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IDT Stock Slips Post Q2 Earnings Despite Revenue and EPS Growth
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Shares of IDT Corporation (IDT - Free Report) have lost 3.1% since the company reported its earnings for the quarter ended Jan. 31, 2026. This compares to the S&P 500 Index’s 1.7% loss over the same time frame. Over the past month, the stock gained 0.8% against the S&P 500’s 2.3% decline.
IDT’s Earnings Snapshot
For the second quarter of fiscal 2026, IDT reported revenues of $320.5 million, up 5.7% from $303.3 million in the year-ago quarter. GAAP earnings per share (EPS) rose 5% to $0.84 from $0.80 a year earlier, while non-GAAP EPS increased 19% to $1.00 from $0.84. Gross profit increased 8.2% year over year to $121.3 million from $112.1 million, with gross margin improving to 37.8% from 37%. Adjusted EBITDA rose 9% to $38 million from $34.9 million.
Segment-wise, the National Retail Solutions (NRS) business generated revenues of $39.4 million, up 19% from $33 million in the prior-year period. The Fintech segment, which includes BOSS Money, recorded revenues of $41.2 million, an increase of 12% from $36.8 million a year ago. net2phone posted revenues of $23.9 million, rising 11% from $21.5 million. Traditional Communications remained the largest segment with revenues of $216.1 million, up 2% year over year from $212 million, though profitability declined within the segment.
IDT’s Segment and Operating Metrics
IDT’s NRS platform continued to expand its merchant network and recurring revenue base during the quarter. Active POS terminals increased 12% year over year to 38,900 from 34,800, while payment processing accounts rose 18% to 28,100 from 23,900. Total recurring revenue climbed 18% to $37.5 million from $31.6 million, supported by strong growth in merchant services revenue, which increased 32%, and SaaS fees, which rose 26%. Advertising and data revenue declined 10%, reflecting softer advertising pricing. NRS revenue growth translated into a 20% increase in gross profit to $36.3 million from $30.3 million and a 15% rise in adjusted EBITDA to $11.8 million from $10.3 million.
In the Fintech segment, BOSS Money transactions increased 13% year over year to 6.4 million from $5.7 million. Digital channel transactions rose 17%, while retail channel transactions declined 4%. Total Fintech revenue grew 12% to $41.2 million from $36.8 million, with digital channel revenue increasing 14%. Gross profit in the segment rose 15% to $25 million from $21.7 million, and adjusted EBITDA jumped 44% to $5.6 million from $3.9 million, reflecting improved operating efficiencies and increased digital adoption.
The net2phone unified communications business also reported growth. Total revenue increased 11% year over year to $23.9 million from $21.5 million, driven primarily by a 12% rise in subscription revenue. Seats served increased 6% to 435,000 from 410,000. Gross profit grew 13% to $19.3 million from $17 million, and income from operations surged 96% to $2.2 million from $1.1 million, reflecting operating leverage and disciplined cost management.
Traditional Communications delivered revenue growth but experienced pressure on profitability. Revenue increased 2% year over year to $216.1 million from $212 million, helped by gains in IDT Digital Payments and IDT Global. However, gross profit declined 6% to $40.7 million from $43.1 million, and adjusted EBITDA fell 9% to $18.8 million from $20.6 million as a result of a mix shift toward lower-margin corridors and declines in BOSS Revolution calling revenue.
Management attributed the company’s overall performance to continued expansion in its higher-margin growth segments — NRS, Fintech and net2phone. These segments together accounted for a growing share of profitability, reflecting a broader shift in IDT’s business mix away from its legacy telecom operations. According to company leadership, these three growth segments generated 53% of consolidated adjusted EBITDA less capital expenditures in the quarter, compared with 45% in the prior-year period.
Within Fintech, management highlighted the impact of a new federal remittance tax implemented on Jan. 1. The tax has accelerated migration from retail-based remittance transactions toward digital channels, which typically generate lower revenue per transaction but higher margins. Digital transaction growth at BOSS Money has already begun to reflect this shift, with management expecting the benefits to become more visible in coming quarters.
In the NRS business, management noted that merchant services and SaaS revenue expansion continued to drive growth, though lower advertising CPM rates weighed on advertising revenue during the quarter. At net2phone, improving gross margins, operating leverage and favorable foreign exchange trends supported profitability gains. The company is also introducing AI-enabled communications tools to expand its offerings to small and medium-sized businesses.
IDT’s Guidance and Capital Allocation
IDT raised its fiscal 2026 adjusted EBITDA guidance to a range of $147 million to $149 million, up from its previous forecast of $141 million to $145 million. At the midpoint, the updated outlook represents a 12% increase compared with fiscal 2025 adjusted EBITDA. Management said the improved outlook reflects stronger-than-expected performance in several segments, including net2phone and Fintech.
The company also emphasized shareholder returns during the quarter. IDT repurchased approximately 149,000 shares for $7.4 million in the fiscal second quarter and has spent $15 million on share buybacks during the first half of fiscal 2026. Additionally, the board increased the annual dividend by 17% to $0.28 per share.
IDT’s Other Developments
IDT ended the quarter with $246.2 million in cash, cash equivalents, debt securities and current equity investments and reported no outstanding debt. Operating cash flow improved significantly, with net cash provided by operating activities rising to $38.3 million from $20.2 million in the year-ago quarter.
During the quarter, net2phone launched a HIPAA-compatible AI-powered communications solution for healthcare providers and later introduced an additional AI-based offering targeting the hospitality industry. These product initiatives reflect IDT’s efforts to integrate AI capabilities into its communications platform as it expands its technology offerings.
