NEWARK, NJ — October 13, 2015: IDT
Corporation (NYSE: IDT) reported diluted earnings per share (EPS) of $0.05 and
Non-GAAP diluted EPS* of $0.25 on revenue of $405.8 million for the fourth
quarter of its fiscal year 2015, the three months ended July 31, 2015.
For FY 2015, IDT reported diluted EPS of $3.63 and
Non-GAAP diluted EPS* of $1.27 on revenue of $1,596.8 million.
FOURTH QUARTER AND FULL FISCAL YEAR 2015 HIGHLIGHTS
(Unless otherwise noted, results for
4Q15 are compared to 4Q14, and results for FY 2015 are compared to FY 2014). - 4Q15 revenue was $405.8 million compared to $420.7 million in 4Q14. Fabrix, which was sold in 1Q15, contributed $5.9 million in revenue in 4Q14. FY 2015 revenue was $1,596.8 million compared to $1,651.5 million in FY 2014. Fabrix’s revenue totaled $4.2 million in FY 2015 and $16.6 million in FY 2014;
- 4Q15 SG&A expense decreased to $54.1 million from $58.3 million. FY 2015 SG&A expense decreased to $222.2 million from $228.9 million;
- 4Q15 Adjusted EBITDA* increased to $12.4 million from $10.4 million. FY 2015 Adjusted EBITDA* decreased to $44.5 million from $45.3 million;
- 4Q15 income from operations increased to $7.2 million from $5.8 million. FY 2015 income from operations increased to $93.0 million, including a gain of $76.9 million on the sale of IDT’s interest in Fabrix and $8.4 million non-routine severance expense, from $29.8 million in FY 2014, including a non-routine gain of $0.8 million;
- 4Q15 net income attributable to IDT decreased to $1.3 million from $7.7 million. FY 2015 net income attributable to IDT increased to $84.5 million from $18.8 million, including the gain of $76.9 million on the sale of IDT’s interest in Fabrix;
- 4Q15 diluted EPS decreased to $0.05 from $0.33. FY 2015 diluted EPS increased to $3.63 from $0.82;4Q15 non-GAAP diluted EPS* decreased to $0.25 from $0.39. FY 2015 Non-GAAP diluted EPS* decreased to $1.27 from $1.41.
Shmuel Jonas, IDT’s Chief Executive
Officer, said, “Sales of our Boss Revolution international long distance
calling service continued to grow year over year and sequentially, albeit at a
slower rate than in recent quarters, reflecting its mature market penetration into
many of our key destinations and industry-wide competitive rate declines to our
key Mexican corridor. Boss Revolution’s
growth, in combination with our ongoing efforts to streamline operations and
reduce costs, helped us to deliver healthy increases in Adjusted EBITDA and
income from operations compared to the year ago quarter. Overall, our core
businesses performed to expectations, and Zedge reported a great quarter,
increasing revenue by 40% year over year and contributing a half million
dollars in Adjusted EBITDA,” Jonas concluded.
*Throughout this release, Adjusted EBITDA
and Non-GAAP diluted EPS for all periods presented are non-GAAP measures
intended to provide useful information that supplements IDT’s or the relevant
segment’s core results in accordance with GAAP.
Please refer to the Reconciliation of Non-GAAP Financial Measures at the
end of this release for an explanation of these terms and their respective
reconciliation to the most directly comparable GAAP measure.
4Q15 AND
FY 2015 OPERATING RESULTS BY SEGMENT
(Results are for 4Q15 unless otherwise
noted).
TPS
IDT’s Telecom Platform Services (TPS) segment accounted for 98.8%
of IDT’s revenue in 4Q15 and 98.5% in FY 2015.
TPS markets and distributes multiple communications and payment services
across four broad business verticals: Retail Communications, Wholesale Carrier Services,
Payment Services and Hosted Platform Solutions.
