IDT Corporation (NYSE: IDT), a global provider of fintech, cloud
communications, and traditional communications services, today
reported results for the second quarter of its fiscal year 2023,
the three months ended January 31, 2023.
HIGHLIGHTS
(Throughout this release, unless otherwise
noted, results for the second quarter of fiscal year 2023 (2Q23)
are compared to the second quarter of fiscal year 2022 (2Q22). All
earnings per share (EPS) and other ‘per share’ results are per
diluted share.)
- National Retail
Solutions (NRS) increased recurring revenue* 103% to $18.3 million.
Active point-of-sale (POS) terminals increased by approximately
1,600 during 2Q23, a record quarterly increase, to approximately
22,400 at the end of the quarter;
- BOSS Money
remittance revenue increased 47% to $17.6 million. Transaction
volume increased by 39% to 3.06 million;
- net2phone
subscription revenue* increased 30% to $16.3 million and net2phone
achieved positive Adjusted EBITDA for the second consecutive
quarter. Seats served increased by approximately 18,000
sequentially to end 2Q23 at approximately 327,000;
- Consolidated
revenue decreased 7% to $314 million while the consolidated direct
cost of revenue decreased 14% to $222 million;
- Consolidated
income from operations increased 32% to $18.2 million;
- Net income
attributable to IDT increased to $14.6 million from $7.5
million;
- Consolidated
Adjusted EBITDA increased 25% to $23.4 million; and
- EPS increased to
$0.57 from $0.28. Non-GAAP EPS increased to $0.62 from $0.30.
Adjusted EBITDA and Non-GAAP EPS 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
later in this release for an explanation of these terms and their
respective reconciliations to the most directly comparable GAAP
measure. Please see the final page of this release for the
explanation of asterisked key performance metrics.
REMARKS BY SHMUEL JONAS,
CEO
“NRS, BOSS Money and net2phone, our three
primary high-growth businesses, again performed very well this
quarter. Their formula is simple – delivering better value and
superior customer experiences. I’m pleased that they continued on
their growth trajectories while remaining very focused on improving
their bottom lines.
“Each of these businesses grew robustly in the
second quarter. In addition to adding a record number of net new
terminals this quarter, NRS once again more than doubled its
recurring revenue led by a year over year jump in advertising and
data revenue. net2phone achieved 30% year over year subscription
revenue growth with a 35% increase in our Latin American markets
and a 23% increase in US-based revenue. At BOSS Money, transaction
volumes through both our retail and direct-to-consumer sales
channels increased by 39% year over year, as we continued to
leverage the synergies between the two channels.
“Led by their contributions, IDT delivered
significant year over year increases in Adjusted EBITDA, income
from operations, and EPS.”
RESULTS BY SEGMENT
NRS
National Retail Solutions (NRS) is an operator
of a nationwide point-of-sale (POS) network providing independent
retailers with store management software, and with credit, debit,
and other electronic payment processing as well as with other
ancillary merchant services. NRS’ POS platform provides marketers
with digital out-of-home (DOOH) advertising and transaction
data.
In 2Q23 and 2Q22, NRS contributed 6.3% and 3.2%
of IDT’s consolidated revenue, respectively.
