Executive Summary / Key Takeaways

• IDT Corporation is successfully transforming into a diversified fintech and cloud communications powerhouse, with its high-margin NRS, BOSS Money, and net2phone segments driving robust growth and profitability.
• Fiscal Year 2025 saw record consolidated adjusted EBITDA of $129 million, a 43% increase year-over-year, with management projecting further growth to $141-$145 million in fiscal 2026.
• Strategic investments in AI-powered solutions, such as net2phone's AI Agent and Coach, and platform enhancements like NRS's delivery integrations and Panther POS, are expanding addressable markets and improving unit economics.
• The company maintains a strong balance sheet with $253.8 million in cash, cash equivalents, debt securities, and current equity investments as of July 31, 2025, and no outstanding debt, enabling organic growth and opportunistic capital allocation.
• While managing the expected decline in its Traditional Communications segment, IDT's focus on profitable growth and technological differentiation positions it for continued value creation, despite competitive pressures and foreign exchange headwinds.

A Diversified Growth Story Unfolds

IDT Corporation, founded in 1990 as International Discount Telephone, has evolved significantly from its origins in international call re-origination services. After going public in 1996 and listing on the NYSE in 2001, the company strategically divested non-core assets, including stakes in net2phone and IDT Entertainment, to sharpen its focus. This strategic evolution laid the groundwork for its current incarnation as a provider of fintech and communications solutions, primarily targeting underserved consumer and B2B markets. IDT's overarching strategy is to maximize synergies among its core strategic assets—its popular BOSS consumer brands, leading B2B brands like NRS and net2phone, extensive retail networks, and global technology infrastructure—to achieve exceptional growth and profitability.

The company's high-margin growth businesses—National Retail Solutions (NRS), BOSS Money, and net2phone—have been developed organically, largely financed by the cash flows generated from its more mature Traditional Communications segment. This disciplined approach has allowed IDT to avoid debt financing and dilutive capital raises, a notable differentiator in a capital-intensive industry. These three growth businesses are now cash-flow positive, contributing to improved consolidated bottom-line performance, a strengthened balance sheet, and a consistent return of value to stockholders through share repurchases and quarterly dividends, which were initiated in 2024 and increased in March 2025. This trend is expected to continue as these high-margin segments become increasingly significant contributors to both top-line and bottom-line results.

Technological Edge: Fueling Next-Generation Solutions

IDT's competitive advantage is deeply rooted in its proprietary technology and continuous innovation across its segments, enabling it to offer differentiated solutions.

The National Retail Solutions (NRS) segment leverages a purpose-built platform tailored for independent retailers, including convenience stores, bodegas, liquor, and tobacco stores. Its integrated POS hardware and software provide essential operational tools such as inventory management, sales tracking, and price book management. A key differentiator is the 15-inch customer-facing screen on each NRS terminal, which serves as a digital retail media platform for advertising. Through NRS Insights, the company licenses first-party transaction data, filling a critical "blind spot" for consumer-packaged goods brands and marketers seeking reach into urban, multicultural consumer markets often underserved by traditional data syndicators. As of July 31, 2025, NRS boasted approximately 37,200 active terminals, a significant increase from 32,100 a year prior, demonstrating strong market penetration. Recent innovations include integrating with online ordering and delivery platforms like DoorDash (DASH), with a pilot program already processing over 2,000 weekly delivery orders for about 100 retailers. The introduction of self-ordering kiosks and the tablet-based Panther POS system (with iOS development and "Pay-on-the-Tablet" functionality planned by fiscal year-end) is designed to enhance efficiency and significantly increase merchant services transactions, as customers are more likely to use cards at kiosks.

