UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-16371

IDT CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware	22-3415036
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
520 Broad Street, Newark, New Jersey	07102
(Address of principal executive offices)	(Zip Code)

(973) 438-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Class B common stock, par value $.01 per share	New York Stock Exchange

Trading symbol: IDT

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ☐ No ☒

As of June 6, 2023, the registrant had the following shares outstanding:

Class A common stock, $.01 par value: 1,574,326 shares outstanding (excluding 1,698,000 treasury shares)

Class B common stock, $.01 par value: 23,922,011 shares outstanding (excluding 3,921,172 treasury shares)

IDT CORPORATION

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Equity	6
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	37
Item 4.	Controls and Procedures	37
PART II. OTHER INFORMATION		38
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	38
SIGNATURES		39

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

IDT CORPORATION

CONSOLIDATED BALANCE SHEETS

	April 30, 2023			July 31, 2022
	(Unaudited)			(Note 1)
	(in thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents	$	90,722		$	98,352
Restricted cash and cash equivalents		94,321			91,210
Debt securities		41,987			22,303
Equity investments		5,776			17,091
Trade accounts receivable, net of allowance for doubtful accounts of $6,133 at April 30, 2023 and $5,882 at July 31, 2022		65,942			64,315
Disbursement prefunding		40,428			21,057
Prepaid expenses		15,575			17,526
Other current assets		35,211			30,773
Total current assets		389,962			362,627
Property, plant, and equipment, net		39,083			36,866
Goodwill		26,596			26,380
Other intangibles, net		8,483			9,609
Equity investments		10,263			7,426
Operating lease right-of-use assets		6,141			7,210
Deferred income tax assets, net		27,501			36,701
Other assets		10,197			10,275
Total assets	$	518,226		$	497,094
Liabilities, redeemable noncontrolling interest, and equity
Current liabilities:
Trade accounts payable	$	29,715		$	29,080
Accrued expenses		109,177			117,109
Deferred revenue		33,910			36,531
Customer deposits		86,111			85,764
Other current liabilities		42,762			36,588
Total current liabilities		301,675			305,072
Operating lease liabilities		3,572			4,606
Other liabilities		3,527			6,588
Total liabilities		308,774			316,266
Commitments and contingencies
Redeemable noncontrolling interest		10,449			10,191
Equity:
IDT Corporation stockholders’ equity:
Preferred stock, $.01 par value; authorized shares—10,000; no shares issued		—			—
Class A common stock, $.01 par value; authorized shares—35,000; 3,272 shares issued and 1,574 shares outstanding at April 30, 2023 and July 31, 2022		33			33
Class B common stock, $.01 par value; authorized shares—200,000; 27,798 and 27,725 shares issued and 23,892 and 24,112 shares outstanding at April 30, 2023 and July 31, 2022, respectively		278			277
Additional paid-in capital		300,328			296,005
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of Class A common stock and 3,906 and 3,613 shares of Class B common stock at April 30, 2023 and July 31, 2022, respectively		(109,410	)		(101,565	)
Accumulated other comprehensive loss		(14,475	)		(11,305	)
Retained earnings (accumulated deficit)		16,685			(15,830	)
Total IDT Corporation stockholders’ equity		193,439			167,615
Noncontrolling interests		5,564			3,022
Total equity		199,003			170,637
Total liabilities, redeemable noncontrolling interest, and equity	$	518,226		$	497,094

See accompanying notes to consolidated financial statements.

