Record quarterly gross profit, gross profit margin, Adjusted EBITDA* and Non-GAAP EPS*
Income from operations at NRS, Fintech and net2phone segments increased by 12%, 32% and 96%, respectively
1H FY2026 stock repurchases totaled 308K shares for
2Q26 CONSOLIDATED HIGHLIGHTS
Throughout this release, unless otherwise noted, results for the second quarter of fiscal year 2026 (2Q26) are compared to the second quarter of fiscal year 2025 (2Q25).
| (in millions except for shares and per share figures) | 2Q26 | 2Q25 | |||||||||||||||
| Revenue | +6 | % | to | $ | 320.5 | from | $ | 303.3 | |||||||||
| Gross Profit | +8 | % | to | $ | 121.3 | from | $ | 112.1 | |||||||||
| Gross Profit Margin | 88 bps | to | 37.8 | % | from | 37.0 | % | ||||||||||
| Income from Operations | (4 | )% | to | $ | 27.2 | from | $ | 28.3 | |||||||||
| GAAP EPS | +$ | 0.04 | to | $ | 0.84 | from | $ | 0.80 | |||||||||
| Non-GAAP EPS* | +$ | 0.16 | to | $ | 1.00 | from | $ | 0.84 | |||||||||
| Adjusted EBITDA* | +9 | % | to | $ | 38.0 | from | $ | 34.9 | |||||||||
| Repurchases of IDT Common Stock (2Q26) | 149,000 shares for | ||||||||||||||||
*This release discloses certain Non-GAAP financial measures as well as certain Key Performance Metrics. Please see the explanations of those measures and metrics, the reasons for their inclusion, and reconciliations of non-GAAP measures to their closest GAAP measures, at the end of this release.
REMARKS BY
“NRS’, BOSS Money’s and net2phone’s top and bottom-line expansion drove IDT’s strong overall results again this quarter.
“NRS recurring revenue grew year-over-year powered by large increases in
“At BOSS Money, our digital channel continued to outperform relative to the industry, as transactions increased 17% year-over-year. The new federal remittance tax, which applies mainly to transactions originated with cash, went into effect on
“net2phone’s bottom line continues to benefit from its strengthening gross margins and operating leverage, and this quarter we also got a boost from favorable foreign exchange rates. Looking ahead, our AI offerings are generating very positive customer reviews and increased spend. Based on these early results, we are readying a new offering — agentic AI seamlessly integrated with unified communications, with a go-to market strategy targeting both direct and channel sales to small-medium businesses.
“Traditional Communications remained a strong cash generator. The segment contributed
“Because of our recent strong financial and operational performance, growth outlook, and balance sheet, we again repurchased stock in the second quarter and our Board has increased our annual dividend by 17% to
2Q26 RESULTS BY SEGMENT
National Retail Solutions (NRS)
| (In millions except for active POS terminals, payment processing accounts, recurring revenue per terminal, and gross profit margin. Numbers may not foot due to rounding.) | 2Q26 | 1Q26 | 2Q25 | 2Q26-2Q25 (%, ?) | ||||||||||||
| Terminals and payment processing accounts | ||||||||||||||||
| Active POS terminals | 38,900 | 37,900 | 34,800 | +12 | % | |||||||||||
| Payment processing accounts | 28,100 | 27,300 | 23,900 | +18 | % | |||||||||||
| Recurring revenue | ||||||||||||||||
| $ | 24.0 | $ | 23.8 | $ | 18.1 | +32 | % | |||||||||
| Advertising & Data | $ | 9.0 | $ | 7.2 | $ | 10.0 | (10 | )% | ||||||||
| SaaS Fees | $ | 4.4 | $ | 4.2 | $ | 3.5 | +26 | % | ||||||||
| Total recurring revenue | $ | 37.5 | $ | 35.3 | $ | 31.6 | +18 | % | ||||||||
