulrey of IDT Investor Relations. Bill, you may begin.

Thank you, John. In today's presentation, IDT's Chief Executive Officer, Shmuel Jones; and Chief Financial Officer, Marcelo Fischer, will discuss IDT's financial and operational results for the 3 months ended January 31, 2026. After their remarks, they will be happy to take your questions.

Any forward-looking statements made during this conference call, either in their 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 adjusted measures including adjusted EBITDA, adjusted EBITDA margin, non-GAAP earnings per share, NRS' Rule of 40 score and adjusted net cash provided by operating activities. Schedules provided in the IDT earnings release reconcile these non-GAAP measures 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 a Form 8-K with the SEC.

Now I'll turn the call over to Shmuel for his comments on the quarter's results.

Thank you, Bill, and thank you to everyone who joined the call. NRS and BOSS Money and net2phone's top and bottom line expansion drove IDT's strong overall results again this quarter. NRS recurring revenue grew year-over-year, powered by large increases in merchant services and SaaS fee revenues. This quarter, we continue to make progress on initiatives to drive additional merchant services and SaaS growth and expand our delivery partnerships. We are also developing offerings for differentiated retailer verticals. Advertising and data results came in lower than we expected after decreases in CPM rates pressured revenues. At BOSS Money, our digital channel continued to outperform relative to the industry as transactions increased 17% year-over-year. The new federal admittance tax, which applies mainly to transactions originated with cash went into effect on January 1. As expected, the tax implementation has accelerated customer migration from the lower-margin retail channel to the higher-margin digital channel, and you will begin to see those positive impacts next quarter.

net2phone's bottom line continues to benefit from its strengthening gross margins and operating leverage, and this quarter, we also got a boost from favorable foreign exchange rates. Looking ahead, our AI offerings are generating very positive customer reviews and increased spend. Based on these early results, we are readying a new offering, Agent seamlessly integrated with unified communications with a go-to-market strategy targeting both direct and channel sales to small and medium businesses.

Traditional Communications remained a strong cash generator. The segment contributed $19 million in adjusted EBITDA during the second quarter, a decrease from the year ago quarter but approximately the same as in the prior 2 quarters. Because of our recent strong financial and operational performance growth and outlook and balance sheet, we again repurchased stock in the second quarter, and our Board has increased our annual dividend by 17% to $0.28 per year.

Now Marcelo, who is more of a gifted orator than I will discuss our financial results. I also just can't go without saying that our hearts and prayers are with all of our soldiers abroad, and we hope that you come home safely.

Thank you, Shmuel. My remarks on our financial results for the second quarter of fiscal year 2026. will focus on the year-over-year comparisons to set aside seasonal impacts on our business. IDT achieved record levels with several key consolidated financial metrics in the second quarter, gross profit, gross profit margin, adjusted EBITDA, adjusted EBITDA margin and non-GAAP EPS. These results were very much in line with our recent year-over-year growth trajectory. The underlying positive dynamic at IDT remains the same as it has been for several years, namely, our consolidated results increasingly reflect the growing contributions of our 3 higher-margin growth segment and RF fintech and net2phone, while the contributions of our larger lower-margin Traditional Communications segment becomes relatively less impactful.

To date, we have been pleased by the speed with which each of our 3 growth segments have increased their cash flow contribution. In aggregate, these 3 segments contributed during Q2, 53% of IDT's consolidated adjusted EBITDA less CapEx, which we view as our profit or free cash flow compared to 45% in the year ago quarter. Given this ongoing rotation plus our strong results through the first half of the year and our positive outlook, we have begun to increase our allocation to shareholder returns.

Shmuel already mentioned the increased levels of our share buyback and our dividend. I just want to add that the increase in our dividend marked the second consecutive year of dividend increases, and we hope and expect to be in a position to continue increasing the dividend in the years ahead. Also of note is that the 15 million of stock repurchases in the first 6 months of fiscal '26 put us on track to exceed the rate of share buybacks compared to the preceding years. We allocated $18 million to share repurchases in all of fiscal 2025 and $11 million in fiscal '24.

Now I want to discuss our outlook for the remainder of the year. IDT raised its consolidated adjusted EBITDA guidance for fiscal '26 from the $141 million to $145 million range we shared at the start of the year to now being $147 million to $149 million. At the midpoint, this revised guidance is a $5 million adjusted EBITDA increase and a 12% increase compared to fiscal 2025 actuals. The guidance increase reflects certain developments in each of our segments. At net2phone, our initial guidance made at the beginning of the year was predicated on the assumption that increased investment in AI product development would pressure adjusted EBITDA growth. It has not worked out that way. The net2phone team has been extraordinarily disciplined and made excellent progress thus far this fiscal year developing and refining its AI offerings with only modest increases in spend. That approach drove a 37% year-over-year increase in adjusted EBITDA to $3.9 million in the second quarter, a stronger increase than we anticipated.

For the remainder of this fiscal year, we expect net2phone's adjusted EBITDA growth rate to moderate somewhat as the increased investment in growth initiatives during the second half of the year is expected.

At BOSS Money, federal immigration policies and the new federal tax on remittances that took effect on January 1 have had a massive impact on the remittance industry. No question. But the impact has been felt primarily on transactions originated at retail agents rather than those initiated through a digital channel. As such, IDT has benefited from an accelerated rotation from higher revenue, but lower margin with the charter transactions to relatively much lower revenue but higher margin digital channel transactions. This rotation has also been accelerated by our decision to maximize near-term cash generation at BOSS Money Retail.

As a result, our higher-margin digital channel transactions increased at 17% year-over-year. That helped to drive a $0.15 increase in fee tax segment gross profit in the second quarter. We are also achieving significant cost advantages as the money business continues to scale, specifically by negotiating better terms without payout agents as well as by continuing to integrate AI into our back office operations.

The combination of stronger GP and more efficient operations drove a 44% increase in adjusted EBITDA compared to a year ago, well ahead of the pace we had envisioned in our original guidance. At Traditional Communications, we once again were very pleased by our ability to extract more cash from our telecom businesses. To date, this year, our BOSS Revolution calling business has been a true standout. Revenue is down by double digits that we did expect and continue to foresee going forward, but gross profit has been rocksteady over the past year. The BOSS Revolution team has done an amazing job developing and bringing to market international prepaid call plans that have significantly improved the unit economics of this business and helping traditional business adjusted EBITDA to decline by just 3.5% in the first 6 months of the year compared to the same period a year earlier, which represents a lower rate of decline than we had expected in our original guidance.

Finally, at NRS merchant services and SaaS fee revenue outperformed our expectations. But as Shmuel mentioned, the broader market softening in CPM rates in certain segments of our advertising markets offset those gains so that adjusted EBITDA remains on track with our original guidance to achieve our forecast range of 20% to 25% growth for fiscal '26.

To sum up, overall, we are very pleased with our financial results so far this year and are continuing to build on our momentum. Now Shmuel and I will do our best to answer your questions. Operator, back to you for Q&A.

[Operator Instructions] Our first question is from Inigo Alonzo with Stoic Capital.

I would like to ask 4 questions. I'll start with NRS. The first one is -- well, a couple of questions on NRS. So are we going to see the monthly report again? We haven't seen the release for this year? And then in the past, you have mentioned how the opportunities for growth are ample. And I was wondering if you could provide some color on the execution level at the group in this quarter for those opportunities and maybe some color on why SG&A went up and advertisement picked up a little bit from last quarter.

On the first question, why the NRS release didn't go out? I don't know. I'd have to check.

Probably tomorrow or the day after.

And as far as your second question on the pickup in SG&A, again, I would say it's probably a couple of different things. There's no one answer, unfortunately. One is maybe I should be watching them a little closer. Number two is that we are sort of beginning to sell a new product inside of NRS and we've done some hiring sort of in advance of of it coming out. And that has probably led to some increase in SG&A. And the third piece is, I would say that probably a larger percentage of our sales came through, through resellers recently, and they are both slightly higher percentage goes back to them. So I think that those are probably the 3 main effects.

If I had to -- did I miss one of your questions?

Yes. The other one was on dynamics and if you can give some color on those opportunities that you have been working on.

I mean, again, we continue to work every day to try to increase our advertising sales. As you know, we've had a couple of different challenges, including partner that we worked with for quite some time that's no longer in business. But I think that, overall, they're doing their best to get through this period. I think that going forward, we're going to do a much better job of really connecting the data that we have with the ads that we're trying to sell. And we think that that's going to be a much bigger contributor to volume going forward. Unfortunately, like it wasn't yet a big enough contributor, but we expect that to be what helps NRS ads turn the corner.

Okay. On BOSS Money, obviously, this was an important release because it was the first month of January included in the results, and that is after the tax change. So we have seen a revenue decrease quarter-over-quarter, which is logical because you have seasonal promotions that you ran in the winter, and you are probably trying to get customers. So part of it might be due to customer acquisition cost.

I would appreciate color on, obviously, the surveys that we have done in the markets, so see that immigrant communities are echoing about this tax transaction, and they are adapting quickly to minimize their cost in remittances. So can you provide some of the picture of how many new users are you getting compared to what it has been in the past and maybe explain that revenue decrease quarter-over-quarter? Is it due to increased competition from retail players going digital? Or is it purely due to customer acquisition costs?

