• IDT Corporation Reports Second Quarter Fiscal Year 2024 Results

    Source: Nasdaq GlobeNewswire / 06 Mar 2024 15:30:00   America/Chicago

    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 06, 2024 (GLOBE NEWSWIRE) -- 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 126% 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).

    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.”

    CONSOLIDATED RESULTS 

    IDT Consolidated Results
    ($ in millions, except gross profit margin and EPS)
     2Q241Q244Q233Q232Q23 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 margin32.9%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)
     2Q241Q244Q233Q232Q23 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% 
             


    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)
     2Q241Q244Q233Q232Q23 2Q24-2Q23 Variance
    Seats375364352340327 +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.

    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)
     2Q241Q244Q233Q232Q23 2Q24-2Q23 Variance
    BOSS Money Transactions4.24.03.83.33.1  +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.

    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)
     2Q241Q244Q233Q232Q23 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.

    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.

    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

    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 


    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 


    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 


    *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.

    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)


    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)


    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)


    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.

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