IDT (IDT) Q1 2022 Earnings Call Transcript

IDT (IDT 0.45%)
Q1 2022 Earnings Call
Dec 07, 2021, 5:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good evening, and welcome to the IDT Corporation's first quarter fiscal year 2022 earnings call. In today's presentation, IDT's management will discuss IDT's financial and operational results for the three-month period ended October 31, 2021. [Operator instructions] After Mr. Jonas' remarks, Marcelo Fischer, IDT's chief financial officer, will join Mr.

Jonas for a Q&A. Any forward-looking statements made during this conference call, either in the prepared remarks or in the Q&A session, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those which the company anticipates. These risks and uncertainties include but are not limited to specific risks and uncertainties discussed in the reports that IDT files periodically with the SEC. IDT assumes no obligation either to update any forward-looking statements that they have made or may make or to update the factors that may cause actual results to differ materially from those that they forecast.

In their presentation or in the Q&A session, IDT's management may make reference to non-GAAP measures, including adjusted EBITDA, non-GAAP net income, and non-GAAP earnings or loss per share. A schedule provided in the IDT earnings release reconciles adjusted EBITDA, non-GAAP net income, and non-GAAP earnings or loss per share to the nearest corresponding GAAP measures. Please note that the IDT earnings release is available on the investor relations page of the IDT Corporation website. The earnings release has also been filed on Form 8-K with the SEC.

I will now turn the conference over to Mr. Jonas. 

Samuel Jonas -- Chief Executive Officer

Thank you, operator. Welcome to IDT's first quarter fiscal year 2022 earnings call. I'm joined on the call by Marcelo Fischer, IDT's chief financial officer, and we'll both be available to answer questions after my remarks. My discussion today focuses on our first quarter fiscal 2022, the three months ended October 31, 2021.

For a more detailed report and discussion on our financial and operational results, please read our earnings release filed earlier today and our Form 10-Q that we expect to file with the Securities and Exchange Commission on Friday. Our first quarter operational results were, thank God, strong once again, highlighted by robust performance from our high-margin net2phone, NRS, and BOSS Money businesses, as well as from Mobile Top-Up. As a result, we delivered year-over-year increases in revenue, gross profit, income from operations, and adjusted EBITDA. At our net2phone-UCaaS segment, subscription revenue increased 37.5% year over year, and revenue and margin increased 20 basis points to 82.3%.

Both our subscription revenue growth and revenue margin rates remain well above industry averages. In the United States, our expanding network of channel partnerships drove a 42% year-over-year increase in UCaaS subscription revenue. While in Latin America, our strategic focus on midsize businesses, multichannel go-to-market strategies, deeply localized in-country offerings all helped to increase UCaaS subscription revenue by 58%. Net2phone has been getting especially strong traction in several markets, including Mexico where service revenue increased nearly 150%.

This quarter, we landed a leading restaurant franchise, and of course, we're also closing deals with small enterprise clients throughout Mexico. Across net2phone market, our commitment to provide every customer with top-notch service, regardless of size, continues to help us win new business, many as a result of referrals from existing satisfied customers. And our net2phone won the Global Partner of the Year award for UC Today, a popular news service covering the business communications and collaborations industry. Net2phone was recognized for providing exceptional performance and solutions through our global channel partners.

Never content with the status quo, we continue to work on driving channel partner penetration. In 2022, we will provide our managed service partners with real-time account access, enabling them to directly support, configure, and modify their clients' accounts. This will better enable our partners to focus more on customer experience while enabling to focus their efforts on high-value services. At NRS, strong demand for NRS PAY payment processing in a recently launched funding service provides retailers with ready working capital, digital advertising, and transaction data services, coupled with the continued expansion of our POS network, boosted NRS revenue by 104% year over year to $10.1 million in the first quarter.

Recurring revenue, which excludes revenue from the sale of new terminals, increased 126% to $8.6 million. As of October 31, NRS had over 15,100 active terminals. One of the strategic strengths of NRS is its ability to leverage our platform to provide new offering. This opens new markets, creates additional revenue streams to boost ARPU, and accelerates growth in our terminal network.

