NEWARK, N.J., Dec. 3, 2020 /PRNewswire/ -- IDT Corporation
(NYSE: IDT) reported net income per diluted share of $0.32 and Non-GAAP earnings per diluted share* of
$0.35 on revenue of $343 million for the first quarter of FY 2021,
the three months ended October 31,
2020.
1Q FY21 HIGHLIGHTS
(Results are for 1Q21 and
are compared to 1Q20)
- Consolidated revenue increased 1% to $343 million from $340
million.
- Consolidated revenue less direct cost of revenue increased 16%
to $70 million from $61 million, the fifth consecutive year-over-year
quarterly increase.
- BOSS Revolution Money Transfer, National Retail Solutions (NRS)
and net2phone (subscription) revenue increased by 111%, 109% and
32%, respectively. These three businesses in the aggregate
increased their share of consolidated revenue less direct cost of
revenue to 31% from 19%.
- Consolidated income from operations increased to $13.3 million from a loss from operations of
$1.4 million.
- Adjusted EBITDA* increased 148% to $18.1
million from $7.3 million, and
Adjusted EBITDA less CAPEX** increased 291% to $13.5 million from $3.5
million.
- EPS was $0.32 compared to a loss
per share of $0.06. Non-GAAP earnings
per diluted share* was $0.35 compared
to $0.10.
- IDT repurchased 463,792 shares of its Class B common stock for
$2.8 million during 1Q21.
REMARKS BY SHMUEL JONAS,
CEO
"This was another strong financial quarter for IDT, with
substantial year-over-year improvements in revenue less direct cost
of revenue and bottom-line results.
"All three of our high growth, higher margin businesses - BOSS
Revolution Money Transfer, NRS and net2phone's cloud communications
offerings - generated impressive year over year revenue
growth.
"In aggregate, these businesses have been contributing an
increasing share of our consolidated revenue less direct cost of
revenue, and this quarter their contribution topped 30%. Our
money transfer business again benefitted, although less
significantly, from the favorable foreign exchange market
conditions that boosted its results last quarter.
"As a result of strong operational cash generation, IDT closed
the quarter with a stronger balance sheet, even as we continued to
invest in our businesses and repurchase our stock."
CONSOLIDATED RESULTS
Results
(in millions,
except EPS)
|
1Q21
|
4Q20
|
1Q20
|
|
1Q21 - 1Q20
change (%/$)
|
Revenue
|
$343
|
$360
|
$340
|
|
+0.9%
|
Direct cost of
revenue
|
$273
|
$283
|
$279
|
|
(2.2)%
|
Revenue less direct
cost of revenue
|
$70
|
$77
|
$61
|
|
+15.7%
|
Revenue less direct
cost of revenue as a
percentage of revenue**
|
20.5%
|
21.5%
|
17.9%
|
|
+260 bps
|
SG&A
expense
|
$52
|
$55
|
$53
|
|
(2.4)%
|
Depreciation and
amortization
|
$4.5
|
$4.7
|
$5.3
|
|
$(0.8)
|
Severance
expense
|
$0.1
|
$1.8
|
$0.6
|
|
$(0.5)
|
Other operating
expense, net
|
$0.3
|
$1.7
|
$2.8
|
|
$(2.5)
|
Income (loss) from
operations
|
$13.3
|
$14.2
|
$(1.4)
|
|
+$14.6
|
Adjusted
EBITDA*
|
$18.1
|
$22.4
|
$7.3
|
|
+$10.8
|
Adjusted EBTIDA* less
CAPEX**
|
$13.5
|
$18.2
|
$3.5
|
|
+$10.1
|
Net income (loss)
attributable to IDT
|
$8.3
|
$21.5
|
$(1.5)
|
|
+$9.8
|
Diluted earnings per
share
|
$0.32
|
$0.82
|
$(0.06)
|
|
+$0.38
|
Non-GAAP net
income*
|
$9.0
|
$16.3
|
$2.8
|
|
+$6.3
|
Non-GAAP earnings per
diluted share*
|
$0.35
|
$0.62
|
$0.10
|
|
+$0.25
|
|
* Throughout this
release, Adjusted EBITDA, Non-GAAP net income and Non-GAAP earnings
per diluted share are Non-GAAP 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 at the end of this
release for an explanation of these terms and their respective
reconciliations to the most directly comparable GAAP
measure.