NRS Results($ in
millions. Terminals and accounts at end of period)
|
|
|
2Q23 |
|
|
|
1Q23 |
|
|
|
2Q22 |
|
|
|
2Q23-2Q22 change % |
|
Terminals and payment
processing accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active POS terminals |
|
|
22,400 |
|
|
|
20,800 |
|
|
|
16,500 |
|
|
|
+35 |
% |
Payment processing
accounts |
|
|
12,500 |
|
|
|
11,300 |
|
|
|
8,000 |
|
|
|
+55 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring
revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising & Data |
|
$ |
9.0 |
|
|
$ |
9.7 |
|
|
$ |
3.9 |
|
|
|
+130 |
% |
Merchant Services and
other |
|
$ |
7.4 |
|
|
$ |
6.4 |
|
|
$ |
3.8 |
|
|
|
+95 |
% |
SaaS fees |
|
$ |
1.9 |
|
|
$ |
1.8 |
|
|
$ |
1.3 |
|
|
|
+47 |
% |
Total recurring
revenue |
|
$ |
18.3 |
|
|
$ |
17.8 |
|
|
$ |
9.0 |
|
|
|
+103 |
% |
POS terminal sales |
|
$ |
1.5 |
|
|
$ |
1.5 |
|
|
$ |
1.6 |
|
|
|
(7 |
)% |
Total
revenue |
|
$ |
19.8 |
|
|
$ |
19.3 |
|
|
$ |
10.6 |
|
|
|
+87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monthly average
recurring revenue per terminal* |
|
$ |
283 |
|
|
$ |
296 |
|
|
$ |
190 |
|
|
|
+49 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
$ |
5.4 |
|
|
$ |
5.2 |
|
|
$ |
2.1 |
|
|
|
+161 |
% |
Adjusted
EBITDA |
|
$ |
6.0 |
|
|
$ |
5.7 |
|
|
$ |
2.2 |
|
|
|
+166 |
% |
Take-Aways:
- Sequentially,
NRS added approximately 1,600 net active terminals -- the largest
quarter-over-quarter gain in its history.
- Despite
advertising industry-wide headwinds, Advertising & Data revenue
increased 130% year over year, driving a 103% increase in total
recurring revenue. Income from operations increased 161% year over
year to $5.4 million.
Fintech
The Fintech segment is comprised of BOSS Money -
an international money remittance provider, as well as other,
significantly smaller financial services offerings.
In 2Q23 and 2Q22, the Fintech segment
contributed 6.5% and 4.3% of IDT’s consolidated revenue,
respectively.
Fintech Results($ in
millions. Transactions in thousands)
|
|
|
2Q23 |
|
|
|
1Q23 |
|
|
|
2Q22 |
|
|
|
2Q23-2Q22Change % |
|
BOSS Money
Transactions |
|
|
3,061 |
|
|
|
2,871 |
|
|
|
2,204 |
|
|
|
+39 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fintech
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BOSS Money |
|
$ |
17.6 |
|
|
$ |
17.6 |
|
|
$ |
12.0 |
|
|
|
+47 |
% |
Other |
|
$ |
2.7 |
|
|
$ |
2.3 |
|
|
$ |
2.6 |
|
|
|
+4 |
% |
Total
Revenue |
|
$ |
20.3 |
|
|
$ |
19.9 |
|
|
$ |
14.6 |
|
|
|
+39 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income from
operations |
|
$ |
(0.8 |
) |
|
$ |
1.5 |
|
|
$ |
(2.3 |
) |
|
|
+$1.5 |
|
Adjusted
EBITDA |
|
$ |
(0.5 |
) |
|
$ |
0.5 |
|
|
$ |
(1.7 |
) |
|
|
+$1.2 |
|
Take-Aways:
- BOSS Money
transaction volumes increased 39% in 2Q23 with strong contributions
from both retail and digital channels.
- BOSS Money
average revenue per transaction* increased 5.7% in 2Q23 to $5.77
from $5.46 in 2Q22. The increase was driven by unusually favorable
economics on certain high-volume African corridors that dissipated
late in the quarter and by the development and introduction of new
platform functionalities enabling more flexible and granular
pricing strategies.
net2phone
In 2Q23 and 2Q22, the net2phone segment
accounted for 5.7% and 4.0% of IDT’s consolidated revenue,
respectively.
net2phone Results ($ in
millions. Seats in thousands)
|
|
|
2Q23 |
|
|
|
1Q23 |
|
|
|
2Q22 |
|
|
|
2Q23-2Q22Change % |
|
Seats |
|
|
327 |
|
|
|
309 |
|
|
|
258 |
|
|
|
+27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription revenue |
|
$ |
16.3 |
|
|
$ |
15.5 |
|
|
$ |
12.5 |
|
|
|
+30 |
% |
Other revenue |
|
$ |
1.5 |
|
|
$ |
1.4 |
|
|
$ |
1.0 |
|
|
|
+45 |
% |
Total
Revenue |
|
$ |
17.8 |
|
|
$ |
17.0 |
|
|
$ |
13.5 |
|
|
|
+31 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
$ |
(0.6 |
) |
|
$ |
(1.1 |
) |
|
$ |
(2.9 |
) |
|
|
+$2.3 |
|
Adjusted
EBITDA |
|
$ |
0.8 |
|
|
$ |
0.3 |
|
|
$ |
(1.9 |
) |
|
|
+$2.7 |
|
Take-Aways:
- Total seats as
of January 31, 2023 increased by 27% to approximately 327,000 from
258,000 a year earlier, led by growth in net2phone’s Latin American
markets.
