IDT Corporation Reports First Quarter Fiscal Year 2024 Results
- BOSS Money revenue increased 38% to $24.2 million
- NRS’ recurring revenue increased 25% to $22.4 million
- Net2phone subscription revenue increased 19% to $18.5 million
- Consolidated gross profit increased 6% to a record high $94 million
- Consolidated gross profit margin increased 370 basis points to 31.4%
- Consolidated revenue decreased 6% to $301 million
- Net income attributable to IDT decreased 30% to $7.7 million
- Consolidated Adjusted EBITDA decreased 8% to $22.3 million
BOSS Money revenue increased
NRS’ recurring revenue* increased
net2phone subscription revenue* increased
NEWARK, NJ, Dec. 04, 2023 (GLOBE NEWSWIRE) -- IDT Corporation (NYSE: IDT), a global provider of fintech, cloud communications, and traditional communications services, today reported results for the first quarter of fiscal year 2024, the three months ended October 31, 2023.
HIGHLIGHTS
(Throughout this release, unless otherwise noted, results are for the first quarter of fiscal year 2024 (1Q24) and are compared to the first quarter of fiscal year 2023 (1Q23). All earnings per share (EPS) and other ‘per share’ results are per diluted share.)
- BOSS Money, the principal business in our Fintech segment, increased remittance volume by
41% to 4.05 million transactions during 1Q24 while revenue increased38% to$24.2 million ; - National Retail Solutions (NRS) added approximately 1,500 net active point-of-sale (POS) terminals during 1Q24 to reach approximately 27,200 as of October 31st. NRS recurring revenue* increased
25% to$22.4 million ; - net2phone added approximately 12,000 net seats served during 1Q24 to reach approximately 364,000 as of October 31st. Subscription revenue* increased
19% to$18.5 million ; - Consolidated revenue decreased
6% to$301 million from$322 million ; - Consolidated gross profit** increased
6% to a record high$94 million from$89 million , and the consolidated gross profit margin increased 370 basis points to31.4% from27.7% ; - Consolidated income from operations decreased
15% to$17.2 million from$20.2 million ; - Net income attributable to IDT decreased
30% to$7.7 million from$11.0 million ; - Consolidated Adjusted EBITDA*** decreased
8% to$22.3 million from$24.3 million ; - EPS decreased to
$0.30 from$0.43 and Non-GAAP EPS*** decreased to$0.32 from$0.43 ; - During 1Q24, IDT repurchased 125,470 shares of its Class B common stock for
$2.8 million .
(See ‘Notes’ later in this release for supplemental information on asterisked metrics).
REMARKS BY SHMUEL JONAS, CEO
“Our three primary high-growth, high-margin businesses delivered strong revenue growth in the first quarter, while the businesses in our Traditional Communications segment performed as expected.
In the first quarter, the ongoing growth of BOSS Money, NRS, and net2phone drove a 370 basis point year-over-year increase in gross profit margin and record gross profit. They are steadily becoming more significant contributors to our top and bottom lines, while the cash generation of our paid-minute businesses has been relatively resilient.
“BOSS Money continued to grow at a rapid clip, helped by the accelerating expansion of our retail money transfer channel. Retail money transfer channel revenue increased by
“NRS continued to expand its network and upgrade existing accounts, helping to drive strong increases in Merchant Services and SaaS Fee revenues, while Advertising & Data revenue increased sequentially propelled by seasonal tailwinds and the gradual recovery of advertising demand in the digital out-of-home advertising space – a trend which has accelerated since the quarter close. NRS’ income from operations was a record
“net2phone delivered steady sequential customer base and topline growth, while its unit economics are strengthening as the business scales and our higher ARPU, higher margin, CCaaS offerings gradually become a more significant part of the business. net2phone generated positive Adjusted EBITDA of
“We’re working very hard to innovate exciting new offerings, features and functionalities– and not just in our growth businesses. At BOSS Revolution Calling, we’ve redesigned the look and feel of our popular calling app and added a bunch of new products and features. We have also introduced advertising placements into the app, and we have already begun to generate some nice revenue from it as a result. We also continue to focus on streamlining overhead and wringing significant costs out of our operations -- especially in our Traditional Communications segment. This effort will help preserve the cash generation of our paid-minute businesses despite their continued, expected topline declines in the quarters ahead. It also will allow us to continue investing in innovative new products and promising initiatives in our existing growth businesses.
