IDT CORP

Previous wording

The following information should be read in conjunction with the accompanying condensed 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, 2025 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 condensed 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 the 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 2025 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 2025 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 the 2025 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 the 2025 Form 10-K.

Previous wording

As of October 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 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 90.1% of the equity of net2phone 2.0 and 79.5% of the equity of NRS.

Current wording

As of January 31, 2026, 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 82.3% 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 90.0% of the equity of net2phone 2.0 and 80.2% of the equity of NRS.

Previous wording

net2phone’s UNITE (UCaaS), uContact (CCaaS) and Coach offerings are priced on a per-seat basis, with customers paying based on the number of users in their organization. net2phone AI is priced according to interaction credits, a usage-based criterion. net2phone’s subscription revenue is its revenue in accordance with U.S. GAAP excluding its equipment revenue and revenue generated by a legacy SIP trunking offering in Brazil.

Current wording

net2phone’s UNITE (UCaaS), uContact (CCaaS) and Coach (a contact center performance optimization tool) offerings are priced on a per-seat basis, with customers paying based on the number of users in their organization. net2phone AI is priced according to interaction credits, a usage-based criterion. net2phone’s subscription revenue is its revenue in accordance with U.S. GAAP excluding its equipment revenue and revenue generated by a legacy SIP trunking offering in Brazil.

Previous wording

Three Months Ended October 31, 2025 Compared to Three Months Ended October 31, 2024

Current wording

Three and Six Months Ended January 31, 2026 Compared to Three and Six Months Ended January 31, 2025

Previous wording

NRS, which represented 11.5% and 9.8% of our total revenues in the three months ended October 31, 2025 and 2024, respectively, is an operator of a POS network operating in the U.S. and Canada that provides 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.

Current wording

NRS, which represented 12.3% and 10.9% of our total revenues in the three months ended January 31, 2026 and 2025, respectively, and 11.9% and 10.3% of our total revenues in the six months ended January 31, 2026 and 2025, respectively, operates a POS network in the U.S. and Canada that provides 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

Revenues. Revenues increased in the three months ended October 31, 2025 compared to the comparable period in fiscal 2025. This increase was driven primarily by continued growth of $6.3 million in recurring revenue, reflecting the expansion of NRS’ retailer network, increased penetration of payment processing services, and increased software revenue per terminal as retailers increasingly adopted premium software as a service (SaaS) features and functionalities.

Current wording

Revenues. Revenues increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These increases were driven primarily by continued growth in recurring revenue, reflecting the expansion of NRS’ retailer network, increased penetration of payment processing services, and increased software revenue per terminal as retailers increasingly adopted premium software as a service (SaaS) features and functionalities.

Previous wording

**Direct Cost of Revenues.**Direct cost of revenues increased in the three months ended October 31, 2025 compared to the comparable period in fiscal 2025. The increase was driven primarily by higher direct costs associated with NRS’ operations, including increased costs related to POS terminal sales and merchant services.

Current wording

Direct Cost of Revenues. Direct cost of revenues increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These increases were driven primarily by higher direct costs associated with NRS’ operations and increased sales, including increased costs related to POS terminal sales and merchant services.

Previous wording

Selling, General and Administrative. Selling, general and administrative expense increased in the three months ended October 31, 2025 compared to the comparable period in fiscal 2025. The increase was primarily driven by increases in personnel-related costs and other operating expenses supporting NRS’ continued growth. As a percentage of NRS’ revenue, NRS’ selling, general and administrative expense decreased to 59.0% from 62.6% in the three months ended October 31, 2025 and 2024, respectively.

Current wording

Selling, General and Administrative. Selling, general and administrative expense increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These increases were primarily driven by increases in personnel-related costs and other operating expenses supporting NRS’ continued growth. As a percentage of NRS’ revenue, NRS’ selling, general and administrative expense increased to 59.7% from 57.6% in the three months ended January 31, 2026 and 2025, and decreased to 59.4% from 60.0% in the six months ended January 31, 2026 and 2025, respectively

Previous wording

Technology and Development. Technology and development expense increased in the three months ended October 31, 2025 compared to the comparable period in fiscal 2025. The increase was primarily driven by general ongoing business investments to develop premium software services provided through the NRS platform, and in other development and operations supporting our business platforms.

Current wording

Technology and Development. Technology and development expense increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These increases were primarily driven by general ongoing business investments to develop premium software services provided through the NRS platform, and in other development and operations supporting our business platforms.

Previous wording

Fintech, which represented 13.2% and 12.0% of our total revenues in the three months ended October 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(“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.