|
|
** Revenue less
direct cost of revenue as a percentage of revenue and Adjusted
EBITDA less CAPEX are key performance metrics. Please refer
to the Explanation of Key Performance Metrics at the end of this
release for an explanation of these metrics.
|
RESULTS BY SEGMENT
(Results are for 1Q21 and are
compared to 1Q20 except where otherwise noted)
IDT has revised its segment reporting for FY 2021 to reflect
the growth of its fintech and cloud communications businesses and
their increased contributions to the Company's consolidated
results. The Company is reporting results for three new reporting
segments. Comparative results have been reclassified
and restated for all periods presented. The revised reportable
business segments reflect management's approach to analyzing
results, its resource allocation strategy and its assessment of
business performance.
Fintech – Comprises BOSS Revolution Money
Transfer, a provider of international money remittance and related
value/payment transfer services and National Retail Solutions
(NRS), operator of a nationwide point-of-sale retail network
providing payment processing, digital advertising, transaction
data and ancillary services. BOSS Revolution Money Transfer
and NRS were formerly reported in the Company's Telecom &
Payment Services (TPS) segment as TPS' Growth vertical.
net2phone-UCaaS - Comprises net2phone's
cloud communications offerings, which were previously reported in
the net2phone segment.
Traditional Communications - Comprises
lines of business participating in whole or in part in the paid
minute telecommunications market and other smaller lines of
business.
- BOSS Revolution Calling, an international long-distance
calling service marketed primarily to immigrant communities in the
U.S.;
- Mobile Top-Up, which enables customers to transfer airtime
and bundles of airtime, messaging, and data to international and
domestic mobile accounts;
- Carrier Services, a wholesale provider of international
voice and SMS termination as well as outsourced traffic management
solutions to telecoms worldwide; and
- Other, which includes net2phone-Platform Services and
smaller communications and payments offerings, many of which are in
harvest mode.
Traditional Communications businesses were previously
reported in the former TPS segment except for net2phone-Platform
Services, which was previously included within the former net2phone
segment.
IDT continues to report its corporate overhead
separately.
Segment Financial Results
(in
millions)
|
Fintech
|
net2phone-UCaaS
|
Traditional
Communications
|
1Q21
|
4Q20
|
1Q20
|
1Q21
|
4Q20
|
1Q20
|
1Q21
|
4Q20
|
1Q20
|
Revenue
|
$20.1
|
$25.9
|
$9.6
|
$9.6
|
$8.6
|
$7.2
|
$313.7
|
$325.8
|
$323.4
|
Revenue less
direct
cost of revenue
|
$13.9
|
$20.1
|
$5.7
|
$7.6
|
$6.8
|
$5.7
|
$48.7
|
$50.5
|
$49.3
|
SG&A
|
$10.4
|
$10.6
|
$8.1
|
$10.3
|
$9.6
|
$8.5
|
$29.3
|
$32.7
|
$34.6
|
Income (loss)
from
operations
|
$3.1
|
$9.1
|
$(2.7)
|
$(3.8)
|
$(3.9)
|
$(3.7)
|
$15.8
|
$11.5
|
$7.5
|
Adjusted
EBITDA*
|
$3.5
|
$9.4
|
$(2.4)
|
$(2.7)
|
$(2.7)
|
$(2.7)
|
$19.5
|
$17.8
|
$14.7
|
Fintech
The Fintech segment accounted for 6% and 3% of
IDT's consolidated revenue and 20% and 9% of IDT's consolidated
revenue less direct cost of revenue in 1Q21 and 1Q20,
respectively.