- The continued
improvements in loss from operations and Adjusted EBITDA reflect
multiple factors: the strengthening of unit economics as the
business scales and revenue increases; the acquisition of a CCaaS
provider in 3Q22 and subsequent increases in higher ARPU, higher
margin CCaaS seats; a continued focus on cost control; and,
investment in customer acquisition within geographic markets and
verticals that yield higher returns on investment.
Traditional Communications
In 2Q23 and 2Q22, the Traditional Communications segment
accounted for 81.5% and 88.5% of IDT’s consolidated revenue,
respectively.
Traditional Communications
Results($ in millions)
|
|
|
2Q23 |
|
|
|
1Q23 |
|
|
|
2Q22 |
|
|
|
2Q23-2Q22Change % |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IDT Digital Payments |
|
$ |
106.1 |
|
|
$ |
109.0 |
|
|
$ |
116.2 |
|
|
|
(9 |
)% |
BOSS Revolution Calling |
|
$ |
82.8 |
|
|
$ |
86.3 |
|
|
$ |
100.0 |
|
|
|
(17 |
)% |
IDT Global |
|
$ |
58.6 |
|
|
$ |
61.6 |
|
|
$ |
73.1 |
|
|
|
(20 |
)% |
Total
Revenue |
|
$ |
256.0 |
|
|
$ |
265.7 |
|
|
$ |
298.3 |
|
|
|
(14 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
$ |
17.0 |
|
|
$ |
17.3 |
|
|
$ |
19.9 |
|
|
$ |
(2.9 |
) |
Adjusted
EBITDA |
|
$ |
19.6 |
|
|
$ |
19.7 |
|
|
$ |
22.3 |
|
|
$ |
(2.7 |
) |
Take-Aways:
- The
year-over-year decrease in IDT Digital Payments revenue reflects
the deterioration of a key corridor that was particularly impactful
to sales in the lower margin wholesale and retail channels and so
had a limited impact on margin profitability. Revenue in the higher
margin direct to consumer channel increased 6% over the same
period.
- BOSS Revolution
Calling revenue decreased 17% in 2Q23 to $82.8 million from $100.0
million in 2Q22. IDT Global’s carrier services revenue decreased
20% in 2Q23 to $58.6 million from $73.1 million in 2Q22. These
decreases continue to reflect the long-standing industry-wide
decline in the paid minute calling markets and are in line with
expectations.
- In February, IDT
Digital Payments launched Zendit, a cloud-based,
prepaid-as-a-service platform enabling businesses to easily add a
curated menu of airtime top-ups and other cross-border prepaid
offerings to their apps and websites.
NOTES ON FINANCIAL STATEMENTS
Consolidated results for all periods presented
include corporate overhead. Corporate G&A expense in 2Q23
increased to $2.5 million from $2.3 million in 2Q22.
As of January 31, 2023, IDT held $156.8 million
in cash, cash equivalents, debt securities, and current equity
investments. Current assets totaled $373.5 million and current
liabilities totaled $287.9 million. IDT had no outstanding debt at
quarter end.
Net cash provided by operating activities during
2Q23 was $17.4 million compared to $17.5 million during 2Q22.
Exclusive of changes in customer deposit balances at our
Gibraltar-based bank, net cash provided by operating activities
during 2Q23 was $20.3 million compared to $6.3 million during
2Q22.
Capital expenditures increased to $5.4 million
in 2Q23 from $4.6 million in 2Q22.
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 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
1-888-506-0062 (toll-free from the US) or 1-973-528-0011
(international) and request the IDT Corporation call (participant
access code: 151514).