This quarter, we deployed software that enables retailers to process electronic benefits provided by the Supplemental Nutrition Program for Women, Infants, and Children. Nationwide, WIC provides nearly $5 billion in benefits annually to over 6 million beneficiaries. Most states have transitioned or are transitioning to pay these benefits electronically known as eWIC. Our eWIC payment processing solution is a game-changer for our merchants, providing an affordable fully integrated solution to serve this channel.

Until now, only larger retail chain stores or those able to pay hefty fees for eWIC payment processing could accept eWIC transactions. We have already begun to roll out our affordable eWIC offering, working with our retailers, benefit managers, and state regulators to certify our solutions state by state. Money Transfer had an exceptional quarter. Revenue increased nearly 15% sequentially to $12.5 million.

Although the first quarter of '22 revenue decreased 82% compared to the year-ago quarter, the decline is entirely due to the impact of transitory foreign exchange market conditions that materially improved revenue and gross profit during calendar 2021. Absent that impact, first quarter fiscal '22 revenue increased by 45% from the year-ago quarter. Traditional Communications revenue increased 6.7% year over year to $334.6 million. Within Traditional Communications, Mobile Top-Up revenue increased 34.1% to $128.5 million, and IDT Global carrier services revenue climbed slightly.

These increases more than offset a decline in BOSS Revolution Calling revenue in line with expectations. Our Mobile Top-Up business generated double-digit year-over-year growth in the three largest sales channels, strengthening its unique position as the only significant omnichannel player in the top-up space. All our Mobile Top-Up regional quarters continue to expand, led by the U.S. to Africa corridor.

Sales of top-up bundles, which include both airtime and data, are key in growth. These data bundles now account for roughly 30% of our total sales, and that helped increase average revenue per transaction by 11% compared to the year-ago quarter. We forecast that demand for data packages will continue to drive revenue and revenue per transaction increases. On a consolidated basis, income from operation and adjusted EBITDA both increased modestly compared to the year-ago quarter, rising to $13.8 million and $18.3 million respectively.

This quarter, we had a loss per share of $0.10 compared to EPS of $0.32 a year ago after an unrealized $0.49 per share loss on the mark-to-market value of our investment in Rafael Holdings stock. Looking ahead, we are making good progress and expect to be in a position in early 2022 calendar year for the potential spinoff of net2phone should our board authorize it. To wrap up, this is a strong quarter for each of our high-margin businesses, and sales of Mobile Top-Up continue to drive growth in our Traditional Communication segment. Now, Marcelo and I would be happy to take your questions.

Thank you.

Questions & Answers:

Operator

We will now begin the question-and-answer session. [Operator instructions] OK. The first question is coming from Daniel Koch from Alta Fox Capital. Your line is live.

Daniel Koch -- Alta Fox Capital -- Analyst

Hey, guys. Congrats on a strong quarter across the board.

Samuel Jonas -- Chief Executive Officer

Thank you.

Daniel Koch -- Alta Fox Capital -- Analyst

The NRS numbers look pretty great, specifically the strong ARPU in the quarter. Can you shed some light on the drivers of the ARPU growth and maybe how we should think about ARPU growth going forward from here? Thanks.

Marcelo Fischer -- Chief Financial Officer

Yeah, hi, Dan. Thanks for joining the call today. Yup, we, at IDT, as well are very, very pleased with the progress that we have seen at NRS. While we try to shy away from giving specific guidance, let me just share with you some specifics on what NRS has been doing recently.

On the set-based fees vertical where we charge our retailers monthly, we continue to look at ways to increase the set fees per terminal. All right? We think we can accomplish this by partnering with our retailers to understand the specific needs, to develop solutions to these needs, and then finding ways to upcharge for these features. And when we think about NRS PAY and the merchant services vertical, we will continue to focus on growing the payment processing side of the business and now offering a very compelling solution to our retailers. Now, our offer today is very valuable, right? We offer our retailers a no-contract free equipment, a multiple plan approach, and with live customer service.

