Samuel Jonas - Chief Operating Officer Davidi Jonas - Chief Executive Officer, President and Director Marcelo Fischer - Senior Vice President of Finance

John Edward Rolfe - Argand Capital Advisors, L.L.C. Jay Srivatsa - Chardan Capital Markets, LLC, Research Division Robert W.

Koehn - Ivy Lane Capital Management, LLC

Hi, good afternoon. Thank you all for joining the earnings call and for your interest in IDT.

The third quarter's results confirm that our core business remains strong, and that we continue to make good progress on our strategic growth initiatives. On a consolidated basis, revenue increased year-over-year to $397.2 million, from $379.7 million in the year-ago quarter.

This is the 13th consecutive quarter of year-over-year increases. The third quarter revenue decreased 14 [indiscernible].

I'll go into why when I discuss our segment results. In prior quarters we reported gross profit as the difference between revenue and [indiscernible].

The direct cost of revenue includes depreciation and amortization expenses that are directly related to revenue generation. Because it is not practical for IDT to allocate depreciation and amortization expense, we will no longer report gross profit and gross margin percentage.

Instead, we will disclose our direct cost of revenue and our direct cost as a percentage of revenue. Direct cost of revenue in the third quarter was $331.2 million, compared to $319.8 million in the year-ago quarter, and $344.5 million in the previous quarter.

As a percentage of revenue, direct cost improved to 83.4%, compared to 84.2% in the year-ago quarter and 83.7% in the sequential quarter. The direct cost of revenue represents, for the most part, the permanent cost of originating and terminating our long-distance traffic, the cost of circuits [ph] supporting our telecom network connectivity, as well as the costs associated with the regulatory transactional tariffs and fees.

Overall, these costs have declined as a percentage of revenue, as the relatively higher margin Retail Communications category within the TPS segment has become more profitable, and a larger contributor to our company-wide revenue mix. SG&A expense was $55.2 million, an increase compared to $51.3 million in the year-ago quarter, but $1.2 million less than the prior quarter's figure.

As a percentage of revenue, SG&A expense was 13.9% compared to 13.5% one year ago, and 13.7% in Q2. Corporate G&A rose to $3.4 million from $3 million in the year-ago quarter, but was $1.1 million less than the prior quarter when IDT recorded a $945,000 contribution to the IDT Foundation.

Corporate G&A expense in the third quarter included $900,000 in non-cash compensation. Research and development expense incurred wholly by Fabrix was $1.7 million compared to $1.2 million in the third quarter of fiscal 2012, and $1.8 million in the second quarter of fiscal 2013.

Adjusted EBITDA increased to $9.1 million from $7.5 million in the third quarter of fiscal 2012 and from $9 million in the second quarter of fiscal 2013. Depreciation and amortization expense was $4 million compared to $4.2 million in the year-ago quarter and $3.9 million in the prior quarter.

Income from operations grew to $14.7 million from $2.2 million in the year-ago quarter, and $5.3 million in the prior quarter. Income from operations in the current quarter included a gain of $9.6 million, reflecting reversals of previous accruals made for potential legal settlements.

In the third quarter of 2012, income from operations included a $6.5 million charge related to legal matters. IDT recorded a provision for income tax of $7.6 million in the third quarter of 2013, compared to a benefit of $2.3 million in the year-ago quarter, and a provision for income taxes of $3.1 million in the prior quarter.

As you may recall, last year we reversed a portion of the evaluation allowance that had been applied against our U.S. deferred income tax assets, as a result of the continued profitability of our operations in the United States.

Because of this reversal, we now record a provision for federal income tax in periods where we have pretax income. However, we do expect that our actual U.S.

federal cash taxes paid will be minimal for the foreseeable future. As of April 30, 2013, IDT had $168 million remaining in available U.S.

