IDT Corp (IDT) 2013 Q4 法說會逐字稿

Hello, and welcome to the IDT Corporation's Fourth Quarter and Full Year Fiscal 2013 Earnings Conference Call. During management's prepared remarks, all participants will be in listen-only mode.

(Operator Instructions)

After today's presentation by IDT's Management, there will be an opportunity to ask questions.

(Operator Instructions)

In today's' presentation, IDT's Chief Operating Officer, Shmuel Jonas, will discuss IDT's financial and operational results for the three month and 12 month periods ended July 31, 2013.

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 obligations either to update any forward-looking statements that they may 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 the Q&A. IDT's management may make reference to the non-GAAP measures, adjusted EBITDA, non-GAAP net income, and non-GAAP EPS. A schedule provided in the Earnings Release reconciles adjusted EBITDA, non-GAAP net income, and non-GAAP EPS 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, www.IDT.net. The Earnings Release has also been filed on the Form 8-K with the SEC.

Finally, please note this event is being recorded. I would now like to turn the conference over to IDT's Chief Operating Officer, Shmuel Jonas.

Thank you. I am joined here in Newark today by Marcelo Fischer, the Chief Financial Officer of IDT Telecom and to answer your questions about Zedge Jonathan Wright, Chief Operating Officer of our Zedge business. We also have Tom Arnoy, CEO, Zedge's Co-Founder and the Chief Executive Officer on line from Norway.

For those who are new to the IDT story, let me begin by summarizing our business. IDT's growing and profitable core telecommunications business is focused on providing international long distance calling and payment services, primarily to immigrant communities through our flagship Boss Revolution brand, and on leveraging that retail traffic to provide wholesale international call termination services to other telecoms globally. In addition, we have majority stakes in two exciting early stage businesses, Zedge and Fabrix systems, built around mobile content acquisition and cloud based video storage respectively. Rather than start with an overview of our results for the fourth quarter and the full fiscal year 2013, I'm going to take a few minutes to highlight several trends and strategies which are driving our business and results, touching on the numbers as appropriate, and when done we will take questions.

I'll begin by pointing out that our two non-telecom businesses, Zedge and Fabrix, continued to perform extremely well. I believe that both businesses are often overlooked as significant potential sources of value within IDT. During the fourth quarter, we announced that we have begun to explore strategic options for Zedge, where mobile users go to discover free, high quality mobile games, ring tones and wallpapers. Zedge's app is available on both Android and iOS. We believe that as consumers continue to customize their devices, platforms like Zedge that offer everything from wall papers to ring tone options will prove increasingly popular with consumers. Already, Zedge has been ranked in the top 15 most popular apps in Google Play Store for the last three years. That is a remarkable feat, typically one that is only achieved by players like Facebook, Google, and Twitter.

More impressive is that Zedge's popularity has been fueled by organic growth, not by expensive user acquisition programs. Zedge has over 1 million Facebook likes. Zedge's sustained popularity is a testament to the unique value that it offers to mobile phone users, mainly a fun and easy way to acquire relevant content which is in high demand and core to the mobile customer experience. That value is enhanced exponentially by Zedge's ability to identify and deliver curated content recommendations specific to each user, with a singular commitment to an outstanding user experience.

You will notice that in the Earnings Release and our soon to be filed SEC 10-K report, we have begun to report Zedge as a separate reportable segment. While Zedge's revenue growth continues to be impressive, up 70% in the fourth quarter compared to the year-ago, our excitement over this business is based far more on the underlying user metrics and the exploding mobile market in which it operates. Zedge's app has been downloaded over 75 million times, and remains installed on over 33 million devices. A huge percentage compared to most other apps, which testifies to Zedge's user satisfaction and acceptance. Also, I think it's important to highlight that we believe that Zedge's popularity on Android serves as a good harbinger for what we expect to happen on iOS.