Fintech Takeaways:
- BOSS Revolution Money Transfer revenue increased 111% to
$15.2 million from $7.2 million, driven primarily by increased
transaction volume. Money Transfer's top and bottom-line results
also reflect a significant but diminished benefit from the
transient FX market conditions that positively impacted 4Q20
results.
- Money Transfer transactions increased 59% to 1.8 million from
1.1 million in 1Q20 fueled by 77% growth in Money Transfer's
digital channel.
- National Retail Solutions (NRS) revenue increased 109% to
$4.9 million from $2.4 million, driven primarily by the expansion
of its point-of-sale network and by increased sales of payment
processing services and digital out-of-home (DOOH) advertising
offerings.
- At October 31, 2020, NRS had
deployed 12,500 billable POS terminals and had 3,100 payment
processing merchant accounts.
net2phone-UCaaS
The net2phone-UCaaS segment accounted
for 3% and 2% of IDT's consolidated revenue and 11% and 9% of IDT's
consolidated revenue less direct cost of revenue in 1Q21 and 1Q20,
respectively.
net2phone-UCaaS Takeaways:
- Seats served increased 58% to 176,000 at October 31st from 112,000 a year
earlier and from 154,000 at July
31st.
- Subscription revenue increased 32% to $9.0 million from $6.8
million, led by growth in the U.S. market. Sequentially,
however, revenue growth was strongest in net2phone's Latin American
markets as sales began to recover from a COVID-19 related slow
down.
- net2phone recently released integrations with Slack and Zoho,
building on the previously announced integration with Microsoft
Teams. The company recently launched service in Peru, Latin
America's sixth largest economy, and plans to expand
coverage to six additional cities in Brazil during the current (second)
quarter.
Traditional Communications
The Traditional
Communications segment accounted for 91% and 95% of IDT's
consolidated revenue and 69% and 81% of IDT's consolidated revenue
less direct cost of revenue in 1Q21 and 1Q20, respectively.
Traditional Communications Takeaways:
- BOSS Revolution Calling revenue was unchanged at $116 million. Minutes of use decreased by 7%
offset by a corresponding increase in revenue per minute.
- Mobile Top-Up revenue increased 25% to $96 million from $77
million. The increase was driven by the addition of new
mobile partners and increasing demand for data-centric top-up
bundles.
- Carrier Services revenue decreased 23% to $88 million from $114
million. The decrease reflects the continued, industry-wide
decline of international voice calling, accelerated by the rise of
over the top and video conferencing particularly among corporate
users who have transitioned to work from home.
- Other revenue decreased 17% to $14
million from $17 million, in
line with expectations. Many of the offerings within Other are in
harvest mode.
NOTES ON FINANCIAL STATEMENTS
Consolidated results
for all periods presented include corporate overhead.
Corporate G&A expense of $2.2
million was the same in both 1Q21 and 1Q20.
As of October 31, 2020, IDT held
$119.0 million in unrestricted cash,
cash equivalents, debt securities and current equity investments.
Current assets totaled $325.3 million
and current liabilities totaled $319.9
million.
Net cash provided by operating activities during 1Q21 was
$18.8 million, compared to net cash
used in operating activities of $5.0
million in the year ago quarter. Exclusive of changes
in customer deposit balances at the Gibraltar bank, net cash provided by operating
activities during 1Q21 was $19.3
million, compared to net cash used in operating activities
of $6.7 million in 1Q20.
Capital expenditures (CAPEX) were $4.6
million and $3.9 million in
1Q21 and 1Q20, respectively.
IDT EARNINGS ANNOUNCEMENT & 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, outlook and strategy followed
by Q&A with investors.
To listen to the call and participate in the Q&A, dial
toll-free 1-888-348-8417 (from U.S.) or 1-412-902-4243
(international) and request the IDT Corporation call.
