IDT Corp (IDT) 2022 Q2 法說會逐字稿

Good evening, and welcome to the IDT Corporation Second Quarter Fiscal Year 2022 Earnings Call. In today's presentation, IDT's management will discuss IDT's financial and operational results for the 3-month period ended January 31, 2022. During prepared remarks by IDT's Chief Executive Officer, Shmuel Jonas, all participants will be in a listen-only mode. (Operator Instructions) After Mr. Jonas' remarks, Marcelo Fischer, IDT's Chief Financial Officer; and Jonah Fink, Chief Executive Officer of IDT's net2phone business will join Mr. Jonas for 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 the non-GAAP measures, including adjusted EBITDA, non-GAAP net income and non-GAAP earnings or loss per share.

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 a Form 8K with the SEC.

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

Thank you, operator. Welcome to AT's earnings conference call. I'm joined on the call by Marcelo Fischer, IDT's Chief Financial Officer; and Jonah Fink, CEO of net2phone, who is prepared to do these calls on his own. The 3 of us will be available to answer questions after my remarks. My discussion today will focus on the second quarter of our fiscal year 2022, the 3 months ended January 31st, 2022. 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 Monday, March 14.

Our second quarter financial results were highlighted by year-over-year improvement in gross profit, income from operations and adjusted EBITDA, driven by the continued expansion of our growth businesses. In our Fintech segment, NRS accelerated the growth of its customer base, activating nearly 1,400 new POS units and 1,200 NRS Pay accounts during the quarter. As of January 31, NRS served 16,500 active POS terminals and 8,000 NRS Pay accounts. NRS' recurring revenue increased 118% from the year ago quarter to $9 million, led by triple-digit gains from advertising and merchant services revenue. For purposes of sequential comparison, keep in mind that our second fiscal quarter includes January, which is invariably the slowest month of the year by far, for advertising revenue.

We are still in the early stages of NRS development in terms of our addressable markets, new service offerings and monetization of our current offerings. And net2phone subscription revenue increased 32% year-over-year to $12.5 million in the second quarter of 2022. Growth was strong in our Latin American markets, particularly in Mexico, where we continue to find success with larger customers. Net2phone's reach into the mid-enterprise market will expand significantly in the coming quarters, as we leverage the Integra acquisition that closed just last week. Integra is a fast-growing CCaaS provider with an entrepreneurial team. We are delighted to welcome them to the IDT family. We will incorporate Integra's CCaaS service with net2phone's UCaaS solutions to create a higher value integrated offering that we expect will drive growth and significantly enhance net2phone's unit economics, as we become more competitive upmarket.

We expect to pay a total of approximately $15 million in cash and stock for Integra, inclusive of an earn-out of approximately $3.5 million, as the business grows, as we expect to roll in the next few years. In calendar 2021, Integra generated a little over $3 million in revenue and $1.2 million in EBITDA. Integra's CCaaS ARPU is approximately twice that net2phone's UCaaS offerings.

Our goal is to complete the spin-off by the end of the current fiscal year on July 31, should our Board authorize it. Also within our Fintech segment, BOSS Revolution money transfer transactions increased 21% year-over-year, while revenue decreased 6% to $12.5 million. On an apples-to-apples basis, adjusting for the impact of transitory foreign exchange that improved second quarter fiscal 2021 results, transactions in the second quarter of fiscal 2022 would have increased 36% and revenue would have increased by 48% from the year ago quarter.

We continue to invest in the long-term growth of our payments business with the acquisition of Leaf global fintech, a startup, with an innovative mobile wallet platform operating in Rwanda, Uganda and Kenya. Leaf was designed to help traders, refugees in other vulnerable populations, store value and conduct financial transactions, safely and securely, by leveraging the Stellar blockchain network, to track balances and activity. Leaf also uses USSD communications protocol. It's also a viable option for 2.4 billion people worldwide, who use feature phones rather than smartphones. We are excited to work with Leaf and hope that their team adds lots of stuff to IDT over the coming years.

Finally, in our traditional communications segment, revenue decreased 3.2% year-over-year to $300.4 million. However, revenue less direct costs of revenue for the segment increased 6%, led by the expansion of our mobile top-up business. While still growing 20% year-over-year, mobile top-up revenue has declined over the past 3 quarters. The decline was predominantly in our lower-margin wholesale B2B channel, where we capitalize on the large opportunity during the third quarter of fiscal 2021, that significantly boosted mobile top-up revenue, but which since has narrowed considerably. We continue to believe that there is a large opportunity in mobile top up, and we expect to return that channel to growth mode soon.