“We also returned value directly to our stockholders in the first quarter, repurchasing 125,470 shares of our Class B common stock for
“We are very well positioned as we head into the second quarter of our fiscal year 2024. To wrap up, I want to wish our employees, stockholders and their families a very joyous holiday season, and to thank each of you for everything you do for the IDT family.”
CONSOLIDATED RESULTS
| IDT Consolidated Results ($ in millions, except gross profit margin and EPS) | |||||||||||||||||||||||||
| 1 | Q24 | 4 | Q23 | 3 | Q23 | 2 | Q23 | 1 | Q23 | 1Q24-1Q23 Variance | |||||||||||||||
| Revenue | $ | 301.2 | $ | 303.8 | $ | 299.3 | $ | 313.9 | $ | 321.8 | (6.4 | )% | |||||||||||||
| Gross Profit | $ | 94.4 | $ | 91.1 | $ | 87.9 | $ | 90.4 | $ | 89.1 | +5.9 | % | |||||||||||||
| Gross Profit Margin | 31.4 | % | 30.0 | % | 29.4 | % | 28.8 | % | 27.7 | % | +370 BP | ||||||||||||||
| SG&A | $ | 77.2 | $ | 78.2 | $ | 72.6 | $ | 72.1 | $ | 69.6 | +10.9 | % | |||||||||||||
| Income from operations | $ | 17.2 | $ | 12.0 | $ | 10.4 | $ | 18.2 | $ | 20.2 | (15.1 | )% | |||||||||||||
| Adjusted EBITDA | $ | 22.3 | $ | 18.1 | $ | 20.5 | $ | 23.4 | $ | 24.3 | (8.5 | )% | |||||||||||||
| Net income attributable to IDT | $ | 7.7 | $ | 8.0 | $ | 6.9 | $ | 14.6 | $ | 11.0 | (30.4 | )% | |||||||||||||
| EPS (diluted) | $ | 0.30 | $ | 0.31 | $ | 0.27 | $ | 0.57 | $ | 0.43 | $ | (0.13 | ) | ||||||||||||
| Non-GAAP EPS (diluted) | $ | 0.32 | $ | 0.36 | $ | 0.46 | $ | 0.62 | $ | 0.43 | $ | (0.11 | ) | ||||||||||||
RESULTS BY SEGMENT
National Retail Solutions (NRS)
During 1Q24 and 1Q23, the NRS segment contributed
| National Retail Solutions (NRS) (Terminals and accounts at end of period. $ in millions, except for revenue per terminal) | ||||||||||||||||||||||||||
| 1 | Q24 | 4 | Q23 | 3 | Q23 | 2 | Q23 | 1 | Q23 | 1Q24-1Q23 Variance | ||||||||||||||||
| Terminals and payment processing accounts | ||||||||||||||||||||||||||
| Active POS terminals | 27,200 | 25,700 | 23,900 | 22,400 | 20,800 | +31 | % | |||||||||||||||||||
| Payment processing accounts | 17,100 | 15,800 | 14,100 | 12,500 | 11,300 | +51 | % | |||||||||||||||||||
| Recurring revenue | ||||||||||||||||||||||||||
| Merchant Services and other | $ | 11.4 | $ | 10.3 | $ | 8.7 | $ | 7.4 | $ | 6.4 | +78 | % | ||||||||||||||
| Advertising and Data | $ | 8.5 | $ | 6.2 | $ | 5.8 | $ | 9.0 | $ | 9.7 | (13 | )% | ||||||||||||||
| SaaS Fees | $ | 2.5 | $ | 2.3 | $ | 2.1 | $ | 1.9 | $ | 1.8 | +42 | % | ||||||||||||||
| Total recurring revenue | $ | 22.4 | $ | 18.8 | $ | 16.5 | $ | 18.3 | $ | 17.8 | +25 | % | ||||||||||||||
| POS Terminal Sales | $ | 1.6 | $ | 1.1 | $ | 1.6 | $ | 1.5 | $ | 1.5 | +10 | % | ||||||||||||||
| Total revenue | $ | 24.0 | $ | 19.9 | $ | 18.1 | $ | 19.8 | $ | 19.3 | +24 | % | ||||||||||||||
| Monthly average recurring revenue per terminal* | $ | 282 | $ | 253 | $ | 237 | $ | 283 | $ | 296 | (5 | )% | ||||||||||||||
| Gross profit | $ | 20.9 | $ | 17.4 | $ | 15.1 | $ | 17.2 | $ | 17.0 | +23 | % | ||||||||||||||
| SG&A | $ | 15.4 | $ | 15.6 | $ | 13.0 | $ | 11.9 | $ | 11.8 | +31 | % | ||||||||||||||
| Income from operations | $ | 5.5 | $ | 1.7 | $ | 2.1 | $ | 5.4 | $ | 5.2 | +$ | 0.3 | ||||||||||||||
| Adjusted EBITDA | $ | 6.2 | $ | 2.4 | $ | 2.7 | $ | 6.0 | $ | 5.7 | +$ | 0.5 | ||||||||||||||
Take-Aways:
- During 1Q24, NRS added approximately 1,500 net active terminals to reach approximately 27,200 and added approximately 1,300 net payment processing accounts to reach approximately 17,100.