A replay of the conference call will be available approximately
three hours after the call concludes through December 10, 2020. To access the call replay,
dial toll free 1-844-512-2921 (from U.S.) or 1-412-317-6671
(international) and provide this replay number: 10149919. A
replay will also be accessible via streaming audio at the IDT
investor relations website.
ABOUT IDT:
IDT Corporation (NYSE: IDT) is a
global provider of fintech, cloud communications and traditional
communications services. Our fintech businesses include BOSS
Revolution® Money Transfer, an international remittance and
financial services provider, and National Retail Solutions®,
operator of a nationwide point-of-sale retail network providing
payment processing, digital advertising, transaction data and
ancillary services. net2phone provides cloud communications
and collaboration solutions for businesses and organizations.
IDT's traditional communications platform offerings include
international voice and text, mobile top-up and wholesale telecom
services.
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.
IDT
CORPORATION
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
October 31,
2020
|
|
July 31,
2020
|
|
(Unaudited)
|
|
|
|
(in
thousands)
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
74,082
|
|
$
84,860
|
Restricted cash and
cash equivalents
|
114,046
|
|
116,362
|
Debt
securities
|
23,890
|
|
18,363
|
Equity
investments
|
21,036
|
|
5,964
|
Trade accounts
receivable, net of allowance for doubtful accounts of $6,361 at
October 31, 2020 and $6,085 at July 31, 2020
|
47,182
|
|
44,166
|
Prepaid
expenses
|
28,042
|
|
33,115
|
Other current
assets
|
17,004
|
|
19,302
|
|
|
|
|
Total current
assets
|
325,282
|
|
322,132
|
Property, plant and
equipment, net
|
30,509
|
|
30,061
|
Goodwill
|
12,808
|
|
12,858
|
Other intangibles,
net
|
3,878
|
|
3,959
|
Equity
investments
|
9,748
|
|
8,833
|
Operating lease
right-of-use assets
|
9,435
|
|
9,490
|
Deferred income tax
assets, net
|
5,405
|
|
8,512
|
Other
assets
|
8,881
|
|
8,905
|
|
|
|
|
Total
assets
|
$
405,946
|
|
$
404,750
|
|
|
|
|
Liabilities and
equity
|
|
|
|
Current
liabilities:
|
|
|
|
Trade accounts
payable
|
$
31,261
|
|
$
31,147
|
Accrued
expenses
|
122,498
|
|
125,544
|
Deferred
revenue
|
39,952
|
|
40,114
|
Customer
deposits
|
113,659
|
|
115,992
|
Other current
liabilities
|
12,497
|
|
12,073
|
|
|
|
|
Total current
liabilities
|
319,867
|
|
324,870
|
Operating lease
liabilities
|
7,193
|
|
7,353
|
Other
liabilities
|
1,303
|
|
1,388
|
|
|
|
|
Total
liabilities
|
328,363
|
|
333,611
|
Commitments and
contingencies
|
|
|
|
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, 2020 and July
31, 2020
|
33
|
|
33
|
Class B common stock,
$.01 par value; authorized shares—200,000; 25,983 and 25,961 shares
issued and 23,900 and 24,345 shares outstanding at October 31, 2020
and July 31, 2020, respectively
|
260
|
|
260
|
Additional paid-in
capital
|
278,134
|
|
277,443
|
Treasury stock, at
cost, consisting of 1,698 and 1,698 shares of Class A common stock
and 2,083 and 1,616 shares of Class B common stock at October 31,
2020 and July 31, 2020, respectively
|
(59,077)
|
|
(56,221 )
|
Accumulated other
comprehensive loss
|
(7,188)
|
|
(7,410)
|
Accumulated
deficit
|
(131,045 )
|
|
(139,333 )
|
|
|
|
|
Total IDT Corporation
stockholders' equity
|
81,117
|
|
74,772
|
Noncontrolling
interests
|
(3,534 )
|
|
(3,633)
|
|
|
|
|
Total
equity
|
77,583
|
|
71,139
|
|
|
|
|
Total liabilities and
equity
|
$
405,946
|
|
$
404,750
|
|
|
|
|
IDT
CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
Three Months
Ended October 31,
|
|
2020
|
2019
|
|
