IDT CORP
For the period ended Apr 30, 2024. Filed Jun 10, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Apr 30, 2024 · Filed Jun 10, 2024
IDT$82.17+0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-01-31; filed 2024-03-11.
0001493152-24-009529
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-04-30; filed 2024-06-10.
0001493152-24-023350
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 98 previous paragraphs and 106 current paragraphs.
43 unchanged; 52 reworded; 9 added; 3 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 14 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
From and after February 1, 2024, we reclassified most of our technology and development expenses from “Selling, general and administrative” expense to a new “Technology and development” expense caption in the consolidated statements of income and reclassified an amount that was immaterial in all periods to “Direct cost of revenues.” “Technology and development” expense consists primarily of personnel-related expenses for employees involved in the research, design, development, and maintenance of both new and existing technology products and services, including salaries, benefits, and stock-based compensation. “Technology and development” expense also includes costs for software licenses, subscription services, and other companywide technology tools dedicated for use by our technology and development teams. The costs of third-party contractors that support our technology and development are also included. “Technology and development” expense also includes the costs of product and engineering teams used to support the development of both internal infrastructure and internal-use software, to the extent such costs do not qualify for capitalization. The expenses reclassified to “Direct cost of revenues” are the costs of cloud computing arrangements hosted by a vendor in the production environment incurred by the net2phone segment and NRS, and net2phone’s colocation costs for data centers where net2phone is not fully operational in the cloud. Finally, depreciation and amortization of capitalized internal use software costs was reclassified from “Selling, general and administrative” expense to “Technology and development” expense.
Current report
The following table shows the amounts that were reclassified in the three and nine months ended April 30, 2023 to conform to the current year’s presentation:
Current report
Technology and Development. Technology and development expense increased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 primarily due to increases in employee compensation and consulting expense.
Current report
Fintech’s other revenues increased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 primarily because of increases in IDT Financial Services’ revenues.
Current report
Technology and Development. Technology and development expense increased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 primarily due to increases in employee compensation and depreciation and amortization expense.
Current report
Technology and Development. Technology and development expense increased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 primarily due to increases in employee compensation and depreciation and amortization expense.
Current report
Technology and Development. Technology and development expense decreased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 primarily due to decreases in depreciation and amortization and software license and maintenance expense.
Current report
Other Operating Expenses. Other operating expenses included $3.9 million in the three and nine months ended April 30, 2023 for the indemnification of one of our cable telephony customers related to patent infringement claims brought against the customer. On May 8, 2023, we and the customer agreed to a release from the indemnification agreement in exchange for $3.9 million. Also, in the three and nine months ended April 30, 2023, we increased the estimated fair value of acquisition-related contingent consideration by $0.2 million.
Current report
On April 6, 2023, in accordance with an Agreement and Plan of Merger dated as of April 5, 2023, the EMI merged with and into its subsidiary, with the subsidiary being the surviving corporation. Effective with the merger, among other things, the notes receivable from the EMI that we held with an aggregate principal and accrued interest of $4.0 million were converted into shares of the EMI’s convertible preferred stock. In addition, each of the EMI’s shareholders agreed to purchase additional shares of EMI’s convertible preferred stock, for which we paid $0.2 million in April 2023 and $0.7 million in May 2023 to purchase the additional shares.
Removed paragraphs (3)
Previous report
COVID-19
Previous report
In May 2023, the World Health Organization declared an end to COVID-19 as a public health emergency. As of the date of this Quarterly Report, we continue to monitor the situation. We cannot predict with certainty the potential impact of COVID-19 if it re-invigorates on our results of operations, financial condition, or cash flows.
Previous report
nm—not meaningful
Reworded paragraphs (52)
Previous wording
In November 2023, the FASB issued ASU No. 2023-07,Segment Reporting (Topic 280),*Improvements to Reportable Segment Disclosures,*to improve the disclosures about reportable segments and add more detailed information about a reportable segment’s expenses. The amendments in the ASU require public entities to disclose on an annual and interim basis significant segment expenses that are regularly provided to the chief operating decision maker, or CODM, and included within each reported measure of segment profit or loss, other segment items by reportable segment, the title and position of the CODM, and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The ASU does not change the definition of a segment, the method for determining segments, the criteria for aggregating operating segments into reportable segments, or the current specifically enumerated segment expenses that are required to be disclosed. We will adopt the amendments in this ASU for our fiscal year beginning on August 1, 2024 applied retrospectively to all prior periods presented. We are evaluating the impact that this ASU will have on our consolidated financial statements.
