National Retail Solutions (NRS) - Investment Thesis (IDT Corporation)
The jewel of the crown of the empire being built by IDT
National Retail Solutions (NRS)
Ten days ago, we published the thesis on IDT—a family-owned U.S. conglomerate of companies that has delivered incredible returns since its founding in 1990. If one had held IDT and its spinoffs during the decade from 2010 to 2020, they would have achieved a CAGR of over 50%. IDT operates as a business incubator, spinning off the successful businesses they grow organically. It was one of the most comprehensive theses we've written, and we also mentioned that we would publish a separate thesis on the crown jewel of their business: National Retail Solutions (NRS).
Today, after they reported impressive results for 1Q25 yesterday, we are sharing with you the NRS thesis, its main business.
What is NRS?
In 2015, National Retail Solutions was founded organically within IDT with the mission of providing technology to the stores network that provided the IDT BOSS Revolution services. These are independent (not belonging to a franchise chain) convenience stores, liquor stores, bodegas or tobacco stores distributed all over the US, that very often are immigrant-owned (due to the own nature of the type of services that BOSS offers: International calling and Money Transfer). The initial TAM of NRS was around 200,000 of these independently owned C-stores. But over time it has grown into something much bigger than that, expanding the TAM considerably.
These independent retailers are the last ones to the dance when it comes to technology and they are a target of larger C-store chains like 7-11, CVS, Walgreens and others that had access to scale and much more powerful technology to run their stores
NRS sells the retailers a Point Of Sale (POS) Terminal and computer with the NRS software that allows the merchants to have a simplified ERP with the same features that the large chain stores have access to. Here is a list of some of the features that NRS provides to independent retailers:
Turnkey loyalty and rewards programs (electronic coupon systems)
An inventory management software,
Merchant and consumer apps
Seamless integration of their store with Uber Eat, Grubhub or other distance purchase apps
Access to a wholesale purchase portal (NRS retailers have access to bulk prices as nation-wide retailers place orders together),
Access to data analytics: Answers a lot of questions to the retailers how much they purchased their inventory for, what the avg sale price is, when do they need to reorder… It also provides them with a list of the top 300 items that are selling in their neighborhood and their average prices.
Access to financing: The NRS POS has direct access to their sales data and uses that data to underwrite loans or cash advances that the retailer may need.
Employee management software
Accounting solutions
Advertising screens: The POS has a 15-inch customer facing screen in addition to the merchant facing screen. Additional screens are possible too. IDT makes money on these ads from the advertising brands.
Payment processing
One should note that the number of services offered by NRS has expanded since its start in 2015, initially NRS was just a POS reseller with a software that generated electronic coupons.
What is the business of NRS?
Geographically, NRS operates mainly in the US, with some presence in Canada. Its customer pool has expanded since its origination. Today, NRS not only serves C-Stores in the BOSS Revolution network, but also independent-owned Gas stations, Cafes, Hair Salons, Dollar Stores, Quick Service Restaurants, Grocery stores, Tobacco and Liquor shops.
NRS has 5 different revenue streams: Hardware resale, SaaS Fees, Merchant Services (Payment Processing and Marketplace Services fit here), Selling Data and Advertising (these last 2 are reported together in the 10-Qs). All these streams, except the hardware resale, are recurrent revenues. IDT started to publicly provide a breakdown of the NRS different revenue streams in Q4 2021