- The strong sequential increase in monthly average recurring revenue per terminal was driven primarily by the sequential increase in Advertising and Data revenue, which benefitted from seasonal tailwinds and strengthening digital out-of-home advertising demand.
net2phone
During 1Q24 and 1Q23, the net2phone segment contributed
| net2phone (Seats in thousands at end of period. $ in millions) | ||||||||||||||||||||||||||
| 1 | Q24 | 4 | Q23 | 3 | Q23 | 2 | Q23 | 1 | Q23 | 1Q24-1Q23 Variance | ||||||||||||||||
| Seats | 364 | 352 | 340 | 327 | 309 | +18 | % | |||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Subscription revenue | $ | 18.5 | $ | 17.9 | $ | 17.1 | $ | 16.3 | $ | 15.5 | +19 | % | ||||||||||||||
| Other revenue | $ | 1.4 | $ | 1.4 | $ | 1.3 | $ | 1.5 | $ | 1.4 | +2 | % | ||||||||||||||
| Total Revenue | $ | 19.9 | $ | 19.3 | $ | 18.4 | $ | 17.8 | $ | 17.0 | +18 | % | ||||||||||||||
| Gross profit | $ | 16.1 | $ | 15.5 | $ | 14.8 | $ | 14.2 | $ | 13.6 | +18 | % | ||||||||||||||
| SG&A | $ | 16.1 | $ | 16.1 | $ | 15.2 | $ | 14.8 | $ | 14.7 | +10 | % | ||||||||||||||
| Loss from operations | $ | - | $ | (0.7 | ) | $ | (0.4 | ) | $ | (0.6 | ) | $ | (1.1 | ) | +$ | 1.0 | ||||||||||
| Adjusted EBITDA | $ | 1.4 | $ | 0.9 | $ | 1.0 | $ | 0.8 | $ | 0.3 | +$ | 1.1 | ||||||||||||||
Take-Aways:
- net2phone’s year-over-year increase in seats served was powered by continued expansion in key markets led by the U.S., Brazil, and Mexico.
- In 1Q24, subscription revenue increased
19% year-over-year driven by the18% increase in seats served augmented by an increase in average revenue per seat served. - CCaaS seats served increased
31% year-over-year to approximately 10,000.