Federal NOLs, and $25.1 million in net deferred income tax assets. I will now review the performance of our 2 key reporting segments, Telecom Platform Services segment, or TPS, which generated 98% of IDT's revenue in the third quarter; and then our All Other segment, which holds our non-telecom assets, including Fabrix, Zedge and the assets to be spun off in Straight Path Communications.

TPS' revenue increased to $388.9 million from $372.1 million in the third quarter of fiscal 2012. This revenue increase was driven primarily by growth in our Retail Communications, and to a lesser extent, in our payment services verticals.

Third quarter revenue was $13.8 million less than the prior quarter's revenue of $402.8 million, a 3.4% decline. The decrease was entirely attributable to a decrease in wholesale termination revenues.

We attribute the sequential decline in wholesale termination revenue partly to 3 fewer days in the third quarter, compared with the second quarter, the holidays in the second quarter and partly to increasing permit [ph] international long-distance termination rates in several key calling corridors. These rate increases impacted the entire industry, leading to a reduction in Wholesale Carrier minutes that IDT sells and transports, and a decline in revenue even as we increased our revenue per minute.

Although minutes of use and revenue were down as a result, these wholesale markets shifts were generally related to a very low margin country destinations, and thus, the impact of these rate increases on operating profit is expected to be neutral to positive. Overall, our wholesale terminations vertical generated $159.3 million in revenue in the third quarter, compared to $179.8 million in the year-ago quarter, and $182.2 million in the prior quarter.

Retail Communications revenue was $165.4 million, a strong increase over the year-ago's $138.9 million. The increase was, again, fueled by growth in Boss Revolution Pin-less calling services, which more than offset decreases in retail revenue from other areas, including traditional calling cards, both in the U.S.

and in Europe. Revenues derived from sales of our prepaid cards and services at big box retail chains in the U.S.

also grew significantly year-over-year, although they are a relatively small contributor to overall revenues. Payment services revenue, which is comprised predominantly of sales of our international mobile top-up or IMTU offerings, were $51.3 million compared to $39.4 million in the third quarter of fiscal 2012.

IDT's success with IMTU indicates that there is a robust and vibrant market for IDT to offer other types of payment services to immigrant, under banked or unbanked communities. In the third quarter, we soft launched domestic bill payment and a virtual prepaid Visa card offering, and we expect to roll out international money remittance on a very limited basis before the end of the fiscal year.

While these new offerings will not be impactful to our overall revenues in the near term, we expect to see them gradually ramp up during fiscal 2014 and into 2015. TPS' SG&A expense, including non-cash compensation, was $46.8 million compared to $45 million in the year-ago quarter.

As a percentage of TPS' revenue, SG&A was 12% compared to 12.1% one year ago. The increase was below the level we anticipated, as we continue to execute on cost savings.

We continue to expect that SG&A will increase more rapidly in future quarters, especially as we ramp up staff and marketing to promote money remittance and other new payment services. TPS' adjusted EBITDA in the third quarter of 2013 was $13 million, compared to $9.9 million in the year-ago quarter.

TPS' depreciation and amortization expense continued to decline year-over-year, falling to $3.3 million in the third quarter of 2013, compared to $3.5 million in the year-ago quarter. However, depreciation and amortization expense increased slightly sequentially as we shorten the estimated useful life of some equipment.

TPS' income from operations in the third quarter of 2013 was $19.3 million, compared to a loss from operations of $0.1 million in the year-ago quarter. Income from operations in the current quarter included nonrecurring other gains, totaling $9.6 million as a result of 2 somewhat favorable legal verdicts.

In the year-ago quarter, on the other hand, loss from operations included $6.5 million in charges related to legal matters. Our All Other business reported revenues of $4.9 million compared to $3 million in the year-ago quarter and $5.2 million in the prior quarter.

Fabrix's revenue nearly doubled year-over-year. Zedge's revenue increase by over 15 -- by over 50% year-over-year.