TPS’ quarterly minutes of use were
7.47 billion, an increase from 7.35 billion (+1.6%) in 4Q14 and an increase
from 7.15 billion (+4.5%) in 3Q15 reflecting, in part, the fact that the fourth
quarter has 92 days compared to 89 in the third quarter. For FY 2015, TPS’s minutes of use increased
(+0.1%) to 29.63 billion, compared to 29.59 billion in FY 2014.
TPS’ revenue was $400.8 million
compared to $410.1 million (-2.3%) in the year ago quarter and $379.1 million (+5.7%)
in the prior quarter. The year over year
quarterly decrease was mostly due to declines in Wholesale Carrier Services and
Hosted Platform Solutions revenues. The
sequential quarterly increase was driven by the greater number of days in the
fourth quarter and a robust increase in Wholesale Carrier Services’ revenue. For FY 2015, TPS’ revenue was $1,572.7
million, a decrease from $1,615.6 million (-2.7%) in FY 2014.
TPS Revenue by Product Category
(in
millions)
|
4Q15
|
3Q15
|
4Q14
|
4Q15 -4Q14
% Change in Revenue
|
4Q15-4Q14
% Change in Minutes of Use
|
4Q15 Revenue as a % of all TPS Revenue
|
Retail Communications
|
$182.9
|
$182.3
|
$181.0
|
+1.0%
|
(6.9%)
|
45.6%
|
Wholesale Carrier Services
|
$153.6
|
$135.7
|
$164.9
|
(6.8)%
|
+6.6%
|
38.3%
|
Payment Services
|
$55.7
|
$51.6
|
$53.2
|
+4.7%
|
n/a
|
13.9%
|
Hosted Platform Solutions
|
$8.6
|
$9.5
|
$11.0
|
(21.2)%
|
(12.2%)
|
2.2%
|
Total TPS
|
$400.8
|
$379.1
|
$410.1
|
(2.3)%
|
+1.6%
|
100.0%
|
TPS Revenue by Product Category
(in
millions)
|
FY 2015
|
FY 2014
|
% Change in Revenue
|
FY15-FY14
% Change in Minutes of Use
|
FY 2015 Revenue as a % of all TPS Revenue
|
Retail Communications
|
$729.1
|
$695.8
|
+4.8%
|
(1.8%)
|
46.4%
|
Wholesale Carrier Services
|
$596.8
|
$672.3
|
(11.2)%
|
+1.4%
|
37.9%
|
Payment Services
|
$208.3
|
$202.3
|
+3.0%
|
n/a
|
13.3%
|
Hosted Platform Solutions
|
$38.5
|
$45.2
|
(14.9)%
|
(8.0%)
|
2.4%
|
Total TPS
|
$1,572.7
|
$1,615.6
|
(2.7)%
|
+0.1%
|
100.0%
|
Retail Communications revenue climbed to $182.9
million in 4Q15 (+1.0%) and to $729.1 million for FY 2015 (+4.8%). Boss Revolution continued to grow, although at
slowing rates of increase. Sales of international
calling services on the Boss Revolution platform increased 7.6% year over year
and 1.8% sequentially. The year-over-year
and sequential revenue increases were driven by continued expansion of Boss
Revolution’s customer base and a shift within Boss Revolution to higher average
revenue per minute destinations. For all
of Retail Communications, the quarterly and full year increases in Boss
Revolution revenue more than offset continued declines in sales of traditional
disposable prepaid calling cards in the U.S. and overseas.
Wholesale Carrier Services’ revenue
decreased to $153.6 million (-6.8%) in 4Q15 and to $596.8 million (-11.2%) for FY
2015 as a result of lower average revenue per minute rates, partially offset by
higher minutes of use. Nevertheless,
minutes of use and revenue in 4Q15 compared 3Q15 increased at a rate well
beyond the baseline three percent difference in days comprising these two quarters. The full year-over-year revenue decrease reflected
lower average revenue per minute rates and a decline in Latin America of a pricing
opportunity resulting from local currency exchange rate disparities.
