IDT CORP

Previous wording

The following information should be read in conjunction with the accompanying consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended July 31, 2024 (or the 2024 Form 10-K) as filed with the U.S. Securities and Exchange Commission (or SEC).

Current wording

The following information should be read in conjunction with the accompanying consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended July 31, 2024 (or our 2024 Form 10-K) as filed with the U.S. Securities and Exchange Commission (or SEC).

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends,” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks, and uncertainties that could result in those differences include, but are not limited to, those discussed under Item 1A to Part I “Risk Factors” in our 2024 Form 10-K. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the SEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our 2024 Form 10-K.

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends,” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks, and uncertainties that could result in those differences include, but are not limited to, those discussed under Item 1A to Part I “Risk Factors” in our 2024 Form 10-K and Item 1A to Part II “Risk Factors” of this Quarterly Report. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the SEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our 2024 Form 10-K.

Previous wording

As of October 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 81.5% of the outstanding shares of National Retail Solutions, or NRS. On a fully diluted basis assuming all the vesting criteria related to various rights granted have been met, we would own 90.3% of the equity of net2phone 2.0 and 79.3% of NRS.

Current wording

As of January 31, 2025, 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 81.5% of the outstanding shares of National Retail Solutions, or NRS. On a fully diluted basis assuming all the vesting criteria related to various rights granted have been met, we would own 90.2% of the equity of net2phone 2.0 and 79.3% of the equity of NRS.

Previous wording

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.” The following table shows the amounts that were reclassified in the three months ended October 31, 2023 to conform to the current period’s presentation:

Current wording

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.” The following table shows the amounts that were reclassified in the three and six months ended January 31, 2024 to conform to the current period’s presentation:

Previous wording

Three Months Ended October 31, 2024 Compared to Three Months Ended October 31, 2023

Current wording

Three and Six Months Ended January 31, 2025 Compared to Three and Six Months Ended January 31, 2024

Previous wording

NRS, which represented 9.8% and 8.0% of our total revenues in the three months ended October 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 10.9% and 8.5% of our total revenues in the three months ended January 31, 2025 and 2024, respectively, and 10.3% and 8.2% of our total revenues in the six months ended January 31, 2025 and 2024, 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 months ended October 31, 2024 compared to the similar period in fiscal 2024 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 six months ended January 31, 2025 compared to the similar periods in fiscal 2024 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 decreased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 primarily due to the decrease in the direct costs of NRS’ POS terminal sales.

Current wording

Direct Cost of Revenues. Direct cost of revenues decreased in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024 primarily due to the decreases in the direct costs of NRS’ POS terminal sales.

Previous wording

Selling, General and Administrative. Selling, general and administrative expense increased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 primarily due to increases in sales commissions, employee compensation, legal fees, marketing expense, and bad debt expense. As a percentage of NRS’ revenue, NRS’ selling, general and administrative expense increased to 62.6% from 56.7% in the three months ended October 31, 2024 and 2023, respectively.

Current wording

Selling, General and Administrative. Selling, general and administrative expense increased in the three months ended January 31, 2025 compared to the similar period in fiscal 2024 primarily due to increases in sales commissions, employee compensation, and bad debt expense. Selling, general and administrative expense increased in the six months ended January 31, 2025 compared to the similar period in fiscal 2024 primarily due to increases in sales commissions, employee compensation, legal fees, marketing expense, and bad debt expense. As a percentage of NRS’ revenue, NRS’ selling, general and administrative expense decreased to 57.6% from 60.4% in the three months ended January 31, 2025 and 2024, respectively, and increased to 60.0% from 58.6% in the six months ended January 31, 2025 and 2024, respectively.

Previous wording

Technology and Development. Technology and development expense increased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 primarily due to increases in employee compensation and depreciation and amortization expense, partially offset by a decrease in consulting expense.

Current wording

Technology and Development. Technology and development expense increased in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024 primarily due to increases in employee compensation and depreciation and amortization expense, partially offset by a decrease in consulting expense.

Previous wording

Fintech, which represented 12.0% and 8.8% of our total revenues in the three months ended October 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 a variable interest entity, or VIE, that processes disbursement payments, and IDT Financial Services Limited, or IDT Financial Services, our Gibraltar-based bank.

Current wording

Fintech, which represented 12.1% and 9.4% of our total revenues in the three months ended January 31, 2025 and 2024, respectively, and 12.1% and 9.1% of our total revenues in the six months ended January 31, 2025 and 2024, 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 a variable interest entity, or VIE, that processes disbursement payments, and IDT Financial Services Limited, or IDT Financial Services, our Gibraltar-based bank.

Previous wording

*Revenues.*Revenues from BOSS Money increased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 primarily because of increased transaction volume in BOSS Money’s digital and retail channels. BOSS Money continues to benefit from cross-marketing to BOSS Revolution customers and the expansion of its retail agent network.