I'll let Marcelo answer it a little bit more thoroughly. But I mean one thing I'll say is that we had a weaker November and December than we had planned for. Frankly, we don't know why. Just it was just weaker than we expected. January picked up quite dramatically, and it's picked up since then as well. But I'll let Marcelo answer.

Yes, Yes, Shmuel is right. I mean since the remittance tax kicked in, in January, we saw digital transactions increased significantly. And that impacted Q2 by only 1 month. Now if you go into Q3, we continue to see a very nice uptick in digital transactions during February and now you're going to March. I mean just we ourselves are still trying to better determine how significant the remittance tax is going to be impacted the dynamics. There is no question that we are seeing some of our retail customers migrating into our app. So some of the apples on our apple tree are moving to digital. But I think more than that is that I think we are picking up apples with apple of some other players as well and adding those apples into our digital offering. So -- and that's driving digital transactions.

For example, this past week was our third best week ever in transactions for BOSS Money behind just the week of Christmas and the week of Mother's Day, right, which typically are the tons we, right? So in general, March, you should have nice uplift seasonality. We've seen that in previous years.

So it's a bit early to tell. We also are trying to get our hands around how strong this shift to digital is going to continue to be. A bit too early to tell. But so far, it's been good sailing since the tax kicked in.

Really good. A higher picture question related to this quarter performance. In 2021, you acquired a minority stake in Marcus Park. That company recently turned profitable. I was wondering what's the plan with Marcus Park. Do you have any call options to acquire the full business? Is it planning to go public in the future? How do you see that investment today?

I don't think that I can really comment on that. I mean I'm a Board member, and I wouldn't feel comfortable commenting on their business without their authorization to do so.

We have a minority stake in the company.

Okay. And the last one. Last quarter, you mentioned how on the M&A front, you were planning your next big move. Do you have any updates on the future in terms of M&A and if those conversations are still progressing adequately?

Not right now.

[Operator Instructions] We have a question coming from William Van with Coriant.

Congrats on the quarter. My question -- first question relates to NRS. Just wondering if you guys give us some commentary just on the general single-store operator, convenience bodega market. Like what trends are you guys seeing? I know in the past, it's been mentioned that there is a little bit of an effect in terms of store traffic from the immigration policies. Has that changed? Are you seeing any trends or any type of commentary you can give on the economics around those businesses and what the NRS side is seeing? That would be helpful.

Yes. I mean, I think ultimately, what drives the economics of the single retailer that we service is probably a lot less about the immigration issue. Now that could be a factor. Maybe certain markets in certain location. By and large, I think it's much more a reflection of the larger economy on the side of the customer pocket, affordability. So I think that inflation and other measures of customer demand, a much more of a factor impacting how the retailers are doing than the immigration side.

And so far, over the past few retail report that we put out on a market basis, now we have seen that the retailers continue to grow the businesses that are now quite nice percentages. So I think that overall, when you look at the at our 35,000-plus retailers. I think that category mains quite strong.

Okay. Good color. Another question on BOSS Money. Nice growth in the quarter. It sounds like you mentioned that the digital transaction business might be accelerating maybe in the second quarter. So just wondered if you could give some color on that. And also, what do the competitive dynamics look like in the business. There are some other digital first ran players that have shown a really good growth in their previous quarter in their filings as well.

So just if you could comment on the competitive positioning, thoughts on investments in that business in terms of increased possible marketing to compete with those players. How do you guys think about that?

I mean, again, as we, I guess, answered in the last question, it's definitely accelerating. I mean in terms of competition, we have some very strong competitors, both from the traditional players as well as only digital players. And I'm sure that they're also benefiting from the change from a retail-driven business to a digital-driven business. That being said, I think that we really do have an excellent app and an excellent experience for our customers, and we received probably by at least some measurements, the highest ratings of any app in the U.S. And we think that there's a reason why our customers come to us and stay with us.

And our pricing is extremely competitive. The experience, as I said, is extremely good. If I were looking for a money transfer service myself, I would use BOSS Money. So that being said, we do have strong competitors, and it's a competitive market. But we are spending, I would say, probably also more acquiring customers than we have in the past just because we have been doing a good job bringing on customers, so might as well spend money to get more of them and keeping them.

I would just add what I just mentioned in my remarks, something to bear in mind is that, as you know, revenues at retail are significantly higher than revenues that are derived digitally. I think this is for relative grew for other players in the industry as well. And the reason being is that when we sell something at retail, we charge a much higher fee because usually half of that fee then goes back to the retailer, either cost of goods sold or something like that.

So in general, revenue per transaction is much higher at retail than in digital. But at least for us, our digital net margins I think is higher than retail. So to some extent, you're seeing that dichotomy that, on one hand, our revenues continue to grow because of digital, but maybe not as fast as they used to. But some of it is because the retail revenues are coming down, which is almost 2x as high as our digital revenues. But at the same time, you see our EBITDA growing at a much faster clip because the margins at digital are so much higher.

Awesome. Great color. Last question. So I was definitely pleased to see the buyback this quarter. Just in terms of capital allocation, the buyback of [ $15 million ] or so, definitely a great first step. But if I'm thinking about the businesses, you got some really cash in your businesses here, the 3 high-growth businesses, plus even the legacy business. And so the current capital allocation plan, it's great, but doesn't necessarily put a huge dent in the cash position. So how do you guys think about going forward, is it do buybacks got to keep the cash where it is right now and maybe wait for a bigger opportunity for M&A transaction? Or do you expect buybacks to eventually sort of start eating away at the large cash position that you have?

I would probably say the first rather than the second. I don't expect cash to materially decline from where it is. I think we prefer having more cash available for lots of different purposes, including potential acquisitions. That being said, as you're pointing out, the businesses are very cash generative, and we intend to continue to purchase back shares depending on the price more or less opportunistically. And we increased the dividend this quarter, as you know. And we try to be as responsible as we can.

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

Thank you.

Good evening. Welcome to the IDT Corporation's First Quarter Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] Please note, this conference call is being recorded.

I will now turn the call over to Bill Ulrey of IDT Investor Relations. Bill, you may begin.

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 3 months ended October 31, 2025. After their remarks, they will be happy to take your questions.

Any forward-looking statements made during this conference call, either in their 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 in 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, adjusted EBITDA margin, non-GAAP earnings per share, NRS' Rule of 40 score and adjusted net cash provided by operating activities. Schedules provided in the IDT earnings release reconcile these non-GAAP measures to their 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 a Form 8-K with the SEC.

Now I'll turn the call over to Shmuel for his comments on the quarter's results.

Thank you, Bill. And thanks, everyone, on the call for joining this evening. IDT delivered consolidated revenue growth and record levels of gross profit, adjusted EBITDA -- and adjusted EBITDA in the first quarter. NRS led top line expansion, while all 3 of our growth segments reported strong bottom line results. Our traditional communications segment again provided steady cash generation. NRS recurring revenue increased 22% year-over-year, helping to drive a 35% increase in income from operations and a 33% increase in adjusted EBITDA.

This quarter, we continue to launch and build out innovative premium services, delivery integrations, couponing and product data scan programs, to name a few. Our premium offerings are becoming important growth drivers and factored into the large increase in average recurring revenue per terminal this quarter. There is tremendous opportunity for additional long-term growth through innovation, both in NRS' current and in adjacent markets.

At BOSS Money, our digital channel continues to outperform retail and that churn may accelerate as implementation of the new federal excise tax on cash remittances begins on January 1. The Fintech segment's income from operations and adjusted EBITDA nearly doubled year-over-year, aided by BOSS Money's increasing operating leverage and enhanced profitability of other smaller Fintech initiatives. Our push to integrate tailored AI and machine learning into BOSS Money customer service and fraud detection activities have helped to significantly improve unit economics. Looking ahead, we will soon introduce the first integration of the BOSS wallet enabling our U.S. customers to share money and receive rewards.

During the quarter, net2phone began offering its AI agent to both our existing and new customers and added our Coach AI solution at quarter's end. Increasingly, our customers are ordering multiple net2phone offerings to enhance their operations and streamline workflows. As a result, we have pivoted from stand-alone product offerings to holistic solutions comprised of multiple offerings tailored to customers' communications and workflow needs. This approach plays net2phone's product and distribution place to net2phone, product and distribution strengths and we are very excited about the potential as we continue to add new AI solutions.

On a final note, the Delaware Supreme Court and ruling issued yesterday affirmed the decision of the Court of Chancery dismissing all claims against IDT in the straight at class action suit. And we are very pleased that this case has now been favorably resolved. I don't usually do this, but I would like to thank a couple of people in particular. I would like to thank [Jason Seronik] and [Paul Federico] and [Rudy Catch] as well as our own [indiscernible]. I would also want a sad note, I like to remember our esteemed colleague, [Susie Silom], who led the data of the division of NRS and worked tirelessly for NRS even while very sick and loss of pain and unfortunately, has departed.

I will wrap up by thanking everyone on the IDT team for their hard work and another great year and wishing them and all of you on the call a very Joy's holiday season.

Now Marcelo will discuss our financial results.