| POS Terminal Sales | $ | 1.9 | $ | 1.8 | $ | 1.3 | +40 | % | ||||||||
| Total revenue | $ | 39.4 | $ | 37.1 | $ | 33.0 | +19 | % | ||||||||
| Monthly average recurring revenue per terminal* | $ | 325 | $ | 313 | $ | 310 | +5 | % | ||||||||
| Gross profit | $ | 36.3 | $ | 33.5 | $ | 30.3 | +20 | % | ||||||||
| Gross profit margin | 92.2 | % | 90.2 | % | 91.8 | % | +40 | bps | ||||||||
| Technology & development | $ | 2.5 | $ | 2.7 | $ | 2.2 | +18 | % | ||||||||
| SG&A | $ | 23.5 | $ | 21.9 | $ | 19.0 | +24 | % | ||||||||
| Income from operations | $ | 10.2 | $ | 8.9 | $ | 9.1 | +12 | % | ||||||||
| Adjusted EBITDA | $ | 11.8 | $ | 10.3 | $ | 10.3 | +15 | % | ||||||||
| CapEx | $ | 1.7 | $ | 1.6 | $ | 0.9 | +83 | % |
NRS Take-Aways
| ? | NRS added approximately 900 net active terminals and 800 net payment processing accounts during 2Q26. | |
| ? | The growth of NRS SaaS Fees again outpaced terminal expansion as retailers subscribed to higher-value subscription tiers, including a new premium service tier, and new third-party integrations with popular direct delivery partners DoorDash and | |
| ? | Merchant Services’ primary revenue growth drivers again included the increase in active payment processing accounts, increased customers’ utilization of credit and debit cards versus cash, and increased same-store sales. | |
| ? | NRS’ ‘Rule of 40’ score was 46 in 2Q26, indicating a productive balance between growth and profitability. |
BOSS Money and Fintech Segment
| (in millions except for average revenue per transaction and gross profit margin) | 2Q26 | 1Q26 | 2Q26 | 2Q26-2Q25 (%, ?) | ||||||||||||
| BOSS Money transactions* | 6.4 | 6.6 | 5.7 | +13 | % | |||||||||||
| Digital channel | 5.5 | 5.5 | 4.7 | +17 | % | |||||||||||
| Retail channel | 1.0 | 1.1 | 1.0 | (4 | )% | |||||||||||
| Fintech segment revenue | ||||||||||||||||
| BOSS Money | $ | 36.3 | $ | 38.3 | $ | 33.5 | +8 | % | ||||||||
| Digital channel | $ | 26.8 | $ | 27.9 | $ | 23.6 | +14 | % | ||||||||
| Retail channel | $ | 9.5 | $ | 10.4 | $ | 9.9 | (5 | )% | ||||||||
| Other | $ | 4.9 | $ | 4.4 | $ | 3.3 | +48 | % | ||||||||
| Total Fintech segment revenue | $ | 41.2 | $ | 42.7 | $ | 36.8 | +12 | % | ||||||||
| Average BOSS Money revenue per transaction* | $ | 5.63 | $ | 5.80 | $ | 5.87 | (4 | )% | ||||||||
| Fintech segment | ||||||||||||||||
| Gross profit | $ | 25.0 | $ | 25.5 | $ | 21.7 | +15 | % | ||||||||
| Gross profit margin | 60.6 | % | 59.8 | % | 58.9 | % | +170 | bps | ||||||||
| Technology & development | $ | 2.7 | $ | 2.5 | $ | 2.3 | +16 | % | ||||||||
| SG&A | $ | 18.2 | $ | 16.7 | $ | 16.3 | +12 | % | ||||||||
| Income from operations | $ | 4.1 | $ | 6.4 | $ | 3.1 | +32 | % | ||||||||
| Adjusted EBITDA | $ | 5.6 | $ | 7.5 | $ | 3.9 | +44 | % | ||||||||
| CapEx | $ | 1.1 | $ | 0.8 | $ | 0.8 | +28 | % |
BOSS Money and Fintech Take-Aways:
| ? | BOSS Money digital channel send volume* - the amount of principal transferred by BOSS Money customers using the BOSS Money and BOSS Revolution apps - increased by 29% in 2Q26 compared to 2Q25 reflecting increases in both transaction volume and average dollars sent per transaction. | |
| ? | The Fintech segment’s year-over-year increases in income from operations and Adjusted EBITDA were driven by BOSS Money’s digital transaction growth, decreases in BOSS Money operating costs per transaction, and by improved economics from other, smaller, businesses within the Fintech segment. |
net2phone