Also within our traditional communications segment, both BOSS calling and IDT Global, which is our wholesale carrier services business, experienced an acceleration in the rate of revenue decline, reverting back to levels we were experiencing before the COVID pandemic.

To wrap up, we continue to allocate capital to accelerate the development of our growth businesses, both through R&D and acquisitions, concurrently, our traditional syndication segment continues to generate increasing margins and robust cash flow. Across all our businesses, we remain focused on creating value for our stockholders and expect that the spinoff of net2phone will be exceptional in that regard.

Now Marcelo, Jonah and I will be happy to take your questions.

(Operator Instructions) The first question comes from [Brian Warner], private investor.

I actually have 3, if I could. First one is on NRS. You've done a great job with advertising (inaudible). And frankly, I'm surprised how well it's done and I congratulate you. But I'm wondering -- a couple of things. Are you surprised how well it's done, and can you give a little color on how you're selling it, and if there's anything changing in your plans there? Are you selling direct to large advertisers now, just sort of maybe you can give your thoughts around that?

Second question relates to your UCaaS business. I'm just wondering if there's pricing pressure that you're seeing in that business, maybe you can contrast that question in both USA and international operations. And then also, if you could, give us a sense of where you're trending in terms of, maybe average account size to a number of lines, stuff like that? And lastly, if there are any material hurdles to the spin-off in your mind?

And then finally -- on the money transfer business, it's a little confusing for me to sort of try and reconcile all the various numbers. I realized there was a very unusual transaction a year ago. But can you give us a little -- sort of the puts and takes on -- you pointed out that the revenue would have been up, I believe it's 48% and the units would have been up maybe 36%. I'm wondering if you can sort of reconcile the difference between those 2 numbers, and maybe just give a little color around the calculation.

Okay. I'm going to try to answer your questions in order, as I remember them. As far as the advertising sales for NRS, I don't believe that anything has changed in the way that we sell it or our expected growth for that business. So there's no material change. As we said in the earnings release, there is some seasonality to advertising in general, and that's a year-over-year comparison is better than a comparable -- than a quarter-over-quarter comparison. However, we are making an attempt to, I would say, increase our direct-to-brand sales force. So we hope that will increase the advertising sales over the coming quarters, as more brands hear about us. I'm actually going to let Jonah take your question on net2phone, so I would -- would like to welcome Jonah Fink to our earnings conference call and take it away.

Thank you. Before I respond to the question, firstly, I just want to thank Shmuel and Marcelo for inviting me on today's earnings call. I'm honored to introduce myself formally to our valued IDT and net2phone communities. I'd also like to take this opportunity of thanking what we've coined internally, net2phone world. Net2phone has now successfully launched our UCaaS product line in 9 markets around the world, and it's due to the net2phone employees that have really brought us to this point. And as we can discuss shortly, a big welcome in virtual hub to our new members in Montevideo, Uruguay at Integra.

To answer the 2 questions, specifically in terms of number one, pricing pressure, we are not. What we've been able to do, is really maintain and sustain ARPU levels for net2phone UCaaS. We look at ARPU very, very carefully as an operational KPI in our dashboards. And like I said, we've been able to maintain and sustain pricing ARPUs around the world. In terms of user size, currently today average user side for UCaaS net2phone is set to 11, but we do expect because of the CCaaS offering, that CCaaS will not only create a value in and of itself, we also expect a lip rate into our UCaaS business, as we have an experience for our customers to get one bill at the end of the month for both UCaaS telephony and CCaaS.

What was your third question, before I turn it over to Marcelo to answer your money transfer question?

I think your question was regarding the timing of the spin-off, if you have had any hurdles around that. So the answer is no. Obviously, we wanted to start the process a bit earlier. But because of the Integra acquisition, which is material for net2phone on a standalone basis, we have to wait until the acquisition process, [with] the completion now -- make sure that we get audited financial statements for the standalone Integra business, which will be incorporated into our registration statement. So now that that's behind us, we could now refocus and try to get the spin-off done by the end of the fiscal year.

I see.

