15th Consecutive Quarter of Year-Over-Year Revenue Growth Increases Quarterly Dividend to $0.17 NEWARK, NJ — December 5, 2013: IDT Corporation (NYSE: IDT) reported diluted income per share of $0.15 and Non-GAAP diluted EPS of $0.32 for its first quarter of fiscal 2014, the three months ended October 31, 2013. Howard Jonas, IDT’s Chief Executive Officer said, “IDT continued to deliver solid results in the first quarter, our fifteenth consecutive quarter of year-over-year revenue increases led by IDT Telecom. We are raising our quarterly dividend from $0.15 to $0.17 per share to reflect our positive outlook for the business based on our continued strong bottom line results, improving balance sheet, and the cash generative power of IDT Telecom. Beyond our telecom and emergent payment services operations, we continue to be very pleased with the performance of Zedge and Fabrix and are actively exploring options to fully realize the value of Zedge for our stockholders. We expect to decide upon a course of action early in calendar 2014.” “I invite stockholders and investors to join us at our annual meeting of stockholders on Monday, December 16th, at 10:30 AM,” Jonas added. “It’s a great opportunity to meet the Company’s management and to ask questions regarding our business. Please check your proxy statement or contact us for the location and additional information.” 1Q14 HIGHLIGHTS (Results for 1Q14 are compared to 1Q13 unless otherwise noted). · Revenue increased 5.1% from $400.1 million to $420.7 million; · Direct cost of revenue expressed as a percentage of revenue improved 50 basis points from 83.8% to 83.3%; · Adjusted EBITDA increased from $10.2 million to $10.3 million; · Income from operations - including the impact of a non-routine gain of $0.9 million related to the receipt of property insurance claim proceeds and a reversal of an accrual for a legal settlement – increased from $6.7 million to $7.3 million; · Net income attributable to IDT including the non-routine items mentioned above, was $3.5 million compared to $3.6 million; · Diluted EPS in 1Q14 was $0.15 compared to diluted EPS of $0.16; · Non-GAAP net income of $7.4 million compared to $8.5 million; · Non-GAAP diluted EPS of $0.32 compared to $0.39; · Net cash provided by operating activities of $15.6 million compared to $20.5 million. NOTES: Adjusted EBITDA, Non-GAAP net income 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 operating 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. IDT’s operating results for fiscal 2013 have been adjusted to reflect the spin-off of Straight Path Communications Inc. in July 2013. Straight Path Communications Inc. is accounted as a discontinued operation for all periods presented.
1Q14 OPERATING RESULTS BY SEGMENT TPS IDT’s Telecom Platform Services (TPS) segment accounted for 98.1% of IDT’s revenue in 1Q14. 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 in 1Q14 decreased to 7.4 billion from 8.7 billion in 1Q13 (-15.0%) and increased from 7.3 billion in 4Q13 (+1.4%). The year-over-year decrease primarily reflects the impact, industry-wide, of market price increases in termination rates into several South Asian nations. These price increases were largely imposed during 3Q13, and have resulted in decreased minutes of use and revenue on the high volume, low margin routes to these destinations. However, to date, these market price increases have had little impact on TPS’s bottom line, as gross profit dollars per minute to these destinations remained relatively stable. TPS’ revenue in 1Q14 increased to $412.7 million from $392.0 million (+5.3%) in the year ago quarter and $403.9 million (+2.2%) in the prior quarter: · Retail Communications’ revenue in 1Q14 increased to $172.5 million from $153.7 million (+12.3%) in 1Q13 and decreased from $176.3 million (-2.2%) compared to 4Q13. Year over year, the increase in U.S. retail’s sales of PIN-less calling services on the Boss Revolution platform more than offset declines in sales of traditional disposable calling cards in both the U.S. and in Europe. Sequentially, the decline in retail revenue reflects slower growth of Boss Revolutions PIN-less in some maturing markets and the continued decline of traditional disposable prepaid calling cards. Retail Communications’ revenue comprised 41.8% of TPS’ total revenue in 1Q14. · Wholesale Termination Services’ revenue in 1Q14 decreased to $178.5 million from $181.6 million (-1.7%) in 1Q13, and increased from $164.5 million (+8.5%) compared to 4Q13. The year over year decrease reflects the aforementioned reduction in traffic to certain South Asian destinations. The sequential increase substantially came from new sales from South America, stemming from recent opportunities associated with certain disparities in currency exchange rates and related macro conditions. To date, some of these opportunities persist, and thus could continue to benefit Wholesale Termination Services’ performance in 2Q14. Wholesale Termination Services’ revenue comprised 43.3% of TPS’ total revenue in 1Q14. · Payment Services’ revenue in 1Q14 increased to $49.9 million from $43.7 million (+14.2%) in 1Q13, and increased from $49.7 million (+0.5%) in 4Q13. The year over year increase primarily reflects the growth of international and domestic airtime top-up sales while the smaller sequential increase reflects the impact of a decline in domestic airtime top-up sales. Payment Services revenue comprised 12.1% of total TPS revenue in 