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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): March 6, 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 March 6, 2024, IDT Corporation (the “Registrant”) issued a press release announcing its results of operations for its fiscal quarter ended January 31, 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 March 6, 2024, reporting operational and financial results for IDT Corporation’s fiscal quarter ended January 31, 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: March 6, 2024

 

3

 

 

EXHIBIT INDEX

 

Exhibit Number   Document
99.1   Earnings Release, dated March 6, 2024, reporting operational and financial results for IDT Corporation’s fiscal quarter ended January 31, 2024.
104   Cover Pager Interactive Data File, formatted in Inline XBRL document

 

4

 

 

Exhibit 99.1

 

 

IDT Corporation Reports Second Quarter Fiscal Year 2024 Results

 

GAAP EPS of $0.57 – unchanged YoY; Non-GAAP EPS* increased to $0.67 from $0.62

Cash, cash equivalents, debt securities, and current equity investments totaled $177.6 million

Initiates quarterly dividend of $0.05 per share of Common Stock

 

NEWARK, NJ — March 6, 2024: IDT Corporation (NYSE: IDT), a global provider of fintech, cloud communications, and traditional communications services, today reported results for the second quarter of its fiscal year 2024, the three months ended January 31, 2024.

 

HIGHLIGHTS

 

(Throughout this release, unless otherwise noted, results are for the second quarter of fiscal year 2024 (2Q24) and are compared to the second quarter of fiscal year 2023 (2Q23). All earnings per share (EPS) and other ‘per share’ results are per diluted share.)

 

●National Retail Solutions (NRS) added approximately 1,500 net active point-of-sale (POS) terminals during 2Q24 to reach approximately 28,700 as of January 31st. NRS recurring revenue** increased 30% to $23.9 million;

 

●BOSS Money, the principal business in IDT’s Fintech segment, increased revenue 42% to $25.0 million while increasing remittance volume by 37% to 4.2 million transactions during 2Q24;

 

●net2phone added approximately 11,000 net seats served during 2Q24 to reach approximately 375,000 as of January 31st. Subscription revenue** increased 19% to $19.3 million. Income from operations increased to $0.4 million and Adjusted EBITDA* increased to $1.8 million;

 

●Consolidated revenue decreased 6% to $296 million from $314 million;

 

●Consolidated gross profit*** increased 8% to a record $97 million from $90 million, and the consolidated gross profit margin increased 410 basis points to 32.9% from 28.8%;

 

●Consolidated income from operations decreased 12% to $16.0 million from $18.2 million;

 

●Net income attributable to IDT decreased slightly to $14.4 million from $14.6 million;

 

●Consolidated Adjusted EBITDA* decreased 7% to $21.8 million from $23.4 million;

 

●GAAP EPS was unchanged at $0.57 and Non-GAAP EPS* increased to $0.67 from $0.62.

 

●IDT’s Board of Directors has initiated a quarterly cash dividend of $0.05 per share of its Class A and Class B Common stock. The initial dividend will be paid on or about March 27th with a record date of March 19th.

 

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

 

1
 

 

REMARKS BY SHMUEL JONAS, CEO

 

“The second quarter was highlighted by the continued expansion of our growth businesses, with both NRS and BOSS Money surpassing the $100 million annual revenue run rate milestone.

 

“NRS continued to deliver robust recurring revenue per terminal. We again saw strong growth in Merchant Services and SaaS revenues, and increased Merchant Services revenue per NRS Pay account. We added approximately 1500 net new terminals to the NRS network this quarter.

 

“BOSS Money delivered another quarter of impressive results, with 42% year-over-year revenue growth. Its improving economics helped our Fintech segment to achieve Adjusted EBITDA break-even for the quarter.

 

“I am also very pleased with net2phone increasing subscription revenue 19% year over year and achieving cash flow break-even – which we measure as Adjusted EBITDA less CapEx. Together, our combined growth segments propelled IDT to achieve another quarter of record consolidated gross profit and increased gross margin.

 

“The businesses within our Traditional Communications segment continue to generate strong cash-flow. Over the past few months, we have been very focused on reducing our overhead and on streamlining our operations within Traditional Communications and company-wide. You will see the benefits of these efforts in the third quarter and beyond.

