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What changed in IDT CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of IDT CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+469 added−479 removedSource: 10-K (2023-10-16) vs 10-K (2022-10-14)

Top changes in IDT CORP's 2023 10-K

469 paragraphs added · 479 removed · 367 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

104 edited+45 added−34 removed60 unchanged
Biggest changeWe believe that NRS’ competitive advantages include: ■ NRS software and hardware are tailored specifically to the needs of independent retailers in contrast with other providers who primarily seek to provide POS solutions for larger retail chains with centralized decision-making; ■ Our relationships with the 35,000 retailers who sell BOSS Revolution Calling, BOSS Money, and/or our Mobile Top-Up offerings; ■ Our established direct sales and marketing capabilities focused on retail brands including our relationships with wholesale distributors who supply these stores; ■ Our consumer facing advertising screens and established relationships with supply side platforms in the DOOH advertising space; ■ Our ability to accept and target advertising and content in multiple formats to meet the needs of a diverse variety of potential buyers; ■ For our data business, the scale of our network and unique reach into the urban consumer convenience store market; ■ In certain states, our solution is licensed to accept electronic benefit payments that certain competitors may not be licensed to accept; ■ For NRS Pay, our unique pricing structure featuring flat, transparent pricing and no-contracts contrasts with established credit card processing providers; ■ Our ability to develop and leverage new solutions for retailers either directly or through third party providers attracted by our scale in the independent retailer market and flexibility of our platform; ■ Our fees for software as a service are generally well below the fees charged by competitors that serve large retail chains; ■ Our experienced and proven management team, many of whom have been with NRS since inception.
Biggest changeOur approach differentiates us from other POS providers who primarily seek to provide POS solutions for retail and restaurant chains with centralized decision-making and vendor selection processes; ■ Our ability to penetrate the very fragmented independent retailer market, in part by leveraging IDT’s relationships and experience serving over 30,000 retailers nationwide; ■ Our established direct sales and marketing capabilities focused on independent retailers including our relationships with the wholesale distributors who supply these stores; ■ Our POS terminal’s 15” hi-definition customer-facing screen for displaying advertising and promotions provisioned via the NRS platform, and established relationships with supply side platforms in the DOOH advertising space; 5 ■ Our ability to accept and target advertising and content in multiple formats to meet the needs of a diverse variety of potential advertising inventory buyers; ■ For our data analytics business, the scale of our network and unique reach into the urban consumer convenience store market; ■ Our focus on urban markets with high concentrations of first- and second-generation immigrants that provides advertisers and marketers with unprecedented reach and insight into these communities; ■ For NRS PAY, we are ideally positioned to supply payment processing services to retailers who purchase, or already utilize, our terminals, and appeal to many more potential customers through simplified, transparent pricing plans with free card readers, no hidden fees and lower total cost to operate than most competitors; ■ In certain states, NRS PAY’s solution is licensed to accept electronic benefit transfers that certain competitors may not be licensed to accept; ■ Because of our large scale compared to newcomers and small competitors, we are able to attractively price our software-as-a-service fees at levels that are generally well below theirs; ■ Our ability to leverage new offerings for retailers through third party providers who are attracted by our scale and the flexibility of our platform; and ■ Our experienced and proven management team, many of whom have been with NRS since inception.
With the introduction of new technologies and market entrants, net2phone expects competition to continue to intensify in the future. net2phone’s future acquisitions if any, may subject it to new competitors and cause it to face additional and different competition in the markets served by these businesses.
With the introduction of new technologies and market entrants, net2phone expects competition to continue to intensify. net2phone’s future acquisitions, if any, may subject it to new competitors and cause it to face additional and different competition in the markets served by these businesses.
The seamlessly integrated solutions on net2phone’s platform are delivered and centrally managed through an intuitive, ‘single pane of glass’ master portal that allows channel partners and customers to easily monitor and manage the product offering. net2phone’s CCaaS offering provides call center agents software for customized campaign management, including inbound and outbound call management, messaging, gamification, reporting, and live monitoring. net2phone’s CCaaS offering is tailored for call centers ranging from 20 to 1,000 agents. net2phone supports seamless product suite integrations with leading third-party CRMs and text-based business collaboration platforms including Google Meet, Microsoft Teams, Zoho, Slack, Zapier, and Salesforce, with new integrations added to meet demand. ■ Platform built for our channel partners. net2phone has built its platform to both serve the needs of its customers and to empower its channel partners.
The seamlessly integrated solutions on net2phone’s platform are delivered and centrally managed through an intuitive, ‘single pane of glass’ master portal that allows channel partners and customers to easily monitor and manage the product offering. net2phone’s CCaaS offering provides call center agents software for customized campaign management, including inbound and outbound call management, messaging, gamification, reporting, and live monitoring. net2phone’s CCaaS offering is tailored for call centers ranging from 20 to 1,000 agents. net2phone supports seamless product suite integrations with leading third-party CRMs and text-based business collaboration platforms including Google Meet, Microsoft Teams, Zoho, Slack, Zapier, and Salesforce, with new integrations added to meet demand. 10 ■ Platform built for our channel partners. net2phone has built its platform to both serve the needs of its customers and to empower its channel partners.
Straight Path was purchased in February 2018 by Verizon Communications Inc. – We introduce our BOSS Revolution Calling app for Android and iOS. – We launch our BOSS Money international remittance service. 2014 – We sell our stake in Fabrix Systems, a pioneer in cloud storage and network delivery technologies, to Ericsson for $69 million. 2015 – net2phone launches its UCaaS offering in the United States. 2016 – We spin-off our interest in our Zedge subsidiary to our stockholders.
Straight Path was purchased in February 2018 by Verizon Communications Inc. – We introduce our BOSS Revolution Calling app for Android and iOS. – We launch our BOSS Money international remittance service. 2014 – We sell our stake in Fabrix Systems, a pioneer in cloud storage and network delivery technologies, to Ericsson for $69 million. 2015 – net2phone launches its UCaaS offering in the United States. 2016 – We spin-off our majority interest in our Zedge subsidiary to our stockholders.
Tier 1 providers are the largest recognized licensed carriers in a country. Direct connections improve the quality of the telephone calls and reduce the cost, thereby enabling us to generate more traffic with higher margins to the associated foreign locales. We also have direct relationships with mobile network operators, reflecting their growing share of the voice traffic market.
Tier 1 providers are the largest recognized licensed carriers in the country. Direct connections improve the quality of the telephone calls and reduce the cost, thereby enabling us to generate more traffic with higher margins to the associated foreign locales. We also have direct relationships with mobile network operators, reflecting their growing share of the voice traffic market.
BOSS Revolution Calling is a prepaid international long-distance calling service marketed primarily to foreign-born and under-banked consumers in the United States and Canada, and a digital-only offering in Europe and Australia. 12 BOSS Revolution Calling includes our flagship ‘BOSS Revolution’ branded international long-distance prepaid calling service as well as disposable hard cards sold under a variety of brands.
BOSS Revolution Calling is a prepaid international long-distance calling service marketed primarily to foreign-born and under-banked consumers in the United States and Canada, and a digital-only offering in Europe and Australia. BOSS Revolution Calling includes our flagship ‘BOSS Revolution’ branded international long-distance prepaid calling service as well as disposable hard cards sold under a variety of brands.
