IDT Corporation (IDT) - 10-Q Filing Summary
Business Context and Reporting Period
This summary covers IDT Corporation's unaudited financial results for the quarterly period ended April 30, 2026 (Fiscal Q3 2026) and the nine months ended April 30, 2026. IDT operates four reportable segments: National Retail Solutions (NRS), Fintech, net2phone, and Traditional Communications. The company is a large accelerated filer with a fiscal year ending July 31.
Key Financial Metrics
| Metric | Q3 2026 (3 Months) | Q3 2025 (3 Months) | 9 Months 2026 | 9 Months 2025 |
|---|---|---|---|---|
| Total Revenues | $315.7 million | $302.0 million | $959.0 million | $914.9 million |
| Net Income (IDT Corp) | $21.6 million | $21.7 million | $64.9 million | $59.2 million |
| Diluted EPS | $0.87 | $0.86 | $2.59 | $2.34 |
| Operating Income | $29.8 million | $26.6 million | $88.0 million | $78.5 million |
| Operating Margin | 9.4% | 8.8% | 9.2% | 8.6% |
| Cash & Equivalents (Unrestricted) | $215.0 million | $226.5 million | - | - |
| Restricted Cash | $128.4 million | $115.3 million | - | - |
| Working Capital | $284.7 million | $227.3 million | - | - |
| Debt Outstanding | $0 | $0 | - | - |
Note: Debt securities and current equity investments totaled $251.4 million (excluding restricted cash) as of April 30, 2026. The company had no outstanding borrowings under its $25.0 million revolving credit facility.
Material Changes vs. Prior Period
- Revenue Growth: Consolidated revenue increased 4.5% year-over-year (YoY) for Q3 and 4.8% for the nine-month period. Growth was driven by NRS, Fintech, and net2phone segments, partially offset by a decline in Traditional Communications.
- Segment Performance:
- NRS: Revenue up 22.2% (Q3) and 21.1% (9M) due to expansion of the retailer network and increased payment processing penetration. Operating income rose 31.5% YoY.
- Fintech: Revenue up 16.6% (Q3) and 14.6% (9M), driven by higher digital transaction volumes in BOSS Money. Operating income increased 29.3% YoY.
- net2phone: Revenue up 10.9% (Q3) and 10.1% (9M) due to increased UCaaS/CCaaS seats. Operating income surged 74.6% YoY.
- Traditional Communications: Revenue declined 0.9% (Q3) and grew 0.2% (9M). The Q3 decline was driven by a 16.1% drop in BOSS Revolution revenue due to industry trends (unlimited calling plans/OTT services), partially offset by growth in IDT Digital Payments and IDT Global.
- Stock-Based Compensation: Increased significantly to $2.4 million in Q3 2026 (from $0.9 million in Q3 2025) and $8.8 million for the nine months (from $2.7 million), primarily due to the accelerated recognition of Deferred Stock Units (DSUs) granted in September 2025.
- Cash Flow: Net cash provided by operating activities decreased to $46.7 million for the nine months ended April 30, 2026, compared to $96.1 million in the prior year. This was largely due to a $59.0 million increase in disbursement prefunding and settlement assets related to BOSS Money operations.
Guidance, Outlook, and Risks
- Capital Allocation: The company repurchased 391,186 shares of Class B common stock for $19.0 million during the nine months ended April 30, 2026. A quarterly dividend of $0.07 per share was declared on May 29, 2026.
- Acquisitions: On April 16, 2026, NRS agreed to acquire assets of Oncore Digital, Inc. (closed May 1, 2026) for approximately $4.8 million. This integrates ad tech and publisher networks with NRS's screen network.
- AI Strategy & Risks: Management highlighted AI adoption as a key growth driver (e.g., net2phone AI Agent). However, the filing discloses significant risks regarding AI, including regulatory uncertainty, potential for biased/harmful content, cybersecurity vulnerabilities, and high development costs.
- Tax Status: As of July 31, 2025, the company fully utilized U.S. federal net operating loss carryforwards. Starting in fiscal 2026, the company is subject to U.S. federal income tax, with an estimated liability of approximately 21% of pretax income.
- Liquidity: Management believes cash flow from operations and existing liquid assets are sufficient to meet working capital and capital expenditure requirements for the next 12 months. Capital expenditures are expected to be $23.0–$24.0 million for the twelve months ending April 30, 2027.
Investor Verification Checklist
- BOSS Money Working Capital: Verify the sustainability of the $59.0 million increase in disbursement prefunding and its impact on future operating cash flows.
- BOSS Revolution Decline: Assess the long-term trajectory of the BOSS Revolution business given the 16.1% revenue decline in Q3 2026 and industry headwinds from OTT services.
- Stock-Based Compensation Run-Rate: Confirm the timing and magnitude of future stock-based compensation expenses related to the September 2025 DSU grants, which caused a spike in current period expenses.
- AI Implementation Costs: Monitor capital and operating expenditures related to AI integration and the associated regulatory compliance costs.
- Revolving Credit Facility: Note the extension of the $25.0 million facility maturity to July 15, 2026, and track the renewal process.