Exchange: NYSE | Sector: Communication Services | Industry: Telecommunications Services
Q2 2025
Published: Mar 12, 2025
Earnings Highlights
Revenue of $303.35M up 2.5% year-over-year
EPS of $0.80 increased by 42.1% from previous year
Gross margin of 37.0%
Net income of 20.27M
""IDT is on track to deliver approximately 40% adjusted EBITDA growth in fiscal '25 on top of the record $90 million we obtained in fiscal '24."" - Marcelo Fischer
IDT Corporation (IDT) QQ2 2025 Financial Analysis: Fintech Momentum, Traditional Communications Strength, and Strategic AI/NRS Initiatives Drive earnings resilience
Executive Summary
IDT Corporation reported a solid QQ2 2025, underpinned by robust Fintech results and continued profitability momentum in Traditional Communications. Total quarterly revenue reached $303.3 million, delivering a GAAP net income of $20.3 million and earnings per share of $0.81. Despite a modest year-over-year revenue uptick (YoY +2.5%) and a slight sequential decline (QoQ -2.0%), IDT generated a quarterly EBITDA of $28.3 million under GAAP, with management highlighting record first-half Adjusted EBITDA of $63.0 million and a commitment to ~40% adjusted EBITDA growth in fiscal 2025 versus FY2024’s $90 million. The company maintained a conservative balance sheet with a strong liquidity position (net cash of approximately -$246 million) and continued to return capital to shareholders via a 20% dividend increase and a record level of share repurchases (179k shares for $8.5 million in the quarter). Segment commentary emphasized continued NRS penetration, disciplined gross profit management in BOSS Money, and net2phone’s ongoing growth, aided by AI-related features and a strong U.S. trajectory. Management signaled a focus on AI enhancements, data-driven pricing in the digital payments space, and potential US-based inorganic opportunities to scale international capabilities. Overall, IDT’s results reflect a diversified mix of high-margin Fintech cash generation and steady profitability from traditional communications, supported by a pragmatic capital-allocation approach.
Revenue and profitability
- QQ2 2025 revenue: $303.3 million; YoY growth 2.45%; QoQ decline -2.01%.
- Gross profit: $112.11 million; gross margin 36.96%; YoY gross profit growth 19.74%; QoQ +4.17%.
- Operating income: $28.32 million; operating margin 9.33%; YoY operating income growth 70.02%; QoQ +19.78%.
- Net income: $20.27 million; net margin 6.68%; YoY net income growth 40.51%; QoQ +17.51%.
- EPS (GAAP): $0.81; diluted EPS $0.80; YoY EPS growth 42.11%; QoQ +19.12%.
- EBITDA: $28.32 million (GAAP); adjusted EBITDA in QQ2 2025 was $34.0 million (management-reported, per call), with 1H 2025 adjusted EBITDA of $63.0 million.
- EBITDA margin (GAAP): 9.33%; net margin 6.68%.
- Free cash flow: $15.33 million; cash flow from operations: $20.15 million; capex: $4.82 million; operating cash flow to revenue ratio ~6.6% (consistent with reported operating cash flow/segment mix).
- Balance sheet: Cash and cash equivalents $247.71 million; total assets $575.73 million; total liabilities $280.63 million; stockholders’ equity $271.60 million; net debt position is negative (net cash) at approximately -$246.36 million.
- Liquidity and returns: Current ratio 1.66; quick ratio 1.66; cash ratio 0.89; dividend payout ratio 6.23%; share repurchases of ~179k shares for $8.5 million in QQ2; total twelve-month share repurchases ~380k shares for $16.0 million.