| (In millions except for seats and gross profit margin. Numbers may not foot due to rounding) | 2Q26 | 1Q26 | 2Q25 | 2Q26-2Q25 (%, ?) | ||||||||||||
| Seats | 435 | 432 | 410 | +6 | % | |||||||||||
| Revenue | ||||||||||||||||
| Subscription revenue* | $ | 23.4 | $ | 23.0 | $ | 21.0 | +12 | % | ||||||||
| Other | $ | 0.4 | $ | 0.4 | $ | 0.5 | (7 | )% | ||||||||
| Total revenue | $ | 23.9 | $ | 23.5 | $ | 21.5 | +11 | % | ||||||||
| Gross profit | $ | 19.3 | $ | 18.7 | $ | 17.0 | +13 | % | ||||||||
| Gross profit margin | 80.7 | % | 79.9 | % | 79.2 | % | +150 | bps | ||||||||
| Technology & development | $ | 3.1 | $ | 3.0 | $ | 2.8 | +11 | % | ||||||||
| SG&A | $ | 13.9 | $ | 13.7 | $ | 13.0 | +8 | % | ||||||||
| Income from operations | $ | 2.2 | $ | 1.9 | $ | 1.1 | +96 | % | ||||||||
| Adjusted EBITDA | $ | 3.9 | $ | 3.6 | $ | 2.9 | +37 | % | ||||||||
| CapEx | $ | 1.7 | $ | 1.8 | $ | 1.8 | (5 | )% |
net2phone Take-Aways:
| ? | Subscription revenue increased 12% year-over-year and gross profit increased 13% year-over-year, reflecting the increase in seats served, augmented by the positive FX impact of strengthening local currencies versus the | |
| ? | net2phone generated substantial year-over-year increases in income from operations and Adjusted EBITDA during 2Q26, benefitting from customer acquisition and operating cost discipline and from increased operating leverage as its business continues to scale. | |
| ? | net2phone launched a HIPAA-compatible agentic AI-solution for healthcare providers during 2Q26, and after the quarter close introduced another AI-powered solution specifically geared for the hospitality industry. |
| (In millions except for gross profit margin. Numbers may not foot due to rounding.) | 2Q26 | 1Q26 | 2Q25 | 2Q26-2Q25 (%, ?) | ||||||||||||
| Revenue | ||||||||||||||||
| IDT Digital Payments | $ | 104.4 | $ | 107.1 | $ | 101.6 | +3 | % | ||||||||
| BOSS Revolution | $ | 45.7 | $ | 47.0 | $ | 53.3 | (14 | )% | ||||||||
| $ | 60.2 | $ | 59.6 | $ | 51.3 | +17 | % | |||||||||
| Other revenue | $ | 5.8 | $ | 5.8 | $ | 5.9 | (1 | )% | ||||||||
| Total revenue | $ | 216.1 | $ | 219.5 | $ | 212.0 | +2 | % | ||||||||
| Gross profit | $ | 40.7 | $ | 40.4 | $ | 43.1 | (6 | )% | ||||||||
| Gross profit margin | 18.9 | % | 18.4 | % | 20.3 | % | (150 | )bps | ||||||||
| Technology & development | $ | 5.8 | $ | 5.5 | $ | 5.4 | +9 | % | ||||||||
| SG&A | $ | 20.3 | $ | 19.0 | $ | 19.4 | +5 | % | ||||||||
| Income from operations | $ | 14.3 | $ | 15.8 | $ | 18.1 | (21 | )% | ||||||||
| Adjusted EBITDA | $ | 18.8 | $ | 18.9 | $ | 20.6 | (9 | )% | ||||||||
| CapEx | $ | 1.6 | $ | 1.5 | $ | 1.2 | +32 | % |
Traditional Communications Take-Aways:
| ? | Sales on IDT Digital Payments’ Zendit B2B platform more than doubled year-over-year with growth across its mobile top-up, prepaid gift card and e-sim verticals. | |
| ? | The decrease in the overall segment’s gross profit primarily reflects a revenue mix shift at | |
OTHER FINANCIAL RESULTS
Consolidated results for all periods presented include corporate overhead. Corporate G&A expense decreased 7% to
As of
Net cash provided by operating activities in 2Q26 was
Capital expenditures increased to
FY 2026 FINANCIAL OUTLOOK
IDT is increasing its previous FY 2026 guidance for consolidated Adjusted EBITDA from
Reconciliations of Adjusted EBITDA to net income and income from operations for all periods presented are included in the Non-GAAP reconciliations provided at the end of this release.