Fintech
During 1Q24 and 1Q23, the Fintech segment contributed
| Fintech (Transactions in thousands. $ in millions except for revenue per transaction) | |||||||||||||||||||||||||
| 1 | Q24 | 4 | Q23 | 3 | Q23 | 2 | Q23 | 1 | Q23 | 1Q24-1Q23 Variance | |||||||||||||||
| BOSS Money Transactions | 4,045 | 3,793 | 3,274 | 3,053 | 2,862 | +41 | % | ||||||||||||||||||
| Fintech Revenue | |||||||||||||||||||||||||
| BOSS Money | $ | 24.2 | $ | 22.3 | $ | 19.4 | $ | 17.6 | $ | 17.6 | +38 | % | |||||||||||||
| Other | $ | 2.3 | $ | 2.3 | $ | 2.3 | $ | 2.7 | $ | 2.3 | - | ||||||||||||||
| Total Revenue | $ | 26.6 | $ | 24.6 | $ | 21.8 | $ | 20.3 | $ | 19.9 | +34 | % | |||||||||||||
| Average revenue per transaction* | $ | 5.99 | $ | 5.87 | $ | 5.94 | $ | 5.78 | $ | 6.13 | $ | (0.14 | ) | ||||||||||||
| Gross profit | $ | 14.8 | $ | 13.6 | $ | 12.6 | $ | 12.3 | $ | 11.6 | +28 | % | |||||||||||||
| SG&A | $ | 16.2 | $ | 15.5 | $ | 13.9 | $ | 13.4 | $ | 11.7 | +39 | % | |||||||||||||
| (Loss) income from operations | $ | (1.4 | ) | $ | (1.9 | ) | $ | (1.3 | ) | $ | (0.8 | ) | $ | 1.5 | $ | (2.9 | ) | ||||||||
| Adjusted EBITDA | $ | (0.7 | ) | $ | (1.2 | ) | $ | (0.6 | ) | $ | (0.5 | ) | $ | 0.5 | $ | (1.2 | ) | ||||||||
Take-Aways:
- The
41% year-over-year increase in BOSS Money transactions included a54% increase in retail transactions driven by expansion of the BOSS Money retail agent network and enhancements to the retailer portal. Digital transactions increased38% compared to the year-ago quarter. - BOSS Money revenue increased
38% driven primarily by cross-marketing within the larger BOSS ecosystem and expansion of the retail agent network.
Traditional Communications
During 1Q24 and 1Q23, the Traditional Communications segment contributed
| Traditional Communications ($ in millions) | ||||||||||||||||||||||||
| 1 | Q24 | 4 | Q23 | 3 | Q23 | 2 | Q23 | 1 | Q23 | 1Q24-1Q23 Variance | ||||||||||||||
| Revenue | ||||||||||||||||||||||||
| IDT Digital Payments | $ | 100.0 | $ | 100.8 | $ | 101.0 | $ | 106.1 | $ | 109.0 | (8 | )% | ||||||||||||
| BOSS Revolution Calling | $ | 71.2 | $ | 75.4 | $ | 77.6 | $ | 82.8 | $ | 86.3 | (17 | )% | ||||||||||||
| IDT Global | $ | 52.0 | $ | 55.6 | $ | 54.5 | $ | 58.6 | $ | 61.6 | (16 | )% | ||||||||||||
| Other | $ | 7.5 | $ | 8.2 | $ | 7.9 | $ | 8.4 | $ | 8.8 | (15 | )% | ||||||||||||
| Total Revenue | $ | 230.7 | $ | 240.0 | $ | 241.0 | $ | 256.0 | $ | 265.7 | (13 | )% | ||||||||||||
| Gross profit | $ | 42.6 | $ | 44.7 | $ | 45.4 | $ | 46.7 | $ | 46.9 | (9 | )% | ||||||||||||
| SG&A | $ | 26.6 | $ | 28.4 | $ | 28.2 | $ | 29.5 | $ | 29.6 | (10 | )% | ||||||||||||
| Income from operations | $ | 15.4 | $ | 14.1 | $ | 12.9 | $ | 17.0 | $ | 17.3 | (11 | )% | ||||||||||||
| Adjusted EBITDA | $ | 18.1 | $ | 18.6 | $ | 19.7 | $ | 19.6 | $ | 19.7 | (8 | )% | ||||||||||||
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, helping to stabilize revenue sequentially.
- Income from operations increased sequentially for the second consecutive quarter, helped by strong contributions from BOSS Revolution Calling and IDT Global. Nevertheless, the industry-wide decline in the paid-minute calling markets will continue to impact revenues and cash flows for this segment in the coming quarters.
OTHER FINANCIAL STATEMENTS HIGHLIGHTS
Consolidated results for all periods presented include corporate overhead. Corporate G&A expense increased to
As of October 31, 2023, IDT held
Net cash provided by operating activities during 1Q24 was
Capital expenditures decreased to
IDT EARNINGS ANNOUNCEMENT AND SUPPLEMENTAL 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: 637334).
A replay of the conference call will be available approximately three hours after the call concludes through December 18, 2023. 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: 49441. The replay will also be accessible via streaming audio at the IDT investor relations website.
