IDT Corporation (NYSE: IDT), a global provider of fintech, cloud
communications, and traditional communications services, today
reported results for the third quarter of its 2022 fiscal year, the
three months ended April 30, 2022.
THIRD QUARTER FISCAL
YEAR 2022
(3Q22)
HIGHLIGHTS
(Throughout this release, results are for 3Q22
and are compared to 3Q21 unless otherwise noted. All ‘per share’
results are per diluted share. Please see the final page of this
release for important supplemental information on asterisked
metrics.)
-
Key business unit revenue and related metrics:
- National Retail
Solutions (NRS) recurring revenue* increased 101.9% to $10.0
million. Active terminals increased by 1,400 sequentially to
approximately 17,900, and payment processing accounts increased by
1,200 sequentially to approximately 9,200.
- net2phone
subscription revenue** increased 42.0% to $14.2 million. Seats
served increased by 22,000 sequentially, including nearly 7,000
through the previously announced acquisition of a CCaaS provider,
to approximately 279,000.
- Money Transfer
revenue increased 51.5% to $15.5 million. Transaction volumes
increased by 27.1% to 2.4 million, with solid growth in both direct
to consumer and retail channels.
-
Consolidated revenue decreased 12.2% to $328 million from $374
million. Direct cost of revenue decreased 17.7% to $248 million
from $301 million.
- Consolidated
income from operations decreased to $13.3 million from $13.9
million.
- Net income
attributable to IDT decreased to $4.8 million from $36.3 million,
and EPS decreased to $0.18 from $1.39. In 3Q22, EPS included the
impact of a $0.13 per share loss from marked-to-market investments.
In 3Q21, EPS included the positive impacts of both a $0.92 per
share reversal of income tax valuation allowances and a $0.21 per
share gain from marked-to-market investments.
- Adjusted
EBITDA*** increased to $18.0 million from $17.9 million.
- Non-GAAP EPS***
was $0.23 compared to $0.47.
REMARKS BY SHMUEL JONAS,
CEO
“Each of our three high-margin, high-growth
businesses had a very strong third quarter, helping us to again
achieve solid levels of consolidated income from operations and
Adjusted EBITDA, consistent with our results from the first two
quarters of our fiscal year.
“NRS added nearly 1,400 net POS terminals and
1,200 net payment processing accounts during the third quarter,
maintaining the accelerated rate of acquisitions achieved in the
second quarter. NRS recurring revenue increased 102%
year-over-year, keyed by strong merchant service and advertising
sales. Looking ahead, we expect that NRS will sustain robust,
high-margin growth in the coming quarters. In particular, we expect
advertising and data offerings to benefit from both long-term
trends such as the increasing allocation of advertising budgets to
out-of-home venues, as well as from seasonal tailwinds including
increased political advertising heading into the second half of the
calendar year.
“net2phone’s strategic focus on the SMB and
small enterprise markets within North and South America, efficient
execution, and acquisition of CCaaS provider Integra all
contributed to solid growth in the third quarter. Subscription
revenue increased 42% year-over-year due primarily to the addition
of approximately 22,000 seats during the quarter --including almost
7,000 seats from the Integra acquisition. Seat growth was again
strongest in our Latin American markets although our U.S. business
performed nearly as well. We will begin selling our CCaaS offering
in North America in the current - fourth - quarter of our fiscal
year and expect its expansion to gradually become a key driver of
seat growth and ARPU expansion.
“BOSS Money, our international remittance
business, increased revenue 51% to $15.5 million driven both by a
27% year-over-year increase in transaction volumes and a comparably
robust increase in revenue per transaction – including both
transfer fees and revenue derived from foreign exchange. We
continue to build out our disbursement networks, particularly in
Africa and the Caribbean, and to fine-tune our direct-to-consumer
pricing strategies to capture additional revenue and margins. BOSS
Money also continues to benefit from its integration into the BOSS
Revolution Calling app last October, providing another example of
our ability to generate growth by deploying our offerings across
multiple channels and platforms.
“In our Traditional Communications segment,
revenue decreased by $59.9 million or 17% to $285.9 million. The
surge in demand for paid voice that we experienced during the COVID
pandemic is now retreating and exacerbating the impact of the
underlying declines in retail calling and wholesale carrier
services. Our Mobile Top-Up business underperformed this
quarter but we are investing in technology, marketing, and sales to
improve its performance.