A replay of the conference call will be
available approximately three hours after the call concludes
through March 22, 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 number: 47574. The 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. We make it easy for families to contact and support each
other across international borders. We also enable businesses to
transact and communicate with their customers with enhanced
intelligence and insight.
Our BOSS Money international remittance, IDT
Digital Payments and BOSS Revolution international calling services
make sending money, paying for products and services, and speaking
with friends and family around the world convenient and reliable.
National Retail Solutions’ (NRS) point-of-sale retail network
enables independent retailers to operate and process transactions
more effectively while providing advertisers and consumer marketers
with unprecedented reach into underserved consumer markets.
net2phone’s communications-as-a-service solutions provide
businesses with intelligently integrated cloud communications and
collaboration tools across channels and devices. Our IDT Global and
IDT Express wholesale offerings enable communications service
enterprises to provision and manage international voice and SMS
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.
CONTACT:
IDT Corporation Investor RelationsBill Ulrey
william.ulrey@idt.net973-438-3838
IDT CORPORATION
CONSOLIDATED BALANCE SHEETS
|
|
January 31, 2023 |
|
|
July 31, 2022 |
|
|
|
(Unaudited) |
|
|
|
|
|
|
(in thousands) |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
117,811 |
|
|
$ |
98,352 |
|
Restricted cash and cash equivalents |
|
|
89,867 |
|
|
|
91,210 |
|
Debt securities |
|
|
29,777 |
|
|
|
22,303 |
|
Equity investments |
|
|
9,213 |
|
|
|
17,091 |
|
Trade accounts receivable, net of allowance for doubtful accounts
of $6,255 at January 31, 2023 and $5,882 at July 31, 2022 |
|
|
47,605 |
|
|
|
64,315 |
|
Disbursement prefunding |
|
|
28,098 |
|
|
|
21,057 |
|
Prepaid expenses |
|
|
14,611 |
|
|
|
17,526 |
|
Other current assets |
|
|
36,559 |
|
|
|
30,773 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
373,541 |
|
|
|
362,627 |
|
Property, plant, and
equipment, net |
|
|
38,303 |
|
|
|
36,866 |
|
Goodwill |
|
|
26,547 |
|
|
|
26,380 |
|
Other intangibles, net |
|
|
8,985 |
|
|
|
9,609 |
|
Equity investments |
|
|
6,687 |
|
|
|
7,426 |
|
Operating lease right-of-use
assets |
|
|
6,894 |
|
|
|
7,210 |
|
Deferred income tax assets,
net |
|
|
28,913 |
|
|
|
36,701 |
|
Other assets |
|
|
10,641 |
|
|
|
10,275 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
500,511 |
|
|
$ |
497,094 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
23,229 |
|
|
$ |
29,080 |
|
Accrued expenses |
|
|
110,580 |
|
|
|
117,109 |
|
Deferred revenue |
|
|
34,998 |
|
|
|
36,531 |
|
Customer deposits |
|
|
86,899 |
|
|
|
85,764 |
|
Other current liabilities |
|
|
32,215 |
|
|
|
36,588 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
287,921 |
|
|
|
305,072 |
|
Operating lease
liabilities |
|
|
4,243 |
|
|
|
4,606 |
|
Other liabilities |
|
|
4,944 |
|
|
|
6,588 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
297,108 |
|
|
|
316,266 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Redeemable noncontrolling
interest |
|
|
10,389 |
|
|
|
10,191 |
|
Equity: |
|
|
|
|
|
|
|
|
IDT Corporation stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value; authorized shares—10,000; no
shares issued |
|
|
— |
|
|
|
— |
|
Class A common stock, $.01 par value; authorized shares—35,000;
3,272 shares issued and 1,574 shares outstanding at January 31,
2023 and July 31, 2022 |
|
|
33 |
|
|
|
33 |
|
Class B common stock, $.01 par value; authorized shares—200,000;
27,782 and 27,725 shares issued and 23,952and 24,112 shares
outstanding at January 31, 2023 and July 31, 2022,