Current wording
In November 2023, the FASB issued ASU No. 2023-07,Segment Reporting (Topic 280),*Improvements to Reportable Segment Disclosures,*to improve the disclosures about reportable segments and add more detailed information about a reportable segment’s expenses. The amendments in the ASU require public entities to disclose on an annual and interim basis significant segment expenses that are regularly provided to the chief operating decision maker, or CODM, and included within each reported measure of segment profit or loss, other segment items by reportable segment, the title and position of the CODM, and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The ASU does not change the definition of a segment, the method for determining segments, the criteria for aggregating operating segments into reportable segments, or the current specifically enumerated segment expenses that are required to be disclosed. We will adopt the amendments in this ASU for our fiscal year beginning on August 1, 2024, and for interim periods beginning on August 1, 2025, applied retrospectively to all prior periods presented. We are evaluating the impact that this ASU will have on our consolidated financial statements.
Previous wording
As of January 31, 2024, we owned 94.0% of the outstanding shares of our subsidiary, net2phone 2.0, Inc., or net2phone 2.0, which owns and operates the net2phone segment, and 81.2% of the outstanding shares of National Retail Solutions, or NRS, and, on a fully diluted basis assuming all the vesting criteria related to various rights granted have been met and other assumptions, we would own 90.8% of net2phone 2.0 and 78.9% of NRS.
Current wording
As of April 30, 2024, we owned 94.0% of the outstanding shares of our subsidiary, net2phone 2.0, Inc., or net2phone 2.0, which owns and operates the net2phone segment, and 81.2% of the outstanding shares of National Retail Solutions, or NRS, and, on a fully diluted basis assuming all the vesting criteria related to various rights granted have been met and other assumptions, we would own 90.1% of net2phone 2.0 and 78.9% of NRS.
Previous wording
From and after August 1, 2023, we include depreciation and amortization in “Direct cost of revenues” and “Selling, general and administrative” expense. Prior to August 1, 2023, depreciation and amortization was a separate caption in the consolidated statements of income. In addition, from and after August 1, 2023, we are reporting gross profit and gross margin percentage in our “Results of Operations” in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Depreciation and amortization expense of $5.0 million in the three months ended January 31, 2023 was reclassified to conform to the current year’s presentation as follows: $1.1 million was reclassified to “Direct cost of revenues” and $3.9 million was reclassified to “Selling, general and administrative” expense, and depreciation and amortization expense of $9.8 million in the six months ended January 31, 2023 was reclassified to conform to the current year’s presentation as follows: $2.1 million was reclassified to “Direct cost of revenues” and $7.7 million was reclassified to “Selling, general and administrative” expense. Depreciation and amortization expense included in our business segments was as follows:
Current wording
From and after August 1, 2023, we include depreciation and amortization in “Direct cost of revenues” and “Selling, general and administrative” expense. Prior to August 1, 2023, depreciation and amortization was a separate caption in the consolidated statements of income. In addition, from and after August 1, 2023, we are reporting gross profit and gross margin percentage in our “Results of Operations” in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP.
Previous wording
Our results of operations discussion include the following performance metrics:
Current wording
Our results of operations discussion includes the following performance metrics:
Previous wording
Three and Six Months Ended January 31, 2024 Compared to Three and Six Months Ended January 31, 2023
Current wording
Three and Nine Months Ended April 30, 2024 Compared to Three and Nine Months Ended April 30, 2023
Previous wording
NRS, which represented 8.5% and 6.3% of our total revenues in the three months ended January 31, 2024 and 2023, respectively, and 8.2% and 6.2% of our total revenues in the six months ended January 31, 2024 and 2023, respectively, is an operator of a nationwide POS network providing independent retailers with store management software, electronic payment processing, and other ancillary merchant services. NRS’ POS platform provides marketers with digital out-of-home advertising and transaction data.
Current wording
NRS, which represented 8.6% and 6.0% of our total revenues in the three months ended April 30, 2024 and 2023, respectively, and 8.4% and 6.1% of our total revenues in the nine months ended April 30, 2024 and 2023, respectively, is an operator of a nationwide POS network providing independent retailers with store management software, electronic payment processing, and other ancillary merchant services. NRS’ POS platform provides marketers with digital out-of-home advertising and transaction data.
Previous wording
*Revenues.*Revenues increased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 driven primarily by revenue growth from NRS’ merchant services, as well as the expansion of NRS’ POS network.
Current wording
*Revenues.*Revenues increased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 driven primarily by revenue growth from NRS’ merchant services, as well as the expansion of NRS’ POS network.
