UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): March 5, 2020

 

IDT CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware   1-16371   22-3415036
(State or other jurisdiction
of incorporation)
  (Commission File Number)   (IRS Employer
Identification No.)

 

520 Broad Street Newark, New Jersey   07102
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (973) 438-1000

 

Not Applicable

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class   Trading Symbol(s)   Name of each exchange on which registered
Class B common stock, par value $.01 per share   IDT   New York Stock Exchange.

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

  

 

Item 2.02. Results of Operations and Financial Condition

 

On March 5, 2020 IDT Corporation (the “Registrant”) issued a press release announcing its results of operations for its fiscal quarter ended January 31, 2020. A copy of the earnings release concerning the foregoing results is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

 

The Registrant is furnishing the information contained in this Report, including Exhibit 99.1, pursuant to Item 2.02 of Form 8-K promulgated by the Securities and Exchange Commission (the “SEC”). This information shall not be deemed to be “filed” with the SEC or incorporated by reference into any other filing with the SEC unless otherwise expressly stated in such filing. In addition, this Report and the press release contain statements intended as “forward-looking statements” that are subject to the cautionary statements about forward-looking statements set forth in the press release.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.   Document
99.1   Earnings Release, March 5, 2020, reporting operational and financial results for IDT Corporation’s fiscal quarter ended January 31, 2020.

 

 1 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  IDT CORPORATION
     
  By: /s/ Shmuel Jonas
  Name: Shmuel Jonas
  Title: Chief Executive Officer

 

Dated: March 5, 2020

 

 2 

 

EXHIBIT INDEX

 

Exhibit Number   Document
99.1   Earnings Release, March 5, 2020, reporting operational and financial results for IDT Corporation’s fiscal quarter ended January 31, 2020.

 

 

 

3

Exhibit 99.1

 

 

IDT Corporation Reports Second Quarter Fiscal Year 2020 Results

 

NEWARK, NJ — March 5, 2020: IDT Corporation (NYSE: IDT) reported net income per diluted share of $0.04 and Non-GAAP earnings per diluted share* of $0.11 on revenue of $323.9 million for the second quarter of FY 2020, the three months ended January 31, 2020.

 

2Q20 OPERATIONAL HIGHLIGHTS

(Results are for 2Q20 and are compared to 2Q19)

 

  net2phone’s cloud-based Unified Communications as a Service (UCaaS) offering served 123,000 seats as of January 31, 2020 compared to 77,000 a year earlier. Subscription revenue increased 41.7% to $7.5 million. During the quarter, net2phone entered Spain - its first European Union market - through the acquisition of RingSouth, a UCaaS provider based in Murcia.

 

  National Retail Solutions (NRS) had deployed over 11,300 point-of-sale (POS) terminals with independent retailers nationwide as of January 31st, of which approximately 8,700 were active on January 31, 2020 compared to 6,600 a year earlier. NRS revenue increased 35.0% to $2.1 million;

 

  BOSS Revolution Money Transfer transactions increased to 1.25 million from 784,000 in the year ago quarter. Total revenue increased 45.0% from the year ago quarter to $7.7 million, while revenue from retailer originated transactions increased 53.6% to $3.0 million.

 

REMARKS BY SHMUEL JONAS, CEO

 

“During the second quarter, we continued to invest in our higher growth and higher margin businesses, including net2phone, National Retail Solutions and BOSS Revolution Money Transfer, while maximizing the cash generation from our core offerings.

 

“And once again this quarter, the growth capital for our higher growth businesses was provided from cash generated by our core offerings.

 

“The second quarter’s financial results reflect the increasing positive margin impact of these newer businesses, as well as the stable contribution from our legacy core offerings.”