Current wording

*Revenues.*Revenues from BOSS Money increased in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024 primarily because of increased transaction volume at BOSS Money, which included increases in both its digital and retail channels. BOSS Money continues to expand to new destinations and to build out its extensive payout network in destination markets.

Previous wording

Direct Cost of Revenues. Direct cost of revenues increased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 primarily due to an increase in 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 six months ended January 31, 2025 compared to the similar periods in fiscal 2024 primarily due to an increase in BOSS Money’s direct cost of revenues, which was due to the increase in BOSS Money’s revenue.

Previous wording

Selling, General and Administrative. Selling, general and administrative expense increased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 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 43.3% from 53.3% in the three months ended October 31, 2024 and 2023, respectively.

Current wording

Selling, General and Administrative. Selling, general and administrative expense increased in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024 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 44.2% from 51.2% in the three months ended January 31, 2025 and 2024, respectively, and to 43.8% from 52.2% in the six months ended January 31, 2025 and 2024, respectively.

Previous wording

Technology and Development. Technology and development expense increased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 primarily due to an increase in depreciation and amortization expense, partially offset by a decrease in employee compensation.

Current wording

Technology and Development. Technology and development expense decreased in the three months ended January 31, 2025 compared to the similar period in fiscal 2024 primarily due to a decrease in employee compensation expense. Technology and development expense increased in the six months ended January 31, 2025 compared to the similar period in fiscal 2024 primarily due to increases in depreciation and amortization expense and cloud services expense, partially offset by a decrease in employee compensation.

Previous wording

The net2phone segment, which represented 7.0% and 6.6% of our total revenues in the three months ended October 31, 2024 and 2023, respectively, is comprised of net2phone’s integrated cloud communications and contact center services.

Current wording

The net2phone segment, which represented 7.1% and 6.9% of our total revenues in the three months ended January 31, 2025 and 2024, respectively, and 7.0% and 6.8% of our total revenues in the six months ended January 31, 2025 and 2024, respectively, is comprised of net2phone’s integrated cloud communications and contact center services.

Previous wording

*Revenues.*net2phone’s revenues increased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 driven primarily by the growth in subscription revenue primarily in the U.S. and Mexico, which reflected the increase in seats served at October 31, 2024 compared to October 31, 2023.

Current wording

*Revenues.*net2phone’s revenues increased in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024 driven primarily by the growth in subscription revenue, most significantly in the U.S. and Latin America markets, which reflected the increase in seats served at January 31, 2025 compared to January 31, 2024.

Previous wording

Direct Cost of Revenues. Direct cost of revenues increased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 primarily due to the increase in revenues, with the largest increase in the U.S. market. 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 six months ended January 31, 2025 compared to the similar periods in fiscal 2024 primarily due to the increase in revenues, with the largest increase in the U.S. market. net2phone’s revenue growth exceeded the increase in direct cost of revenues.

Previous wording

Selling, General and Administrative. Selling, general and administrative expense decreased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 primarily due to decreases in marketing expense, employee compensation, and consulting expense, partially offset by an increase in sales commissions. As a percentage of net2phone’s revenues, net2phone’s selling, general and administrative expense decreased to 60.8% from 66.6% in the three months ended October 31, 2024 and 2023, respectively.

Current wording

Selling, General and Administrative. Selling, general and administrative expense decreased in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024 primarily due to decreases in marketing expense and consulting expense, partially offset by increases in sales commissions. As a percentage of net2phone’s revenues, net2phone’s selling, general and administrative expense decreased to 60.3% from 64.6% in the three months ended January 31, 2025 and 2024, respectively, and to 60.5% from 65.6% in the six months ended January 31, 2025 and 2024, respectively.

Previous wording

The Traditional Communications segment, which represented 71.2% and 76.6% of our total revenues in the three months ended October 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, 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 69.9% and 75.2% of our total revenues in the three months ended January 31, 2025 and 2024, respectively, and 70.6% and 75.9% of our total revenues in the six months ended January 31, 2025 and 2024, 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, 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 increased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 primarily due to increases in revenues from the direct-to-consumer and enterprise and wholesale channels, partially offset by a decrease in revenues from the retail channel.

Current wording

*Revenues.*Revenues from IDT Digital Payments increased in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024 primarily due to increases in revenues from the direct-to-consumer and enterprise and wholesale channels, partially offset by a decrease in revenues from the retail channel.

Previous wording

Revenues and minutes of use from BOSS Revolution decreased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024. BOSS Revolution 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 decreased in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024. BOSS Revolution 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 from IDT Global slightly increased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024. Minutes of use from IDT Global slightly decreased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024. IDT Global’s revenues and minutes of use generally decline each fiscal quarter as communications globally continue 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 from IDT Global increased in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024, although IDT Global’s minutes of use decreased in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024. IDT Global mitigated the impacts of the ongoing industry-wide declines in paid-minute voice through new service offerings and a traffic mix shift to higher margin routes. However, we expect IDT Global to 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 months ended October 31, 2024 compared to the similar period in fiscal 2024 primarily due to the decrease in BOSS Revolution’s minutes of use and direct cost of revenues.