 

“Now, I want to provide some context to our Board’s decision to initiate a quarterly cash dividend.

 

“NRS, BOSS Money and net2phone no longer need new cash investments to fund their organic growth. In aggregate, they have become significant contributors to our bottom line. Meanwhile, we expect cash flows from our Traditional Communications segment to remain robust for years to come. The strength of our operational results and of our balance sheet — including our enhanced liquidity — provides us with flexibility as we invest in the development of our next generation of exciting early-stage initiatives and scout for other growth opportunities.

 

“In light of our robust financial position and positive outlook, the Board felt that we should supplement our ongoing program of opportunistic stock buybacks, which can vary from quarter to quarter, with a regular, predictable dividend payment to our stockholders.”

 

2
 

 

CONSOLIDATED RESULTS

 

IDT Consolidated Results

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

   2Q24   1Q24   4Q23   3Q23   2Q23   2Q24-2Q23 Variance 
Revenue  $296.1   $301.2   $303.8   $299.3   $313.9    (5.7)%
Gross profit***  $97.4   $94.4   $91.1   $87.9   $90.4    +7.7% 
Gross profit margin   32.9%   31.4%   30.0%   29.4%   28.8%   +410 bps 
SG&A  $80.7   $77.2   $78.2   $72.6   $72.1    +12.0% 
Income from operations  $16.0   $17.2   $12.0   $10.4   $18.2    (11.9)%
Adjusted EBITDA*  $21.8   $22.3   $18.1   $20.5   $23.4    (7.0)%
Net income attributable to IDT  $14.4   $7.7   $8.0   $6.9   $14.6   $(0.2)
EPS (diluted)  $0.57   $0.30   $0.31   $0.27   $0.57    NC 
Non-GAAP EPS* (diluted)  $0.67   $0.32   $0.36   $0.46   $0.62    +$0.05 

 

RESULTS BY SEGMENT

 

National Retail Solutions (NRS)

 

During 2Q24 and 2Q23, the NRS segment contributed 8.5% and 6.3% of IDT’s consolidated revenue, respectively.

 

National Retail Solutions (NRS)

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

   2Q24   1Q24   4Q23   3Q23   2Q23   2Q24-2Q23 Variance 
Terminals and payment processing accounts                              
Active POS terminals   28,700    27,200    25,700    23,900    22,400    +28.5%
Payment processing accounts   18,200    17,100    15,800    14,100    12,500    +45.2%
                               
Recurring revenue                              
Merchant Services and other  $12.5   $11.4   $10.3   $8.7   $7.4    +68.1 %
Advertising & Data  $8.7   $8.5   $6.2   $5.8   $9.0    (3.0)%
SaaS Fees  $2.7   $2.5   $2.3   $2.1   $1.9    +40.0%
Total recurring revenue  $23.9   $22.4   $18.8   $16.5   $18.3    +30.4%
POS Terminal Sales  $1.3   $1.6   $1.1   $1.6   $1.5    (11.3)%
Total revenue  $25.2   $24.0   $19.9   $18.1   $19.8    +27.2%
                               
Monthly average recurring revenue per terminal**  $285   $282   $253   $237   $283    +0.7 %
                               
Gross profit  $22.6   $20.9   $17.4   $15.1   $17.2    +31.0%
SG&A  $17.2   $15.4   $15.6   $13.0   $11.9    +45.3%
Income from operations  $5.3   $5.5   $1.7   $2.1   $5.4    (0.5)%
Adjusted EBITDA*  $6.1   $6.2   $2.4   $2.7   $6.0    +2.7%

 

3
 

 

Take-Aways:

 

●During 2Q24, NRS added approximately 1,500 net active terminals to reach approximately 28,700 and added approximately 1,100 net payment processing accounts to reach approximately 18,200.

 

●The 68% year-over-year increase in Merchant Services and other revenue reflects both the increases in payment processing accounts and merchant services revenue per payment processing account.

 

●Monthly average recurring revenue per terminal** increased slightly year-over-year reflecting the increases in Merchant Services and other and SaaS Fees revenues per terminal.

