IDT Stock Slips Following Q4 Earnings Despite Strong Segment Growth

Shares of IDT Corporation IDT have lost 20.3% since the company reported earnings for the quarter ended July 31, 2025. This compares unfavorably with the S&P 500 Index, which gained 0.9% over the same period. Over the past month, the stock has fallen 23.2%, while the S&P 500 jumped 3.6%.IDT’s Financial Performance OverviewFor the fourth quarter of fiscal 2025, IDT posted consolidated revenues of $316.6 million, up 3% year over year. Gross profit rose 12% to $114.5 million, with margins improving 310 basis points to 36.2%. Income from operations increased 9% to $21.9 million, while adjusted EBITDA surged 33% to $33.4 million from $25.2 million. GAAP earnings per share (EPS) fell 53.8% to $0.67 from $1.45 a year earlier, reflecting the absence of a prior-year tax benefit, but non-GAAP EPS climbed 33.3% to $0.76 from $0.57.For the full fiscal 2025, revenues edged up 2.1% to $1.23 billion from $1.21 billion, marking IDT’s first annual revenue increase since 2021. Net income attributable to IDT rose 18.1% to $76.1 million from $64.5 million, driving GAAP EPS by 18.5% to $3.01 versus $2.54 in fiscal 2024. Non-GAAP EPS jumped 63.6% to $3.19 from $1.95, while adjusted EBITDA surged 43% to a record $128.7 million from $89.7 million.IDT’s Segmental ResultsNational Retail Solutions (NRS): Recurring revenues grew 22% year over year in fourth-quarter fiscal 2025 to $32.6 million from $26.7 million, led by merchant services and SaaS fees, both exceeding 30% growth. Income from operations dipped 3% to $5.8 million from $6 million due to nonrecurring expenses, but adjusted EBITDA rose 32% to $9.3 million from $7.1 million. For the year, recurring revenue increased 27% to $122.6 million from $96.9 million, while adjusted EBITDA jumped 37% to $34.2 million from $25 million. NRS expanded its installed base to 37,200 active POS terminals from 32,100 year over year, though management flagged higher churn, which it plans to address with AI-driven retention initiatives.BOSS Money / Fintech: Fourth-quarter fiscal 2025 BOSS Money transactions climbed 22% year over year, with digital transactions up 28% and comprising 83% of all remittances. Segment revenues increased 21% to $42.1 million from $34.6 million, while adjusted EBITDA surged 267% to $5.5 million from $1.5 million. For fiscal 2025, revenues grew 28% to $154.6 million from $120.7 million, and adjusted EBITDA skyrocketed to $18.4 million from just $1.1 million in fiscal 2024. Management noted that average remittance amounts increased, while transaction frequency fell, prompting adjustments in fee pricing to capture more value.net2phone: Subscription revenues rose 8% to $22.2 million in fourth-quarter fiscal 2025 from $20.5 million year over year, though constant currency growth was slightly stronger at 9%. Income from operations climbed 74% to $1.5 million from $0.8 million, and adjusted EBITDA increased 42% to $3.5 million from $2.5 million. Full-year subscription revenues grew 9% to $85.7 million from $78.4 million, with adjusted EBITDA up 54% to $12.1 million from $7.9 million. Growth was tempered by foreign-exchange headwinds in Latin America.Traditional Communications: Revenues declined 3% to $217.4 million in fourth-quarter fiscal 2025 from $224.6 million year over year, primarily from a 21% plunge in BOSS Revolution calling revenues. However, gross profit improved 2% to $41 million in fourth-quarter fiscal 2025 from $40.1 million year over year, aided by digital payments and IDT Global. Income from operations rose 11% to $15.4 million from $13.9 million, while adjusted EBITDA climbed 8% to $17.6 million from $16.3 million. For the year, adjusted EBITDA for the segment increased 13% to $75 million from $66.3 million despite structural declines in legacy calling services.IDT Corporation Price, Consensus and EPS Surprise IDT Corporation price-consensus-eps-surprise-chart | IDT Corporation QuoteIDT’s Other Key Business MetricsNRS achieved a monthly average recurring revenue per terminal of $299 in fourth-quarter fiscal 2025 from $285, up 4.9% year over year.BOSS Money’s digital channel revenues expanded 31% in fourth-quarter fiscal 2025 and 36% for the year, accounting for more than 80% of total remittance volume.net2phone’s AI Agent product gained traction, with management highlighting strong customer adoption and award recognition. net2phone ended the quarter with 422,000 seats from $396,000, up 6.6% year over year, highlighting steady adoption despite currency headwinds in Latin America.IDT held $253.8 million in cash, cash equivalents, debt securities and current equity investments as of July 31, 2025, with no outstanding debt.IDT’s Management CommentaryCEO Shmuel Jonas emphasized IDT’s progress in digital initiatives across NRS, BOSS Money and net2phone. He highlighted partnerships such as DoorDash integration for NRS retailers and upcoming digital couponing capabilities through NRS Insights in 2026. For BOSS Money, Jonas underscored the shift from retail to digital channels, reinforced by upcoming WhatsApp integration and a new digital wallet. Meanwhile, net2phone is pivoting toward AI-driven solutions, with expectations that 30% of sales could involve AI-enabled offerings by fiscal 2026.Factors Influencing IDT’s ResultsThe decline in GAAP net income was tied to the absence of a one-off tax benefit recorded in the prior year. Segment profitability improved across the board, with cost discipline in Traditional Communications and operating leverage in growth businesses driving margins higher. However, NRS did face increased churn in its terminal base, attributed in part to market competition and external factors such as immigration enforcement affecting some retailers. Also, structural declines in international voice calling and increased customer churn at NRS moderated performance. Currency headwinds also weighed on net2phone’s Latin American results.IDT’s GuidanceFor fiscal 2026, IDT projects adjusted EBITDA of $141 million–$145 million under a revised definition that excludes non-cash compensation. This guidance represents a 7% to 10% increase from fiscal 2025 levels.IDT’s Other DevelopmentsDuring fiscal 2025, IDT repurchased 221,823 shares for $10.1 million, but notably refrained from additional buybacks in the second half of the year as it pursued an acquisition opportunity that ultimately did not materialize. 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