 

1

 

 

CONSOLIDATED RESULTS

 

Results
(in millions, except EPS)

   2Q20   1Q20   2Q19   2Q20 - 2Q19 change (%/$) 
Revenue  $323.9   $340.2   $349.5    (7.3)%
Direct cost of revenue  $262.7   $279.5   $291.2    (9.8)%
Revenue less direct cost of revenue  $61.2   $60.7   $58.3    +4.9%
Revenue less direct cost of revenue as a percentage of revenue*   18.9%   17.9%   16.7%   +220BP 
SG&A expense  $53.8   $53.4   $50.9    +5.7%
Depreciation and amortization  $5.2   $5.3   $5.8    (10.0)%
Severance expense  $0.5   $0.6    -    +$0.5 
Other operating expense, net  $(0.4)  $(2.8)  $(2.1)   +$1.7 
Income (loss) from operations  $1.3   $(1.4)  $(0.5)   +$1.8 
Adjusted EBITDA*  $7.4   $7.3   $7.4    NC 
Net income (loss) attributable to IDT  $0.9   $(1.5)  $(1.3)   +$2.2 
Diluted earnings (loss) per share  $0.04   $(0.06)  $(0.05)   +$0.09 
Non-GAAP net income (loss)*  $2.9   $2.8   $1.0    +$1.9 
Non-GAAP earnings per diluted share*  $0.11   $0.10   $0.04    +$0.07 

 

*Throughout this release, Non-GAAP earnings per diluted share, Adjusted EBITDA, and Non-GAAP net income (loss) for all periods presented are Non-GAAP measures intended to provide useful information that supplements IDT’s or the relevant segment’s results in accordance with GAAP. Revenue less direct cost of revenue as a percentage of revenue is a key performance metric. Please refer to the Reconciliation of Non-GAAP Financial Measures and Explanation of Key Performance Metric at the end of this release for an explanation of these terms and their respective reconciliations to the most directly comparable GAAP measure.

 

Notes on Consolidated Results and Balance Sheet

 

Consolidated results for all periods presented include corporate overhead. Corporate G&A expense decreased to $2.3 million in 2Q20 from $2.4 million in 2Q19.

 

As of January 31, 2020, IDT held $75.7 million in unrestricted cash, cash equivalents, debt securities and current equity investments. Current assets totaled $355.5 million and current liabilities totaled $376.0 million.

 

Net cash used in operating activities during 2Q20 was $18.3 million, including the impact of a $22.4 million decrease in customer deposits at IDT’s Gibraltar-based bank, compared to net cash provided by operating activities of $29.8 million in the year ago quarter, including a $23.4 million increase in customer deposits at the bank.

 

Capital expenditures were $3.8 million and $4.9 million in 2Q20 and 2Q19, respectively.

 

2

 

 

RESULTS BY SEGMENT

(Results are for 2Q20 and are compared to 2Q19)

 

Telecom & Payment Services (TPS)

 

IDT’s TPS segment accounted for 96.0% and 96.7% of IDT’s consolidated revenue in 2Q20 and 2Q19, respectively. The segment includes Core and Growth verticals:

 

Core includes IDT’s three largest communications and payments offerings by revenue: BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the U.S.; Carrier Services, which provides international long-distance termination and outsourced traffic management solutions to telecoms worldwide; and Mobile Top-Up, which enables customers to transfer airtime and bundles of airtime, messaging and data credits to mobile accounts internationally and domestically. Core also includes smaller communications and payments offerings, many in harvest mode.

 

Growth primarily comprises National Retail Solutions, which operates a POS, terminal-based network for independent retailers, and BOSS Revolution Money Transfer, an international money remittance service for customers in the U.S.

 

net2phone

 

IDT’s net2phone segment accounted for 4.0% and 3.3% of IDT’s consolidated revenue in 2Q20 and 2Q19, respectively. The segment comprises two verticals:

 

net2phone-UCaaS, a unified cloud communications service for businesses in North and South America and certain other international markets.

 

net2phone-Platform Services provides telephony services to cable operators and other businesses by leveraging a common technology platform.