NOTES
*See ‘Explanation of Key Performance Metrics’ at the end of this release.
** Beginning in 1Q24, IDT is including depreciation and amortization expense in direct cost of revenues or SG&A expense, as appropriate, and reporting 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.
***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.
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
| October 31, 2023 | July 31, 2023 | |||||||
| (Unaudited) | ||||||||
| (in thousands, except per share data) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 121,668 | $ | 103,637 | ||||
| Restricted cash and cash equivalents | 86,785 | 95,186 | ||||||
| Debt securities | 33,242 | 42,414 | ||||||
| Equity investments | 4,761 | 6,198 | ||||||
| Trade accounts receivable, net of allowance for credit losses of | 35,328 | 32,092 | ||||||
| Settlement assets, net of reserve of | 18,122 | 32,396 | ||||||
| Disbursement prefunding | 35,733 | 30,113 | ||||||
| Prepaid expenses | 19,502 | 16,638 | ||||||
| Other current assets | 27,034 | 28,394 | ||||||
| Total current assets | 382,175 | 387,068 | ||||||
| Property, plant, and equipment, net | 38,802 | 38,655 | ||||||
| Goodwill | 26,311 | 26,457 | ||||||
| Other intangibles, net | 7,215 | 8,196 | ||||||
| Equity investments | 8,150 | 9,874 | ||||||
| Operating lease right-of-use assets | 4,910 | 5,540 | ||||||
| Deferred income tax assets, net | 20,539 | 24,101 | ||||||
| Other assets | 10,944 | 10,919 | ||||||
| Total assets | $ | 499,046 | $ | 510,810 | ||||
| Liabilities, redeemable noncontrolling interest, and equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 24,469 | $ | 22,231 | ||||
| Accrued expenses | 100,107 | 110,796 | ||||||
| Deferred revenue | 34,042 | 35,343 | ||||||
| Customer deposits | 79,541 | 86,481 | ||||||
| Settlement liabilities | 19,268 | 21,495 | ||||||
| Other current liabilities | 18,507 | 17,761 | ||||||
| Total current liabilities | 275,934 | 294,107 | ||||||
| Operating lease liabilities | 2,346 | 2,881 | ||||||
| Other liabilities | 3,220 | 3,354 | ||||||
| Total liabilities | 281,500 | 300,342 | ||||||
| Commitments and contingencies | ||||||||
| Redeemable noncontrolling interest | 10,579 | 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 October 31, 2023 and July 31, 2023 | 33 | 33 | ||||||
| Class B common stock, $.01 par value; authorized shares—200,000; 27,865 and 27,851 shares issued and 23,586 and 23,699 shares outstanding at October 31, 2023 and July 31, 2023, respectively | 279 | 279 | ||||||
| Additional paid-in capital | 302,351 | 301,408 | ||||||
| Treasury stock, at cost, consisting of 1,698 and 1,698 shares of Class A common stock and 4,279 and 4,152 shares of Class B common stock at October 31, 2023 and July 31, 2023, respectively | (118,312 | ) | (115,461 | ) | ||||
| Accumulated other comprehensive loss | (16,627 | ) | (17,192 | ) | ||||
| Retained earnings | 32,321 | 24,662 | ||||||
| Total IDT Corporation stockholders’ equity | 200,045 | 193,729 | ||||||
| Noncontrolling interests | 6,922 | 6,267 | ||||||
| Total equity | 206,967 | 199,996 | ||||||
| Total liabilities, redeemable noncontrolling interest, and equity | $ | 499,046 | $ | 510,810 | ||||
IDT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three Months Ended October 31, | ||||||||
| 2023 | 2022 | |||||||
| (in thousands, except per share data) | ||||||||
| Revenues | $ | 301,205 | $ | 321,816 | ||||
| Direct cost of revenues | 206,777 | 232,670 | ||||||
| Gross profit | 94,428 | 89,146 | ||||||
| Operating expenses (gains): | ||||||||
| Selling, general and administrative (i) | 77,222 | 69,620 | ||||||
| Severance | 525 | 100 | ||||||
| Other operating gain, net | (484 | ) | (800 | ) | ||||
| Total operating expenses | 77,263 | 68,920 | ||||||