(in thousands,
except per share data)
|
|
|
Revenues
|
$
343,425
|
$
340,200
|
Costs and
expenses:
|
|
|
Direct cost of
revenues (exclusive of depreciation and amortization)
|
273,174
|
279,460
|
Selling, general and
administrative (i)
|
52,140
|
53,436
|
Depreciation and
amortization
|
4,493
|
5,295
|
Severance
|
113
|
626
|
|
|
|
Total costs and
expenses
|
329,920
|
338,817
|
Other operating
expense, net
|
(252)
|
(2,775)
|
|
|
|
Income (loss) from
operations
|
13,253
|
(1,392)
|
Interest (expense)
income, net
|
(41)
|
272
|
Other (expense)
income, net
|
(1,380)
|
234
|
|
|
|
Income (loss) before
income taxes
|
11,832
|
(886)
|
Provision for income
taxes
|
(3,417)
|
(536)
|
|
|
|
Net income
(loss)
|
8,415
|
(1,422)
|
Net income
attributable to noncontrolling interests
|
(127)
|
(91)
|
|
|
|
Net income (loss)
attributable to IDT Corporation
|
$
8,288
|
$
(1,513)
|
|
|
|
Earnings (loss) per
share attributable to IDT Corporation common
stockholders:
|
|
|
Basic
|
$
0.32
|
$
(0.06)
|
|
|
|
Diluted
|
$
0.32
|
$
(0.06)
|
|
|
|
Weighted-average
number of shares used in calculation of earnings (loss)
per share:
|
|
|
Basic
|
25,534
|
26,279
|
|
|
|
Diluted
|
25,861
|
26,279
|
|
|
|
(i) Stock-based
compensation included in selling, general and
administrative expenses
|
$
506
|
$
1,364
|
|
|
|
|
|
|
IDT
CORPORATION CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
|
|
|
|
Three Months
Ended October 31,
|
|
2020
|
|
2019
|
|
(in
thousands)
|
Operating
activities
|
|
|
|
Net income
(loss)
|
$
8,415
|
|
$
(1,422)
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
Depreciation and
amortization
|
4,493
|
|
5,295
|
Deferred income
taxes
|
3,104
|
|
479
|
Provision for doubtful
accounts receivable
|
579
|
|
549
|
Stock-based
compensation
|
506
|
|
1,364
|
Other
|
1,094
|
|
(34)
|
Changes in assets and
liabilities:
|
|
|
|
Trade accounts
receivable
|
(4,020)
|
|
7,975
|
Prepaid expenses,
other current assets and other assets
|
7,318
|
|
(9,166)
|
Trade accounts
payable, accrued expenses, other current liabilities and other
liabilities
|
(2,023)
|
|
(10,012)
|
Customer
deposits at IDT Financial Services Limited (Gibraltar-based
bank)
|
(549)
|
|
1,793
|
Deferred
revenue
|
(150)
|
|
(1,798)
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
18,767
|
|
(4,977)
|
Investing
activities
|
|
|
|
Capital
expenditures
|
(4,564)
|
|
(3,851)
|
Purchases of debt
securities and equity investments
|
(29,295)
|
|
(8,195)
|
Proceeds from
maturities and sales of debt securities and redemption of equity
investments
|
6,596
|
|
782
|
|
|
|
|
Net cash used in
investing activities
|
(27,263)
|
|
(11,264)
|
Financing
activities
|
|
|
|
Distributions to
noncontrolling interests
|
(28 )
|
|
(240)
|
Repayment of other
liabilities
|
(40 )
|
|
(19)
|
Proceeds from exercise
of stock options
|
185
|
|
276
|
Repurchases of Class B
common stock
|
(2,856)
|
|
—
|
|
|
|
|
Net cash (used in)
provided by financing activities
|
(2,739)
|
|
17
|
Effect of exchange
rate changes on cash, cash equivalents, and restricted cash and
cash equivalents
|
(1,859)
|
|
11,426
|
|
|
|
|
Net decrease in cash,
cash equivalents, and restricted cash and cash
equivalents
|
(13,094)
|
|
(4,798)
|
Cash, cash
equivalents, and restricted cash and cash equivalents at beginning
of period
|
201,222
|
|
257,199
|
|
|
|
|
Cash, cash
equivalents, and restricted cash and cash equivalents at end of
period
|
$
188,128
|
|
$
252,401
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures for
the
First Quarter Fiscal 2021 and 2020 and Explanations of Key
Performance Metrics
Non-GAAP Financial Measures
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 1Q21, 4Q20, 1Q20, Adjusted EBITDA,
