IDT - NYSE
IDT Corporation
IDT·NYSE
$54.03
-3.5%Communication ServicesTelecommunications Services
IDT Corporation operates in the communications and payment industries in the United States and internationally. The company operates through three segments: Fintech; net2phone-UCaaS (Unified Communications as a Service); and Traditional Communications. The Fintech segment offers international money remittance and related value/payment transfer services under the BOSS Revolution brand name; national retail solutions, such as point of sale network providing payment processing, digital advertising, transaction data, and ancillary services under the NRS brand name. The net2phone-UCaaS segment provides net2phone-UCaaS, a cloud communications service for businesses; and cable telephony services under the net2phone brand name. The Traditional Communications segment, which include Mobile Top-Up, that enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts; BOSS Revolution Calling, an international long-distance calling service; Carrier Services, a wholesale provider of international voice and SMS termination, and outsourced traffic management solutions to telecoms; and net2phone-Platform Services, which offer telephony services to cable operators and others, as well as smaller communications and payments offerings. IDT Corporation was founded in 1990 and is headquartered in Newark, New Jersey.
At a Glance
Live SnapshotMarket Cap$1.35B
EPS3.0200
P/E Ratio17.89
Earnings Date06/04/2026
Earnings Call Transcript
IDT • 2026 • Q2
Operator
Good evening. Welcome to the IDT Corporation second quarter fiscal year 2026 earnings conference call. All participants are now in a listen-only mode. A question-and-answer session will follow management's remarks. Anyone requiring operator assistance during the conference call should press star zero on your telephone keypad. Please note, this conference call is being recorded. I will now turn the call over to Bill Ulrey of IDT Investor Relations. Bill, you may begin.
Bill Ulrey
Thank you, John. In today's presentation, IDT's Chief Executive Officer, Shmuel Jonas and Chief Financial Officer, Marcelo Fischer, will discuss IDT's financial and operational results for the three months ended 31 January 2026. After their remarks, they will be happy to take your questions. Any forward-looking statements made during this conference call, either in their remarks or during the Q&A that follows, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those which the company anticipates. These risks and uncertainties include but are not limited to, specific risks and uncertainties discussed in the reports that IDT files periodically with the SEC.
Bill Ulrey
IDT assumes no obligation either to update any forward-looking statements that they have made or may make or to update the factors that may cause actual results to differ materially from those that they forecast. In their presentation or in the Q&A session, IDT's management may make reference to non-GAAP adjusted measures, including adjusted EBITDA, adjusted EBITDA margin, non-GAAP earnings per share, NRS's Rule of 40 score and adjusted net cash provided by operating activities. Schedules provided in the IDT earnings release reconcile these non-GAAP measures to their nearest corresponding GAAP measures. Please note that the IDT earnings release is available on the investor relations page of the IDT Corporation website. The earnings release has also been filed on a Form 8-K with the SEC. Now I'll turn the call over to Shmuel for his comments on the quarter's results.
Shmuel Jonas
Thank you, Bill and thank you to everyone who joined the call. NRS and BOSS Money and Net2Phone's top and bottom lines expansion drove IDT's strong overall results again this quarter. NRS recurring revenue grew year-over-year, powered by large increases in merchant services and SaaS fee revenues. This quarter, we continue to make progress on initiatives to drive additional merchant services and SaaS growth and expand our delivery partnerships. We are also developing offerings for differentiated retailer verticals. Advertising and data results came in lower than we expected after decreases in CPM rates pressured revenues. At BOSS Money, our digital channel continued to outperform relative to the industry as transactions increased 17% year-over-year. The new federal remittance tax, which applies mainly to transactions originated with cash, went into effect on 1 January.
Shmuel Jonas
As expected, the tax implementation has accelerated customer migration from the lower margin retail channel to the higher margin digital channel and you will begin to see those positive impacts next quarter. Net2Phone's bottom line continues to benefit from its strengthening gross margins and operating leverage. This quarter, we also got a boost from favorable foreign exchange rates. Looking ahead, our AI offerings are generating very positive customer reviews and increased spend. Based on these early results, we are writing a new offering, Agentic AI, seamlessly integrated with Unified Communications with a go-to-market strategy targeting both direct and channel sales to small and medium businesses. Traditional Communications remained a strong cash generator.