All Other's adjusted EBITDA was negative $900,000, compared to negative $400,000 in the year-ago quarter. All Other's loss from operations was $1.6 million compared to income from operations of $4.3 million in the year-ago quarter.

In the year-ago quarter, All Other benefited from a $5.3 million gain resulting from the sale of 8 Spectrum licenses. On a consolidated basis, net income attributable to IDT in the second quarter was $8.7 million, compared to $3 million in the third quarter of last year.

Net income in the current quarter included the provision for income taxes of $7.6 million compared to a benefit from income taxes of $2.3 million in the year-ago quarter. Non-GAAP net income was $6.9 million in the third quarter of fiscal 2013, compared to $9.8 million in the year-ago quarter.

Diluted non-GAAP EPS was $0.31 in the current quarter compared to $0.44 in the year-ago quarter. Our non-GAAP net income and EPS calculation omit depreciation and amortization expense, stock-based compensation and other operating gains and losses.

Income statement category. Following the close of the third quarter, we paid off $21.1 million on the balance of the mortgage on our property at 520 Broad Street here in Newark, in so doing, reduced our projected annual interest spend by approximately $1.7 million.

Also, following the close of the third quarter, we announced our intention to spin off Straight Path Communications to our stockholders. I am very pleased that Straight Path's CEO, Davidi Jonas, is here with me to discuss the spinoff and to explain why we think it offers such an exceptional value to our shareholders.

Davidi?

Thank you, Samuel. As Samuel mentioned, at the beginning of May, IDT announced its intention to spin off Straight Path Communications Inc., or SPCI, to our shareholders.

SPCI will be comprised as 2 subsidiaries, Straight Path Spectrum and the Straight Path IP Group. In addition, IDT plans to capitalize SPCI with $15 million in cash to ensure that we have adequate capital to realize the full value of these assets and for our future business.

Straight Path Spectrum holds a significant number of SEC licenses for commercial fixed wireless spectrum. IDT acquired these assets from WinStar Holdings.

These licenses include deep coverage in the 38 gigahertz spectrum band, which is well-suited to meet the demand for high-quality wireless backhaul. That demand is being driven by the anticipated deployment of small cells by leading mobile network operators in order to support the growth of mobile data traffic.

Straight Path IP Group holds a portfolio of patents primarily related to communications over computer networks such as the Internet. We believe that our IP underlies a range of communications applications, products and services.

We believe that both of these intangible assets can realize their full value as part of a separate entity, with management exclusively focused on the development of our 2 business units. The spinoff is intended to be tax-free to stockholders, and we have announced our intention to distribute no less than 50% of our consolidated positive net earnings available for distribution to SPCI shareholders once we achieve sustainable profitability and retain certain minimum cash reserves.

One of the most exciting aspects of Straight Path is that our 2 business units address real market needs. Consumers are demanding high quality data.

For instance, streaming video on wireless devices. Leading mobile network operators are developing systems to meet the growing demand quicker and more reliably than their competitors.

One of the leading solutions in urban and other densely populated areas is the deployment of small cells, which is placing low powered radio access nodes that operate in licensed and unlicensed Spectrum, closer to consumers, in order to extend the service coverage of the mobile network operators, and/or to increase the capacity of their networks. In fact, AT&T has already announced they will deploy 40,000 small cells by 2015.

That is only the tip of the iceberg. In the next 4 to 5 years, it is anticipated that hundreds of thousands, perhaps millions of small cells, will be deployed nationwide by leading mobile network operators.

One of the key challenges with deploying these small cells is how to connect each cell into the mobile network. Fiber cannot be run to each small cell antenna cost-effectively.

Instead, mobile operators will require the use of Spectrum to link these small cells back to their network. The ideal Spectrum will be interference-free, cost effective and capable of backhauling vast amounts of data.

That is where our 38 gigahertz FCC Spectrum licenses come in. Our Spectrum can serve as the wireless conduit that will deliver the near functional equivalent of fiber at a fraction of the cost.