- Valuation context (as of QQ2 2025 ratios): P/E ~14.6x; P/B ~4.37x; EV/EBITDA ~33.2x; P/S ~3.9x; dividend yield ~0.11%; EV multiple reflects strong cash generation and modest leverage.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
303.35M
2.45%
-2.01%
Gross Profit
112.11M
19.74%
4.17%
Operating Income
28.32M
70.02%
19.78%
Net Income
20.27M
40.51%
17.51%
EPS
0.81
42.11%
19.12%
Key Financial Ratios
currentRatio
1.66
grossProfitMargin
37%
operatingProfitMargin
9.33%
netProfitMargin
6.68%
returnOnAssets
3.52%
returnOnEquity
7.46%
debtEquityRatio
0
operatingCashFlowPerShare
$0.8
freeCashFlowPerShare
$0.61
dividendPayoutRatio
6.23%
priceToBookRatio
4.37
priceEarningsRatio
14.64
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management insights and themes from the QQ2 2025 earnings call:
- Strategy and AI enablement: The management highlighted a strategic emphasis on AI enhancements for net2phone UCaaS, noting the launch of a virtual AI agent and its potential to improve customer interactions while reducing costs. Quote: We are excited about last week's launch of net2phone's virtual AI agent... it will provide clients with increasingly sophisticated tailored solutions that add value across disparate functions within their organizations. (Speaker: Samuel Jonas)
- Growth and profitability balance in BOSS Money: Management discussed optimizing gross profit per transaction, especially in the retail channel, while continuing to grow the digital channel where unit economics are stronger. Quote: We are seeing somewhat slower revenue growth, primarily because of our decision to optimize gross profit per transaction... GP growth for the larger Fintech segment of 35% to a record $22 million. (Speaker: Marcelo Fischer)
- NRS momentum and adoption: NRS delivered 32% recurring revenue growth with recurring revenue per terminal around $310 and anticipated to stay around $300 for the remainder of the year as penetration deepens. Quote: Advertising had a nice performance during Q2. It was up about 12% year-over-year. But we also saw a real nice jump in the data side of the business that grew by almost 40% versus a year ago. (Speaker: Marcelo Fischer, then Samuel Jonas)
- Traditional Communications cash generation: Traditional segment delivered Adjusted EBITDA over $20 million for the third straight quarter and contributed to a record consolidated EBITDA. Quote: Adjusted EBITDA for this segment has increased in each of the last three quarters to reach over $20 million in Q2, a 19% year-over-year increase. (Speaker: Marcelo Fischer)
- Capital allocation and shareholder return: Management signaled a continued investment in the balance sheet with ongoing repurchases and dividend increases, underscoring a shareholder-friendly stance. Quote: Our Board made a decision to increase IDT's quarterly dividend, and we expect to be able to continue to increase the dividend each year for the foreseeable future. (Speaker: Marcelo Fischer)
- Near-term guidance and risk factors: Management projected ~40% adjusted EBITDA growth in fiscal 2025 and noted potential sensitivities to immigration policy developments but reported no meaningful slowdown to date. Quote: IDT is on track to deliver approximately 40% adjusted EBITDA growth in fiscal '25 on top of the record $90 million we obtained in fiscal '24. (Speaker: Marcelo Fischer)
"IDT is on track to deliver approximately 40% adjusted EBITDA growth in fiscal '25 on top of the record $90 million we obtained in fiscal '24."
— Marcelo Fischer
"We are seeing somewhat slower revenue growth, primarily because of our decision to optimize gross profit per transaction, particularly in our retail channel. And as a result, we are quite pleased to have achieved GP growth for the larger Fintech segment of 35% to a record $22 million."
— Marcelo Fischer
Forward Guidance
Assessment of management guidance and outlook:
- EBITDA trajectory: Management asserts that IDT is on track to deliver approximately 40% adjusted EBITDA growth in fiscal 2025 versus a record $90 million in fiscal 2024, supported by continued performance in NRS, BOSS Money, and net2phone, as well as maintained profitability in Traditional Communications. They expect to generate at least as much EBITDA in the second half as in the first half, implying sustained cadence into 2H FY25.
- Near-term drivers: (1) NRS continued penetration in independent retailers with 32% recurring revenue growth and a target recurring revenue per terminal around $300; (2) BOSS Money optimizing GP per transaction while expanding the digital payments channel; (3) net2phone leveraging AI enhancements and a robust pipeline with larger deals in the second half; (4) Traditional Communications continuing to generate high EBITDA with efficiency gains and pricing discipline.
- Balance sheet and capital returns: IDT maintains a strong balance sheet with substantial cash and a net cash position, enabling ongoing share repurchases and dividend increases (20% increment announced for QQ2 2025). The company intends to pursue opportunistic value-creating acquisitions should attractive opportunities arise, particularly to complement US growth with strategic capabilities.