So -- and also, more recently, we have been able to start onboarding higher risk retailers such as like tobacco shops, and there, the processing fees are higher. So, while our focus so far has been on the small independent that also purchase our POS system, in reality, NRS PAY is now in a position to expand payment processing services beyond this channel as well. Like another merchant service product that NRS has launched recently, which you may have heard about, is called NRS Funding, which provides all retailers access to capital in a very easy and seamless process. So, it's still very early.

But to date, we have provided over 100 loans. And then we think about like the -- our digital out-of-home vertical, we are seeing that this market continues to grow rapidly. And as we sell more POS terminals, so those are available inventory increases. So, for example, if an advertiser wants to offer advertising in California and they're willing to pay X dollars per terminal in California, obviously, the more terminal they have in California, the more is the amount of dollar advertising that we're going to generate.

So, advertising and data partners are starting to notice more and more how our model can directly impact their business. And this is translating into the strong growth that you saw this quarter where you saw advertising up sequentially about 150%. So, that -- and now, last but not least, we have a multipronged approach when it comes to expanding our POS and NRS PAY terminal network. We have today three different complementary sales channels.

We have, one, a growing inside sales team. We also have our own boots-in-the-ground sales force making in-person visits to retailers nationwide. And on that, we leverage that sales force together with other IDT offerings at retail such as BOSS Revolution products, Pinless, Money Transfer, and Top-Up. And we also have a well-established third-party distributor channel.

So, our continued investment in developing all three of these sales channels is really critical to our continued success. So, if the team continues to focus on all these types of items, it should really translate into very healthy growth rate for NRS going forward.

Daniel Koch -- Alta Fox Capital -- Analyst

Great. Thanks for all the color, Marcelo. I really appreciate it. And congrats again on the really strong quarter.

Marcelo Fischer -- Chief Financial Officer

Sure. Thank you.

Operator

OK. The next question is coming from Brian Warner, private investor. Brian, your line is live.

Brian Warner -- Private Investor

Hi, guys. Thanks for taking my questions and congratulations. Two questions. The first is on NRS.

I thought in your commentary you've mentioned maybe some small loans to merchants that you had started. Did I hear that right and can you just give us a sort of a 5,000-square-foot view of how you think about sort of that business and maybe a banking charter?

Samuel Jonas -- Chief Executive Officer

Well, again, we don't do loans, we do merchant cash advances. Right now, we're -- unlike [Technical difficulty] a bank, we haven't taken that step. And again, as Marcelo said, it's small. Right now, we [Technical difficulty]

Brian Warner -- Private Investor

Sure. OK. So, just so I understand this properly, you were actually just -- you were talking about cash advances, which is nothing new.

Samuel Jonas -- Chief Executive Officer

Correct.

Brian Warner -- Private Investor

I gotcha. OK. That actually answers that one. My second question regard the Money Transfer business.

There seems to be a general concern that pricing in that business is on a downward skew, and it's going to be sort of a big headwind, or at least some people sort of think that. And I know you've sort of commented in the past there may be some other little more creative ways to make money. So -- but in contrary or differently sort of than you have in the past, can you give us a sort of a two, three, four-year view of what you think that business is capable of doing and do you think that that franchise can continue to grow at a healthy rate?

Samuel Jonas -- Chief Executive Officer

Yes. I mean, I'd say two things. Like I don't -- again, I don't know the timeline for when change exactly happens. Sometimes, you expect something to happen in six months and it ends up happening in 10 years.

And when it comes to pricing on Money Transfer, I can tell you already that you have Facebook announced their first off the country, I think it's -- their product is called Novi. And they announced that to Guatemala. And again, as I had spoken about I believe last quarter, nobody does anything for free. Like I don't remember the saying, but there is a -- the saying about any product that's free, like if it's free, then your -- then you [Inaudible] they're selling.

When it comes to social media, as we've all seen with Facebook, they don't charge you to use Facebook, but they seem to make $30 billion a quarter [Audio gap]. And so, you are the product. So, again, Money Transfer is not going to be different in that sense, like it's not going to be free. Like there is a cost of compliance.

There's a cost of banking [Audio gap] when -- etc., etc. I mean, there's just a lot of cost in the business, and you can't just afford to give that away for free. Maybe, to a degree, it can be supported on a short-term basis promotionally. But long term, they have to make a profit.

