IDT CORP

Previous wording

This Annual Report 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 this Annual Report. The forward-looking statements are made as of the date of this Annual 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 Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our reports on Forms 10-Q and 8-K.

Current wording

This Annual Report 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 this Annual Report. The forward-looking statements are made as of the date of this Annual 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 Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our periodic and current reports on Forms 10-Q and 8-K.

Previous wording

For our annual goodwill impairment test as of May 1, 2024, we performed quantitative assessments of our Retail Communications and net2phone reporting units and qualitative assessments for our Fintech and IDT Digital Payments reporting units. Our assessments did not indicate any goodwill impairment as of May 1, 2024. For the quantitative assessments, we calculated the fair value of the reporting unit using a discounted cash flow method as a form of the income approach. The discounted cash flow method is based on the present value of projected cash flows and a terminal value. The terminal value represents the expected normalized future cash flows of the reporting unit beyond the projection period. We use a discount rate based on the weighted-average cost of capital of comparable companies by Global Industry Classification Standard code that represents our estimate of the expected return a marketplace participant would have required.

Current wording

For our annual goodwill impairment test as of May 1, 2024, we performed quantitative assessments of our Retail Communications and net2phone reporting units and qualitative assessments for our Fintech and IDT Digital Payments reporting units. Our assessments did not indicate any goodwill impairment as of May 1, 2024. For the quantitative assessments, we calculated the fair value of the reporting unit using a discounted cash flow method as a form of the income approach. The discounted cash flow method is based on the present value of projected cash flows and a terminal value. The terminal value represents the expected normalized future cash flows of the reporting unit beyond the projection period. We used a discount rate based on the weighted-average cost of capital of comparable companies by Global Industry Classification Standard code that represented our estimate of the expected return a marketplace participant would have required.

Previous wording

Our allowance for credit losses was $6.4 million at July 31, 2024 and our allowance for doubtful accounts was $5.6 million at July 31, 2023. The allowance as a percentage of gross trade accounts receivable decreased to 13.1% at July 31, 2024 from 15.0% at July 31, 2023 because, at July 31, 2024 compared to July 31, 2023, gross trade accounts receivable increased 28.7% and the allowance increased 12.6%. The most significant increases in the trade accounts receivable balance at July 31, 2024 compared to July 31, 2023 were in NRS and IDT Global.

Current wording

Our allowance for credit losses was $9.1 million and $6.4 million at July 31, 2025 and 2024, respectively, partially due to an increase in credit losses related to ads and data. The allowance as a percentage of gross trade accounts receivable increased to 17.5% at July 31, 2025 from 13.1% at July 31, 2024 because, at July 31, 2025 compared to July 31, 2024, gross trade accounts receivable increased 7.0% and the allowance increased 43.2%. The most significant increase in the trade accounts receivable balance at July 31, 2025 compared to July 31, 2024 was in NRS.

Previous wording

On August 1, 2023, we adopted Accounting Standards Update, or ASU, No. 2016-13,Financial Instruments—Credit Losses (Topic 326),Measurement of Credit Losses on Financial Instruments. Effective with the adoption of ASU 2016-13, we record an expense based on a forward-looking current expected credit loss model to maintain our allowance for credit losses. When determining the allowance for trade accounts receivable, we consider the probability of recoverability of accounts receivable based on past experience, taking into account current collection trends and general economic factors, including bankruptcy rates. We also consider future economic trends to estimate expected credit losses over the lifetime of the asset. Credit risks are assessed based on historical write-offs, net of recoveries, as well as an analysis of the aged accounts receivable balances with allowances generally increasing as the receivable ages. Accounts receivable may be fully reserved for when specific collection issues are known to exist, such as pending bankruptcies. Account balances are written off against the allowance when it is determined that the receivable will not be recovered.

Current wording

For our allowance for trade accounts receivable, we record an expense based on a forward-looking current expected credit loss model to maintain our allowance for credit losses. We consider the probability of recoverability of accounts receivable based on past experience, considering current collection trends and general economic factors, including bankruptcy rates. We also consider future economic trends to estimate expected credit losses over the lifetime of the asset. Credit risks are assessed based on historical write-offs, net of recoveries, as well as an analysis of the aged accounts receivable balances with allowances generally increasing as the receivable ages. Accounts receivable may be fully reserved for when specific collection issues are known to exist, such as pending bankruptcies. Account balances are written off against the allowance when it is determined that the receivable will not be recovered.