Previous wording
Direct Cost of Revenues. Direct cost of revenues increased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 primarily due to the increase in the direct costs of NRS’ POS terminal sales.
Current wording
Direct Cost of Revenues. Direct cost of revenues increased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 primarily due to the increase in the direct costs of NRS’ POS terminal sales.
Previous wording
Selling, General and Administrative. Selling, general and administrative expense increased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 primarily due to increases in sales commissions and employee compensation. As a percentage of NRS’ revenue, NRS’ selling, general and administrative expense increased to 68.3% from 59.9% in the three months ended January 31, 2024 and 2023, respectively, and increased to 66.4% from 60.4% in the six months ended January 31, 2024 and 2023, respectively.
Current wording
Selling, General and Administrative. Selling, general and administrative expense increased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 primarily due to increases in sales commissions, employee compensation, and bad debt expense. As a percentage of NRS’ revenue, NRS’ selling, general and administrative expense decreased to 60.9% from 64.1% in the three months ended April 30, 2024 and 2023, respectively, and increased to 59.4% from 57.6% in the nine months ended April 30, 2024 and 2023, respectively.
Previous wording
Fintech, which represented 9.4% and 6.5% of our total revenues in the three months ended January 31, 2024 and 2023, respectively, and 9.1% and 6.3% of our total revenues in the six months ended January 31, 2024 and 2023, respectively, is comprised of: (i) BOSS Money, a provider of international money remittance and related value/payment transfer services; and (ii) other, significantly smaller, financial services businesses, including Leaf Global Fintech Corporation, or Leaf, a provider of digital wallet services in emerging markets, a variable interest entity, or VIE, that operates money transfer businesses, and IDT Financial Services Limited, or IDT Financial Services, our Gibraltar-based bank.
Current wording
Fintech, which represented 10.5% and 7.3% of our total revenues in the three months ended April 30, 2024 and 2023, respectively, and 9.6% and 6.6% of our total revenues in the nine months ended April 30, 2024 and 2023, respectively, is comprised of: (i) BOSS Money, a provider of international money remittance and related value/payment transfer services; and (ii) other, significantly smaller, financial services businesses, including Leaf Global Fintech Corporation, or Leaf, a provider of digital wallet services in emerging markets, a variable interest entity, or VIE, that operates money transfer businesses, and IDT Financial Services Limited, or IDT Financial Services, our Gibraltar-based bank.
Previous wording
*Revenues.*Revenues from BOSS Money increased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 primarily because of increased transaction volume in BOSS Money’s retail and digital channels. BOSS Money continues to benefit from cross-marketing to BOSS Revolution Calling customers, the expansion of its retail agent network, and ongoing efforts to enhance user-experience within the BOSS Money and BOSS Calling apps.
Current wording
*Revenues.*Revenues from BOSS Money increased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 primarily because of increased transaction volume in BOSS Money’s retail and digital channels. BOSS Money continues to benefit from cross-marketing to BOSS Revolution Calling customers, the expansion of its retail agent network, and enhanced user-experience within the BOSS Money and BOSS Calling apps.
Previous wording
Direct Cost of Revenues. Direct cost of revenues increased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 primarily due to an increase BOSS Money’s direct cost of revenues, which reflected the increase in BOSS Money’s revenue.
Current wording
Direct Cost of Revenues. Direct cost of revenues increased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 primarily due to increases in BOSS Money’s and IDT Financial Services’ direct cost of revenues, which reflected the increase in revenues.
Previous wording
Selling, General and Administrative. Selling, general and administrative expense increased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 primarily due to increases in debit and credit card processing charges, employee compensation, and bank fees. The increase in card processing charges was the result of increased credit and debit card transactions through our BOSS Money app and other digital channels. As a percentage of Fintech’s revenue, Fintech’s selling, general and administrative expense decreased to 60.1% from 66.1% in the three months ended January 31, 2024 and 2023, respectively, and decreased to 60.6% from 62.4% in the six months ended January 31, 2024 and 2023, respectively.
Current wording
Selling, General and Administrative. Selling, general and administrative expense increased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 primarily due to increases in debit and credit card processing charges, employee compensation, bank fees, and marketing expense. The increase in card processing charges was the result of increased credit and debit card transactions through our BOSS Money app and other digital channels. As a percentage of Fintech’s revenue, Fintech’s selling, general and administrative expense decreased to 48.4% from 55.2% in the three months ended April 30, 2024 and 2023, respectively, and decreased to 50.8% from 54.3% in the nine months ended April 30, 2024 and 2023, respectively.