So, again, my own opinion -- and again, this isn't in terms of a timeline, I don't have one. But my own opinion is like, over time, money transfers are definitely going to get significantly less expensive. So, now, whether or not the cash money transfer that people are doing in stores versus the online money transfers that people are doing today, which one of those has a more rapid change in the pricing? I can't tell you for sure. I've heard different people argue both ways on which one will change faster.

And I can see arguments why cash will be harder to, I'll say, change. But I can see, by the same token, there's a lot more margin there. And sometimes, like that's the easier one to change than online competitors. But I do definitely think, at the end of the day, that you are going to need to make money in-country.

And you're seeing numerous services of -- we're now able to open up 22 -- in 22 countries, we'll be open -- we'll be able to open up basically a Visa card where people can use to spend money in-country. And we'll be making money on every transaction that people are doing in that country. And we'll be able to lower our pricing because we'll be able to make money that way. And that is what I see as the future of it.

In terms of our growth rate, I mean, again, I think that we are doing very well on Money Transfer. I'm pleased that we now have retail growing again, and online is doing quite well as well, thank God. And we're just trying to focus on improving the product, more customers to use it, getting them to be secure, etc., etc. But -- so, again, we can't control what's happening everywhere in the world, but we can do our best to control what we can control.

Brian Warner -- Private Investor

Thanks very much. Appreciate it.

Samuel Jonas -- Chief Executive Officer

Thank you.

Operator

[Operator instructions] OK. We have a question coming from David Polansky from Immersion. Your line is live.

David Polansky -- Immersion Investments Inc. -- Analyst

Hey, guys. Thank you for taking my question.

Samuel Jonas -- Chief Executive Officer

How are you?

David Polansky -- Immersion Investments Inc. -- Analyst

Great job on NRS as per usual. High level, like what is the opportunity on terminal deployments? I mean, this kind of started in the independent bodegas. You're up to 15,100 installs now. Where does that go over time? Because I've seen that you're in beauty salons, you're in some coffee shops, you're in groceries, you're in tobacco and liquor.

Like how should we think about like maybe five years out, how many terminals you could have deployed, and kind of just thinking about the market broadly? 

Samuel Jonas -- Chief Executive Officer

I don't know the answer to that question. That's the first thing I would say. What I would say is that the amount of deployments that we've done recently has increased, and we see it continuing to increase. So, I definitely think that there is no slowdown on the horizon.

What I would say is that you're right, that each one of those verticals that you discussed that you're seeing some of our terminals in are verticals that we really don't completely serve today, with the exception of independent convenience stores. And each one of those is an opportunity for us to grow probably tens of thousands of terminals then. Each one of those is also a separate business line. I mean, right now, we're starting to work on a new business line which I'm not yet ready to talk about.

But we believe that will be something that's capable of adding 10,000 terminals to our, I'll say, network. I mean, we've talked about Petro in the past. And again, those are a smaller number of deployments. They tend to be in larger volume stores than -- stores and credit card processing than our independent convenience stores.

But that's another market that has tens of thousands of locations available for us to go after. So, I really think we have really only scratched the surface of what we can do. And that's only in the U.S. I mean, I think there's definitely an opportunity in international markets for our services, and we're starting to deploy our first units in Canada.

And again, we're very excited about where the business is going.

David Polansky -- Immersion Investments Inc. -- Analyst

Sorry. You said you're starting to deploy in Canada. Is that what you said?

Samuel Jonas -- Chief Executive Officer

That's correct. Yes.

David Polansky -- Immersion Investments Inc. -- Analyst

And on this opportunity that you're not ready to talk about, are you talking about a new vertical, or is that like an enterprise contract? So, can you go up --

Samuel Jonas -- Chief Executive Officer

A new vertical. I mean, we're really not focused on enterprise like that. That's the -- I mean, that's the one thing I would say for sure is we think that that's a saturated market. And frankly speaking, it's -- it requires a different kind of sales force and a different -- it's a very different business, frankly, than who we focus on supporting today, and we don't see ourselves as going after that space anytime in the next couple of years at least.