Previous wording

The valuation allowance on our deferred income tax assets was $13.6 million and $10.6 million at July 31, 2024 and 2023, respectively. In fiscal 2024, we increased the valuation allowance by $3.0 million, which included the establishment of a valuation allowance of $3.5 million for deferred income tax assets that were not more likely than not going to be utilized prior to expiration, net of a decrease of $0.2 million due to the utilization or disposal of previously valued deferred income tax assets and a release of $0.3 million for profitability in the United Kingdom. In fiscal 2023, we decreased the valuation allowance by $1.0 million, which included a decrease of $2.8 million due to the utilization or disposal of previously valued deferred income tax assets and a release of $0.7 million for profitability in the United Kingdom, net of an establishment of $2.5 million for deferred income tax assets that were not more likely than not going to be utilized prior to expiration.

Current wording

The valuation allowance on our deferred income tax assets was $14.9 million and $13.6 million at July 31, 2025 and 2024, respectively. In fiscal 2025, we decreased the valuation allowance by $3.4 million, due to profitability in the United Kingdom, offset by $4.7 million of additions in other jurisdictions. In fiscal 2024, we increased the valuation allowance by $3.0 million, which included the establishment of a valuation allowance of $3.5 million for deferred income tax assets that were not more likely than not going to be utilized prior to expiration, net of a decrease of $0.2 million due to the utilization or disposal of previously valued deferred income tax assets and a release of $0.3 million for profitability in the United Kingdom.

Previous wording

Our 2017 FCC Form 499-A, which reported our calendar year 2016 revenue, was audited by the USAC. The USAC’s final decision imposed a $2.9 million charge on us for the Federal Telecommunications Relay Service, or TRS, Fund. We have appealed the USAC’s final decision to the FCC and we do not intend to remit payment for the TRS Fund fees unless and until a negative decision on our appeal has been issued. We have made certain changes to our filing policies and procedures for years that remain potentially under audit. At July 31, 2024 and 2023, our accrued expenses included $25.9 million and $26.8 million, respectively, for FCC-related regulatory fees for the year covered by the audit, as well as prior and subsequent years.

Current wording

Our 2017 FCC Form 499-A, which reported our calendar year 2016 revenue, was audited by the USAC. The USAC’s final decision imposed a $2.9 million charge on us for the Federal Telecommunications Relay Service, or TRS, Fund. We have appealed the USAC’s final decision to the FCC and we do not intend to remit payment for the TRS Fund fees unless and until a negative decision on our appeal has been issued. We have made certain changes to our filing policies and procedures for years that remain potentially under audit. At July 31, 2025 and 2024, our accrued expenses included $21.1 million and $25.9 million, respectively, for FCC-related regulatory fees for the year covered by the audit, as well as prior and subsequent years.

Previous wording

RECENTLY ISSUED ACCOUNTING STANDARDS NOT YET ADOPTED

Current wording

RECENTLY ISSUED ACCOUNTING STANDARD NOT YET ADOPTED

Previous wording

As of July 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 NRS, and, on a fully diluted basis assuming all the vesting criteria related to various rights granted have been met, we would own 90.0% of net2phone 2.0 and 79.3% of NRS.

Current wording

As of July 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 81.6% of the outstanding shares of NRS. On a fully diluted basis assuming all the vesting criteria related to various rights granted have been met, we would own 90.1% of the equity of net2phone 2.0 and 79.5% of the equity of NRS.

Previous wording

Our most significant customers typically include telecom operators to whom we provide wholesale services and distributors of our retail calling products. While they may vary from quarter to quarter, our five largest customers collectively accounted for 10.3%, 10.8%, and 12.5% of our consolidated revenues in fiscal 2024, fiscal 2023, and fiscal 2022, respectively. Our customers with the five largest receivables balance collectively accounted for 22.7% and 16.7% of our consolidated gross trade accounts receivable at July 31, 2024 and 2023, respectively. This concentration of customers increases our risk associated with nonpayment by those customers. In an effort to reduce our risk, we perform ongoing credit evaluations of our significant customers, and in some cases, do not offer credit terms to customers, choosing instead to require prepayment. Historically, when we have issued credit, we have not required collateral to support trade accounts receivable from our customers. However, when necessary, we have imposed stricter credit restrictions on our customers. In some cases, this has resulted in our sharply curtailing, or ceasing completely, sales to certain customers. We attempt to mitigate our credit risk related to specific IDT Global customers by also buying services from the customer, in order to create an opportunity to offset our payables and receivables with the customer. In this way, we can continue to sell services to these customers while reducing our receivable exposure risk. When it is practical to do so, we will increase our purchases from IDT Global customers with receivable balances that exceed our applicable payables in order to maximize the offset and reduce our credit risk.