Thank you, Shmuel. My remarks on the fourth quarter of our fiscal year 2026, we'll focus on the year-over-year comparisons to set aside seasonal impacts on our business.

From a financial perspective, this was a terrific quarter, highlighted by good top line growth, record gross profit and record adjusted EBITDA and adjusted EBITDA margin. Consolidated revenue increased 4% to $323 million, driven by our 3 growth segments: NRF, Fintech and net2phone, which together grew by 16%, with particularly strong contributions from NRS and Fintech. Consolidated gross profit increased 10% to a record $118 million for a gross margin of 37% as we continue to benefit from the increasing contributions of our 3 higher-margin growth segments relative to that of our low-margin traditional communications segment.

Consolidated income from operations increased to $31 million, a 31% year-over-year increase. Adjusted EBITDA and adjusted EBITDA margin also hit record levels at $37.9 million and 11.7%, respectively. EBITDA less CapEx totaled $32.1 million in the first quarter, a 30% year-over-year increase and also an IDT all-time high.

EPS increased by 31% or $0.21 to $0.89 per share on both the basic and diluted basis. Non-GAAP diluted EPS also climbed by 32% to $0.94 from $0.71.

As Shmuel pointed out, the big driver in the first quarter was again our 3 growth segments. Together, they contributed $103 million in revenue, equal to 32% of our consolidated revenue compared to 29% a year earlier. But because the average gross margin is 66% compared to 18% in our traditional communications segment, they provide tremendous operating leverage as the revenue contribution increases and the cost structures continue to be optimized.

Adjusted EBITDA from NRS, Fintech and net2phone combined totaled $21.4 million in the first quarter, a 50% increase from the first quarter of fiscal 2025. Together, they now represent 57% of our consolidated adjusted EBITDA compared to only 48% 1 year ago. Because these segments still generate less than 1/3 of our revenue, that rotation from low-margin businesses to higher ones still has a long way to run.

This being said, given the quite solid and consistent profitability results delivered by our traditional communications segment, we believe that the largest segment of ours will continue to be a major contributor to our adjusted EBITDA generation for years to come.

Now let's take a closer look at each of our segments. At NRS, results were highlighted by the very strong increase in the monthly average recurring revenue per terminal to $313 from $295 in the year ago quarter as a result of the strong revenue growth in Merchant Services, which is up 38% and SaaS fees up 30% that more than offset the 15% decline in advertising and data revenue. Merchant Services revenue this quarter continue to benefit from consumer and retail trends that we believe will drive long-term increases in payment processing revenue per account. Overall, NRS's recurring revenue climbed 22% to $35 million. Income from operations in the first quarter increased 35% to $9 million, primarily reflecting a 21% increase in gross profit, while adjusted EBITDA increased 33% to $10.3 million.

In our BOSS Money remittance business, revenue growth at our dominant digital channel, which generated 84% of our transactions during the quarter was 20%. Although revenue growth has slowed, we continue to take market share from our peers, many of whom especially the retail centric providers have seen revenues from U.S.-based remittances decrease in recent quarters.

Income from operations in the Fintech segment, which includes also our Gibraltar-based bank and other smaller financial businesses and offerings increased 97% to $6 million, and adjusted EBITDA climbed 87% to $7.5 million. These exceptional increases reflect the reduction in our transaction cost structure that machine learning and AI are providing the increasing operating leverage of the business and the improving profitability of the other businesses we've seen in our Fintech segment. Fintech's adjusted EBITDA margin climbed to 18%, and BOSS Money as a stand-alone entity would likely have achieved several percentage points above that, an impressive accomplishment that stacks up favorably in comparison to the larger long-established players in the remittance industry.

With the recent launch of its AI offerings, net2phone is transitioning its focus away from the per seat metrics we have traditionally used as a key indicator of the performance of this business. As Shmuel just noted, net2phone customers are now increasingly looking for communications and operating solutions comprised of multiple orderings. So in order to better capture and report this new dynamic, over the next year, net2phone will begin reporting new customer-based KPIs that more meaningfully attractive performance of customers of customer economics as opposed to post economics.

For now, however, seat growth remains a key performance indicator. And this quarter, seats increased 7% to 432,000, while revenue increased 10% on a net reported basis and 9% on a constant currency basis. Revenue growth outstripped seat growth in part because of some nice win for our higher-value CCaaS offering.

Income from operations increased 94% to $2 million in the first quarter, while adjusted EBITDA increased 44% to $3.6 million. EBITDA less CapEx increased 104% to $1.9 million. Net2phone was able to achieve all of this, while at the same time ramping up its investment in strategic AI technologies. Looking ahead, net2phone expects to further increase its investment in technology development as we build out integrations and features for new verticals, such as health care.

For our traditional Communications segment, this was another very good quarter, exceeding our expectations. Income from operations again increased up 1% year-over-year to $16 million, adjusted EBITDA increased 2% year-over-year to $18.9 million as modest decreases in gross profit were more than offset by our ongoing efforts to reduce OpEx in our legacy paid minutes businesses. Adjusted EBITDA less CapEx for this segment increased 1% year-over-year to $17.3 million, indicating once again the durability of this segment's free cash flows.

Turning to our balance sheet. At October 31, 2025, IDT held $220 million in cash, cash equivalents, debt securities and current equity investments. This represents a decrease of $34 million compared to the $254 million held at July 31. This reduction mostly reflect the fact that our first quarter fiscal '26 ended on a Friday compared to last quarter, which ended on a Wednesday. As I have mentioned in previous calls, as part of our weekly process of funding, weekend transactions for our BOSS Money remittance business in any given week, our highest cash balances are typically on Wednesdays and our lowest on Fridays.

During the first quarter, IDT also repurchased $7.6 million in stock. We expect to opportunistically buy additional shares during the remainder of our fiscal year and to return cash directly to our stockholders through our quarterly dividends.

To conclude, after generating $38 million in consolidated adjusted EBITDA this quarter, representing a 26% year-over-year growth, IDT is extremely well positioned to achieve our full year '26 adjusted EBITDA guidance of $141 million to $145 million, which would represent a 7% to 10% full year-over-year growth rate. For now, we will monitor Q2 performance and update our guidance when we report our next quarterly results, god willing, in early March.

Now Shmuel I would be happy to take your questions.

[Operator Instructions] Our first question comes from [ Anigo Alonzo ] with Maram Capital.

Congratulations on the 26% EBITDA growth and on the resolution of the [indiscernible] litigation. You have always been a really shareholder-friendly company and know that there is gone and as you wait for the M&A market to figure out over the first half of the fiscal year. I was wondering if we could expect any special dividend accelerated buybacks in the second half of the year or you still think that M&A is the way to go for that capital allocation.

I mean, on the M&A front, we're not looking at anything very large right now. unless something regulatorily changes in the market, I think we're sort of waiting to see how the effects of the tax on money transfers affect retail businesses in particular. On the NRS front, we're not looking at any major acquisitions, but we do have 1 or 2 small acquisitions in mind for them. And we're continuing to plan sort of our next big move, and we hope that it will be pleasing to our investors.

Okay. Another question, this one on additions of net payment processing accounts exceeding at the terminal count I was wondering if these additions are coming from businesses that do not require EOS. And if so, how relevant is a percentage of businesses to your revenue or it is coming from conversions.

No. It's coming from ones that require a POS.

Okay. And then in the prepared remarks, you comment on NRS, and you mentioned that there's tremendous opportunities for growth in pen markets. I was wondering what those adjacent markets are.

I mean there's a bunch of adjacent markets, some of which we've talked about in the past related to food service and related to international markets that we've yet to really launching with the exception of Canada. And there's lots of adjacent markets inside of the -- that are sort of specialties in spite of the businesses that we do already. I mean I can give you a bunch of examples, but you know most of them, whether or not it's hard work stores or CBD shops or there's lots of different verticals. I mean as I said, I can give you 100 different ones that if we build out a couple of small features for each one of them, they open up tens of thousands of stores each.

In the international market comments, do you think we could see other countries started to the IDT [indiscernible].

Yes. I mean, again, I can't say 100% that we have decided to go into more countries yet. We're looking at an acquisition outside the country that would accelerate that for us. But it's definitely on the road map. As I said, I'm not sure I can say it will be on the '26 road map, but definitely on the road map.

And the last one, this is on IDT Global. You have commented traditional exceeding the expectations, especially on the bottom line front and [indiscernible] commented on the initiatives to expand their bottom line but you have not commented on the record IDT global top line revenue. I mean, it's a record number for the last 2 years. And I know there's some seasonality to it, but if you could provide some color there, I would appreciate it.

Yes. I mean I think that they're doing a great job all around bringing lots of new and interesting solution to our carrier partners all around the world, whether or not it's SMS solutions, voice solutions, some of even our new AI solutions that we're using a net2phone are being, I'll say, offered to carriers as well. And they've really done a great job all around.

Yes. And [indiscernible], as we maybe have spoken before, when we manage our IDT Global wholesale carrier business, our account managers are incentivized to manage it in terms of generating maximum gross profit. on any quarter, revenues might go up or down depending on whether they chose the opportunities in a high revenue per minute country or a low revenue per mile country by high marginal margin.