DIVIDEND
The Board of Directors of
IDT EARNINGS ANNOUNCEMENT INFORMATION
This release is available for download in the “Investors & Media” section of the
IDT will host an earnings conference call beginning at
A replay of the conference call will be available approximately three hours after the call concludes through
ABOUT
All statements above that are not purely about historical facts, including, but not limited to, those in which we use the words “believe,” “anticipate,” “expect,” “plan,” “intend,” “estimate,” “target” and similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent our current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous important factors. Our filings with the
CONTACT
IDT Corporation Investor Relations
william.ulrey@idt.net
973-438-3838
CONDENSED CONSOLIDATED BALANCE SHEETS
2026 | 2025 | |||||||
| (Unaudited) (in thousands, except per share data) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 210,183 | $ | 226,505 | ||||
| Restricted cash and cash equivalents | 126,745 | 115,327 | ||||||
| Debt securities | 25,607 | 21,649 | ||||||
| Equity investments | 10,388 | 5,637 | ||||||
| Trade accounts receivable, net of allowance for credit losses of | 42,717 | 44,932 | ||||||
| Settlement assets, net of reserve of | 69,315 | 28,014 | ||||||
| Disbursement prefunding | 45,598 | 37,097 | ||||||
| Prepaid expenses | 11,588 | 12,440 | ||||||
| Other current assets | 30,659 | 28,702 | ||||||
| Total current assets | 572,800 | 520,303 | ||||||
| Property, plant, and equipment, net | 40,865 | 38,869 | ||||||
| 26,639 | 26,488 | |||||||
| Other intangibles, net | 4,476 | 5,056 | ||||||
| Equity investments | 5,179 | 6,658 | ||||||
| Operating lease right-of-use assets | 1,455 | 1,878 | ||||||
| Deferred income tax assets, net | 18,678 | 18,790 | ||||||
| Other assets | 8,199 | 8,161 | ||||||
| Total assets | $ | 678,291 | $ | 626,203 | ||||
| Liabilities, redeemable noncontrolling interest, and equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 16,648 | $ | 19,435 | ||||
| Accrued expenses | 90,030 | 97,295 | ||||||
| Deferred revenue | 27,022 | 27,726 | ||||||
| Customer funds deposits | 128,105 | 114,708 | ||||||
| Settlement liabilities | 18,547 | 13,922 | ||||||
| Other current liabilities | 28,059 | 19,910 | ||||||
| Total current liabilities | 308,411 | $ | 292,996 | |||||
| Operating lease liabilities | 753 | 1,103 | ||||||
| Other liabilities | 923 | 1,688 | ||||||
| Total liabilities | 310,087 | 295,787 | ||||||
| Commitments and contingencies | ||||||||
| Redeemable noncontrolling interest | 11,854 | 11,459 | ||||||
| Equity: | ||||||||
| Preferred stock, | — | — | ||||||
| Class A common stock, | 33 | 33 | ||||||
| Class B common stock, | 285 | 285 | ||||||
| Additional paid-in capital | 315,053 | 308,111 | ||||||
| (158,892 | ) | (143,853 | ) | |||||
| Accumulated other comprehensive loss | (14,156 | ) | (16,569 | ) | ||||
| Retained earnings | 197,416 | 157,124 | ||||||
| 339,739 | 305,131 | |||||||
| Noncontrolling interests | 16,611 | 13,826 | ||||||
| Total equity | 356,350 | 318,957 | ||||||
| Total liabilities, redeemable noncontrolling interest, and equity | $ | 678,291 | $ | 626,203 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Revenues | $ | 320,516 | $ | 303,349 | $ | 643,268 | $ | 612,915 | ||||||||
| Direct cost of revenues | 199,239 | 191,239 | 403,812 | 393,178 | ||||||||||||
| Gross profit | 121,277 | 112,110 | 239,456 | 219,737 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 78,846 | 70,721 | 152,853 | 141,772 | ||||||||||||
| Technology and development | 14,123 | 12,612 | 27,754 | 25,372 | ||||||||||||
| Severance | 227 | 233 | 431 | 410 | ||||||||||||
| Other operating expense, net | 836 | 227 | 247 | 227 | ||||||||||||
| Total operating expenses | 94,032 | 83,793 | 181,285 | 167,781 | ||||||||||||
| Income from operations | 27,245 | 28,317 | 58,171 | 51,956 | ||||||||||||
| Interest income, net | 1,640 | 1,354 | 3,348 | 2,782 | ||||||||||||
| Other income (expense), net | 186 | 207 | (281 | ) | (76 | ) | ||||||||||
| Income before income taxes | 29,071 | 29,878 | 61,238 | 54,662 | ||||||||||||
| Provision for income taxes | (6,247 | ) | (7,665 | ) | (14,318 | ) | (13,967 | ) | ||||||||
| Net income | 22,824 | 22,213 | 46,920 | 40,695 | ||||||||||||
| Net income attributable to noncontrolling interests | (1,876 | ) | (1,944 | ) | (3,610 | ) | (3,178 | ) | ||||||||
| Net income attributable to | $ | 20,948 | $ | 20,269 | $ | 43,310 | $ | 37,517 | ||||||||
| Earnings per share attributable to | ||||||||||||||||
| Basic | $ | 0.84 | $ | 0.81 | $ | 1.72 | $ | 1.49 | ||||||||
| Diluted | $ | 0.84 | $ | 0.80 | $ | 1.72 | $ | 1.48 | ||||||||
| Weighted-average number of shares used in calculation of earnings per share: | ||||||||||||||||
| Basic | 25,048 | 25,161 | 25,115 | 25,182 | ||||||||||||
| Diluted | 25,055 | 25,324 | 25,124 | 25,343 | ||||||||||||
| Stock-based compensation included in total operating expenses | $ | 4,348 | $ | 863 | $ | 6,362 | $ | 1,774 | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| Six Months Ended | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Operating activities | ||||||||
| Net income | $ | 46,920 | $ | 40,695 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 10,698 | 10,490 | ||||||