In addition to these larger competitors, we face significant competition from smaller prepaid calling providers. 13 From time-to-time, competitors may offer rates that are substantially below ours, in an apparent attempt to gain market share. In some instances, these rates are below what we believe to be the cost to provide the service.
In addition to these larger competitors, we face significant competition from smaller prepaid calling providers. From time to time, competitors may offer rates that are substantially below ours, in an apparent attempt to gain market share. In some instances, these rates are below what we believe to be the cost to provide the service.
Prepaid customers are typically smaller telecommunication companies as well as independent call aggregators. IDT Global also offers outsourcing services to help fixed and mobile telephony operators enhance the profitability and value of their international voice operations.
Prepaid customers are typically smaller telecommunication companies as well as independent call aggregators. 15 IDT Global also offers outsourcing services to help fixed and mobile telephony operators enhance the profitability and value of their international voice operations.
BOSS Revolution has since become our flagship brand, and the BOSS Revolution platform has expanded to include payment offerings. 2009 – We spin-off our CTM Media Holdings subsidiary to our stockholders.
BOSS Revolution has since become our flagship brand, and the BOSS Revolution platform has expanded to include payment offerings. 2 2009 – We spin-off our CTM Media Holdings subsidiary to our stockholders.
CRM vendors also continue to partner with contact center service providers to provide integrated solutions and may, in the future, acquire competitive contact center service providers. net2phone’s actual and potential competitors may enjoy competitive advantages over it, including greater name recognition, longer operating histories and larger marketing budgets, as well as greater financial and/or technical resources.
CRM vendors also continue to partner with contact center service providers to provide integrated solutions and may, in the future, acquire competitive contact center service providers. net2phone’s competitors may enjoy competitive advantages over it, including greater name recognition, longer operating histories and larger marketing budgets, as well as greater financial and/or technical resources.
We can offer competitively priced termination services in part because of the large volumes of originating minutes generated by our BOSS Revolution Calling business, our global platform powered by proprietary software, our team of professional and experienced account managers and market makers, and our global network of interconnections and relationships with other telecom operators around the globe.
We can offer competitively priced termination services in part because of the large volumes of originating minutes generated by our BOSS Revolution Calling business, our global platform powered by proprietary software, our team of professional and experienced account managers and market makers, and our global network of interconnections and relationships with other telecom operators.
The primary market for NRS’ POS terminals is the more than 200,000 independently owned convenience, liquor, grocery, and tobacco stores in the United States, many of which primarily serve foreign-born communities. NRS continues to increase the number of POS terminals active in its network.
The primary market for NRS’ POS terminals is the more than 200,000 independently owned convenience, liquor, grocery, and tobacco stores in the United States, many of which primarily serve foreign-born communities in urban areas. NRS continues to increase the number of POS terminals active in its network.
We believe that BOSS Money’s competitive strengths include: ■ BOSS Revolution is an established and trusted brand that has served immigrant communities in the United States for over a decade. We spend significantly on BOSS Revolution branded marketing to support BOSS Revolution Calling and BOSS Money.
We believe that BOSS Money’s competitive strengths include: ■ Our BOSS name is an established and trusted brand that has served immigrant communities in the United States for over a decade. We spend significantly on BOSS-branded marketing to support BOSS Revolution Calling and BOSS Money.
These efforts could likewise harm our ability to offer VoIP communications services. Money Transmitter and Payment Instrument Laws and Regulations Our consumer payment services offerings include money transfer and various network branded, also called “open loop”, prepaid card offerings. These industries are heavily regulated.
These efforts could likewise harm our ability to offer VoIP communications services. Money Transmitter and Payment Instrument Laws and Regulations Our consumer payment services offerings include BOSS Money and various network branded, also called “open loop”, prepaid card offerings. These industries are heavily regulated.
IDT Global’s telecommunications network is comprised of interconnections and commercial relationships that reach virtually every significant telecom operator globally. These relationships enable us to carry international telecommunications traffic to more than 200 countries around the world.
IDT Global’s telecommunications network is comprised of interconnections and commercial relationships that reach virtually every significant global telecom operator. These relationships enable us to carry international telecommunications traffic to more than 200 countries around the world.
In addition, we estimate that approximately 7,000 retailers resell our disposable hard cards without utilizing our retailer portal. BOSS Revolution retailers are typically independent retailers serving foreign-born communities with significant unbanked or under-banked populations. The BOSS Revolution digital retailer portal can be accessed by any broadband enabled device.
In addition, we estimate that approximately 5,000 retailers resell our disposable hard cards without utilizing our retailer portal. BOSS Revolution retailers are typically independent retailers serving foreign-born communities with significant unbanked or under-banked populations. The BOSS Revolution retailer portal can be accessed by any broadband enabled device.
Our ability to compete successfully against these various operators and service providers stems from several factors, including: ■ our interconnect and termination agreements, network infrastructure, and least-cost-routing system enable us to offer low-cost, high-quality services; ■ our continued innovation with new plans tailored to the specific needs of different corridors and finding new ways of delivering more value to consumers striving to connect with third parties around the globe; ■ our extensive distribution and retail networks provide us with a strong presence in communities of foreign-born residents, a significant portion of which purchase our services with cash; ■ our continued migration of our existing customers to our digital platform including the BOSS Revolution Calling app; ■ our BOSS Revolution brand is often highly visible in these communities and has a reputation for quality service and competitive, transparent pricing; and ■ our offering of synergistic mobile top-up and payment services over the BOSS Revolution platform that customers can conveniently access from their accounts.
Our ability to compete successfully against these various operators and service providers stems from several factors, including: ■ our interconnect and termination agreements, network infrastructure, and least-cost-routing system enable us to offer low-cost, high-quality services; ■ our continued innovation with new plans tailored to the specific needs of different corridors and finding new ways of delivering more value to consumers striving to connect with third parties around the globe; 14 ■ our extensive distribution and retail networks provide us with a strong presence in communities of foreign-born residents, a significant portion of which purchase our services with cash; ■ our continued migration of our existing customers to our digital platform including the BOSS Revolution Calling app; ■ our BOSS Revolution brand is often highly visible in these communities and has a reputation for quality service and competitive, transparent pricing; and ■ our offering of synergistic IDT Digital Payments and BOSS Money over the BOSS Revolution platform that customers can conveniently access from their accounts.
Postpaid customers typically include Tier 1 carriers, mobile network operators and our most credit worthy customers. The majority of IDT Global’s prepaid customers connect via our IDT Express portal. IDT Express offers the convenience of a mobile self-service portal paired with dedicated account managers backed by customer support.
Postpaid customers typically include Tier 1 carriers, mobile network operators, and our most creditworthy customers. The majority of IDT Global’s prepaid customers connect via our IDT Express portal. IDT Express offers the convenience of a mobile self-service portal paired with dedicated account managers backed by customer support.
At July 31, 2022, approximately 1.6 million customers per month utilized the BOSS Revolution Calling app. In the United States, we distribute our BOSS Revolution Calling hard cards and other retail products primarily through our network of distributors that, either directly or through sub-distributors, sell to retail locations.
At July 31, 2023, approximately 1.5 million customers per month utilized the BOSS Revolution Calling app. In the United States, we distribute our BOSS Revolution Calling hard cards and other retail products primarily through our network of distributors that, either directly or through sub-distributors, sell to retail locations.