As you recall, Zedge's app has been available on Android since late 2009, and today around 20% of all Android users in the US have installed Zedge on their phones. Zedge released a limited version of its app on iOS, featuring wall papers alone in December 2012. Despite this initial content limitation, Zedge's iOS app has already been installed close to 5 million times, and is in the top 100 most downloaded free apps in iOS. In the coming weeks, Zedge will expand its iOS offerings to include ring tones, which should accelerate growth even further, and we will then launch games and apps and the discovery tools inside.

In order to fully realize what we believe is Zedge's impressive untapped value, we are looking at value unlocking options for this business. The alternatives may include a spinoff as a separate Company, a sponsored spinoff, taking in a strategic partner, or an outright sale. The goal is to find the right mix of growth capital and positioning to allow Zedge to flourish, and have that value recognized. IDT, of course, has a track record of creating shareholder value by successfully pursuing strategic alternatives. Net to phone IDT entertainment and more recently Genie Energy and Straight Path Communications subsidiaries are all examples. With regard to Zedge, we are very early in this process and we will keep you apprised as developments warrant.

Now let me shift gears to discuss IDT's financial results, beginning with our steady revenue growth. Fourth quarter revenue of $412 million represents the 14th consecutive quarter of year-over-year revenue increases. From a revenue standpoint, our TPS segment accounts for 98% of IDT's total revenue. So let's spend a little time discussing where the growth in TPS is coming from, and to understand why.

TPS's revenue of $404 million in the fourth quarter increased 6.8% compared to the year-ago quarter, and for the full year fiscal 2013 it increased by 7.5% to $1.6 billion. The IDT retail communications vertical within TPS was the key driver of TPS's revenue growth. Retail communications revenue in the fourth quarter increased 20% year-over-year to $176 million. For the full fiscal year, retail communications grew by 19% compared to fiscal 2012 to $656 million. Retail growth was powered by sales of our flagship Boss Revolution Endless Service, which saw sales grow by 56% compared to the year-ago quarter, and now compromises over 75% of all US retail communications revenue.

Retail communications also includes several product lines that are in decline including, most notably, our traditional disposable pre-paid calling card businesses in both the US and abroad. Within retail communications, these declining product lines are becoming less impactful as Boss Revolution Pinless continues to grow. In fact, traditional prepaid disposable calling cards comprised less than 10% of US retail communications revenue in the fourth quarter. For fiscal 2014, we expect that Boss Revolution Pinless will again power a double-digit increase in retail communications revenues compared to 2013, though most likely at a rate below the 20% jump we saw in the fourth quarter. We are seeing slower growth in Boss Pinless as the service matures and we begin to fully penetrate our target market in certain areas. Also just last week, Boss Revolution apps were launched on Android and iOS, and version 2 is already being readied for release.

TPS's payment services vertical also continued to play a prominent role in the growth story. The largest current component of payment service revenue is derived from the sales of international air time top up, or what we referred to in the past as IMTU. Payment services revenue increased 17% compared to the year-ago quarter to $50 million for the full year. Payment services revenue is up 25% to $191 million. You can try the service for yourself by going to bossrevolution.com from your desktop or mobile phone.

Our wholesale termination vertical with revenues in the fourth quarter of $165 million, saw a decrease in revenue of 6% compared to the year-ago quarter for fiscal 2013. Wholesale termination revenue was $688 million, a decrease of 4% compared to the prior year. The declines resulted primarily from rate increases and [froze] on calls industry-wide into several popular south Asian countries that began to impact us in the third quarter. Although these increases reduced our minutes of use and revenues to these destinations, these routes were only marginally profitable and hence the reductions in revenues had virtually no impact on our profitability. To see some of our innovative ways we help small carriers, log into IDTexpress.com. You'll see new tools that allow carriers, particularly smaller ones, to self service their international long distance telephony needs. For fiscal 2014, we expect that wholesale termination revenues will remain relatively steady. However, as we experienced with the south Asian destination carders pricing issue in the third and fourth quarters of this year, developments completely outside our control can have a significant impact, positive or negative, on wholesale revenues but typically with little consequences to bottom line wholesale business profitability and operating margins.