3

IDT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended April 30,						Nine Months Ended April 30,
	2023			2022			2023			2022
	(in thousands, except per share data)
Revenues	$	299,295		$	328,353		$	935,047		$	1,035,494
Costs and expenses:
Direct cost of revenues (exclusive of depreciation and amortization)		210,250			247,565			664,281			796,516
Selling, general and administrative (i)		68,574			62,772			202,591			183,948
Depreciation and amortization		5,185			4,509			14,986			13,333
Severance		145			—			458			67
Total costs and expenses		284,154			314,846			882,316			993,864
Other operating expense, net (see Note 10)		(4,764	)		(179	)		(3,948	)		(709	)
Income from operations		10,377			13,328			48,783			40,921
Interest income, net		709			85			2,029			217
Other expense, net		(382	)		(5,068	)		(2,610	)		(24,234	)
Income before income taxes		10,704			8,345			48,202			16,904
Provision for income taxes		(2,960	)		(3,239	)		(12,594	)		(5,887	)
Net income		7,744			5,106			35,608			11,017
Net income attributable to noncontrolling interests		(854	)		(335	)		(3,093	)		(1,231	)
Net income attributable to IDT Corporation	$	6,890		$	4,771		$	32,515		$	9,786
Earnings per share attributable to IDT Corporation common stockholders:
Basic	$	0.27		$	0.18		$	1.27		$	0.38
Diluted	$	0.27		$	0.18		$	1.27		$	0.37
Weighted-average number of shares used in calculation of earnings per share:
Basic		25,518			25,901			25,544			25,706
Diluted		25,612			26,205			25,589			26,455
(i) Stock-based compensation included in selling, general and administrative expenses	$	1,679		$	1,245		$	3,537		$	1,840

See accompanying notes to consolidated financial statements.

4

IDT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended April 30,						Nine Months Ended April 30,
	2023			2022			2023			2022
	(in thousands)
Net income	$	7,744		$	5,106		$	35,608		$	11,017
Other comprehensive income (loss):
Change in unrealized loss on available-for-sale securities		115			(224	)		81			(547	)
Foreign currency translation adjustments		(879	)		(29	)		(3,251	)		(611	)
Other comprehensive loss		(764	)		(253	)		(3,170	)		(1,158	)
Comprehensive income		6,980			4,853			32,438			9,859
Comprehensive income attributable to noncontrolling interests		(854	)		(335	)		(3,093	)		(1,231	)
Comprehensive income attributable to IDT Corporation	$	6,126		$	4,518		$	29,345		$	8,628

See accompanying notes to consolidated financial statements.

5

IDT CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

	Three Months Ended April 30, 2023 (in thousands)
	IDT Corporation Stockholders
	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings		Noncontrolling Interests			Total Equity
BALANCE AT JANUARY 31, 2023	$	33	$	278	$	298,649	$	(106,906	)	$	(13,711	)	$	9,795	$	4,876		$	193,014
Repurchases of Class B common stock through repurchase program		—		—		—		(2,500	)		—			—		—			(2,500	)
Restricted Class B common stock purchased from employees		—		—		—		(4	)		—			—		—			(4	)
Stock-based compensation		—		—		1,679		—			—			—		—			1,679
Distributions to noncontrolling interests		—		—		—		—			—			—		(106	)		(106	)
Other comprehensive loss		—		—		—		—			(764	)		—		—			(764	)
Net income		—		—		—		—			—			6,890		794			7,684
BALANCE AT APRIL 30, 2023	$	33	$	278	$	300,328	$	(109,410	)	$	(14,475	)	$	16,685	$	5,564		$	199,003

	Nine Months Ended April 30, 2023 (in thousands)
	IDT Corporation Stockholders
	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			(Accumulated Deficit) Retained Earnings			Noncontrolling Interests			Total Equity
BALANCE AT JULY 31, 2022	$	33	$	277	$	296,005	$	(101,565	)	$	(11,305	)	$	(15,830	)	$	3,022		$	170,637
Exercise of stock options		—		—		172		—			—			—			—			172
Repurchases of Class B common stock through repurchase program		—		—		—		(7,506	)		—			—			—			(7,506	)
Restricted Class B common stock purchased from employees		—		—		—		(339	)		—			—			—			(339	)
Stock issued to certain executive officers for bonus payments		—		—		615		—			—			—			—			615
Stock-based compensation		—		1		3,536		—			—			—			—			3,537
Distributions to noncontrolling interests		—		—		—		—			—			—			(293	)		(293	)
Other comprehensive loss		—		—		—		—			(3,170	)		—			—			(3,170	)
Net income		—		—		—		—			—			32,515			2,835			35,350
BALANCE AT APRIL 30, 2023	$	33	$	278	$	300,328	$	(109,410	)	$	(14,475	)	$	16,685		$	5,564		$	199,003