 

net2phone

 

During 2Q24 and 2Q23, the net2phone segment contributed 6.9% and 5.7% of IDT’s consolidated revenue, respectively.

 

net2phone

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

   2Q24   1Q24   4Q23   3Q23   2Q23   2Q24-2Q23 Variance 
Seats   375    364    352    340    327    +14.7%
                               
Revenue                              
Subscription revenue**  $19.3   $18.5   $17.9   $17.1   $16.3    +18.5%
Other revenue  $1.0   $1.4   $1.4   $1.3   $1.5    (30.7)%
Total Revenue  $20.4   $19.9   $19.3   $18.4   $17.8    +14.4%
                               
Gross profit  $16.4   $16.1   $15.5   $14.8   $14.2    +15.4%
SG&A  $16.1   $16.1   $16.1   $15.2   $14.8    +8.9%
Income (loss) from operations  $0.4   $0.0   $(0.7)  $(0.4)  $(0.6)   +$0.9 
Adjusted EBITDA*  $1.8   $1.4   $0.9   $1.0   $0.8    +$1.0 

 

Take-Aways:

 

●Contact center as a service (CCaaS) seats served increased 23% year-over-year to approximately 11,000.

 

●net2phone’s sequential and year-over-year increases in unified communications as a service (UCaaS) seats served were powered by continued expansion in key markets led by the U.S., Brazil, and Mexico.

 

●The 18.5% increase in subscription revenue was driven by an increase in seats served augmented by an increase in average recurring revenue per seat (ARPU). The ARPU increase reflects, in part, the faster rate of CCaaS seat expansion compared to UCaaS seats.

 

4
 

 

Fintech

 

During 2Q24 and 2Q23, the Fintech segment contributed 9.4% and 6.5% of IDT’s consolidated revenue, respectively.

 

Fintech

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

   2Q24   1Q24   4Q23   3Q23   2Q23   2Q24-2Q23 Variance 
BOSS Money Transactions   4.2    4.0    3.8    3.3    3.1    +37.1%
                               
Fintech Revenue                              
BOSS Money  $25.0   $24.2   $22.3   $19.4   $17.6    +41.9%
Other  $2.9   $2.3   $2.3   $2.3   $2.7    +10.3%
Total Revenue  $28.0   $26.6   $24.6   $21.8   $20.3    +37.7%
                               
Average revenue per transaction**  $5.98   $5.99   $5.87   $5.94   $5.78    +3.5%
                               
Gross profit  $16.1   $14.8   $13.6   $12.6   $12.3    +31.1%
SG&A  $16.8   $16.2   $15.5   $13.9   $13.4    +25.3%
Loss from operations  $(0.7)  $(1.4)  $(1.9)  $(1.3)  $(0.8)   +$0.1 
Adjusted EBITDA*  $0.0   $(0.7)  $(1.2)  $(0.6)  $(0.5)   +$0.5 

 

Take-Aways:

 

●The 37% year-over-year increase in BOSS Money transactions comprised a 36% increase in digital transactions and a 43% increase in retail transactions. The latter was driven by expansion of the BOSS Money retail agent network.

 

●BOSS Money revenue increased 42% driven primarily by cross-marketing within the larger BOSS ecosystem, an expansion of the BOSS Money retailer network, and ongoing efforts to enhance user-experience within the BOSS Money and Boss Calling apps.

 

●The continued growth of BOSS Money transaction volumes and improving unit economics drove the Fintech segment’s year-over-year and sequential improvements in loss from operations and Adjusted EBITDA.

 

5
 

 

Traditional Communications

 

During 2Q24 and 2Q23, the Traditional Communications segment contributed 75.2% and 81.5% of IDT’s consolidated revenue, respectively.