 

Revenue in 2Q20 and comparative periods for all verticals and for the most significant core offerings is provided in the following chart:

 

Revenue by Segment and Vertical
(in millions)

   2Q20   1Q20   2Q19   2Q20-2Q19 change 
TPS                    
Core  $301.2   $318.0   $331.1    (9.0)%
BOSS Revolution Calling  $112.8   $116.2   $122.1    (7.7)%
Carrier Services  $101.7   $113.5   $127.9    (20.5)%
Mobile Top-Up  $75.8   $76.8   $64.3    18.0%
Other  $11.0   $11.4   $16.8    (34.7)%
Growth  $9.8   $9.6   $6.9    +42.5%
Total TPS  $311.0   $327.6   $338.0    (8.0)%
net2phone                    
net2phone-UCaaS  $7.9   $7.2   $6.0    +31.7%
net2phone-Platform Services  $5.0   $5.4   $5.5    (9.6)%
Total net2phone  $12.9   $12.6   $11.5    +12.0%

 

3

 

 

Segment level financial results are summarized in the following chart:

 

Results by Segment

  TPS   net2phone 
(in millions)  2Q20   1Q20   2Q19   2Q20   1Q20   2Q19 
Revenue  $311.0   $327.6   $338.0   $12.9   $12.6   $11.5 
Direct cost of revenue  $259.8   $276.5   $287.9   $2.9   $3.0   $3.2 
Revenue less direct cost of revenue  $51.2   $51.1   $50.0   $10.0   $9.6   $8.3 
SG&A expense  $40.6   $40.8   $40.4   $10.9   $10.4   $8.1 
Depreciation and amortization  $2.9   $3.2   $3.7   $2.2   $2.1   $2.1 
Severance expense  $0.5   $0.6    -    -    -    - 
Other operating expense, net   -   $2.2   $1.8   $0.2   $0.4    - 
Income (loss) from operations  $7.1   $4.4   $4.2   $(3.3)  $(3.3)  $(1.9)
Adjusted EBITDA  $10.6   $10.3   $9.6   $(0.8)  $(0.8)  $0.2 

 

TPS Segment Takeaways:

 

  BOSS Revolution Calling revenue decreased 7.7% to $112.8 million and Carrier Services revenue decreased 20.5% to $101.7 million, in line with expectations;

 

  Mobile Top-Up revenue increased 18.0% to $75.8 million on increased sales of bundled offerings;

 

  NRS revenue increased by 35.0% to $2.1 million, led by increased sales of credit card processing services to retailers operating NRS terminals, increased sales of transaction data to data analytics and consumer package goods marketers, and increased advertising capacity offered to digital-out-of-home advertisers. NRS increased the number of POS terminals active in its network as of January 31, 2020 to approximately 8,700 from 6,600 a year earlier;

 

  BOSS Revolution Money Transfer revenue increased 45.0% to $7.7 million

 

net2phone Segment Takeaways:

 

  Consolidated net2phone-UCaaS revenue increased 31.7% to $7.9 million, led by growth in the US and South American markets.

 

  net2phone-UCaaS subscription revenue for its cloud communications offering - exclusive of equipment sales - increased 41.7% to $7.5 million;

 

  net2phone’s cloud communications offering served 123,000 seats as of January 31st, exclusive of seats acquired via the RingSouth acquisition, compared to 77,000 a year earlier and 112,000 as of October 31, 2019.

 

4

 

 

IDT EARNINGS ANNOUNCEMENT & SUPPLEMENTAL INFORMATION

 

This release is available for download in the “Investors & Media” section of the IDT Corporation website (http://ir.idt.net/) and has been filed on a current report (Form 8-K) with the SEC.

 

IDT will host an earnings conference call beginning at 5:30 PM Eastern today with management’s discussion of results, outlook and strategy followed by Q&A with investors.

 

To listen to the call and participate in the Q&A, dial toll-free 1-888-348-8417 (from US) or 1-412-902-4243 (international) and request the IDT Corporation call.

 

A replay of the conference call will be available approximately three hours after the call concludes through March 12, 2020. To access the replay, dial toll free 1-844-512-2921 (from US) or 1-412-317-6671 (international) and provide this replay number: 10139692. A replay will also be accessible via streaming audio at the IDT investor relations website (http://ir.idt.net/).

 

ABOUT IDT:

 

IDT Corporation (NYSE: IDT) provides communications and payment services to individuals and businesses primarily through its Boss Revolution®, net2phone® and National Retail Solutions® brands. IDT’s wholesale carrier services business is a leading global carrier of international long-distance calls. For more information on IDT, visit www.idt.net.