non-GAAP net income, and non-GAAP earnings per diluted share, all
of which are non-GAAP measures. Generally, a non-GAAP financial
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 Adjusted EBITDA consists of revenue less direct
cost of revenues and selling, general and administrative expense.
Another way of calculating Adjusted EBITDA is to start with income
(loss) from operations, add depreciation and amortization,
severance expense, and other operating expense, and deduct other
operating gains.
IDT's measure of non-GAAP net income starts with net income
(loss) in accordance with GAAP and adds severance expense,
stock-based compensation, and other operating expense,
net.
IDT's measure of non-GAAP earnings per diluted share is
calculated by dividing non-GAAP net income by the diluted
weighted-average shares.
These additions and subtractions are non-cash and/or non-routine
items in the relevant fiscal 2021 and fiscal 2020 periods.
Management believes that IDT's Adjusted EBITDA, non-GAAP net
income, and non-GAAP earnings per diluted share 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, non-GAAP net
income, and non-GAAP earnings per diluted share 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 (loss), 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, non-GAAP net income, and non-GAAP earnings per diluted
share. 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, net, which is a component of income
(loss) from operations, is excluded from the calculation of
Adjusted EBITDA, non-GAAP net income, and non-GAAP earnings per
diluted share. Other operating expense, net includes accruals for
non-income related taxes related to one of IDT's foreign entities,
expense for the indemnification of a net2phone cable telephony
customer related to patent infringement claims brought against the
customer, legal fees related to Straight Path Communications Inc.'s
stockholders' putative class action and derivative complaint,
expenses for other legal matters, and the write-off of certain
assets. From time-to-time, IDT may incur costs related to
non-routine legal and tax matters, and write-off assets, however,
these various items generally do not occur each quarter. IDT
believes the losses from these non-routine matters are not
components of IDT's or the relevant segment's core operating
results.
The other calculation of Adjusted EBITDA consists of revenue
less direct cost of revenues and selling, general and
administrative expense. As the other excluded items are not
reflected in this calculation, they are excluded automatically and
there is no need to make additional adjustments. This calculation
results in the same Adjusted EBITDA amount and its utility and
significance is as explained above.
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 net income and
non-GAAP earnings per diluted share 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.
In 4Q20, due to continued and projected profitability in the
Unites States, IDT was able to release a portion of its valuation
allowance that was recorded against its U.S. deferred tax assets.
This income tax benefit is excluded from IDT's non-GAAP net income
and non-GAAP EPS because it only indirectly related to the current
results of IDT's core operations.
Adjusted EBITDA, non-GAAP net income, and non-GAAP earnings per
diluted share 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 (loss), 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, non-GAAP net
income, and non-GAAP earnings per diluted share may not be
comparable to similarly titled measures reported by other
companies.