| Income from operations | 17,165 | 20,226 | ||||||
| Interest income, net | 844 | 509 | ||||||
| Other expense, net | (5,586 | ) | (3,842 | ) | ||||
| Income before income taxes | 12,423 | 16,893 | ||||||
| Provision for income taxes | (3,947 | ) | (4,338 | ) | ||||
| Net income | 8,476 | 12,555 | ||||||
| Net income attributable to noncontrolling interests | (817 | ) | (1,553 | ) | ||||
| Net income attributable to IDT Corporation | $ | 7,659 | $ | 11,002 | ||||
| Earnings per share attributable to IDT Corporation common stockholders: | ||||||||
| Basic | $ | 0.30 | $ | 0.43 | ||||
| Diluted | $ | 0.30 | $ | 0.43 | ||||
| Weighted-average number of shares used in calculation of earnings per share: | ||||||||
| Basic | 25,178 | 25,603 | ||||||
| Diluted | 25,277 | 25,616 | ||||||
| (i) Stock-based compensation included in selling, general and administrative expense | $ | 771 | $ | 572 | ||||
IDT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| Three Months Ended October 31, | ||||||||
| 2023 | 2022 | |||||||
| (in thousands) | ||||||||
| Operating activities | ||||||||
| Net income | $ | 8,476 | $ | 12,555 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 5,047 | 4,790 | ||||||
| Deferred income taxes | 3,561 | 3,672 | ||||||
| Provision for credit losses, doubtful accounts receivable, and reserve for settlement assets | 759 | 430 | ||||||
| Net unrealized loss from marketable securities | 1,528 | 1,846 | ||||||
| Stock-based compensation | 771 | 572 | ||||||
| Other | 897 | 756 | ||||||
| Changes in assets and liabilities: | ||||||||
| Trade accounts receivable | (4,572 | ) | 2,442 | |||||
| Settlement assets, disbursement prefunding, prepaid expenses, other current assets, and other assets | 8,250 | (4,380 | ) | |||||
| Trade accounts payable, accrued expenses, settlement liabilities, other current liabilities, and other liabilities | (7,061 | ) | (6,970 | ) | ||||
| Customer deposits at IDT Financial Services Limited (Gibraltar-based bank) | (2,326 | ) | 2,865 | |||||
| Deferred revenue | (540 | ) | (394 | ) | ||||
| Net cash provided by operating activities | 14,790 | 18,184 | ||||||
| Investing activities | ||||||||
| Capital expenditures | (4,322 | ) | (5,172 | ) | ||||
| Purchase of convertible preferred stock in equity method investment | (672 | ) | — | |||||
| Purchases of debt securities and equity investments | (7,750 | ) | (2,058 | ) | ||||
| Proceeds from maturities and sales of debt securities and equity investments | 17,067 | 11,472 | ||||||
| Net cash provided by investing activities | 4,323 | 4,242 | ||||||
| Financing activities | ||||||||
| Distributions to noncontrolling interests | (55 | ) | (99 | ) | ||||
| Proceeds from other liabilities | 100 | 300 | ||||||
| Repayment of other liabilities | (15 | ) | (1,916 | ) | ||||
| Proceeds from borrowings under revolving credit facility | 30,315 | — | ||||||
| Repayment of borrowings under revolving credit facility | (30,315 | ) | — | |||||
| Proceeds from exercise of stock options | 172 | — | ||||||
| Repurchases of Class B common stock | (2,851 | ) | (5,341 | ) | ||||
| Net cash used in financing activities | (2,649 | ) | (7,056 | ) | ||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents | (6,834 | ) | (6,157 | ) | ||||
| Net increase in cash, cash equivalents, and restricted cash and cash equivalents | 9,630 | 9,213 | ||||||
| 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 | $ | 208,453 | $ | 198,775 | ||||
| Supplemental Schedule of Non-Cash Financing Activities | ||||||||
| Stock issued to certain executive officers for bonus payments | $ | — | $ | 615 | ||||