Previous wording
Other Operating Gain. In the three and six months ended January 31, 2023, Leaf received payments of $0.3 million and $0.4 million, respectively, from government grants for the development and commercialization of blockchain-backed financial technologies. In addition, in the six months ended January 31, 2023, we determined that the requirements for a portion of the contingent consideration payments related to the Leaf acquisition would not be met. We recognized a gain of $1.6 million on the write-off of this contingent consideration payment obligation.
Current wording
Other Operating (Expense) Gains. In March 2024, we completed a portion of the integration of the Leaf Wallet platform into the BOSS Money app, including replacing the Leaf tradename with BOSS Money. The Leaf tradename balance of $0.1 million was written-off in the three months ended April 30, 2024. In the nine months ended April 30, 2023, Leaf received payments of $0.3 million from government grants for the development and commercialization of blockchain-backed financial technologies. In addition, in the nine months ended April 30, 2023, we determined that the requirements for a portion of the contingent consideration payments related to the Leaf acquisition would not be met. We recognized a gain of $1.6 million on the write-off of this contingent consideration payment obligation.
Previous wording
The net2phone segment, which represented 6.9% and 5.7% of our total revenues in the three months ended January 31, 2024 and 2023, respectively, 6.8% and 5.5% of our total revenues in the six months ended January 31, 2024 and 2023, respectively, is comprised of net2phone’s cloud communications and contact center offerings.
Current wording
The net2phone segment, which represented 6.9% and 6.2% of our total revenues in the three months ended April 30, 2024 and 2023, respectively, and 6.8% and 5.7% of our total revenues in the nine months ended April 30, 2024 and 2023, respectively, is comprised of net2phone’s integrated cloud communications and contact center services.
Previous wording
*Revenues.*net2phone’s revenues increased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 driven primarily by the growth in subscription revenue in the U.S. and Latin American markets, which reflected the increase in seats served at January 31, 2024 compared to January 31, 2023.
Current wording
*Revenues.*net2phone’s revenues increased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 driven primarily by the growth in subscription revenue in the U.S. and Latin American markets, which reflected the increase in seats served at April 30, 2024 compared to April 30, 2023.
Previous wording
Direct Cost of Revenues. Direct cost of revenues increased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 primarily due to the increase in revenues, with the largest increase in the U.S. markets. net2phone’s focus on mid-sized businesses, multi-channel strategies, and localized offerings generated revenue growth that exceeded the increase in direct cost of revenues.
Current wording
Direct Cost of Revenues. Direct cost of revenues increased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 primarily due to the increase in revenues, with the largest increase in the U.S. markets. net2phone’s focus on mid-sized businesses, multi-channel strategies, and localized offerings generated revenue growth that exceeded the increase in direct cost of revenues.
Previous wording
Selling, General and Administrative. Selling, general and administrative expense increased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 primarily due to increases in employee compensation, sales commissions, and consulting expense. As a percentage of net2phone’s revenues, net2phone’s selling, general and administrative expense decreased to 79.2% from 83.2% in the three months ended January 31, 2024 and 2023, respectively, and decreased to 80.1% from 84.8% in the six months ended January 31, 2024 and 2023, respectively.
Current wording
Selling, General and Administrative. Selling, general and administrative expense increased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 primarily due to increases in employee compensation and sales commissions. As a percentage of net2phone’s revenues, net2phone’s selling, general and administrative expense decreased to 63.1% from 67.7% in the three months ended April 30, 2024 and 2023, respectively, and decreased to 64.7% from 68.7% in the nine months ended April 30, 2024 and 2023, respectively.
Previous wording
Other Operating Gain. In the three and six months ended January 31, 2024, we determined that the requirement for a contingent consideration payment related to an acquisition in a prior period would not be met. We recognized a gain of $0.1 million on the write-off of this contingent consideration payment obligation.
Current wording
Other Operating Gain. In the nine months ended April 30, 2024, we determined that the requirement for a contingent consideration payment related to an acquisition in a prior period would not be met. We recognized a gain of $0.1 million on the write-off of this contingent consideration payment obligation.
Previous wording
The Traditional Communications segment, which represented 75.2% and 81.5% of our total revenues in the three months ended January 31, 2024 and 2023, respectively, and 75.9% and 82.0% of our total revenues in the six months ended January 31, 2024 and 2023, respectively, includes: (i) IDT Digital Payments, which enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts; (ii) BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States and Canada; and (iii) IDT Global, a wholesale provider of international voice and SMS termination and outsourced traffic management solutions to telecoms worldwide. Traditional Communications also includes other small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode.
