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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): June 5, 2024

 

 

 

IDT CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-16371   22-3415036

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification No.)

 

520 Broad Street Newark, New Jersey   07102
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (973) 438-1000

 

Not Applicable

(Former name or former address, if changed since last report.)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class   Trading Symbol(s)   Name of each exchange on which registered
Class B common stock, par value $0.01 per share   IDT   New York Stock Exchange.

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 
 

 

Item 2.02.Results of Operations and Financial Condition

 

On June 5, 2024, IDT Corporation (the “Registrant”) issued a press release announcing its results of operations for its fiscal quarter ended April 30, 2024. A copy of the earnings release concerning the foregoing results is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

 

The Registrant is furnishing the information contained in this Report, including Exhibit 99.1, pursuant to Item 2.02 of Form 8-K promulgated by the Securities and Exchange Commission (the “SEC”). This information shall not be deemed to be “filed” with the SEC or incorporated by reference into any other filing with the SEC unless otherwise expressly stated in such filing. In addition, this Report and the press release contain statements intended as “forward-looking statements” that are subject to the cautionary statements about forward-looking statements set forth in the press release.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.   Document
99.1   Earnings Release, dated June 5, 2024, reporting operational and financial results for IDT Corporation’s fiscal quarter ended April 30, 2024.
104   Cover Pager Interactive Data File, formatted in Inline XBRL document

 

2
 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  IDT CORPORATION
     
  By: /s/ Shmuel Jonas
  Name: Shmuel Jonas
  Title: Chief Executive Officer

 

Dated: June 5, 2024

 

3
 

 

EXHIBIT INDEX

 

Exhibit Number   Document
99.1   Earnings Release, dated June 5, 2024, reporting operational and financial results for IDT Corporation’s fiscal quarter ended April 30, 2024.
104   Cover Pager Interactive Data File, formatted in Inline XBRL document

 

4

 

 

Exhibit 99.1

 

 

IDT Corporation Reports Third Quarter Fiscal Year 2024 Results

 

NRS: Recurring Revenue* Up 45%; Income from Operations Up 129%, Adjusted EBITDA** Up 108%

net2phone: Subscription Revenue* Up 17%; Income from Operations Up 226%; Adjusted EBITDA Up 107%

BOSS Money: Transactions Up 44%; Revenue Up 42% -- Fintech Segment Adjusted EBITDA Turns Positive

 

NEWARK, NJ — June 5, 2024: IDT Corporation (NYSE: IDT), a global provider of fintech, cloud communications, and traditional communications solutions, today reported results for the third quarter of its fiscal year 2024, the three months ended April 30, 2024.

 

HIGHLIGHTS

 

(Throughout this release, unless otherwise noted, results are for the third quarter of fiscal year 2024 (3Q24) and are compared to the third quarter of fiscal year 2023 (3Q23). All earnings per share (EPS) and other ‘per share’ results are per diluted share. For 3Q24 and all prior periods presented, IDT reclassified most of its technology and development expenses from SG&A expense to a new “Technology and development” expense line item and reclassified a small portion to “Direct cost of revenues.”)

 

●National Retail Solutions (NRS) added approximately 1,600 net active point-of-sale (POS) terminals during 3Q24, to reach approximately 30,300 as of April 30th. NRS recurring revenue increased 45% year-over-year to $24.0 million;

 

●BOSS Money, the principal business in IDT’s Fintech segment, increased revenue 42% to $27.6 million, while increasing remittance transactions by 44% to 4.7 million;

 

●net2phone added approximately 9,000 net seats served, to reach approximately 384,000 as of April 30th. Subscription revenue increased 17% to $20.0 million;

 

●Consolidated revenue of $299.6 million compared to $299.3 million;

 

●Consolidated gross profit increased 11% to a record $97.0 million from $87.6 million, and the consolidated gross profit margin increased 310 basis points to 32.4% from 29.3%;

 

●Consolidated income from operations increased to $11.4 million from $10.4 million;

 

●Net income attributable to IDT decreased to $5.6 million from $6.9 million, primarily due to an increase in the effective income tax rate in 3Q24 and to certain foreign currency transaction losses realized;

 

●Consolidated Adjusted EBITDA increased to $20.6 million from $20.5 million;

 

●GAAP EPS decreased to $0.22 from $0.27. Non-GAAP EPS** decreased to $0.38 from $0.46 as a result of the decrease in net income attributable to IDT;

 

●During 3Q24, IDT repurchased 68,846 shares of its Class B common stock for $2.5 million.

 

(See ‘Notes’ later in this release for supplemental information on asterisked metrics).

 

1

 

 

REMARKS BY SHMUEL JONAS, CEO

 

“IDT’s three high-growth, high-margin businesses again delivered strong results in the third quarter, contributing to a 310-basis point improvement in our consolidated gross margin. NRS has surpassed the 30 thousand active terminal milestone, making it the largest POS network for C-stores in the country. At net2phone, Adjusted EBITDA doubled year-over-year in the current quarter, as the business continues to scale and improve its operating leverage. And at BOSS Money, our balanced, omni-channel approach to customer acquisition and focus on customer service and user experience drove another quarter of strong revenue increases, helping the Fintech segment to its first Adjusted EBITDA positive quarter.