***Reconciliation of Non-GAAP Financial Measures for the
First 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 1Q24, 4Q23, 3Q23, 2Q23, and 1Q23, 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 gain (expense), net, which is a component of income (loss) from operations, is excluded from the calculation of Adjusted EBITDA and non-GAAP EPS. Other operating gain (expense), net includes, among other items, gain from the write-off of contingent consideration liabilities, legal fees net of insurance claims related to Straight Path Communications Inc.’s stockholders’ class action, 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 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 | ) | ||||||||||
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 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 | ) | ||||||||||
| 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 | ) | ||||||||||
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, 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 | ) | ||||||||||
| Total IDT Corporation | Traditional Communica-tions | net2phone | NRS | Fintech | Corporate | |||||||||||||||||||
| Three Months Ended October 31, 2022 (1Q23) | ||||||||||||||||||||||||
| Net income attributable to IDT Corporation | $ | 11.0 | ||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 1.6 | |||||||||||||||||||||||
| Net income | 12.6 | |||||||||||||||||||||||
| Provision for income taxes | 4.3 | |||||||||||||||||||||||
| Income before income taxes | 16.9 | |||||||||||||||||||||||
| Interest income, net | (0.5 | ) | ||||||||||||||||||||||
| Other expense, net | 3.8 | |||||||||||||||||||||||
| Income (loss) from operations | 20.2 | $ | 17.3 | $ | (1.1 | ) | $ | 5.2 | $ | 1.5 | $ | (2.7 | ) | |||||||||||
| Depreciation and amortization | 4.8 | 2.3 | 1.4 | 0.5 | 0.6 | - | ||||||||||||||||||
| Severance | 0.1 | 0.1 | - | - | - | - | ||||||||||||||||||
| Other operating (gain) expense, net | (0.8 | ) | - | - | - | (1.6 | ) | 0.8 | ||||||||||||||||
| Adjusted EBITDA | $ | 24.3 | $ | 19.7 | $ | 0.3 | $ | 5.7 | $ | 0.5 | $ | (1.9 | ) | |||||||||||
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.
| 1 | Q24 | 4 | Q23 | 3 | Q23 | 2 | Q23 | 1 | Q23 | |||||||||||
| Net income attributable to IDT Corporation | $ | 7.7 | $ | 8.0 | $ | 6.9 | $ | 14.6 | $ | 11.0 | ||||||||||
| Adjustments (add): | ||||||||||||||||||||
| Stock-based compensation | (0.8 | ) | (1.0 | ) | (1.7 | ) | (1.3 | ) | (0.6 | ) | ||||||||||
| Severance expense | (0.5 | ) | (0.5 | ) | (0.1 | ) | (0.2 | ) | (0.1 | ) | ||||||||||
| Other operating gain (expense), net | 0.5 | (0.5 | ) | (4.8 | ) | - | 0.8 | |||||||||||||
| Total adjustments | (0.8 | ) | (2.0 | ) | (6.6 | ) | (1.5 | ) | 0.1 | |||||||||||
| Income tax effect of total adjustments | (0.3 | ) | (0.7 | ) | (1.8 | ) | (0.4 | ) | - | |||||||||||
| 0.5 | 1.3 | 4.8 | 1.1 | (0.1 | ) | |||||||||||||||
| Non-GAAP net income | $ | 8.2 | $ | 9.3 | $ | 11.7 | $ | 15.7 | $ | 10.9 | ||||||||||
| Earnings per share: | ||||||||||||||||||||
| Basic | $ | 0.30 | $ | 0.31 | $ | 0.27 | $ | 0.57 | $ | 0.43 | ||||||||||
| Total adjustments | 0.03 | 0.06 | 0.19 | 0.05 | - | |||||||||||||||
| Non-GAAP - basic | $ | 0.33 | $ | 0.37 | $ | 0.46 | $ | 0.62 | $ | 0.43 | ||||||||||
| Weighted-average number of shares used in calculation of basic earnings per share | 25.2 | 25.4 | 25.5 | 25.5 | 25.6 | |||||||||||||||
| Diluted | $ | 0.30 | $ | 0.31 | $ | 0.27 | $ | 0.57 | $ | 0.43 | ||||||||||
| Total adjustments | 0.02 | 0.05 | 0.19 | 0.05 | - | |||||||||||||||
| Non-GAAP - diluted | $ | 0.32 | $ | 0.36 | $ | 0.46 | $ | 0.62 | $ | 0.43 | ||||||||||
| Weighted-average number of shares used in calculation of diluted earnings per share | 25.3 | 25.5 | 25.6 | 25.5 | 25.6 |
*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.
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.
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.
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