Current wording
The Traditional Communications segment, which represented 74.0% and 80.5% of our total revenues in the three months ended April 30, 2024 and 2023, respectively, and 75.2% and 81.6% of our total revenues in the nine months ended April 30, 2024 and 2023, respectively, includes: (i) IDT Digital Payments, which enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts; (ii) BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States and Canada; and (iii) IDT Global, a wholesale provider of international voice and SMS termination and outsourced traffic management solutions to telecoms worldwide. Traditional Communications also includes other small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode.
Previous wording
*Revenues.*Revenues from IDT Digital Payments decreased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 primarily from the deterioration of a key international corridor that was particularly impactful to revenues in the wholesale channel.
Current wording
*Revenues.*Revenues from IDT Digital Payments slightly increased in the three months ended April 30, 2024 compared to the similar period in fiscal 2023 primarily from an increase in revenues in the direct-to-consumer channel. Revenues from IDT Digital Payments decreased in the nine months ended April 30, 2024 compared to the similar period in fiscal 2023 primarily from the deterioration of a key international corridor that was particularly impactful to revenues in the wholesale channel, however, this corridor has not been a significant factor since the second quarter of fiscal 2024.
Previous wording
Revenues and minutes of use from BOSS Revolution Calling decreased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023. BOSS Revolution Calling continues to be impacted by persistent, market-wide trends, including the proliferation of unlimited calling plans offered by wireless carriers and mobile virtual network operators, and the increasing penetration of free and paid over-the-top voice, video conferencing, and messaging services.
Current wording
Revenues and minutes of use from BOSS Revolution Calling decreased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023. BOSS Revolution Calling continues to be impacted by persistent, market-wide trends, including the proliferation of unlimited calling plans offered by wireless carriers and mobile virtual network operators, and the increasing penetration of free and paid over-the-top voice, video conferencing, and messaging services.
Previous wording
Revenues and minutes of use from IDT Global decreased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 as communications globally continued to transition away from international voice calling. This trend was accelerated by the impact of COVID-19 as business communications shifted from calling to video conferencing and other collaboration platforms. We expect that IDT Global will continue to be adversely impacted by these trends, and minutes of use and revenues will likely continue to decline from quarter-to-quarter, as we seek to maximize economics rather than necessarily sustain minutes of use or revenues.
Current wording
Revenues and minutes of use from IDT Global decreased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 as communications globally continued to transition away from international voice calling. This trend was accelerated by the impact of COVID-19 as business communications shifted from calling to video conferencing and other collaboration platforms. We expect that IDT Global will continue to be adversely impacted by these trends, and minutes of use and revenues will likely continue to decline from quarter-to-quarter, as we seek to maximize economics rather than necessarily sustain minutes of use or revenues.
Previous wording
Direct Cost of Revenues. Direct cost of revenues decreased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 primarily due to the decreases in minutes of use and revenues.
Current wording
Direct Cost of Revenues. Direct cost of revenues decreased in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 primarily due to the decreases in minutes of use and revenues.
Previous wording
Selling, General and Administrative. Selling, general and administrative expense decreased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 primarily due to decreases in employee compensation, sales commissions, marketing expense, and debit and credit card processing charges, partially offset by increases in stock-based compensation. As a percentage of Traditional Communications’ revenue, Traditional Communications’ selling, general and administrative expense increased to 12.3% from 11.5% in the three months ended January 31, 2024 and 2023, respectively, and increased to 11.9% from 11.3% in the six months ended January 31, 2024 and 2023, respectively.
Current wording
Selling, General and Administrative. Selling, general and administrative expense increased in the three months ended April 30, 2024 compared to the similar period in fiscal 2023 primarily due to increases in stock-based compensation, marketing expense, and employee compensation, partially offset by decreases in sales commissions, postage and printing expense, and debit and credit card processing charges. Selling, general and administrative expense decreased in the nine months ended April 30, 2024 compared to the similar period in fiscal 2023 primarily due to decreases in sales commissions, employee compensation, and debit and credit card processing charges, partially offset by an increase in stock-based compensation. As a percentage of Traditional Communications’ revenue, Traditional Communications’ selling, general and administrative expense increased to 10.2% from 9.0% in the three months ended April 30, 2024 and 2023, respectively, and increased to 9.6% from 8.9% in the nine months ended April 30, 2024 and 2023, respectively.