Because Traditional Communications’ lost revenue
overall was skewed to lower margin sales, income from operations
from this segment decreased $3.0 million year-over-year to $17.4
million. On a consolidated basis, income from operations decreased
$0.5 million to $13.3 million while Adjusted EBITDA*** increased
$0.1 million to $18.0 million. We expect that as our growth
businesses continue to expand, our consolidated bottom-line results
in the coming quarters will increasingly reflect their
contributions.”
CONSOLIDATED RESULTS
Results(in millions, except EPS) |
|
|
3Q22 |
|
|
|
2Q22 |
|
|
|
3Q21 |
|
|
|
3Q22 - 3Q21 change (%/$) |
|
Revenue |
|
$ |
328 |
|
|
$ |
337 |
|
|
$ |
374 |
|
|
|
(12.2 |
|
)% |
Direct cost of revenue |
|
$ |
248 |
|
|
$ |
257 |
|
|
$ |
301 |
|
|
|
(17.7 |
|
)% |
SG&A expense |
|
$ |
63 |
|
|
$ |
61 |
|
|
$ |
55 |
|
|
|
+13.8 |
% |
|
Depreciation and
amortization |
|
$ |
4.5 |
|
|
$ |
4.4 |
|
|
$ |
4.4 |
|
|
|
+1.9 |
% |
|
Income from operations |
|
$ |
13.3 |
|
|
$ |
13.8 |
|
|
$ |
13.9 |
|
|
|
(3.9 |
|
)% |
Net income attributable to
IDT |
|
$ |
4.8 |
|
|
$ |
7.5 |
|
|
$ |
36.3 |
|
|
$ |
(31.5 |
|
) |
Adjusted EBITDA*** |
|
$ |
18.0 |
|
|
$ |
18.7 |
|
|
$ |
17.9 |
|
|
|
+0.7 |
% |
|
Earnings per diluted
share |
|
$ |
0.18 |
|
|
$ |
0.28 |
|
|
$ |
1.39 |
|
|
$ |
(1.21 |
|
) |
Non-GAAP net income*** |
|
$ |
6.0 |
|
|
$ |
8.8 |
|
|
$ |
12.3 |
|
|
$ |
(6.3 |
|
) |
Non-GAAP EPS*** |
|
$ |
0.23 |
|
|
$ |
0.33 |
|
|
$ |
0.47 |
|
|
$ |
(0.24 |
|
) |
RESULTS BY SEGMENT(Results are
for 3Q22 and are compared to 3Q21 except where otherwise noted)
(in millions) |
|
Fintech |
|
|
net2phone-UCaaS |
|
|
Traditional Communications |
|
|
|
|
3Q22 |
|
|
|
2Q22 |
|
|
|
3Q21 |
|
|
|
3Q22 |
|
|
|
2Q22 |
|
|
|
3Q21 |
|
|
|
3Q22 |
|
|
|
2Q22 |
|
|
|
3Q21 |
|
Revenue |
|
$ |
26.9 |
|
|
$ |
23.1 |
|
|
$ |
16.6 |
|
|
$ |
15.6 |
|
|
$ |
13.5 |
|
|
$ |
11.4 |
|
|
$ |
285.9 |
|
|
$ |
300.4 |
|
|
$ |
345.7 |
|
Direct cost of revenue |
|
$ |
8.2 |
|
|
$ |
7.3 |
|
|
$ |
6.0 |
|
|
$ |
2.6 |
|
|
$ |
2.4 |
|
|
$ |
2.2 |
|
|
$ |
236.7 |
|
|
$ |
247.6 |
|
|
$ |
292.6 |
|
SG&A expense |
|
$ |
17.9 |
|
|
$ |
15.3 |
|
|
$ |
11.6 |
|
|
$ |
13.8 |
|
|
$ |
13.0 |
|
|
$ |
11.8 |
|
|
$ |
29.3 |
|
|
$ |
30.4 |
|
|
$ |
30.0 |
|
Income (loss) from
operations |
|
$ |
0.2 |
|
|
$ |
(0.2 |
) |
|
$ |
(1.4 |
) |
|
$ |
(2.3 |
) |
|
$ |
(2.9 |
) |
|
$ |
(4.0 |
) |
|
$ |
17.4 |
|
|
$ |
19.9 |
|
|
$ |
20.4 |
|
Adjusted EBITDA*** |
|
$ |
0.8 |
|
|
$ |
0.4 |
|
|
$ |
(1.0 |
) |
|
$ |
(0.9 |
) |
|
$ |
(1.9 |
) |
|
$ |
(2.6 |
) |
|
$ |
19.9 |
|
|
$ |
22.4 |
|
|
$ |
23.1 |
|
Capital expenditures |
|
$ |
1.2 |
|
|
$ |
1.3 |
|
|
$ |
1.3 |
|
|
$ |
1.4 |
|
|
$ |
1.3 |
|
|
$ |
1.3 |
|
|
$ |
1.9 |
|
|
$ |
1.9 |
|
|
$ |
1.9 |
|
Fintech
Fintech comprises National Retail Solutions
(NRS), an operator of a nationwide Point-Of-Sale (POS) retail
network providing merchant services, digital advertising,
transaction data, and ancillary services, and BOSS Money, a
provider of international money remittances.