 

“Looking ahead, we are very excited by the potential of each of these three businesses for sustainable, profitable growth. In our Traditional Communications segment, we are making progress turning around our IDT Digital Payments business and expect its bottom-line results will continue to improve.”

 

CONSOLIDATED RESULTS

 

IDT Consolidated Results

($ in millions, except gross profit margin and EPS)

   3Q24   2Q24   1Q24   4Q23   3Q23   3Q24-3Q23 variance 
Revenue  $299.6   $296.1   $301.2   $303.8   $299.3    +0.1% 
Gross profit  $97.0   $96.9   $94.0   $90.7   $87.6    +10.8% 
Gross profit margin   32.4%   32.7%   31.2%   29.9%   29.3%   +310 bps 
SG&A  $69.0   $67.3   $64.4   $65.7   $60.1    +14.7% 
Technology and development  $12.6   $12.9   $12.4   $12.1   $12.1    +4.1% 
Income from operations  $11.4   $16.0   $17.2   $12.0   $10.4    +$1.1 
Adjusted EBITDA  $20.6   $21.8   $22.3   $18.1   $20.5    +$0.1 
Net income attributable to IDT  $5.6   $14.4   $7.7   $8.0   $6.9   $(1.3)
EPS (diluted)  $0.22   $0.57   $0.30   $0.31   $0.27   $(0.05)
Non-GAAP EPS (diluted)  $0.38   $0.67   $0.32   $0.36   $0.46   $(0.08)

 

2

 

 

RESULTS BY SEGMENT

 

National Retail Solutions (NRS)

 

During 3Q24 and 3Q23, the NRS segment contributed 8.6% and 6.0% of IDT’s consolidated revenue, respectively.

 

National Retail Solutions (NRS)

(Terminals and accounts at end of period. $ in millions, except for revenue per terminal)

   3Q24   2Q24   1Q24   4Q23   3Q23   3Q24-3Q23
variance		 
Terminals and payment processing accounts                              
Active POS terminals   30,300    28,7000    27,200    25,700    23,900    +26.6%
Payment processing accounts   19,500    18,200    17,100    15,800    14,100    +38.0%
                               
Recurring revenue                              
Merchant Services and other  $14.4   $12.5   $11.4   $10.3   $8.7    +65.9%
Advertising & Data  $6.7   $8.7   $8.5   $6.2   $5.8    +16.2%
SaaS Fees  $2.9   $2.7   $2.5   $2.3   $2.1    +41.0%
Total recurring revenue  $24.0   $23.9   $22.4   $18.8   $16.5    +45.4%
POS Terminal Sales  $1.8   $1.3   $1.6   $1.1   $1.6    +9.8%
Total revenue  $25.7   $25.2   $24.0   $19.9   $18.1    +42.3%
                               
Monthly average recurring revenue per terminal*  $271   $285   $282   $253   $237    +14.0%
                               
Gross profit  $22.1   $22.5   $20.8   $17.2   $15.0    +47.6%
SG&A  $15.7   $15.2   $13.6   $14.0   $11.6    +35.0%
Technology and development  $1.7   $1.9   $1.7   $1.5   $1.3    +28.5%
Income from operations  $4.8   $5.3   $5.5   $1.7   $2.1    +$2.7 
Adjusted EBITDA  $5.6   $6.1   $6.2   $2.4   $2.7    +$2.9 

 

Take-Aways:

 

●During 3Q24, NRS added approximately 1,600 net active terminals and approximately 1,300 net payment processing accounts. NRS continues to incentivize new and existing retailers to utilize its native payment processing solution, NRS Pay.

 

●The strong year-over-year increases in both Merchant Services and in SaaS Fees revenues reflects the continued, robust growth in active POS terminals and payment processing accounts, as well as increased
sales of higher revenue payment processing and software plans.

 

●The year-over-year revenue increase in advertising sales, which comprises most of Advertising & Data revenue, resulted from steady growth stemming from both programmatic and direct sales channel enhancements. The sequential quarterly decline was in line with expected seasonal factors characteristic of the advertising industry.

 

●The year-over-year increase in monthly average recurring revenue per terminal was impacted mostly by the strong increases in Merchant Services and SaaS Fees revenues per terminal.

 

3

 

 

net2phone

 

During 3Q24 and 3Q23, the net2phone segment contributed 6.9% and 6.2% of IDT’s consolidated revenue, respectively.