Shmuel Jonas
The segment contributed $19 million in adjusted EBITDA during the second quarter, a decrease from the year ago quarter but approximately the same as in the prior two quarters. Because of our recent strong financial and operational performance growth and outlook and balance sheet, we again repurchased stock in the second quarter and our board has increased our annual dividend by 17% to $0.28 per year. Now, Marcelo, who is more of a gifted orator than I, will discuss our financial results. I also just can't go without saying that our hearts and prayers are with all of our soldiers abroad and we hope that you come home safely.
Marcelo Fischer
Thank you, Shmuel. My remarks on our financial results for the second quarter of fiscal year 2026 will focus on the year-over-year comparisons to set aside seasonal impacts on our business. IDT achieved record levels in several key consolidated financial metrics in the second quarter. Gross profit, gross profit margin, adjusted EBITDA, adjusted EBITDA margin and non-GAAP EPS. These results were very much in line with our recent year-over-year growth trajectory. The underlying positive dynamic at IDT remains the same as it has been for several years. Namely, our consolidated results increasingly reflect the growing contributions of our three higher margin growth segments, NRS, Fintech and Net2Phone, while the contributions of our larger low margin Traditional Communications segment become relatively less impactful.
Marcelo Fischer
To date, we have been pleased by the speed with which each of our three growth segments have increased their cash flow contribution. In aggregate, these three segments contributed during Q2, 53% of IDT's consolidated adjusted EBITDA less CapEx, which we view as our proxy for free cash flow, compared to 45% in the year-ago quarter. Given this ongoing rotation, plus our strong results through the first half of the year and our positive outlook, we have begun to increase our allocation to shareholder returns. Shmuel already mentioned the increased levels of our share buyback and our dividend. I just want to add that the increase in our dividend marks the second consecutive year of dividend increases and we hope and expect to be in a position to continue increasing the dividend in the years ahead.
Marcelo Fischer
Also of note is that the $15 million of stock repurchases in the first six months of fiscal 2026 put us on track to exceed the rate of share buybacks compared to the preceding years. We allocated $18 million to share repurchases in all of fiscal 2025 and $11 million in fiscal 2024. Now, I want to discuss our outlook for the remainder of the year. IDT raised its consolidated adjusted EBITDA guidance for fiscal 2026 from the $141-$145 million range we shared at the start of the year to now being $147-$149 million. At the midpoint, this revised guidance is a $5 million adjusted EBITDA increase and a 12% increase compared to fiscal 2025 actuals. The guidance increase reflects certain developments in each of our segments.
Marcelo Fischer
At Net2Phone, our initial guidance made at the beginning of the year was predicated on the assumption that increased investment in AI product development would pressure adjusted EBITDA growth. It has not worked out that way. The Net2Phone team have been extraordinarily disciplined and made excellent progress thus far this fiscal year, developing and refining its AI offerings with only modest increases in spend. That approach drove a 37% year-over-year increase in adjusted EBITDA to $3.9 million in the second quarter, a stronger increase than we anticipated. For the remainder of this fiscal year, we expect Net2Phone's adjusted EBITDA growth rate to moderate somewhat as the increased investment in growth initiatives during second half of the year, is expected.
Marcelo Fischer
At BOSS Money, federal immigration policies and the new federal tax on remittances that took effect on 1 January have had a massive impact on the remittance industry, no question. The impact has been felt primarily on transactions originated at retailer agents rather than those initiated through a digital channel. As such, IDT have benefited from an accelerated rotation from higher revenue but lower margin retail channel transactions to relatively much lower revenue but higher margin digital channel transactions. This rotation has also been accelerated by our decision to maximize net new cash generation at BOSS Money retail. As a result, our higher margin digital channel transactions increased at 17% year-over-year. That helped to drive a 15% increase in Fintech segment gross profit in the second quarter.