Current wording

While they may vary from quarter to quarter, our five largest customers collectively accounted for 8.9%, 10.3%, and 10.8% of our consolidated revenues in fiscal 2025, fiscal 2024, and fiscal 2023, respectively. Our customers with the five largest receivables balance collectively accounted for 20.4% and 22.7% of our consolidated gross trade accounts receivable at July 31, 2025 and 2024, respectively. This concentration of customers increases our risk associated with nonpayment by those customers. In an effort to reduce our risk, we perform ongoing credit evaluations of our significant customers, and in some cases, do not offer credit terms to customers, choosing instead to require prepayment. Historically, when we have issued credit, we have not required collateral to support trade accounts receivable from our customers. However, when necessary, we have imposed stricter credit restrictions on our customers. In some cases, this has resulted in our sharply curtailing, or ceasing completely, sales to certain customers.

Previous wording

NRS uses two key metrics to measure the size of its customer base: active POS terminals and payment processing accounts. Active POS terminals are the number of POS terminals that have completed at least one transaction in the calendar month. It excludes POS terminals that have not been fully installed by the end of the month. Payment processing accounts are NRS PAY accounts that can generate revenue. It excludes accounts that have been approved but not activated. NRS’ recurring revenue is NRS’ revenue in accordance with U.S. GAAP, excluding its revenue from POS terminal sales.

Current wording

NRS uses three key metrics to measure the size of its customer base, including two that are non-GAAP measures: active POS terminals and payment processing accounts. Active POS terminals are the number of POS terminals that have completed at least one transaction in the calendar month. It excludes POS terminals that have not been fully installed by the end of the month. Payment processing accounts are accounts that can generate revenue. It excludes accounts that have been approved but not activated. In addition to the foregoing, NRS uses recurring revenue as a performance metric, which consist of NRS’ revenue in accordance with U.S. GAAP, excluding its revenue from POS terminal sales.

Previous wording

The trends and comparisons between periods for the number of active POS terminals, NRS PAY accounts, seats served, recurring revenue, and subscription revenue are used in the analysis of NRS’ or net2phone’s revenues and direct cost of revenues and are strong indications of the top-line growth and performance of the business.

Current wording

The trends and comparisons between periods for the number of active POS terminals, payment processing accounts, seats served, recurring revenue, and subscription revenue are used in the analysis of NRS’ or net2phone’s revenues and direct cost of revenues and are strong indications of the top-line growth and performance of the business.

Previous wording

NRS, which represented 8.6%, 6.2%, and 3.8% of our total revenues in fiscal 2024, fiscal 2023, and fiscal 2022, 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 10.5%, 8.6%, and 6.2% of our total revenues in fiscal 2025, fiscal 2024, and fiscal 2023, respectively, is an operator of a nationwide POS network providing independent retailers with POS equipment, store management software, electronic payment processing, and other ancillary merchant services. NRS’ POS platform also provides marketers with digital out-of-home advertising and transaction data.

Previous wording

Direct Cost of Revenues. Direct cost of revenues increased in fiscal 2024 compared to 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 fiscal 2025 compared to fiscal 2024 primarily due to the increases in the direct costs of NRS’ merchant services and advertising, partially offset by a decrease in the direct costs of NRS’ POS terminal sales.

Previous wording

Selling, General and Administrative. Selling, general and administrative expense increased in fiscal 2024 compared to 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 was 60.7%, 61.0%, and 55.3% in fiscal 2024, fiscal 2023, and fiscal 2022, respectively.

Current wording

Selling, General and Administrative. Selling, general and administrative expense increased in fiscal 2025 compared to fiscal 2024 primarily due to increases in sales commissions, bad debt expense, employee compensation, and marketing expense. The increase in bad debt expense was related to a large programmatic advertising partner. As a percentage of NRS’ revenue, NRS’ selling, general and administrative expense was 60.6%, 60.7%, and 61.0% in fiscal 2025, fiscal 2024, and fiscal 2023, respectively.

Previous wording

Technology and Development. Technology and development expense increased in fiscal 2024 compared to fiscal 2023 primarily due to increases in employee compensation and depreciation and amortization expense.

Current wording

Technology and Development. Technology and development expense increased in fiscal 2025 compared to fiscal 2024 primarily due to increases in employee compensation and depreciation and amortization expense, partially offset by a decrease in consulting expense.