 

net2phone

(Seats in thousands at end of period. $ in millions)

   3Q24   2Q24   1Q24   4Q23   3Q23   3Q24-3Q23 variance 
Seats   384    375    364    352    340    +12.9% 
                               
Revenue                              
Subscription revenue  $20.0   $19.3   $18.5   $17.9   $17.1    +17.1% 
Other revenue  $0.7   $1.0   $1.4   $1.4   $1.3    (50.4)%
Total Revenue  $20.7   $20.4   $19.9   $19.3   $18.4    +12.4% 
                               
Gross profit  $16.4   $16.1   $15.8   $15.2   $14.6    +12.4% 
SG&A  $13.0   $13.1   $13.3   $13.2   $12.5    +4.7% 
Technology and development  $2.8   $2.6   $2.5   $2.5   $2.5    +12.1% 
Income (loss) from operations  $0.5   $0.4   $0.0   $(0.7)  $(0.4)   +$0.9 
Adjusted EBITDA  $2.1   $1.8   $1.4   $0.9   $1.0    +$1.1 

 

Take-Aways:

 

●net2phone’s year-over-year increases in seats were powered by expansion in key markets led by the U.S., Brazil, and Mexico.

 

●net2phone’s combined SG&A expense and technology and development cost as a percentage of its total revenue decreased to 77% from 81% in the year ago quarter, as it continues to achieve higher levels of operating leverage as the business scales.

 

Fintech

 

During 3Q24 and 3Q23, the Fintech segment contributed 10.5% and 7.3% of IDT’s consolidated revenue, respectively.

 

Fintech

(Transactions in millions. $ in millions except for revenue per transaction)

   3Q24   2Q24   1Q24   4Q23   3Q23   3Q24-3Q23 variance 
BOSS Money Transactions   4.7    4.2    4.0    3.8    3.3    +44.2% 
                               
Fintech Revenue                              
BOSS Money  $27.6   $25.0   $24.2   $22.3   $19.4    +41.9% 
Other  $3.9   $2.9   $2.3   $2.3   $2.3    +67.7% 
Total Revenue  $31.5   $28.0   $26.6   $24.6   $21.8    +44.7% 
                               
Average revenue per transaction**  $5.84   $5.98   $5.99   $5.87   $5.94    (1.6)%
                               
Gross profit  $17.3   $16.1   $14.8   $13.6   $12.6    +37.8% 
SG&A  $15.3   $14.3   $14.2   $13.6   $12.0    +26.7% 
Technology and development  $2.5   $2.5   $2.1   $2.0   $1.8    +37.3% 
Loss from operations  $(0.6)  $(0.7)  $(1.4)  $(1.9)  $(1.3)   +$0.8 
Adjusted EBITDA  $0.2   $0.0   $(0.7)  $(1.2)  $(0.6)   +$0.9 

 

4

 

 

Take-Aways:

 

●The 44% year-over-year increase in BOSS Money transactions comprised a 43% increase in digital transactions via the BOSS Money and BOSS Calling apps, and a 49% increase in retail transactions. The latter was driven primarily by expansion of the BOSS Money retail agent network.

 

●BOSS Money revenue increased 42% as a result of transactions growth, driven by cross-marketing within the larger BOSS ecosystem, the expansion of the BOSS Money retailer network, and enhanced user-experience within the BOSS Money and Boss Calling apps.

 

●The Fintech segment generated positive Adjusted EBITDA for the first time, primarily as a result of the continued growth in BOSS Money transactions, revenue, and gross profit.

 

Traditional Communications

 

During 3Q24 and 3Q23, the Traditional Communications segment contributed 74.0% and 80.5% of IDT’s consolidated revenue, respectively.

 

Traditional Communications

($ in millions)

   3Q24   2Q24   1Q24   4Q23   3Q23   3Q24-3Q23 variance 
Revenue                              
IDT Digital Payments  $101.6   $99.6   $100.0   $100.8   $101.0    +0.5% 
BOSS Revolution Calling  $63.2   $66.7   $71.2   $75.4   $77.6    (18.5)%
IDT Global  $50.1   $48.7   $52.0   $55.6   $54.5    (8.1)%
Other  $6.9   $7.5   $7.5   $8.2   $7.9    (13.1)%
Total Revenue  $221.7   $222.5   $230.7   $240.0   $241.0    (8.0)%
                               
Gross profit  $41.2   $42.3   $42.6   $44.7   $45.4    (9.3)%
SG&A  $22.7   $21.4   $20.6   $22.3   $21.8    +4.4% 
Technology & development  $5.6   $5.9   $6.1   $6.1   $6.5    (13.3)%
Income from operations  $12.5   $14.6   $15.4   $14.1   $12.9   $(0.5)
Adjusted EBITDA  $14.9   $17.0   $18.1   $18.6   $19.7   $(4.8)

 

Take-Away:

 

●Traditional Communications revenue in the third quarter outperformed expectations with stronger than anticipated results from IDT Global.

 

5

 

 

OTHER FINANCIAL RESULTS

 

Consolidated results for all periods presented include corporate overhead. Corporate G&A expense was $2.3 million in both 3Q24 and 3Q23.