So the IDT Global folks are doing exceptionally well in the sense that despite that the minutes business have been in decline now for so many years, they have consistently delivered what we look from a managerial perspective, about $9 million to $10 million of GP, gross profit, every quarter for now several years. despite the declines in the minutes, right? So the fact that the revenue has grown in the last 2 quarters. It's just a small indicator, okay, on the resilience of the business. And the revenues could come down, but the focus is really that the gross profit continues to be maximized as much as possible.

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

Good evening. Welcome to the IDT Corporation's Fourth Quarter and Full Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference call is being recorded.

I will now turn the call over to Bill Ulrey of IDP Investor Relations. Bill, you may begin.

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 3- and 12-month periods ended July 31, 2025. After their remarks, they will be happy to take your questions.

Any forward-looking statements made during this conference call, either in their 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, non-GAAP earnings per share, NRS' Rule of 40 score and adjusted net cash provided by operating activities. Schedules provided in the IDT earnings release reconcile these non-GAAP measures to their 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 a Form 8-K with the SEC.

Now I'll turn the call over to Shmuel for his comments on the quarter's results.

Thank you, Bill. IDT's fourth quarter capped off a strong fiscal year, highlighted by a full year double-digit adjusted EBITDA expansion at each of our operating segments. Combining to drive a 43% increase in consolidated adjusted EBITDA to a record $129 million. At NRS, Merchant Services and SaaS fee revenue drove the top line growth while NRS operating leverage continue to contribute to net margin expansion. In fiscal 2026, we expect that Merchant Services and SaaS fees revenue will again drive significant increases in revenue per terminal and adjusted EBITDA.

Also at NRS, we continue to work on several early stage initiatives, that true to our mission will help our retailers to prosper. In fiscal 2025, we began to integrate select retailers of DoorDash. Our retailers are thrilled by the new orders DoorDash is bringing to them. Building on this success, we are preparing to begin integrations with another large delivery service. NRS' data business, NRS Insights just signed a deal with one of the largest coupon providers in the country.

Once this deal is launched in calendar year 2026 our retailers will be able to offer digital coupons to their customers, helping their customers to save money while opening a new channel for our brand partners to engage with customers. BOSS Money's fourth quarter and full year results reflected strong digital channel which is now contributing over 80% of our remittance volume. The industry-wide customer-led migration from retail to digital provides us a large opportunity. In the year ahead, we expect to continue to build market share by increasing our marketing and cross-marketing efforts within the larger bus ecosystem.

While also expanding our reach through our integration with WhatsApp and deployment of a cross-border digital wallet. In our digital channel, the amount of cash or customers send increased by 41% in the fourth quarter, all transactions increased 34%, customers are sending larger amounts in fewer transactions. Last quarter, I mentioned that we would adapt our pricing to capture more of the upside and we have begun to do that, removing some discounts for larger transactions.

In our back office, our efforts to leverage machine learning and AI to reduce costs and improve the customer experience have been very successful, and we will continue to invest in AI-driven efforts to improve our remittance services and many other areas as well. At net2phone, we are very excited by the potential we see in the marketplace of AI-Agentic offerings and the progress we've made to date in developing and deploying these solutions. Already approximately 1 in 10 of our sales conversations includes an AI agent, and we have successfully sold and launched hundreds of agents already. Keep in mind that our [ Gentek.ai ] program is still in the [ warmup ] stage. We are playing -- we are not playing ball yet, but when we do, we expect to win a lot. As it becomes a key driver of net funds growth, our revenue model will gradually shift from a seat-based model to one based on usage that we expect will generate significant revenues at high margins.

In fiscal 2026, we will focus on building out net2phone's AI agent and coach product, our data-driven coaching agent and deploying tailored solutions for specific industry verticals, including offerings for hospitality and medical operators. With this investment, we believe that by year-end, 30% or more of our sales will include one or both of these even as we continue to steadily expand our base of UCaaS and CCaaS customers.

To that last point, we have already picked up momentum with several large contact center wins to start the new fiscal year. In our traditional communications segment, IDT Digital Payments business and BOSS calling both continue to benefit from our efforts to streamline operating costs, which is helping us expand margins Meanwhile, we continue to operate BOSS calling and IDT Global, both of which participate in the international long distance minutes business for maximum cash flow efficiency. Across IDT, we expect to build on the considerable progress we made during fiscal 2025 with top line growth and stronger cash generation.

In all our markets, consumer attitudes, government policy and/or technology are driving rapid change, and we are working hard to capitalize on the exciting opportunities in each of our growth businesses. Backed by the cash on our balance sheet and strengthening financial performance, we will continue returning cash to our stockholders through opportunistic buybacks and our quarterly dividend. We will also continue to evaluate potential acquisitions. Our conservative approach to M&A had led to some almost acquisitions, we won't pursue deals at prices that don't make sense.

I am very excited about the potential for fiscal year 2026 because every day I see how enthusiastic our customers are about our services, whether they are NRS retailers expanding their businesses, hard-working customers supporting their families through BOSS Money and calling home or business is relying on NetPone to improve their business. please customers and operate more leanly and intelligently with services like coach that we offer them. Our ability to continue to outperform depends, of course, on the commitment and hard work of our employees around the globe who have been nothing short of amazing. Their expertise and professionals empower everything we do. Each day first and foremost grateful to them and to you, our stockholders, thank you for your continued support and guidance. We look forward to reporting to you on our progress in the fiscal year ahead.

Thank you. Now I will pass the call over to Marcelo.

Thank you, Shmuel. As always, my remarks on our fourth quarter and full fiscal year '25 results will focus on the year-over-year comparisons to set aside seasonal impact on our business. Our fourth quarter extended the strong year-over-year growth trajectory that we have followed throughout the fiscal year. Full year adjusted EBITDA totaled $128.7 million, so parsing of updated $126 million guidance. IDT increased consolidated revenue in Q4 by 3% as our 3 high-margin growth segments namely nares, fintech and net2phone, continue to expand the top line. Collectively, these fast-growing segments contributed 31% of total revenue in the fourth quarter compared to 27% year-over-year. It's fiscal 2025 revenue increased [ 2% ] and that's the first full year increase since 2021 and we present a significant inflection point, signaling the start of what we expect will become a long-term trend of sustained revenue growth and the increasing revenue from our growth businesses more than offset the continued declines in revenue from our 2 ILD voice businesses.

Each of our 4 reporting segments including traditional communications, increase the gross profit contribution for both the fourth quarter and full year, with our consolidated gross margins increasing 310 and [ 380 ] basis points, respectively. These increases reflect the continued expansion of our high-margin segments and in the traditional communications segment, the increased contribution from our digital payments and IDT global wholesale carrier businesses. Consolidated income from operations increased 9% to $21.9 million in the fourth quarter and increased 55% to [ $100.4 million ] for the full year. Adjusted EBITDA increased 33% to $33.4 million in Q4 and increased 43% to $128.7 million for the full year.

These increases were driven by the operational leverage of our 3 high-margin growth segments, which together generated over 50% of our consolidated adjusted EBITDA for the first time. And in the traditional communications segment by significant reduction in OpEx and improved margins on our mobile top-up offerings within our IDT digital payments business. At NRS, income from operations in the fourth quarter decreased 3% to $5.8 million, reflecting the impact of nonrecurring expenses while adjusted EBITDA increased 32% to $9.3 million. For the full fiscal year, income from operations at increased 28% to $27.8 million, and adjusted EBITDA increased 37% to $34.2 million.

Recurring revenue increased 22% in the fourth quarter to $32.6 million and increased 27% to $122.6 million for the full year. These increases were powered by [ mature ] services and [indiscernible] fees revenue growth, both of which exceeded 30%. And Advertising and data revenue decreased 8% year-over-year in Q4 and was roughly unchanged for the full year. We have now fully worked through the impact of the loss of a programmatic advertising partner and look forward to returning NRS advertising revenue once again into growth mode. A significant part of NRS' growth story has been the increase in monthly average recurring revenue per terminal, which reached $299 in the fourth quarter. Recurring revenue per terminal has benefited from increased penetration of our NRS Pay offering from our work to provide retailers with premium payment processing plants and SaaS plans and from the ongoing migration of consumers in general from cash to credit and debit card payment methods. We expect to drive continued strong gains in recurring revenue per terminal.

And as such, we believe this will help us sustain revenue growth in fiscal 2026 of 20% to 25% and adjusted EBITDA growth at an even faster clip. In our Fintech segment, income from operations increased 88% to $4.8 million in the fourth quarter and adjusted EBITDA climbed over threefold to $5.5 million. For the full fiscal year 2024, fintech generated a loss from operations of [ $100,000 ]. But now in fiscal 2025, income from operations surged to $15.4 million. Adjusted EBITDA increased over 16 fold from just $1.1 million in fiscal '24 to $18.4 million in fiscal '25. We have long said that our BOSS Money international remittance business could scale to achieve adjusted EBITDA margins comparable to industry peers in the 15% to 20% range. And in the fourth quarter for the very first time, it did enter that range when build on a stand-alone basis. Fourth quarter remittance transactions surpassed an annual run rate of $26 million, with digital transactions contributing 83% of all remittances.