Current wording

Direct Cost of Revenues. Direct cost of revenues decreased in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024 primarily due to the decreases in BOSS Revolution’s minutes of use and direct cost of revenues.

Previous wording

Selling, General and Administrative. Selling, general and administrative expense decreased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 primarily due to decreases in sales commissions and employee compensation, partially offset by increases in marketing expense and stock-based compensation. As a percentage of Traditional Communications’ revenue, Traditional Communications’ selling, general and administrative expense increased to 9.1% from 8.9% in the three months ended October 31, 2024 and 2023, respectively.

Current wording

Selling, General and Administrative. Selling, general and administrative expense decreased in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024 primarily due to decreases in stock-based compensation, sales commissions, employee compensation, and debit and credit card processing charges, partially offset by increases in marketing expense and legal fees. As a percentage of Traditional Communications’ revenue, Traditional Communications’ selling, general and administrative expense decreased to 9.2% from 9.6% in the three months ended January 31, 2025 and 2024, respectively, and decreased to 9.1% from 9.3% in the six months ended January 31, 2025 and 2024, respectively.

Previous wording

Technology and Development. Technology and development expense decreased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 primarily due to decreases in depreciation and amortization expense, employee compensation, and software license and maintenance expense.

Current wording

Technology and Development. Technology and development expense decreased in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024 primarily due to decreases in employee compensation, software license and maintenance expense, and depreciation and amortization expense.

Previous wording

Severance Expense. In the three months ended October 31, 2024 and 2023, Traditional Communications incurred severance expense of $0.2 million and $0.5 million, respectively.

Current wording

Severance Expense. In the three months ended January 31, 2025 and 2024, Traditional Communications incurred severance expense of $0.2 million and $0.4 million, respectively, and in the six months ended January 31, 2025 and 2024, Traditional Communications incurred severance expense of $0.5 million and $0.9 million, respectively.

Previous wording

General and Administrative. Corporate general and administrative expense increased in the three months ended October 31, 2024 compared to the similar period in fiscal 2024 primarily because of an increase in audit and accounting fees, partially offset by a decrease in employee compensation. As a percentage of our consolidated revenues, Corporate general and administrative expense was 0.9% in both the three months ended October 31, 2024 and 2023.

Current wording

General and Administrative. Corporate general and administrative expense decreased in the three months ended January 31, 2025 compared to the similar period in fiscal 2024 primarily because of a decrease in audit and accounting fees, partially offset by an increase in legal fees. Corporate general and administrative expense decreased in the six months ended January 31, 2025 compared to the similar period in fiscal 2024 primarily because of a decrease in employee compensation, partially offset by an increase in legal fees. As a percentage of our consolidated revenues, Corporate general and administrative expense was 1.0% and 1.1% in the three months ended January 31, 2025 and 2024, respectively, and 1.0% and 1.0% in the six months ended January 31, 2025 and 2024, respectively.

Previous wording

Other Operating 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 nil and $0.2 million in the three months ended October 31, 2024 and 2023, respectively, related to this action. Also, we recorded offsetting gains from insurance claims for this matter of nil and $0.7 million in the three months ended October 31, 2024 and 2023, respectively. In fiscal 2024, we received the final payment from our insurance policy for these claims. 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) 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 $6,000 and $2.6 million in the three months ended January 31, 2025 and 2024, respectively, and $6,000 and $2.8 million in the six months ended January 31, 2025 and 2024, respectively, related to this action. Also, we recorded offsetting gains from insurance claims for this matter of nil and $2.2 million in the three months ended January 31, 2025 and 2024, respectively, and nil and $2.9 million in the six months ended January 31, 2025 and 2024, respectively. In fiscal 2024, we received the final payment from our insurance policy for these claims. 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. On January 14, 2025, the plaintiff filed a notice of appeal of the Final Order and Judgment to the Supreme Court of the State of Delawareto appeal the Final Order and Judgment.

Previous wording

Stock-Based Compensation Expense. Total stock-based compensation expense included in consolidated selling, general and administrative expense and technology and development expense was $0.9 million and $0.8 million in the three months ended October 31, 2024 and 2023, respectively. The increase in stock-based compensation expense was primarily due to certain equity grants to Bill Pereira, our President and Chief Operating Officer, in the second quarter of fiscal 2024, including a contingent bonus subject to the completion of certain financial milestones that may be paid, at Mr. Pereira’s option, in either shares of our Class B common stock or cash. The increase in stock-based compensation expense was partially offset by a decrease in stock-based compensation expense from the grant of deferred stock units, or DSUs, that, upon vesting, will entitle the grantees to receive shares of our Class B common stock. As of October 31, 2024, there was $1.0 million of total unrecognized compensation cost related to non-vested DSUs, which is being recognized on a graded vesting basis over the requisite service periods that end in October 2027.