 

As of April 30, 2024, IDT held $174.0 million in cash, cash equivalents, debt securities, and current equity investments. Current assets totaled $408.5 million and current liabilities totaled $277.8 million. IDT had no outstanding debt at the fiscal quarter’s end.

 

Net cash provided by operating activities during 3Q24 was $9.6 million – an increase from 3Q23 when net cash used in operating activities was $6.9 million. Exclusive of changes in customer deposit balances at IDT’s Gibraltar-based bank, net cash provided by operating activities during 3Q24 increased to $12.3 million compared to net cash used in operating activities of $4.3 million during 3Q23.

 

Capital expenditures decreased to $4.7 million in 3Q24 from $5.5 million in 3Q23.

 

DIVIDEND

 

IDT will pay a $0.05 quarterly dividend on its Class A and Class B Common stock on or about June 17th to stockholders of record as of the close of business on June 10th.

 

IDT EARNINGS ANNOUNCEMENT INFORMATION

 

This release is available for download in the “Investors & Media” section of the IDT Corporation website (https://www.idt.net/investors-and-media) and has been filed on a current report (Form 8-K) with the SEC.

 

IDT will host an earnings conference call beginning at 5:30 PM Eastern today with management’s discussion of results followed by Q&A with investors. To listen to the call and participate in the Q&A, dial 1-888-506-0062 (toll-free from the US) or 1-973-528-0011 (international) and request the IDT Corporation call (participant access code: 217002).

 

A replay of the conference call will be available approximately three hours after the call concludes through June 19, 2024. To access the call replay, dial 1-877-481-4010 (toll-free from the US) or 1-919-882-2331 (international) and provide this replay passcode: 50617. The replay will also be accessible via streaming audio at the IDT investor relations website.

 

NOTES

 

*Adjusted EBITDA and Non-GAAP EPS are Non-GAAP financial measures intended to provide useful information that supplements IDT’s or the relevant segment’s results in accordance with GAAP. Please refer to the Reconciliation of Non-GAAP Financial Measures later in this release for an explanation of these terms and their respective reconciliations to the most directly comparable GAAP measures.

 

**See ‘Explanation of Key Performance Metrics’ at the end of this release.

 

6

 

 

ABOUT IDT CORPORATION

 

IDT Corporation (NYSE: IDT) is a global provider of fintech and communications services through a portfolio of synergistic businesses: National Retail Solutions (NRS), through its point-of-sale (POS) platform, enables independent retailers to operate more effectively while providing advertisers and marketers with unprecedented reach into underserved consumer markets; net2phone provides enterprises and organizations with intelligently integrated cloud communications and contact center services across channels and devices; IDT’s fintech and neo-banking services include BOSS Money, a popular international remittance business, as well as other services that make saving, spending, and sharing money easy and secure; IDT Digital Payments and BOSS Revolution Calling make sharing prepaid products and services and speaking with friends and family around the world convenient and reliable; and, IDT Global and IDT Express enable communications services to provision and manage international voice and SMS messaging.

 

All statements above that are not purely about historical facts, including, but not limited to, those in which we use the words “believe,” “anticipate,” “expect,” “plan,” “intend,” “estimate,” “target” and similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent our current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous important factors. Our filings with the SEC provide detailed information on such statements and risks and should be consulted along with this release. To the extent permitted under applicable law, IDT assumes no obligation to update any forward-looking statements.

 

CONTACT

 

IDT Corporation Investor Relations

Bill Ulrey

william.ulrey@idt.net

973-438-3838

 

7

 

 

IDT CORPORATION

 

CONSOLIDATED BALANCE SHEETS

 

  

April 30,
2024

  