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IDT Stock Slips Post Q2 Earnings Despite Revenue and EPS Growth
Shares of IDT Corporation (IDT - Free Report) have lost 3.1% since the company reported its earnings for the quarter ended Jan. 31, 2026. This compares to the S&P 500 Index’s 1.7% loss over the same time frame. Over the past month, the stock gained 0.8% against the S&P 500’s 2.3% decline.
IDT’s Earnings Snapshot
For the second quarter of fiscal 2026, IDT reported revenues of $320.5 million, up 5.7% from $303.3 million in the year-ago quarter. GAAP earnings per share (EPS) rose 5% to $0.84 from $0.80 a year earlier, while non-GAAP EPS increased 19% to $1.00 from $0.84. Gross profit increased 8.2% year over year to $121.3 million from $112.1 million, with gross margin improving to 37.8% from 37%. Adjusted EBITDA rose 9% to $38 million from $34.9 million.
Segment-wise, the National Retail Solutions (NRS) business generated revenues of $39.4 million, up 19% from $33 million in the prior-year period. The Fintech segment, which includes BOSS Money, recorded revenues of $41.2 million, an increase of 12% from $36.8 million a year ago. net2phone posted revenues of $23.9 million, rising 11% from $21.5 million. Traditional Communications remained the largest segment with revenues of $216.1 million, up 2% year over year from $212 million, though profitability declined within the segment.
IDT’s Segment and Operating Metrics
IDT’s NRS platform continued to expand its merchant network and recurring revenue base during the quarter. Active POS terminals increased 12% year over year to 38,900 from 34,800, while payment processing accounts rose 18% to 28,100 from 23,900. Total recurring revenue climbed 18% to $37.5 million from $31.6 million, supported by strong growth in merchant services revenue, which increased 32%, and SaaS fees, which rose 26%. Advertising and data revenue declined 10%, reflecting softer advertising pricing. NRS revenue growth translated into a 20% increase in gross profit to $36.3 million from $30.3 million and a 15% rise in adjusted EBITDA to $11.8 million from $10.3 million.
In the Fintech segment, BOSS Money transactions increased 13% year over year to 6.4 million from $5.7 million. Digital channel transactions rose 17%, while retail channel transactions declined 4%. Total Fintech revenue grew 12% to $41.2 million from $36.8 million, with digital channel revenue increasing 14%. Gross profit in the segment rose 15% to $25 million from $21.7 million, and adjusted EBITDA jumped 44% to $5.6 million from $3.9 million, reflecting improved operating efficiencies and increased digital adoption.
The net2phone unified communications business also reported growth. Total revenue increased 11% year over year to $23.9 million from $21.5 million, driven primarily by a 12% rise in subscription revenue. Seats served increased 6% to 435,000 from 410,000. Gross profit grew 13% to $19.3 million from $17 million, and income from operations surged 96% to $2.2 million from $1.1 million, reflecting operating leverage and disciplined cost management.
Traditional Communications delivered revenue growth but experienced pressure on profitability. Revenue increased 2% year over year to $216.1 million from $212 million, helped by gains in IDT Digital Payments and IDT Global. However, gross profit declined 6% to $40.7 million from $43.1 million, and adjusted EBITDA fell 9% to $18.8 million from $20.6 million as a result of a mix shift toward lower-margin corridors and declines in BOSS Revolution calling revenue.
IDT Corporation Price, Consensus and EPS Surprise
IDT Corporation price-consensus-eps-surprise-chart | IDT Corporation Quote
IDT’s Management Commentary and Business Drivers
Management attributed the company’s overall performance to continued expansion in its higher-margin growth segments — NRS, Fintech and net2phone. These segments together accounted for a growing share of profitability, reflecting a broader shift in IDT’s business mix away from its legacy telecom operations. According to company leadership, these three growth segments generated 53% of consolidated adjusted EBITDA less capital expenditures in the quarter, compared with 45% in the prior-year period.
Within Fintech, management highlighted the impact of a new federal remittance tax implemented on Jan. 1. The tax has accelerated migration from retail-based remittance transactions toward digital channels, which typically generate lower revenue per transaction but higher margins. Digital transaction growth at BOSS Money has already begun to reflect this shift, with management expecting the benefits to become more visible in coming quarters.
In the NRS business, management noted that merchant services and SaaS revenue expansion continued to drive growth, though lower advertising CPM rates weighed on advertising revenue during the quarter. At net2phone, improving gross margins, operating leverage and favorable foreign exchange trends supported profitability gains. The company is also introducing AI-enabled communications tools to expand its offerings to small and medium-sized businesses.
IDT’s Guidance and Capital Allocation
IDT raised its fiscal 2026 adjusted EBITDA guidance to a range of $147 million to $149 million, up from its previous forecast of $141 million to $145 million. At the midpoint, the updated outlook represents a 12% increase compared with fiscal 2025 adjusted EBITDA. Management said the improved outlook reflects stronger-than-expected performance in several segments, including net2phone and Fintech.
The company also emphasized shareholder returns during the quarter. IDT repurchased approximately 149,000 shares for $7.4 million in the fiscal second quarter and has spent $15 million on share buybacks during the first half of fiscal 2026. Additionally, the board increased the annual dividend by 17% to $0.28 per share.
IDT’s Other Developments
IDT ended the quarter with $246.2 million in cash, cash equivalents, debt securities and current equity investments and reported no outstanding debt. Operating cash flow improved significantly, with net cash provided by operating activities rising to $38.3 million from $20.2 million in the year-ago quarter.
During the quarter, net2phone launched a HIPAA-compatible AI-powered communications solution for healthcare providers and later introduced an additional AI-based offering targeting the hospitality industry. These product initiatives reflect IDT’s efforts to integrate AI capabilities into its communications platform as it expands its technology offerings.