For several reasons, we believe that we have the best solution. First, our nationwide holdings cover the entire continental United States, providing national carriers with the option of a unified national -- with a unified solution across the country.

Second, our holdings, particularly in key urban markets, are extremely deep, with Straight Path Spectrum holding multiple channels in any given market. SEC rulemaking in the 38 gigahertz band allows antennas -- allows for us to use blocks of contiguous channels within the 38 gigahertz band, thereby greatly expanding the capacity compared to a holder with only a single channel.

Third, the 38 gigahertz band allows for sectored or wideband antennas, which enables point to multipoint deployment, and obviates the need for precision alignment between antennas. Finally, SEC rulemaking for the 38 gigahertz band waived Category A antenna requirements.

This allows us to use very small 3.5-inch antennas, as opposed to 1-foot dish antennas required by Category A. This makes it practicable to deploy small cells on lampposts and other street furniture.

This allows mobile operators to negotiate pieces with fewer landlords, the municipalities or incumbent electric utilities, instead of negotiating with thousands of individual building owners across any one city. Together, these 4 differentiators, again nationwide coverage, multiple channels in any given market, wideband antennas allowing for point to multipoint deployment and 3 -- the use of 3.5-inch antennas, are the foundation of Straight Path Spectrum's powerful value proposition.

We have been working closely to align our offering with equipment manufacturers, integrators -- systems integrators and the carriers themselves. Testing of solutions involving our frequencies will be carried out by one of the leading systems integrators in the coming months.

If all goes well, we'd expect to enter into commercial discussions with integrators and carriers regarding pricing and terms. We will also set the Straight Path IP Group on a relatively short term path to monetization.

Already, prior litigation and extensive re-examination has confirmed the validity of key patent claims. The strength of these findings has enabled us to retain very highly regarded national law firms to pursue enforcement on a contingency basis.

Already, we have 2 firms on board preparing cases and plan to retain an additional firm in the near term. We intend to aggressively pursue enforcement, not only with direct users of the IP, but also with equipment manufacturers and others who derive benefit from our technology.

By initially establishing a solid record of favorable settlements or verdicts, we expect to facilitate subsequent licensing agreements relatively quickly. As you evaluate the spinoff, we know that the lack of comparables makes the task particularly difficult.

That's especially true for Straight Path Spectrum, where we have a truly unique fit for mobile operators. For the Straight Path IP Group, there are of course, other public firms actively seeking to enforce and monetize their IP related to the Internet and mobile communications.

But clearly our IP is significantly different and must be evaluated on its own merit. Now I'm going to turn the call back over to the operator for Q&A.

A couple of quick questions. In Retail Communications, I guess if I adjust for the sort of 3% fewer days in the quarter you had, you would've had sort of 5% plus sequential growth there this quarter.

I believe you guys have been trying to ramp up the internal sales force, particularly for Boss. Can you give an update in terms of sort of where you are from a salesperson perspective, and vis-a-vis where you hope to be, either by the end of this year or within the next couple of quarters?

Yes, John, this is Marcelo Fischer. In terms of the Retail business, a lot of the growth that we have experienced over the past quarter and also year-over-year, as you know, is coming from our Boss Revolution product here in the U.S.

We really have not increased the internal sales force as aggressively as we would have liked to increase, but that being said, we were able to over-deliver on the revenue growth of -- on Boss Revolution. We still actually are trying to sign up more people to -- into internal sales force, and that will even help us propel the business to the next level.

In general, I mean, Boss Revolution is doing really very strong. I mean in Q3 alone, we added more than 4,000 additional points of presence.

We grew our active points of presence retailers by more than 50% year-over-year, by more than 10%, compared to the last quarter, and though we are looking to continue to expand both in the U.S., as well as trying to plant the seeds for a possible expansion into Canada over the next few months. Now the product is doing well, the technology has gotten better, we have launched a new portal for Boss Revolution, it's a mobile bust portal, it has a lot of friendly, better features for our retailers.

