Shares of IDT Corporation IDT have gained 5.4% since the company reported its earnings for the quarter ended Jan. 31, 2025. This compares to the S&P 500 Index’s 4% loss over the same time frame. Over the past month, the stock gained 2.8% against the S&P 500’s 7.5% decline.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Strong Revenue and Earnings Growth
IDT delivered solid financial results for the second quarter of fiscal 2025, with revenue increasing 2.4% year over year to $303.3 million from $296.1 million in the year-ago quarter. Gross profit surged 15.7% to a record $112.1 million, with the gross margin expanding 420 basis points to 36.9% from 32.7% in the year-ago quarter. The company’s income from operations jumped 76.8% to $28.3 million from $16 million in the year-ago quarter, while net income attributable to IDT rose 40.5% to $20.3 million from $14.4 million in the year-ago quarter.
Earnings per share (EPS) reflected this growth, with GAAP EPS increasing 40.4% to $0.80 from $0.57 in the year-ago quarter. Non-GAAP EPS also improved, rising 25.4% to $0.84 from $0.67. Adjusted EBITDA saw a significant 55.9% increase, reaching $34 million.
National Retail Solutions (NRS): Recurring revenues grew 32% to $31.6 million from $23.9 million in the year-ago period, reflecting a strong increase in active POS terminals (+21%) and payment processing accounts (+32%). Total revenues grew 31% to $33 million from $25.2 million in the year-ago period. Income from operations climbed 71% to $9.1 million from $5.3 million in the year-ago period, while adjusted EBITDA increased 65% to $10.1 million from $6.1 million in the year-ago period.
Fintech: The segment saw a 36% increase in BOSS Money transactions, reaching 5.7 million from 4.2 million in the year-ago period, while BOSS Money revenues rose 34% to $33.5 million from $25 million in the year-ago period. Total revenues grew 32% to $36.8 million from $28 million in the year-ago period. Gross profit grew 35% to $21.7 million from $16.1 million in the year-ago period, and the segment’s income from operations swung to a profit of $3.1 million from a loss of $0.7 million in the prior year. Adjusted EBITDA improved to $3.9 million from a loss of $12,000.
net2phone: Subscription revenues rose 9% to $21 million (14% on a constant currency basis) from $19.3 million in the year-ago period. Total revenues grew 6% to $21.5 million from $20.4 million in the year-ago period. Income from operations grew 201% to $1.1 million from $0.4 million, while adjusted EBITDA jumped 55% to $2.9 million from $1.8 million.
Traditional Communications: Total revenues declined 5% to $212 million from $222.5 million in the year-ago period. The segment generated a 2% increase in gross profit to $43.1 million from $42.3 million in the year-ago period. Income from operations advanced 24% to $18.1 million from $14.6 million in the year-ago period, and adjusted EBITDA increased 19% to $20.2 million from $17 million in the year-ago period.
Other Key Business Metrics
IDT’s balance sheet remained strong, with cash, cash equivalents, debt securities, and current equity investments totaling $171.1 million as of Jan. 31, 2025, compared with $193 million as of July 31, 2024. The company had no outstanding debt at the quarter-end.
However, net cash provided by operating activities declined to $20.3 million from $43.3 million in the year-ago quarter. Excluding changes in customer funds deposits at IDT’s Fintech segment, net cash from operations was $7.3 million, down from $25.4 million, primarily due to the timing of payments related to BOSS Money disbursement prefunding.
IDT increased its quarterly dividend by 20% to $0.06 per share. The company also repurchased 179,338 shares of Class B common stock for $8.5 million at an average price of $47.59 per share during the quarter. This brought the total repurchases over the past 12 months to 380,000 shares for $16 million. Management indicated that they expect to continue increasing the dividend annually and remain committed to opportunistic share repurchases.
Management Commentary
CEO Shmuel Jonas attributed the strong performance to the company’s growth across key segments, particularly in NRS and BOSS Money, as well as improving profitability in Traditional Communications. He highlighted NRS’ deeper penetration in the independent retailer market and the ongoing expansion of BOSS Money’s digital transactions.
Jonas also expressed enthusiasm for net2phone’s AI-powered virtual agent, which is expected to enhance customer interactions and operational efficiencies. Management emphasized the continued focus on optimizing profitability while maintaining growth, particularly in the fintech segment.
Guidance and Market Outlook
IDT expects to generate at least as much adjusted EBITDA in the second half of fiscal 2025 as it did in the first half, suggesting approximately 40% growth for the full year. While management remains cautious about the potential impacts of new federal immigration policies, they have not observed any significant slowdown in key business segments.
Other Developments
During the quarter, BOSS Money expanded its payout network, adding services in Venezuela and Eritrea. Brazil is expected to come online in the fiscal third quarter. The segment also launched debit card payment capabilities at BOSS Money retailers across the United States.
In addition, net2phone introduced its AI-powered virtual assistant, which has already been implemented internally and is expected to drive efficiencies for customers across various industries.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