July 31,
2023

 
   (Unaudited)     
   (in thousands, except per share data) 
Assets          
Current assets:          
Cash and cash equivalents  $139,773   $103,637 
Restricted cash and cash equivalents   93,072    95,186 
Debt securities   29,384    42,414 
Equity investments   4,844    6,198 
Trade accounts receivable, net of allowance for credit losses of $6,717 at April 30, 2024 and allowance for doubtful accounts of $5,642 at July 31, 2023   38,967    32,092 
Settlement assets, net of reserve of $1,676 at April 30, 2024 and $1,143 at July 31, 2023   21,435    32,396 
Disbursement prefunding   36,626    30,113 
Prepaid expenses   20,046    16,638 
Other current assets   24,385    28,394 
Total current assets   408,532    387,068 
Property, plant, and equipment, net   38,515    38,655 
Goodwill   26,254    26,457 
Other intangibles, net   6,591    8,196 
Equity investments   6,630    9,874 
Operating lease right-of-use assets   4,370    5,540 
Deferred income tax assets, net   15,270    24,101 
Other assets   11,140    10,919 
Total assets  $517,302   $510,810 
Liabilities, redeemable noncontrolling interest, and equity          
Current liabilities:          
Trade accounts payable  $23,976   $22,231 
Accrued expenses   99,335    110,796 
Deferred revenue   32,070    35,343 
Customer deposits   83,660    86,481 
Settlement liabilities   22,853    21,495 
Other current liabilities   15,937    17,761 
Total current liabilities   277,831    294,107 
Operating lease liabilities   1,753    2,881 
Other liabilities   3,647    3,354 
Total liabilities   283,231    300,342 
Commitments and contingencies          
Redeemable noncontrolling interest   10,791    10,472 
Equity:          
IDT Corporation stockholders’ equity:          
Preferred stock, $.01 par value; authorized shares—10,000; no shares issued   —    — 
Class A common stock, $.01 par value; authorized shares—35,000; 3,272 shares issued and 1,574 shares outstanding at April 30, 2024 and July 31, 2023   33    33 
Class B common stock, $.01 par value; authorized shares—200,000; 28,165 and 27,851 shares issued and 23,766 and 23,699 shares outstanding at April 30, 2024 and July 31, 2023, respectively   282    279 
Additional paid-in capital   303,055    301,408 
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of Class A common stock and 4,399 and 4,152 shares of Class B common stock at April 30, 2024 and July 31, 2023, respectively   (122,668)   (115,461)
Accumulated other comprehensive loss   (17,243)   (17,192)
Retained earnings   51,028    24,662 
Total IDT Corporation stockholders’ equity   214,487    193,729 
Noncontrolling interests   8,793    6,267 
Total equity   223,280    199,996 
Total liabilities, redeemable noncontrolling interest, and equity  $517,302   $510,810 

 

8

 

 

IDT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 

  

Three Months Ended
April 30,

  

Nine Months Ended
April 30,

 
  

2024

  

2023

  

2024

  

2023

 
   (in thousands, except per share data) 
     
Revenues  $299,643   $299,295   $896,946   $935,047 
Direct cost of revenues   202,599    211,734    608,982    668,513 
Gross profit   97,044    87,561    287,964    266,534 
Operating expenses:                    
Selling, general and administrative (i)   68,962    60,130    200,685    177,475 
Technology and development (i)   12,640    12,145    37,975    35,870 
Severance   779    145    1,648    458 
Other operating expense, net   3,231    4,764    3,041    3,948 
Total operating expenses   85,612    77,184    243,349    217,751 
Income from operations   11,432    10,377    44,615    48,783 
Interest income, net   1,162    709    3,201    2,029 
Other expense, net   (3,273)   (382)   (6,326)   (2,610)
Income before income taxes   9,321    10,704    41,490    48,202 
Provision for income taxes   (2,979)   (2,960)   (10,918)   (12,594)
Net income   6,342    7,744    30,572    35,608 
Net income attributable to noncontrolling interests   (791)   (854)   (2,937)   (3,093)
Net income attributable to IDT Corporation  $5,551   $6,890   $27,635   $32,515 
Earnings per share attributable to IDT Corporation common stockholders:                    
Basic  $0.22   $0.27   $1.10   $1.27 
Diluted  $0.22   $0.27   $1.09   $1.27 
Weighted-average number of shares used in calculation of earnings per share:                    
Basic   25,345    25,518    25,233    25,544 
Diluted   25,516    25,612    25,380    25,589 
(i) Stock-based compensation included in:                    
Selling, general and administrative expense  $2,027   $1,579   $5,025   $3,096 
Technology and development expense  $91   $100   $350   $441 

 

9

 

 

IDT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

  

Nine Months Ended
April 30,

 
  

2024

  

2023

 
   (in thousands) 
Operating activities          
Net income  $30,572   $35,608 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   15,256    14,986 
Deferred income taxes   8,830    9,200 
Provision for credit losses, doubtful accounts receivable, and reserve for settlement assets   3,010    1,180 
Net unrealized loss from marketable securities   1,537    3,151 
Stock-based compensation   5,375    3,537 
Other   2,528    2,114 
Change in assets and liabilities:          
Trade accounts receivable   (9,000)   57 
Settlement assets, disbursement prefunding, prepaid expenses, other current assets, and other assets   6,797    (29,184)
Trade accounts payable, accrued expenses, settlement liabilities, other current liabilities, and other liabilities   (12,263)   (6,220)
Customer deposits at IDT Financial Services Limited (Gibraltar-based bank)   (431)   (2,570)
Deferred revenue   (2,903)   (3,160)
Net cash provided by operating activities   49,308    28,699 
Investing activities          
Capital expenditures   (13,621)   (16,033)
Purchase of convertible preferred stock in equity method investment   (1,513)   (168)
Payments for acquisition   (60)   — 
Purchases of debt securities and equity investments   (27,593)   (44,166)
Proceeds from maturities and sales of debt securities and redemptions of equity investments   41,527    34,309 
Net cash used in investing activities   (1,260)   (26,058)
Financing activities          
Dividends paid   (1,269)   — 
Distributions to noncontrolling interests   (62)   (293)
Proceeds from notes payable   100    300 
Repayment of notes payable.   (128)   (2,031)
Proceeds from borrowings under revolving credit facility   32,864    2,383 
Repayment of borrowings under revolving credit facility.   (32,864)   (2,383)
Proceeds from exercise of stock options   172    172 
Repurchases of Class B common stock   (7,207)   (7,845)
Net cash used in financing activities   (8,394)   (9,697)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents   (5,632)   2,537 
Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents   34,022    (4,519)
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period   198,823    189,562 
Cash, cash equivalents, and restricted cash and cash equivalents at end of period  $232,845   $185,043 
Supplemental schedule of non-cash financing activities          
Shares of Class B common stock issued for business acquisition holdback payment  $100   $— 
Restricted net2phone common stock withheld from employees for income tax obligations  $3,558   $— 
Value of Class B common stock exchanged for National Retail Solutions shares  $6,254   $— 
Conversion of equity method investment’s secured promissory notes into convertible preferred stock  $—   $4,038 
Stock issued to certain executive officers for bonus payments  $1,495   $615 