Marcelo Fischer
We are also achieving significant cost advantages as the money transfer business continues to scale, specifically by negotiating better terms with our payout agents, as well as by continuing to integrate AI into our back-office operations. The combination of stronger GP and more efficient operations drove a 44% increase in adjusted EBITDA compared to a year ago, well ahead of the pace we had envisioned in our original guidance. At Traditional Communications, we once again were very pleased by our ability to extract more cash from our telecom businesses. To date this year, our BOSS Revolution calling business has been a true standout. Revenue is down by double digits, as we did expect it and continue to foresee going forward but gross profit has been rock steady over the past year.
Marcelo Fischer
The BOSS Revolution team has done an amazing job developing and bringing to market international prepaid calling plans that have significantly improved the unit economics of this business. Helping traditional business adjusted EBITDA to decline by just 3.5% in the first six months of the year compared to the same period a year earlier, which represents a lower rate of decline than we had expected in our original guidance. Finally, at NRS, merchant services and SaaS fee revenue outperformed our expectations. As Shmuel mentioned, the broader market softening in CPM rates in certain segments of our advertising markets offset those gains. That adjusted EBITDA remains on track with our original guidance to achieve our forecast range of 20%-25% growth for fiscal 2026.
Marcelo Fischer
To sum up, overall, we are very pleased with our financial results so far this year and are continuing to build on our momentum. Now Shmuel and I will do our best to answer your questions. Operator, back to you for Q&A.
Shmuel Jonas
On the first question, why the NRS release didn't go out, I don't know. I'd have to check.
Marcelo Fischer
It comes out probably tomorrow or the day after.
Shmuel Jonas
I mean, again, you know, we continue to, you know, work every day to try to, you know, increase our advertising sales. You know, as you know, we've had, you know, a couple different challenges, you know, including, you know, a partner that we worked with for quite some time that's no longer in business. I think that, you know, overall they're doing, you know, their best to get through this period. I think that, you know, going forward, we're gonna do a much better job of really connecting the data that we have with the ads that we're trying to sell and we think that that's going to be, you know, a much bigger contributor to volume going forward.
Shmuel Jonas
You know, I'll let Marcelo answer it a little bit more thoroughly but I mean, one thing I'll say is that you know, we had a weaker November and December than we had planned for. Frankly, we don't know why. Just you know, it was just weaker than we expected. January picked up quite dramatically and you know, it's picked up since then as well. I'll let Marcelo answer.
Marcelo Fischer
Yeah, I mean, yeah, Shmuel is right. I mean, since the remittance tax kicked in in January, we saw digital transactions increased significantly and that impacted Q2 by only one month. Now as we go into Q3, we continue to see a very nice uptick in digital transactions during February and now as we go into March. I mean, just now we ourselves are still trying to better determine, you know, how significant the remittance tax is going to be impacting the dynamics. You know, there is no question that we are seeing some of our retail customers migrating into our app. So some of the apples on our apple tree are moving to digital.
Shmuel Jonas
I don't think that I can really comment on that. I mean, I'm a board member and I wouldn't feel comfortable commenting on their business without their, you know, authorization to do so.
Shmuel Jonas
Thank you.
Operator
Again, if you have a question, please press star then one. Okay, we have a question coming from William Vaughan with Corient. Please proceed.
William Vaughan
Hey, guys. Congrats on the quarter. My first question relates to NRS. Just wonder if you guys could give us some commentary just on the general single store operator convenience bodega market. Like, what trends are you guys seeing? I know in the past it's been mentioned that there is a little bit of an effect in terms of store traffic from the immigration policies. Has that changed? Are you seeing any trends or any type of commentary you can give on the economics around those businesses and what the NRS side is seeing, that'll be helpful.
Marcelo Fischer
Yeah, I mean, I think ultimately what drives the economics of the single retailer that we service is probably a lot less about immigration issue. Now, that could be a factor, maybe certain markets in certain locations. But by and large, I think it's more, they're much, much more a reflection of the larger economy, you know, on the side of the customer pocket, affordability. So I think that, you know, inflation and all and other measures of customer demand are much more of a factor impacting how the retailers are doing than the immigration side. So far over the past, you know, few retailer reports that we put out on a monthly basis, you know, we have seen that the retailers continue to grow the businesses that are now quite nice percentages.
