Question-and-Answer Session
Operator
Thank you very much, sir. (Operator instructions) Our first question will come from the line of Wayne Johnson of Raymond James. Please proceed.
Wayne Johnson – Raymond James
Hi, good afternoon.
Henry Graham
Hi, Wayne.
Dennis Randolph
How you?re doing, Wayne?
Wayne Johnson – Raymond James
Hi. Just a couple of quick questions here on the JPG acquisition , can you give us a sense of the timeline for when you think that's going to be fully integrated, number one, and number two, what is the margin implications of that to ISD?
Henry Graham
Wayne, we would expect the JPG should be fully converted some time in the third quarter, late second, early third quarter of this fiscal year. Maybe a little longer because we continue to run into different types of terminals as we go through this but quite frankly, it has been moving at a speed that we anticipated. As far as margins in the second part of the question was gross margin, in ISD?
Wayne Johnson – Raymond James
Yes.
Henry Graham
Okay. Around 63% to 65%.
Wayne Johnson – Raymond James
And that's the ISD gross profit margins or that’s the JPG's gross profit margins?
Dennis Randolph
No. That's ISD gross margins in total.
Wayne Johnson – Raymond James
Okay. And so then how do you, like when JPG is fully integrated, it's going to be within that bandwidth? Is it going to be higher or is it going to be lower?
Dennis Randolph
It’ll actually be higher than that. You have to remember the model that we operate in France. It’s a little bit different than in some of the other jurisdictions, so at a gross margin, our cost in France are relatively fixed in nature and we do have the capacity in the network today and prior to the acquisition, so adding this additional traffic there's very little cost for us to add into the network.
Wayne Johnson – Raymond James
Right. And what kind of revenue contribution does JPG represent?
Dennis Randolph
On an annualized basis once it's fully migrated it's between $8million and $9 million.
Wayne Johnson – Raymond James
Okay, that's great. And can you talk a little bit about the Dialect revenues? Can you give a sense of proportion there and the ramp, what's driving the ramp and can you talk about American Express as well?
Dennis Randolph
Dialect revenues right now, Wayne, our average is somewhere between $700,000 and $800,000 a month, which is pretty consistent sometimes a little more, sometimes a little less. We continue to work with AMEX, just try and complete the project. I think we have with AMEX identified all of the components of that and hopefully we are well under our way to satisfying that requirement. We hope to have that done some time during the course of this fiscal year. All in all Dialect continues to do as we expected that it would and we still hold to the prediction that it will in fact be accretive in June of this fiscal year.
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