These three verticals retail communications, payment services, and wholesale termination provide a good starting point for understanding the likely trajectory of growth in the current fiscal year. Looking further into the future, our ability to grow and prosper will depend in large part on our ability to expand the geographic footprint and distribution penetration of our existing Boss Revolution based products. Our ability to acquire and retain Boss Revolution customers and our ability to further diversify the Boss Revolution franchise to include a powerful suite of payment services tailored to our target market, under banked immigrant communities, primarily in the US.

The United States leads the world by far and away in attracting foreign born residents. As of March 2012, the Pugh's Research Center estimated that approximately 42 million immigrants lived in the US, and nearly half of them were of Hispanic origin. Further, a significant portion of the foreign born US population, around half are under banked. The data also shows that the under banked spend a disproportionate amount of their income on alternative banking services like money orders, check cashing fees, et cetera. There is clearly a huge potential for affordable, convenient, and reliable payment services accessible to the under banked consumer.

In terms of our payment service offerings, we have already rolled out not only global air time top up products over the Boss Revolution platform, but also domestic air time top up air, and more recently a domestic bill payment product. And as we previously announced, we are also soft launching our international money remittance service, and have begun to gradually sign up agents in those states, now 37, where we have been issued the requisite state regulatory licenses. During fiscal 2014, we expect to add to our suite of payment service products with additional offerings including a prepaid virtual Visa card that will enable the unbanked to shop online, a reloadable debit card to provide bank account like financial services, and closed loop gift cards that will enable customers in the US to purchase gift cards of poplar international brands, and retailers that family members overseas can use to shop in their favorite local stores.

The strength of this suite of payment services lies not only in its diversity and comprehensiveness, but also in that it leverages the Boss Revolution brand and platform. That platform is not only a powerful highly scalable and very flexible transaction processing engine, but also a network that allows us to communicate instantly with our distributors and retailers, and adjusts prices and terms to changing market conditions. The invisible glue that holds all of this together is trust. The trust that our customer base has in Boss Revolution. Boss has become a leading pinless calling brand for our target market because our transparent and competitive pricing, and the ease of use and quality of services we provide. We intend to build upon and enhance that trust as we deploy new payment services.

To wrap up, I just want to underscore the importance of adjusted EBITDA results. For the fourth quarter, adjusted EBITDA increased over 45% to $9.7 million compared to the year-ago quarter. While for the fiscal year, adjusted EBITDA increased 55% to $39.4 million. The bottom line here is that we are taking a long view towards investing in and leveraging the scalability of Boss Revolution, while at the same time focusing on short-term cash generation, and in sharing this cash with our shareholders through dividend payouts. And in fact, we today announced that we will resume quarterly dividends, that the disbursement for the first quarter of fiscal 2014 of $0.15 provided that the quarter's results are consistent with our internal expectations. Throughout fiscal 2014, we expect to continue to grow revenue and deliver adjusted EBITDA at or better than 2013 levels, even as we continue to invest in new payment initiatives and technology that brings us ever closer to our customers.

Finally, as we move to the bottom line of our income statement, I want to stress that the full year provision for income taxes of $15.9 million in 2013 is almost entirely non-cash. IDT has over $100 million in net operating loss carry-forwards that we will continue using in fiscal 2014 to offset any of our federal tax obligations.

That wraps up my remarks on the quarter. Being that Jonathan and Tom were kind enough to join us on the calls, and since this is a great opportunity for them to introduce themselves, I would like to invite them to say a few words about Zedge before we take questions. Jonathan and Tom, take it away.

Thank you Shmuel. So hello, yes, my name is Tom Arnoy. I'm the CEO of Zedge. Zedge is all about customer engagements. Consistently remaining in the top 15, speaks to Zedge not being a fad. Our ability to do this successfully is a result of our technology investment, focused on discovery and relevance. Zedge's solution is validated, and Zedge has become a known and trusted name in the mobile content space. Jonathan?