 

Traditional Communications

($ in millions)

   2Q24   1Q24   4Q23   3Q23   2Q23   2Q24-2Q23 Variance 
Revenue                              
IDT Digital Payments  $99.6   $100.0   $100.8   $101.0   $106.1    (6.1)%
BOSS Revolution Calling  $66.7   $71.2   $75.4   $77.6   $82.8    (19.5)%
IDT Global  $48.7   $52.0   $55.6   $54.5   $58.6    (16.9)%
Other  $7.5   $7.5   $8.2   $7.9   $8.4    (11.2)%
Total Revenue  $222.5   $230.7   $240.0   $241.0   $256.0    (13.1)%
                               
Gross profit  $42.3   $42.6   $44.7   $45.4   $46.7    (9.4)%
SG&A  $27.3   $26.6   $28.4   $28.2   $29.5    (7.3)%
Income from operations  $14.6   $15.4   $14.1   $12.9   $17.0    (14.0)%
Adjusted EBITDA*  $17.0   $18.1   $18.6   $19.7   $19.6    (13.2)%

 

Take-Aways:

 

●As in recent prior quarters, the year-over-year decrease in IDT Digital Payments’ revenue was due to the deterioration of a key international mobile top-up corridor. By 1Q24, however, that corridor was no longer a significant factor in current results

 

●Traditional Communications revenue continued to decrease in line with expectations while the segment’s gross profits have been comparatively more durable.

 

●IDT continues to streamline the operations of its Boss Revolution and IDT Global businesses and expects this effort will drive reductions in SG&A in the coming quarters.

 

OTHER FINANCIAL RESULTS

 

Consolidated results for all periods presented include corporate overhead. Corporate G&A expense increased to $3.2 million in 2Q24 from $2.5 million in 2Q23 reflecting an increase in employee compensation expense.

 

As of January 31, 2024, IDT held $177.6 million in cash, cash equivalents, debt securities, and current equity investments. Current assets totaled $407.6 million and current liabilities totaled $285.0 million. IDT had no outstanding debt at the fiscal quarter’s end.

 

Net cash provided by operating activities during 2Q24 was $24.9 million – an increase from $17.4 million during 2Q23. Exclusive of changes in customer deposit balances at IDT’s Gibraltar-based bank, net cash provided by operating activities increased slightly to $20.4 million from $20.3 million during 2Q23.

 

Capital expenditures decreased to $4.6 million in 2Q24 from $5.4 million in 2Q23.

 

6
 

 

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 1-877-545-0523 (toll-free from the US) or 1-973-528-0016 (international) and request the IDT Corporation call (participant access code: 918160).

 

A replay of the conference call will be available approximately three hours after the call concludes through Wednesday, March 20, 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: 49825. 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.

 

*** IDT now includes depreciation and amortization expense in direct cost of revenues or SG&A expense, as appropriate, and reports gross profit and gross margin in accordance with GAAP. Results for all prior periods presented have been reclassified to conform to the current period’s presentation.

 

7
 

 

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

 

8
 

 

IDT CORPORATION

 

CONSOLIDATED BALANCE SHEETS

 

  

January 31,

2024

  

July 31,

2023

 
   (Unaudited)     
   (in thousands, except per share data) 
Assets          
Current assets:          
Cash and cash equivalents  $141,081   $103,637 
Restricted cash and cash equivalents   93,231    95,186 
Debt securities   31,419    42,414 
Equity investments   5,076    6,198 
Trade accounts receivable, net of allowance for credit losses of $6,315 at January 31, 2024 and allowance for doubtful accounts of $5,642 at July 31, 2023   37,392    32,092 
Settlement assets, net of reserve of $1,514 at January 31, 2024 and $1,143 at July 31, 2023   17,200    32,396 
Disbursement prefunding   27,749    30,113 
Prepaid expenses   23,523    16,638 
Other current assets   30,905    28,394 
Total current assets   407,576    387,068 
Property, plant, and equipment, net   38,713    38,655 
Goodwill   26,318    26,457 
Other intangibles, net   7,026    8,196 
Equity investments   7,558    9,874 
Operating lease right-of-use assets   5,079    5,540 
Deferred income tax assets, net   18,313    24,101 
Other assets   11,195    10,919 
Total assets  $521,778   $510,810 
Liabilities, redeemable noncontrolling interest, and equity          
Current liabilities:          
Trade accounts payable  $21,514   $22,231 
Accrued expenses   107,181    110,796 
Deferred revenue   33,803    35,343 
Customer deposits   87,553    86,481 
Settlement liabilities   15,789    21,495 
Other current liabilities   19,194    17,761 
Total current liabilities   285,034    294,107 
Operating lease liabilities   2,448    2,881 
Other liabilities   3,716    3,354 
Total liabilities   291,198    300,342 
Commitments and contingencies          
Redeemable noncontrolling interest   10,693    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 January 31, 2024 and July 31, 2023   33    33 
Class B common stock, $.01 par value; authorized shares—200,000; 28,069 and 27,851 shares issued and 23,781 and 23,699 shares outstanding at January 31, 2024 and July 31, 2023, respectively   281    279 
Additional paid-in capital   300,631    301,408 
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of Class A common stock and 4,288 and 4,152 shares of Class B common stock at January 31, 2024 and July 31, 2023, respectively   (118,631)   (115,461)
Accumulated other comprehensive loss   (17,276)   (17,192)
Retained earnings   46,746    24,662 
Total IDT Corporation stockholders’ equity   211,784    193,729 
Noncontrolling interests   8,103    6,267 
Total equity   219,887    199,996 
Total liabilities, redeemable noncontrolling interest, and equity  $521,778   $510,810 