Previous wording
Severance Expense. In the three months ended January 31, 2024 and 2023, Traditional Communications incurred severance expense of $0.4 million and $0.2 million, respectively, and in the six months ended January 31, 2024 and 2023, Traditional Communications incurred severance expense of $0.9 million and $0.3 million, respectively.
Current wording
Severance Expense. In the three months ended April 30, 2024 and 2023, Traditional Communications incurred severance expense of $0.4 million and $0.1 million, respectively, and in the nine months ended April 30, 2024 and 2023, Traditional Communications incurred severance expense of $1.3 million and $0.5 million, respectively.
Previous wording
General and Administrative. Corporate general and administrative expense increased in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 primarily because of increases in audit and accounting fees and employee compensation. As a percentage of our consolidated revenues, Corporate general and administrative expense was 1.1% and 0.8% in the three months ended January 31, 2024 and 2023, respectively, and 1.0% and 0.7% in the six months ended January 31, 2024 and 2023, respectively.
Current wording
General and Administrative. Corporate general and administrative expense was substantially unchanged in the three months ended April 30, 2024 compared to the similar period in fiscal 2023 primarily because increases in audit and accounting fees and employee compensation were mostly offset by a decrease in stock-based compensation expense. Corporate general and administrative expense increased in the nine months ended April 30, 2024 compared to the similar period in fiscal 2023 primarily because of increases in audit and accounting fees and employee compensation. As a percentage of our consolidated revenues, Corporate general and administrative expense was 0.8% and 0.8% in the three months ended April 30, 2024 and 2023, respectively, and 0.9% and 0.7% in the nine months ended April 30, 2024 and 2023, respectively.
Previous wording
Other Operating (Expense) Gain, net. As discussed in Note 16 to the Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report, we (as well as other defendants) were named in a class action on behalf of the stockholders of our former subsidiary, Straight Path Communications Inc., or Straight Path. We incurred legal fees of $2.6 million and $1.6 million in the three months ended January 31, 2024 and 2023, respectively, and $2.8 million and $4.1 million in the six months ended January 31, 2024 and 2023, respectively, related to this action. Also, we recorded offsetting gains from insurance claims for this matter of $2.2 million and $1.3 million in the three months ended January 31, 2024 and 2023, respectively, and $2.9 million and $3.0 million in the six months ended January 31, 2024 and 2023, respectively. On October 3, 2023, the Court of Chancery of the State of Delaware dismissed all claims against us, and found that, contrary to the plaintiffs’ allegations, the class suffered no damages. The plaintiffs will have 30 days from entry of the final order to file an appeal.
Current wording
Other Operating Expense, net. As discussed in Note 16 to the Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report, we (as well as other defendants) were named in a class action on behalf of the stockholders of our former subsidiary, Straight Path Communications Inc., or Straight Path. We incurred legal fees of $3.2 million and $1.0 million in the three months ended April 30, 2024 and 2023, respectively, and $5.9 million and $5.1 million in the nine months ended April 30, 2024 and 2023, respectively, related to this action. Also, we recorded offsetting gains from insurance claims for this matter of nil and $0.4 million in the three months ended April 30, 2024 and 2023, respectively, and $2.9 million and $3.3 million in the nine months ended April 30, 2024 and 2023, respectively. On October 3, 2023, the Court of Chancery of the State of Delaware dismissed all claims against us, and found that, contrary to the plaintiffs’ allegations, the class suffered no damages. The plaintiffs will have 30 days from entry of the final order to file an appeal.
Previous wording
Stock-Based Compensation Expense. Stock-based compensation expense included in consolidated selling, general and administrative expense was $2.5 million and $1.3 million in the three months ended January 31, 2024 and 2023, respectively, and $3.3 million and $1.9 million in the six months ended January 31, 2024 and 2023, respectively. The increases in stock-based compensation expense were primarily due to certain equity grants to Bill Pereira, our President and Chief Operating Officer, in the three months ended January 31, 2024, including deferred stock units, or DSUs, that, upon vesting, represent the right to receive shares of our Class B common stock, and shares of Class B common stock of net2phone 2.0, as well as a contingent bonus subject to the completion of certain financial milestones that may be paid, at Mr. Pereira’s option, in either shares of the Company’s Class B common stock or cash.