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 $0.9 million and $2.5 million in the three months ended January 31, 2025 and 2024, respectively, and $1.8 million and $3.3 million in the six months ended January 31, 2025 and 2024, respectively. The decrease in stock-based compensation expense was primarily due to a decrease in expense related to certain equity grants made in the three months ended January 31, 2024 to Bill Pereira, our President and Chief Operating Officer, and a decrease in stock-based compensation expense from the grant of deferred stock units, or DSUs, that, upon vesting, will entitle the grantees to receive shares of our Class B common stock. As of January 31, 2025, there was $0.7 million of total unrecognized compensation cost related to non-vested DSUs, which is being recognized on a graded vesting basis over the requisite service periods that end in October 2027.

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 lapse in three installments, the first was on June 1, 2024, and the others are June 1, 2026 and June 1, 2027. As of October 31, 2024, unrecognized compensation cost related to NRS’ non-vested Class B common stock was an aggregate of $1.8 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. As of January 31, 2025, unrecognized compensation cost related to NRS’ non-vested Class B common stock was an aggregate of $1.6 million. The unrecognized compensation cost is expected to be recognized over the remaining vesting period that ends in fiscal 2027.

Previous wording

As of October 31, 2024, there was an aggregate of $0.8 million in unrecognized compensation cost related to non-vested stock options and restricted stock, which is expected to be recognized over the remaining vesting periods that end in fiscal 2028.

Current wording

As of January 31, 2025, there was an aggregate of $0.7 million in unrecognized compensation cost related to non-vested stock options and restricted stock, which is expected to be recognized over the remaining vesting periods that end in fiscal 2028.

Previous wording

Other Expense, net. Other expense, net consists of the following:

Current wording

Other Income (Expense), net. Other income (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 October 31, 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.

Current wording

We have an investment in shares of convertible preferred stock of a communications company (the equity method investee, or EMI). As of both January 31, 2025 and 2024, our ownership was 33.4% 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 months ended October 31, 2024 compared to the similar period in fiscal 2024 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 six months ended January 31, 2025 compared to the similar periods in fiscal 2024 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 October 31, 2024 compared to the similar period in fiscal 2024 was primarily due to increases in net income attributable to the noncontrolling interests in net2phone 2.0, NRS, and the VIE, partially offset by a decrease in net income attributable to the noncontrolling interests in Sochitel.

Current wording

Net Income Attributable to Noncontrolling Interests. The change in the net income attributable to noncontrolling interests in the three and six months ended January 31, 2025 compared to the similar periods in fiscal 2024 was primarily due to increases in net income attributable to the noncontrolling interests in net2phone 2.0, NRS, and the VIE, partially offset by a decrease in net income attributable to the noncontrolling interests in Sochitel.

Previous wording

At October 31, 2024, we had cash, cash equivalents, debt securities, and current equity investments of $180.4 million and working capital (current assets in excess of current liabilities) of $161.9 million.

Current wording

At January 31, 2025, we had cash, cash equivalents, debt securities, and current equity investments of $171.1 million and working capital (current assets in excess of current liabilities) of $183.9 million.

Previous wording

Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, generally trade accounts receivable and trade accounts payable. The decrease in net cash provided by operating activities to $0.2 million from $14.8 million in the three months ended October 31, 2024 and 2023, respectively, predominantly reflects the timing of our payments to cover anticipated BOSS Money disbursement prefunding.

Current wording

Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, generally trade accounts receivable and trade accounts payable. The decrease in net cash provided by operating activities to $20.3 million in the six months ended January 31, 2025 from $43.3 in the six months ended January 31, 2024 predominantly reflects the timing of our payments to cover anticipated BOSS Money disbursement prefunding.

Previous wording

Gross trade accounts receivable decreased to $48.2 million at October 31, 2024 from $48.6 million at July 31, 2024 primarily due to collections in the three months ended October 31, 2024 that were greater than amounts billed during the period, as well as from changes in foreign currency exchange rates.

Current wording

Gross trade accounts receivable increased to $52.4 million at January 31, 2025 from $48.6 million at July 31, 2024 primarily due to amounts billed in the six months ended January 31, 2025 that were greater than collections during the period.

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 $29.3 million at October 31, 2024 from $30.4 million at July 31, 2024 primarily due to decreases in the BOSS Revolution’s and traditional calling cards’ 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 $28.4 million at January 31, 2025 from $30.4 million at July 31, 2024 primarily due to decreases in BOSS Revolution’s and traditional calling cards’ deferred revenue balances.