 

10

 

 

*Explanation of Key Performance Metrics

 

NRS’ recurring revenue is NRS’ revenue in accordance with GAAP excluding revenue from POS terminal sales. NRS’ Monthly Average Recurring Revenue per Terminal is a financial metric. Monthly Average Recurring Revenue per Terminal is calculated by dividing NRS’ recurring revenue by the average number of active POS terminals during the period. The average number of active POS terminals is calculated by adding the beginning and ending number of active POS terminals during the period and dividing by two. NRS’ recurring revenue divided by the average number of active POS terminals is divided by three when the period is a fiscal quarter. Recurring revenue and Monthly Average Recurring Revenue per Terminal are useful for comparisons of NRS’ revenue and revenue per customer to prior periods and to competitors and others in the market, as well as for forecasting future revenue from the customer base.

 

net2phone’s subscription revenue is its revenue in accordance with GAAP excluding its equipment revenue and revenue generated by a legacy SIP trunking offering in Brazil. net2phone’s cloud communications and contact center offerings are priced on a per-seat basis, with customers paying based on the number of users in their organization. The number of seats served and subscription revenue trends and comparisons between periods are used in the analysis of net2phone’s revenues and direct cost of revenues and are strong indications of the top-line growth and performance of the business.

 

BOSS Money’s Average Revenue per Transaction is also a financial metric. Average Revenue per Transaction is calculated by dividing BOSS Money’s revenue in accordance with GAAP by the number of transactions during the period. Average Revenue per Transaction is useful for comparisons of BOSS Money’s revenue per transaction to prior periods and to competitors and others in the market, as well as for forecasting future revenue based on transaction trends.

 

**Reconciliation of Non-GAAP Financial Measures for the Third Quarter Fiscal 2024 and 2023

 

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States of America (GAAP), IDT also disclosed for 3Q24, 2Q24, 1Q24, 4Q23, and 3Q23 Adjusted EBITDA and non-GAAP earnings per diluted share (EPS), both of which are non-GAAP measures.

 

Generally, a non-GAAP measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.

 

IDT’s measure of non-GAAP EPS is calculated by dividing non-GAAP net income by the diluted weighted-average shares. IDT’s measure of non-GAAP net income starts with net income attributable to IDT in accordance with GAAP and adds severance expense, stock-based compensation, and other operating expenses, and deducts other operating gains. These additions and subtractions are non-cash and/or non-routine items in the relevant fiscal 2024 and fiscal 2023 periods.

 

Management believes that IDT’s Adjusted EBITDA and non-GAAP EPS are measures which provide useful information to both management and investors by excluding certain expenses and non-routine gains and losses that may not be indicative of IDT’s or the relevant segment’s core operating results. Management uses Adjusted EBITDA, among other measures, as a relevant indicator of core operational strengths in its financial and operational decision making. In addition, management uses Adjusted EBITDA and non-GAAP EPS to evaluate operating performance in relation to IDT’s competitors. Disclosure of these financial measures may be useful to investors in evaluating performance and allows for greater transparency to the underlying supplemental information used by management in its financial and operational decision-making. In addition, IDT has historically reported similar financial measures and believes such measures are commonly used by readers of financial information in assessing performance, therefore the inclusion of comparative numbers provides consistency in financial reporting.

 

11

 

 

Management refers to Adjusted EBITDA, as well as the GAAP measures income (loss) from operations and net income, on a segment and/or consolidated level to facilitate internal and external comparisons to the segments’ and IDT’s historical operating results, in making operating decisions, for budget and planning purposes, and to form the basis upon which management is compensated.

 

While depreciation and amortization are considered operating costs under GAAP, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or capitalized in prior periods. IDT’s Adjusted EBITDA, which is exclusive of depreciation and amortization, is a useful indicator of its current performance.

