IDT Corporation (IDT Quick QuoteIDT - Free Report) delivered adjusted earnings per share (EPS) of 38 cents in the third quarter of fiscal 2024, down 17.4% year over year.

GAAP EPS for the quarter was 22 cents, reflecting a decline of 18.5% from the year-ago figure.

Revenues in Detail

IDT registered revenues of $299.6 million in the fiscal third quarter, up 0.1% year over year.

Robust performances by the majority of the segments drove the topline.

Segment Details

IDT’s operations consist of four business segments — National Retail Solutions (NRS), net2phone, Fintech and Traditional Communications.

For the quarter under review, NRS reported revenues of $25.7 million, up 42.3% from the year-ago quarter. During the quarter, NRS added approximately 1,600 net active terminals and approximately 1,300 net payment processing accounts.

The revenues in the net2phone segment totaled $20.7 million, up 12.4% year over year. The segment also recorded a 12.9% uptick in the number of seats, which was driven by expansion in key markets led by the United States, Brazil and Mexico.

The Fintech segment generated revenues of $31.5 million, up 44.7% from the year-ago quarter. BOSS Money Transactions were up 44.2% in the reported quarter, driven by a 43% increase in digital transactions via the BOSS Money and BOSS Calling apps and a 49% increase in retail transactions. BOSS Money revenues increased 41.9% on the back of transaction growth, driven by cross-marketing within the larger BOSS ecosystem, the expansion of the BOSS Money retailer network and enhanced user experience within the BOSS Money and Boss Calling apps.

The Traditional Communications segment generated revenues of $221.7 million, down 8% year over year.

IDT Corporation Price, Consensus and EPS Surprise

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IDT Gross Margin

In the quarter under review, IDT’s gross profit increased 10.8% to $97 million. The gross margin expanded 313 basis points (bps) to 32.4%.

Operating Expenses Analysis

Selling, general and administrative expenses increased 14.7% to $68.9 million. Technology and development expenses increased 4.1% year over year to $12.6 million. Adjusted operating expenses of $81.6 million increased 12.9% year over year.

Profitability

Adjusted operating profit totaled $15.4 million, reflecting a 1% uptick from the year-ago quarter. The adjusted operating margin in the fiscal third quarter expanded 5 bps to 5.2%.

IDT’s adjusted EBITDA in the reported quarter was $20.6 million, up 0.5% from the year-ago quarter’s $20.5 million.

In the fiscal third quarter, net income attributable to IDT was $5.6 million, down 19.4% from $6.9 million in the prior-year quarter. This was primarily due to an increase in the effective income tax rate in the third quarter fiscal of 2024 and certain foreign currency transaction losses that were realized.

Liquidity & Debt Management

IDT exited third-quarter fiscal 2024 with cash and cash equivalents of $139.8 million compared with $141.1 million at the fiscal second-quarter end.

The company had no outstanding debt at the fiscal third-quarter end.

Cumulative net cash provided by continuing operating activities at the end of third-quarter fiscal 2024 was $49.3 million compared with $28.7 million a year ago.

Our Take

IDT exited the third quarter of fiscal 2024 with encouraging top-line results. Robust performances by the majority of its segments were impressive. The continued strength in BOSS Money Transactions is also promising. The expansion of both margins bodes well.

This month, IDT’s remittance and payments brand, BOSS Money, announced several significant initiatives to expand its popular money transfer service, including remittances within the United States. This raises our optimism about the stock.

However, IDT’s dismal bottom-line performances in the reported quarter were disappointing. The decline in the Traditional Communications segment’s revenues was discouraging.