Previous wording

Other Operating Expense. In fiscal 2024, NRS recorded expense of $0.2 million for capitalized internal use software costs for software that was taken out of service, as well as certain other assets no longer in use.

Current wording

Other Operating Expense. In fiscal 2025, we recorded an aggregate expense of $4.0 million related to the settlement of litigation, of which $2.4 million was included in the NRS segment and $1.6 million was included in Corporate. In fiscal 2024, NRS recorded expense of $0.2 million for the cost of capitalized internal use software and certain other assets that were no longer in use.

Previous wording

Fintech, which represented 10.0%, 7.0%, and 4.7% of our total revenues in fiscal 2024, fiscal 2023, and fiscal 2022, 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 operates money transfer businesses, and IDTFS, our Gibraltar-based bank.

Current wording

Fintech, which represented 12.6%, 10.0%, and 7.0% of our total revenues in fiscal 2025, fiscal 2024, and fiscal 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 (“VIE”), that processes disbursement payments, which we refer to as the Disbursement Payments VIE, (iii) IDT Financial Services Limited, or IDT Financial Services, a Gibraltar-based bank and (iv) IDT Services Limited (“IDTS”), a Malta-based electronic money institution.

Previous wording

Direct Cost of Revenues. Direct cost of revenues increased in fiscal 2024 compared to fiscal 2023 primarily due to increases in BOSS Money’s and IDTFS’ direct cost of revenues, which reflected the increases in revenues.

Current wording

Direct Cost of Revenues. Direct cost of revenues increased in fiscal 2025 compared to fiscal 2024 primarily due to an increase in BOSS Money’s direct cost of revenues, which reflected the increase in BOSS Money’s revenue.

Previous wording

Selling, General and Administrative. Selling, general and administrative expense increased in fiscal 2024 compared to fiscal 2023 primarily due to increases in debit and credit card processing charges, employee compensation, bank fees, and marketing expenses. 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 was 49.4%, 54.5%, and 61.2% in fiscal 2024, fiscal 2023, and fiscal 2022, respectively.

Current wording

Selling, General and Administrative. Selling, general and administrative expense increased in fiscal 2025 compared to fiscal 2024 primarily due to increases in debit and credit card processing charges, employee compensation, bank fees, and marketing expenses. 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 was 42.8%, 49.4%, and 54.5% in fiscal 2025, fiscal 2024, and fiscal 2023, respectively.

Previous wording

Other Operating Gain, net. In fiscal 2024 and fiscal 2023, we determined that the requirements for the contingent consideration payments related to the Leaf Global Fintech Corporation, or Leaf, acquisition would likely not be met. We recognized gains of $1.8 million and $1.6 million in fiscal 2024 and fiscal 2023, respectively, on the write-off of these contingent consideration payment obligations. In addition, in fiscal 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 fiscal 2024. In fiscal 2023, Leaf received $0.4 million from government grants for the development and commercialization of blockchain-backed financial technologies.

Current wording

Other Operating Gain, net. In fiscal 2024, we determined that the requirements for contingent consideration payments related to the Leaf Global Fintech Corporation, or Leaf, acquisition would not be met. We recognized a gain of $1.8 million on the write-off of these contingent consideration payment obligations. In addition, in fiscal 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 fiscal 2024.

Previous wording

The net2phone segment, which represented 6.8%, 5.8%, and 4.3% of our total revenues in fiscal 2024, fiscal 2023, and fiscal 2022, respectively, is comprised of net2phone’s integrated cloud communications and contact center services.

Current wording

The net2phone segment, which represented 7.1%, 6.8%, and 5.8% of our total revenues in fiscal 2025, fiscal 2024, and fiscal 2023, respectively, is comprised of net2phone’s integrated cloud communications and contact center services.

Previous wording

*Revenues.*net2phone’s revenues increased in fiscal 2024 compared to 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 July 31, 2024 compared to July 31, 2023.

Current wording

Revenues. net2phone’s revenues increased in fiscal 2025 compared to fiscal 2024 due to the growth in subscription revenue, most significantly in the U.S. market, and from its contact center services’ revenue, which reflected the increase in seats served at July 31, 2025 compared to July 31, 2024.

Previous wording

Direct Cost of Revenues. Direct cost of revenues increased in fiscal 2024 compared to fiscal 2023 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 fiscal 2025 compared to 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 increased in fiscal 2024 compared to 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 63.9% from 68.7% and 81.7% in fiscal 2024, fiscal 2023, and fiscal 2022, respectively.