 

Severance expense is excluded from the calculation of Adjusted EBITDA and non-GAAP EPS. Severance expense is reflective of decisions made by management in each period regarding the aspects of IDT’s and its segments’ businesses to be focused on in light of changing market realities and other factors. While there may be similar charges in other periods, the nature and magnitude of these charges can fluctuate markedly and do not reflect the performance of IDT’s core and continuing operations.

 

Other operating (expense) gain, net, which is a component of income (loss) from operations, is excluded from the calculation of Adjusted EBITDA and non-GAAP EPS. Other operating (expense) gain, net includes, among other items, legal fees net of insurance claims related to Straight Path Communications Inc.’s stockholders’ class action, gains from the write-off of contingent consideration liabilities, gain from the sale of state income tax credits, and fixed asset write-offs. From time-to-time, IDT may have gains or incur costs related to non-routine legal, tax, and other matters, however, these various items generally do not occur each quarter. IDT believes the gain and losses from these non-routine matters are not components of IDT’s or the relevant segment’s core operating results.

 

Stock-based compensation recognized by IDT and other companies may not be comparable because of the variety of types of awards as well as the various valuation methodologies and subjective assumptions that are permitted under GAAP. Stock-based compensation is excluded from IDT’s calculation of non-GAAP EPS because management believes this allows investors to make more meaningful comparisons of the operating results per share of IDT’s core business with the results of other companies. However, stock-based compensation will continue to be a significant expense for IDT for the foreseeable future and an important part of employees’ compensation that impacts their performance.

 

Adjusted EBITDA and non-GAAP EPS should be considered in addition to, not as a substitute for, or superior to, income (loss) from operations, cash flow from operating activities, net income, basic and diluted earnings per share or other measures of liquidity and financial performance prepared in accordance with GAAP. In addition, IDT’s measurements of Adjusted EBITDA and non-GAAP EPS may not be comparable to similarly titled measures reported by other companies.

 

Following are reconciliations of Adjusted EBITDA and non-GAAP EPS to the most directly comparable GAAP measure, which are, (a) for Adjusted EBITDA, income (loss) from operations for IDT’s reportable segments and net income for IDT on a consolidated basis, and (b) for non-GAAP EPS, diluted earnings per share.

 

12

 

 

IDT Corporation

Reconciliation of Net Income to Adjusted EBITDA

(unaudited) in millions. Figures may not foot or cross-foot due to rounding to millions

 

   Total IDT Corporation   Traditional Communica-tions   net2phone   NRS   Fintech   Corporate 

Three Months Ended April 30, 2024 (3Q24)

                        
Net income attributable to IDT Corporation  $5.6                          
Adjustments:                              
Net income attributable to noncontrolling interests        0.8                          
Net income   6.3                          
Provision for income taxes   3.0                          
Income before income taxes   9.3                          
Interest income, net   (1.2)                         
Other expense, net   3.3                                        
Income (loss) from operations   11.4   $12.5   $0.5   $4.8   $(0.6)  $(5.7)
Depreciation and amortization   5.1    2.0    1.6    0.8    0.7    - 
Severance   0.8    0.4    0.1    -    -    0.3 
Other operating expense, net   3.2    -    -    -    0.1    3.2 
Adjusted EBITDA  $20.6   $14.9   $2.1   $5.6   $0.2   $(2.3)

 

13

 

 

IDT Corporation

Reconciliation of Net Income to Adjusted EBITDA

(unaudited) in millions. Figures may not foot or cross-foot due to rounding to millions

 

   Total IDT Corporation   Traditional Communica-tions   net2phone   NRS   Fintech   Corporate 

Three Months Ended January 31, 2024 (2Q24)

                        
Net income attributable to IDT Corporation  $14.4                          
Adjustments:                              
Net income attributable to noncontrolling interests   1.3                          
Net income   15.8                          
Provision for income taxes   4.0                          
Income before income taxes   19.7                          
Interest income, net   (1.2)                         
Other income, net   (2.5)                         
Income (loss) from operations   16.0   $14.6   $0.4   $5.3   $(0.7)  $(3.6)
Depreciation and amortization   5.1    2.0    1.6    0.8    0.7    - 
Severance   0.3    0.3    -    -    -    - 
Other operating expense (gain), net   0.3    -    (0.1)   -    -    0.4 
Adjusted EBITDA  $21.8   $17.0   $1.8   $6.1   $-   $(3.2)

 

14

 

 

IDT Corporation

Reconciliation of Net Income to Adjusted EBITDA

(unaudited) in millions. Figures may not foot or cross-foot due to rounding to millions

 

   Total IDT Corporation   Traditional Communica-tions   net2phone   NRS   Fintech   Corporate 

Three Months Ended October 31, 2023 (1Q24)