In 3Q22 and 3Q21, the Fintech segment accounted
for 8.2% and 4.4% of IDT’s consolidated revenue, respectively.
NRS Results(Revenue $ in
thousands) |
|
|
3Q22 |
|
|
|
2Q22 |
|
|
|
3Q21 |
|
|
|
3Q22 -3Q21 change % |
|
POS terminals, active – end of
period |
|
|
17,900 |
|
|
|
16,500 |
|
|
|
13,100 |
|
|
|
37 |
|
% |
Payment processing accounts –
end of period |
|
|
9,200 |
|
|
|
8,000 |
|
|
|
4,900 |
|
|
|
89 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NRS recurring
revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merchant services and
other |
|
$ |
4,765 |
|
|
$ |
3,810 |
|
|
$ |
2,116 |
|
|
|
+125 |
% |
|
Advertising & data |
|
|
3,729 |
|
|
|
3,901 |
|
|
|
1,958 |
|
|
|
+90 |
% |
|
SaaS fees |
|
|
1,462 |
|
|
|
1,318 |
|
|
|
856 |
|
|
|
+71 |
% |
|
Total recurring
revenue |
|
$ |
9,956 |
|
|
$ |
9,029 |
|
|
$ |
4,930 |
|
|
|
+102 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
POS terminal sales |
|
|
1,427 |
|
|
|
1,591 |
|
|
|
1,454 |
|
|
|
(2 |
|
)% |
Total NRS
revenue |
|
$ |
11,383 |
|
|
$ |
10,620 |
|
|
$ |
6,384 |
|
|
|
+78 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monthly average recurring
revenue per terminal (excl. POS terminal sales revenue)**** |
|
$ |
193 |
|
|
$ |
190 |
|
|
$ |
131 |
|
|
|
+47 |
% |
|
NRS
Take-Aways:
- As of April 30,
2022, NRS’ POS terminal network comprised approximately 17,900
active POS terminals, an increase of 37% compared to a year
earlier, and approximately 9,200 payment processing accounts, a
year over year increase of 89%.
- NRS revenue
increased 78.3% to $11.4 million from $6.4 million and recurring
revenue* increased by 101.9% to $10.0 million from $4.9 million.
The increases were driven by the expansion of the NRS POS and
payment processing networks and increased merchant services and
digital-out-of-home (DOOH) advertising & data sales.
- NRS monthly
average recurring revenue per terminal**** increased to $193 from
$131.
- During 3Q22, NRS
announced a partnership with OnPoint, a leading provider of scan
data programs for the independent and small chain C-store market.
Through the partnership, OnPoint will promote the NRS POS system
and payment processing service to prospective C-store clients.
BOSS Money
Take-Aways:
- Transaction
volumes increased 27% to 2.37 million from 1.86 million in the
year-ago period.
- Revenue
increased 51.5% to $15.5 million from $10.3 million.
- BOSS Money
continued to expand its global payments network including announced
expansions of service to Ethiopia and Jamaica.
net2phone-UCaaS
In 3Q22 and 3Q21, the net2phone-UCaaS segment
accounted for 4.7% and 3.1% of IDT’s consolidated revenue,
respectively.
net2phone-UCaaS
Take-aways:
- Total seats
served increased 33% to 279,000 at April 30, 2022 including
approximately 7,000 seats added through the Integra CCaaS
acquisition, from 210,000 a year earlier.