Current wording

Selling, General and Administrative. Selling, general and administrative expense slightly decreased in fiscal 2025 compared to fiscal 2024 primarily due to decreases in marketing, bad debt, and consulting expenses, partially offset by increases in sales commissions and depreciation and amortization expenses. As a percentage of net2phone’s revenues, net2phone’s selling, general and administrative expense decreased to 59.6% from 63.9% and 68.7% in fiscal 2025, fiscal 2024, and fiscal 2023, respectively.

Previous wording

Technology and Development. Technology and development expense decreased in fiscal 2024 compared to fiscal 2023 primarily due to decreases in depreciation and amortization expense, software license and maintenance expense, and employee compensation.

Current wording

Technology and Development. Technology and development expense increased in fiscal 2025 compared to fiscal 2024 primarily due to increases in employee compensation, software license and maintenance, cloud services, and depreciation and amortization expenses.

Previous wording

*Other Operating Gain (Expense), net.*In fiscal 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. In fiscal 2023, we recorded an expense of $0.1 million for telephone equipment that was taken out of service.

Current wording

*Other Operating (Expense) Gain, net.*In fiscal 2025 and fiscal 2023, we recorded expense of $0.6 million and $0.1 million, respectively, for telephone equipment used in operations that was taken out of service. In fiscal 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 74.6%, 81.0%, and 87.2% of our total revenues in fiscal 2024, fiscal 2023, and fiscal 2022, 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 69.8%, 74.6%, and 81.0% of our total revenues in fiscal 2025, fiscal 2024, and fiscal 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.

Previous wording

Traditional Communications’ most significant revenue streams are from IDT Digital Payments, BOSS Revolution, and IDT Global. IDT Digital Payments and BOSS Revolution are sold directly to consumers and through distributors and retailers. We receive payments for BOSS Revolution, traditional calling cards, and IDT Digital Payments prior to providing the services. We recognize the revenue when services are provided to the customer. Traditional Communications’ revenues tend to be somewhat seasonal, with the second fiscal quarter (which contains Christmas and New Year’s Day) and the fourth fiscal quarter (which contains Mother’s Day and Father’s Day) typically showing higher minute volumes.

Current wording

Traditional Communications’ most significant revenue streams are from IDT Digital Payments, BOSS Revolution, and IDT Global. IDT Digital Payments and BOSS Revolution are sold directly to consumers and through distributors and retailers. We receive payments for BOSS Revolution and IDT Digital Payments prior to providing the services. We recognize the revenue when services are provided to the customer. Traditional Communications’ revenues tend to be somewhat seasonal, with the second fiscal quarter (which contains Christmas and New Year’s Day) and the fourth fiscal quarter (which contains Mother’s Day and Father’s Day) typically showing higher minute volumes.

Previous wording

Revenues and minutes of use from IDT Global decreased in fiscal 2024 compared to 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 from IDT Global increased in fiscal 2025 compared to fiscal 2024, although IDT Global’s minutes of use decreased in fiscal 2025 compared to fiscal 2024. IDT Global mitigated the impacts of the ongoing industry-wide declines in paid-minute voice through a traffic mix shift to higher margin routes and new service offerings. However, we expect IDT Global to continue to be adversely impacted by this industry-wide trend, 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 fiscal 2024 compared to fiscal 2023 primarily due to decreases in minutes of use and revenues.

Current wording

Direct Cost of Revenues. Direct cost of revenues decreased in fiscal 2025 compared to 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 fiscal 2024 compared to 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 was 9.4%, 9.0%, and 7.9% in fiscal 2024, fiscal 2023, and fiscal 2022, respectively.

Current wording

Selling, General and Administrative. Selling, general and administrative expense decreased in fiscal 2025 compared to fiscal 2024 primarily due to decreases in stock-based compensation, sales commissions, and debit and credit card processing charges, partially offset by an increase in bad debt expense. As a percentage of Traditional Communications’ revenue, Traditional Communications’ selling, general and administrative expense was 9.3%, 9.4%, and 9.0% in fiscal 2025, fiscal 2024, and fiscal 2023, respectively.

Previous wording

Severance Expense. Traditional Communications incurred severance expense of $1.6 million and $0.9 million in fiscal 2024 and fiscal 2023, respectively.

Current wording

Severance Expense. Traditional Communications incurred severance expense of $0.8 million and $1.6 million in fiscal 2025 and fiscal 2024, respectively.