Following are reconciliations of Adjusted EBITDA, non-GAAP net
income, and non-GAAP earnings per diluted share 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 (loss) for IDT on a consolidated basis, (b) for
non-GAAP net income, net income (loss), and (c) for non-GAAP
earnings per diluted share, diluted earnings per share.
Key Performance Metrics
Revenue less direct cost of revenue as a percentage of revenue
is a financial metric that measures changes in our revenue relative
to changes in direct cost of revenue during the same period.
Revenue and direct cost of revenue in this metric are from IDT's
consolidated statements of income in accordance with GAAP. Revenue
less direct cost of revenue as a percentage of revenue is a ratio
in which revenue less direct cost of revenue is the numerator and
revenue are the denominator. It is useful for monitoring trends in
the generation of revenue as well as for evaluating the net
contribution of IDT's revenue.
Adjusted EBITDA less CAPEX is also a financial metric, which is
calculated by deriving Adjusted EBITDA as described above and
subtracting capital expenditures in accordance with GAAP as
reported in the consolidated statements of cash flows. Management
uses Adjusted EBITDA less CAPEX to evaluate the level of capital
investment needed to support operations, and as a reasonable proxy
for the cash generated by IDT's businesses. Because IDT's capital
expenditures reflect an allocation of capital for longer term
growth, IDT seeks to strike an appropriate balance between
near-term and long-term financial performance as reflected in
Adjusted EBITDA less CAPEX. IDT's measurement of Adjusted
EBITDA less CAPEX may not be comparable to similarly titled
measures reported by other companies.
IDT
Corporation
Reconciliation of
Adjusted EBITDA to Net Income
(unaudited) in
millions. Figures may not foot or cross-foot due to rounding
to millions
|
|
Total IDT
Corporation
|
|
Traditional
Communica
-tions
|
net2phone-
UCaaS
|
Fintech
|
Corporate
|
Three Months Ended
October 31, 2020
(1Q21)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
18.1
|
|
$
19.5
|
$
(2.7)
|
$
3.5
|
$
(2.1)
|
Subtract
(Add):
|
|
|
|
|
|
|
Depreciation and
amortization
|
4.5
|
|
3.0
|
1.1
|
0.4
|
-
|
Severance
expense
|
0.1
|
|
0.1
|
-
|
-
|
-
|
Other operating
expense (income), net
|
0.3
|
|
0.6
|
-
|
-
|
(0.3)
|
Income (loss) from
operations
|
13.3
|
|
$
15.8
|
$
(3.8)
|
$
3.1
|
$
(1.9)
|
Interest
expense, net
|
-
|
|
|
|
|
|
Other
expense, net
|
(1.4)
|
|
|
|
|
|
Income before income
taxes
|
11.8
|
|
|
|
|
|
Provision for income taxes
|
(3.8)
|
|
|
|
|
|
Net income
|
8.0
|
|
|
|
|
|
Net income
attributable to noncontrolling
interests
|
(0.1)
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$
7.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IDT
Corporation
|
|
Traditional
Communica
-tions
|
net2phone-
UCaaS
|
Fintech
|
Corporate
|
Three Months Ended
July 31, 2020
(4Q20)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
22.4
|
|
$
17.8
|
$
(2.7)
|
$
9.4
|
$
(2.1)
|
Subtract:
|
|
|
|
|
|
|
Depreciation and
amortization
|
4.7
|
|
3.1
|
1.2
|
0.3
|
-
|
Severance
expense
|
1.8
|
|
1.8
|
-
|
-
|
-
|
Other operating
expense, net
|
1.7
|
|
1.4
|
-
|
-
|
0.3
|
Income (loss) from
operations
|
14.2
|
|
$
11.5
|
$
(3.9)
|
$
9.1
|
$
(2.5)
|
Interest
income, net
|
0.5
|
|
|
|
|
|
|
Other
income, net
|
0.1
|
|
|
|
|
|
|
Income before income
taxes
|
14.8
|
|
|
|
|
|
|
Benefit
from income taxes
|
6.7
|
|
|
|
|
|
|
Net income
|
21.5
|
|
|
|
|
|
|
Net income
attributable to noncontrolling
interests
|
(0.1)
|
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$
21.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IDT
Corporation
|
Reconciliation of
Adjusted EBITDA to Net Loss
|
(unaudited) in
millions. Figures may not foot or cross-foot due to rounding
to millions.