Thanks Tom. This is Jonathan Wright. I'm the Chief Operating Officer to Zedge, and I really wanted to provide a little bit of perspective. I'll be brief. But over the past years, Zedge has really invested in its efforts on building a great product and a very loyal customer base. And we're just now at the threshold where we're starting to focus on transforming that customer base into a real monetization engine that will spin off great dividends and revenues as the Company continues to mature. I should comment that monetization from our vantage point is not only something that we generate from the native installed base that we have, but also from the technology investments specific to discovery, which is really what we specialize in, and is one of the reasons why our customers continue to come back to us on a regular and consistent basis.

Discovery in general is a much needed solution in the marketplace today. Going into the app stores is really difficult for most users in terms of finding new and exciting content. And the way that we render content and curate content to our users is the magic sauce, and something which we have developed really on a standalone basis, and allows for us to expand into new verticals or potentially to license that capability to other companies that need to better organize their information and present that content to their users. Just by way of example, some funding or valuation from a valuation perspective, there's a Company, a private Company by the name of Quicksy which focuses on discovery. Just earlier today, they announced that they secured a $50 million Series C round of financing to continue their development and their commercial buildout.

Dating ourselves a little bit, Apple acquired a Company by the name of Chomp which was essentially a pre revenue Company, around two, two and-a-half years ago, for $50 million, in order to help Apple better organize and present and render the contents they have in their app store to users. And we believe that Zedge is really in the right space today in an explosive market that can deliver great returns for our investors, provided that we're given the growth capital that we need in order to mine this opportunity.

Thank you so much for your time, and I think it's time for the moderator to bring on question-and-answer session.

Thank you.

(Operator Instructions)

Jay Srivatsa at Chardan Capital Markets.

Yes, thanks for taking my question. It sure looks like the Boss Revolution products are growing pretty nicely for you, you said I think 75% of all retail communication revenues. Maybe you can share with us what are your plans for expansion of Boss into other geographies, and when do you hope that to play out?

Well, we're already in I would say over half a dozen countries outside of the US, and I don't expect that we're going to be exponentially international in the short term, although we just launched Canada. I think that in terms of geographies that are less fully mature, we definitely believe that California and Texas are much less mature for us than the Northeast, and we're investing heavily in bringing on many more salespeople, advertising, et cetera. Those are the main areas that we're expecting large growth from.

All right. In terms of payment services, the money remittance aspect of it, you mentioned several cards that you're planning on launching. What's the time line on these things? Do you expect money remittance to start to become material for IDT overall by end of fiscal '14, or is it more longer term? Help us understand that.

I think that it's more of a 2015, 2016 event. We don't give projections, but we believe that payment services in general will be half of our EBITDA within three to five years from now. So a $20 million to $25 million EBITDA would be great from that business over the next couple of years.

All right. In terms of minutes of use, looks like the wholesale termination services revenues appear to be dropping off on a year-over-year basis. As you look at fiscal '14, do you expect Boss to make up some of the difference, or do you expect some modest increase in wholesale termination as some of the Asian, south Asian destination traffic starts to increase?

We definitely expect increased traffic from Boss Revolution Pinless. It doesn't affect the revenues for wholesale, but we expect wholesale to hold on to the business, maybe even grow it. As I said, it's really -- it's based on what carriers do. If carriers raise rates tremendously, people call less. If the they lower rates, people call more. But as we also said, it doesn't really have an impactful -- it's not really very impactful on the bottom line one way or the other.

All right. A question for the Zedge guys. Some of these wallpaper and ring tone apps are pretty notorious for some of the adware that shows up. How are you positioned in terms of managing some of these advertising tactics, and how do you ensure a good user experience?

Tom, would you like to take that?

Yes, I'm not sure if I heard the first part of the question.

Okay. Let me repeat. What I was saying is that some of these apps for wallpaper and ring tones are pretty -- have a pretty bad reputation for adware, especially shady advertising tactics and stuff like that. The question was how do you manage that, and how do you protect the consumer from not getting hijacked into a different website, and make sure that their experience is positive?

Okay. Yes, so first of all, we are validating our partners. We also have a lot of direct relationships. So we run in the control of the advertising happening inside our inventory. So we're certainly paying a lot of attention to that, and our users' trust is very, very important to us. So we QA, like all the advertising partners, and we more and more replace networks with direct relationships and run the advertising ourselves.