Marcelo Fischer
I think that overall when you look at our 35,000+ retailers, you know, I think that category remains quite strong.
William Vaughan
Okay. Good color. Another question on BOSS Money. Nice growth in the quarter. It sounds like you mentioned that the digital transaction business might be accelerating, maybe in the second quarter. Just wondering if you could give some color on that. Also, like, what do the competitive dynamics look like in the business? There are some other digital-first players that have shown really good growth in their previous quarter in their filings as well. Just if you could comment on the competitive positioning, thoughts on investments in that business in terms of increased possible marketing to compete with those players. How do you guys think about that?
Shmuel Jonas
I mean, you know, again, as we, I guess, answered in the last question, you know, it's definitely accelerating. I mean, in terms of competition, you know, we have some very strong, you know, competitors, you know, both from the traditional players as well as the, you know, only digital players. You know, I'm sure, you know, that they're also benefiting from, you know, the change from, you know, a retail, you know, driven business to a digital-driven business. That being said, you know, I think that, you know, we really do have, you know, an excellent, you know, app and an excellent experience for our customers. You know, we received probably, you know, by at least some measurements, the highest ratings of any app, you know, in the U.S..
Shmuel Jonas
You know, we think that, you know, there's a reason why our customers, you know, come to us and stay with us. you know, our pricing is, you know, extremely competitive. You know, the experience as I said, is extremely good. you know, if I were looking for a money transfer service myself, I would use BOSS Money. that being said, you know, we do have strong competitors and it's a competitive market. you know, we are, you know, spending, I would say probably also more acquiring customers than we have in the past, just because, you know, we have been, you know, doing a good job bringing on customers, so might as well spend money to get more of them. keeping them.
Marcelo Fischer
Yeah. I'll just add now what I just mentioned in my own remarks. Something to bear in mind is that, as you know, revenues at retail are significantly higher than revenues that are derived digitally. I think this is true for us. It's probably true for other players in the industry as well. The reason being is that now when we sell something at retail, we charge a much higher fee because usually half of that fee then goes back to the retailer, you know, either the cost of goods sold or something like that. In general, revenue per transaction is much higher at retail than in digital. But as for us, our digital net margins are significantly higher than retail.
Marcelo Fischer
To some extent, now you're seeing that dichotomy that on one hand our revenues continue to grow because of digital but maybe not as fast as they used to. Some of it is because the retail revenues are coming down, which is about now almost two times as high as our digital revenues. At the same time, you see our EBITDA growing at a much faster clip because the margins at digital are so much higher.
William Vaughan
Awesome. Great color. Last question. I was definitely pleased to see the buyback this quarter. Just in terms of capital allocation, the buyback is of $50 million or so, definitely a great first step. But if I'm thinking about the businesses, you got some really cash generative businesses here. The three high growth businesses, plus even the legacy business. The current capital allocation plan, it's great but it doesn't actually put a huge dent in the cash position. How are you guys think about going forward? Is it do buybacks kind of keep the cash where it is right now and maybe wait for a bigger opportunity for M&A transaction?
William Vaughan
Do you expect buybacks to eventually sort of start eating away at the large cash position that you have?
Shmuel Jonas
I would probably say the first rather than the second. I don't expect, you know, cash to, you know, materially decline from where it is. I think we, you know, prefer having more cash, you know, available for, you know, for lots of different purposes, you know, including potential acquisitions. You know, that being said, you know, as you're pointing out, the businesses are very cash generative and, you know, we intend to, you know, continue to purchase back shares, you know, depending on the price, more or less opportunistically. We increased the dividend this quarter, as you know. We try to be as responsible as we can.
William Vaughan
Awesome, guys. Thanks for answering my questions. Keep up the good work.
Shmuel Jonas
Thank you very much.
Marcelo Fischer
Thank you.
Operator
Again, if you have a question, please press star then one. As there are no more questions, this concludes our question and answer session and conference call. Thank you for attending today's presentation. You may now disconnect.
Transcript from March 10, 2026
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