- Subscription
revenue** increased 42.0% to $14.2 million from $10.0 million, led
by strong growth in both net2phone's South and North American
regions and the addition of Integra’s CCaaS revenue for the final
two months of the quarter.
- During 3Q22, IDT
announced a postponement of the planned spin-off of net2phone, in
light of market conditions.
Traditional Communications
In 3Q22 and 3Q21, the Traditional Communications
segment accounted for 87.1% and 92.5% of IDT’s consolidated
revenue, respectively.
Traditional
Communications
Take-Aways:
- Mobile Top-Up
revenue decreased 12.6% to $115.9 million from $132.6 million.
- BOSS Revolution
Calling revenue decreased 17.6% to $91.8 million from $111.4
million, while minutes-of-use decreased 21.2% compared to the
year-ago quarter. The decreases reflect the erosion of the surge in
demand for voice calls that began with the onset of the COVID
pandemic, on top of the underlying decline of the paid voice
communications market.
- IDT Global’s
carrier services revenue decreased 24.3% to $67.1 million from
$88.6 million reflecting a 24.2% decrease in minutes-of-use as the
wholesale paid voice market contracted at an accelerated rate.
NOTES ON FINANCIAL STATEMENTS
Consolidated results for all periods presented
include corporate overhead. Corporate G&A expense increased to
$1.8 million in 3Q22 from $1.7 million in 3Q21.
As of April 30, 2022, IDT held $136.0 million in
cash, cash equivalents, debt securities, and current equity
investments. Current assets totaled $371.1 million and current
liabilities totaled $315.4 million.
Net cash provided by operating activities during
3Q22 was $1.6 million compared to $12.5 million during 3Q21.
Exclusive of changes in customer deposit balances at our
Gibraltar-based bank, net cash provided by operating activities
during 3Q22 was $9.6 million compared to $12.5 million during
3Q21.
Capital expenditures increased to $4.8 million
in 3Q22 from $4.6 million in 3Q21.
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
1-888-506-0062 (toll-free from the US) or 1-973-528-0011
(international) and request the IDT Corporation call (participant
access code: 733921).
A replay of the conference call will be
available approximately three hours after the call concludes
through June 15, 2022. 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: 45654. 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 and traditional communications services. We make
it easy for families to communicate 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 and BOSS
Revolution international calling services make sending money 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
|
|
|
April 30, |
|
|
|
July 31, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
(in thousands) |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
97,139 |
|
|
$ |
107,147 |
|
Restricted cash and cash equivalents |
|
|
100,957 |
|
|
|
119,769 |
|
Debt securities |
|
|
22,706 |
|
|
|
14,012 |
|
Equity investments |
|
|
16,179 |
|
|
|
42,434 |
|
Trade accounts receivable, net of allowance for doubtful accounts
of $5,061 at April 30, 2022 and $4,438 at July 31, 2021 |
|
|
52,881 |
|
|
|
46,644 |
|
Disbursement prefunding |
|
|
37,111 |
|
|
|
27,656 |
|
Prepaid expenses |
|
|
16,676 |
|
|
|
13,694 |
|
Other current assets |
|
|
27,442 |
|
|
|
16,779 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
371,091 |
|
|
|
388,135 |
|
Property, plant, and
equipment, net |
|
|
33,447 |
|
|
|
30,829 |
|
Goodwill |
|
|
26,490 |
|
|
|
14,897 |
|
Other intangibles, net |
|
|
10,041 |
|
|
|
7,578 |
|
Equity investments |
|
|
7,319 |
|
|
|
11,654 |
|
Operating lease right-of-use
assets |
|
|
7,919 |
|
|
|
7,671 |
|
Deferred income tax assets,
net |
|
|
36,598 |
|
|
|
41,502 |
|
Other assets |
|
|
10,365 |
|
|
|
10,389 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
503,270 |
|
|
$ |
512,655 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
27,817 |
|
|
$ |
24,502 |
|
Accrued expenses |
|
|
118,285 |
|
|
|
129,085 |
|
Deferred revenue |
|
|
39,054 |
|
|
|
42,293 |