respectively |
|
|
278 |
|
|
|
277 |
|
Additional paid-in capital |
|
|
298,649 |
|
|
|
296,005 |
|
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of
Class A common stock and 3,830 and 3,613 shares of Class B common
stock at January 31, 2023 and July 31, 2022, respectively |
|
|
(106,906 |
) |
|
|
(101,565 |
) |
Accumulated other comprehensive loss |
|
|
(13,711 |
) |
|
|
(11,305 |
) |
Retained earnings (accumulated deficit) |
|
|
9,795 |
|
|
|
(15,830 |
) |
|
|
|
|
|
|
|
|
|
Total IDT Corporation stockholders’ equity |
|
|
188,138 |
|
|
|
167,615 |
|
Noncontrolling interests |
|
|
4,876 |
|
|
|
3,022 |
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
193,014 |
|
|
|
170,637 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
500,511 |
|
|
$ |
497,094 |
|
IDT
CORPORATIONCONSOLIDATED STATEMENTS OF
INCOME (Unaudited)
|
|
Three Months Ended January 31, |
|
|
Six Months Ended January 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands, except per share data) |
|
|
|
|
|
Revenues |
|
$ |
313,936 |
|
|
$ |
337,058 |
|
|
$ |
635,752 |
|
|
$ |
707,141 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of revenues (exclusive of depreciation and
amortization) |
|
|
222,394 |
|
|
|
257,325 |
|
|
|
454,031 |
|
|
|
548,950 |
|
Selling, general and administrative (i) |
|
|
68,153 |
|
|
|
61,070 |
|
|
|
134,017 |
|
|
|
121,177 |
|
Depreciation and amortization |
|
|
5,012 |
|
|
|
4,378 |
|
|
|
9,801 |
|
|
|
8,825 |
|
Severance |
|
|
213 |
|
|
|
29 |
|
|
|
312 |
|
|
|
67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses |
|
|
295,772 |
|
|
|
322,802 |
|
|
|
598,161 |
|
|
|
679,019 |
|
Other operating gain (expense), net |
|
|
17 |
|
|
|
(442 |
) |
|
|
816 |
|
|
|
(530 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
18,181 |
|
|
|
13,814 |
|
|
|
38,407 |
|
|
|
27,592 |
|
Interest income, net |
|
|
810 |
|
|
|
119 |
|
|
|
1,320 |
|
|
|
132 |
|
Other income (expense), net |
|
|
1,613 |
|
|
|
(2,949 |
) |
|
|
(2,229 |
) |
|
|
(19,165 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
20,604 |
|
|
|
10,984 |
|
|
|
37,498 |
|
|
|
8,559 |
|
Provision for income taxes |
|
|
(5,295 |
) |
|
|
(2,734 |
) |
|
|
(9,634 |
) |
|
|
(2,648 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
15,309 |
|
|
|
8,250 |
|
|
|
27,864 |
|
|
|
5,911 |
|
Net (income) attributable to noncontrolling interests |
|
|
(686 |
) |
|
|
(763 |
) |
|
|
(2,239 |
) |
|
|
(896 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to IDT
Corporation |
|
$ |
14,623 |
|
|
$ |
7,487 |
|
|
$ |
25,625 |
|
|
$ |
5,015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to IDT Corporation common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.57 |
|
|
$ |
0.29 |
|
|
$ |
1.00 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.57 |
|
|
$ |
0.28 |
|
|
$ |
1.00 |
|
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of
shares used in calculation of earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
25,510 |
|
|
|
25,652 |
|
|
|
25,556 |
|
|
|
25,609 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
25,538 |
|
|
|
26,542 |
|
|
|
25,577 |
|
|
|
26,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) Stock-based compensation
included in selling, general and administrative expenses |
|
$ |
1,286 |
|
|
$ |
310 |
|
|
$ |
1,858 |
|
|
$ |
595 |
|
IDT
CORPORATIONCONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited)
|
|
Six Months Ended January 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands) |
|
Operating
activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
27,864 |
|
|
$ |
5,911 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
9,801 |
|
|
|
8,825 |
|
Deferred income taxes |
|
|
7,788 |
|
|
|
1,683 |
|
Provision for doubtful accounts receivable |
|
|
915 |
|
|
|
1,289 |
|
Net unrealized loss from marketable securities |
|
|
2,349 |
|