Current wording

Fintech, which represented 12.8% and 12.1% of our total revenues in the three months ended January 31, 2026 and 2025, respectively, and 13.0% and 12.1% of our total revenues in the six months ended January 31, 2026 and 2025, 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

Revenues. Revenues from BOSS Money increased in the three months ended October 31, 2025 compared to the comparable period in fiscal 2025. This increase was primarily driven by higher digital transaction volume of 6.6 million, from 5.4 million, initiated on the BOSS Money and BOSS Revolution Calling apps. BOSS Money continued to benefit from cross-marketing to BOSS Revolution and IDT Digital Payments.

Current wording

Revenues. Revenues from BOSS Money increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These increases were primarily driven by higher digital transaction volumes initiated on the BOSS Money and BOSS Revolution Calling apps. BOSS Money continued to benefit from cross-marketing to BOSS Revolution and IDT Digital Payments retail customers.

Previous wording

Selling, General and Administrative. Selling, general and administrative expense increased in the three months ended October 31, 2025 compared to the comparable period in fiscal 2025. The modest increase primarily reflected higher debit and credit card processing charges, and other operating costs associated with growth in BOSS Money’s app and digital transaction activity. As a percentage of Fintech’s revenue, Fintech’s selling, general and administrative expense decreased to 39.0% from 43.3% in the three months ended October 31, 2025 and 2024, respectively. The decrease reflects, in part, the efficiencies derived from BOSS Money’s ongoing integration of AI and machine learning in its workflows to enhance customer service and to prevent potential chargebacks, among other priorities.

Current wording

Selling, General and Administrative. Selling, general and administrative expense increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These modest increases primarily reflected higher debit and credit card processing charges, and other operating costs associated with growth in BOSS Money’s app and digital transaction activity. As a percentage of Fintech’s revenue, Fintech’s selling, general and administrative expense remained flat at 44.2% for both the three months ended January 31, 2026 and 2025, respectively, and decreased to 41.6% from 43.8% in the six months ended January 31, 2026 and 2025, respectively. The decrease reflects, in part, the efficiencies derived from BOSS Money’s ongoing integration of AI and machine learning in its workflows to enhance customer service and to prevent potential chargebacks, among other priorities.

Previous wording

Technology and Development. Technology and development expense increased slightly in the three months ended October 31, 2025 compared to the comparable period in fiscal 2025. The increase primarily reflected higher depreciation and amortization expense, partially offset by lower employee compensation and other development-related costs.

Current wording

Technology and Development. Technology and development expense increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These modest increases primarily reflected higher depreciation and amortization expense, partially offset by lower employee compensation and development-related costs.

Previous wording

The net2phone segment, which represented 7.3% and 7.0% of our total revenues in the three months ended October 31, 2025 and 2024, respectively, is comprised of net2phone’s communications and workflow solutions including its UCaaS net2phone AI and Coach solutions.

Current wording

The net2phone segment, which represented 7.5% and 7.1% of our total revenues in the three months ended January 31, 2026 and 2025, respectively, and 7.4% and 7.0% of our total revenues in the six months ended January 31, 2026 and 2025, respectively, is comprised of net2phone’s communications and workflow solutions including its UCaaS, CCaas, net2phone AI, and Coach solutions.

Previous wording

Revenues. net2phone’s revenues increased in the three months ended October 31, 2025 compared to the comparable period in fiscal 2025 primarily due to sales in its UCaaS and CCaas services revenue, reflecting an increase in seats served during the period.

Current wording

Revenues. net2phone’s revenues increased in the three and six months ended January 31, 2026 from the comparative prior-year periods primarily due to sales in its UCaaS and CCaas services revenue, reflecting an increase in seats served during the respective periods and gains from foreign exchange.

Previous wording

Direct Cost of Revenues. Direct cost of revenues increased in the three months ended October 31, 2025 compared to the comparable period in fiscal 2025 primarily due to higher revenues, net2phone’s continued focus on mid-sized businesses, multi-channel strategies, and localized offerings supported 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, 2026 from the comparative prior-year periods primarily due to higher revenues, net2phone’s continued focus on mid-sized businesses, multi-channel strategies, and localized offerings supported 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 months ended October 31, 2025 compared to the comparable period in fiscal 2025. This increase was primarily driven by higher sales commissions and depreciation and amortization, partially offset by decreases in marketing, consulting and bad debt expenses. As a percentage of net2phone’s revenues, net2phone’s selling, general and administrative expense decreased to 58.6% from 60.8% in the three months ended October 31, 2025 and 2024, respectively.