Payment Services’ revenue in 4Q15 increased to $55.7 million
(+4.7%) reflecting more aggressive pricing on international airtime top-up sales.
For FY 2015, revenue increased to $208.3 million (+3.0%) driven by the growth
of IDT’s international money transfer business, increased sales of
international and domestic airtime top-up, and revenue generated by IDT’s
Gibraltar-based bank.
Hosted Platform Solutions’ revenue decreased to $8.6 million
in 4Q15 (-21.2%) and to $38.5 million (-14.9%)
for FY 2015. The decreases were in-line
with expectations.
TPS’ direct cost of revenue as a percentage of TPS’ revenue was
84.3% in 4Q15, a decrease of 30 basis points year over year and an increase of 120
basis points sequentially. The year over
year improvement primarily reflects a shift in Wholesale Carrier Services’ traffic
to higher margin routes, while the sequential deterioration primarily reflects
a reduction in IDT’s retail rates to certain key destinations. For FY 2015, TPS’ direct cost of revenue was
84.1% of revenue – unchanged from the prior year.
TPS’ SG&A expense decreased to $49.4 million
from $51.2 million (-3.6%) in 4Q14 and increased from $48.6 million (+1.5%) in 3Q15. Expressed as a percentage of TPS’ revenue,
TPS’ 4Q15 SG&A decreased to 12.3% from 12.5% in 4Q14 and 12.8% in 3Q15. The year over year decrease reflects reduced
employee compensation expense after reductions in force were implemented
earlier this fiscal year, and reduced marketing expense compared to the year
ago quarter, which included a heavy advertising and promotional spend around
the World Cup. The sequential dollar increase
primarily reflects the incremental compensation costs of the three additional
days in 4Q15 compared to 3Q15. TPS’ SG&A expense in FY 2015 was $199.6
million, an increase from $198.8 million (+0.4%) in the prior year, reflecting
increased marketing and commission expense.
As a percentage of revenue, SG&A expense in FY 2015 increased to
12.7% from 12.3% in FY 2014, primarily as a result of the year-over-year
decrease in Wholesale Carrier Services’ revenue.
TPS’ Adjusted EBITDA increased to $13.4 million from
$12.0 million (+11.7%) in 4Q14 and decreased from $15.3 million (-12.4%) in 3Q15. The year over year increase was driven by the
reduction in SG&A expense compared to 4Q14, while the sequential decrease
primarily reflects lower average gross margins and higher SG&A expense. For FY 2015, Adjusted EBITDA decreased to $50.8
million from $58.2 million (-12.7%) in FY 2014 due to the decrease in revenue and
the increase in SG&A expense.
TPS’ depreciation and amortization expense was $4.3
million in 4Q15 compared to $3.6 million (+20.6%) in 4Q14 and $4.1 million (+6.3%)
in 3Q15. Depreciation increased due to higher
levels of capital expenditures in recent periods to support investments in new
products, including IDT Messaging, Net2Phone Office, and the Boss Revolution Calling
App. For FY 2015, depreciation and
amortization expense increased to $16.2 million from $13.8 million (+17.4%) in
FY 2014.
TPS’ income from operations increased to $8.8
million from $8.4 million (+5.0%) in 4Q14 and $5.6 million (+57.2%) in 3Q15. Severance expense was $0.2 million, nil and
$5.6 million in 4Q15, 4Q14 and 3Q15, respectively. For FY 2015, income from operations totaled $27.0
million compared to $45.1 million (-40.2%) in FY 2014. The year-over-year decrease
primarily reflects the decline in Adjusted EBITDA, severance expense of $7.7
million in FY 2015 compared to nil in FY 2014, and the increase in depreciation
and amortization expense.