Okay. In terms of -- I believe you had a question about money transfer. So in the Q2, 1 year ago, as we had mentioned multiple times before, benefited significantly from special FX opportunities, particularly in Africa. Those opportunities that we have mentioned in the past are behind us. So when we look more apples-to-apples to what would have been -- business a year ago versus now, you will be seeing revenues growing about [48%] year-over-year, but like fee revenues growing around 55% to 60%, FX revenues growing around the 45% rate on a blended basis, net 48% rate that we shared with you. Obviously, our D2C money transfer business is growing at a much better clip than our retail channel, B2C is growing at around the 55% rate year-over-year, whereas retail growth around 35% to 40%.

The next question is coming from Jason Lustig with J. Goldman.

Jonah, it's nice to have you on this call. Can I start out -- can I start out by asking you a little bit about the Integra acquisition, the strategic rationale and how you -- how it folds into net2phone and your strategy?

Yes, Jason, absolutely, hope all's well. So I'm thrilled to announce the acquisition of Integra by net2phone. Just in terms of the what, let's start with the what -- net2phone -- Integra is not only a complete, modern and robust cloud-based contact center solution. Integra is also a developer platform, that will allow for items such as customizations and integrations and AI, more for the modern global contact center workspace. So really net2phone is getting into the foray, Jason, selling experiences.

The acquisition, in general, made a ton of sense for us for a variety of reasons. One, and most importantly, our UCaaS customers and partners are asking for a cloud-based contact center solution [hosted] by net2phone, it feels almost on a daily basis. Our customers love the idea of having a single invoice at the end of the month for all of their cloud-based communication needs, UCaaS plus CCaaS, all under net2phone. Just as businesses across the globe have migrated and are migrating their on-premise communication systems to net2phone over the cloud. So few contact centers and enterprise-based call centers will be migrating to net2phone via the cloud as well. On a single bill to our valued customers, net2phone will be serving the complete enterprise needs for UCaaS, telephony and CCaaS.

And Jason, 2, as you know, over the past 5 years, net2phone has built one of the most efficient UCaaS distribution businesses in the world. Net2phone continues to act global and think local, and we have deployed talented teams locally in these markets, to now have conversations around the go-to-market for CCaaS. Net2phone has also forged over the past 5 years, significant partnerships with leading master and direct agencies for cloud communication services. Net2phone continues to onboard new partnerships in the space, with leading master agencies such as Avant, based in Chicago, that has a wonderful and current, might I add foray into the UCaaS and now CCaaS market segments.

The above stated allows for quick and efficient go-to-market. Sales teams are in place, support teams are in place and the customers and partners are eager to adopt our net2phone technologies.

I'll just add 2 things to it is, one is that, we did business with Integra before we entered into a transaction with them. So we had some firsthand dealing with them as a partner, before they became part of the net2phone team. And from everything I heard directly from the team using them, they are really great partners before they became part of the team. The second thing that I think that's important to add is that, they've also developed everything internally. So besides this being a talented sales organization, it's also a very talented development team that we think we can leverage to enhance net2phone overall. So it's -- it's multifaceted, in my opinion, not just from a -- not just from being a call center solution, but from us to being a general technology solution for net2phone.

Okay. Great. And I guess moving to NRS. And just a few questions about -- you guys have given a great disclosure about revenue and the various line items over time. Can you talk a little bit about how we should think about gross margin, maybe also the difference between the hardware gross margin and the recurring revenue gross margins?

Jason, it's Marcelo. So you hit it in the [middle], right? When you think about NRS' recurring revenues, whether it's SaaS fees, or advertising and data or merchant services for all those revenue streams, our margins are approximately close to 100%. When we talk about the margins on the POS sales, obviously, our goal over there, is not to achieve high marginal growth there. It's just to distribute the POS' in strategic ways. We price it differently depending on different opportunities. But historically, the margin on the POS terminals have ranged anywhere between 10% to 20%. So when you add 2 -- all the volumes together, you probably see a blended rate now of about 85% to 90%. And obviously, that blended rate would continue to move further towards 100% of becoming revenue -- become a larger portion of our business.

However, we intended a lot more POS sales, so that might pull down a little bit.

Can you talk about -- I mean it seems like there was a -- the net add for POS seems to have taken a large tick up in the quarter, which is very nice to see. Can you talk about some of the changes that have gone on in the business, that have allowed for that step-up?