 

All statements above that are not purely about historical facts, including, but not limited to, those in which we use the words “believe,” “anticipate,” “expect,” “plan,” “intend,” “estimate,” “target” and similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent our current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous important factors. Our filings with the SEC provide detailed information on such statements and risks, and should be consulted along with this release. To the extent permitted under applicable law, IDT assumes no obligation to update any forward-looking statements.

 

Contact:

IDT Corporation Investor Relations

Bill Ulrey

william.ulrey@idt.net

973-438-3838

 

5

 

 

IDT CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

  

January 31,
2020

  

July 31,
2019

 
   (Unaudited)     
   (in thousands) 
Assets        
Current assets:          
Cash and cash equivalents   $61,091   $80,168 
Restricted cash and cash equivalents    172,003    177,031 
Debt securities    8,750    2,534 
Equity investments    5,890    5,688 
Trade accounts receivable, net of allowance for doubtful accounts of $6,362 at January 31, 2020 and $5,444 at July 31, 2019    52,172    58,060 
Prepaid expenses    25,451    20,276 
Other current assets    30,104    24,704 
Total current assets    355,461    368,461 
Property, plant and equipment, net    31,556    34,355 
Goodwill    12,613    11,209 
Other intangibles, net    4,206    4,196 
Equity investments    9,592    9,319 
Operating lease right-of-use assets    10,981     
Deferred income tax assets, net    3,120    4,589 
Other assets    12,183    11,574 
Total assets   $439,712   $443,703 
           
Liabilities and equity          
Current liabilities:          
Trade accounts payable   $32,800   $37,077 
Accrued expenses    125,533    127,834 
Deferred revenue    39,293    42,479 
Customer deposits    168,326    175,028 
Other current liabilities    10,093    6,652 
Total current liabilities    376,045    389,070 
Operating lease liabilities    8,731     
Other liabilities    1,543    1,076 
Total liabilities    386,319    390,146 
Commitments and contingencies          
Equity:          
IDT Corporation stockholders’ equity:          
Preferred stock, $.01 par value; authorized shares—10,000; no shares issued         
Class A common stock, $.01 par value; authorized shares—35,000; 3,272 shares issued and 1,574 shares outstanding at January 31, 2020 and July 31, 2019    33    33 
Class B common stock, $.01 par value; authorized shares—200,000; 25,961 and 25,803 shares issued and 25,016 and 24,895 shares outstanding at January 31, 2020 and July 31, 2019, respectively    260    258 
Additional paid-in capital    276,118    273,313 
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of Class A common stock and 945 and 908 shares of Class B common stock at January 31, 2020 and July 31, 2019, respectively    (52,005)   (51,739)
Accumulated other comprehensive loss    (6,575)   (4,858)
Accumulated deficit    (161,344)   (160,763)
Total IDT Corporation stockholders’ equity    56,487    56,244 
Noncontrolling interests    (3,094)   (2,687)
Total equity    53,393    53,557 
Total liabilities and equity   $439,712   $443,703 

 

6

 

 

IDT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 

   Three Months Ended
January 31,
   Six Months Ended
January 31,
 
   2020   2019   2020   2019 
   (in thousands, except per share data) 
     
Revenues   $323,890   $349,473   $664,089   $711,789 
Costs and expenses:                    
Direct cost of revenues (exclusive of depreciation and amortization)    262,716    291,178    542,177    595,870 
Selling, general and administrative (i)    53,789    50,900    107,223    101,452 
Depreciation and amortization    5,184    5,762    10,479    11,357 
Severance    486        1,112     
Total costs and expenses    322,175    347,840    660,991    708,679 
Other operating expense, net    (392)   (2,090)   (3,168)   (3,385)
Income (loss) from operations    1,323    (457)   (70)   (275)
Interest income, net    195    186    467    295 
Other income (expense), net    550    496    785    (853)
Income (loss) before income taxes    2,068    225    1,182    (833)
Provision for income taxes    (1,164)   (1,236)   (1,700)   (2,176)
Net income (loss)    904    (1,011)   (518)   (3,009)
Net loss (income) attributable to noncontrolling interests    28    (300)   (63)   (601)
Net income (loss) attributable to IDT Corporation   $932   $(1,311)  $(581)  $(3,610)
Earnings (loss) per share attributable to IDT Corporation common stockholders:                    
Basic   $0.04   $(0.05)  $(0.02)  $(0.15)
Diluted   $0.04   $(0.05)  $(0.02)  $(0.15)
Weighted-average number of shares used in calculation of earnings (loss) per share:                    
Basic    26,320    24,816    26,300    24,323 
Diluted    26,451    24,816    26,300    24,323 
                     