Previous wording

*Other Operating Expense, net.*In fiscal 2024 and fiscal 2023, Traditional Communications recorded expense of $0.2 million and $1.4 million, respectively, for internal use software that was taken out of service. In addition, in fiscal 2023, other operating expense, net included $3.9 million 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 fiscal 2023, we increased the estimated fair value of acquisition-related contingent consideration by $0.2 million.

Current wording

*Other Operating Expense, net.*In fiscal 2025, Traditional Communications recorded expense of $0.2 million for certain equipment that was taken out of service. In fiscal 2024, Traditional Communications recorded expenses of $0.2 million for internal use software that was taken out of service.

Previous wording

General and Administrative. Corporate general and administrative expense increased in fiscal 2024 compared to 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 0.9%, 0.8%, and 0.6% in fiscal 2024, fiscal 2023, and fiscal 2022, respectively.

Current wording

General and Administrative. Corporate general and administrative expense increased in fiscal 2025 compared to fiscal 2024 primarily because of increases in employee compensation and legal fees. As a percentage of our consolidated revenues, Corporate general and administrative expense was 0.9%, 0.9%, and 0.8% in fiscal 2025, fiscal 2024, and fiscal 2023, respectively.

Previous wording

Other Operating Expense, net. As discussed in Note 23 to the Consolidated Financial Statements included in Item 8 to Part II of this Annual Report, we (as well as other defendants) were named in a class action on behalf of the stockholders of our former subsidiary Straight Path. We incurred legal fees of $7.2 million and $5.8 million in fiscal 2024 and fiscal 2023, respectively, related to this action. Also, we recorded offsetting gains from insurance claims for this matter of $2.9 million and $3.8 million in fiscal 2024 and fiscal 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

As discussed in Note 22 to the Consolidated Financial Statements included in Item 8 to Part II of this Annual Report, we (as well as other defendants) were named in a class action on behalf of the stockholders of our former subsidiary Straight Path. We incurred legal fees of $0.5 million and $7.2 million in fiscal 2025 and fiscal 2024, respectively, related to this action. Also, we recorded offsetting gains from insurance claims for this matter of nil and $2.9 million in fiscal 2025 and fiscal 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 Delaware to appeal the Final Order and Judgment. On April 22, 2025, we filed our answering brief to the appeal. Oral argument is scheduled for October 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 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. As of July 31, 2024, unrecognized compensation cost related to NRS’ non-vested Class B common stock was an aggregate of $1.9 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 July 31, 2025, unrecognized compensation cost related to NRS’ non-vested Class B common stock was an aggregate of $1.2 million. The unrecognized compensation cost is expected to be recognized over the remaining vesting period that ends in fiscal 2027.

Previous wording

We have an investment in shares of convertible preferred stock of a communications company (the equity method investee, or EMI). As of July 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 July 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

Benefit from (Provision for) Income Taxes. With our reacquisition of net2phone in March 2006, its losses were limited under IRC Section 382 to approximately $7 million per year. In fiscal 2024, we had an IRC Section 382 study conducted on the reacquisition and the limitation was adjusted to $9 million per year. We recorded a tax benefit related to the adjusted amount of $23.6 million in fiscal 2024. The change in income tax expense in fiscal 2024 compared to fiscal 2023, excluding the income tax benefit in fiscal 2024, was primarily due to differences in the amount of taxable income earned in the various taxing jurisdictions.

Current wording

(Provision for) Benefit from Income Taxes. With our reacquisition of net2phone in March 2006, its losses were limited under IRC Section 382 to approximately $7 million per year. In fiscal 2024, we had an IRC Section 382 study conducted on the reacquisition and the limitation was adjusted to $9 million per year. We recorded a tax benefit related to the adjusted amount of $23.6 million in fiscal 2024. The change in income tax expense in fiscal 2025 compared to fiscal 2024, excluding the income tax benefit 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 fiscal 2024 compared to fiscal 2023 was primarily due to changes in amounts attributable to the noncontrolling interests in the VIE and net2phone 2.0, 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 fiscal 2025 compared to fiscal 2024 was primarily due to increases in net income attributable to the noncontrolling interests in NRS, net2phone 2.0, and the Disbursement Payments VIE, partially offset by the change in the amounts attributable to the noncontrolling interests in Sochitel.

Previous wording

At July 31, 2024, we had cash, cash equivalents, debt securities, and current equity investments of $193.0 million and working capital (current assets in excess of current liabilities) of $143.2 million.

Current wording

At July 31, 2025, we had cash, cash equivalents, debt securities, and current equity investments of $253.8 million and working capital (current assets in excess of current liabilities) of $227.3 million.