David Polansky -- Immersion Investments Inc. -- Analyst

Great. Excellent. And so, on payment processing accounts, you're at 6,800, so that's 45% of your base, and a year ago, you were at 28%. Do you -- like where do you see that going? Like can that get to 80%, 90% over time? How should we think about that?

Samuel Jonas -- Chief Executive Officer

I don't know if it can get to 80%, 90% over time. I mean, I think that it will personally. I mean -- but I don't know if I'm right. I would say that we're already signing up probably two-thirds of our new customers onto merchant processing.

And we are definitely making an effort now to start to convert customers that signed up with us earlier with our merchant services to get them on as well. But we -- again, like keeping up with the growth has been tough. And frankly speaking, like we haven't really been focused on going after, I'll call it, our base of customers so much. Like we really focused on making sure all the new customers that we get in get turned up.

But over the next quarter, we're hoping to add a bunch of salespeople and installation people that will help us go after our existing base of accounts.

David Polansky -- Immersion Investments Inc. -- Analyst

Right. And your merchant services revenue, are you reporting that net of fees? So, is that really like a gross profit number?

Samuel Jonas -- Chief Executive Officer

Yeah, that's a gross -- I mean, yeah, it is net of fees.

Marcelo Fischer -- Chief Financial Officer

It's net of fees, it's [Inaudible]. It's net of fees. So, therefore, the revenue is really 100% gross profit.

David Polansky -- Immersion Investments Inc. -- Analyst

OK. So, like --

Samuel Jonas -- Chief Executive Officer

But then again, I have read other of our -- I won't say competitors, but I'll say I've read other people in the space's numbers, and most of them do not report it that way.

David Polansky -- Immersion Investments Inc. -- Analyst

Right. So, you would be reporting, I mean, I think over 100 million in revenue for NRS. So, if you were to report it gross. So, am I off by saying that?

Samuel Jonas -- Chief Executive Officer

I don't want to say that you're off. I never did the translation of our numbers to their numbers. They can say that ours are net.

David Polansky -- Immersion Investments Inc. -- Analyst

OK. All right. Well, I mean, I think it's over 100 million if you were doing it gross [Inaudible] 

Samuel Jonas -- Chief Executive Officer

It very well could be.

Marcelo Fischer -- Chief Financial Officer

You would check it out.

David Polansky -- Immersion Investments Inc. -- Analyst

I mean, yeah. So, I mean, I guess, just broadly speaking, going back to what you said earlier in my questioning was you really don't see a slowdown in growth. I mean, you've got a pretty good runway. You've got a good upsell engine.

You have ARPU expansion. You already have 80% gross margins. I mean, this is -- I mean, this could really be like 100 million ARR business net-net of the merchant services in a couple of years. So, if you look at the valuation of --

Samuel Jonas -- Chief Executive Officer

Yeah, we hope so. We hope sooner.

David Polansky -- Immersion Investments Inc. -- Analyst

Yes. But I mean, that's like a billion dollars in enterprise value, and the entire stock today is at one point -- what is it, 1.3 billion, 1.4 billion. So, I guess like how do you think about that and how do you think about the timing of a potential spin for NRS?

Samuel Jonas -- Chief Executive Officer

Again, we're -- we don't want to commit to a timeline at this point in terms of a potential spin. Right now, we're really focused on, A, getting our spin that's already announced done. And once we've completed that, we will -- we'll start to think about others. But again, we're right now focused on building this into a huge business, and that's our No.

1 priority.

David Polansky -- Immersion Investments Inc. -- Analyst

Well, I think it will be a huge business. And you look a few years out, I think the stock is tremendously undervalued if you just think about where NRS could be in a few years. But anyway, I'll get off my soapbox. I really appreciate you guys taking the time to take my questions.

Samuel Jonas -- Chief Executive Officer

Our pleasure. Thank you.

David Polansky -- Immersion Investments Inc. -- Analyst

Thank you.

Operator

OK. The next question is coming from Adam Wilk from Greystone Capital Management.

Adam Wilk -- Greystone Capital -- Analyst

Hey, guys. Thanks for taking my questions. I appreciate it.