CPS
Consumer Phone Services (CPS) sells local and long distance
services domestically in 11 states, marketed under the brand name IDT America. CPS has been in harvest mode since fiscal
2006 - maximizing revenue from current customers while maintaining SG&A and
other expenses at the minimum levels essential to operate the business. Results this quarter and fiscal year
conformed to expectations.
CPS’ revenue was $2.0 million
compared to $2.5 million (-21.9%) in 4Q14 and $2.1 million (-5.8%) in the prior
quarter. FY 2015 revenue was $8.6
million compared to $11.0 million (-21.7%) in FY 2014. CPS’ income from operations was $0.3 million
in 4Q15, compared $0.4 million (-37.8%) in 4Q14 and $0.3 million (-15.6%) in
3Q15. Income from operations in FY 2015
was $1.3 million compared to $1.8 million (-30.0%) in FY 2014.
ALL OTHER
All Other includes Zedge - a popular platform for mobile
phone consumers to obtain free customization content, IDT’s real estate
holdings and other small businesses. All
Other’s results previously included Fabrix, a software development company
specializing in highly efficient cloud-based video processing, storage and
delivery. Fabrix’s operations were
consolidated into IDT for all prior periods up to the first two months of 1Q15,
at which point Fabrix was sold and deconsolidated.
As of July 31, 2015 Zedge’s app, available on Android, iOS
and Windows Mobile, had surpassed 162 million cumulative installs, increasing
from 111 million (+46%) a year earlier and 149 million (+9%) at April 30,
2015. Zedge has averaged among the top
thirty most popular apps in the Google Play store in the U.S. for the last five
years and is currently in the top six most popular free apps in the iTunes
Entertainment category. As a result of
Zedge’s large, active user base, it offers advertisers, game developers,
musicians and artists a scalable, non-incentivized, user acquisition platform
with global reach.
Zedge’s revenue in 4Q15 was $2.4 million, an increase from
$1.7 million (+39.5%) in 4Q14 and from $2.2 million (+10.4%) in 3Q15. Zedge’s FY 2015 revenue increased to $9.1
million from $6.5 million (+38.6%) in FY 2014.
The year over year and sequential revenue increases were driven by
continued strong growth in users and impressions, and increased revenue per
impression. Revenue growth was robust
across both the Android and iOS platforms.
All Other’s revenue was $3.0 million in 4Q15, a decrease
from $8.1 million (-63.2%) in 4Q14. FY 2015 revenue was $15.4 million compared
to $24.9 million in FY 2014. (In 4Q14,
Fabrix contributed $5.9 million to All Other’s revenue. In FY 2015, Fabrix contributed $4.2 million
in revenue compared to $16.6 million in FY 2014.) In addition to the revenue
generated by Zedge, IDT’s real estate holdings, comprised of its public garage
in Newark and commercial properties in Newark, Piscataway and Jerusalem,
generated the balance of All Other’s revenue in 4Q15.
All Other’s income from operations in 4Q15 was $449 thousand
compared to $506 thousand in 4Q14, and $1.6 million in 3Q15. All Other’s income
from operations in 3Q15 included a gain on sale of IDT’s interest in Fabrix of
$1.2 million, reflecting adjustments to Fabrix’ working capital and estimated
transaction costs. Income from
operations was $78.0 million in FY 2015 compared to a loss from operations of
$1.7 million in FY 2014.
OTHER CONSOLIDATED RESULTS
Consolidated results for all periods presented include
corporate overhead. In 4Q15, corporate G&A
expense decreased to $2.3 million compared to $3.1 million (-27.1%) in the year
ago quarter and to $2.9 million (-19.7%) in the prior quarter. Corporate G&A expense was $10.9 million
in FY 2015 compared to $14.8 million (-26.1%) in FY 2014.
4Q15 net income attributable to IDT decreased to $1.3
million from $7.7 million in the year ago quarter and increased from $0.6
million in 3Q15. Net income attributable
to IDT in 4Q15 included income tax expense of $3.8 million compared to a benefit
from income taxes of $3.9 million in 4Q14 and $59 thousand in 3Q15. FY
2015 net income attributable to IDT increased to $84.5 million from $18.8
million. The full year increase primarily reflects the $76.9 million gain on
the sale of IDT’s interest in Fabrix.