1Q14. · Hosted Platform Solutions’ revenue in 1Q14 decreased to $11.8 million from $13.0 million (-9.7%) in 1Q13, and decreased from $13.4 million (-12.0%) in 4Q13. The majority of Hosted Platform Solutions revenue is generated by IDT’s cable telephony business which has been in harvest mode. Hosted Platform Solutions’ revenue comprised 2.8% of total TPS revenue in 1Q14. For the remainder of FY 2014, IDT anticipates that TPS’ revenue will continue to increase year over year, albeit at a slower pace than in FY 2013, reflecting moderating growth in Retail Communications and Payment Services in the U.S. TPS’ direct cost of revenue expressed as a percentage of TPS revenue in 1Q14 continued to improve, decreasing to 84.4% from 84.9% in 1Q13 and 84.8% in 4Q13. The year over year improvement primarily reflects the impact of the growth of higher-margin Retail Communications revenues compared to Wholesale Termination Services, improved overall margins on Wholesale Termination Services’ sales, as well as lower connectivity costs. TPS’ 1Q14 SG&A expense increased to $49.7 million from $47.1 million (+5.5%) in 1Q13 and from $48.0 million (+3.6%) in 4Q13, primarily reflecting increased employee compensation and severance costs. Expressed as a percentage of TPS’ revenue, SG&A was unchanged at 12.0% compared to 1Q13, and just slightly higher than 11.9% in 4Q13. TPS’ Adjusted EBITDA in 1Q14 increased to $14.8 million compared to $11.9 million (+24.3%) in 1Q13 and to $13.4 million (+10.8%) in 4Q13. TPS’ income from operations increased to $11.9 million in 1Q14 from $9.0 million (+31.5%) in 1Q13. Income from operations in 1Q14 included a $0.3 million non-routine gain reflecting a reversal of a litigation accrual, compared to a $0.4 million non-recurring charge in 1Q13 also reflecting a litigation accrual. Sequentially, income from operations increased 17.8% from $10.1 million. Zedge Zedge offers an exceptionally popular online platform for mobile phone users interested in acquiring free, high quality games, apps, and device customization content including ringtones, wallpapers, and notification sounds. Zedge’s app, available on iOS and Android, boasts more than 82 million downloads and has been among the Top 15 most popular apps in the Google Play store for the last three years and counting. Zedge’s reach and popularity allow the company to offer advertisers, game developers, musicians, and artists a scalable, non-incentivized, user acquisition platform on a global basis. IDT recently began exploring strategic alternatives for Zedge, including a potential spin-off or IPO. IDT currently owns approximately 83% (69% on a fully diluted basis) of Zedge. Zedge’s revenues are generated from offering direct advertisers, advertising networks, game publishers and marketers exposure to its customer base via advertising inventory that is sold on the smartphone app and website. Zedge’s revenue increased to $1.4 million in 1Q14 from $1.2 million in 1Q13 and decreased from $1.6 million in the sequential quarter. The year over year revenue increase is primarily attributable to the growth in the Zedge Android and iOS apps’ user base which had a combined 36 million current installs as of October 31, 2013, compared to 21 million current installs a year earlier. The sequential revenue decrease primarily reflects seasonal declines in advertising revenues. Zedge expects to release significant product upgrades in 2Q14 that will positively impact advertising revenues in the second half of the fiscal year. Zedge’s 1Q14 SG&A expense was approximately unchanged compared to 1Q13 at $0.8 million, and decreased from $1.1 million in 4Q13. Zedge’s 1Q14 Adjusted EBITDA was $0.4 million, an increase from $0.1 million in 1Q13 and approximately unchanged from $0.4 million in the prior quarter. Zedge’s income from operations in 1Q14 was $0.2 million compared to a loss from operations of $0.1 million in the year ago quarter, and was unchanged compared to the prior quarter. The year over year improvement in operating income primarily reflects Zedge’s revenue growth and scalable business model. ALL OTHER All Other includes 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. All Other’s 1Q14 revenue increased to $3.5 million from $2.9 million in 1Q13 and $3.2 million in 4Q13. The increases were due to Fabrix’s product sales to cable system operators and other media content providers, who utilize Fabrix’s software to efficiently store, process and distribute video for both remote DVR and deep storage applications. All Other’s direct cost of revenue expressed as a percentage of revenue was 15.8% in 1Q14, a deterioration from 12.1% in 1Q13 and an improvement from 18.4% in the prior quarter. All Other’s SG&A expense was $1.5 million in 1Q14, an increase from $0.9 million in 1Q13 but unchanged compared to the prior quarter. Research and development expense, which is entirely incurred by Fabrix, was $2.3 million in 1Q13 compared to $1.4 million in 1Q13 and $2.2 million in the prior quarter All Other’s Adjusted EBITDA in 1Q14 was a loss of $0.8 million, compared to income of $0.3 million in 1Q13 and a loss of $1.1 million in 4Q13. R&D expense at Fabrix was a key driver of the year over year decline in EBITDA. The loss narrowed sequentially on the strength of Fabrix’ revenue growth. All Other’s loss from operations in 1Q14 was $0.6 million, compared to a loss from operations of $0.1 million in 1Q13 and a loss from operations of $5.9 million in the prior quarter. The loss from operations in 1Q14 included a non-routine gain of $0.6 million related to the receipt of property insurance claim proceeds. In 4Q13, the loss from operations included a $4.4 million impairment charge for the building and improvements at IDT’s former headquarters in Newark, NJ. 