|
|
|
|
|
|
|
|
|
|
Total IDT
Corporation
|
|
Traditional
Communic-
ations
|
net2phone
-UCaaS
|
Fintech
|
Corporate
|
Three Months Ended
October 31, 2019
(1Q20)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
7.3
|
|
$
14.7
|
$
(2.7)
|
$
(2.4)
|
$
(2.2)
|
Subtract:
|
|
|
|
|
|
|
Depreciation
and amortization
|
5.3
|
|
4.1
|
1.0
|
0.3
|
-
|
Severance
expense
|
0.6
|
|
0.6
|
-
|
-
|
-
|
Other operating
expense, net
|
2.8
|
|
2.5
|
-
|
-
|
0.3
|
(Loss) income
from operations
|
(1.4)
|
|
$
7.5
|
$
(3.7)
|
$
(2.7)
|
$
(2.5)
|
Interest
income, net
|
0.3
|
|
|
|
Other
income, net
|
0.2
|
|
|
|
Loss before income
taxes
|
(0.9)
|
|
|
|
Provision for income
taxes
|
(0.5)
|
|
|
|
Net loss
|
(1.4)
|
|
|
|
Net income
attributable to noncontrolling
interests
|
(0.1)
|
|
|
|
Net loss attributable
to IDT Corporation
|
$
(1.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IDT
Corporation
Reconciliations of Net Income (Loss) to Non-GAAP Net Income and
Earnings (Loss) per share to Non-GAAP Earnings per diluted
share (unaudited) in millions, except per share data.
Figures may not foot due to rounding to millions.
|
|
|
1Q21
|
4Q20
|
1Q20
|
|
|
|
|
Net income
(loss)
|
$
8.4
|
$
21.6
|
$
(1.4)
|
Adjustments (add)
subtract:
|
|
|
|
Stock-based
compensation
|
(0.5)
|
(0.5)
|
(1.3)
|
Severance
expense
|
(0.1)
|
(1.8)
|
(0.6)
|
Release of prior year
DTA valuation
allowance
|
-
|
8.4
|
-
|
Other operating
expense, net
|
(0.3)
|
(1.7)
|
(2.8)
|
Total
adjustments
|
(0.9)
|
4.4
|
(4.7)
|
Income tax effect of
total
adjustments
|
0.3
|
(0.9)
|
0.5
|
|
0.6
|
(5.3)
|
4.2
|
Non-GAAP net
income
|
$
9.0
|
$
16.3
|
$
2.8
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
Basic
|
$
0.32
|
$
0.82
|
$
(0.06)
|
Total
adjustments
|
0.03
|
(0.20)
|
0.17
|
Non-GAAP -
basic
|
$
0.35
|
$
0.62
|
$
0.11
|
|
|
|
|
Weighted-average
number of shares
used in calculation of basic earnings
(loss) per share
|
25.5
|
26.1
|
26.3
|
|
|
|
|
Diluted
|
$
0.32
|
$
0.82
|
$
(0.06)
|
Total
adjustments
|
0.02
|
(0.20)
|
0.16
|
Non-GAAP -
diluted
|
$
0.35
|
$
0.62
|
$
0.10
|
|
|
|
|
Weighted-average
number of shares
used in calculation of diluted
earnings (loss) per share
|
25.9
|
26.3
|
26.5
|
|
|
|
|
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SOURCE IDT Corporation