| Deferred income taxes | 85 | 12,674 | ||||||
| Provision for credit losses, doubtful accounts receivable, and reserve for settlement assets | 2,372 | 2,472 | ||||||
| Stock-based compensation | 6,361 | 1,774 | ||||||
| Other | 1,971 | 1,077 | ||||||
| Changes in assets and liabilities: | ||||||||
| Trade accounts receivable | 761 | (4,271 | ) | |||||
| Settlement assets and disbursement prefunding | (50,261 | ) | (47,262 | ) | ||||
| Prepaid expenses, other current assets, and other assets | 961 | 311 | ||||||
| Trade accounts payable, accrued expenses, settlement liabilities, other current liabilities, and other liabilities | 68 | (11,844 | ) | |||||
| Customer funds deposits | 9,587 | 15,701 | ||||||
| Deferred revenue | (1,343 | ) | (1,500 | ) | ||||
| Net cash provided by operating activities | 28,180 | 20,317 | ||||||
| Investing activities | ||||||||
| Capital expenditures | (11,969 | ) | (10,100 | ) | ||||
| Purchase of equity investments | (500 | ) | — | |||||
| Purchase of convertible preferred stock in equity method investment | — | (673 | ) | |||||
| Purchases of debt and equity securities | (26,319 | ) | (15,997 | ) | ||||
| Proceeds from maturities and sales of debt and equity securities | 17,354 | 16,751 | ||||||
| Net cash used in investing activities | (21,434 | ) | (10,019 | ) | ||||
| Financing activities | ||||||||
| Dividends paid | (3,018 | ) | (2,524 | ) | ||||
| Distributions to noncontrolling interests | (50 | ) | (50 | ) | ||||
| Proceeds from borrowings under revolving credit facility | 15,987 | 24,534 | ||||||
| Repayment of borrowings under revolving credit facility | (15,987 | ) | (24,534 | ) | ||||
| Proceeds from borrowings | 125 | — | ||||||
| Repayment of borrowings | (100 | ) | — | |||||
| Proceeds from exercise of stock options | 200 | — | ||||||
| Repurchases of Class B common stock | (15,039 | ) | (11,395 | ) | ||||
| Net cash used in financing activities | (17,882 | ) | (13,969 | ) | ||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents | 6,232 | (4,079 | ) | |||||
| Net decrease in cash, cash equivalents, and restricted cash and cash equivalents | (4,904 | ) | (7,750 | ) | ||||
| Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period | 341,832 | 255,456 | ||||||
| Cash, cash equivalents, and restricted cash and cash equivalents at end of period | $ | 336,928 | $ | 247,706 | ||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid during the period for: | ||||||||
| Income taxes | $ | 7,000 | $ | — | ||||
| Non-Cash Financing Activities | ||||||||
| Shares of the Company’s Class B common stock issued to an executive officer for bonus payment | $ | — | $ | 1,824 | ||||
| Value of the Company’s DSUs exchanged for National Retail Solutions shares | $ | 3,547 | $ | — | ||||
Reconciliation of Non-GAAP Financial Measures for the Second Quarter Fiscal 2026 and 2025
In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in
Generally, a non-GAAP measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.
IDT’s measure of Adjusted EBITDA starts with net income from operations in accordance with GAAP and adds depreciation and amortization, severance expense, stock-based compensation, and other operating expenses, and deducts other operating income.
IDT’s measure of Non-GAAP EPS is calculated by dividing non-GAAP net income by the diluted weighted-average shares. IDT’s measure of non-GAAP net income starts with net income attributable to IDT in accordance with GAAP and adds severance expense, stock-based compensation, and other operating expenses, and deducts other operating income. These additions and subtractions are non-cash and/or non-routine items in the relevant fiscal 2026 and fiscal 2025 periods.
Management believes that IDT’s Adjusted EBITDA and Non-GAAP EPS are measures which provide useful information to both management and investors by excluding certain expenses and non-routine gains and losses that may not be indicative of IDT’s or the relevant segment’s core operating results. Management uses Adjusted EBITDA, among other measures, as a relevant indicator of core operational strengths in its financial and operational decision making. In addition, management uses Adjusted EBITDA and Non-GAAP EPS to evaluate operating performance in relation to IDT’s competitors. Disclosure of these financial measures may be useful to investors in evaluating performance and allow for greater transparency of the underlying supplemental information used by management in its financial and operational decision-making. In addition, IDT has historically reported similar financial measures and believes such measures are commonly used by readers of financial information in assessing performance, therefore the inclusion of comparative numbers provides consistency in financial reporting.
Management refers to Adjusted EBITDA, as well as the GAAP measures income (loss) from operations and net income, on a segment and/or consolidated level to facilitate internal and external comparisons to the segments’ and IDT’s historical operating results, in making operating decisions, for budget and planning purposes, and to form the basis upon which management is compensated.