Samuel Jonas -- Chief Executive Officer

Pleasure.

Adam Wilk -- Greystone Capital -- Analyst

Really impressive quarter in a number of areas. I've been incredibly impressed with the recent efforts of NRS and Mobile Top-Up specifically. So, starting with NRS, can we talk a little bit about the data and advertising opportunity? So, clearly, pretty significant growth in that segment. And I'm wondering how you guys are kind of thinking about that opportunity moving forward in terms of maybe signing new deals with third parties or CPG companies or growing ARR or what you kind of think the ceiling is there? Although I know it's early stages, but I'd be interested in your thoughts.

Samuel Jonas -- Chief Executive Officer

I mean, it's definitely early stages. I don't have -- I don't know where the ceiling is. I think all I can say is I think we're very, very far from it. In terms of new relationships, we continue to sign up new large advertising partners.

We signed some very large deals this week. And we don't see any slowdown. In terms of the data partners, all the data partners that we sell to are adding more things that they're buying from us. So, again, we see no slowdown in that side of the business either.

We are adding a number of salespeople because like everything else, you have to get your story out there and in front of the right people. And someone talked about our enterprise sales. We don't do enterprise sales for POS. But when it comes to advertising and data, that is an enterprise sale.

And we are bringing on a bunch of new people, some have already started. We have a really great team. And we think it's going to be a sizable part of the business going forward. And I don't know if I can give you more clarity than that.

But did you have a second question that I missed?

Adam Wilk -- Greystone Capital -- Analyst

I did. Just -- I haven't asked, but I appreciate that color. That's helpful. For Mobile Top-Up, again, another segment that's been incredibly impressive in terms of your recent efforts in kind of propping up Traditional Communications overall.

And I'm kind of just wondering how you guys are thinking about growing this business moving forward, whether you're looking at geographic expansion or in, I guess, highlighting some of the unit economics or breaking some of the stuff out or maybe making a push into more of that direct channel versus retail, and I'd be interested in your thoughts there as well.

Samuel Jonas -- Chief Executive Officer

I mean, I'm going to let Marcelo answer a little bit of the question because he's been doing more of the work on that in the background in terms of breaking it out and what have you. What I would say is from a sales perspective -- and again, I think I also talked about this a little bit last quarter. Again, to a degree, the growth in this business was surprising to us, and we are -- we're really putting in place a team sort of as we speak to capitalize on the growth. We've made some small acquisitions in the space that have really helped us grow geographically.

And we're looking at some more small acquisitions as well to help enhance the product and the technology. But again, it's -- this is a business again where we really think that, A, we have a very small piece of the market; and B, we're really, right now, only a U.S. and Africa player, and we think that there's a ton of market share to be gotten. And we intend to have -- to be a very, very sizable and predictable business.

Marcelo Fischer -- Chief Financial Officer

Yeah, I mean, our Mobile Top-Up business today is a U.S. story, and now, the plan is to really -- the objective of trying to bring this business to be a large business outside of the U.S. as well in terms of origination. And our entry to Africa has -- recently, has accelerated some of that.

At the same time, we are also not just a one-pony show. [Technical difficulty] Mobile Top-Up. And really, the goal is for that business to be really a leader in all types of digital prepaid offerings. So, we are just starting to increase the product portfolio and starting to add vouchers and subscriptions into that business.

That's a very large opportunity for us. Recently, we've seen that some private equity investment into that space. I think we had a company I know which you know -- we know well called Recharge.com just got the nice funding of about $35 million, private equity funding into the business. So, there's a lot of opportunity and interest in those type of fintech opportunities.

And because we realize that this is becoming an area of large interest, internally, at IDT, we are trying to also to carve out the economics of that business away from the rest of the Traditional Communications products. Not thinking about from an accounting perspective, but even managerially, we want -- we are trying to make MTU to become more independent in its operations in terms of its management team and resources. Today, obviously, the top-up business share the tremendous amount of resources all across the spectrum with our other U.S. offerings, especially Pinless and Money Transfer, same sales force, a lot of the same operations people, a lot of same technology in some areas.