|
|
16,242 |
|
Stock-based compensation |
|
|
1,858 |
|
|
|
595 |
|
Other |
|
|
1,359 |
|
|
|
2,850 |
|
Change in assets and
liabilities: |
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
16,298 |
|
|
|
(8,045 |
) |
Disbursement prefunding, prepaid expenses, other current assets,
and other assets |
|
|
(11,492 |
) |
|
|
(8,551 |
) |
Trade accounts payable, accrued expenses, other current
liabilities, and other liabilities |
|
|
(19,344 |
) |
|
|
(6,313 |
) |
Customer deposits at IDT Financial Services Limited
(Gibraltar-based bank) |
|
|
15 |
|
|
|
(1,862 |
) |
Deferred revenue |
|
|
(1,795 |
) |
|
|
(960 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities |
|
|
35,616 |
|
|
|
11,664 |
|
Investing
activities |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(10,578 |
) |
|
|
(8,991 |
) |
Purchase of convertible preferred stock in equity method
investment |
|
|
— |
|
|
|
(1,051 |
) |
Payments for acquisitions, net of cash acquired |
|
|
— |
|
|
|
(100 |
) |
Purchases of debt securities and equity investments |
|
|
(28,129 |
) |
|
|
(10,825 |
) |
Proceeds from maturities and sales of debt securities and
redemptions of equity investments |
|
|
27,531 |
|
|
|
6,068 |
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities |
|
|
(11,176 |
) |
|
|
(14,899 |
) |
Financing
activities |
|
|
|
|
|
|
|
|
Distributions to noncontrolling interests |
|
|
(187 |
) |
|
|
(198 |
) |
Proceeds from other liabilities |
|
|
300 |
|
|
|
2,301 |
|
Repayment of other liabilities. |
|
|
(2,014 |
) |
|
|
(1,291 |
) |
Proceeds from borrowings under revolving credit facility |
|
|
2,383 |
|
|
|
2,488 |
|
Repayment of borrowings under revolving credit facility. |
|
|
(2,383 |
) |
|
|
(2,488 |
) |
Proceeds from sale of redeemable equity in subsidiary |
|
|
— |
|
|
|
10,000 |
|
Proceeds from exercise of stock options |
|
|
172 |
|
|
|
— |
|
Repurchases of Class B common stock |
|
|
(5,341 |
) |
|
|
(8,974 |
) |
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by
financing activities |
|
|
(7,070 |
) |
|
|
1,838 |
|
Effect of exchange rate
changes on cash, cash equivalents, and restricted cash and cash
equivalents |
|
|
746 |
|
|
|
(4,967 |
) |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in
cash, cash equivalents, and restricted cash and cash
equivalents |
|
|
18,116 |
|
|
|
(6,364 |
) |
Cash, cash equivalents, and
restricted cash and cash equivalents at beginning of period |
|
|
189,562 |
|
|
|
226,916 |
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, and
restricted cash and cash equivalents at end of period |
|
$ |
207,678 |
|
|
$ |
220,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule
of non-cash financing activities |
|
|
|
|
|
|
|
|
Stock issued to certain executive officers for bonus payments |
|
$ |
615 |
|
|
$ |
— |
|
Reconciliation of Non-GAAP Financial
Measures for theSecond Quarter Fiscal 2023 and
2022
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 2Q23, 1Q23, and 2Q22, 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 2023 and
fiscal 2022 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 primarily includes gains from the write-off of
a contingent consideration liabilities, legal fees net of insurance
claims related to Straight Path Communications Inc.’s stockholders’
putative class action and derivative complaint, and expense for the
indemnification of a net2phone cable telephony customer related to
patent infringement claims brought against the customer. From
time-to-time, IDT may have gains or incur costs related to
non-routine legal 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 CorporationReconciliation 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 Communications |
|
|
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 Communications |
|
|
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, net |