(i) Stock-based compensation included in selling, general and administrative expenses   $1,167   $467   $2,531   $880 

 

 

7

 

 

IDT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Six Months Ended
January 31,
 
   2020   2019 
   (in thousands) 
Operating activities        
Net loss   $(518)  $(3,009)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:           
Depreciation and amortization    10,479    11,357 
Deferred income taxes    1,587    2,035 
Provision for doubtful accounts receivable    1,466    620 
Stock-based compensation    2,531    880 
Other    (412)   (78)
Change in assets and liabilities:          
Trade accounts receivable    6,253    17,333 
Prepaid expenses, other current assets and other assets    (9,315)   79 
Trade accounts payable, accrued expenses, other current liabilities and other liabilities    (11,488)   (15,188)
Customer deposits at IDT Financial Services Limited, our Gibraltar-based bank    (20,613)   29,015 
Deferred revenue    (3,260)   (4,997)
Net cash (used in) provided by operating activities    (23,290)   38,047 
Investing activities          
Capital expenditures    (7,656)   (9,396)
Payments for acquisitions, net of cash acquired    (450)   (5,453)
Purchases of debt securities and equity investments    (8,994)   (500)
Proceeds from maturities and sales of debt securities and redemptions of equity investments    2,672    5,555 
Net cash used in investing activities    (14,428)   (9,794)
Financing activities          
Distributions to noncontrolling interests    (470)   (737)
Proceeds from sale of Class B common stock to Howard S. Jonas        13,272 
Repayment of other liabilities.    (79)   (615)
Repayments of borrowings under revolving credit facility    (273)   (3,000)
Proceeds from borrowings under revolving credit facility    273    3,000 
Proceeds from exercise of stock options    276     
Repurchases of Class B common stock    (266)   (3,870)
Net cash (used in) provided by financing activities    (539)   8,050 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents    14,152    (236)
Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents    (24,105)   36,067 
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period    257,199    203,197 
Cash, cash equivalents, and restricted cash and cash equivalents at end of period   $233,094   $239,264 
Supplemental schedule of non-cash investing and financing activities          
Liabilities incurred for acquisition   $375   $ 
Howard S. Jonas’ advance payment used for sale of Class B common stock   $   $1,500 

 

8

 

 

Reconciliation of Non-GAAP Financial Measures for the

 

Second Quarter Fiscal 2020 and 2019 and Explanation of Performance Metric

 

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States of America (GAAP), IDT also disclosed, for 2Q20, 1Q20, and 2Q19, Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share, which are non-GAAP measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.

 

IDT’s measure of Adjusted EBITDA consists of revenue less direct cost of revenues and selling, general and administrative expense. Another way of calculating Adjusted EBITDA is to start with income (loss) from operations, add depreciation and amortization, severance expense, and other operating expense, and deduct other operating gains.

 

IDT’s measure of non-GAAP net income starts with net income (loss) in accordance with GAAP and adds severance expense, stock-based compensation, and other operating expense, net.

 

IDT’s measure of non-GAAP earnings per share is calculated by dividing non-GAAP net income by the diluted weighted-average shares.

 

These additions and subtractions are non-cash and/or non-routine items in the relevant fiscal 2020 and fiscal 2019 periods.