I think 2 things. I mean one is, its increasing sales, and that has definitely helped. The other thing is in terms of making sure that we don't have any churn, there's nothing we can do about a store going out of business, but we really have put an emphasis on the service that we provide, the stores, and that's really been helping keeping churn to as low a level as it has, and we continue to make improvements. When the business is in rapid growth mode, it's sometimes hard to, I'll say, solve every piece of the puzzle. But I really give the NRS team credit, because they've really put a big emphasis, on making sure that the service levels are where they need to be, considering the growth.

Great. And then, I guess, just lastly, what was the adjusted EBITDA for NRS in the quarter?

For NRS, they did around -- a little bit more than $2 million in EBITDA for the quarter. So it's showing pretty nice growth compared to about $1.25 million in Q1. So the trajectory is good. And obviously, that EBITDA may vary up and down, depending on whether we accelerate investment or not. But all else being equal, we should see that EBITDA trends continue to move upwards.

The next question is coming from David Polansky from Immersion Investments.

I really appreciate. I think everybody else does appreciate you putting a hard date around the net2phone spend. But I actually want to talk about traditional a little bit, and I think you almost answered my question in the commentary. Do you anticipate being able to grow traditional EBITDA on a go-forward basis?

I mean I would say that different parts of traditional are growing and different parts of it are contracting. Carrier is not in growth mode. We definitely intend to be able to squeeze out more profit from PIN less than we have been, and IMTU continues to grow. So I would say that net-net, we do intend to be able to continue to grow EBITDA, whether or not we can do that for years and years to come, I can't tell you at this point. But maybe I'll let Marcelo [to address]?

Yes. I mean, David, as you know, traditional consist of 3 distinct primary business, right? So the reality is, when we think about the wholesale carrier business, that business revenues and operational margins have been challenged quite a while. Even though in the pandemic, it also suffered quite a bit. We have been maximizing that business in terms of generating net gross profit. Similarly on the BOSS Revolution PIN-less business, we got a fairly nice lift and a reversal of the trends during the pandemic. Now the trend towards revenue are starting to decline again -- have come back again. That being said, gross profit for PIN-less have not been impacted significantly at all, and that's both because our cost optimization have improved, as well as our mix of our revenues -- shifting more (inaudible) towards our B2C channel, if this higher margin helps mitigate the revenue decline.

So -- and at the same time, mobile continues to grow quite nicely, up 20% year-over-year, and the nice growth in -- specifically in the B2C channel, we've seen mobile [top up]. So there is quite a bit pressure on revenue. I think there will be a tremendous focus on trying to maintain the gross profit around the current levels, and as we continue to give greater focus on reducing the cost structure, both SG&A and CapEx, we may be seeing, I wouldn't say necessarily improvement in EBITDA. Perhaps we [we will catch up -- once] mobile top-up starts growing a little faster. But certainly, we hope to maintain the current EBITDA levels, until mobile top-ups start showing more in the bottom line.

Okay. So basically, if I flatline EBITDA for the remainder of the year, I have traditionally desired about $100 million business. I have fintech, which is roughly breakeven. I have net2phone at negative $15 million in EBITDA, which is going to be gone in several months. So pro forma, I'm looking at a business that today, including net2phone is $700 million in enterprise value. I have $100 million in EBITDA, because I'm getting net2phone, and then I have NRS, which as you just disclosed in the previous question, is actually EBITDA positive and growing 100% year-on-year, and quickly on its way towards $75 million, $100 million in ARR. I mean, you can kind of put whatever valuation multiple you want on NRS, and basically, the pro forma value for all of IDT post spin is like 3 or 4 times.

So I guess like how -- like how low does the stock have to go, before there's like some action? Like you do a buyback, you accelerate the NRS spend, and you pull it forward a little bit and say, the stock is too low, it's too cheap, where we need to realize some value here, because it -- the stock fell like 10% the other day on the Integra acquisition on some ridiculous beliefs that, you wouldn't be able to effect the spin because, oh, well, they're doing an acquisition, so they're not going to do the spin. You clearly just told everyone that you're doing the spin.

So I guess where I'm going with my question, it's like the market doesn't care, right? I mean, the market clearly doesn't care, they're not willing to give you credit for anything. So at what point do we just say, screw it, let's just gobble up all of our shares or accelerate and pull forward the NRS spin? So I guess, -- that's where I'm coming from. So I appreciate an answer on that.