While depreciation and amortization are considered operating costs under GAAP, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or capitalized in prior periods. IDT’s Adjusted EBITDA, which is exclusive of depreciation and amortization, is a useful indicator of its current performance.
Severance expense is excluded from the calculation of Adjusted EBITDA and Non-GAAP EPS. Severance expense is reflective of decisions made by management in each period regarding the aspects of IDT’s and its segments’ businesses to be focused on in light of changing market realities and other factors. While there may be similar charges in other periods, the nature and magnitude of these charges can fluctuate markedly and do not reflect the performance of IDT’s core and continuing operations.
Other operating income (expense), net, which is a component of income (loss) from operations, is excluded from the calculation of Adjusted EBITDA and Non-GAAP EPS. Other operating expense, net primarily includes legal fees net of insurance claims related to Straight Path Communications Inc.’s stockholders’ class action, legal settlements, and gains from the write-off of contingent consideration liabilities. From time-to-time, IDT may have gains or incur costs related to non-routine legal, tax, and other matters, however, these various items generally do not occur each quarter. IDT believes the gain and losses from these non-routine matters are not components of IDT’s or the relevant segment’s core operating results.
Stock-based compensation recognized by IDT and other companies may not be comparable because of the variety of types of awards as well as the various valuation methodologies and subjective assumptions that are permitted under GAAP. Stock-based compensation is excluded from IDT’s calculation of Adjusted EBITDA and Non-GAAP EPS because management believes this allows investors to make more meaningful comparisons of the operating results per share of IDT’s core business with the results of other companies. Stock-based compensation continues to be a significant expense for IDT and an important part of employees’ compensation that impacts their performance.
Adjusted EBITDA and Non-GAAP EPS should be considered in addition to, not as a substitute for, or superior to, income (loss) from operations, cash flow from operating activities, net income, basic and diluted earnings per share or other measures of liquidity and financial performance prepared in accordance with GAAP. In addition, IDT’s measurements of Adjusted EBITDA and Non-GAAP EPS may not be comparable to similarly titled measures reported by other companies.
The ‘Rule of 40’ score is a metric used to evaluate the performance of SaaS providers. It postulates that a SaaS provider’s revenue growth rate plus its EBITDA margin should equal or exceed 40 percent. The ‘Rule of 40’ is typically used to assess a company’s balance between growth and profitability. A total of over 40 is thought to indicate a healthy combination of expansion and financial stability, making it a useful tool for management and investors to gauge the potential for long-term success and make informed decisions about resource allocation and business strategy.
NRS’ ‘Rule of 40’ score is computed by adding (a) the growth rate of NRS’ recurring revenue for the relevant period compared to the corresponding year ago period to (b) NRS’ Adjusted EBITDA margin for the twelve-month period through the end of the current period. NRS’ recurring revenue is calculated by subtracting NRS’ revenue from POS terminal sales from its total GAAP revenue. Adjusted EBITDA is a non-GAAP measure as discussed above. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by GAAP revenue for the relevant period.
IDT’s Non-GAAP adjusted measure of net cash provided by operating activities is calculated by excluding the impact of changes in customer funds deposits held from net cash provided by operating activities. Customer funds deposits represent, for the most part, funds loaded by customers of the various prepaid debit card programs issued under IDT’s wholly-owned back in
Following are reconciliations of Adjusted EBITDA and Non-GAAP EPS to the most directly comparable GAAP measure, which are, (a) for Adjusted EBITDA, (i) income (loss) from operations for IDT’s reportable segments and (ii) net income for IDT on a consolidated basis, and (b) for Non-GAAP EPS, diluted earnings per share. Also following is NRS’ ‘Rule of 40’ score computation including the reconciliation of NRS’ Adjusted EBITDA to the most directly comparable GAAP measure, NRS’ income from operations, and IDT’s Non-GAAP adjusted measure of net cash provided by operating activities reconciled to GAAP net cash provided by operating activities.