In the Fintech segment, BOSS Money operates on a proprietary, internally developed, and scalable digital platform. This platform is lauded by customers for its ease of use, reliability, and robust customer service, facilitating cross-border money transfers to 50 destination countries. The company is actively exploring new technologies, including stable coin transfers and in-country wallets linked to Visa cards, aiming to improve the user experience and generate interchange revenue. These initiatives are critical for reducing cross-border friction and increasing profitability in the rapidly evolving digital payments landscape.

net2phone is at the forefront of AI-powered communications solutions. Its Unified Communications as a Service (UCaaS) offering provides conversational continuity across multiple channels and devices, featuring voice management, unlimited international calling to over 40 countries, messaging, and video conferencing via net2phone Huddle, which now includes real-time AI summaries and transcripts. The platform seamlessly integrates with leading business communication and CRM platforms like Microsoft Teams (MSFT), Slack (CRM), Salesforce, and Zoho. The Contact Center as a Service (CCaaS) solution, uContact, offers omnichannel capabilities, workflows, and gamification, tailored for call centers ranging from 20 to 1,000 agents. In fiscal 2025, net2phone launched two significant AI-powered offerings: the net2phone AI Agent and net2phone Coach. The AI Agent is an autonomous, customer-facing solution designed to expertly handle routine and complex sales, support, and administrative tasks across web, phone, and chat channels. Management highlights its ability to drive "significant, sustained reductions in operating cost and substantial increases in productivity while freeing employees to focus on higher value challenges." It leverages conversational AI and machine learning to perform tasks from scheduling appointments to processing orders, following business rules and external APIs. The net2phone Coach is a workforce intelligence and coaching platform that uses real-time AI-powered insights to support employee performance, analyzing calls, SMS, chats, emails, and video meetings for response time, tone, sentiment, and performance trends. This technology directly addresses the "biggest drawback of remote work—a lack of supervision and coaching." These AI initiatives are expected to significantly enhance net2phone's competitive moat, drive average revenue per user (ARPU) growth, and contribute to expanding profitability.

Competitive Arena: Strategic Positioning and Differentiation

IDT operates in highly competitive markets, facing both large, established players and agile startups. Its strategy hinges on identifying and serving underserved niches where its technological advantages and cost structure can provide a decisive edge.

In the POS market, NRS competes with nationwide providers like Square (SQ), Toast (TOST), Lightspeed (LSPD), Clover (FI), and NCR (VYX), which typically target larger retail chains or specific segments like sit-down restaurants. NRS differentiates itself by offering a purpose-built hardware and software package specifically tailored to the needs of independent convenience, bodega, liquor, and tobacco stores, many of which serve foreign-born communities. Its transparent payment processing pricing, acceptance of Electronic Benefit Transfer (EBT), and attractive SaaS fees (enabled by its scale) provide a compelling alternative to competitors. While NRS expects increased direct competition as it expands into adjacent markets, its established direct sales and marketing capabilities, coupled with its unique reach into urban consumer markets for advertising, position it strongly.

The money transfer industry is intensely competitive, with participants ranging from global banks and digital remittance providers like Xoom (a PayPal (PYPL) subsidiary), Wise, Remitly (RELY), and Sendwave, to traditional remitters such as Western Union (WU), Ria (EEFT), MoneyGram (MGI), Intermex (IMXI), and Viamericas. BOSS Money's competitive strengths include its established BOSS brand, which has built trust within immigrant communities for over a decade. The company leverages its extensive BOSS customer ecosystem (BOSS Revolution and IDT Digital Payments users) to significantly lower customer acquisition costs through cross-product marketing. Unlike many competitors who rely on lines of credit, IDT's strong balance sheet provides ready access to capital, allowing BOSS Money to fund its working capital needs without incurring additional financing costs, thereby enhancing its profitability. While Mexico is a dominant corridor for many U.S. money transfer operations, it is not yet a top-three corridor for IDT, presenting a significant growth opportunity for market share capture.

net2phone faces formidable competition in the UCaaS space from companies like RingCentral (RNG), 8x8 (EGHT), Crexendo (CXDO), Vonage (ERIC), Dialpad, and Nextiva, and in AI agent solutions from specialists like Lindy or Phonely. Many of these rivals possess more recognized brands, larger sales forces, and more developed product sets. However, net2phone's proprietary cloud-based product suite, including its advanced CCaaS offering (uContact), white-glove customer service, deep localization, and a "One World, One Platform" approach for consistent global feature deployment, provide distinct advantages. Its platform is specifically designed to empower channel partners, and its growing network of over 2,500 active partners, complemented by an emergent direct-to-consumer strategy, gives it significant distribution power.