Okay.

Hope that answered your question.

Sure. Shmuel, just on the spinoff of Zedge itself, looks like is it's just beginning to start to contribute to IDT's revenues in a meaningful way. What's the urgency in the spinoff, and why now?

I don't think that we're urgent. As you said, it's doing quite nicely. It actually slightly adds to the bottom line as well. I think that it's, frankly, I think it's not valued appropriately inside of IDT. I think it's worth, who knows, maybe it's worth as much as IDT in the right hands. And that's really the reason. And I think it's -- that they provide an incredible user experience for their users.

They're currently only on one platform materially. The games vertical is just starting to grow, and that's where most of the revenue comes from. But the apps hasn't even been launched yet. And that too will be material. And we think that they'll continue to do very well inside of IDT, but we think that they might do even better with more capital invested in them to continue that growth trajectory.

All right. Last question for you, Marcelo. Looking at the financials if I'm looking at this right, looks like there was a pretty hefty tax bill this quarter, which seems to have affected earnings quite a bit. Can you help us understand what happened to the tax line, and what do you expect the tax rate to be as you look at 2014?

Sure. Hello Jay. First of all, thank you for joining us on the call. Yes indeed the tax line was a bit higher than we saw previous quarters. That really reflects to some extent good news in terms of how IDT, especially in the US, is progressing in terms of profitability. Right now, our effective tax rate is around 47%. That's what you see for the full year in today's filings, in today's release. And we probably should be using about 47% going forward. And the main reason why the effective tax rate is relatively high and became higher over the last quarter is that the US is becoming more and more profitable, and therefore, we need to make a provision for taxes in the US, and of course they're utilizing our NOLs and our little tax assets to cover that, not to result in any cash taxes liabilities in the US. While at the same time, in our overseas operations we have losses on the bottom line net income, for which we cannot take a tax benefit because they have a full valuation allowance on the tax NOLs. And because of that, when you combine -- the basis, losses overseas for us very high pretax income in the US and growing, that results in a higher effective tax rate.

Okay. Thank you. Good luck.

Rob Cohen at Ivy Lane.

Hello guys. Thanks for taking my call. Great quarter. Just had a few, a couple housekeeping questions, and then one to move on to the divisions. So starting out, from a cash perspective, the $147 million of cash, going through the cash flow statement it looks like you've already allocated the $15 million of cash to the Straight Path spinoff. Is that right?

That's correct. The cash on the balance sheet from July 31 excludes the $15 million that went with SPCI.

Okay. Great, great. Phenomenal cash generation. Going through the cash flow statement, it looks like roughly $60 million of cash from operations and $15 million of CapEx, so $45 million is pretty strong. Next, talking about Boss a little bit, and great presentations that you guys put out a few days ago. I don't know how many people saw that in the 8-K. But, one of the things you talked about with Boss was growing your margins by getting closer to the consumer. What that kind of sounds like is maybe after a consumer has activated his Boss account, maybe through the mobile apps or through the computer, they might recharge that account through directly with Boss, directly with you guys. Is that kind of what you're talking about in terms of getting closer to the consumer to grow margins?

Yes, that's definitely a large part of it. I think in that sense, you're now able to actually go out and see the products. You can, as I said during the earnings prerecord we'll call it, you can go and download both our iOS app and Android app and see how it gets closer to the consumers. But it's also in terms of a variety of ways. Frankly, we're starting to do a lot more friends and family type referrals. So inside of the app now it says when you suggest to a friend of yours that you -- that they join Boss Revolution, you're going to get 10% added to your calling balance for every dollar that they spend.

And that's a lot less than we pay in distribution costs for a customer we might not have already gotten, and we then have their e-mail address and their -- obviously their phone number and we can get closer to them with other offers, and money remittances, and prepaid GPR cards, et cetera. One of the things that we try you to do every day is to, A, strengthen the relationship we have with our distribution, because they're the key to our success. So we never, ever try to compete with them. So all of our products try to get the consumer both to come to us directly and to go to the retail stores, and I think we've been pretty successful at it to date and we continue trying.

