NEWARK, NJ — December 8, 2014: IDT
Corporation (NYSE: IDT) reported diluted earnings per share (EPS) of $3.47 and
Non-GAAP diluted EPS* of $0.46 on revenue of $412.9 million for the first
quarter of its fiscal year 2015, the three months ended October 31, 2014. The 1Q15 results include a gain of $75.1
million on the sale of IDT’s stake in Fabrix Systems.
FIRST QUARTER FISCAL 2015 CONSOLIDATED HIGHLIGHTS
(Unless otherwise noted, results are for1Q15
and are compared to 1Q14). ·
Revenue decreased to $412.9 million from $420.7 million; ·
Direct costs decreased to $343.8 million from
$350.3 million; ·
SG&A expense decreased to $57.0 million from
$57.8 million; ·
Adjusted EBITDA* increased to $10.4 million from
$10.3 million; ·
Gain on the sale of interest in Fabrix Systems
of $75.1 million; ·
Income from operations increased to $79.6
million (including the gain on the sale of interest in Fabrix) from $7.3 million; ·
Net income attributable to IDT increased to $80.2
million from $3.5 million; ·
Diluted EPS increased to $3.47 from
$0.15; ·
Non-GAAP net income* increased to $10.5 million
from $7.4 million; ·
Non-GAAP diluted EPS* increased to $0.46 from $0.32; ·
Net cash provided by operating activities decreased
to $8.3 million from $11.0 million.
Shmuel Jonas, IDT’s Chief Executive
Officer, said, “In our core telecommunications business, I was pleased by the customer
base increase and revenue growth of our flagship Boss Revolution PIN-less
calling service. Zedge had a good
quarter, increasing revenue by better than 40% year over year to $2 million
while significantly increasing its user base. IDT’s bottom line this quarter benefitted substantially
from the sale of our interest in Fabrix Systems. After realizing a gain of $75 million on the
sale, the Board declared a special $0.68 per share dividend distribution during
the first quarter, and in light of our balance sheet strength and the continued
expansion of our Boss Revolution services, we subsequently increased our quarterly
dividend to $0.18 per share.”
*Throughout this release, Non-GAAP
diluted EPS and Adjusted EBITDA 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.
1Q15 OPERATING
RESULTS BY SEGMENT
(Results are for 1Q15 and are compared
to 1Q14 unless otherwise noted).
TPS
IDT’s Telecom Platform Services (TPS) segment accounted for 97.8%
of IDT’s revenue in 1Q15. TPS markets
and distributes multiple communications and payment services across four broad
business verticals: Retail Communications, Wholesale Termination Services, Payment
Services and Hosted Platform Solutions.
TPS’ minutes of use were 7.48
billion, an increase from 7.29 billion (+2.6%) in 1Q14. TPS’ 1Q15 revenue was $403.8 million, a
decrease from $412.8 million (-2.2%) in the year ago quarter.
·
Retail Communications’ revenue was $182.6
million, an increase from $172.5 million (+5.9%) in 1Q14. Sales of international
PIN-less calling services on the Boss Revolution platform increased 17.2% year
over year due to growth in the number of active Boss Revolution retailers and customers. Boss Revolution PIN-less growth more than
offset continued declines in revenue from the sale of traditional disposable
prepaid calling cards in the U.S. and overseas. Retail Communications’ revenue comprised 45.2%
of TPS’ total revenue in 1Q15.
·
Wholesale Termination Services’ revenue was $159.7
million, a decrease from $178.6 million (-10.6%) in 1Q14. Although
minutes of use increased by 3.3% compared to the prior year, the traffic mix
tilted towards lower revenue per minute destinations in 1Q15, as compared to
the previous year. In addition, compared
to the previous year, IDT found in 1Q15 fewer pricing shift opportunities in
Latin America resulting from disparities in local currency exchange rates. Wholesale Termination Services’ revenue
comprised 39.6% of TPS’ total revenue in 1Q15.
·
Payment Services’ revenue was $51.2 million, an
increase from $50.1 million (+2.1%) in 1Q14. The year over year increase is due
primarily to more aggressive pricing on international mobile top-up sales. Revenue
from IDT’s nascent international money transfer business was not yet material
although it contributed to the revenue increase. Payment Services revenue comprised 12.7% of
total TPS revenue in 1Q15.
·
Hosted Platform Solutions’ revenue was $10.3
million, a decrease from $11.6 million (-11.2%) in 1Q14. Within IDT’s cable telephony business, IDT
renewed multi-year contracts with key cable telephony customers in the second
half of fiscal 2014, but at lower rates, reflecting the long term decline in
the underlying costs of hosted telephony services. In addition, several of our other hosted managed
services operators are continuing to experience attrition in their subscriber
customer base. Hosted Platform
Solutions’ revenue comprised 2.5% of total TPS revenue in 1Q15.
TPS’ direct cost of revenue as a percentage of TPS’ revenue was
84.6% in 1Q15, an increase of 20 basis points year over year. The change primarily reflects a decrease in Wholesale
Termination Service’s average margin per minute of use, partially offset by the
growth of relatively higher margin Retail Communications revenue.
TPS’ SG&A expense increased to $51.2 million from $49.7
million (+3.0%) in 1Q14. Expressed as a
percentage of TPS’ revenue, TPS’ 1Q15 SG&A increased to 12.7% from 12.0%, due
primarily to higher personnel costs and increased marketing and advertising
expense. To somewhat constrain SG&A
expense on a go-forward basis, IDT downsized some sales and administrative
personnel in both Europe and the U.S. prior to the close of 1Q15.