The rate of transaction growth slowed somewhat as our customer set more money per transaction while cutting back on the frequency of those transactions. Digital transactions increased 28% in the fourth quarter, while the related dollar spend increased by 41%. As Shmuel mentioned, we have recently introduced fee pricing initiatives that will help capture more of the [ sand ] value growth upside. As those of you who follow the [indiscernible] space already know, a new 1% federal tax on remittances originated with cash or money of those is scheduled to go into effect on January 1, '26. We expect that the effect of the tax will result in an acceleration of the industry-wide migration of remittance transactions to the digital channel, which is effectively exempted from this new tax since customers must use a debit or credit card or ACH to effectuate a digital channel transaction.

The migration from retail to digital channel has been a key driver of both monies increasing profitability over the past few years as digital transactions generate approximately 20% more in gross profit per transaction than retail with lower overhead. For fiscal 2026, we are budgeting BOSS Money revenue and adjusted EBITDA to grow at percentage rates in the high teens. As we continue to win share from retail-centric providers. Adjusted EBITDA for the broader fintech segment is also expected to benefit from bottom line improvement in our Gibraltar-based bank operations and in other early-stage fintech initiatives.

Now moving to net2phone. In fiscal '25, net2phone continued its steady growth trajectory. Income from operations increased 74% to $1.5 million in the fourth quarter, while adjusted EBITDA increased 42% to $3.5 million. For the full year '25, net2phone income from operations increased 194% to $4.9 million, and adjusted EBITDA increased 54% to $12.1 million. Net2phone subscription revenue increased 8% to $22.2 million in the fourth quarter on strong revenue growth achieved in the U.S. On a constant currency basis, the rate of increase was slightly higher at 9%.

For the full 2025 years, [indiscernible] in dollar FX translation impacted financial results from our key South American markets, muting the positive impacts of continued seat growth there. For the full year, total net2phone subscription revenue increased 9% to $85.7 million. And in constant currency terms, the revenue increase was 12%. During Q4, net2phone continued its disciplined approach towards customer acquisition spending and fixed overhead cost management as they did in Q3, the net2phone team was able to hold total SG&A spend year-over-year, almost unchanged again this quarter, even while continuing to grow revenue.

Looking ahead to 2026, we are budgeting for a lift in top line growth based on sales of net phones, AI agent layered on our UCaaS and CCaS offerings. However, we also plan to significantly increase our investment both in Natform coach product development and in tailored Agentic AI offerings for specific marketing opportunities. As a result, net2phone adjusted EBITDA percentage growth rate in fiscal 2026 is budgeted to increase more slowly than revenue in the high single digits. And we expect these investments to significantly drive profitability in yields ahead. At our traditional communications segment, gross profit in the fourth quarter increased 2% year-over-year powered by IDT digital payments and supported by strong results from our IDT global wholesale carrier business. G&A expense decreased 1% year-over-year in the fourth quarter and decreased 6% or $5 million for the full year. as we benefited from cost-cutting initiatives previously implemented.

Likewise, technology and development expense decreased 5% for the fourth quarter and 7% for the full year as a result of streamlining efforts. All these cost reductions in combination with higher gross margins realized by our IDT digital payments business helped drive an 11% increase in income from operations to $15.4 million and an 8% increase in adjusted EBITDA to $17.6 million in the fourth quarter. For the whole fiscal 2025, income from operations increased 18% to $66.5 million, and adjusted EBITDA increased 13% to $75 million.

In 2026, we do not expect that either of the above factors will be meaningfully in play. And therefore, we expect that steady growth in our IDT digital payments business will be offset by the expected declines of our BOSS Revolution Calling and IDT global businesses. As such, we have assumed in our budget the traditional communications gross profit and adjusted EBITDA will both decline single-digit percentage rates this year. In terms of our financial condition, at July 31, our balance sheet measure of cash, cash equivalents and current investments increased $30 million from [indiscernible] to $254 million, reflecting the strong cash generation from all 4 of our reporting segments.

I will wrap up with a brief comment on capital allocation. Unlike in most recent periods, IDT did not repurchase any of its shares on the open market in the fourth quarter, not for most of Q3. During that entire period, IDT was very actively pursuing a highly accretive merger acquisition opportunity of a sizable compatible of one of our growth businesses. Our acquisition bid had it been accepted would have entailed utilizing significant available cash and also adding substantial leverage to our balance sheet.

Consequently, we refrain from repurchasing shares in order to further build our cash position. Ultimately, this opportunity did not come to fruition. Historically, we take an opportunistic approach to share buybacks, repurchasing more heavily doing share price dips that we determine to be macro driven. I expect that unless other sizable M&A opportunities come our way, we will continue to employ this approach towards repurchases in this new fiscal year, even as we continue to build our balance sheet and create a quarterly dividend. Now turning to our consolidated financial outlook for fiscal 2026. I want to begin by noting that beginning with our Q1 FY '26 earnings, we will report a revised measure of our non-GAAP adjusted EBITDA metric. To make our measure of adjusted EBITDA more directly comparable to those reported by our peers and to more closely reflect our cash flow generation, we will exclude noncash compensation expense from the determination of adjusted EBITDA going forward and will adjust prior period figures to the new measure for comparison purposes.

Noncash comp varies from year-to-year, depending on the timing of equity grants through our employee equity growth plan and specific management incentive awards. Over the past 4 years, Noncash comp averaged $4.2 million with a high of $7.4 million in fiscal '24 and a low of $1.9 million in fiscal '22. In fiscal '25 just ended, noncash comp totaled $3.1 million.

In our earnings release, we provide a reconciliation of our revised measure of adjusted EBITDA to the nearest corresponding GAAP measures for fiscal year '24 and '25. Now no matter which measure of adjusted EBITDA you use, however, we expect that IDT will deliver another strong increase in fiscal '26, building on our record fiscal '25 level. Utilizing the revised measure of adjusted EBITDA, IDT expects to generate a range of $141 million to $145 million in consolidated adjusted EBITDA for fiscal '26. Our estimate of $141 million to $145 million for fiscal '26 represents a 7% to 10% increase from fiscal year 2025 level of $131.7 million of similarly defined adjusted EBITDA, i.e., exclusive or noncash comp.

I would just like to mention in closing that we filed our annual 10-K report today. Earlier this year, as a result of meeting certain higher public float valuation metrics. IDT Corporation's SEC reporting status changed to become a large accelerated filer. As such, we now have a shorter filing deadline period of our -- for our 10-K report, which we are pleased to comply with.

Now operator, back to you for Q&A.

[Operator Instructions] First question comes from Emilio Alonzo with Morum Capital.

I have 3, 4 questions. I'll start with the money [ remittance ] business. The whole industry has been subjected to a lot of volatility. You have addressed the tax that is going to be starting next year. I was wondering what's the progress with the stable coins and the B-cell linked wallet that you mentioned last call, since that is being one of the topics creating that volatility?

Yes. As far as the [ wallet's ], we've actually already launched our wallet to some customers. I'll call it, it's in a beta phase right now. I think that over time, most transactions are going to happen using stable coins. And I think a large portion of of transactions that aren't spent right away, will end up being stored in wallet. Using stable coins, both because of volatility in currency markets in certain countries, as well as because of the cost and ease of moving funds in that manner. As far as how it's impacted us. To date, I can't yet say that it's impacted us in any material way. But I think that it's definitely going to be a bigger part of our future and the money transfer business in general. .

Another one on this topic that I forgot to ask, what's the WhatsApp launch date?

The WhatsApp launch -- is that what you asked? It's also launching in the next couple of days. It's starting with only existing customers. and we expect to launch it to new customers, I would say, probably within 30 to 45 days after. .

Okay. And then the stable coins, are you going to allow for those in Europe in the future?

Yes, 100%.

Okay. Then switching slightly the subject. You have mentioned quite a bit a sale acquisition. In the past, you also mentioned being very excited about the prospect that some of your competitors were offering and maybe the opportunity to acquire them. We had the acquisition of Intermex by Western Union this quarter. both of them together is going to be nearly 50% of the money sent to Mexico in the retail space. Do you think there's going to be regulatory concerns and this acquisition could be halted?

I can't comment on that. I'm not a regulatory expert. So I don't know. I would suggest if you have a question like that to ask your attorney?

Okay. I'll ask another one on this subject. And happy M&A prospects for IDT have changed after what has happened this quarter? Or do you see still very attractive valuations in the market?

I mean it's a complicated question to answer. I think that there are always new opportunities that come around I don't think that the market for money transfer companies has improved over this past quarter in terms of where they trade as a general group. I think the there definitely seems to be a large premium being willing to be paid for for certain acquisitions. So I think it's a nuanced question that I don't exactly have an answer to.

Okay. Organically, where are the main investments that you're going to make as IDT to grow your businesses this year? Those 3, 4, 5 items that are top of mind for you?

Yes. I mean that's a very broad -- question, and we don't like to give too much guidance to competitors on how we are going to acquire customers better and cheaper than they do. So I will say that we will continue to spend wisely and creatively to acquire customers at the lowest -- possible cost and with the highest benefit. And we're using all sorts of techniques to do those.

Okay. And the last question, you mentioned something of in net2phone of changing [ Fernet ] model to a usage model. Is that going to be for UCaaS? Or is that going to be for the AI agent?