 

Management believes that IDT’s Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share measures provide useful information to both management and investors by excluding certain expenses and non-routine gains and losses that may not be indicative of IDT’s or the relevant segment’s core operating results. Management uses Adjusted EBITDA, among other measures, as a relevant indicator of core operational strengths in its financial and operational decision making. In addition, management uses Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share to evaluate operating performance in relation to IDT’s competitors. Disclosure of these financial measures may be useful to investors in evaluating performance and allows for greater transparency to the underlying supplemental information used by management in its financial and operational decision-making. In addition, IDT has historically reported similar financial measures and believes such measures are commonly used by readers of financial information in assessing performance, therefore the inclusion of comparative numbers provides consistency in financial reporting.

 

Management refers to Adjusted EBITDA, as well as the GAAP measures income (loss) from operations and net income (loss), on a segment and/or consolidated level to facilitate internal and external comparisons to the segments’ and IDT's historical operating results, in making operating decisions, for budget and planning purposes, and to form the basis upon which management is compensated.

 

While depreciation and amortization are considered operating costs under GAAP, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or capitalized in prior periods. IDT’s Adjusted EBITDA, which is exclusive of depreciation and amortization, is a useful indicator of its current performance.

 

Severance expense is excluded from the calculation of Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share. Severance expense is reflective of decisions made by management in each period regarding the aspects of IDT’s and its segments’ businesses to be focused on in light of changing market realities and other factors. While there may be similar charges in other periods, the nature and magnitude of these charges can fluctuate markedly and do not reflect the performance of IDT’s core and continuing operations.

 

Other operating expense, net, which is a component of income (loss) from operations, is excluded from the calculation of Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share. Other operating expense, net includes accruals for non-income related taxes related to one of IDT’s foreign entities, legal fees related to Straight Path Communications Inc.’s stockholders’ putative class action and derivative complaint, and expense for the indemnification of a net2phone cable telephony customer related to patent infringement claims brought against the customer. From time-to-time, IDT may incur costs related to non-routine tax and legal matters, however, these matters do not occur each quarter. IDT does not believe the gains or losses from these non-routine matters are components of IDT’s or the relevant segment’s core operating results.

 

9

 

 

The other calculation of Adjusted EBITDA consists of revenue less direct cost of revenues and selling, general and administrative expense. As the other excluded items are not reflected in this calculation, they are excluded automatically and there is no need to make additional adjustments. This calculation results in the same Adjusted EBITDA amount and its utility and significance is as explained above.

 

Stock-based compensation recognized by IDT and other companies may not be comparable because of the variety of types of awards as well as the various valuation methodologies and subjective assumptions that are permitted under GAAP. Stock-based compensation is excluded from IDT’s calculation of non-GAAP net income and non-GAAP earnings per share because management believes this allows investors to make more meaningful comparisons of the operating results per share of IDT’s core business with the results of other companies. However, stock-based compensation will continue to be a significant expense for IDT for the foreseeable future and an important part of employees’ compensation that impacts their performance.

 

Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share should be considered in addition to, not as a substitute for, or superior to, income (loss) from operations, cash flow from operating activities, net income (loss), basic and diluted earnings (loss) per share or other measures of liquidity and financial performance prepared in accordance with GAAP. In addition, IDT’s measurements of Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share may not be comparable to similarly titled measures reported by other companies.

 

Following are reconciliations of Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share to the most directly comparable GAAP measure, which are, (a) for Adjusted EBITDA, income (loss) from operations for IDT’s reportable segments and net income (loss) for IDT on a consolidated basis, (b) for non-GAAP net income, net income (loss), and (c) for non-GAAP earnings per share, basic and diluted earnings (loss) per share.

 

Revenue less direct cost of revenue as a percentage of revenue is a financial metric that measures changes in our revenue relative to changes in direct cost of revenue during the same period. Revenue and direct cost of revenue in this metric are from IDT’s consolidated statements of operations in accordance with GAAP. Revenue less direct cost of revenue as a percentage of revenue is a ratio in which revenue less direct cost of revenue is the numerator and revenue are the denominator. It is useful for monitoring trends in the generation of revenue as well as for evaluating the net contribution of our revenue.