|
Customer deposits |
|
|
95,104 |
|
|
|
115,524 |
|
Other current liabilities |
|
|
35,103 |
|
|
|
27,930 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
315,363 |
|
|
|
339,334 |
|
Operating lease
liabilities |
|
|
5,322 |
|
|
|
5,473 |
|
Other liabilities |
|
|
6,326 |
|
|
|
1,234 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
327,011 |
|
|
|
346,041 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Redeemable noncontrolling
interest |
|
|
10,099 |
|
|
|
— |
|
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 April 30, 2022
and July 31, 2021 |
|
|
33 |
|
|
|
33 |
|
Class B common stock, $.01 par value; authorized shares—200,000;
27,725 and 26,379 shares issued and 24,667 and 24,187 shares
outstanding at April 30, 2022 and July 31, 2021, respectively |
|
|
277 |
|
|
|
264 |
|
Additional paid-in capital |
|
|
295,915 |
|
|
|
278,021 |
|
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of
Class A common stock and 3,058 and 2,192 shares of Class B common
stock at April 30, 2022 and July 31, 2021, respectively |
|
|
(88,175 |
) |
|
|
(60,413 |
) |
Accumulated other comprehensive loss |
|
|
(11,341 |
) |
|
|
(10,183 |
) |
Accumulated deficit |
|
|
(33,072 |
) |
|
|
(42,858 |
) |
Total IDT Corporation stockholders’ equity |
|
|
163,637 |
|
|
|
164,864 |
|
Noncontrolling interests |
|
|
2,523 |
|
|
|
1,750 |
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
166,160 |
|
|
|
166,614 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
503,270 |
|
|
$ |
512,655 |
|
IDT CORPORATION
CONSOLIDATED STATEMENTS OF
INCOME (Unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
April 30, |
|
|
April 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
328,353 |
|
|
$ |
373,831 |
|
|
$ |
1,035,494 |
|
|
$ |
1,057,022 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of revenues (exclusive of depreciation and
amortization) |
|
|
247,565 |
|
|
|
300,797 |
|
|
|
796,516 |
|
|
|
843,116 |
|
Selling, general and administrative (i) |
|
|
62,772 |
|
|
|
55,148 |
|
|
|
183,948 |
|
|
|
161,591 |
|
Depreciation and amortization |
|
|
4,509 |
|
|
|
4,425 |
|
|
|
13,333 |
|
|
|
13,381 |
|
Severance |
|
|
— |
|
|
|
184 |
|
|
|
67 |
|
|
|
439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses |
|
|
314,846 |
|
|
|
360,554 |
|
|
|
993,864 |
|
|
|
1,018,527 |
|
Other operating (expense) gain, net |
|
|
(179 |
) |
|
|
595 |
|
|
|
(709 |
) |
|
|
1,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
13,328 |
|
|
|
13,872 |
|
|
|
40,921 |
|
|
|
40,045 |
|
Interest income, net |
|
|
85 |
|
|
|
125 |
|
|
|
217 |
|
|
|
223 |
|
Other (expense) income, net |
|
|
(5,068 |
) |
|
|
3,815 |
|
|
|
(24,234 |
) |
|
|
5,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
8,345 |
|
|
|
17,812 |
|
|
|
16,904 |
|
|
|
45,876 |
|
(Provision for) benefit from income taxes |
|
|
(3,239 |
) |
|
|
18,586 |
|
|
|
(5,887 |
) |
|
|
12,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
5,106 |
|
|
|
36,398 |
|
|
|
11,017 |
|
|
|
58,018 |
|
Net (income) attributable to noncontrolling interests |
|
|
(335 |
) |
|
|
(50 |
) |
|
|
(1,231 |
) |
|
|
(274 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to IDT
Corporation |
|
$ |
4,771 |
|
|
$ |
36,348 |
|
|
$ |
9,786 |
|
|
$ |
57,744 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to IDT Corporation common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.18 |
|
|
$ |
1.42 |
|
|
$ |
0.38 |
|
|
$ |
2.27 |
|
Diluted |
|
$ |
0.18 |
|
|
$ |
1.39 |
|
|
$ |
0.37 |
|
|
$ |
2.23 |
|
Weighted-average number of
shares used in calculation of earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
25,901 |
|
|
|
25,530 |
|
|
|
25,706 |
|
|
|
25,475 |
|
Diluted |
|
|
26,205 |
|
|
|
26,136 |
|
|
|
26,455 |
|
|
|
25,903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) Stock-based compensation
included in selling, general and administrative expenses |
|
$ |
1,245 |
|
|
$ |
275 |
|
|
$ |
1,840 |
|
|
$ |
1,215 |
|
IDT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Nine Months EndedApril 30, |
|
|
|
2022 |
|
|
2021 |
|
|
|
(in thousands) |
|
|
|
|
|