I was more referring to the AI agents in general. I mean in terms of our UCaaS and CCaaS offerings, those will still be generally sold by the seat. And I was really referring to both our coach service as well as our genic services that we're offering.

Good. Thank you for the over delivering once again.

Our next question comes from William Vaughan with Corient. .

Congrats on the good quarter. My first question is about NRS. On the prepared remarks in the release you mentioned a little increase in the rate of churn or the churn rate in terminals. Do you have an idea of what's causing this churn? And is it folks just switching to other providers for us getting more competitive? Like any color you could give on the churn and and other reasons behind it would be helpful?

Yes. I mean I would say that there are are a couple of factors. Some of them are larger than other factors. I would say One thing is in certain small areas like there has really been a big uptick in immigration enforcement, and it's actually affected retailers in those areas to a point that they're -- to the point that they're closing. And those aren't really being lost to anybody else, those stores are being lost because they're out of business. I would say, definitely, because we've had success in the market, more competitors have come out of the woodwork and have tried to, I'll say, pretend that they can replicate our pricing and feature set. Most of the time, they deliver far less in savings and functionality, to retailers than what they claim, but they do have strong sales teams in some instances that has led to churn.

I mean, we do our best to win those types of customers back because most of the time, they're very dissatisfied after a short period of time. I would say 2 other maybe more recent issues that we've had is one is with some of the card schemes being maybe I'll say a little bit trigger happy on our merchants in terms of claiming that they're noncompliant with certain -- of the schemes rules. And even though they're not fines that are levied by us, they do influence our retailers to think that it's us. And it's -- I mean it's really an unfair thing to us, but it has hurt, I would say, churn.

And then we also had some technical issues with some of the equipment that we were purchasing and how it was interacting with some of our service providers. We seem to have gotten it, I would say, 95%, 99%, something in that neighborhood like under control over the past couple of weeks, but it definitely did lead to some spike in churn because essentially, like it was -- I mean, it's hard to to go into really the technical reasons of why it was happening. But it was leading to some inaccurate like reporting and retailers sort of believing that the amount of money that they were expecting the next day was different than what they were actually receiving. Again, as I said, it's mostly solid, but it did lead to a little bit of extra churn.

Just a little follow-up on one of those points. You mentioned new competitors. Would you say those new competitors are start-ups or legacy businesses and legacy players seeing some success you have in creating a product to try to compete?

I'd say it's a little bit of both. I mean, again, you're seeing the Clovers of the world pretending to be really good for convenience stores, which they're not. And you're also seeing some upstart companies that are, as I said, putting on a good, I'll call it, UI without really having much substance behind it. as I said, to try to convince retailers that they can do the same thing as we can, even though as I said, that's usually not the case, and we can usually win those stores back.

Awesome. So just another question. This would be on the BOSS Money business. So you guys have been growing really nicely in the past few quarters 30%, and a lot of other players in the digital remittance space have been growing well also like taking share from the retail or the physical channel. Do you think that you guys can continue this strong growth? I mean that's a pretty strong growth rate. Is this something that you think can be sustained for a longer period of time? Do you think this naturally over time, it was sort of settling up something a little bit more mature. I guess, what are your thoughts on just the overall growth rate of the digital channel, whether that's sustainable or not?

I would say a couple of things on it. I mean, I would say that, listen, there's no question that immigration policy in general in this country has shifted materially over the past couple of months. And that is definitely not a good thing for the remittance business, whether or not you're a digital remittance player or a retail player, you have effectively less customers choosing to live and work in our great country. And I think that there is definitely, I would say, a much more -- I don't have the real word, but maybe I won't even explain this one because I don't know how to explain it. But I say the other thing I would say is that I definitely think that it is becoming a more mature business.

And probably because of that, it will grow less than it has traditionally. That being said, there are definitely factors that I think are going to help the digital business in the short term. And there's initiatives that we're doing, whether or not it's in wallets or WhatsApp or other things that we didn't talk about today that are also going to enhance the growth of our business. And I think that all those things together, like I would say, I would probably, if I were betting then say that growth will slow a little bit. But not in a very big way.

But again, I think there are things that we don't know yet. What those effects will be. I think when this tax comes into place, that's going to bring a lot of people that were going into stores, looking for a good alternative to send online. And while I don't think we're the only good alternative, I think we are definitely one of the best alternatives for customers to use. And I think that we will probably get more than our fair share of customers that are looking for a new solution, I'll say it, to save money on the tax. That being said, the tax is not as great as it once was, plan to be. So might not have as much of an effect as it could have -- had the tax come out higher than where it ended up coming out.

And William as you -- because of all the things that Shmuel and the broader uncertainty around immigration, et cetera. So when we did the budget for this year, -- we -- as I mentioned in my prepared remarks, we budgeted that revenue would grow in [indiscernible] first of this year, okay? [indiscernible] now as the months go by, as to whether that is a good forecast or not. But from what we know at this point is now -- so it's a pretty good baseline for modeling growth.

Yes. I'm usually slightly more pessimistic than Marcelo, but I mean, in this particular case, I'm slightly more optimistic than Marcelo. But we shall see in the results.

Awesome. Last question, you mentioned looking at potentially larger acquisition in the past quarter, where you use up a lot of the cash and possibly borrow -- with that acquisition opportunity in passing just because you're being thoughtful and disciplined on price, which I appreciate. Do you -- are you focusing more on -- we do you lean more for smaller acquisitions, which you can grow once integrated with more resources behind it or more larger acquisitions like the one that you were just looking at. Like where would you say you're leaning more towards in terms of opportunities in the market?

I don't know if I would tell you which one I'm leaning more to. I mean, I would say that there's less large acquisitions come -- come around that are -- that would meet our qualifications to do them than smaller ones. So if I were -- going to guess, I would tend to say that we will go for smaller acquisitions rather than larger ones. That being said, I think that -- we have a great team at IDT. And because of, I'll say, our prudence, we've sort of decided to double down on building more things internally and acquiring more customers organically rather than looking to do so through acquisitions. So in the short term, I would expect more of an investment to be made in our own efforts, which traditionally have served us I would say probably better than most of the acquisitions, although there are some acquisitions that we've done that have been very good.

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

Good evening. Welcome to the IDT Corporation's Third Quarter Fiscal 2025 Earnings Conference Call.

[Operator Instructions]

Please note, this conference call is being recorded. I will now turn the call over to Bill Ulrey of IDT Investor Relations. Bill, you may begin.

Thank you, John. In today's presentation, IDT's Chief Executive Officer, Samuel Jonas; and Chief Financial Officer, Marcelo Fischer, will discuss IDT's financial and operational results for the 3-month period ended April 30, 2025. After their remarks, they will be happy to take your questions. .

Any forward-looking statements made during this conference call, either in their remarks or in 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.

Schedules provided in the IDT earnings release reconcile 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 on a Form 8-K with the SEC.

Now I'll turn the call over to Samuel for his comments on the quarter's results.

Thank you, Bill, and thank you, John, and Marcelo. IDT's third quarter was solid with strong year-over-year gains while slightly softer than our second quarter in part because of expected seasonal factors. Year-over-year revenue growth and continued expansion of each of our business segments, bottom line results drove a 133% year-over-year increase in consolidated income from operations, a 57% increase in consolidated adjusted EBITDA and a 290% increase in EPS. At NRS, recurring revenue increased 23% year-over-year, powered by a 37% revenue increase from NRS' largest vertical merchant services and a 33% increase in Saas, which more than offset a 12% decrease in advertising and data revenue.

Income from operations and adjusted EBITDA were both up 29% year-over-year, and the business has generated a record $32 million in adjusted EBITDA over the past 12 months. Looking ahead, we continue to focus on developing new offerings that leverage the NRS platform to enable retailers to compete more effectively with large retail chains. For instance, independent neighborhood retailers have not yet meaningfully benefited from consumer shift to online ordering and delivery. We are working to change that by integrating our network with online ordering and delivery platforms enabling retailers on the NRS network to provide hyper fast local delivery of sundries and prepared foods.

The 100 or so retailers we have signed up so far already receiving in aggregate over 2,000 delivery orders a week. BOSS Money, our remittance platform increased transactions by 27% and revenue by 25%. The growth rates have been impacted by the deliberate shift we made last summer to prioritize gross profit per transaction in our retail channel rather than market share and by a recent shift in customer preferences towards larger send amounts per remittance through fewer transactions.

The Fintech segment, which includes BOSS Money and early-stage fintech initiatives generated over $5 million in adjusted EBITDA compared to $244,000 in the year ago quarter. Looking ahead, BOSS Money is working on initiatives to drive sustained long-term growth and innovations that reduce cross-border friction and increase profitability. [ Metron ] continued its steady progress with balanced growth in the U.S., Brazil and Mexico. The team has done a great job growing its business while holding the line on overhead. NetSol's adjusted EBITDA margins reached 15% in the third quarter of '25. [ Meta ] phone began to offer its AI agents this quarter and customers are already seeing the benefits, including enhanced efficiency, even as we deploy AI agents refine for specific market verticals therefore -- we are preparing to launch another AI-powered service, which we internally refer to as Coach, we think will be very successful.

