Year-over-Year Revenue Increase for Ninth Consecutive Quarter
NEWARK, NJ — June 7, 2012: IDT Corporation (NYSE: IDT) reported Diluted EPS of $0.14 and non-GAAP diluted EPS of $0.44 for its third quarter of fiscal 2012, the three months ended April 30, 2012.
Howard Jonas, IDT’s Chairman and CEO, said, “Our Telecom retail and wholesale businesses performed well with strong top line growth, consistent gross profits and increased Adjusted EBITDA.”
· Revenue increased 11.6% to $379.7 million from $340.2 million in 3Q11
· Gross profit increased 4.0% to $59.9 million from $57.6 million in 3Q11
· Adjusted EBITDA increased to $7.5 million from $5.6 million in the year ago quarter
· Income from operations increased to $2.2 million from $0.3 million in 3Q11. 3Q12 results included significant non-routine items: a charge of $6.5 million to accrue for four legal matters partially offset by a gain of $5.3 million from the sale of wireless spectrum licenses. Absent these items, income from operations would have been $3.3 million
· Net income attributable to IDT was $3.0 million, compared to $7.0 million in the year ago quarter
· Non-GAAP net income of $9.8 million, compared to $12.0 million in the year ago quarter
· Diluted EPS of $0.14 compared to $0.31 in 3Q11
· Non-GAAP diluted EPS of $0.44 compared to $0.53 in 3Q11
· Net cash provided by operating activities of $24.4 million compared to $12.0 million in the year ago quarter
· Adjusted EBITDA for all periods presented is a non-GAAP measure representing income (loss) from operations exclusive of depreciation and amortization, severance and other charges, and other operating gains (losses). It is one of several key metrics used by management to evaluate the operating performance of the Company and its individual business units. See explanation and reconciliations provided below.
· Non-GAAP net income for all periods presented is a non-GAAP measure representing net income exclusive of depreciation and amortization, severance and other charges, other operating gains (losses), stock-based compensation, and income from discontinued operations.
· Non-GAAP EPS for all periods presented is a non-GAAP measure representing non-GAAP net income divided by basic or diluted weighted-average shares.
· IDT’s operating results for the nine months ended April 30, 2012 and all prior periods presented have been adjusted to reflect the spin-off of Genie Energy in October 2011. Genie Energy is accounted for as a discontinued operation for all periods presented.
3Q12 OPERATING RESULTS BY SEGMENT
TPS’ minutes of use increased 18.3% year over year, and 5.4% sequentially, to 7.8 billion.
TPS’ revenue was $372.1 million – an increase of 12.3% year over year and 4.1% sequentially:
· Retail Communications revenue of $139.5 million (37.5% of TPS’ revenue in 3Q12) grew 18.0% year over year and 4.8% sequentially. Increases in sales of pin-less calling services on the Boss Revolution platform more than offset declines in sales of traditional IDT-branded disposable calling cards.
Wholesale Termination Services revenue of $179.5 million (48.2% of TPS’ revenue in 3Q12) grew 10.6% year over year and 3.3% sequentially.
· Payment Services revenue of $39.1 million (10.5% of TPS’ revenue in 3Q12) grew 22.0% year over year and 7.4% sequentially. The increase primarily reflects continued growth of International Mobile Top-Up (IMTU) sales.
· Hosted Platform Solutions revenue of $14.0 million (3.8% of TPS’ revenue in 3Q12) declined 26.1% year over year and 2.2% sequentially. The majority of Hosted Platform Solutions revenue is generated by IDT’s cable telephony business which is in harvest mode. As such, Hosted Platform Solutions’ revenue is expected to continue to decline over the next several quarters.
TPS’ gross margin was 14.7% of revenue. Gross margin percentage declined 110 basis points year over year and 40 basis points sequentially. The margin declines primarily reflect the growth in the high volume but lower margin Wholesale Termination Services category, and, within Retail Communications, the continued shift in product mix from traditional higher margin prepaid cards to lower margin sales over the Boss Revolution platform.
TPS’ gross profits increased 4.9% year over year and 1.6% sequentially to $54.9 million, the highest level since the fourth quarter of fiscal 2009.
TPS’ SG&A expense was $45.0 million, a 4.3% increase year over year but a 1.4% decrease sequentially. SG&A as a percentage of TPS’ revenue declined to 12.1% compared to 13.0% in the year ago quarter and 12.8% in the prior quarter. The rapid growth of both sales over the Boss Revolution platform and of Wholesale Termination Services has allowed IDT to better leverage its fixed cost infrastructure.
TPS’ Adjusted EBITDA was $9.9 million, a 7.6% increase compared to 3Q11 and an 18.0% increase compared to 2Q12.
TPS’ depreciation and amortization expense continue to decrease, reflecting the deployment of technologies with a lower rate of CAPEX required to upgrade and maintain its network. In 3Q12, depreciation and amortization expense was $3.5 million, a 17.5% decrease from the year ago period and a 2.0% decrease sequentially.