Operating
activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
11,017 |
|
|
$ |
58,018 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
13,333 |
|
|
|
13,381 |
|
Deferred income taxes |
|
|
4,624 |
|
|
|
(13,811 |
) |
Provision for doubtful accounts receivable |
|
|
1,578 |
|
|
|
1,220 |
|
Net unrealized loss (gain) from marketable securities |
|
|
19,705 |
|
|
|
(508 |
) |
Stock-based compensation |
|
|
1,840 |
|
|
|
1,215 |
|
Other |
|
|
3,486 |
|
|
|
(4,415 |
) |
Change in assets and
liabilities: |
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
(8,461 |
) |
|
|
1,626 |
|
Disbursement prefunding, prepaid expenses, other current assets,
and other assets |
|
|
(20,504 |
) |
|
|
(7,961 |
) |
Trade accounts payable, accrued expenses, other current
liabilities, and other liabilities |
|
|
(2,566 |
) |
|
|
(2,154 |
) |
Customer deposits at IDT Financial Services Limited
(Gibraltar-based bank) |
|
|
(9,843 |
) |
|
|
(11,078 |
) |
Deferred revenue |
|
|
(948 |
) |
|
|
2,611 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities |
|
|
13,261 |
|
|
|
38,144 |
|
Investing
activities |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(13,794 |
) |
|
|
(13,455 |
) |
Purchase of convertible preferred stock in equity method
investment |
|
|
(1,051 |
) |
|
|
(4,000 |
) |
Payments for acquisitions, net of cash acquired |
|
|
(7,546 |
) |
|
|
(2,656 |
) |
Purchase of Rafael Holdings, Inc. Class B common stock and
warrant |
|
|
— |
|
|
|
(5,000 |
) |
Exercise of warrant to purchase shares of Rafael Holdings, Inc.
Class B common stock |
|
|
— |
|
|
|
(1,000 |
) |
Purchases of debt securities and equity investments |
|
|
(11,277 |
) |
|
|
(39,347 |
) |
Proceeds from maturities and sales of debt securities and
redemptions of equity investments |
|
|
7,752 |
|
|
|
18,670 |
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities |
|
|
(25,916 |
) |
|
|
(46,788 |
) |
Financing
activities |
|
|
|
|
|
|
|
|
Distributions to noncontrolling interests |
|
|
(359 |
) |
|
|
(646 |
) |
Proceeds from other liabilities |
|
|
2,301 |
|
|
|
— |
|
Repayment of other liabilities. |
|
|
(1,319 |
) |
|
|
(69 |
) |
Proceeds from borrowings under revolving credit facility |
|
|
2,566 |
|
|
|
— |
|
Repayment of borrowings under revolving credit facility. |
|
|
(2,566 |
) |
|
|
— |
|
Proceeds from sale of redeemable equity in subsidiary |
|
|
10,000 |
|
|
|
— |
|
Proceeds from exercise of stock options |
|
|
137 |
|
|
|
686 |
|
Repurchases of Class B common stock |
|
|
(12,832 |
) |
|
|
(4,192 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in financing
activities |
|
|
(2,072 |
) |
|
|
(4,221 |
) |
Effect of exchange rate
changes on cash, cash equivalents, and restricted cash and cash
equivalents |
|
|
(14,093 |
) |
|
|
6,652 |
|
|
|
|
|
|
|
|
|
|
Net decrease in cash, cash
equivalents, and restricted cash and cash equivalents |
|
|
(28,820 |
) |
|
|
(6,213 |
) |
Cash, cash equivalents, and
restricted cash and cash equivalents at beginning of period |
|
|
226,916 |
|
|
|
201,222 |
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, and
restricted cash and cash equivalents at end of period |
|
$ |
198,096 |
|
|
$ |
195,009 |
|
|
|
|
|
|
|
|
|
|
Supplemental schedule
of non-cash investing and financing activities |
|
|
|
|
|
|
|
|
Liabilities incurred for acquisitions |
|
$ |
7,849 |
|
|
$ |
393 |
|
|
|
|
|
|
|
|
|
|
Shares of the Company’s Class B common stock issued for
acquisition |
|
$ |
1,000 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Cashless exercise of stock options in exchange for shares of the
Company’s Class B common stock |
|
$ |
14,930 |
|
|
$ |
— |
|
Reconciliation of Non-GAAP Financial
Measures for the Third Quarter
Fiscal 2022 and 2021
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 3Q22, 2Q22, and 3Q21, Adjusted EBITDA, non-GAAP net
income, and non-GAAP earnings per diluted share (EPS), all 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 net income starts with
net income 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 2022 and
fiscal 2021 periods.