These include, but are not limited to, webinars, channel partner events, contact center industry focused events, Search Engine Optimization, or SEO, and Search Engine Marketing, or SEM, layered with ongoing channel sales training, proof of concepts and demos.
These include, but are not limited to, webinars, channel partner events, contact center industry-focused events, search engine optimization, and search engine marketing, layered with ongoing channel sales training, proof of concepts and demos.
In the United States, BOSS Revolution Calling served, as of July 31, 2022, approximately 2.4 million customers per month. BOSS Revolution Calling is offered through our digital channels – the BOSS Revolution Calling app and website, and through our extensive national network of BOSS Revolution retailers.
In the United States, BOSS Revolution Calling served, as of July 31, 2023, approximately 2.1 million customers per month. BOSS Revolution Calling is offered through our digital channels – the BOSS Revolution Calling app and website, and through our extensive national network of BOSS Revolution retailers.
This predatory pricing can adversely affect our revenues and our gross margins. The continued growth of OTT calling and messaging services such as WhatsApp, Viber, Skype, and others have adversely affected the sales of BOSS Revolution Calling and our other prepaid calling services.
This predatory pricing can adversely affect our revenues and our gross margins. The continued growth of OTT calling and messaging services such as WhatsApp, Messenger, FaceTime, and others have adversely affected the sales of BOSS Revolution Calling and our other prepaid calling services.
Rafael Holdings’ stock is listed on the NYSE with the ticker symbol “RFL”. 2 2019 – NRS launches NRS PAY, enabling retailers to accept credit cards and other forms of digital payment with an affordable, easily understood rate structure and no hidden fees. 2020 – net2phone introduces its Huddle video conferencing solution and integration with Microsoft Teams. – IDT acquires a majority stake in Sochitel UK Ltd., or Sochitel, a global hub and digital distribution platform for mobile top-up, electronic vouchers, and other value transfer services. 2021 – net2phone launches integrations with Salesforce and Zapier among others, and HIPAA compatible solutions for healthcare providers. – BOSS Money is integrated into the BOSS Revolution Calling app. 2022 – net2phone acquires Integra CCS, a CCaaS provider operating in the Americas and Europe. – IDT acquires Leaf Global Fintech, an award-winning provider of digital wallet services in emerging markets serving unbanked customers in Rwanda, Uganda, and Kenya. – NRS launches its eWIC service, enabling NRS retailers to accept electronic benefits vouchers from the beneficiaries of the popular Supplemental Nutrition Program for Women, Infants and Children, or WIC.
Rafael Holdings’ stock is listed on the NYSE with the ticker symbol “RFL”. 2019 – NRS launches NRS PAY, enabling retailers to accept credit cards and other forms of digital payment with an affordable, easily understood rate structure and no hidden fees. 2020 – net2phone introduces its Huddle video conferencing solution and integration with Microsoft Teams. – We acquire a majority stake in Sochitel UK Ltd., or Sochitel, a global hub and digital distribution platform for mobile top-up, electronic vouchers, and other value transfer services. 2021 – net2phone launches integrations with Salesforce and Zapier among others, and HIPAA-compatible solutions for healthcare providers. – BOSS Money is integrated into the BOSS Revolution Calling app. 2022 – net2phone acquires Integra CCS, or Integra, a CCaaS provider operating in the Americas and Europe. – We acquire Leaf Global Fintech Corporation, or Leaf, an award-winning provider of digital wallet services in emerging markets serving unbanked customers in Rwanda, Uganda, and Kenya. – NRS launches its eWIC service, enabling NRS retailers to accept electronic benefits vouchers from the beneficiaries of the popular Supplemental Nutrition Program for Women, Infants and Children, or WIC. 2023 – NRS expands its POS network to Canada, enrolling its first retailers in the Toronto area. - IDT Digital Payments launches Zendit, a global prepaid-as-a-service platform.
In addition, our internal sales force sells BOSS Revolution Calling and other platform products directly to retailers. At July 31, 2022, approximately 24,500 retailers per month utilized our digital retailer platform to provision customers, the substantial majority of whom pay the retailer in cash.
In addition, our internal sales force sells BOSS Revolution Calling and other platform products directly to retailers. 13 At July 31, 2023, approximately 23,500 retailers per month utilized our digital retailer platform to provision customers, the substantial majority of whom pay the retailer in cash.
Latin American markets generally exhibit lower levels of unified communications adoption and market leadership than in the United States and Europe, allowing net2phone to establish itself as an early mover within the market and gain significant market share. ■ Expand internationally . net2phone plans to continue its focus on growing our business within, and expanding to new, international markets.
Latin American markets generally initially exhibit lower levels of unified communications adoption and market leadership than in the United States and Europe, allowing net2phone to establish itself as an early mover within the market and gain significant market share. ■ Expand internationally . net2phone plans to continue growing its business within its international markets.
While net2phone is primarily focused on strategically growing its channel sales, it has also been focusing on the expansion of its direct-to-business customer sales. 10 ■ Differentiated customer support and local market presence. net2phone offers channel partners and customers white glove customer service, integrations with third-party software, and deep localization. net2phone’s on-the-ground presence in international markets accounts for approximately 75% of its current personnel.
While net2phone is primarily focused on strategically growing its channel sales, it has also been focusing on the expansion of its direct-to-business sales. ■ Differentiated customer support and local market presence. net2phone offers channel partners and customers white glove customer service, integrations with third-party software, and deep localization. net2phone’s on-the-ground presence in international markets accounted for approximately 75% of its personnel at the end of fiscal 2023.
These services meet a growing need for higher-quality connections for some of our customers who provide services to high-value, quality-conscious retail customers. As of July 31, 2022, IDT Global had more than 1,800 customers and had more than 325 carrier relationships globally. IDT Global’s revenues are generated by sales to both postpaid and prepaid customers.
These services meet a growing need for higher-quality connections for some of our customers who provide services to high-value, quality-conscious retail customers. As of July 31, 2023, IDT Global had more than 1,600 customers, including more than 315 carrier relationships globally. IDT Global’s revenues are generated by sales to both postpaid and prepaid customers.
IDT Global accounted for 7.7 billion minutes and 10.5 billion minutes of the total Traditional Communications’ minutes in fiscal 2022 and fiscal 2021, respectively. IDT Global has a significant number of direct connections to Tier 1 providers in North America, Latin America, Asia, Africa, Europe and the Middle East.
IDT Global accounted for 6.3 billion minutes and 7.7 billion minutes of the total Traditional Communications’ minutes in fiscal 2023 and fiscal 2022, respectively. IDT Global has a significant number of direct connections to Tier 1 providers in North America, Latin America, Asia, Africa, Europe, and the Middle East.
The main telephone number at our headquarters is (973) 438-1000 and our corporate website’s home page is www.idt.net. 1 We make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports, and all beneficial ownership reports on Forms 3, 4 and 5 filed by directors, officers and beneficial owners of more than 10% of our equity through the investor relations page of our website (http://ir.idt.net/) as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission.
We make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports, and all beneficial ownership reports on Forms 3, 4 and 5 filed by directors, officers and beneficial owners of more than 10% of our equity through the investor relations page of our website (http://ir.idt.net/) as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission.