In our traditional communications segment, income from operations and adjusted EBITDA both jumped over 30% year-over-year to $17.3 million and $19.3 million, respectively, underscoring that this segment continues to be a long-term cash generator. At IDT, on a consolidated basis, we continue to scale our 3 primary growth businesses and our operating leverage in combination with the resilient contributions of our traditional communications businesses are driving expansion in IDT's cash generation and earnings. As we enter our budgeting season, we are fortunate to be in a great position to pursue next generation of exciting growth initiatives.

I want to wrap up by thanking the millions of customers who put some of their hard to earn dollars to work through our BOSS offerings and the business customers around the world who rely on us to enhance their businesses and communications. Our ability to provide these services depends on the dedication of our employees who have been executing and innovating on so many fronts and our stockholders who entrust us with their capital, I'm grateful for your continued patronage and support.

Thank you.

Thank you, Samuel. My remarks on the third quarter's financial results will focus on the year-over-year comparisons in order to set aside seasonal impact on our business. As Samuel just mentioned in his remarks, our third quarter was slightly softer than our second quarter and seasonality dose factor in our results. For 1 thing, our fiscal third quarter has just 89 days in years like this one, roughly 3% fewer than the 92 days in our other fiscal quarters.

In addition, our February through April fiscal third quarter is typically the lowest revenue quarter for NRS advertising as advertising budget spend by our customers trends higher over the course of the calendar year. Given that, we are extremely pleased with our consolidated financial performance in the third quarter. We again grew revenue year-over-year. Expansion of our fintech and SaaS businesses more than offset the expected top line decline of bottle evolution calling. Gross profit increased 15% year-over-year, reflecting increased contributions from each of our 4 reporting segments and was just under left [ Quad's ] record level.

Our gross profit margin reached another record high of 37.1%. The robust year-over-year increases in our income from operations, adjusted EBITDA and earnings resulted from the expanding operational leverage of our 3 high-growth businesses and from a positive contribution from our traditional communications segment. Traditional Communications adjusted EBITDA margin for Q3 grew to 9.2% from 6.7% 1 year ago. NRS had solid third quarter results. Merchant Services revenue increased 37% year-over-year, and SAT fees increased 33% powering increases of 29% in both income from operations and adjusted EBITDA.

NRS' financial results would have been even stronger had it not been for a few proactive steps we took during the quarter. Advertising and data revenue decreased $821,000 or 12% year-over-year largely because of our decision to limit sales to 1 of our larger programmatic platform clients in order to manage our receivables exposure with them. Exclusive of sales to that partner, the underlying advertising business grew nicely compared to the year ago quarter. We also decided in an abundance of caution to set up a bad debt expense provision of $1.4 million relating to amounts due from this client.

And finally, IDT exercised its right to purchase certain depot units from NRS employees during the third quarter. This was a win-win deal. It provided NRS employees with access to liquidity while enabling IDT to slightly increase its majority stake in NRS at an attractive valuation. The details of this exchange also have been fully disclosed in our previously filed 10-Q report. As part of this transaction, NRS incurred additional compensation costs of approximately $0.5 million during Q3.

At BOSS Money Remittance transactions reached another record $6 million with digital transactions to our BOSS Money and BOSS Evolution apps, again constituting more than 80% of our remittances. We did see a reduction in the rate of transaction growth primarily because of our decision to optimize gross profit or transaction in our retail channel, but also because our customers are now sending more money per transaction while cutting back on the frequency of those transactions. So while transactions and revenue increased 32% and 31%, respectively, digital send volume increased at an even higher rate, 40% year-over-year.

Adjusted EBITDA margin for the Fintech segment continued to expand during Q3 to 13%. As the Remittance business continues to grow into scale and that we continue to improve operational efficiencies, we expect adjusted EBITDA margins for BOSS Money when considered as a stand-alone business to reach 15% to 20% comparable to other industry players. Net fund continued on its steady growth trajectory, although funding exchange translation once again masked the strength of the underlying performance of the business on a year-over-year basis.

Subscription revenue increased 7% to $21.5 million in the quarter. However, on a constant currency basis, the rate of increase was higher at 11%. Net2phone continues to be disciplined in cost management and in customer acquisition spending. As they did last quarter, the net2phone team was able to decrease SG&A spend year-over-year again this quarter, even as its revenue continue to grow, thus enabling a 188% increase in income from operations to $1.4 million and a 50% increase in adjusted EBITDA to $3.2 million.

At our traditional communications segment, gross profit increased 5% year-over-year, powered by IDT digital payments and supported by strong results from our IDT Global wholesale carrier business. SG&A expense decreased 9.5% year-over-year of $2.2 million as we continue to benefit from previously announced and ongoing cost reduction initiatives and that helped drive a 39% increase in income from operations and a 30% increase in adjusted EBITDA. The strong growth and net margin results confirm our conviction that additional communications will be a robust and resilient contributor to our long-term profitability.

Our balance sheet saw a sequential lift in cash, cash equivalents and current investments to $ 224 million from $171 million at January 31. This quite large $53 million increase is highly impacted by our BOSS Money weekly working capital cycle. On any given week, most of the weekly remittance volumes typically take place over the course of the weekend. In anticipation of this ahead of each weekend, we must prefund the wallet of our disbursement payers, and we gradually recover the proceeds from the weekend transactions at the beginning of the following week.

As a result, for fiscal quarters ending on Thursday, Friday and Monday, we will typically show significantly less cash at quarter end than those ending on Tuesday or Wednesday. Such was the case with this quarter's April 30 quarter end, that happened on a Wednesday as compared to the previous quarter's January 31 quarter end, that happened on a Friday.

One final point on capital allocation this quarter. While IDT repurchased just a few thousand shares on the open market in Q3, the company did purchased 6 million of employee-owned shares that vested during the quarter in order to satisfy tax obligations triggered by the West.

I want to wrap up today's remarks by confirming our guidance for the full year fiscal 2025. Last quarter, I said that we expected to double our first half $63 million adjusted EBITDA total for the full year to $126 million. Given our results to date, we remain fully on track to meeting that goal. We are now in the midst of our fiscal 2026 budgeting process, and I look forward to providing guidance for our next fiscal year during our fourth quarter earnings call in late September.

Now operator, back to you for Q&A.

[Operator Instructions]

First question comes from Anil Alonzo with [indiscernible] Capital.

Marcelo. If I may, I would like to ask a question of each of the fast-growing businesses and another 1 in capital allocation. I'll start with NRS. Last quarter, you mentioned the additions of the salespeople. There's really interesting numbers in the report today. There is some 1 end record terminal revenue when it comes to only purely the product, the terminal itself. And we also see that happened despite a lower addition of net terminals.

So if you could provide more color on this item and the go-to-market strategy, how you're leveraging your agents versus the third-party distributors now that you have increased the staff? I would really appreciate that.

I think just I would say that more effort was put on bringing both new as well as existing retailers that don't yet have our merchant processing to take it this quarter. And that was definitely helped by many of the new salespeople that we brought on.

Okay. And are you switching towards higher sales costs, terminals, maybe kiosk? Or how would you explain the increase over than the terminal additions? And also if you can add more color on the NRS Pay accounts. That was a record number for Q3.

Yes. I mean, again, as I said, it's mostly related to just good sales, it wasn't really anything particularly substantively interesting that I could tell you other than that all around, both from distributors, our existing sales base as well as our new salespeople. They all had strong numbers this past quarter. In terms of the other types of, call it, form factors that we provide in the store. I don't think that those had a material impact this particular quarter.

Okay. Let me move to net2phone. So you launched the AI agent. And you are probably seeing the first customers on that end. And I would like to know more about what type of customers you're seeing, are those already net2phone customers or you're getting customers outside of that outside of those existing clients?

Most of the customers right now are existing net2phone customers. There's a couple of exceptions to that rule. But we are trying to make sure that it works perfectly for our existing customers, and then we will eventually add on outside parties as well.

Can you provide some color on what type of businesses are purchasing this AI agent.

We've really -- I mean, all different types of customers, everything from call centers to doctors' offices to accounting firms to collection companies, there's a bunch of others. Again, we're making a bigger effort in the future to sort of verticalize it into some of those areas we believe, accountants have a need for it. We believe that doctors' offices have a need for it and that we could build similar functionality for each of those ones same thing for call centers.

So we expect it to get a little bit more verticalized over the next year or so. But the sales are really starting to pick up quite a lot, and we're very excited about where it's going to go.

Is the focus going to be a small, medium enterprise.

No, it's going to be both. I mean we have users who obviously are going to be smaller businesses. And we have users that are talking about using millions of interactions a month.

Well, Okay. Then on BOSS Money, you started this quarter EBITDA program of the earnings program for the owners in the stores? I think you kicked it in some of your higher traffic stores in the southern part of the country. How did that go? How was the start of that program?

I'm not honestly sure about the results of the program so far. So I don't feel comfortable commenting.

Okay. And then on the last conference that you attended, you mentioned that M&A valuations are attractive. I saw that you recently acquired a really small company for NRS call or [indiscernible] something like that? I'm not sure how it is pronounced. Would we expect any more transactions in the remaining of the year or more bigger transactions? Or is this the 1 you were referring to in that conference?