So, we are going through that process. And our ultimate goal is to be able to educate to ourselves, as well as to our investors, how does that business truly look from an economic perspective if it was a carved-out operation. And once we get better at doing that, we'll be glad to share that with our investors.

Adam Wilk -- Greystone Capital -- Analyst

Great to hear that. I really appreciate that. That's helpful, and I'm glad you guys are kind of thinking about it that way. And I would echo David's comments as well, and I'm looking forward to watching you guys continue to execute.

So, thanks again for taking my questions, and great job.

Marcelo Fischer -- Chief Financial Officer

Thank you.

Operator

[Operator instructions] OK. We have a question coming from Kevin Zeng from Tribunal Capital. Your line is live.

Kevin Zeng -- Tribunal Capital -- Analyst

Hi. Thanks so much for taking the time for my question. I wanted to echo the thoughts mentioned by Adam and David. I think IDT business, in general, is doing great.

You guys are executing well. I just had a few questions on Mobile Top-Up in general. So, you mentioned that you guys have recently expanded with your acquisition of the African Mobile Top-Up business. I was just curious how that's been going.

Like any color on that acquisition progress, like has revenue been inflecting? Any sort of color there would be great.

Samuel Jonas -- Chief Executive Officer

Yeah, I mean, I'll let Marcelo speak about the specifics related to the financials of it. From an operational standpoint, I can tell you that they're being very well integrated into the company. Tomorrow -- I'm sorry, not tomorrow, Thursday, we have a companywide kickoff, and they will be presenting about their business to everyone. And they're joining all of our meetings that we have with carriers around the world and tell them about their abilities of selling into Africa, as well as, I'll call it, Pan-Africa as well.

And it's been -- it's really been a very good partnership, and they're great guys. So, I mean, we're very happy to have them on board. I'll let Marcello answer a little bit on the P&L related to them.

Marcelo Fischer -- Chief Financial Officer

Sure, yeah. Hi, Kevin. Yeah, the company we acquired is no new -- is not a new relationship to IDT. We have been doing business with them for more than a decade.

The -- we have been one of the largest aggregators supplying to us the Mobile Top-Up airtime for Africans MNOs for a long time. So, effectively, what we have done is we acquired them, a majority stake on them. And by doing that, we have been able to kind of verticalize, right, the relationship. And now, we have direct access to the MNOs which previously we did not.

OK? So, that improves the cost that we get for airtime for African carriers. And having a lower cost allows our team in the U.S. to price our Mobile Top-Up offerings better in the marketplace. And by doing so, we're now able to gain market share and expand the market in the U.S.

So, we also have, in some ways, a platform, especially on the B2B side, platform which are probably better than what we had in IDT, and we are in the process of incorporating their platforms into ours and taking the best of both. So, it's a really good relationship, a relationship that we have known for a long time. And the integration, the synergies in pricing and cost, and approach to go-to-market has been very strong. And because of the fact that they have boots on the ground in several African countries, it also opens our ability to market our products in that continent faster.

That's what's about the national growth strategy.

Kevin Zeng -- Tribunal Capital -- Analyst

I see. That makes a lot of --

Samuel Jonas -- Chief Executive Officer

I would say -- I'll add one more thing --

Kevin Zeng -- Tribunal Capital -- Analyst

I'm sorry.

Samuel Jonas -- Chief Executive Officer

To what Marcelo said is that they, on their own, have been doing quite well in sales to African carriers, and their own margins have improved.

Kevin Zeng -- Tribunal Capital -- Analyst

I see. That -- now, that's amazing to hear. I'm glad that it's -- the integration is going well on that. In terms of the P&L, it's also pretty good in terms of reducing costs and verticalizing the relationship.

And this is for Marcelo specifically. I think you mentioned like that there was private equity interest in the business. My internet was a bit shaky, so I'm not sure if I heard it right. Like a $35 million like on [Inaudible] I'm just curious, any color on that? 

Marcelo Fischer -- Chief Financial Officer

Yeah, I think that recently, if I read correctly, I think there's a company, we know them well and they're a competitor of ours, Recharge.com. I think they believe -- I believe they got private equity funding recently, probably a Round B for about $35 million. It's just anecdotal, right?