Item 1. Business. OVERVIEW IDT is a global provider of financial technology, or fintech, cloud communications and traditional communications services. Our businesses often leverage common strategic assets to serve differentiated markets with innovative offerings. Our consumer businesses make it easier for families to connect, support and share across international borders.
Item 1. Business. OVERVIEW IDT is a provider of point-of-sale terminal-based solutions, international money remittance and other financial technology, or fintech businesses, cloud communications and traditional communications services. Our businesses leverage common strategic assets to serve differentiated markets with innovative offerings. Our consumer businesses make it easier for families to connect, support and share across international borders.
The defect escape ratio, a measure of quality engineering for our flagship BOSS Revolution brand, was 3% in fiscal 2022, meaning more than 97% of product defects were detected and fixed before being released to our customers.
The software defect escape ratio, a measure of quality engineering for our flagship BOSS Revolution brand, was 4% in fiscal 2023, meaning more than 96% of product defects were detected and fixed internally before being released to our customers.
IDT Global IDT Global’s revenues were $292.4 million in fiscal 2022 compared to $361.0 million in fiscal 2021, contributing 24.4% and 27.2% of Traditional Communications’ revenues in fiscal 2022 and fiscal 2021, respectively. IDT Global is one of the largest wholesale carriers of international long-distance minutes in the world.
IDT Global IDT Global’s revenues were $230.3 million in fiscal 2023 compared to $292.4 million in fiscal 2022, contributing 23.0% and 24.6% of Traditional Communications’ revenues in fiscal 2023 and fiscal 2022, respectively. IDT Global is one of the largest wholesale carriers of international long-distance minutes in the world.
Competition and Competitive strengths BOSS Money competes in the international money remittance space with both ‘brick and mortar’ services which operate primarily in retail locations through stores or authorized agents and a growing number of digital-only platforms. Most retailer-based originators of money transfers have now developed digital capabilities as well.
Competition and Competitive Strengths BOSS Money competes in the international money remittance space with both ‘brick and mortar’ services which operate primarily in retail locations through stores or authorized agents and with digital-only platforms. Most retailer-based originators of money transfers have now developed digital capabilities as well. Significant participants in this category include Western Union, International Money Express, Inc.
As of July 31, 2022, the NRS POS network included more than 19,000 terminals, an increase from 14,000 a year earlier. NRS’ POS terminal sales and marketing efforts are targeted, in part, to our nationwide network of BOSS Revolution retailers.
As of July 31, 2023, the NRS POS network included approximately 25,700 terminals, an increase from 19,400 a year earlier. NRS’ POS terminal sales and marketing efforts are targeted, in part, to our nationwide network of BOSS Revolution retailers.
A limited version of Huddle is also offered as a free stand-alone service. Huddle delivers a comprehensive feature set including phone dial-in conference options, robust user controls, single sign-on, noise cancelation, screen blur, Huddle reactions and complete on-the-go access. Huddle integrates fully with Google and Microsoft Outlook calendars.
Huddle delivers a comprehensive feature set including phone dial-in conference options, robust user controls, single sign-on, noise cancelation, screen blur, Huddle reactions and complete on-the-go access. Huddle integrates fully with Google and Microsoft Outlook calendars.
We continue to expand our BOSS Money customer base by focusing our marketing efforts on converting the large BOSS Revolution Calling and Mobile Top-Up customer bases, as well as by targeting new customers directly, primarily through attractive fee and foreign exchange rate offers, through both our digital and retail channels.
We continue to expand our BOSS Money customer base at rates well above the domestic remittance industry’s average by focusing our marketing efforts on converting the large BOSS Revolution customer base, as well as by targeting new customers directly, primarily through attractive fee and foreign exchange rate offers, through both our digital and retail channels.
NRS also markets and sells to retailers outside the BOSS Revolution network, including direct sales and through strategic relationships with more than 100 wholesale distributors including some of the largest cash-and-carry wholesalers in the United States. 4 NRS generates revenue from a portfolio of services for both retailers and third parties.
NRS also markets and sells to retailers through direct sales and strategic relationships with more than 100 wholesale distributors including some of the largest cash-and-carry wholesalers in the United States. NRS generates revenue from a portfolio of services for both retailers and third parties. The vast majority of revenue is generated by recurring services including: ■ Display Advertising .
Key differentiators typically include net2phone’s advanced feature sets, white glove customer service, integrations with third-party software and deep localization. net2phone’s global infrastructure and locally based sales and customer support teams enable clients to retain the look and feel of localized customer and user experiences with local phone numbers, porting, native language support, and in-country sales teams. net2phone’s marketing to channel partners and end users includes search engine marketing, search engine optimization, third-party lead generation platforms, social media marketing, and other forms of demand generation. net2phone’s indirect marketing funnels through its network of partners, master agencies, and affiliates and includes tradeshows and local events, support for digital marketing and other forms of demand generation. net2phone primarily sells its solutions through the partner channel, overseen by field-based channel sales managers employed by us. net2phone tracks its acquisition costs closely across all channels to ensure it is acquiring customers in a cost-efficient manner and consistent with its targets for return on investment. net2phone differentiates its position in the marketplace by leveraging its international assets which enables net2phone to enter and serve international markets in North America, Latin America and Europe.
Key differentiators typically include net2phone’s advanced feature sets, white glove customer service, integrations with third-party software and deep localization. net2phone’s global infrastructure, locally based sales and customer support teams and local phone numbers, porting, and native language support, all enable net2phone clients to retain the look and feel of localized customer and user experiences. net2phone’s marketing to channel partners and end users includes search engine marketing, search engine optimization, third-party lead generation platforms, social media marketing, and other forms of demand generation. net2phone’s indirect marketing funnels through its network of partners, master agencies, and affiliates and includes tradeshows and local events, support for digital marketing and other forms of demand generation. net2phone tracks its acquisition costs closely across both channels to ensure it is acquiring customers in a cost-efficient manner and consistent with its targets for return on investment. net2phone’s CCaaS offering is integrated into its core marketing strategies.
REGULATION The following summary of regulatory developments and legislation is intended to describe what we believe to be the most important, but not all, current and proposed international, federal, state, and local laws, regulations, orders, and legislation that are likely to materially affect us. 16 Regulation of Telecom in the United States Telecommunications services are subject to extensive government regulation at both the federal and state levels in the United States.
REGULATION The following summary of regulatory developments and legislation is intended to describe what we believe to be the most important, but not all, current and proposed international, federal, state, and local laws, regulations, orders, and legislation that are likely to materially affect us.
In North America, net2phone continues to outperform with streamlined offerings, channel partner expansion, and its direct sales channel. In Latin America, net2phone leverages its network infrastructure and regional expertise to provide a truly localized solution supported by knowledgeable staff and regional offices in Argentina, Brazil, Colombia, Peru, Uruguay, and Mexico.
In Latin America, net2phone leverages its network infrastructure and regional expertise to provide a truly localized solution supported by knowledgeable staff and regional offices in Argentina, Brazil, Colombia, Peru, Uruguay, and Mexico.
Our businesses derive their competitive advantages leveraging one or more of our strategic assets including: ■ The NRS, net2phone, BOSS Revolution, BOSS Money and IDT Global brands; ■ A nationwide network of more than 30,000 retailers including over 25,000 who utilize our digital retailer platform; ■ Our customer base of more than eight million users, primarily in immigrant communities within the United States; ■ Our technology, global infrastructure and high-capacity transaction platforms; ■ Extensive VoIP and cloud services expertise; and ■ Our staff of more than 1,600 working in over 20 countries on four continents.