At July 31, 2015, IDT had $150.6 million in unrestricted
cash, cash equivalents and marketable securities. Additionally, at that date, IDT
reported $91.0 million in current restricted cash and cash equivalents, which
included $87.6 million of customer deposits held by IDT’s Gibraltar-based
bank. Current notes payable, consisting
of a mortgage on real estate, totaled $6.4 million, which was paid on the
maturity date after the quarter close. Current
assets totaled $341.2 million and current liabilities were $348.9 million.
Net cash provided by operating activities during 4Q15 was $2.8
million, compared to $16.1 million during 4Q14 and $6.8 million in 3Q15. For the same periods, capital expenditures
were $5.7 million compared to $4.6 million and $8.9 million, respectively. For FY 2015, cash provided by operating
activities was $30.5 million compared to $45.7 million in FY 2014. Capital expenditures for FY 2015 totaled $28.6
million compared to $17.0 million in the prior year. The increase in capital expenditures during
4Q15 and FY 2015 was due mostly to costs related to the refurbishment of IDT’s headquarters
building at 520 Broad Street in Newark, New Jersey
DIVIDEND
On September 25th, IDT announced that on or about
October 15, 2015 it will pay a quarterly dividend quarterly dividend of $0.18
per share of Class A and Class B common stock for the fourth quarter of FY 2015. The dividend will be paid to stockholders of
record as of the close of business on October 7, 2015. The ex-dividend date was
October 5, 2015. This distribution is an
ordinary dividend for tax purposes.
IDT EARNINGS ANNOUNCEMENT
& SUPPLEMENTAL INFORMATION
IDT will host a conference call at 5:30 PM ET today, October
13th, beginning with management’s discussion of financial and
operational results, business outlook and strategy, followed by Q&A.
To listen to the call and participate in the Q&A, dial
toll-free 1-877-300-8521 (from U.S.) or 1-412-317-6026 (international) and
request the IDT Corporation call.
An audio replay of the conference call will be available one
hour after the call concludes through October 19, 2015 by dialing
1-877-870-5176 (toll free from the U.S.) or 1-858-384-5517 (international) and
providing the conference code: 10071762.
An audio replay will also be available by streaming from the IDT website
investor relations site: www.idt.net/ir
after the call concludes.
Copies of this release - including the reconciliation of the
non-GAAP financial measures that are both used herein and referenced during
management’s discussion of results - are also available in the Investor
Relations portion of IDT’s website.
About IDT:
IDT Corporation
(NYSE: IDT), through its IDT Telecom division, provides retail
telecommunications and payment services to help foreign born communities, under-banked
consumers, and small businesses communicate and share resources around the
world. IDT Telecom’s wholesale business
is a leading global carrier of international long distance calls. IDT also holds a majority interest in Zedge
(www.zedge.net), developer of the popular, eponymous app for mobile content
discovery and acquisition. For more
information on IDT, visit www.idt.net.
All statements above that
are not purely about historical facts, including, but not limited to, those in
which we use the words “believe,” “anticipate,” “expect,” “plan,” “intend,”
“estimate,” “target” and similar expressions, are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
While these forward-looking statements represent our current judgment of what
may happen in the future, actual results may differ materially from the results
expressed or implied by these statements due to numerous important
factors. Our filings with the SEC
provide detailed information on such statements and risks, and should be
consulted along with this release. To the extent permitted under applicable
law, IDT assumes no obligation to update any forward-looking statements.
Contact:
IDT
Corporation Investor Relations Bill
Ulrey william.ulrey@idt.net 973-438-3838
(Please see attached PDF of the complete earnings release for the financial statements and Non-GAAP reconciliation) |