We are planning on launching soon our first Boss Revolution mobile app in both iOS and Android in the next few months. And in terms of the product itself, as you know, Boss Revolution is a platform in which we carry several products.

Right now the product that we have in the platform are PIN-less international calling, as well as our IMTU mobile top-up and domestic top-up products. We are adding more IMTU properties into Boss Revolution.

Compared to last year alone, I think we more than doubled the amount of properties. I think we have more than 130 properties at this point.

And we are now right now, soft launching and testing our first pure payment type of products to go into Boss Revolution, both our domestic bill pay initiative, as well as our future Visa initiatives. So all in all, there is a lot of momentum going on behind Boss Revolution, both in terms of product, both in terms of distribution, both in terms of technology, and I think it will continue to grow, whether or not we add more salespeople into our workforce to help propel it to the next level.

Yes, I mean, just add on a little bit what Marcello said, I mean, we do expect to increase the number of salespeople by at least 50 people over the next 6 to 8 months. However, I mean again, we're investing more, I would say, actually in the short term on supporting the stores that we already have, both with additional brand ambassadors and additional outsource marketing, because we feel like we already have close to 50,000 points of presence for Boss Rev, and we feel it's very important to make sure that we grow our, we'll call it, other products in those stores before we just keep expanding the actual number of stores that carry it.

So better to have, we'll call it even 25,000 incredible stores than 100,000 not so incredible stores.

Okay, and that increase of 50 salespeople, just to clarify that, that's of a base of a couple of hundred right now. Is that correct?

Yes, we have, I would say, about 150 to 170 right now.

Okay, okay, and so my last question, and this may be something that you guys really don't have any way to gauge, but on these routes where you saw the increase in termination fees for wholesale and the associated drop off in volume, is your sense that the customers on those routes are just so price-sensitive that they're just sort of not making the calls? Or are they going to the other form factors or other Internet-based calling methods?

This is a -- I mean this is another question that I think we'll both take a stab at answering. We probably have both have different perspectives on it.

My personal gut is, that the rates more than doubled, as an example, to India. And it's not that I believe people stopped calling India, but I think that people call less.

If you only have $10 in your pocket, and no, you can't use more than $10. So I think people did call us, and I think they do, I'll call it, move quicker to alternative ways of calling.

And also, some of our competitors had better pricing into those countries. They were more, I don't know if -- more entrenched in those markets.

I mean, those markets have never, I mean, even though it obviously had an effect on our revenue, specifically for our retail products, we've never been particularly strong to any of those destinations. So in the U.S., like it really didn't have much of an effect.

It really, actually hurt us much more in Europe, where calling to India, Bangladesh is much more -- that's much more of their market. But I'm sorry, I'm not answering your question exactly.

No, that's helpful, and I -- again, I mean, I -- so presumably, you guys saw some drop-off in your Retail Communications segment as well, as a result of these termination rates, because --

We did, but again, I mean, it mostly happened outside of the U.S.

I want to go back to your comment about India. So given the increase in the rates, obviously, it looks like it's helped your gross profit line a little bit -- with [ph] gross profit margin a little bit.

In terms of looking ahead, what is your sense in terms of what the run rate's going to be in total minutes? Do you expect further declines in total minutes in Q4, given that I think a lot of the changes actually happened sometime in the middle of the quarter?

Or do you expect this run rate to be roughly flat if you look at sales [ph] out of the coming quarters?

I mean, we don't give guidance really towards the next quarter. But I mean, overall, I would say we expect it to level off essentially, maybe decline a little bit.

I mean, what you pointed out is correct. It did not happen until the middle of the -- approximately the middle of last quarter.

With that being said, I mean, Marcello follows it much closer so I'm going to hand this question over to him.

Yes, I mean we have been experiencing a lot of market shifts and fluidity and a lot of dynamic movements in the wholesale termination markets. India is just one example of several others.