These assets include: ■ Our key brands including NRS, net2phone, BOSS Revolution, BOSS Money and IDT Global; ■ Our nationwide network of more than 30,000 retailers including over 20,000 who utilize our digital retailer platform; ■ Our customer base of more than eight million users, primarily in immigrant communities within the United States; ■ Our technology, global infrastructure and high-capacity transaction platforms; ■ Extensive VoIP and cloud services expertise; and ■ Our staff of more than 2,300 dedicated personnel working in over 20 countries on four continents including in-house technology and product development teams.
Publicly traded companies in this category include Western Union, International Money Express, Inc. (Intermex), Ria, a subsidiary of Euronet Worldwide, and MoneyGram International, Inc. Money remittance providers that compete wholly or primarily through digital channels include Xoom (a subsidiary of PayPal), WorldRemit, Remitly, TransferWise and many others.
(Intermex), Ria, a subsidiary of Euronet Worldwide, and MoneyGram International, Inc. Money remittance providers that compete wholly or primarily through digital channels include Xoom (a subsidiary of PayPal), WorldRemit, Remitly, Sendwave, and TransferWise.
We compete for customers outside the BOSS Revolution ecosystem primarily based on brand reputation, low fees, and competitive foreign exchange rates. net2phone net2phone’s revenues were $58.2 million in fiscal 2022 compared to $44.5 million in fiscal 2021. net2phone’s loss from operations was $11.1 million in fiscal 2022 compared to a loss from operations of $15.5 million in fiscal 2021. net2phone launched its UCaaS offering in 2015, leveraging our deep expertise in VoIP communications, established technology team, and global telephony network. net2phone enables its customers to transform their communications by leveraging its cloud platform to provide solutions that enable more intelligent, flexible and adaptive communications. net2phone’s flagship UCaaS service utilizes its cloud platform to provide conversational continuity across channels from any connected device – tethered or mobile – and to measure, manage and analyze those communications for enhanced insight and productivity. net2phone’s offerings include: ■ Unified Communications as a Service (UCaaS): Business communications globally are rapidly evolving.
We compete for customers outside the BOSS ecosystem primarily based on brand reputation, low fees, and competitive foreign exchange rates. net2phone net2phone’s revenues were $72.4 million in fiscal 2023 compared to $58.2 million in fiscal 2022. net2phone’s loss from operations was $2.8 million in fiscal 2023 compared to $11.1 million in fiscal 2022. net2phone launched its UCaaS offering in 2015, leveraging our expertise in VoIP communications, established technology team, and global telephony network. net2phone enables its customers to transform their communications by leveraging its cloud platform to provide solutions that enable more intelligent, flexible and adaptive communications. net2phone’s offerings include: ■ Unified Communications as a Service (UCaaS): Business communications is rapidly evolving.
We believe that our technological position significantly depends on the technical experience, expertise, and creative ability of our employees to maintain both our current businesses and pursue future business development.
From time to time, we have also acquired or licensed intellectual property relating to present and future business strategy. We believe that our technological position significantly depends on the technical experience, expertise, and creative ability of our employees to maintain both our current businesses and pursue future business development.
Financial information by segment is presented in Note 2 to our Consolidated Financial Statements in Item 8 to Part II of this Annual Report. Our headquarters is located at 520 Broad Street, Newark, New Jersey 07102.
Financial information by segment is presented in Note 2 to our Consolidated Financial Statements in Item 8 to Part II of this Annual Report. Our headquarters is located at 520 Broad Street, Newark, New Jersey 07102. The main telephone number at our headquarters is (973) 438-1000 and our corporate website’s home page is www.idt.net.
We actively pursue the filing and registration of patents, domain names, trademarks, and service marks to protect our intellectual property rights within the United States and abroad; in particular our registered trademarks and brands: IDT®, BOSS Revolution®, and net2phone®. From time to time we have also acquired or licensed intellectual property relating to present and future business strategy.
INTELLECTUAL PROPERTY We own numerous patents, trademarks, domain names and other intellectual property rights necessary to conduct our business. We actively pursue the filing and registration of patents, domain names, trademarks, and service marks to protect our intellectual property rights within the United States and abroad; in particular our registered trademarks and brands: IDT®, BOSS Revolution®, and net2phone®.
BOSS Revolution Calling BOSS Revolution Calling’s revenues were $387.9 million in fiscal 2022 compared to $455.2 million in fiscal 2021 (32.4% and 34.3% of Traditional Communications’ revenues in fiscal 2022 and fiscal 2021, respectively).
BOSS Revolution Calling BOSS Revolution Calling’s revenues were $322.1 million in fiscal 2023 compared to $387.9 million in fiscal 2022 (32.1% and 32.6% of Traditional Communications’ revenues in fiscal 2023 and fiscal 2022, respectively).
Increasingly sophisticated cloud-based communications solutions are displacing siloed, multi-channel solutions and on-premise Private Branch Exchanges, or PBXs, which most businesses operate to support their legacy phone systems. net2phone offers unified communications as a cloud-based PBX with advanced Internet Protocol, or IP, desktop phones and as a bring-your-own-device solution accessed through its integrated web portal and mobile app. net2phone’s UCaaS service includes multi-channel communications with voice management features, unlimited domestic and international calling to over 40 countries, robust messaging and chat tools, voicemail to email transcription, client analytics, the net2phone Huddle video conferencing service, and reporting and system management capabilities accessed through its online console. net2phone’s UCaaS service integrates seamlessly with business communication platforms (such as Microsoft Teams and Slack), leading customer relationship management, or CRM, services (such as SalesForce, Zoho and others) and text-based communications platforms. net2phone adds features, enhancements and integrations on a regular basis leveraging its agile development philosophy. ■ Huddle : net2phone’s video and audio streaming solution, Huddle, is integrated with and provisioned through its unified communications offering.
Increasingly sophisticated cloud-based solutions are displacing siloed, multi-channel solutions and on-premise Private Branch Exchanges, or PBXs, which businesses operate to support their legacy phone systems. net2phone’s Unite branded UCaaS service utilizes its cloud platform to provide conversational continuity across channels from any connected device – tethered or mobile – and to measure, manage and analyze those communications for enhanced insight and productivity. net2phone provides its UCaaS customers that convert from on-premise PBXs with advanced Internet Protocol, or IP, desktop phones and/or with a bring-your-own-device solution accessed through its integrated web portal and through net2phone’s mobile app. net2phone’s UCaaS service includes multi-channel communications with voice management features, unlimited domestic and international calling to over 40 countries, robust messaging and chat tools, voicemail to email transcription, client analytics, the net2phone Huddle video conferencing service, and reporting and system management capabilities accessed through its online console. net2phone’s UCaaS service integrates seamlessly with business communication platforms (such as Microsoft Teams and Slack), leading customer relationship management, or CRM, services (such as SalesForce, Zoho and others) and text-based communications platforms. net2phone adds features, enhancements and integrations on a regular basis leveraging its agile development philosophy. ■ Cloud Contact Center as a Service (CCaaS) : net2phone offers robust and integrated cloud CCaaS solutions under its uContact brand. uContact provides omnichannel contact center solutions including workflows, forms, reports, dashboards, CRM alerts, and monitoring for inbound, outbound, or blended contact centers. uContact also offers gamification components to improve employee efficiency and engagement. uContact is sold either as a stand-alone offer or as a bundled solution with net2phone’s UCaaS or SIP Trunking offerings. ■ Huddle : net2phone’s video and audio streaming solution, Huddle, is integrated with and provisioned through its unified communications offering.
