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Oct 11, 2019 2:10 AM ET

IDT Corporation Reports Fourth Quarter and Full Fiscal Year 2019 Results


iCrowd Newswire - Oct 11, 2019

NEWARK, N.J.,– IDT Corporation (NYSE: IDT) reported EPS of $0.06 and Non-GAAP EPS* of $0.15 on revenue of $356.1 million for the fourth quarter of FY 2019, the three months ended July 31, 2019. For the full fiscal year 2019, IDT reported EPS of $0.01 and Non-GAAP EPS of $0.38 on revenue of $1,409.2 million.

4Q19 & FISCAL YEAR OPERATIONAL HIGHLIGHTS
(4Q19 results are compared to 4Q18. FY 2019 results are compared to FY 2018)

REMARKS BY SHMUEL JONAS, CEO
“Our growth initiatives – net2phone’s UCaaS offerings, National Retail Solutions and our BOSS Revolution international money transfer service – continued their rapid expansions in the fourth quarter.

“As expected, revenue from our core Carrier Services and BOSS Revolution Calling offerings continued to decrease as a result of industry-wide headwinds in the paid minute communications market, but the company-wide margin impact was dampened by increased contributions from our growth initiatives. Consolidated revenue less direct cost of revenue has increased sequentially in each of the last three quarters.

“Consolidated Adjusted EBITDA* was $7.4 million in the fourth quarter. In the year ago quarter, consolidated Adjusted EBITDA was $16.8 million — a significant outlier to the upside as a result of changes to estimates for recognizing breakage revenue. For the full fiscal year, consolidated Adjusted EBITDA was $30.8 million compared to $38.2 million in fiscal 2018.

“Overall, the fourth quarter marked a consistent end to a solid year, and I want to thank everyone in our company for all their hard work. As fiscal 2020 gets underway, we are working from a strong position to vigorously pursue our exciting growth opportunities.”

4Q19 AND FISCAL YEAR 2019 CONSOLIDATED RESULTS

 

Results

(in millions, except EPS)

4Q19

3Q19

4Q18

4Q19 –
4Q18

Change
(%/$)

 

Fiscal
Year
2019

Fiscal
Year

2018

FY2019 –

FY2018

Change

(%/$)

Revenue

$356.1

$341.3

$392.6

(9.3%)

 

$1,409.2

$1,547.5

(8.9%)

Direct cost of revenue

$295.4

$282.8

$325.1

(9.2%)

 

$1,174.0

$1,306.0

(10.1%)

Revenue less direct cost of
revenue

$60.8

$58.5

$67.5

(10.0%)

 

$235.2

$241.5

(2.6%)

Revenue less direct cost of
revenue as a percentage of
revenue

17.1%

17.1%

17.2%

(0.1%)

 

16.7%

15.6%

+1.1%

SG&A expense

$53.4

$49.5

$50.7

+5.3%

 

$204.4

$203.3

+0.5%

Depreciation and amortization

$5.8

$5.5

$5.6

+2.8%

 

$22.6

$22.8

(0.7%)

Severance expense

$0.9

$0.6

$0.3

+162.7%

 

$1.4

$4.6

(68.9%)

(Loss) income from operations

$(1.2)

$0.4

$10.5

($11.7)

 

$(1.0)

$8.4

($9.4)

Adjusted EBITDA*

$7.4

$8.9

$16.8

($9.4)

 

$30.8

$38.2

($7.4)

Net income attributable to IDT

$1.6

$2.2

$8.2

($6.6)

 

$0.1

$4.2

($4.1)

Diluted earnings per share

$0.06

$0.08

$0.33

($0.27)

 

$0.01

$0.17

($0.16)

Non-GAAP net income*

$4.1

$5.2

$9.8

($5.7)

 

$9.7

$12.5

($2.8)

Non-GAAP earnings per share*

$0.15

$0.20

$0.40

($0.25)

 

$0.38

$0.51

($0.13)

 

*Throughout this release, Non-GAAP earnings per share, Adjusted EBITDA, and Non-GAAP net income for all periods presented are Non-GAAP measures
intended to provide useful information that supplements IDT’s or the relevant segment’s 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 reconciliations to the most directly
comparable GAAP measure.