Yes. I mean I don't think that we have a definitive answer on that. I mean, again, as you know, we have purchased back shares before we paid dividends before and all options are always on the table. At this moment in time, we are laser-focused on completing the previously announced net2phone spin, and making sure that, that investment continues to do really well, even when it's no longer under IDT anymore. And we're also laser focused on making sure that NRS continues to grow even more than it has previously. And that also takes additional investment and both time and resources. But if our stock continues to perform as poorly as it's done over the past couple of months, it's definitely not out of the question. But at some point, we would start to either buy back shares or some other idea. But again, I don't want to say that we're going to do it, because we haven't discussed it with our Board, and we do not have a plan in place at this particular moment.

Yes. That's okay. I guess where I'm coming from, is just -- clearly, the execution is there. You're doing well, you're performing and more importantly, you're doing what you say you're going to do, which is affect -- right now, at least, is the [effective] spin of net2phone, and you're doing it. So that's why I asked about it.

And we think we're also putting net2phone on a really great foot with this acquisition. I mean, again, entering a space that arguably is significantly sexier than UCaaS is at the moment, I think is a major net benefit to our shareholders that, unfortunately, they didn't see in the release. I mean, again, I was going to say that actually, before I forgot, when Jason asked this question about Integra, is that we looked at their business model, I would say, like without net2phone. And it was an amazing business model. even before net2phone got involved. And I would say that over the course of the next 5 years, it's going to look like a home run irrespective of how well it gets integrated into net2phone.

So I think it's actually a very, very exciting piece of news that was unfortunately not loved by the markets. But markets are weird. I don't know what else to tell you, I mean (inaudible). And frankly speaking, we're also going through, I mean, a crazy time in the world right now that, I mean, I think is putting a lot of pressure on a lot of companies, and we're very lucky that we don't have those kind of financial pressures affecting our decisions, that we can stay the course and make sure that we do, do, what we told our investors we were going to do, and we think that we will be handsomely rewarded for that.

And David, totally agree with your calculation that you provided before. And just bear in mind, that we do also have about [$10 million] of corporate costs, okay, which is a negative to the EBITDA number [that you gave].

Yes, of course. Still -- I can split this a million different ways. This is an incredibly cheap stock. But the company -- the management team that's executing and their catalysts and there are a lot of valuable assets in here. So I can spin it a million different ways for you. It's still cheap, but I appreciate the clarification. I do want to ask a follow-up on Integra. Shmuel, did you say that the revenue was $3 million or $30 million? Was that $3 million or $30 million?

$3 million. I wish it was $30 million. It will be one day, but right now it's $3 million.

Okay. But it's doing $1.2 million in positive EBITDA, right?

That's correct.

And you bought it for $15 million I think...

Yes. And not all of that is paid upfront. I mean that includes a large earnout.

The next question is coming from Sean Berger with Adirondack Retirement.

Marcelo and Shmuel, congratulations on a good NRS quarter. Just a question, 2 things. One is I'm wondering if there's any material impact from Eastern Europe, as far as disruption of any tech support or employees or anything like that? And then the other question is, if there's been any change in the reserves for any possible legal settlements with regard to the Straight Path litigation. That's it.

So I mean, the answer is -- unfortunately, we always joke that, whatever happens in the world, somehow it affects IDT. And listen, we have a very large office in Belarus, and we have some really amazingly talented employees who work for us there. And I can tell you from speaking to many of them directly, how they feel about Ukraine and how their government feels about Ukraine are completely different. However, that being said, it does create a very unstable environment for them to live in, and we are relocating many of them outside of the country. However, many of them do not want to be relocated. It has not affected any of our deliverables or our ability to pay people, but it's definitely a moving target, I'll say it like that. And depending on what happens with sanctions, it could eventually affect us, at this moment in time, it doesn't.

I'm going to let Marcelo answer your second question.

Hi. No, we have not had any changes in terms of any type of provision or anything like that, as it relates to any of our litigation.

And I will say that, we also have a number of employees in Ukraine, and we really feel for what's going on there. Obviously, on a personal level, these are our colleagues, but also from just watching the news, just terrible. So you know, our prayers are with them.

Okay. Sean, do you have a follow-up question?