Current wording
Stock-Based Compensation Expense. Total stock-based compensation expense included in consolidated selling, general and administrative expense and technology and development expense was $2.1 million and $1.7 million in the three months ended April 30, 2024 and 2023, respectively, and $5.4 million and $3.5 million in the nine months ended April 30, 2024 and 2023, respectively. The increases in stock-based compensation expense were primarily due to certain equity grants to Bill Pereira, our President and Chief Operating Officer, in the second quarter of fiscal 2024, including deferred stock units, or DSUs, that, upon vesting, represent the right to receive shares of our Class B common stock, and shares of Class B common stock of net2phone 2.0, as well as a contingent bonus subject to the completion of certain financial milestones that may be paid, at Mr. Pereira’s option, in either shares of the Company’s Class B common stock or cash.
Previous wording
At January 31, 2024, there was an aggregate of $2.0 million of total unrecognized compensation cost related to Mr. Pereira’s contingent bonus, which is expected to be recognized over the estimated period that we expect the milestones to be satisfied, which ends in the first quarter of fiscal 2025.
Current wording
At April 30, 2024, there was an aggregate of $0.9 million of total unrecognized compensation cost related to Mr. Pereira’s contingent bonus, which is expected to be recognized over the estimated period that we expect the milestones to be satisfied, which ends in the first quarter of fiscal 2025.
Previous wording
At January 31, 2024, there was $1.5 million of total unrecognized compensation cost related to non-vested DSUs under our equity incentive program adopted on November 30, 2022, which is being recognized on a graded vesting basis over the requisite service periods that end in February 2025. On February 21, 2024, the second vesting date under the program, in accordance with the program and based on certain elections made by grantees, we issued 53,706 shares of our Class B common stock for vested DSUs. Subject to continued full time employment or other services to us, the remaining 147,540 DSUs are scheduled to vest on February 25, 2025.
Current wording
At April 30, 2024, there was $0.9 million of total unrecognized compensation cost related to non-vested DSUs under our equity incentive program adopted on November 30, 2022, which is being recognized on a graded vesting basis over the requisite service periods that end in February 2025. On February 21, 2024, the second vesting date under the program, in accordance with the program and based on certain elections made by grantees, we issued 53,706 shares of our Class B common stock for vested DSUs. Subject to continued full time employment or other services to us, the remaining 147,540 DSUs are scheduled to vest on February 25, 2025.
Previous wording
Effective as of June 30, 2022, restricted shares of NRS’ Class B common stock were granted to certain NRS employees. The restrictions on the shares will lapse in three installments on each of June 1, 2024, 2026, and 2027. The estimated fair value of the restricted shares on the grant date was $3.3 million, which is being recognized over the vesting period. At January 31, 2024, unrecognized compensation cost related to NRS’ non-vested Class B common stock was an aggregate of $2.3 million. The unrecognized compensation cost is expected to be recognized over the remaining vesting period that ends in fiscal 2027.
Current wording
Effective as of June 30, 2022, restricted shares of NRS’ Class B common stock were granted to certain NRS employees. The restrictions on the shares lapse in three installments, the first was on June 1, 2024, and the others are June 1, 2026 and June 1, 2027. The estimated fair value of the restricted shares on the grant date was $3.3 million, which is being recognized over the vesting period. At April 30, 2024, unrecognized compensation cost related to NRS’ non-vested Class B common stock was an aggregate of $2.1 million. The unrecognized compensation cost is expected to be recognized over the remaining vesting period that ends in fiscal 2027.
Previous wording
Other Income (Expense), net. Other income (expense), net consists of the following:
Current wording
Other Expense, net. Other expense, net consists of the following:
Previous wording
We have an investment in shares of convertible preferred stock of a communications company (the equity method investee, or EMI). As of January 31, 2024 and 2023, our ownership was 33.4% and 26.57%, respectively, of the EMI’s outstanding shares on an as converted basis. We account for this investment using the equity method since we can exercise significant influence over the operating and financial policies of the EMI but do not have a controlling interest. We determined that on the dates of the acquisitions of the EMI’s shares, there were differences between our investment in the EMI and our proportional interest in the equity of the EMI of an aggregate of $8.2 million, which represented the share of the EMI’s customer list on the dates of the acquisitions attributed to our interest in the EMI. These basis differences are being amortized over the 6-year estimated life of the customer list. “Equity in the net loss of investee” includes the amortization of equity method basis difference.
Current wording
We have an investment in shares of convertible preferred stock of a communications company (the equity method investee, or EMI). As of April 30, 2024 and 2023, our ownership was 33.4% and 33.3%, respectively, of the EMI’s outstanding shares on an as converted basis. We account for this investment using the equity method since we can exercise significant influence over the operating and financial policies of the EMI but do not have a controlling interest. We determined that on the dates of the acquisitions of the EMI’s shares, there were differences between our investment in the EMI and our proportional interest in the equity of the EMI of an aggregate of $8.2 million, which represented the share of the EMI’s customer list on the dates of the acquisitions attributed to our interest in the EMI. These basis differences are being amortized over the 6-year estimated life of the customer list. “Equity in the net loss of investee” includes the amortization of equity method basis difference.