And even though there are certain destinations that pricing has come down, by and large, now when you look at the market overall, the pricing to a lot of these destinations has gone up. To go back to the previous caller, we really don't have a great knowledge at this point as to how much of the minutes volume evaporated totally from the market as a result of these price increases as consumers react to it, or how much of [ph] it did -- that just maybe other players within wholesale took some of those needs away from IDT.

Now in the case of India, in particular, which happened in the very beginning of April, the last month of our Q3, we are reacting quite quickly now to those changes. I mean we are renegotiating our reciprocal deals and now with various vendors, organical pricing right.

So far, during the month of May, we have seen some of the minutes come back. And I think that over the course of the next few months, as everybody adjusts to the new pricing and the dynamic situation, we see this as both a risk and as an opportunity.

I think we are a strong player in the market. We are well entrenched in understanding this market.

I think we're going to turn that into an income opportunity. Our message to our account managers, who are doing this day in, day out, is to go after high gross profit margin destinations, and make sure that to maximize gross profit out of this.

In general, when price increases, I think we view that as a positive in an industry that historically has always seen declines in the revenue per minute. So I think pricing pressures gives us an opportunity to play around in trying to get some additional margin.

And ultimately, if the margins go up, even buyers not chasing low revenue destinations or low minutes -- high minutes to low revenue destinations, we'll be fine with that.

All right, I guess one more question on the TPS minutes, it looks like, in total minutes, you saw almost a drop of 1 billion minutes, sequentially from last quarter. Could you share with us what portion of that was due to the fewer days in the quarter, and what portion was because of some of the disruptions in India and other places?

Yes, I mean in general, when you compare Q3 versus Q2, because it's less days, so you could say 3%, automatically, of the decline is because of the number of days when you compare apples to apples. In addition, in our Q2, because of the holiday season, usually is a very, very strong quarter for international long-distance traffic.

And so -- to the effect of the price increases, okay, probably you know the difference between that.

I mean, I do want to say one thing on that. I mean the one place where it really did, I would say, hurt us more, even then than in wholesale is really in Europe.

I mean, because even though these countries are not [indiscernible] , and Europe is becoming smaller and smaller as a percentage of all of retail, it did have a very bad impact on them in the short-term.

Okay, switching to your domestic payments initiative. Can you give us some sense on how many -- which -- how many licenses do you have in terms of how many states have approved the process and you mentioned domestic payments really becoming more meaningful next year, but do you expect any kind of contribution in Q4 this year, from those -- from the domestic payment initiatives?

Yes, I mean, in terms of the license applications, I think we have mentioned earlier, in other calls, we are applying for licenses in all 50 states that require licenses, plus Puerto Rico. At this point, we have obtained about 31 licenses so far, from 31 states, plus Puerto Rico.

So I think we have enough licenses to launch our products when they are ready for it, and in line [ph] to get enough penetration and distribution, and we hope to be getting, given [ph] the remaining licenses in the course of the next 12 months or so. And what was the second part of your question?

When do you expect material contribution to start? Is there any contribution, Q4 at all?

Sure, I mean, when we are talking about a company that generates $1.6 billion in revenues, okay, we definitely do not expect the payment initiatives to add meaningfully to that for probably for a number of years. And now I will try to ramp it up, okay?

The good thing about a lot of these payment product is that they are higher margin than our traditional domestic and long distance offerings, and we hope to ramp them up, make them part of the overall portfolio, and make that a very strategic part of the product portfolio in trying to grow the Boss Revolution brand name and the product in the platform overall.

Okay, and then in terms of the dividend payment, it looks like you're announcing that you're going to resume quarterly dividends. Can you give us the thinking on that, and what prompts you to go that route?

I don't think we ever intended not to go that route. I mean, as you know, we prepaid, I believe, 5 quarters of dividends in advance, of, well mostly in advance, and the different tax treatment that dividends now have.