No, that was it. My prayers go out to the people as well, and just wondering if there was any known business impact at this time, and that was it.

The next question is coming from Adam Wilk with Greystone Capital.

My condolences to your employees who are having to deal with this situation. Hopefully, everything is okay. I guess one of the pitfalls of going last or toward the end of the line here, is that most of the -- most of my questions have been asked, some really good ones about net2phone and the acquisition and buybacks, et cetera. I guess I just have a couple of hopefully quick ones. I may have missed this, so I'm sorry if it's repetitive, but I'd like to dig in a little bit more to mobile top-up, obviously, still showing impressive growth numbers, and I'm wondering where you see things shaking out in a few years, between wholesale versus the direct opportunity and the revenue split there? Because my sort of aim -- my direction in asking that is, I think the economics could improve materially for both mobile top-up and traditional as a whole, if you kind of push towards that direct channel? And please correct me if I'm wrong.

I'm going to let Marcelo also talk to it a little bit. But I mean I will say that, listen, direct definitely has higher gross profit than wholesale. That being said, there is cost of acquisition, and that is usually in the -- I'll call it, in the early years or months, depending on how lucky we are in terms of cost of acquisition, that can affect the ability to acquire customers, at the rate that we would want for direct-to-consumer.

However, really, where we've seen pressure of late, is really in the wholesale business, not in the direct-to-consumer business, and I think that's -- a large part of that is based on some of the competitors that we've talked about, recently getting large investments and then spending that money to try to make sure that we don't steal all their business, and that definitely has affected the wholesale business in the short term. However, that being said, we have some very exciting product launches that we think are going to really differentiate our wholesale business over the next couple of months, and we think that we are going to gain back a lot of that business. Marcelo, do you have anything to add?

No, I just -- I think that our strategy for mobile top-up under the leadership of Emilio, is to continue to focus and grow both the B2B channel as well as the direct-to-consumer channel. They're not independent of each other. I think that we have made large strides in improving our B2B wholesale platform. Our acquisition of Sochitel, most recently, has helped us towards that. They have a very robust platform for B2B and we will be leveraging on that platform to position our products for better and faster growth in that space, and to take more leadership position in that area. And at the same time, Emilio continues to be very focused on trying to grow the catalog of products, trying to continue to leverage our offerings in our apps, as well as trying to penetrate further, especially into the African continent.

Great. That's helpful. And then Jonah answered some questions about conference center services, the demand drivers there and somewhat the opportunity set. And I guess I'm wondering just kind of as a follow-on to that, I heard when the question was asked about $3 million or $30 million in revenues. I think I heard Jonah chime in, in the background when you said it would be $30 million someday. So maybe you can talk a little bit about, I guess, just the conference center opportunity as a whole? It's not a fad that everybody's piling into, and there's real demand there, and then maybe it looks like, I guess, you paid around 4x revenue, excluding the earn-out for Integra. How did you kind of derive that multiple, and is that kind of like -- is that kind of like correlated to market conditions, or any detail there would be helpful? And then maybe, when we can see an impact to the P&L for net2phone?

I mean just in terms of the opportunity, again, the same ways that net2phone UCaaS has successfully migrated professional businesses over to the cloud. We see that opportunity now at the right time, in the world that we live in for cloud-based -- for contact centers to move from on-premise to the cloud as well. As I mentioned before, we have sales teams and partnerships in place to cater towards that. The benefit down to the contact center is, not only just the cost savings, but being able to modify and configure and edit any type of settings for the contact center in the cloud instantaneously, is a major value add for these call centers to move over. And might I add, it's not just contact centers, but if you think of larger enterprises, and this is why we're very hopeful that our average user per account will increase with CCaaS. These are -- we have large enterprises with call center functionality residing within the enterprise for call queues, support, billing, sales. So that can also layer in very nicely to our UCaaS customers, in terms of our partners as well.

In terms of the acquisition and the price and the valuation; right now, I can say that on our side and our teams, we're laser-focused on the plan, where I'm laser-focused on the go-to-market. We're laser focused on defining the offer and introducing this into the channel. So at this point, I will reserve discussions around the economics in terms of right now, the go-to-market, the channel adoption, the business integration between the 2 firms, us getting out there into Uruguay, a very energetic and passionate team awaits us, and we're going to focus mainly on the go-to-market.

