IDT Corporation Reports Strong Q1 Growth, Outperforming Market
Shares of IDT Corporation have gained 3.1% since the company reported its earnings for the quarter ended October 31, 2024, surpassing the S&P 500 index’s modest 0.1% rise during the same period. Over the last month, IDT stock increased by 2.3%, outperforming the S&P 500’s 0.9% gain, signaling robust momentum in its stock performance.
For the quarter that ended on October 31, 2024, IDT reported consolidated revenues of $309.6 million, marking a 2.8% year-over-year increase. This growth was propelled by key segments, including National Retail Solutions (NRS), BOSS Money, and net2phone. The company saw a 14.5% rise in gross profit, totaling $107.6 million, alongside an improvement in gross margin, which increased by 356 basis points to 34.8%. Income from operations for the first quarter of fiscal 2025 reached $23.6 million, reflecting a significant year-over-year rise of 37.7%.
Net income attributable to IDT surged by 125.2% to $17.2 million in the first quarter of fiscal 2025. This translated to earnings per share (EPS) soaring 126.7%, reaching $0.68 compared to $0.30 in the same quarter of fiscal 2024. Additionally, adjusted EBITDA hit a record $29.1 million, up 30.5% year-over-year.
Examining the segments, NRS recurring revenue rose 29.3% to $28.9 million, while the Fintech segment, driven by BOSS Money, experienced a revenue leap of 39.6% to $37.1 million. Meanwhile, the Traditional Communications segment faced a 4.4% decline in revenue to $220.5 million but achieved a slight increase in income from operations.
Business Performance Highlights
NRS: This segment showed robust growth, with active POS terminals increasing by 21.7% year-over-year to 33,100. Income from operations rose by 21.1% to $6.6 million, and adjusted EBITDA grew by 22.6% to $7.6 million. The company attributed this success to increased merchant services revenues spurred by a 32.7% rise in payment processing accounts and an expanding POS network.
Fintech Segment: BOSS Money performed exceptionally well, with revenues climbing 39% year-over-year. Notable growth in transaction volume, particularly through digital channels, helped boost gross margins. The income from operations turned positive, jumping from a loss of $1.4 million in the first quarter of fiscal 2024 to a profit of $3.2 million in fiscal 2025. Adjusted EBITDA for this segment also staged a recovery, reaching $4 million, up from a $0.7 million loss.
net2phone: The subscription revenues for net2phone rose 13.4% to $21 million, supported by an 11% increase in served seats. Despite facing currency challenges in Latin America, this segment reported income from operations of $1 million, with adjusted EBITDA growing 77% to $2.5 million. Management highlighted its focus on expanding its U.S. market presence for stronger profitability.
Traditional Communications: This segment encountered difficulties, with a revenue decline of 4.4% to $220.5 million, mainly due to a drop in BOSS Revolution’s usage. However, improved pricing and effective cost management resulted in a slight increase of 1.7% in income from operations, totaling $15.7 million.
IDT Corporation Stock Performance Overview
IDT Corporation price-consensus-eps-surprise-chart | IDT Corporation Quote
Management Insights
CEO Shmuel Jonas recognized the company’s strong performance across its main sectors, crediting investments in product development and enhanced operational efficiencies. The focus on improving gross margins within the BOSS Money retail channel and extending net2phone’s U.S. market reach were noted as key factors contributing to this quarter’s success.
Drivers of Growth
Management emphasized margin enhancements in critical segments and operational efficiency as essential factors for success in the quarter. The ability to tackle foreign exchange hurdles and increased focus on high-margin initiatives helped sustain momentum. The strategy to leverage synergies among its businesses, such as cross-marketing within the BOSS ecosystem, played a significant role in maintaining growth.
Future Outlook and Guidance
IDT remains optimistic about maintaining its growth momentum, especially in high-margin areas like NRS and BOSS Money. Although faced with challenges such as currency fluctuations in Latin America, the company is geared towards strengthening its operations in the U.S. market.
Recent Developments
In the last quarter, IDT repurchased 37,714 shares of Class B common stock for $1.3 million, reinforcing its commitment to enhancing shareholder value. The company’s liquidity remains robust, with $180.4 million in cash and investments, though this marked a slight decrease due to prefunding disbursement payments within its Fintech segment.
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