Current wording

Selling, General and Administrative. Selling, general and administrative expense increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These increases were primarily driven by higher sales commissions and depreciation and amortization, partially offset by decreases in marketing, consulting and bad debt expenses. As a percentage of net2phone’s revenues, net2phone’s selling, general and administrative expense decreased to 59.1% from 60.3% in the three months ended January 31, 2026 and 2025, respectively, and to 58.4% from 60.5% in the six months ended January 31, 2026 and 2025, respectively.

Previous wording

Technology and Development. Technology and development expense for the current quarter remained flat compared to the comparable period in fiscal 2025. While certain costs, including employee compensation, software licenses and maintenance, cloud services, and depreciation and amortization increased, these were largely offset by disciplined cost management and the timing of project-related expenditures, resulting in overall flat expenses for the period.

Current wording

Technology and Development. Technology and development expense increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. While certain costs, including employee compensation, software licenses and maintenance, cloud services, and depreciation and amortization increased, these were largely offset by disciplined cost management and the timing of project-related expenditures, resulting in overall modest increased expenses for the period.

Previous wording

The Traditional Communications segment, which represented 68.0% and 71.2% of our total revenues in the three months ended October 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.

Current wording

The Traditional Communications segment, which represented 67.4% and 69.9% of our total revenues in the three months ended January 31, 2026 and 2025, respectively, and 67.7% and 70.6% of our total revenues in the six months ended January 31, 2026 and 2025, 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 the BOSS Money and BOSS Revolution apps as well as 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.

Current wording

Traditional Communications’ largest businesses by revenue are IDT Digital Payments, IDT Global, and BOSS Revolution. IDT Digital Payments and BOSS Revolution are sold directly to consumers and through the BOSS Money and BOSS Revolution apps as well as 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. Revenues for the Traditional Communications segment decreased slightly in the three months ended October 31, 2025 compared to the comparable period in fiscal 2025. This decrease was driven primarily by BOSS Revolution, reflecting industry-wide trends, including the proliferation of unlimited calling plans and over-the-top voice and messaging services. This decrease was partially offset by an increase in revenue in IDT Digital Payments and IDT Global. Revenues from Other offerings decreased slightly.

Current wording

Revenues. Revenues for the Traditional Communications segment increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These increases were driven primarily by higher revenues from IDT Digital Payments and IDT Global. IDT Global revenues increased primarily due to higher international long-distance traffic volumes and improved product mix. The increases in IDT Digital Payments revenues reflected higher transaction volumes and continued growth in digital payment channels. These increases were partially offset by a decline in BOSS Revolution revenues, reflecting industry-wide trends, including the proliferation of unlimited calling plans and free over-the-top voice and messaging services, which have reduced demand for prepaid international calling plans. Revenues from Other offerings remained flat and decreased slightly for the three and six months ended January 31, 2026 from the comparative prior-year periods, respectively.

Previous wording

Selling, General and Administrative. Selling, general and administrative expense decreased in the three months ended October 31, 2025 compared to the comparable period in fiscal 2025. The decrease was primarily due to lower sales commissions and debit and credit processing charges, partially offset by higher bad debt expense. As a percentage of Traditional Communications’ revenue, Traditional Communications’ selling, general and administrative expense decreased to 8.7% from 9.1% in the three months ended October 31, 2025 and 2024, respectively.

Current wording

Selling, General and Administrative. Selling, general and administrative expense increased in the three months ended and remained flat for the six months ended January 31, 2026 from the comparative prior-year periods. The modest increase reflects relatively stable sales commissions and debit and credit processing charges, partially offset by minor fluctuations in bad debt expense. As a percentage of Traditional Communications’ revenue, Traditional Communications’ selling, general and administrative expense increased to 9.4% from 9.2% in the three months ended January 31, 2026 and 2025, respectively, and decreased to 9.0% from 9.1% in the six months ended January 31, 2026 and 2025, respectively.

Previous wording

Technology and Development. Technology and development expense remained flat in the three months ended October 31, 2025 compared to the comparable period in fiscal 2025. Modest increases in certain operating costs were offset by decreases in employee compensation, cloud services, and depreciation and amortization expense, resulting in overall flat expenses for the period.

Current wording

**Technology and Development.**Technology and development expense increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. Modest increases in certain operating costs were offset by decreases in employee compensation, cloud services, and depreciation and amortization expense, resulting in overall modest increases for the periods.