|
|
(0.8 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1.6 |
) |
|
|
0.8 |
|
Adjusted EBITDA |
|
$ |
24.3 |
|
|
$ |
19.7 |
|
|
$ |
0.3 |
|
|
$ |
5.7 |
|
|
$ |
0.5 |
|
|
$ |
(1.9 |
) |
IDT CorporationReconciliation 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 Communications |
|
|
net2phone |
|
|
NRS |
|
|
Fintech |
|
|
Corporate |
|
Three Months Ended
January 31, 2022 (2Q22) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to IDT Corporation |
|
$ |
7.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
noncontrolling interests |
|
|
0.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
8.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
2.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
11.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense, net |
|
|
2.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
|
13.8 |
|
|
$ |
19.9 |
|
|
$ |
(2.9 |
) |
|
$ |
2.1 |
|
|
$ |
(2.3 |
) |
|
$ |
(3.0 |
) |
Depreciation and amortization |
|
|
4.4 |
|
|
|
2.4 |
|
|
|
1.3 |
|
|
|
0.2 |
|
|
|
0.5 |
|
|
|
- |
|
Other operating expense (gain), net |
|
|
0.4 |
|
|
|
- |
|
|
|
(0.3 |
) |
|
|
- |
|
|
|
- |
|
|
|
0.7 |
|
Adjusted EBITDA |
|
$ |
18.7 |
|
|
$ |
22.3 |
|
|
$ |
(1.9 |
) |
|
$ |
2.2 |
|
|
$ |
(1.7 |
) |
|
$ |
(2.3 |
) |
IDT CorporationReconciliation of
Earnings per share to Non-GAAP EPS (unaudited) in
millions, except per share data. Figures may not foot due to
rounding to millions.
|
|
|
2Q23 |
|
|
|
1Q23 |
|
|
|
2Q22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to IDT
Corporation |
|
$ |
14.6 |
|
|
$ |
11.0 |
|
|
$ |
7.5 |
|
Adjustments (add)
subtract: |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
(1.3 |
) |
|
|
(0.6 |
) |
|
|
(0.3 |
) |
Severance expense |
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
- |
|
Other operating gain
(expense), net |
|
|
- |
|
|
|
0.8 |
|
|
|
(0.4 |
) |
Total adjustments |
|
|
(1.5 |
) |
|
|
0.1 |
|
|
|
(0.8 |
) |
Income tax effect of total
adjustments |
|
|
(0.4 |
) |
|
|
- |
|
|
|
(0.2 |
) |
|
|
|
1.1 |
|
|
|
(0.1 |
) |
|
|
0.6 |
|
Non-GAAP net income |
|
$ |
15.7 |
|
|
$ |
10.9 |
|
|
$ |
8.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.57 |
|
|
$ |
0.43 |
|
|
$ |
0.29 |
|
Total adjustments |
|
|
0.05 |
|
|
|
- |
|
|
|
0.02 |
|
Non-GAAP - basic |
|
$ |
0.62 |
|
|
$ |
0.43 |
|
|
$ |
0.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of
shares used in calculation of basic earnings per share |
|
|
25.5 |
|
|
|
25.6 |
|
|
|
25.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.57 |
|
|
$ |
0.43 |
|
|
$ |
0.28 |
|
Total adjustments |
|
|
0.05 |
|
|
|
- |
|
|
|
0.02 |
|
Non-GAAP - diluted |
|
$ |
0.62 |
|
|
$ |
0.43 |
|
|
$ |
0.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of
shares used in calculation of diluted earnings per share |
|
|
25.5 |
|
|
|
25.6 |
|
|
|
26.5 |
|
*Explanation of Key Performance
Metrics
NRS’ recurring revenue is NRS’ revenue in
accordance with GAAP excluding revenue from POS terminal sales.
NRS’ Monthly Average Recurring Revenue per
Terminal is a financial metric. Monthly Average Recurring Revenue
per Terminal is calculated by dividing NRS’ recurring revenue by
the average number of active POS terminals during the period. The
average number of active POS terminals is calculated by adding the
beginning and ending number of active POS terminals during the
period and dividing by two. NRS’ recurring revenue divided by the
average number of active POS terminals is divided by three when the
period is a fiscal quarter. Monthly Average Recurring Revenue per
Terminal is useful for comparisons of NRS’ 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 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 are strong
indications of the top-line growth and performance of the
business.
# # #
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