IDT CORP (IDT)·Q3 2025 Earnings Summary

Executive Summary

• Consolidated revenue grew 1% year-over-year to $302.0M, gross profit rose 15% to $112.0M, and gross margin reached a record 37.1% while results were “slightly softer than our second quarter” due to seasonality; GAAP EPS was $0.86 and Non-GAAP EPS $0.90 .
• Operating leverage drove income from operations up 133% to $26.6M and Adjusted EBITDA up 57% to $32.2M; cash and investments were $223.8M at quarter-end with no debt .
• Segment highlights: Fintech (BOSS Money) revenue +25% with digital send volume +40% YoY; net2phone launched AI Agents and plans ‘Coach’; Traditional Communications boosted profitability despite revenue decline; NRS recurring revenue +23% but ad/programmatic softness .
• Guidance: CFO reaffirmed full-year FY25 Adjusted EBITDA guidance to double 1H total ($63M) to $126M; quarterly dividend maintained at $0.06 (raised in Q2) .
• Near-term catalysts: AI Agents commercialization at net2phone, DoorDash integration on NRS POS for hyperlocal delivery, pricing optimization at BOSS Money, continued cost discipline in Traditional Communications .

What Went Well and What Went Wrong

What Went Well

• “Gross profit increased 15% year over year… Our gross profit margin reached another record high of 37.1” (CFO) .
• net2phone began deploying AI Agents; “customers are already seeing the benefits, including enhanced efficiency” and ‘Coach’ is next (CEO) .
• Fintech/BOSS Money scaled profitably: transactions +27% to 6.0M, digital send volume +40% YoY; segment income from operations reached $4.3M and Adjusted EBITDA $5.0M .

What Went Wrong

• NRS Advertising & Data revenue down 12.3% YoY due to deliberate slowdown to a large programmatic partner to limit bad-debt risk; $1.4M bad-debt provision recorded (CFO) .
• Seasonality: Q3 has ~89 days vs ~92 in other quarters and is typically weakest for NRS advertising, making results “slightly softer” vs Q2 (CFO/CEO) .
• FX headwinds tempered net2phone reported subscription revenue; constant currency +11% vs reported +7% (management focus shifting to ARPU and margins) .

Financial Results

Consolidated results vs prior periods

Notes: Non-GAAP EPS adjustments include stock-based comp, severance, and other operating items; Q3 adjusted added ~$0.04 to diluted EPS .

Segment breakdown (revenue, profitability)

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “IDT’s third quarter was solid, with strong year-over-year gains, while slightly softer than our second quarter in part because of expected seasonal factors.”
• CEO: “net2phone’s Adjusted EBITDA margin reached 15%… began to offer its AI Agents this quarter… preparing to launch another AI-powered service ‘Coach’.”
• CFO: “Our gross profit margin reached another record high of 37.1… Traditional communications adjusted EBITDA margin for Q3 grew to 9.2% from 6.7% one year ago.”
• CFO: “Advertising and data revenue decreased… because of our decision to limit sales to one of our larger programmatic platform clients… set up a bad debt expense provision of $1.4 million relating to amounts due from this client.”
• CFO: “We remain fully on track to [FY25]… double our first half $63 million Adjusted EBITDA total for the full year to $126,000,000.”

Q&A Highlights

• NRS growth drivers and go-to-market: Management emphasized salesforce expansion and focus on merchant services uptake; near-term terminal adds may lag revenue realization timing .
• net2phone AI Agents: Early deployments largely to existing customers across verticals (call centers, healthcare, accounting, collections); plan to verticalize solutions over the next year .
• BOSS Money profitability: Customers sending larger amounts per transaction; company testing pricing by region; exploring stablecoin-to-wallet rails with linked Visa cards to enhance user experience and monetization .
• NRS advertising partner: Sales “deliberately reduced”; partner now ~5% of ad revenue vs >20% a year ago; other partners growing ~10% YoY and likely to backfill .
• Capital allocation: Continue buybacks with excess cash but prioritize funding organic growth/M&A; no debt-financed repurchases .

Estimates Context

• S&P Global consensus for Q3 FY2025 was unavailable for EPS and revenue (limited or no coverage). Actuals: Revenue $302.0M and GAAP diluted EPS $0.86; Non-GAAP EPS $0.90 . Values retrieved from S&P Global for consensus; coverage appears insufficient to compute means.*

*Values retrieved from S&P Global.

Implication: With no formal Street benchmarks, the narrative and segment KPIs will likely drive price discovery; estimate models may revise upward on Fintech/net2phone profitability momentum and consolidated margin resilience.

Key Takeaways for Investors

• Consolidated margin expansion continues; record 37.1% gross margin with strong YoY growth in operating income and Adjusted EBITDA—focus on operating leverage appears intact .
• Fintech/BOSS Money is scaling profitably with digital-led growth and pricing optimization; watch for initiatives (wallets/stablecoin rails) that could increase monetization per user .
• net2phone’s AI Agents/‘Coach’ add new revenue drivers; constant-currency growth outpaces reported due to FX—ARPU and margin focus should lift profitability through FY26 .
• NRS remains healthy on recurring revenue and merchant services momentum, but programmatic ad exposure is a tactical headwind; direct channel build-out should mitigate .
• Traditional Communications continues to contribute cash with improved margins despite expected structural revenue declines—cost discipline is a persistent tailwind .
• Guidance reaffirmation to ~$126M FY25 Adjusted EBITDA and a steady $0.06 quarterly dividend anchor the near-term setup; capital allocation remains balanced with organic growth and selective M&A .
• Near-term trading: Expect sensitivity to AI product traction (net2phone), BOSS Money pricing tests, and NRS ad normalization; medium-term thesis centers on multi-asset operating leverage and profitable growth across Fintech and cloud communications .