Yes. In terms of the valuation, and I don't think that we paid the lowest price ever for a call center company. But I think the fact that they have such a -- A, such a good software and B, that they were already EBITDA positive, was really 2 driving forces that made us pay what we paid. And as you know, we don't write checks easily, and we really thought that this was a great opportunity for net2phone, and that's why we went ahead with it.

And I think now from the perspective of Integra, we really see the combination with UCaaS in net2phone as a great way for them to expand their product portfolio; to have a partner in net2phone, to allow them to grow in a way, on a standalone basis, cannot do so right now. So they see it as a great opportunity to partner with us. We are taking a (technical difficulty) of the purchase price in equity, as they want to be able to ride on the opportunity together with us.

Yes. That's helpful. I certainly wasn't implying that the price paid was too high. Just curious behind the drivers there. So I appreciate that. And I guess a quick follow-on to your commentary is, can we maybe expect moving forward a little bit of that, sort of buy and build or buy and integrate as part of the strategy with net2phone, either, I guess, post spin? Or is it -- or was this kind of like a one-off for you guys?

Listen, I think we're always browsing new technologies. I think the Integra acquisition is a great use case, where net2phone wants to go to market with new modern technologies in the cloud communications space. Nothing prevents us from browsing. I think the fact that I have noted before in my remarks that we've built this really efficient global UCaaS distribution team, and now we're layering in CCaaS. I think there's other experiences that we could focus and concentrate on. But again, our #1 focus right now, is to continue growing our UCaaS business and our CCaaS business. And I actually think that CCaaS being the top of the sphere of new conversations that we have with enterprise, will actually provide a lift rate for our UCaaS business as well.

And our history in net2phone has been with a combination of both, right? We have made acquisition in Canada. We have made acquisitions in Spain, in growing the business. Our technology internally is now pretty [slow] right now. And we always have to measure, whether we are able to continue to build supply. So we try to get into a mix that makes sense. So buying into CCaaS in terms of building it without (inaudible) in terms of the valuation.

And speed to market.

As well as technology roadmap is meaningful right now, [every day].

Great. That's really helpful. Last one for me, maybe for Marcelo or whomever. I'm going to push on this a little bit more. Nothing -- no changes with the Straight Path litigation. I'm just kind of curious where you guys stand on wanting -- maybe wanting to get this thing resolved and put behind you? Obviously, it would benefit, I guess, both parties to come to some sort of settlement. Is there an element of like stubbornness on any one of the sides, or where do you guys kind of stand on that, in terms of trying to get it resolved?

So the trial is scheduled for May of this year. If that time holds, you will probably expect a decision later in the year. We are vigorously defending ourselves, and we are optimistic about achieving a favorable resolution. You're welcome to read our disclosures on all of our pending legal matters in our 10-Q. But beyond that, as a matter of policy, we really cannot comment on pending legal measures or any strategy around it.

Next, we have Daniel Koch from Alta Fox Capital.

Just quickly on Integra. Can you share a little more color on the growth profile of that business? Is it long-term accretive to the growth profile of net2phone? And then is all of that revenue outside of the U.S. today?

Yes. The $3 million and change is pretty much all outside of the U.S. They do have a few U.S. customers, though, but pretty much in Central and South America is where the $3 million sits today. They're already accretive -- to your question, I think we made reference to the $1.2 million EBITDA. And there's really 2 prongs to the acquisition approach. One is Integra being able to continue to grow. They put together some interesting projection discussions there. And now Integra serving the markets, the service provider aspects, being able to go and serve the markets that we're in today as well.

Got it. But the -- sorry, if I wasn't clear, the growth profile of Integra is that a 30%-plus top line grower? How should we think about the growth profile of the business?

Yes. I think north of that, but yes.

Great. And then one last quick one. Historically, at net2phone, have you all lost out on converting leads and deals because you did not have the offering that Integra brings to you?

Yes. As I mentioned in my earlier remarks, first and foremost, we're taking the temperature of our customers and partners, and we're getting active requests for net2phone to add CCaaS to our product portfolio. So absolutely, from a win-loss perspective. We have the dashboards. We understand where we missed out on a few accounts, and we certainly will start reaching back. But absolutely, that's a driving force for why we're adding this product to our portfolio.

(Operator Instructions) As there are no more questions, this concludes our question-and-answer session and conference call. Thank you for attending today's presentation. You may now disconnect.