Previous wording
Provision for Income Taxes. The change in income tax expense in the three and six months ended January 31, 2024 compared to the similar periods in fiscal 2023 was primarily due to differences in the amount of taxable income earned in the various taxing jurisdictions.
Current wording
Provision for Income Taxes. The change in income tax expense in the three and nine months ended April 30, 2024 compared to the similar periods in fiscal 2023 was primarily due to differences in the amount of taxable income earned in the various taxing jurisdictions.
Previous wording
Net Income Attributable to Noncontrolling Interests. The change in the net income attributable to noncontrolling interests in the three months ended January 31, 2024 compared to the similar period in fiscal 2023 was primarily due to changes in amounts attributable to the noncontrolling interests in NRS, net2phone 2.0, and Sochitel UK Ltd. The change in the net income attributable to noncontrolling interests in the six months ended January 31, 2024 compared to the similar period in fiscal 2023 was primarily due to changes in amounts attributable to the noncontrolling interests in net2phone 2.0 and the VIE, partially offset by the change in the amounts attributable to the noncontrolling interests in NRS.
Current wording
Net Income Attributable to Noncontrolling Interests. The change in the net income attributable to noncontrolling interests in the three months ended April 30, 2024 compared to the similar period in fiscal 2023 was primarily due to the change in the amount attributable to the noncontrolling interests in Sochitel UK Ltd., partially offset by the changes in the amounts attributable to the noncontrolling interests in NRS and the VIE. The change in the net income attributable to noncontrolling interests in the nine months ended April 30, 2024 compared to the similar period in fiscal 2023 was primarily due to changes in amounts attributable to the noncontrolling interests in Sochitel UK Ltd. and net2phone 2.0, partially offset by the changes in the amounts attributable to the noncontrolling interests in NRS and the VIE.
Previous wording
At January 31, 2024, we had cash, cash equivalents, debt securities, and current equity investments of $177.6 million and working capital (current assets in excess of current liabilities) of $122.5 million.
Current wording
At April 30, 2024, we had cash, cash equivalents, debt securities, and current equity investments of $174.0 million and working capital (current assets in excess of current liabilities) of $130.7 million.
Previous wording
We treat unrestricted cash and cash equivalents held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC as substantially restricted and unavailable for other purposes. At January 31, 2024, “Cash and cash equivalents” in our consolidated balance sheet included an aggregate of $39.8 million held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC that was unavailable for other purposes.
Current wording
We treat unrestricted cash and cash equivalents held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC as substantially restricted and unavailable for other purposes. At April 30, 2024, “Cash and cash equivalents” in our consolidated balance sheet included an aggregate of $42.2 million held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC that was unavailable for other purposes.
Previous wording
Gross trade accounts receivable increased to $43.7 million at January 31, 2024 from $37.7 million at July 31, 2023 primarily due to amounts billed in the six months ended January 31, 2024 that were greater than collections during the period, partially offset by changes in foreign currency exchange rates.
Current wording
Gross trade accounts receivable increased to $45.7 million at April 30, 2024 from $37.7 million at July 31, 2023 primarily due to amounts billed in the nine months ended April 30, 2024 that were greater than collections during the period, partially offset by changes in foreign currency exchange rates.
Previous wording
Deferred revenue arises from sales of prepaid products and varies from period to period depending on the mix and the timing of revenues. Deferred revenue decreased to $33.8 million at January 31, 2024 from $35.3 million at July 31, 2023 primarily due to decreases in the BOSS Revolution Calling and IDT Digital Payments deferred revenue balances.
Current wording
Deferred revenue arises from sales of prepaid products and varies from period to period depending on the mix and the timing of revenues. Deferred revenue decreased to $32.1 million at April 30, 2024 from $35.3 million at July 31, 2023 primarily due to decreases in the BOSS Revolution Calling and IDT Digital Payments deferred revenue balances.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Depreciation and amortization expense included in our business segments was as follows:
Current report — wording carried from elsewhere
In April 2024, each of the EMI’s shareholders including us agreed to purchase additional shares of the EMI’s convertible preferred stock. We paid $0.3 million in May 2024 and we are committed to pay $0.2 million to purchase the additional shares.