Reconciliation of Net Income to Adjusted EBITDA for the three months ended 2Q26, 1Q26, and 2Q25
(unaudited) in millions. Figures may not foot or cross-foot due to rounding
| Traditional Comm. | net2phone | NRS | Fintech | Corporate | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||
| Net income attributable to | $ | 20.9 | ||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | $ | (1.9 | ) | |||||||||||||||||||||
| Net income | $ | 22.8 | ||||||||||||||||||||||
| Provision for income taxes | $ | (6.2 | ) | |||||||||||||||||||||
| Income before income taxes | $ | 29.1 | ||||||||||||||||||||||
| Interest income, net | $ | 1.6 | ||||||||||||||||||||||
| Other expense, net | $ | 0.2 | ||||||||||||||||||||||
| Income (loss) from operations | $ | 27.2 | $ | 14.3 | $ | 2.2 | $ | 10.2 | $ | 4.1 | $ | (3.5 | ) | |||||||||||
| Depreciation and amortization | $ | 5.4 | $ | 1.8 | $ | 1.7 | $ | 1.2 | $ | 0.8 | $ | 0.0 | ||||||||||||
| Stock-based compensation | $ | 4.3 | $ | 2.4 | $ | 0.0 | $ | 0.4 | $ | 0.8 | $ | 0.7 | ||||||||||||
| Other operating expense, net | $ | 0.8 | $ | 0.2 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.7 | ||||||||||||
| Severance expense | $ | 0.2 | $ | 0.1 | $ | 0.1 | $ | 0.0 | $ | 0.0 | $ | 0.0 | ||||||||||||
| Adjusted EBITDA | $ | 38.0 | $ | 18.8 | $ | 3.9 | $ | 11.8 | $ | 5.6 | $ | (2.1 | ) | |||||||||||
| Traditional Comm. | net2phone | NRS | Fintech | Corporate | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||
| Net income attributable to | $ | 22.4 | ||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | $ | (1.7 | ) | |||||||||||||||||||||
| Net income | $ | 24.1 | ||||||||||||||||||||||
| Provision for income taxes | $ | (8.1 | ) | |||||||||||||||||||||
| Income before income taxes | $ | 32.2 | ||||||||||||||||||||||
| Interest income, net | $ | 1.7 | ||||||||||||||||||||||
| Other expense, net | $ | (0.5 | ) | |||||||||||||||||||||
| Income (loss) from operations | $ | 30.9 | $ | 15.8 | $ | 1.9 | $ | 8.9 | $ | 6.4 | $ | (2.2 | ) | |||||||||||
| Depreciation and amortization | $ | 5.3 | $ | 1.8 | $ | 1.6 | $ | 1.1 | $ | 0.7 | $ | 0.0 | ||||||||||||
| Stock-based compensation | $ | 2.0 | $ | 1.1 | $ | 0.0 | $ | 0.2 | $ | 0.3 | $ | 0.3 | ||||||||||||
| Other operating income, net | $ | (0.6 | ) | $ | (0.1 | ) | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | (0.5 | ) | |||||||||
| Severance expense | $ | 0.2 | $ | 0.1 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | ||||||||||||
| Adjusted EBITDA | $ | 37.9 | $ | 18.9 | $ | 3.6 | $ | 10.3 | $ | 7.5 | $ | (2.4 | ) | |||||||||||
| Three Months Ended | ||||||||||||||||||||||||
| Net income attributable to | $ | 20.3 | ||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | $ | (1.9 | ) | |||||||||||||||||||||
| Net income | $ | 22.2 | ||||||||||||||||||||||
| Provision for income taxes | $ | (7.7 | ) | |||||||||||||||||||||
| Income before income taxes | $ | 29.9 | ||||||||||||||||||||||
| Interest income, net | $ | 1.4 | ||||||||||||||||||||||
| Other expense, net | $ | 0.2 | ||||||||||||||||||||||
| Income (loss) from operations | $ | 28.3 | $ | 18.1 | $ | 1.1 | $ | 9.1 | $ | 3.1 | $ | (3.1 | ) | |||||||||||
| Depreciation and amortization | $ | 5.2 | $ | 1.9 | $ | 1.6 | $ | 1.0 | $ | 0.8 | $ | 0.0 | ||||||||||||
| Stock-based compensation | $ | 0.9 | $ | 0.3 | $ | 0.0 | $ | 0.2 | $ | 0.1 | $ | 0.3 | ||||||||||||
| Other operating income, net | $ | 0.2 | $ | 0.0 | $ | 0.2 | $ | 0.0 | $ | 0.0 | $ | 0.0 | ||||||||||||
| Severance expense | $ | 0.2 | $ | 0.2 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | ||||||||||||
| Adjusted EBITDA | $ | 34.9 | $ | 20.6 | $ | 2.9 | $ | 10.3 | $ | 3.9 | $ | (2.8 | ) | |||||||||||
Reconciliation of Earnings Per Share (EPS) to Non-GAAP EPS for 2Q26 and 2Q25
(unaudited) in millions, except for per share data. Figures may not foot due to rounding
| 2Q26 | 2Q25 | |||||||
| Net income attributable to | $ | 20.9 | $ | 20.3 | ||||
| Adjustments (add) subtract: | ||||||||
| Stock-based compensation | (4.3 | ) | (0.9 | ) | ||||
| Severance expense | (0.2 | ) | (0.2 | ) | ||||
| Other operating income, net | (0.8 | ) | (0.2 | ) | ||||
| Total adjustments | (5.4 | ) | (1.3 | ) | ||||