Notes on Consolidated Results and Balance Sheet
Income from operations and net income include accruals of $2.6 million$2.3 million and $8.0 million for 4Q19, 3Q19 and FY 2019, respectively, for non-income related taxes pertaining to one of our foreign entities in our Telecom & Payment Services (TPS) segment. Also within TPS, 4Q18 revenue increased $9.5 million as a result of changes to estimates for recognizing certain breakage revenue, and direct cost increased by $4.5 million as a result of a change in accrued regulatory fee expense. Consolidated and TPS revenue less direct cost increased by the net of the changes, $5.0 million.

Consolidated results for all periods presented include corporate overhead. Corporate G&A expense decreased to $2.1 million in 4Q19 from $2.6 million in 4Q18, and decreased to $9.2 million in FY 2019 from $9.8 million in FY 2018.

At July 31, 2019, IDT held $88.4 million in unrestricted cash, cash equivalents, debt securities and current equity investments. Current assets totaled $368.5 million and current liabilities totaled $389.1 million. As of 3Q19, IDT no longer classifies its Gibraltar-based bank’s assets and liabilities as “held for sale” in the consolidated balance sheets for all periods presented.

On August 1, 2018, IDT adopted a change in GAAP related to the classification and presentation of changes in restricted cash in the statement of cash flows and has conformed prior period results.

Net cash provided by operating activities during 4Q19 was $37.8 million, including a $26.0 million increase in customer deposits at IDT’s Gibraltar-based bank, compared to $19.3 million in the year ago quarter, including a $3.8 million reduction in customer deposits. In the corresponding periods, capital expenditures were $5.0 million and $4.6 million, respectively. FY 2019 net cash provided by operating activities was $85.1 million including a $59.1 million increase in customer deposits at IDT’s Gibraltar-based bank, compared to $20.4 million in FY 2018 including a $14.7 million increase in customer deposits. In the corresponding periods, capital expenditures were $18.7 million and $20.6 million, respectively.

4Q19 AND FISCAL YEAR 2019 RESULTS BY SEGMENT
(4Q19 results are compared to 4Q18 and FY 2019 results are compared to FY 2018).

Beginning with fiscal year 2019, IDT has modified the way it reports its business verticals within its two reporting segments to align more closely with IDT’s business strategy and operational structure, as follows:

Telecom & Payment Services (TPS)
IDT’s TPS segment accounted for 96.4% and 97.5% of IDT’s consolidated revenue in 4Q19 and 4Q18, respectively, and 96.6% and 97.7% of consolidated revenue in FY 2019 and FY 2018, respectively. The segment includes Core and Growth verticals:

Core includes IDT’s three largest communications and payments offerings from both a revenue and cash generation perspective: BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the US; Carrier Services, which provides international long-distance termination and outsourced traffic management solutions to telecoms worldwide, and; Mobile Top-Up, which enables customers to transfer airtime and bundles of airtime, messaging and data credits to mobile phones overseas and within the US. TPS Core also includes smaller communications and payments offerings – some of which are in harvest mode.

Growth is comprised of NRS’ retailer POS terminal-based services, the BOSS Revolution international money transfer service, and the BOSS Revolution Mobile service.

net2phone
IDT’s net2phone segment accounted for 3.6% and 2.5% of IDT’s consolidated revenue in 4Q19 and 4Q18, respectively, and 3.4% and 2.3% of FY 2019 and FY 2018 consolidated revenue, respectively. The segment comprises two verticals:

net2phone-UCaaS comprises unified cloud communications in the US and certain international markets and SIP-trunking offerings in South America.

net2phone-Platform Services includes other offerings leveraging a common technology platform to provide cable telephony and other voice services.

Revenue in 4Q19, fiscal year 2019 and comparative periods for all verticals and the most significant core offerings is provided in the following chart:



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