No, that was not the 1 I was referring to in that conference. But I mean we are definitely looking at acquisitions. We believe that you have to pay the right price to really extract the most value out of an acquisition. So we don't chase things at any price. But if we think that there is good value to be created by having it inside of IDT, we definitely pursue it, and we are pursuing a couple of different acquisitions.

What type of technology did this last acquisition bring to the table?

If you're referring to the small one, [indiscernible] , it's a restaurant technology company.

Okay. And 1 last one, if I may. And the stock price is slightly higher, and you've been repurchasing a lot. Would you still be keen to repurchase shares? Or are you going to consider a one-off dividend in view that you are going to exceed the targets for the year most likely?

I would hand that question off to Marcelo. I mean what I would say is that I think that it's definitely not as cheap as it was when we were buying back earlier, I still think it's a great value. But our capital allocation is also dependent on whether or not we're doing acquisitions or not doing acquisitions, and we'll know more on that over, hopefully, the next quarter.

Yes. Samuel, as you just mentioned, we believe that repurchasing our stock is a good way of allocating our capital, and we have been doing so. At the same time, okay, we protect our cash to be able to deploy it towards growing the business towards acquisitions. As Samuel mentioned, the M&A environment right now is quite attractive, and we have been looking at a variety of opportunities in each 1 of our segments. So to the extent that we decide to deploy the cash in ways to create a lot of value to shareholders, we will deploy the cash towards growth and M&A. If not, we continue to repurchase stock.

One thing I can tell you for sure is we will not take on debt like some other companies do to take -- to buy back shares, like we buy back shares with excess cash, not with borrowed cash.

The next question comes from William Vaughan with Corient .

Marcelo, congrats on the quarter. Really good growth in NRS. It does look like the pace of POS terminal additions, payment processing accounts, merchant service revenue is slowing down a little bit. What would you diagnose the cause of this? Is it economy, industry dynamics, competition? Just any comments that you have on just a slowing pace would be helpful.

Yes. I think I don't know if I would agree that it's a slowing pace. I mean, I think that the numbers might not have been quite as strong as we had hoped as I sort of indicated in our release. But I think that the numbers are still very strong. And I actually -- I mean, again, just from being closer to like what's happening. A lot of the accounts that we recently signed on -- so what I'll call is like the benefit that you're seeing from added accounts don't really hit us in the past quarter, they hit us in future quarters. So I mean, I expect the fact that we've been growing better than previously, actually, to help us more in the current quarters as well as upcoming quarters after that. So I don't actually think that it's slowing down at all.

Okay. That's good color. A couple of follow-ups. Can you just describe how the food delivery the DoorDash and other services, how that actually works with the point-of-sale system? Is it something with the display where drivers can pick things up easier. I'm just trying to understand just walk through how it.

It's a variety of different elements to it. It's not a very simple product. But again, just because this is a call I'm more than happy to have a call with you after the call to explain it in more detail. But I mean, just because this is an earnings call to give you a very brief description of it, basically, all the orders come into our order management system. And then those are placed into queue on the POS or in the kitchen. And then as things are being either worked on or filled, those notifications are then going back to the different delivery companies and/or somebody who's picking up an order saying, hey, the order is ready or the orders in processor, et cetera, then come and get it.

I mean also on the pricing side, it allows retailers to have different pricing when you use delivery services or when you don't use delivery services that allows them to price it higher in the afternoon hours when people might be less sensitive to pricing than in the morning when they're more sensitive to pricing. There's a lot of features and functionalities that it has that help get more orders.

That's helpful color. Just a question on BOSS Money. The rate of growth has slowed overall, which had a really good growth in the digital channel in terms of remittances. And you mentioned profit maximization in terms of improving profit per transaction. But I was just wondering if those profit maximization efforts were really only on the retail side, versus the digital side on both.

No. It's on both. I mean what I would say is like listen, there is a dynamic happening. And we -- it's in our earnings release of where transactions are starting to become larger. So where somebody might have spent, let's say, 4 transactions a month previously, they're now sending 3 transactions a month. The amount per transaction has actually grown quite a lot, as we said, year-over-year, like our spend volume is up 40%. So if you had -- if that had been -- and I were called standard size of transactions a year ago, that would have been 40% growth. Because it's being put into larger transactions, I don't think that we completely optimized our pricing to sort of take into account that people are sending fewer transactions of larger volumes.

So we are testing different pricing in different regions to help, I'll call it, improve the profitability. And again, assuming that it doesn't hurt growth or retention in the markets that we're testing it, we'll roll it out in all of our markets across the country.

As far as new technologies, I mean, again, there's many different things that we're doing. I don't want -- as I said, this is an earnings call, I don't want to spend a lot of time talking about it, but everything from stable coin transfers, wallets in country that we'll be able to have a Visa card link to so people can spend money in country and we make money on interchange. So there again, a variety of different things being worked on that we think will both add to the profitability as well as really improve the user experience.

The next question comes from Alex Rohr with Emmet Investment Management.

On the NRS ads business, now that, that 1 partner has been turned off. What does the ads business look like on a run rate basis? Can you backfill that demand that was turned off? Or are we going to sort of be declining year-on-year for a little bit here?

Again, it's too soon for us to give you like a 100% answer to that question. I mean I would say that we are definitely seeing better numbers so far this quarter than we did last quarter. So our -- I'll call it our other ad partners are making up quite a fair share of it. It hasn't quite filled the total gap yet. But I'm hoping that the fourth quarter then we will have filled it back up. At the same time, we're also expanding our direct team, but I think Marcelo wants to say something, I apologize.

Just to correct, we have not completely shut down the programmatic partner, okay? We have just deliberately reduce significantly the amount of sales we do to them because of the current situation. Now that partner was a very large partner. A year ago, probably represented more than 20% of our total advertising revenue. Currently, represent probably about 5% now, a much, much, much smaller number. And the fact that the advertising revenues -- that partner have been growing quite nicely at about 10% or so for all the other program partners. We are almost there about being able to completely cover for that decline on that 1 partner by the growth in the other relationships. .

Okay. We have a follow-up coming from William Vaughan with Coriant.

Just had a follow-up on net2phone. Where do you guys think that the EBITDA margins on that business can get to over time, like in terms of a mature steady state?

It's not a simple question to answer because, again, we have a lot of new initiatives, particularly with AI agents and our coach product that should be launching this quarter. And those have -- we don't have a history, I'll say, of running those programs to sort of know where exactly the margins are going to shake out. My own personal opinion is that they should be accretive by a substantial amount. But it might take a year or 2 because there's a lot of costs in setting up those programs that don't necessarily, I'll say, hit the bottom line in a positive way.

Even though we charge for implementation, we charge a very, very low price for implementation. If you were to go and get IT help at BestBuy, it might cost more money than what we charge for AI help. And so essentially speaking, like we are subsidizing the launch of the product by lowering the cost of implementing it for our customers. And that will, over time, probably increase in price once we have more scale. And at the same time, once the customers have been implemented, the usage will hopefully go up quite substantially, and that will obviously add to our margins over time. If I know it's not a very quick answer to your question, but with more color.

Awesome. And just another one, circling back to BOSS Money. And I know that we're focused on profitable growth, and we always want it to be profitable. I do want to your thoughts on with the digital channel, it is a scale business. So profitability increases as you get more users and customers. What are your thoughts on actually increasing investment just to get more customers? Thinking about the landscape of how there's a lot of white space with these legacy players that are mostly retail like Western Union and others. There's just a lot of customers to grab there. What are your thoughts on...

I think it's a very fair point. And again, it's budget season, and we are definitely looking at our unit economics, our cost of acquisition, all the types of fun things that you get to try to figure out season. And what I would say is that like if we don't make any acquisitions in any of these businesses, like we will definitely grow organically at a much faster pace by investing more in acquisitions. And some times, I have to say that even though it's a slower and we'll call it hard or grind. I actually think that sometimes it's better to grow things organically than do acquisitions because acquisition is going to always have things that go wrong as opposed to like when you're doing it yourself, you kind of know what you're comfortable with and how to do it.

So yes, I mean, its budget season, and I would say that, that is definitely going to be part of our plan into next year.

And just to go back a little bit on your comment about net margin growth for net2phone. I think just important to bear in mind that you do your models that for the past few years, we have been investing roughly about $20 million to $25 million each year in customer acquisitions for net2phone and most likely, again, budget season, but most likely, we will continue to deploy those types of dollars as long as the IRRs for every 1 of our markets continue to be very attractive.

And as we continue to grow with that type of investment, you have seen over the past few quarters, how rigid we are in terms of maintaining our fixed costs in that state. So the business really scales nicely as it continues to grow. A few other things to bear in mind is that as the mix of UCaaS and CCaaS continues to change, that would affect the operating margins as CCaaS customers and CCaaS businesses operate at much higher margin than do our UCaaS businesses. And finally, as we hope to introduce and launch and grow agents and other AI initiatives, all of those things could make a big difference in terms of account ARPU growth that could lead again to enhancing the growth in the net margin.

Yes. I mean I'll just add 1 last thing to what Marcelo already said, which is like I think we're much more focused on net2phone going forward on revenue and gross profit and bottom line profitability than we are on seat growth and what have you. And it's -- even though you need both to get those results, like we're -- it's a change in mindset, and I think that it will be reflected positively in the business over the next year.

[Operator Instructions]

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