The Traditional Communications segment, which represented 87.7% and 91.8% of our total revenues in fiscal 2022 and fiscal 2021, respectively, includes Mobile Top-Up, BOSS Revolution Calling, and IDT Global, as well as other small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode.
The Traditional Communications segment, which contributed revenue of $1,002.7 million in fiscal 2023 and $1,190.0 million in fiscal 2022 (81.0% and 87.2% of our total revenues, respectively) includes IDT Digital Payments, BOSS Revolution Calling, and IDT Global, as well as other small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode.
Regulation of Telecom by State Public Utility Commissions Our telecommunications services that originate and terminate within the same state, including both local and in-state long distance services are subject to the jurisdiction of that state’s public utility commission, or PUC.
Whether these contribution factors will be stable in the future is unknown, but it is possible that we will be subject to significant increases. 17 Regulation of Telecom by State Public Utility Commissions Our telecommunications services that originate and terminate within the same state, including both local and in-state long distance services are subject to the jurisdiction of that state’s public utility commission, or PUC.
OUR STRATEGY Since our inception more than 30 years ago, we have generated strong returns for our stockholders by incubating early-stage, high-growth businesses with investment capital provided by our more mature, cash-generating businesses. As these growth businesses scaled, we monetized many of them through sales or spin-offs to our stockholders.
OUR STRATEGY Since our inception more than 30 years ago, we have generated strong returns for our stockholders by incubating high-growth businesses with investment capital provided by our more mature, cash-generating businesses.
IDT Express focuses on delivering wholesale voice and direct inward dialing, or DID, services to small and medium size businesses domestically and internationally. 14 Traditional Communications terminated 11.3 billion minutes in fiscal 2022, as compared to 15.1 billion minutes in fiscal 2021.
IDT Global’s services are marketed and sold through our internal account management team and the IDT Express digital portal. IDT Express focuses on delivering wholesale voice and direct inward dialing, or DID, services to small and medium size businesses domestically and internationally. Traditional Communications terminated 9.3 billion minutes in fiscal 2023, as compared to 11.3 billion minutes in fiscal 2022.
This market is subject to intense revenue and margin pressure as consumers continue to migrate to free over-the-top voice and messaging services and to flat-rate international long-distance plans.
Like other operators in this market, these businesses, and particularly our BOSS Revolution Calling and IDT Global businesses, are subject to intense revenue and margin pressure as consumers continue to migrate to free over-the-top voice and messaging services and to flat-rate international long-distance plans.
Additionally, net2phone competes with vendors that historically provided other contact center services and technologies and expanded to offer cloud contact center software such as NICE, Five9, and Genesys. net2phone also faces competition from many smaller contact center service providers such as Talkdesk and Seranova, as well as vendors offering both unified communications and contact center solutions.
These legacy telephony vendors are increasingly supplementing and replacing their traditional on-premise contact center systems with competing cloud offerings, through a combination of acquisitions, partnerships, and in-house development. 11 Additionally, net2phone competes with vendors that historically provided other contact center services and technologies and expanded to offer cloud contact center software such as NICE, Five9, and Genesys. net2phone also faces competition from many smaller contact center service providers such as Talkdesk and Seranova, as well as vendors offering both unified communications and contact center solutions.
Significant changes to the applicable laws or regulations imposed by any of these regulators could have a material adverse effect on our business, operating results and financial condition.
Local governments often indirectly regulate aspects of our communications business by imposing zoning requirements, taxes, permit or right-of-way procedures or franchise fees. Significant changes to the applicable laws or regulations imposed by any of these regulators could have a material adverse effect on our business, operating results and financial condition.
IDT Global participates in a global marketplace with: ■ interexchange carriers and other long-distance resellers and providers, including large carriers such as T-Mobile, AT&T, and Verizon; ■ historically state-owned or state-sanctioned telephone companies such as Telefonica, Orange SA, and KDDI; ■ on-line, spot-market trading exchanges for voice minutes; ■ OTT internet telephony providers; ■ other VoIP providers; ■ other providers of international long-distance services; and ■ alliances between large multinational carriers that provide wholesale carrier services. 15 We believe that IDT Global derives a competitive advantage from several inter-related factors: ■ our BOSS Revolution Calling business generates large volumes of originating minutes, which represents a desirable, negotiable asset that helps us win return traffic and obtain beneficial pricing which we can offer in the wholesale arena; ■ the proprietary technologies powering our IDT Global’s platform and, in particular, the software that drives VoIP enables us to scale up at a lower cost than many of our competitors; ■ our professional and experienced account management team; and ■ our extensive network of interconnects around the globe, with the ability to connect in whichever format (IP or TDM) is most feasible.
We believe that IDT Global derives a competitive advantage over some participants on certain routes from several inter-related factors: ■ our BOSS Revolution Calling business generates large volumes of originating minutes, which represents a desirable, negotiable asset that helps us win return traffic and obtain beneficial pricing which we can offer in the wholesale arena; ■ the proprietary technologies powering our IDT Global platform and, in particular, the software that drives VoIP enables us to scale up at a lower cost than many of our competitors; ■ our professional and experienced account management team; and ■ our extensive network of interconnects around the globe, with the ability to connect in whichever format (IP or time-division multiplexing, or TDM) is most feasible.
These trends and cost saving efforts have significantly offset the decreases in the paid minute voice revenue. The increasing revenue and gross margin contributions from our high-margin growth businesses in combination with our efforts to maximize the cash generation of our lower margin, more mature offerings have enabled us to improve our consolidated bottom-line performance in recent quarters.
The increasing revenue and gross margin contributions from our high-margin growth businesses in combination with our efforts to maximize the cash generation of our lower margin, more mature offerings have enabled us to improve our consolidated bottom-line performance in recent years and to return value to stockholders through purchases of our Class B common stock.
Any violations of the regulations may subject us to enforcement actions, including interest and penalties. The Federal Communications Commission, or FCC, has jurisdiction over all telecommunication’s common carriers to the extent they provide interstate or international communications services, including the use of local networks to originate or terminate such services.
The Federal Communications Commission, or FCC, has jurisdiction over all telecommunication’s common carriers to the extent they provide interstate or international communications services, including the use of local networks to originate or terminate such services. Each state regulatory commission has jurisdiction over the same carriers with respect to their provision of local and intrastate communications services.
In addition, net2phone’s integrations with leading third-party applications enable its partners to offer more comprehensive solutions. net2phone’s suite of solutions is delivered to the marketplace both quickly, intuitively, and precisely. net2phone has developed a proprietary partner portal exclusively for its growing partner community. net2phone’s channel partners are able to easily quote and deliver a net2phone proposal and agreement proceeding directly to onboarding. ■ Distribution power of net2phone’s more than 2,500 active channel partners enhanced with an emergent direct to consumer strategy. net2phone’s’ vast and growing partner network gives it tremendous leverage to grow its business customer base, increase revenue from our existing clients and expand its footprint to adjacent geographies. net2phone’s platform is tailored to support channel partners and includes channel incentives built into its pricing structure, technology platform, and support services. net2phone puts its channel and customer priorities first.