The Traditional Communications segment, particularly BOSS Revolution and IDT Global, operates in markets characterized by fierce price competition and structural declines in international voice calling. This is driven by the proliferation of unlimited calling plans from wireless carriers and the increasing adoption of free over-the-top (OTT) voice and video messaging services like WhatsApp (META) and FaceTime (AAPL). Despite these headwinds, IDT Global maintains a competitive edge through its ability to generate originating minutes from the BOSS Revolution business, which serves as a valuable, negotiable asset in wholesale carrier agreements. Its proprietary VoIP software enables scalable operations at a lower cost than many competitors, supported by an extensive global network of interconnections.

Financial Momentum: Accelerating Profitability and Cash Generation

IDT has demonstrated robust financial performance, particularly in fiscal year 2025, reflecting the successful execution of its growth strategy and operational efficiencies. For the fiscal year ended July 31, 2025, IDT reported consolidated revenues of $1.23 billion, a 2.1% increase from $1.21 billion in fiscal 2024, marking its first annual revenue increase since 2021. Gross profit surged 14% year-over-year to $446.19 million, with the gross profit margin expanding to a record 36.23%. This strong margin expansion underscores the favorable product mix and operational leverage from its growth businesses. Consolidated income from operations for fiscal 2025 dramatically increased by 55% to $100.42 million, up from $64.75 million in fiscal 2024. Adjusted EBITDA, a key profitability metric, soared 43% to a record $129 million for fiscal 2025, compared to $90 million in fiscal 2024. Net income attributable to IDT Corporation common stockholders rose 18.1% to $76.09 million, translating to GAAP EPS of $3.01, up from $2.54 in fiscal 2024.

Segment-wise, NRS revenue grew 24.90% to $128.80 million in fiscal 2025, with income from operations reaching $27.80 million. The Fintech segment's revenue increased 28.10% to $154.60 million, achieving a significant turnaround from a loss to an income from operations of $15.40 million in fiscal 2025. net2phone's revenue grew 6.70% to $87.90 million, with income from operations improving to $4.90 million. Even the Traditional Communications segment, despite a 4.40% revenue decline to $860.20 million, saw its income from operations increase by 17.90% to $66.50 million, demonstrating effective cost management.

Operating cash flow for fiscal 2025 was $127.06 million, a substantial increase from $78.19 million in fiscal 2024, highlighting the company's robust cash generation capabilities. Free cash flow also saw a significant jump to $106.29 million in fiscal 2025 from $59.27 million in fiscal 2024.

Capital Allocation and Balance Sheet Strength

IDT maintains a remarkably strong financial position. As of July 31, 2025, the company held $253.8 million in cash, cash equivalents, debt securities, and current equity investments, with virtually no outstanding debt. This robust liquidity provides significant strategic flexibility, enabling IDT to fund its organic growth initiatives and pursue opportunistic acquisitions without external financing. The company explicitly states its policy to fund share buybacks with excess cash, not borrowed funds, reinforcing its conservative financial management.

The nature of the BOSS Money business, with its weekly working capital cycle, often leads to fluctuations in reported cash balances, as large amounts (typically $30 million to $40 million) are prefunded to global payout networks ahead of weekends. This operational requirement is seamlessly managed by IDT's strong balance sheet, a distinct competitive advantage that allows it to avoid the financing costs incurred by many competitors who rely on lines of credit.

IDT returned value to shareholders through its dividend program, increasing the quarterly cash dividend to $0.06 per share in March 2025. The company also engaged in share repurchases, buying back 221,823 shares for $10.1 million in fiscal 2025. While additional buybacks were paused in the second half of fiscal 2025 due to an acquisition opportunity that did not materialize, IDT remains committed to opportunistic repurchases as part of its capital allocation strategy.