Right, right. And so I guess my understanding is the bodega or the convenience store that sells, that makes the original sale of the Boss account is going to get a commission regardless, say if you sign up in the store, even if you recharge or use the app, but that's just --

100%. That's correct. The person that -- the distributor store that opens a Boss Revolution account will get commission on that account no matter where that person recharges, whether or not he recharges in that store or online.

So how much -- obviously I guess for competitive reasons you haven't kind of disclosed the margins on Boss. But can you give any -- give us any direction as to how much margins might be able to improve because of this phenomenon of getting closer to the consumer?

We didn't discuss on the call. I should say we didn't discuss before the call whether or not we would disclose it. So therefore, I guess if we decide to we'll do maybe a separate 8-K about it. But at this time, I'm not going to disclose it.

Okay. Okay. And then going to -- just we've been tracking the quarterly growth in retail communications for the last -- going back to 2010, and this looks like the fastest growth basically that you've had. This is 20% basically year-over-year, and 6.6% sequentially. It almost looks like it's accelerating a little bit. In terms of dollars, it's up almost $11 million sequentially, which is by far the biggest sequential growth quarter you've had. What's driving that? Is it California? Is it Texas?

Again, I don't think that the growth has grown tremendously, maybe it is slightly up. I don't have the chart in front of me. But it's definitely continuing to push it everywhere, and any way we can. And again, we expect that all of the new ways that we're trying to get customers are going to pay off. But I think Marcelo has something.

Obviously, (inaudible) communications vertical have been growing. It's increasing by the Pinless product in Boss Revolution. You're correct, it's up 20% year-over-year. We believe it probably will continue to grow double-digit. We expect that to happen. We're putting a lot of investment behind it, thinking about this day in day out. We probably would say that probably the rate of growth at some point will probably start declining just because the baseline upon which it is growing is becoming a much higher baseline, no question about it. But our TPS business up till now did $1.6 billion in 2013. We would surely like to be at the $1.7 billion for telecom by the end of next year, if not more.

Right, right. And Marcelo, while you're on the phone, just kind of going off topic, going back to the NOLs, what is the rough NOL balance right now? You said over $100 million. What is it?

Yes, we have total NOLs at this point of roughly about $170 million that we could utilize over the next 15 plus years. Some of those NOLs at this point we have already reflected them in our balance sheet in the form of the full tax asset. But most of it, okay, we still have a valuation allowance against it, but they are fully available for us to utilize.

We're really going to use most of it this year for a sale of something.

You'd like to use it for the sale of something?

Yes.

What are you going to sell?

Who knows. Zedge maybe, God willing.

Okay. Just looking at it, it's obviously for a sale but it would seem like you're not going to be paying cash taxes for everything else equal for a few years at least, right? Or maybe a -- (multiple speakers)

Everything else equal, that's the case.

Yes, okay. Now, jumping over to Zedge or not to -- to Fabrix, I noticed that your R&D was up $0.5 million sequentially, so that call it 30% sequentially. Is that -- that's pretty strong R&D growth. Is that -- are you anticipating some new customers there? Or you talked a little bit about the sales pipeline.

The answer is we're definitely -- we definitely are. We're also expanding into new verticals as we've said in the past, security is one of the main things. They have over 85 engineers right now in Israel, so the answer is it's really an expansion of engineering, and we hope it pays off in multitudes.

Okay. Directionally, how do we -- I know you haven't given guidance, but for investors, how can you -- how can we kind of quantify the opportunity there? It's sort of a black box. It's this software company that sort of operates with -- I guess IBM is the primary partner for now, at least. How do you quantify the opportunity there, or how should we quantify the opportunity and what do you think it might be worth to investors at some point?

It's really hard for me to say. I think it's our most valuable asset. I hate to say that while the folks from Zedge are on the phone, but I've always told you this in the past. I think Fabrix is really terrific. The fact of the matter is, is I really don't -- I can't give you an answer.

Well how much -- maybe put it like how much -- when you look at the size of the market you're going after, how much revenue do you think a business like that could generate in the next couple of years?