The platform has been deployed in the United States, Brazil, and Mexico to date. ■ Distribution power of net2phone’s more than 2,000 active channel partners enhanced with an emergent direct to consumer strategy. net2phone’s’ vast and growing partner network gives it tremendous leverage to grow its business customer base, increase revenue from our existing clients and expand its footprint to adjacent geographies. net2phone’s platform is tailored to support channel partners and includes channel incentives built into its pricing structure, technology platform, and support services. net2phone puts its channel and customer priorities first.
In numerous countries where we operate or plan to operate, we are subject to many local laws and regulations that, among other things, may restrict or limit the ability of telecommunications companies to provide telecommunications services in competition with state-owned or state-sanctioned dominant carriers. 17 Regulation of Internet Telephony The use of the Internet and private IP networks to provide voice communications services is generally less regulated than traditional switch-based telephony within the United States and abroad and, in many markets, is not subject to the imposition of certain taxes and fees that increase our costs.
Regulation of Internet Telephony The use of the Internet and private IP networks to provide voice communications services is generally less regulated than traditional switch-based telephony within the United States and abroad and, in many markets, is not subject to the imposition of certain taxes and fees that increase our costs.
Conversations on Huddle are secure, and passcode protected. ■ Session Initiation Protocol (SIP) Trunking : net2phone’s SIP Trunking service provides high-quality voice channels from net2phone’s expansive VOIP network directly to the client’s on-premise IP-PBX. net2phone’s SIP Trunking service has been certified for compatibility with leading IP-PBX vendors such as Avaya and 3CX. ■ Cloud Contact Center as a Service (CCaaS) : Prior to its acquisition of Integra, net2phone offered CCaaS services on a limited basis through resale agreements with CCaaS providers, including Integra and Five9 Inc.
Conversations on Huddle are secure, and passcode protected. 8 ■ Session Initiation Protocol (SIP) Trunking : net2phone’s SIP Trunking service provides high-quality voice channels from net2phone’s expansive VoIP network directly to the client’s on-premise IP-PBX. net2phone’s SIP Trunking service has been certified for compatibility with leading IP-PBX vendors such as Avaya and 3CX. net2phone operates in the United States, Canada, Latin America, the Caribbean, and Spain.
As of July 31, 2022, net2phone has approximately 474 employees worldwide, with approximately 75% located outside of the United States. Competition Major competitors to net2phone’s offerings include other UCaaS providers such as RingCentral, 8x8, Crexendo, Vonage, and Nextiva.
As of July 31, 2023, net2phone had approximately 460 employees worldwide, with 77% located outside of the United States. Competition net2phone’s most significant competitors in the UCaaS space include RingCentral, 8x8, Crexendo, Vonage, and Nextiva.
Traditional Communications Our Traditional Communications segment, which represented 87.7% and 91.8% of our total revenues in fiscal 2022 and fiscal 2021, respectively, includes: ■ Mobile Top-Up, which enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts; ■ BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States and Canada; ■ IDT Global, a wholesale provider of international voice and SMS termination and outsourced traffic management solutions to telecoms worldwide; and ■ Other, small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode. 11 During fiscal 2022, Traditional Communications generated $1,197 million in revenues and income from operations of $74.8 million, as compared with revenues of $1,328 million and income from operations of $81.3 million in fiscal 2021.
Traditional Communications comprises the following businesses: ■ IDT Digital Payments, which includes certain prepaid offerings – primarily mobile top-up, which enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts, and Zendit, its cloud-based prepaid-as-a-service platform, which enables businesses and developers to offer prepaid digital offerings globally through their apps and websites; ■ BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States and Canada; ■ IDT Global, a wholesale provider of international voice and SMS termination and outsourced traffic management solutions to telecoms worldwide; and ■ Other, small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode.
To date, we have spun off five publicly traded companies, one of which was subsequently acquired: ■ IDW Media Holdings, Inc. (NYSE American: IDW), a publishing and entertainment company (2009); ■ Genie Energy, Ltd.
As these growth businesses scaled, we have monetized many of them through sales or spin-offs to our stockholders. 3 To date, we have spun off five publicly traded companies, one of which was subsequently sold: ■ IDW Media Holdings, Inc. (OTC: IDW), a publishing and entertainment company (2009); ■ Genie Energy, Ltd.
Competition The major competitors to Mobile Top-Up include: ■ international mobile operators, who seek to control more of their own distribution channel or create their own products that directly compete with our Mobile Top-Up; and ■ other service providers, distributors, and wholesalers, who develop a more comprehensive product offering than our Mobile Top-Up or aggressively discount their product offerings.
Competition IDT Digital Payments’ major competitors include: ■ international mobile operators, who seek to control more of their own distribution channel or create their own products that directly compete with IDT Digital Payments; and ■ other service providers, distributors, and wholesalers, including DT One, Ding, and Recharge.com.
NRS technology teams in the United States and Israel continuously enhance the software and develop new features to better serve existing customers and facilitate expansion into additional retail market segments.
NRS’ integrated, proprietary software is offered to retailers as a service and provides operational tools including inventory management, sales tracking, price book management, and other useful features. NRS technology teams in the United States and Israel continuously enhance the software and develop new features to better serve existing customers and facilitate expansion into additional retail market segments.
As of July 31, 2022, we had over 2,500 active channel partner relationships. net2phone believes that its channel partner strategy, including the flexibility of go-to-market alternatives and the extensive support net2phone provides to its partners, creates strong incentives for resellers to partner with it. net2phone believes that its direct sales strategy is driving incremental expansion with direct sales generated via its web-based portals in all of its markets and led by its direct sales teams in Canada. ■ CCaaS. net2phone’s CCaaS solution called Ucontact allows net2phone to expand its channel partner portfolio by adding partners that focus mainly or exclusively in the CCaaS space.
As of July 31, 2023, we had over 2,000 active channel partner relationships. net2phone believes that its channel partner strategy, including the flexibility of go-to-market alternatives and the extensive support net2phone provides to its partners, creates strong incentives for resellers to partner with it. net2phone’s direct sales strategy is driving incremental expansion via its web-based portals in each of its markets and led by its direct sales teams in Canada. ■ Expansion of CCaaS. net2phone’s uContact branded CCaaS solution enables net2phone to expand its channel partner portfolio by adding partners that focus mainly or exclusively on the CCaaS space. uContact also expands net2phone’s total addressable market by allowing it to target larger enterprise accounts, business process optimization, or BPO, providers (outsourced call centers), and international contact centers, as well as entities that want an integrated UCaaS and CCaaS solution. net2phone expects CCaaS-driven opportunities will increase its average user per customer considerably beyond what it experiences in the UCaaS space.
The proliferation of each is driving change in contact center technology, as customers expect seamless communication across any channel according to their preference and needs.
The CCaaS market is fragmented, highly competitive and evolving rapidly in response to shifting consumer behavior, especially the rapid adoption of mobile devices and social media. The proliferation of mobile devices and social media is driving change in contact center technology, as customers expect seamless communication across any channel according to their preference and needs.