Outlook and Growth Catalysts

IDT enters fiscal 2026 with strong momentum across its growth segments. Management projects consolidated adjusted EBITDA for fiscal 2026 to be between $141 million and $145 million, representing a 7% to 10% increase from fiscal 2025 levels. This guidance reflects confidence in the continued scaling of NRS, BOSS Money, and net2phone, alongside disciplined management of the Traditional Communications segment.

For NRS, the outlook includes continued expansion of its POS network by approximately 500 terminals per month, or 6,000 annually. This growth will be fueled by increased adoption of NRS Pay, migration of retailers to premium SaaS plans, and the successful rollout of new features like integrated delivery services and the Panther POS system. NRS's EBITDA is expected to grow another 30% in fiscal 2026.

BOSS Money is projected to deliver more than $10 million in EBITDA for fiscal 2025, more than double its 2024 performance. The focus on optimizing "gross profit per transaction" (GMPT) in the retail channel, coupled with continued heavy investment in the digital channel, is expected to drive its stand-alone adjusted EBITDA margin to 15% to 20% in the long term, comparable to other industry leaders. New initiatives like stable coin transfers and in-country digital wallets are anticipated to further enhance profitability and user experience.

net2phone is poised for continued growth, particularly with its AI-powered offerings. Management expects AI-enabled offerings to account for 30% of sales by fiscal 2026. The AI Agent and the forthcoming "Coach" product are critical catalysts for increasing ARPU and expanding margins. While foreign exchange headwinds in Latin America may continue to mask reported revenue growth in U.S. dollar terms, local currency growth remains robust, and net2phone's disciplined cost management and strategic investments in customer acquisition (approximately $20 million to $25 million annually) are expected to drive margin expansion, especially as the mix shifts towards higher-margin CCaaS customers.

The Traditional Communications segment is expected to see a moderation in its EBITDA decline for fiscal 2025, with projections around $5 million to $6 million, significantly less than the $11 million decline in fiscal 2024. This improvement is attributed to extensive cost-cutting measures and strategic pricing changes in the IDT Digital Payments business, which is now in a faster-growth mode.

Risks and Challenges

Despite its strong trajectory, IDT faces several pertinent risks. The company's reliance on immigrant communities for its BOSS Money, BOSS Revolution, and IDT Digital Payments businesses exposes it to potential impacts from changes in immigration policies, economic conditions, and job opportunities. While management remains cautiously optimistic, any tightening of immigration laws or enforcement could affect customer spending patterns.

Foreign currency fluctuations, particularly the strengthening U.S. dollar against Latin American currencies, continue to be a headwind for net2phone's reported revenues and profitability. While local currency growth remains strong, these translational impacts can obscure underlying performance.

The rapidly evolving competitive landscape in fintech and cloud communications, coupled with the structural decline in legacy international voice calling, presents ongoing challenges. IDT must continuously innovate and adapt its offerings to maintain its competitive edge against larger, well-resourced players and agile startups. Furthermore, the company faces risks from cyberattacks, network disruptions, and potential technology failures, which could impact operations, customer trust, and financial results. Regulatory changes, including increasing scrutiny on anti-money laundering (AML) and consumer protection in money transfer services, as well as new excise taxes on remittances, could increase compliance costs and affect profitability.

Conclusion

IDT Corporation stands at a pivotal juncture, successfully executing a strategic transformation that is yielding accelerating profitability and robust cash flow. By organically cultivating high-margin growth businesses in NRS, BOSS Money, and net2phone, and leveraging cash from its mature Traditional Communications segment, IDT has built a resilient and diversified portfolio. Its technological leadership, particularly in AI-powered communication solutions and specialized POS platforms, provides a strong competitive moat in underserved markets. The company's strong balance sheet and disciplined capital allocation further underpin its investment thesis, enabling continued strategic investments and consistent shareholder returns. While challenges such as foreign exchange volatility and intense competition persist, IDT's clear strategic roadmap, commitment to innovation, and focus on profitable growth position it as a compelling investment opportunity poised for sustained value creation in the dynamic fintech and communications sectors.