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. In line with management’s expectations, CPS’ 1Q14 revenue was $3.0 million compared to $4.0 million (-24.9%) in 1Q13 and $3.4 million (-10.2%) in the prior quarter. Income from operations was $0.4 million in 1Q14 compared to $0.6 million in 1Q13 and unchanged from the prior quarter. CONSOLIDATED RESULTS AND BALANCE SHEET Consolidated results in all periods presented include corporate overhead. Corporate G&A expense was $4.5 million in 1Q14, including an accrual of $1.1 million for the IDT Charitable Foundation, compared to $2.8 million in 1Q13 and $3.4 million in the prior quarter. Net income attributable to IDT in 1Q14 was $3.5 million, compared to $3.6 million in 1Q13 and a net loss attributable to IDT in 4Q13 of $3.7 million. The net loss attributable to IDT in 4Q13 included the $4.4 million impairment charge for the building and improvements at IDT’s former headquarters in Newark, NJ. Non-GAAP net income was $7.4 million in 1Q14, compared to $8.5 million in the year ago quarter and $2.9 million in the prior quarter. Non-GAAP diluted EPS was $0.32 in 1Q14 compared to $0.39 in the year ago quarter and $0.13 in the prior quarter. As of October 31, 2013, IDT had $161.8 million of unrestricted cash, cash equivalents and marketable securities. In addition, IDT had an aggregate of $43.0 million of current and long-term restricted cash and cash equivalents, which included $38.7 million for customer deposits held at IDT’s Gibraltar based bank. Notes payable, consisting primarily of a mortgage loan against IDT-owned real estate, totaled $7.1 million. In addition, at October 31, 2013, total current liabilities included $15.0 million borrowed under IDT Telecom’s revolving credit facility. Net cash provided by operating activities in 1Q14 was $15.6 million, compared to $20.5 million in 1Q13. Capital expenditures in each of these periods were $3.6 million. DIVIDEND IDT’s Board of Directors has increased the Company’s quarterly dividend from $0.15 to $0.17 per share of Class A and Class B common stock for the first quarter of fiscal year 2014. The first quarter’s dividend will be paid on January 7, 2014 to stockholders of record as of the close of business on December 16, 2013. The ex-dividend date will be December 12, 2013. The distribution will be treated as a dividend for tax purposes, and not as a return on capital.
IDT EARNINGS ANNOUNCEMENT & SUPPLEMENTAL INFORMATION · IDT will host a conference call at 5:30 PM ET today, December 5th, beginning with management’s discussion of financial and operational results, business outlook and strategy, followed by Q&A. · To listen to the conference call and/or participate in the Q&A, dial toll-free 1-877-317-6789 (from U.S.) or 1-412-317-6789 (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 12, 2013 by dialing 1-877-344-7529 (conference code 10037034), or by streaming from the IDT website investor relations site: www.idt.net/about/ir. · 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 available in the Investor Relations portion of IDT’s website, at http://www.idt.net/about/ir. 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 to conveniently and inexpensively communicate and share resources around the world. IDT Telecom’s wholesale business is a leading global carrier of international long distance voice calls. IDT also holds majority interests in two early-stage technology companies focused on high growth industries: Zedge (www.zedge.net), a mobile content discovery and acquisition platform, that includes one of the most popular Apps for Android and iOS; and Fabrix Systems (www.fabrixsystems.com), a cloud based storage and computing platform, that provides a scalable solution optimized for media and big data processing and delivery. For more information, visit www.idt.net. In this press release, all statements that are not purely about historical facts, including, but not limited to, payment of dividends and 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, including, but not limited to, those described in our most recent report on SEC Form 10-K (under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. These factors include, but are not limited to, the following: potential declines in prices for our products and services; our ability to maintain and grow our telecommunication businesses; availability of termination capacity to particular destinations; our ability to maintain carrier agreements with foreign carriers; our ability to obtain telecommunications products or services required for our services; the financial stability of our major customers; our ability to remain profitable and improve our cash flow; impact of government regulation; effectiveness of our marketing and distribution efforts; and general economic conditions. We are under no obligation, and expressly disclaim any obligation, to update the forward-looking statements in this press release, whether as a result of new information, future events or otherwise.
Contact: IDT Corporation Investor Relations Bill Ulrey william.ulrey@idt.net
973-438-3838 Please see attached pdf for complete financial statements and NON-GAAP reconciliation |