Kevin Zeng -- Tribunal Capital -- Analyst

For sure.

Marcelo Fischer -- Chief Financial Officer

Example of the fact that people are interested in this type of mobile top-up and fund up and other prepaid digital offerings right now. Yeah.

Kevin Zeng -- Tribunal Capital -- Analyst

Got it. That makes sense. I guess one last question about Mobile Top-Up. So, I think, yes, you've talked a lot about how you guys are mostly in the United States right now and domestic, but you're thinking about doing some sort of expansion outwards.

And so, just looking at like year-over-year growth, Mobile Top-Up is somewhere around like 30%, 40%. I'm curious, like do you think that it's going to trend down from here over the next few years or that it's like an inflection point? And like what -- maybe like a general range for you where you see this business in like a few years? Look, I know you guys think it'll be big, for sure, but just curious on the specific numbers.

Samuel Jonas -- Chief Executive Officer

I mean, I don't see it trending down. That's for sure. I mean, what I would say is that we need to build out some of the capabilities to take advantage of the amount of growth that there is out there. And that comes both on the direct-to-consumer side.

Again, right now, we've been focused on acquiring customers in the U.S., and we haven't focused on acquiring customers outside of the U.S. And that means that we have to hire D2C marketing personnel essentially in each of the markets that we go after since each one of them is different. They all need their own SEO and SEM, and they all have their own advertising partners and their own -- and then from a technology point of view, you need to be able to accept different payment types in different countries. You need to make sure that your foreign exchange is competitive with whatever is in those markets.

So, again, I think that it might be, I'll say, not linear growth internationally, but definitely, over time, I think that the amount of growth that we could get from international is way in excess of 30% a year. I think that that would be an understatement.

Kevin Zeng -- Tribunal Capital -- Analyst

Great. Sorry, I just thought of a new question while your answering. So, one last one for real. So, I was thinking in terms of just the take rate for Mobile Top-up.

So, I guess two parts to this question. One, so obviously, the next expansion, the next step is international, right? I was just curious on the dynamics in terms of the take rate, of whether or not like the take rate would kind of trend down internationally and just, on average, be lower? And I guess the second thing I would ask is just like, in general, as like Mobile Top-Up, obviously, you guys have a great cost structure. So, you guys are probably getting a better take rate than most other mobile top-up businesses. I'm just curious if you guys think like there's going to be competitive pressure that would push down the take rate? And if you think you guys could be able to spin that off or if you think that it'll probably shed some take rate loss over overtime.

Samuel Jonas -- Chief Executive Officer

Definitely -- I mean, domestically, I think that we have done a good job of improving, I'll call it, our take rate by moving more of the business to direct to consumer and negotiating really good deals. As far as internationally, again, we don't have as much experience with it. We definitely don't think that in every country, we're going to be able to get the same take rates that we have here in the U.S. But we think that there are certain countries that have better economics and certain that have worse.

I mean, we're hoping that when it equalizes out, that it will be similar to where the U.S. is, but it might end up being slightly lower.

Kevin Zeng -- Tribunal Capital -- Analyst

Got it. All right. Thank you so much. Or did you have something else you want to add? Sorry.

Samuel Jonas -- Chief Executive Officer

No, that was it.

Kevin Zeng -- Tribunal Capital -- Analyst

OK. All right. Great. Thank you so much for taking the time.

I think you guys are doing a great job. Keep up the good work. Thanks so much. Take care.

Samuel Jonas -- Chief Executive Officer

Have a good night, everyone.

Operator

[Operator signoff]

Duration: 46 minutes

Call participants:

Samuel Jonas -- Chief Executive Officer

Daniel Koch -- Alta Fox Capital -- Analyst

Marcelo Fischer -- Chief Financial Officer

Brian Warner -- Private Investor

David Polansky -- Immersion Investments Inc. -- Analyst

Adam Wilk -- Greystone Capital -- Analyst

Kevin Zeng -- Tribunal Capital -- Analyst

More IDT analysis

All earnings call transcripts