IDT’s measure of non-GAAP EPS is calculated by
dividing non-GAAP net income by the diluted weighted-average
shares.
Management believes that IDT’s Adjusted EBITDA,
non-GAAP net income, 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, non-GAAP net income, 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, non-GAAP net income, and non-GAAP
EPS. Severance expense is reflective of decisions made by
management in each period regarding the aspects of IDT’s and its
segments’ businesses to be focused on in light of changing market
realities and other factors. While there may be similar charges in
other periods, the nature and magnitude of these charges can
fluctuate markedly and do not reflect the performance of IDT’s core
and continuing operations.
Other operating (expense) gain, net, which is a
component of income (loss) from operations, is excluded from the
calculation of Adjusted EBITDA, non-GAAP net income, and non-GAAP
EPS. Other operating (expense) gain, net includes legal fees net of
insurance claims related to Straight Path Communications Inc.’s
stockholders’ putative class action and derivative complaint,
expense for the indemnification of a net2phone cable telephony
customer related to patent infringement claims brought against the
customer, a gain from the write-off of a contingent consideration
liability, expense for other legal and regulatory matters, and a
gain from the sale of IDT’s rights under a class action lawsuit.
From time-to-time, IDT may have gains or incur costs related to
non-routine legal and regulatory 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 net
income and 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.
In 3Q21, due to continued and projected
profitability, IDT was able to release a portion of its valuation
allowance that was recorded against its deferred tax assets. This
income tax benefit was excluded from IDT’s non-GAAP net income and
non-GAAP EPS because it was only indirectly related to the current
results of IDT’s core operations.
Adjusted EBITDA, non-GAAP net income, 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, non-GAAP net income, and non-GAAP
EPS 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 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, (b) for non-GAAP net income, net
income, and (c) 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 IDTCorporation |
|
|
TraditionalCommunica-tions |
|
|
net2phone-UCaaS |
|
|
Fintech |
|
|
Corporate |
|
Three Months Ended
April 30, 2022(3Q22) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to IDT
Corporation |
|
$ |
4.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
noncontrolling interests |
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
5.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
3.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
8.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense, net |
|
|
5.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
|
13.3 |
|
|
$ |
17.4 |
|
|
$ |
(2.3 |
) |
|
$ |
0.2 |
|
|
$ |
(2.0 |
) |
Depreciation and amortization |
|
|
4.5 |
|
|
|
2.5 |
|
|
|
1.3 |
|
|
|
0.7 |
|
|
|
- |
|
Other operating expense, net |
|
|
0.2 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.2 |
|
Adjusted EBITDA |
|
$ |
18.0 |
|
|
$ |
19.9 |
|
|
$ |
(0.9 |
) |
|
$ |
0.8 |
|
|
$ |
(1.8 |
) |
|
|
Total IDTCorporation |
|
|
TraditionalCommunica-tions |
|
|
net2phone-UCaaS |
|
|
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 |
) |
|
$ |
(0.2 |
) |
|
$ |
(3.0 |
) |
Depreciation and
amortization |
|
|
4.4 |
|
|
|
2.5 |
|
|
|
1.3 |
|
|
|
0.6 |
|
|
|
- |
|
Other operating expense
(gain), net |
|
|
0.4 |
|
|
|
- |
|
|
|
(0.3 |
) |
|
|
- |
|
|
|
0.7 |
|
Adjusted EBITDA |
|
$ |
18.7 |
|
|
$ |
22.4 |
|
|
$ |
(1.9 |
) |
|
$ |
0.4 |
|
|
$ |
(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- UCaaS |
|
|
Fintech |
|
|
Corporate |
|
Three Months Ended
April 30, 2021(3Q21) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to IDT
Corporation |
|
$ |
36.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
noncontrolling interests |
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
36.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit from income taxes |
|
|
(18.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
17.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
|
|
(3.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
|
13.9 |
|
|
$ |
20.4 |
|
|
$ |
(4.0 |
) |
|
$ |
(1.4 |
) |
|
$ |
(1.1 |
) |
Depreciation and amortization |
|
|
4.4 |
|
|
|
2.5 |
|
|
|
1.4 |
|
|
|
0.5 |
|
|
|
- |
|
Severance expense |
|
|
0.2 |
|
|
|
0.2 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other operating (gain) expense, net |
|
|
(0.6 |
) |
|
|
0.1 |
|
|
|
- |
|
|
|
(0.1 |
) |
|
|
(0.6 |
) |
Adjusted EBITDA |
|
$ |
17.9 |
|
|
$ |
23.1 |
|
|
$ |
(2.6 |
) |
|
$ |
(1.0 |
) |
|
$ |
(1.7 |
) |
IDT CorporationReconciliations
of Net Income to Non-GAAP Net Income and Earnings
per share to Non-GAAP
EPS (unaudited) in millions, except per share data.