TPS’ Adjusted EBITDA decreased to $11.0 million from $14.8
million (-25.8%) in 1Q14, primarily reflecting the decrease in revenue and the
increase in SG&A expense.
TPS’ depreciation and amortization expense increased to
$3.8 million compared to $3.2 million (+17.2%) in 1Q14, due to increased capital
investment in recent quarters in new products, including IDT Messaging,
Net2Phone Office, and feature-rich enhancements to the Boss Revolution app.
TPS’ income from operations in 1Q15 decreased to $5.7
million from $11.9 million (-52.4%) in 1Q14.
Income from operations in 1Q15 includes the impact of severance expense of
$1.5 million.. In 1Q14, income from
operations included a non-routine operating gain related to a legal matter of
$0.3 million.
CPS
Consumer Phone Services (CPS) sells local and long distance
services in the United States. 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.
CPS’ revenue was $2.3 million
compared to $3.0 million (-23.4%) in 1Q14.
Income from operations was $0.4 million in both the first quarter of FY
2015 and FY 2014. The results were in
line with expectations.
Zedge
Zedge owns and operates a
popular platform for mobile phone consumers interested in obtaining free, high
quality games, apps, and mobile phone customization content including
ringtones, wallpapers, and notification sounds.
Zedge’s app, available on Android, iOS and Windows Mobile, boasts more
than 120 million installs. Zedge has
averaged among the top twenty most popular apps in the Google Play store in the
U.S. for the last five years and is currently in the top three most popular
apps in the iTunes Entertainment category.
As a result of Zedge’s large, active user base, it is able to offer
advertisers, game developers, musicians and artists a scalable,
non-incentivized, user acquisition platform with global reach. IDT currently owns approximately 83% (69% on
a fully diluted basis) of Zedge.
Zedge’s revenue is generated by
selling advertising inventory across its apps and websites and from mobile game
installations on Android. Zedge’s
revenue increased to $2.0 million in 1Q15 from $1.4 million in 1Q14
(+40.9%). Zedge’s rapidly growing
Android user base and the introduction of Zedge on iOS during fiscal 2014 were
the key revenue growth drivers. As of
October 31, 2014, active Zedge installs were 55 million compared to 36 million
a year earlier.
Zedge’s SG&A expense was
$1.2 million compared to $0.8 million (+42.6%) in 1Q14, as Zedge continued to
expand its product and technology teams.
To this end the Company has been investing in several new initiatives
including social integration, new content types and marketing tools.
Zedge’s Adjusted EBITDA was $0.6
million, compared to $0.4 million in 1Q14.
Zedge’s income from operations was $0.3 million, compared to $0.2
million in 1Q14.
All Other
All Other’s results for 1Q15 include Fabrix, a software development
company specializing in highly efficient cloud-based video processing, storage
and delivery, IDT’s real estate holdings and other small businesses. IDT sold its majority stake in Fabrix in
early October 2014. Consequently, Fabrix’s operations were consolidated for
only the first two months of the quarter, at which point Fabrix was
deconsolidated.
All Other’s revenue was $4.8 million, an increase from $3.4
million (+39.9%) in 1Q14. All Other’s
income from operations was $76.2 million (which includes the $75.1 million gain
on the sale of interest in Fabrix), compared to a loss from operations of $0.6
million in 1Q14.
OTHER CONSOLIDATED RESULTS
Consolidated results in all periods presented include
corporate overhead. In 1Q15, Corporate
G&A expense decreased to $3.0 million compared to $4.5 million in year ago
quarter.
As of October 31, 2014, IDT had $183.3
million in unrestricted cash, cash equivalents and marketable securities. In
addition, IDT had $60.6 million in current restricted cash and cash equivalents,
which included $56.7 million in customer deposits held by IDT’s Gibraltar based
bank. Notes payable, consisting of a mortgage
on real estate, totaled $6.6 million. Total
current assets were $358.5 million and total current liabilities were $341.8
million.
Net cash provided by operating activities during 1Q15 was $8.3
million, compared to $11.0 million during 1Q14.
For the same periods, capital expenditures were $6.1 million compared to
$3.6 million.
DIVIDEND
In November 2014, IDT paid a special dividend of $0.68 per
share, $15.8 million in the aggregate, to holders of record of the Company’s
Class A common stock and Class B common stock as of the close of business on
November 14, 2014.
IDT has increased its quarterly dividend to $0.18 per share
of Class A and Class B common stock for the first quarter of its fiscal year
2015. The dividend will be paid on or
about December 19, 2014 to stockholders of record as of the close of business
on December 15, 2014. The ex-dividend date will be December 11, 2014.
Both distributions will be treated as returns of capital for
tax purposes.
IDT EARNINGS ANNOUNCEMENT
& SUPPLEMENTAL INFORMATION
IDT will host a conference call at 5:30 PM ET today, December
8th, beginning with management’s discussion of results, outlook and
strategy, followed by Q&A with participants.
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 December 22, 2014 by dialing 1-877-870-5176 (toll
free from the U.S.) or 1-858-384-5517 (international) and providing the
conference code: 10055971. The replay
will also be available by streaming from the IDT website investor relations
site: www.idt.net/ir shortly after the call concludes.
ABOUT IDT CORPORATION
IDT Corporation (NYSE: IDT), through its IDT Telecom
division, provides retail telecommunications and payment services to help
immigrants and the under-banked conveniently and inexpensively 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 a 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 |