But we do intend on going back to paying dividends very soon.

All right, last question for me. Marcello, it looks like tax rates had increased significantly from previous quarter.

Is the rough 35% tax rate the ongoing tax rate, or is there going to be any variability going forward?

I don't think anything -- I mean, I'm sorry, I'll let Marcello answer, but I don't think it has to do with tax rates. I think it has to do with the fact that we were more profitable this quarter because of the $9.6 million, we call it, reversal.

Sure. Yes, I mean, our effective tax rate, Jay, if you look for it, net, for last quarter, was about 27%, when you looked at our income statement from last quarter.

This quarter, our effective tax rate was about 45%. The reason why they got this tax rate overall is knowing that in like in the 40% range is higher than the, for example, just a U.S.

typical rate of just 30, 35%, et cetera, is because most of our profit is generating in the U.S., and some of our losses that we generate overseas, we do not have the benefit of getting a benefit from those losses. So we expect the effective tax rate, probably to continue around the 40% to 45% range going forward, and you can use that as a guidance.

First, a balance sheet question. It looks like there's a new line item for marketable securities this quarter.

Can you describe what that is?

Sure, during the quarter, now we decided to seek some additional yield by acquiring some additional fixed income securities, which have maturities above 3 months. And as you know, in terms of GAAP classification, fixed income securities or any securities that you hold for less than 3 months maturity...

Sure, and okay, so are those corporates? Or are they...

Well, mostly cities [ph] in which we've got some better yields on, yes.

Okay, great. And then, just so on an apples-to-apples basis then, it looks like, if I look at unrestricted cash, marketable securities and then your investments, your hedge fund investments, it looks like, just sequentially, you're up $13.3 million in those 3 line items.

Is that right?

That's about right, that's correct.

Okay. So that's up $3.3 million, then you've reversed $9.6 million of a legal accrual.

So between those 2 accounts, effectively you've got additional asset value of almost $23 million. Is that right?

That's correct. If you -- don't forget to tax effect it.

Yes, okay, I mean I, right, that's fine, that's fine. And I know that historically, you haven't described -- kind of broken out Boss from the traditional calling card business, but could you point directionally to effectively, a year-over-year growth rate for Boss?

Sure, I'll give you a couple of metrics, okay? Year-over-year, Boss Revolution is up by more than 70%, while traditional calling cards are probably down about 30% to 40%.

Is that enough?

Yes, I think -- I mean, that's helpful. And how about sequentially, if you look...

Sequentially, yes, traditional calling cards, down double digits, now like about 10% or so, and Boss up about 12%, it was as of the last quarter. Yes, it's doing well, and also note that because IMTU, often, though I mentioned earlier, we added a lot of new properties about a year ago, probably about 85% of our entire Boss Revolution sales here in the U.S.

was mostly in ILD [ph] PIN-less now it's more like 80%/20% because IMTU is taking a bit of share of that.

That's incredible performance. And do you feel like the traditional calling card business, I mean in this sort of, comping down only 10% or so.

Do you feel like that's -- they were maybe not quite stabilizing, but...

No, I don't -- I mean, we don't believe that it's stabilizing. I mean, we do actually believe that it continues to decline.

I mean however, I mean we do intend to -- I'm not -- I don't want to use the word invest, but I mean we do intend to roll out some new products in the area, to try to stabilize it, maybe even -- basically, to try to stabilize and maybe even grow it minimally, in the short-term.

I mean just looking at the math, eventually, your -- the retail communications segment, I mean, if you look at it now, I mean, could you give a percentage that's Boss right now? $155 million?

No. We don't do that.

But I mean, but we are trying to stabilize traditional.

Okay, fair enough. Obviously, over time it will be, if it's not already, mostly Boss, okay.

It is already mostly Boss.

Yes, already mostly Boss, great. And stepping over to Fabrix.