Figures may not foot due to rounding to millions.
|
|
3Q22 |
|
|
2Q22 |
|
|
3Q21 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
5.1 |
|
|
$ |
8.3 |
|
|
$ |
36.4 |
|
Adjustments (add)
subtract: |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
(1.2 |
) |
|
|
(0.3 |
) |
|
|
(0.3 |
) |
Severance expense |
|
|
- |
|
|
|
- |
|
|
|
(0.2 |
) |
Other operating (expense)
gain, net |
|
|
(0.2 |
) |
|
|
(0.4 |
) |
|
|
0.6 |
|
Release of DTA valuation
allowance |
|
|
- |
|
|
|
- |
|
|
|
24.0 |
|
Total adjustments |
|
|
(1.4 |
) |
|
|
(0.7 |
) |
|
|
24.1 |
|
Income tax effect of total
adjustments |
|
|
(0.5 |
) |
|
|
(0.2 |
) |
|
|
- |
|
|
|
|
0.9 |
|
|
|
0.5 |
|
|
|
(24.1 |
) |
Non-GAAP net income |
|
$ |
6.0 |
|
|
$ |
8.8 |
|
|
$ |
12.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.18 |
|
|
$ |
0.29 |
|
|
$ |
1.42 |
|
Total adjustments |
|
|
0.05 |
|
|
|
0.05 |
|
|
|
(0.94 |
) |
Non-GAAP - basic |
|
$ |
0.23 |
|
|
$ |
0.34 |
|
|
$ |
0.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of
shares used in calculation of basic earnings per share |
|
|
25.9 |
|
|
|
25.7 |
|
|
|
25.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.18 |
|
|
$ |
0.28 |
|
|
$ |
1.39 |
|
Total adjustments |
|
|
0.05 |
|
|
|
0.05 |
|
|
|
(0.92 |
) |
Non-GAAP - diluted |
|
$ |
0.23 |
|
|
$ |
0.33 |
|
|
$ |
0.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of
shares used in calculation of diluted earnings per share |
|
|
26.2 |
|
|
|
26.5 |
|
|
|
26.1 |
|
Explanation of Key Performance
Metrics
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. NRS’
recurring revenue is NRS’ revenue in accordance with GAAP excluding
revenue from POS terminal sales. 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.
net2phone-UCaaS’ 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-UCaaS’ revenues and direct cost
of revenues are strong indications of the top-line growth and
performance of the business.
Supplemental Information
* NRS’ recurring revenue is a key performance
metric. Please refer to the Explanation of Key Performance Metrics
above for an explanation of this metric.
** net2phone subscription revenue is a key
performance metric. Please refer to the Explanation of Key
Performance Metrics above for an explanation of this metric.
*** Throughout this release, Adjusted EBITDA,
Non-GAAP net income 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 earlier in this
release for an explanation of these terms and their respective
reconciliations to the most directly comparable GAAP measure.
**** NRS’ Monthly Average Recurring Revenue per
Terminal is a key performance metric. Please refer to the
Explanation of Key Performance Metrics above for an explanation of
this metric.
# # #
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