 

9
 

 

IDT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

  

Three Months Ended

January 31,

  

Six Months Ended

January 31,

 
   2024   2023   2024   2023 
   (in thousands, except per share data) 
     
Revenues  $296,098   $313,936   $597,302   $635,752 
Direct cost of revenues   198,699    223,499    405,475    456,170 
Gross profit   97,399    90,437    191,827    179,582 
Operating expenses (gains):                    
Selling, general and administrative (i)   80,743    72,060    157,965    141,679 
Severance   345    213    869    312 
Other operating expense (gain), net   294    (17)   (190)   (816)
Total operating expenses   81,382    72,256    158,644    141,175 
Income from operations   16,017    18,181    33,183    38,407 
Interest income, net   1,195    810    2,039    1,320 
Other income (expense), net   2,534    1,613    (3,053)   (2,229)
Income before income taxes   19,746    20,604    32,169    37,498 
Provision for income taxes   (3,992)   (5,295)   (7,939)   (9,634)
Net income   15,754    15,309    24,230    27,864 
Net income attributable to noncontrolling interests   (1,329)   (686)   (2,146)   (2,239)
Net income attributable to IDT Corporation  $14,425   $14,623   $22,084   $25,625 
Earnings per share attributable to IDT Corporation common stockholders:                    
Basic  $0.57   $0.57   $0.88   $1.00 
Diluted  $0.57   $0.57   $0.87   $1.00 
Weighted-average number of shares used in calculation of earnings per share:                    
Basic   25,175    25,510    25,176    25,556 
Diluted   25,317    25,538    25,297    25,577 
(i) Stock-based compensation included in selling, general and administrative expenses  $2,487   $1,286   $3,258   $1,858 

 

10
 

 

IDT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

  