- Risks and monitoring factors: Key risks include currency headwinds (FX impact on net2phone), regulatory/new immigration policies affecting business activity (though no meaningful slowdowns observed to date), and competitive dynamics in BOSS Money’s digital vs. retail channels. Investors should monitor: (a) NRS unit growth and ARPU evolution, (b) net2phone pipeline conversion and FX exposure, (c) BOSS Money digital vs. retail mix and gross margin progression, (d) accretive uses of excess cash and potential acquisitions, and (e) the cadence of dividend increases and buybacks as a signal of balance-sheet discipline.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
IDT Focus
36.96%
9.33%
7.46%
14.64%
ATNI
58.00%
4.58%
1.71%
9.84%
SHEN
29.90%
-5.31%
-1.38%
-18.00%
IHS
51.80%
34.00%
24.60%
-2.10%
ATEX
1.00%
-8.47%
-9.18%
-13.71%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
IDT presents a constructive near-term investment thesis anchored in accelerating Fintech cash generation and resilient profitability from Traditional Communications, supported by a strong balance sheet and ongoing capital returns. The anticipated 40% adjusted EBITDA growth in FY25 demonstrates management confidence in a multi-segment recovery, with NRS, BOSS Money, and net2phone contributing meaningfully to cash generation. AI enhancements and a robust pipeline for net2phone could sustain higher ARR growth and improve ARPU. Valuation appears reasonable given a mid-teens P/E, solid FCF generation, and a capital-allocation framework that prioritizes shareholder returns plus opportunistic accretive M&A. However, investors should monitor FX exposure, immigration-policy risk, and the execution risk of scaling NRS and new verticals. If the company maintains its disciplined investment approach and continues returning capital while pursuing value-enhancing acquisitions, IDT could outperform within the Communications Services sector over the next 12-24 months.
Key Investment Factors
Growth Potential
IDT benefits from a diversified revenue mix across Fintech (NRS, BOSS Money, digital payments) and cloud UCaaS (net2phone) plus a stable Traditional Communications franchise. The AI-enabled enhancements in net2phone and the ongoing NRS penetration program can sustain multi-year revenue and margin expansion, with management projecting ~40% EBITDA growth in FY25 and a trajectory to sustain high cash generation. The potential international expansion, likely via acquisition, could unlock new addressable markets and cross-sell opportunities.
Profitability Risk
Key risks include FX volatility impacting net2phone revenue in non-dollar markets, regulatory and immigration policy developments that could affect cross-border remittance flows, competitive intensity in the digital payments and UCaaS spaces, and execution risk from scaling NRS and new verticals (e.g., delivery integrations and QSR enhancements). The company also faces execution risk in achieving all-growth-without-over-investing in BOSS Money given the competitive funding environment.
Financial Position
IDT maintains a conservative balance sheet with substantial liquidity and a net cash position (net debt of approximately -$246.4 million). This position supports working capital needs for BOSS Money, enables opportunistic buybacks, and sustains dividend growth. Low leverage (debt to capitalization ~0.5% and debt/equity ~0.5%) provides flexibility to fund growth initiatives and potential strategic acquisitions.
SWOT Analysis
Strengths
Diversified revenue mix across Fintech, UCaaS, and Traditional Communications
Strong free cash flow and record EBITDA in H1 2025 with 1H Adjusted EBITDA of $63 million
Prudent balance sheet with net cash and substantial liquidity
AI-enabled product enhancements (net2phone AI agent) and robust NRS penetration (32% recurring revenue growth)
Weaknesses
FX headwinds impacting net2phone, masking underlying performance in some markets
Moderate reliance on U.S. market growth; international expansion contemplated via acquisition rather than organic growth
Ad revenue and data-services variability within NRS could introduce volatility in a few quarters
Opportunities
AI-driven product enhancements for UCaaS and customer engagement
Expansion of NRS in the U.S. retailer channel and potential upscale of advertising revenue through KPI disclosures for screens
Strategic acquisitions to accelerate international exposure and scale
Threats
Regulatory and immigration policy developments that could affect cross-border remittance and international traffic
Competitive intensity in BOSS Money and digital payments; potential pricing pressure
FX volatility and macro uncertainty affecting cross-border revenues