Previous wording

General and Administrative. Corporate general and administrative expense decreased in the three months ended October 31, 2025 compared to the comparable period in fiscal 2025. This decrease primarily reflects lower employee-related costs and reduced overhead expenses during the quarter. As a percentage of our consolidated revenues, Corporate general and administrative expense was 0.8% and 0.9% in the three months ended October 31, 2025 and 2024. respectively.

Current wording

General and Administrative. Corporate general and administrative expense decreased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These modest decreases primarily reflect employee-related costs and decreased overhead expenses during the periods. As a percentage of our consolidated revenues, Corporate general and administrative expense was 0.9% and 1.0% in the three months ended January 31, 2026 and 2025, respectively, and 0.9% and 1.0% in the six months ended January 31, 2026 and 2025, respectively.

Previous wording

Other Operating Income, net. Other operating income in the three months ended October 31, 2025 consists primarily of insurance proceeds in excess of related legal fees. Management views these proceeds and charges as non-core and related to occasional corporate-level expenses that are not expected to recur regularly.

Current wording

Other Operating Expense, net. Other operating expense consists primarily of legal fees in excess of related insurance proceeds. Management views these proceeds and charges as non-core and related to occasional corporate-level expenses that are not expected to recur regularly.

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 $2.0 million and $0.9 million in the three months ended October 31, 2025 and 2024, respectively. The increase primarily reflects the expense recognized during the period related to DSU’s granted to executive officers and employees under the Company’s long-term incentive programs. As of October 31, 2025, there was $11.9 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 February 2028.

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 $4.3 million and $0.9 million in the three months ended January 31, 2026 and $6.4 million and $1.8 million in the six months ended January 31, 2026 and 2025, respectively. These increases primarily reflect the expense recognized during the period related to DSUs granted to executive officers and employees under the Company’s long-term incentive programs. As of January 31, 2026, there was $9.6 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 February 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 both October 31, 2025 and 2024, our ownership was 33.4% 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 MarketSpark Inc., a communications company(“MarketSpark”). As of both January 31, 2026 and 2025, our ownership was 33.4% of MarketSpark’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 MarketSpark but do not have a controlling interest. We determined that on the dates of the acquisitions of MarketSpark’s shares, there were differences between our investment in MarketSpark and our proportional interest in the equity of MarketSpark of an aggregate of $8.2 million, which represented the share of MarketSpark’s customer list on the dates of the acquisitions attributed to our interest in MarketSpark. 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, 2025 compared to the comparable period in fiscal 2025 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, 2026 compared to the comparable prior-year periods 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, 2025 compared to the comparable period in fiscal 2025 was primarily due to increases in net income attributable to the noncontrolling interests in NRS and the VIE.

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, 2026 compared to the comparable prior-year periods was primarily due to changes in net income attributable to the noncontrolling interests in NRS and the VIE.

Previous wording

As of the date of this Quarterly Report, we expect our cash flow from operations and the balance of cash, cash equivalents, debt securities, and current equity investments that we held on October 31, 2025 will be sufficient to meet our currently anticipated working capital and capital expenditure requirements during the twelve-month period ending October 31, 2026.

Current wording

As of the date of this Quarterly Report, we believe that our cash flow from operations and the balance of cash, cash equivalents, debt securities, and current equity investments that we held on January 31, 2026 will be sufficient to meet our currently anticipated working capital and capital expenditure requirements during the twelve-month period ending January 31, 2027.

Previous wording

At October 31, 2025, we had cash, cash equivalents, debt securities, and current equity investments of $220.0 million and working capital (current assets in excess of current liabilities) of $245.1 million.

Current wording

At January 31, 2026, we had cash, cash equivalents, debt securities, and current equity investments of $246.2 million (excluding restricted cash and cash equivalents) and working capital (current assets in excess of current liabilities) of $264.4 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. During the three months ended October 31, 2025, net cash used in operating activities was $10.1 million, which includes the impact of settlement assets and disbursements prefunding and customer fund deposits.

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. During the six months ended January 31, 2026, net cash provided by operating activities was $28.2 million, compared to $20.3 million for the prior-year period, which includes the impact of settlement assets and disbursements prefunding and customer fund deposits.

Previous wording

Settlement assets and disbursements prefunding increased $18.5 million and $38.9 million, respectively, during the three months ended October 31, 2025. The increase in settlement assets reflects a higher level of funds provided by customers for pending money-remittances at BOSS Money and for pending purchases of goods and services on IDT Digital Payments’ prepaid platform. The increase in disbursement prefunding reflects higher levels of funds pre-paid to disbursement partners to fulfill expected customer remittance obligations at BOSS Money, and higher levels of pre-payments made to providers of goods and services to fulfill expected customer purchases of goods and services obligations at IDT Digital Payments.