During 3Q12, TPS recorded a non-routine charge of $6.5 million to accrue for four legal matters.
TPS’ loss from operations was $0.1 million compared to income from operations of $4.9 million in 3Q11 and $6.5 million in the sequential quarter. Absent the charge related to four legal matters previously mentioned, TPS’ income from operations in 3Q12 would have been $6.3 million.
Consumer Phone Services (CPS) includes sales of both bundled (unlimited local and long distance) services as well as long distance-only services. 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 decreased to $4.6 million from $6.3 million in the year ago quarter and $5.0 million in the prior quarter. Income from operations decreased to $1.0 million from $1.5 million in the year ago quarter, and decreased slightly compared to the prior quarter. The declines in revenue and income from operations were in line with management expectations.
All Other includes: Fabrix, a software development company specializing in highly efficient cloud-based video processing, storage and delivery; Zedge, a distribution platform including an Android app that allows users to share and obtain content to personalize mobile phones and tablets; IDT Spectrum, which holds, leases and sells fixed wireless spectrum; ICTI, which holds intellectual property previously held by IDT’s Net2Phone subsidiary; and IDT’s real estate holdings.
All Other’s revenue increased 24.2% year over year and 5.0% sequentially to $3.0 million, primarily reflecting revenue growth at Fabrix. All Other reported income from operations of $4.3 million as a result of the $5.3 million gain generated by IDT Spectrum on the sale of eight wireless spectrum licenses. Absent this gain, All Other’s loss from operations in 3Q12 would have been $1.0 million. In the year ago quarter, All Other’s loss from operations was $1.7 million.
FABRIX: Fabrix’s revenue increased to $1.3 million from $0.9 million in the year ago quarter. Fabrix’s revenue is generally recognized over three years from the date on which delivered orders are accepted by the customer.
ZEDGE: Zedge (www.zedge.net) continues to experience strong growth in global downloads of its Android apps. In 3Q12, Zedge launched its game and live wallpaper channels. These channels utilize Zedge’s proprietary machine learning-based recommendation engine to provide users with a customized selection of games and wallpapers based on their individual preferences. Zedge generated revenue of $0.9 million in 3Q12 compared to $0.8 million in 3Q11.
IDT SPECTRUM: During 3Q12, IDT Spectrum closed on its previously announced agreement to sell eight spectrum licenses covering certain metropolitan areas from its nationwide portfolio. This initial sale represents a step in IDT’s longer term effort to monetize its spectrum assets.
BALANCE SHEET AND CASH FLOW
As of April 30, 2012, IDT had $156.5 million of cash and cash equivalents, and an additional $17.1 million of short-term and long-term restricted cash and cash equivalents, of which $5.2 million represents customer deposits held by IDT’s wholly-owned bank in Gibraltar. Notes payable (both long and short term), consisting of mortgage loans against IDT-owned real estate, totaled $30.2 million.
Net cash provided by operating activities was $24.4 million in 3Q12, compared to $12.0 million in 3Q11 and $19.9 million in 2Q12. In 3Q12, IDT received $7.0 million from sales by Fabrix of video storage software licenses and maintenance agreements. Also in 3Q12, IDT received $6.8 million from the sale of spectrum licenses, which is included in net cash provided by investing activities in the statement of cash flows.
IDT’s Board of Directors declared an ordinary cash dividend of $0.15 for 3Q12. The Board anticipates continuing to pay quarterly dividends commensurate with the Company’s financial results, strate
gic goals and available resources.
The dividend will be paid on or about June 26, 2012 to stockholders of record of IDT’s Class A and Class B common stock as of the close of business on June 18, 2012. The ex-dividend date is June 14, 2012.
IDT EARNINGS ANNOUNCEMENT & SUPPLEMENTAL INFORMATION
§ IDT will host a conference call at 6:00 PM EDT today, June 7th, to discuss financial and operational results, business outlook and strategy. Management’s presentation will be followed by a live question and answer session with investors.
§ To participate in the Q&A session, dial toll-free 1-877-317-6789 (from U.S.) or 1-412-317-6789 (international) and request the IDT Corporation call.
§ A listen-only webcast will be available at http://services.choruscall.com/links/idt120607.html The webcast will remain available in the ‘Investor Relations’ section of the IDT Corporation website (www.idt.net/about/ir) for one year after the call. An audio replay will also be available one hour after the call concludes through June 18, 2012 by dialing 1-877-344-7529 (conference code 10014352).
§ Copies of this release – which includes a 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 https://www.idt.net/about/ir/overview.asp.
ABOUT IDT CORPORATION:
IDT Corporation (NYSE: IDT), through its IDT Telecom division, provides telecommunications and financial services. IDT Telecom’s retail products allow people to communicate and share financial resources around the world while its carrier services business is a global leader in wholesale voice termination. 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.
IDT Corporation Investor Relations
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