It's hundreds of millions. A single client could generate from $20 million to $100 million. So it's not impossible that it could be hundreds of millions.

Okay. From your lips to God's ears. And I guess finally, and I'll get back in queue, for the Zedge guys, how big do you think that business can get? Obviously you're just now starting to ramp. It would seem like a business that would scale cash flow very quickly as revenue started to grow, and that margins could end up being pretty high in a business like that. Do you have a -- do you have thoughts on that? Or is there a business model or a business plan that kind of outlines how you think that business could grow in the next few years?

Sure. This is Jonathan. So we're actually in the midst of working with financial advisors. But I will say if you take a look at the overall apps marketplace, and specific to that you take a look at the portion of revenues that are generated from games through in-app purchases and the like, that is the overwhelming majority of revenue that comes out of the app marketplace today. And specifically, what we are focusing on from a end customer perspective is really serving as a very valuable distribution platform. Everything is non-incented. So we bring high value customers to the advertisers and to the app developers. And to highlight what Tom had said earlier, we have really been successful in converting advertisers that had been buying inventory through third party networks, and becoming direct advertisers of ours. Not on a one or two month basis but on a recurring basis.

So as we continue to expand, as we launch on iOS and increase our user base there, and really most importantly to a certain extent as we continue to improve and increase the engagement that we have with each customer, either from the existing content that we have or by rolling out new verticals, we expect that the reward will be very visible. Not only at the top line but also at the bottom line. I should also point out that our revenues are true revenues. These are not grossed-up revenues like you'll see out of many app networks where they've got partners that are going to take a 70 or 80% cut. So what you see with us is truly what you get, and the opportunity is one which to your point we believe truly does scale.

Separate and apart from that, that does not address the technology piece of this. Where with the right capital investments, we believe that we can take the recommendation engine that we have built and productize that so that third party apps can take advantage of that in terms of their offering, and ultimately provide a better user experience by curating whatever content or advertising they offer to their end users accordingly. And that's something which is really at a very early stage, but is one of the things that we would want to invest in with the outside funding coming in.

Okay. And maybe one more question for Marcelo if you don't mind. Just looking at adjusted EBITDA for the core business. So if you take out Fabrix, for instance, take out All Other, let's take out All Other, that was $1.1 million of loss in the fourth quarter. It looks like your run rating what probably close to $11 million a quarter in adjusted EBITDA, excluding All Other?

That's correct.

Okay. And so say you're talking about double-digit growth next year for Boss, I would -- everything else equal with margins, should we assume that EBITDA probably grows double-digits as well?

I don't want to say that. Again, there's a lot of investment necessary especially in money remittance, in bill pay, in international bill pay, et cetera, that both in terms of actual machines that we need to put into all these stores and et cetera, as well as technology investment. So again, we definitely feel comfortable saying that we can at least meet what we did this past year. Obviously, we try to do better, but we don't want to guarantee anything.

It really depends on the amount of SG&A and CapEx, not much investment I did not try to accomplish this year. We do see still a lot of opportunity to grow Boss, to grow the products that could be sold in the Boss platform to increase the awareness of the Boss Revolution name, through more heavier more tactical marketing advertising campaigns. We are trying to really create that mix of on one hand generating strong short-term cash flows and sharing those cash flows with our investors, and at the same time taking a lot of the cash flow generation and trying to reinvest in the business to create a very solid brand and to improve the longevity and the health of the business.

Okay. Thanks, guys.

John Rolfe at Argonne Capital.

Hello. Just two quick questions. Did you guys disclose what Fabrix's revenue was in the quarter?

I think it's under All Other.

Okay. But can you tell me how much of All Other it was, or no?

So it's almost everything under All Other is Fabrix at this point.

Okay. Great. And then secondly, just one other quick question. Earlier, did I hear you right that you said you thought or hoped that payment -- the payment through the Boss platform could be like a $20 million EBITDA business a couple of years out?

Yes.

Okay. Okay. Great. Thanks very much.

At this time, there are no further questions. Thank you for attending today's presentation. You may now disconnect.