 

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IDT Corporation  

Reconciliation of Adjusted EBITDA to Net Income (Loss)  

(unaudited)  

in millions  

Figures may not foot or cross-foot due to rounding to millions.

 

   Total IDT
Corporation
   Telecom &
Payment Services
   net2phone   Corporate 

Three Months Ended January 31, 2020

(2Q20)

                
Adjusted EBITDA  $7.4   $10.6   $(0.8)  $(2.3)
Subtract:                    
Depreciation and amortization   5.2    2.9    2.2    - 
Severance expense   0.5    0.5    -    - 
Other operating expense, net   0.4    -    0.2    0.2 
Income (loss) from operations   1.3   $7.1   $(3.3)  $(2.5)
Interest income, net   0.2                
Other income, net   0.6                
Income before income taxes   2.1                
Provision for income taxes   (1.2)               
Net income   0.9                
Net loss attributable to noncontrolling interests   -                
Net income attributable to IDT Corporation  $0.9                
                     
   Total IDT
Corporation
   Telecom &
Payment Services
   net2phone   Corporate 

Three Months Ended October 31, 2019

(1Q20)

                
Adjusted EBITDA  $7.3   $10.3   $(0.8)  $(2.2)
Subtract:                    
Depreciation and amortization   5.3    3.2    2.1    - 
Severance expense   0.6    0.6    -    - 
Other operating expense, net   2.8    2.2    0.4    0.3 
(Loss) income from operations   (1.4)  $4.4   $(3.3)  $(2.5)
Interest income, net   0.3                
Other income, net   0.2                
Loss before income taxes   (0.9)               
Provision for income taxes   (0.5)               
Net loss   (1.4)               
Net income attributable to noncontrolling interests   (0.1)               
Net loss attributable to IDT Corporation  $(1.5)               

 

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IDT Corporation

Reconciliation of Adjusted EBITDA to Net Loss

(unaudited)

in millions

Figures may not foot or cross-foot due to rounding to millions.

 

   Total IDT
Corporation
   Telecom &
Payment Services
   net2phone   Corporate 

Three Months Ended January 31, 2019

(2Q19)

                
Adjusted EBITDA  $7.4   $9.6   $0.2   $(2.4)
Subtract:                    
Depreciation and amortization   5.8    3.7    2.1    - 
Other operating expense, net   2.1    1.8    -    0.3 
(Loss) income from operations   (0.5)  $4.2   $(1.9)  $(2.8)
Interest income, net   0.2                
Other income, net   0.5                
Income before income taxes   0.2                
Provision for income taxes   (1.2)               
Net loss   (1.0)               
Net income attributable to noncontrolling interests   (0.3)               
Net loss attributable to IDT Corporation  $(1.3)               

 

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IDT Corporation

Reconciliations of Net Income (Loss) to Non-GAAP Net Income and Earnings (Loss) per share
to Non-GAAP Earnings per share
(unaudited)

in millions, except per share data

Figures may not foot due to rounding to millions.

 

   2Q20   1Q20   2Q19 
             
Net income (loss)  $0.9   $(1.4)  $(1.0)
Adjustments (add) subtract:               
Stock-based compensation   (1.2)   (1.3)   (0.5)
Severance expense   (0.5)   (0.6)   - 
Other operating expense, net   (0.4)   (2.8)   (2.1)
Total adjustments   (2.0)   (4.7)   (2.6)
Income tax effect of total adjustments   -    0.5    0.6 
    2.0    4.2    2.0 
Non-GAAP net income  $2.9   $2.8   $1.0 
                
Earnings (loss) per share:               
Basic  $0.04   $(0.06)  $(0.05)
Total adjustments   0.07    0.17    0.09 
Non-GAAP - basic  $0.11   $0.11   $0.04 
                
Weighted-average number of shares used in calculation of basic earnings (loss) per share   26.3    26.3    24.8 
                
Diluted  $0.04   $(0.06)  $(0.05)
Total adjustments   0.07    0.16    0.09 
Non-GAAP - diluted  $0.11   $0.10   $0.04 
                
Weighted-average number of shares used in calculation of diluted earnings (loss) per share   26.5    26.5    24.8 

 

 

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