| Income tax effect of total adjustments | (1.3 | ) | (0.3 | ) | ||||
| 4.1 | 1.0 | |||||||
| Non-GAAP net income | $ | 25.0 | $ | 21.3 | ||||
| Earnings per share: | ||||||||
| Basic | $ | 0.84 | $ | 0.81 | ||||
| Total adjustments | 0.16 | 0.03 | ||||||
| Non-GAAP - basic | $ | 1.00 | $ | 0.84 | ||||
| Weighted-average number of shares used in calculation of basic earnings per share | 25.0 | 25.2 | ||||||
| Diluted | $ | 0.84 | $ | 0.80 | ||||
| Total adjustments | 0.16 | 0.04 | ||||||
| Non-GAAP - diluted | $ | 1.00 | $ | 0.84 | ||||
| Weighted-average number of shares used in calculation of diluted earnings per share | 25.1 | 25.3 | ||||||
NRS’ ‘Rule of 40’ Score
For 2Q26
(unaudited) in millions. Figures may not foot due to rounding
| Trailing twelve months (TTM) | ||||||||||||||||||||
| 3Q25 | 4Q25 | 1Q26 | 2Q26 | 2Q26 | ||||||||||||||||
| Reconciliation of NRS’ Income from Operations to Adjusted EBITDA | ||||||||||||||||||||
| Income from operations | $ | 6.2 | $ | 5.8 | $ | 8.9 | $ | 10.2 | $ | 31.1 | ||||||||||
| Depreciation and amortization | 1.0 | 1.1 | 1.1 | 1.2 | 4.4 | |||||||||||||||
| Stock-based compensation | 0.6 | 0.2 | 0.2 | 0.4 | 1.4 | |||||||||||||||
| Other operating expense, net | 0.0 | 2.4 | 0.0 | 0.0 | 2.4 | |||||||||||||||
| Adjusted EBITDA | $ | 7.8 | $ | 9.5 | $ | 10.3 | $ | 11.8 | $ | 39.4 | ||||||||||
| 2Q26 | 2Q25 | |||||||
| NRS’ ‘Rule of 40’ Score | ||||||||
| NRS recurring revenue | $ | 37.5 | $ | 31.6 | ||||
| NRS other revenue | 1.9 | 1.3 | ||||||
| NRS total revenue | $ | 39.3 | $ | 33.0 | ||||
| NRS recurring revenue growth rate | 18 | % | ||||||
| NRS TTM Adjusted EBITDA (from above) | $ | 39.4 | ||||||
| NRS TTM total revenue | 141.9 | |||||||
| NRS TTM Adjusted EBITDA margin | 28 | % | ||||||
| Rule of 40 score | 46 | % | ||||||
Adjusted net cash provided by operating activities for 2Q26 and 2Q25
(unaudited) in millions. Figures may not foot due to rounding
| (in millions) | ||||||||
| Three months ended | 2Q26 | 2Q25 | ||||||
| Net cash provided by operating activities (GAAP) | $ | 38.3 | $ | 20.2 | ||||
| Changes in customer deposits | $ | (1.0 | ) | $ | 12.9 | |||
| Adjusted net cash provided by operating activities | $ | 39.3 | $ | 7.3 | ||||
Explanation of Key Performance Metrics
net2phone Subscription Revenue is calculated by subtracting net2phone’s equipment revenue and revenue generated by a legacy SIP trunking offering in
NRS’ Monthly Average Recurring Revenue per Terminal is calculated by dividing NRS’ recurring revenue as defined in the Reconciliation of Non-GAAP Financial Measures by the average number of active POS terminals during the period. The average number of active POS terminals is calculated by adding the beginning and ending number of active POS terminals during the period and dividing by two. NRS’ recurring revenue divided by the average number of active POS terminals is divided by three when the period is a fiscal quarter. Recurring Revenue and Monthly Average Recurring Revenue per Terminal are useful for comparisons of NRS’ revenue and revenue per customer to prior periods and to competitors and others in the market, as well as for forecasting future revenue from the customer base.
BOSS Money Transactions are a nonfinancial metric that measures customer usage during a reporting period. Average BOSS Money Revenue per Transaction measures the revenue productivity of BOSS Money’s remittance business. It is calculated by dividing BOSS Money revenue during the period by the number of transactions. Average BOSS Money Revenue per Transaction is a key metric for evaluating the productivity and operational performance of the business. BOSS Money’s Digital Send Volume is the aggregate amount of principal remitted by BOSS Money’s digital customers – those using the BOSS Money and BOSS Revolutions apps to originate remittances. Digital Send Volume is a key metric for evaluating the operational performance of the digital channel of the remittance business, and for comparing the performance of BOSS Money’s digital channel to competitors in the remittance business as well as to performance to other temporal periods.
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