Not a lot about Fabrix in the press release, how would you describe your momentum with customers there, and how many customers does Fabrix have now, and what is the outlook there for that business?

I mean personally again, I'm a huge believer in Fabrix. I mean, I think that we have, like, the best technology out there by far.

They continue to do very well. I mean, I've looked at their, we'll call it, their sales leads over the next 12 to 18 months, and it's, I mean, it's phenomenal.

I mean that they could be on a cash flow basis, they could be like half as profitable as all of IDT. So I continue to think that they're going to do quite well, both in the near term and in the long-term.

We're starting to extend verticals, from mostly doing video storage and video streaming technologies, to also doing stuff related to security, as well as to biosciences, and yes, sorry, also drilling technologies as well. And we think that there have big, big stuff ahead of them.

Okay, that's interesting. When you say it could be half as profitable as the rest of IDT, explain to me on a cash flow basis what bump?

That sounds [indiscernible] ...

I mean then, when last year they took in about I might be over or under by a little bit, but they took in about $20 million in cash last year and on -- I guess on a -- what are they doing on a run rate right now? Probably about...

On a run rate, we talk [ph] cash and run rate, revenue record number.

No but I mean, on the SG&A side of their...

It's about 1, 1-something.

All right, so I mean something between I mean I think they do $1.7 million per quarter in research and development, and they do an additional -- I don't have the numbers right in front of me, but let me just, if you don't mind, we're not going to avoid your question, but will -- you give me 1 second to tally something, and we'll take another question in the meantime.

Yes, now well, let me if you don't mind, let me ask one more thing here. Just to follow-up on that, in the proxy, it was stated as a management goal for fiscal 2013 to monetize Fabrix.

Obviously, fiscal 2013 is almost over. What are your thoughts in terms of just monetizing?

Obviously, seems like it's doing pretty well.

I mean, everything depends on what somebody's willing to pay. I mean, I -- we don't feel like we're in any rush to monetize it, because it continues to perform very well, and as I told you, their prospects are, we think very, very good.

But that doesn't mean that we wouldn't, if the right opportunity came along.

I mean, I think what the proxy said is to just either continue to grow Fabrix aggressively, or to monetize it.

Fair enough, fair enough. And then, and last, last question, I'll get out of the queue.

With regard to Zedge, obviously, the growth there is really impressive. And it kind of -- where it sits in terms of consistency and in the Android rankings is really incredible.

But obviously, it's buried inside this large telecom company. Have you ever thought about letting Zedge effectively stand on its own 2 feet, maybe capitalize it with $10 million or $15 million of cash, doing [ph] similar to what you're doing with Straight Path, and giving that a -- letting that be -- letting the market value of the business separately as a spinoff?

I mean, I have a joke, but I don't want to say it. I mean, I don't have any other brothers in Norway to run it, so.

No, I mean, we're not thinking about -- currently we are not thinking about spinning it off as its own entity. But that doesn't mean that in a year's time, as the revenue we hope continues to climb significantly and their cash flow continues to grow significantly, that we won't change directions.

I mean Tom Arnoy and Jonathan Reich, who run Zedge have booked on a terrific job, both in terms of growing the user base, and coming out with excellent content that basically continues to keep it in the top 10 to 15 most downloaded apps on Android. And we expect like a major spike in iOS once ring tones comes out, and games, I mean, had another record month last month, and thank God they are doing very, very well.

Well a couple of years ago, in a presentation, you outlined that you thought that the real opportunity may have been something more along the lines of a like almost like pointing to other applications, almost as a marketing company to...

I mean we still -- yes, I mean essentially that is, I mean when I say that games had a record month, that's actually what I mean. I mean we generate essentially, leads for other games, for other apps, for music, for wallpapers, for movies.

I mean, people come to us, they look through our content I mean, and then they download other content. I mean, so we're essentially -- I don't know if filter is the right way or -- they have a word for it.

Yes, they call it a content discovery platform.