Current wording

Settlement assets and disbursements prefunding increased $42.0 million and $8.3 million, respectively, during the six months ended January 31, 2026, compared to the prior-year period. The increase in settlement assets reflects a higher level of funds due from customers for pending money-remittances at BOSS Money. The increase in disbursements prefunding reflects, for the most part, higher levels of funds pre-paid to disbursement partners to fulfill expected customer remittance obligations at BOSS Money, and, to a smaller extent, higher levels of pre-payments made to providers of goods and services to fulfill expected customer purchases of goods and services obligations at IDT Digital Payments.

Previous wording

Each week, IDT prefunds BOSS Money disbursement partners for remittances expected during the upcoming weekend. As a result, Friday is typically the day with the lowest cash balance after prefunding disbursements for the upcoming weekend. Wednesday is typically the day with the highest cash balances after collecting cash from retailers for remittances originated during the preceding weekend but before prefunding disbursements for the upcoming weekend. This weekly cycle constitutes a significant use of the Company’s working capital, and, as such, the day of the week on which the quarter ends can have significant impacts on working capital levels.

Current wording

Towards the end of each week, IDT needs to prefund BOSS Money disbursement partners for remittances expected during the upcoming weekend. As a result, Friday is typically the day of the week on which IDT’s cash balance is at its lowest level, after prefunding disbursements for the upcoming weekend. Conversely, Wednesday is typically the day of the week on which IDT’s cash balance is at its highest level, after IDT collects cash from digital processors and retailers for all of the remittances originated during the preceding weekend but before the new weekly cycle of prefunding disbursements for the upcoming weekend begins again. This weekly cycle constitutes a significant working capital use of the Company’s cash, and, as such, the day of the week on which the quarter ends can have significant impact on the cash balance reported at the balance sheet date.

Previous wording

Customer fund deposits increased $10.2 million during the three months ended October 31, 2025, reflecting balances held on behalf of customers across our prepaid, digital payments, and disbursements programs. These balances are supported by restricted cash and cash equivalents held by IDT Financial Services and our Disbursement Payments VIE.

Current wording

Customer fund deposits decreased $9.6 million during the six months ended January 31, 2026 reflecting balances held on behalf of customers across our prepaid, digital payments, and disbursements programs. These balances are supported by restricted cash and cash equivalents held by IDT Financial Services and our Disbursement Payments VIE and fluctuate based on transaction volume and program activity

Previous wording

During the three months ended October 31, 2025, we deployed $5.3 million for capital expenditures. We currently anticipate that total capital expenditures in the twelve-month period ending October 31, 2026 will be $20 million to $22 million. We expect to fund our capital expenditures with our net cash provided by operating activities and cash, cash equivalents, debt securities, and current equity investments on hand.

Current wording

During the six months ended January 31, 2026, we deployed $12.0 million for capital expenditures. We currently anticipate that total capital expenditures in the twelve-month period ending January 31, 2027 will be $22 million to $23 million. We expect to fund our capital expenditures with our net cash provided by operating activities and cash, cash equivalents, debt securities, and current equity investments on hand.

Previous wording

In February 2025, we entered into a loan agreement with the EMI for a revolving credit facility. The aggregate principal amount available under the facility is $2.0 million. The loans will incur interest at 12% per annum payable semiannually and are due and payable in February 2027. In February 2025, the Company loaned the EMI $0.5 million under the revolving credit facility. In May 2025, the Company loaned the EMI an additional $0.4 million for an aggregate of $1.9 million under the revolving credit facility. In both the three months ended October 31, 2025 and 2024, each of the EMI’s shareholders, including us, purchased additional shares of the EMI’s convertible preferred stock.

Current wording

In February 2025, we entered into a loan agreement with MarketSpark for a revolving credit facility. The aggregate principal amount available under the facility is $2.0 million. The loans incur interest at 12% per annum payable semiannually and are due and payable in February 2027. In February 2025, the Company loaned MarketSpark $0.5 million under the revolving credit facility. In May 2025, the Company loaned MarketSpark an additional $0.4 million for an aggregate of $1.9 million under the revolving credit facility.

Previous wording

For the three months ended October 31, 2025, purchases of debt securities and equity investments were $16.1 million and proceeds from maturities and sales of debt securities and redemptions of equity investments were $12.7 million.

Current wording

During the six months ended January 31, 2026, purchases of debt securities and equity investments were $25.8 million and proceeds from maturities and sales of debt securities and redemptions of equity investments were $17.3 million.