6

IDT CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY—Continued

(Unaudited)

	Three Months Ended April 30, 2022 (in thousands)
	IDT Corporation Stockholders
	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interests			Total Equity
BALANCE AT JANUARY 31, 2022	$	33	$	267	$	278,613	$	(69,387	)	$	(11,088	)	$	(37,843	)	$	2,385		$	162,980
Exercise of stock options by Howard S. Jonas		—		10		14,920		(18,788	)		—			—			—			(3,858	)
Exercise of stock options		—		—		137		—			—			—			—			137
Business acquisition		—		—		1,000		—			—			—			—			1,000
Stock-based compensation		—		—		1,245		—			—			—			—			1,245
Distributions to noncontrolling interests		—		—		—		—			—			—			(161	)		(161	)
Other comprehensive loss		—		—		—		—			(253	)		—			—			(253	)
Net income		—		—		—		—			—			4,771			299			5,070
BALANCE AT APRIL 30, 2022	$	33	$	277	$	295,915	$	(88,175	)	$	(11,341	)	$	(33,072	)	$	2,523		$	166,160

	Nine Months Ended April 30, 2022 (in thousands)
	IDT Corporation Stockholders
	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interests			Total Equity
BALANCE AT JULY 31, 2021	$	33	$	264	$	278,021	$	(60,413	)	$	(10,183	)	$	(42,858	)	$	1,750		$	166,614
Exercise of stock options by Howard S. Jonas		—		10		14,920		(18,788	)		—			—			—			(3,858	)
Exercise of stock options		—		—		137		—			—			—			—			137
Restricted Class B common stock purchased from employees		—		—		—		(8,974	)		—			—			—			(8,974	)
Business acquisition		—		—		1,000		—			—			—			—			1,000
Stock-based compensation		—		3		1,837		—			—			—			—			1,840
Distributions to noncontrolling interests		—		—		—		—			—			—			(359	)		(359	)
Other comprehensive loss		—		—		—		—			(1,158	)		—			—			(1,158	)
Net income		—		—		—		—			—			9,786			1,132			10,918
BALANCE AT APRIL 30, 2022	$	33	$	277	$	295,915	$	(88,175	)	$	(11,341	)	$	(33,072	)	$	2,523		$	166,160

See accompanying notes to consolidated financial statements.

7

IDT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended April 30,
	2023			2022
	(in thousands)
Operating activities
Net income	$	35,608		$	11,017
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14,986			13,333
Deferred income taxes		9,200			4,624
Provision for doubtful accounts receivable		1,180			1,578
Net unrealized loss from marketable securities		3,151			19,705
Stock-based compensation		3,537			1,840
Other		2,114			3,486
Change in assets and liabilities:
Trade accounts receivable		(2,084	)		(8,461	)
Disbursement prefunding, prepaid expenses, other current assets, and other assets		(27,043	)		(20,504	)
Trade accounts payable, accrued expenses, other current liabilities, and other liabilities		(6,220	)		(2,566	)
Customer deposits at IDT Financial Services Limited (Gibraltar-based bank)		(2,570	)		(9,843	)
Deferred revenue		(3,160	)		(948	)
Net cash provided by operating activities		28,699			13,261
Investing activities
Capital expenditures		(16,033	)		(13,794	)
Purchase of convertible preferred stock in equity method investment		(168	)		(1,051	)
Payments for acquisitions, net of cash acquired		—			(7,546	)
Purchases of debt securities and equity investments		(44,166	)		(11,277	)
Proceeds from maturities and sales of debt securities and redemptions of equity investments		34,309			7,752
Net cash used in investing activities		(26,058	)		(25,916	)
Financing activities
Distributions to noncontrolling interests		(293	)		(359	)
Proceeds from other liabilities		300			2,301
Repayment of other liabilities.		(2,031	)		(1,319	)
Proceeds from borrowings under revolving credit facility		2,383			2,566
Repayment of borrowings under revolving credit facility.		(2,383	)		(2,566	)
Proceeds from sale of redeemable equity in subsidiary