                        
Net income attributable to IDT Corporation  $7.7                          
Adjustments:                              
Net income attributable to noncontrolling interests   0.8                          
Net income   8.5                          
Provision for income taxes   3.9                          
Income before income taxes   12.4                          
Interest income, net   (0.8)                         
Other expense, net   5.6                          
Income (loss) from operations   17.2   $15.4   $-   $5.5   $(1.4)  $(2.3)
Depreciation and amortization   5.0    2.1    1.4    0.7    0.7    - 
Severance   0.5    0.5    -    -    -    - 
Other operating gain, net   (0.5)   -    -    -    -    (0.5)
Adjusted EBITDA  $22.3   $18.1   $1.4   $6.2   $(0.7)  $(2.8)

 

    Total IDT Corporation    Traditional Communica-tions    net2phone    NRS    Fintech    Corporate 

Three Months Ended July 31, 2023(4Q23)

                              
Net income attributable to IDT Corporation  $8.0                          
Adjustments:                              
Net income attributable to noncontrolling interests   0.8                          
Net income   8.8                          
Provision for income taxes   3.8                          
Income before income taxes   12.6                          
Interest income, net   (1.1)                         
Other expense, net   0.5                          
Income (loss) from operations   12.0   $14.1   $(0.7)  $1.7   $(1.9)  $(1.2)
Depreciation and amortization   5.1    2.3    1.5    0.7    0.7    - 
Severance   0.5    0.4    0.1    -    -    - 
Other operating expense (gain), net   0.5    1.8    0.1    -    -    (1.4)
Adjusted EBITDA  $18.1   $18.6   $0.9   $2.4   $(1.2)  $(2.6)

 

15

 

 

IDT Corporation

Reconciliation of Net Income to Adjusted EBITDA

(unaudited) in millions. Figures may not foot or cross-foot due to rounding to millions

 

   Total IDT Corporation   Traditional Communica-tions   net2phone   NRS   Fintech   Corporate 

Three Months Ended April 30, 2023 (3Q23)

                        
Net income attributable to IDT Corporation  $6.9                          
Adjustments:                              
Net income attributable to noncontrolling interests   0.9                          
Net income   7.7                          
Provision for income taxes   3.0                          
Income before income taxes   10.7                          
Interest income, net   (0.7)                         
Other expense, net   0.4                          
Income (loss) from operations   10.4   $12.9   $(0.4)  $2.1   $(1.3)  $(2.9)
Depreciation and amortization   5.2    2.5    1.4    0.6    0.7    - 
Severance   0.1    0.1    -    -    -    - 
Other operating expense, net   4.8    4.1    -    -    -    0.6 
Adjusted EBITDA  $20.5   $19.7   $1.0   $2.7   $(0.6)  $(2.3)

 

16

 

 

IDT Corporation

Reconciliation of Earnings per share to Non-GAAP EPS

(unaudited) in millions, except per share data. Figures may not foot due to rounding to millions.

 

   3Q24   2Q24   1Q24   4Q23   3Q23 
                     
Net income attributable to IDT Corporation  $5.6   $14.4   $7.7   $8.0   $6.9 
Adjustments (add) subtract:                         
Stock-based compensation   (2.1)   (2.5)   (0.8)   (1.0)   (1.7)
Severance expense   (0.8)   (0.3)   (0.5)   (0.5)   (0.1)
Other operating (expense) gain, net   (3.2)   (0.3)   0.5    (0.5)   (4.8)
Total adjustments   (6.1)   (3.1)   (0.8)   (2.0)   (6.6)
Income tax effect of total adjustments   (2.0)   (0.6)   (0.3)   (0.7)   (1.8)
    4.1    2.5    0.5    1.3    4.8 
Non-GAAP net income  $9.7   $16.9   $8.2   $9.3   $11.7 
                          
Earnings per share:                         
Basic  $0.22   $0.57   $0.30   $0.31   $0.27 
Total adjustments   0.16    0.10    0.03    0.06    0.19 
Non-GAAP - basic  $0.38   $0.67   $0.33   $0.37   $0.46 
                          
Weighted-average number of shares used in calculation of basic earnings per share   25.3    25.2    25.2    25.4    25.5 
                          
Diluted  $0.22   $0.57   $0.30   $0.31   $0.27 
Total adjustments   0.16    0.10    0.02    0.05    0.19 
Non-GAAP - diluted  $0.38   $0.67   $0.32   $0.36   $0.46 
                          
Weighted-average number of shares used in calculation of diluted earnings per share   25.5    25.3    25.3    25.5    25.6 

 

# # #

 

17

 

v3.24.1.1.u2
Cover
Jun. 05, 2024
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Jun. 05, 2024
Entity File Number 1-16371
Entity Registrant Name IDT CORPORATION
Entity Central Index Key 0001005731
Entity Tax Identification Number 22-3415036
Entity Incorporation, State or Country Code DE
Entity Address, Address Line One 520 Broad Street
Entity Address, City or Town Newark,
Entity Address, State or Province NJ
Entity Address, Postal Zip Code 07102
City Area Code (973)
Local Phone Number 438-1000
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Class B common stock, par value $0.01 per share
Trading Symbol IDT
Security Exchange Name NYSE
Entity Emerging Growth Company false
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