Six Months Ended

January 31,

 
   2024   2023 
   (in thousands) 
Operating activities          
Net income  $24,230   $27,864 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   10,146    9,801 
Deferred income taxes   5,787    7,788 
Provision for credit losses, doubtful accounts receivable, and reserve for settlement assets   1,696    915 
Net unrealized loss from marketable securities   1,234    2,349 
Stock-based compensation   3,258    1,858 
Other   1,595    1,359 
Change in assets and liabilities:          
Trade accounts receivable   (7,040)   2,483 
Settlement assets, disbursement prefunding, prepaid expenses, other current assets, and other assets   9,966    2,323 
Trade accounts payable, accrued expenses, settlement liabilities, other current liabilities, and other liabilities   (12,021)   (19,344)
Customer deposits at IDT Financial Services Limited (Gibraltar-based bank)   2,253    15 
Deferred revenue   (1,381)   (1,795)
Net cash provided by operating activities   39,723    35,616 
Investing activities          
Capital expenditures   (8,885)   (10,578)
Purchase of convertible preferred stock in equity method investment   (1,009)   — 
Payments for acquisition   (60)   — 
Purchases of debt securities and equity investments   (19,357)   (28,129)
Proceeds from maturities and sales of debt securities and redemptions of equity investments   31,231    27,531 
Net cash provided by (used in) investing activities   1,920    (11,176)
Financing activities          
Distributions to noncontrolling interests   (59)   (187)
Proceeds from other liabilities   100    300 
Repayment of other liabilities.   (15)   (2,014)
Proceeds from borrowings under revolving credit facility   30,588    2,383 
Repayment of borrowings under revolving credit facility.   (30,588)   (2,383)
Proceeds from exercise of stock options   172    172 
Repurchases of Class B common stock   (3,170)   (5,341)
Net cash used in financing activities   (2,972)   (7,070)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents   (3,182)   746 
Net increase in cash, cash equivalents, and restricted cash and cash equivalents   35,489    18,116 
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  $234,312   $207,678 
Supplemental schedule of non-cash financing activities          
Restricted net2phone common stock withheld from employees for income tax obligations  $3,558   $— 
Value of Class B common stock exchanged for NRS shares  $6,254   $— 
Stock issued to certain executive officers for bonus payments  $—   $615 

 

11
 

 

*Reconciliation of Non-GAAP Financial Measures for the

Second 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 2Q24, 1Q24, 4Q23, 3Q23, and 2Q23 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 expense, 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.

 

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 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)

 

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 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)

 

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 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)

 

   Total IDT Corporation   Traditional Communica-tions   net2phone   NRS   Fintech   Corporate 
Three Months Ended January 31, 2023 (2Q23)                              
Net income attributable to IDT Corporation  $        14.6                                                                            
Adjustments:                              
Net income attributable to noncontrolling interests   0.7                          
Net income   15.3                          
Provision for income taxes   5.3                          
Income before income taxes   20.6                          
Interest income, net   (0.8)                         
Other income, net   (1.6)                         
Income (loss) from operations   18.2   $17.0   $(0.6)  $5.4   $(0.8)  $(2.8)
Depreciation and amortization   5.0    2.4    1.4    0.6    0.7    - 
Severance   0.2    0.2    -    -    -    - 
Other operating (gain) expense, net   -    -    -    -    (0.3)   0.3 
Adjusted EBITDA  $23.4   $19.6   $0.8   $6.0   $(0.5)  $(2.5)

 

15
 

 

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.

 

    2Q24   1Q24   4Q23   3Q23   2Q23
                          
Net income attributable to IDT Corporation  $14.4   $7.7   $8.0   $6.9   $14.6 
Adjustments (add) subtract:                         
Stock-based compensation   (2.5)   (0.8)   (1.0)   (1.7)   (1.3)
Severance expense   (0.3)   (0.5)   (0.5)   (0.1)   (0.2)
Other operating (expense) gain, net   (0.3)   0.5    (0.5)   (4.8)   - 
Total adjustments   (3.1)   (0.8)   (2.0)   (6.6)   (1.5)
Income tax effect of total adjustments   (0.6)   (0.3)   (0.7)   (1.8)   (0.4)
    2.5    0.5    1.3    4.8    1.1 
Non-GAAP net income  $16.9   $8.2   $9.3   $11.7   $15.7 
                          
Earnings per share:                         
Basic  $0.57   $0.30   $0.31   $0.27   $0.57 
Total adjustments   0.10    0.03    0.06    0.19    0.05 
Non-GAAP - basic  $0.67   $0.33   $0.37   $0.46   $0.62 
                          
Weighted-average number of shares used in calculation of basic earnings per share   25.2    25.2    25.4    25.5    25.5 
                          
Diluted  $0.57   $0.30   $0.31   $0.27   $0.57 
Total adjustments   0.10    0.02    0.05    0.19    0.05 
Non-GAAP - diluted  $0.67   $0.32   $0.36   $0.46   $0.62 
                          
Weighted-average number of shares used in calculation of diluted earnings per share   25.3    25.3    25.5    25.6    25.5 

 

**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.

 

# # #

 

16

 

v3.24.0.1
Cover
Mar. 06, 2024
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Mar. 06, 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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