As CCaaS sales opportunities will lead to more enterprise deployments, net2phone plans to implement a strong presales engineering cadence to qualify, ascertain and identify the key features and functionality that such client sets require. net2phone growth strategy includes: ■ Channel expansion . net2phone’s growth accelerates as it adds new channel partners and increases direct sales.
As CCaaS sales opportunities will lead to more enterprise deployments, net2phone plans to implement a strong presales engineering cadence to qualify, ascertain and identify the key features and functionality that such client sets require. net2phone growth strategy includes: ■ New Product and Feature Offerings – net2phone expects to introduce new services and functionalities to drive sales, increase average revenue per user, or ARPU, and an enhanced customer experience.
The net2phone segment, which represented 4.3% and 3.1% of our total revenues in fiscal 2022 and fiscal 2021, respectively, comprises net2phone’s cloud communications offerings including its unified communications as a service, or UCaaS, and contact center as a service, or CCaaS, offerings.
The net2phone segment, which contributed revenue of $72.4 million in fiscal 2023 and $58.2 million in fiscal 2022 (5.8% and 4.3% of our total revenues, respectively), comprises unified communications as a service, or UCaaS, offered under net2phone’s Unite Brand, contact center as a service, or CCaaS, offered under its uContact brand, and other offerings that leverage the cloud to enable intelligent business communications.
Many of these companies offer more widely recognized brands, larger and more developed marketing and sales forces and/or channel agent networks, and more advanced product sets such as services designed specifically for call centers, messaging and chat, and solutions customized for specific market segments or verticals.
Many of these companies offer more widely recognized brands, larger and more developed marketing and sales forces and/or channel agent networks, and more advanced product sets and solutions customized for specific market segments or verticals. These competitors’ offerings typically also support integration of their services with other well-known, third-party CRM vendors as well as with various Google and Microsoft applications.
Our research and development team consist of our software engineering, product management, quality engineering, voice engineering, business intelligence, systems and development operations teams. We intend to continue to invest in our research and development capabilities to extend our products and services. Our technology organization uses a number of key performance indicators to track service quality.
Our technology team consist of our software engineering, voice engineering, quality engineering, data warehousing, ML (Machine Learning) and AI (Artificial Intelligence) development, data engineering, systems, NOC (Network Operations Center), and operations teams. We intend to continue to invest in our research and development capabilities to extend our products and services.
In connection with the development of our money transmission services and the expansion of our network branded prepaid card offerings, we have actively pursued our own money transmitter licenses. At July 31, 2022, we had received a money transmitter license in 48 of the 49 U.S. states that require such a license, as well as in Washington, D.C.
In connection with the development of our money transmission services and the expansion of our network branded prepaid card offerings, we have actively pursued our own money transmitter licenses.
Mobile Top-Up Mobile Top-Up’s revenues were $473.2 million in fiscal 2022 compared to $461.6 million in fiscal 2021 (39.5% and 34.8% of Traditional Communications’ revenues in fiscal 2022 and fiscal 2021, respectively).
IDT Digital Payments IDT Digital Payments’ revenues were $417.1 million in fiscal 2023 compared to $473.2 million in fiscal 2022 (41.6% and 39.8% of Traditional Communications’ revenues in fiscal 2023 and fiscal 2022, respectively).
We also continue to enhance the BOSS Money retailer portal and platform to make the transaction more convenient for retailers, many of whom have access to multiple remittance services.
In order to provide our service, BOSS Money retailers must meet certain stringent financial and other regulatory qualifications. We also continue to enhance the BOSS Money retailer portal and platform to make the transaction more convenient for retailers, the majority of whom host multiple remittance providers.
International remittances are a primary economic activity for the tens of millions of first and second-generation immigrants in the United States. According to the World Bank, total remittances from the United States topped $74 billion in 2021. BOSS Money enables customers in the United States to conveniently and affordably send money to third parties around the world.
International remittances are a primary economic activity for the tens of millions of first- and second-generation immigrants in the United States. According to the World Bank, total remittances from the United States topped $79 billion in 2022. At July 31, 2023, BOSS Money provided its remittance service from the United States to 47 countries through approximately 1,100 payer entities.
Mobile Top-Up’s growth drivers include deployment of additional data centric IMTU bundles to meet the demand for data from mobile phone customers in developing countries worldwide, migrating our current BOSS Revolution Calling and BOSS Money customers to our Mobile Top-Up offerings, further expansion into the wholesale market and the addition of new products enabling originators to pay for goods and services on behalf of the Mobile Top-Up recipient.
IDT Digital Payments is sold through the BOSS platform primarily through three channels: ■ direct-to-consumer, through the BOSS digital channel, including our BOSS Revolution Calling and BOSS Money apps, and the BOSS Revolution website; ■ retail, through our BOSS Revolution retail network including direct provisioning by retailers using our BOSS Revolution retailer platform and through mobile operator-branded top-up cards, and ■ enterprise and wholesale, in which we provision international offerings for other businesses. 12 IDT Digital Payments’ growth drivers include deployment of additional data centric bundles to meet the growing demand for data from mobile phone customers in developing countries worldwide, cross selling to our current BOSS Revolution Calling and BOSS Money customers, further expansion into the enterprise and wholesale market as well as other regions, and the addition of new services, including enabling originators to pay for goods and services on behalf of the recipient.
The substantial majority of Mobile Top-Up’s revenue is generated by the sale of IMTU. Mobile Top-Up leverages our platform capabilities, our distribution reach into foreign-born communities and our relationships with mobile operators around the world.
The substantial majority of IDT Digital Payments’ revenue is from international mobile top-up. IDT Digital Payments offers mobile top-up for 194 different carriers in 109 countries, primarily in Latin America, the Caribbean and Africa. IDT Digital Payments leverages our platform capabilities, our distribution reach into foreign-born communities and our relationships with mobile operators around the world.
SEGMENT REPORTING We have three reportable business segments: (1) Fintech; (2) net2phone (formerly net2phone-UCaaS); and (3) Traditional Communications. In fiscal 2022, a line of business was reclassified to the net2phone segment from the Traditional Communications segment. Comparative segment information has been reclassified and restated in all periods to conform to the current period presentation.
As of August 1, 2022, our National Retail Solutions business was reclassified to the NRS segment from the Fintech segment. In addition, certain lines of business were reclassified to the Fintech segment from the Traditional Communications segment. Comparative segment information has been reclassified and restated in all periods to conform to the current period presentation.
Currently, net2phone partners with over 2,500 active channel partners. net2phone is also investing in its direct-to-business channel, which is in the early stages of development across most markets and is expected to drive additional growth. 8 net2phone’s go-to-market strategy for both channel partners and direct sales focuses on owning its business customers, with customers billed and supported directly by it. net2phone’s sales approach is uniquely tailored to each geographic market. net2phone delivers differentiated, white-glove local support for channel partners and end users along with customizable packages and a partner-ready portal for seamless onboarding and management. net2phone’s channel partners and business customers choose its solutions as a result of its intuitive products, reliability, track-record of innovation, and accessibility. net2phone’s value proposition for its channel partners includes streamlined offers with both bundled and unbundled options, extensive customization capabilities, frictionless and rapid quote generation, and competitive compensation – backed by net2phone’s dedicated channel team.
Currently, net2phone partners with over 2,000 active channel partners. net2phone’s partner channel is overseen by field-based channel sales managers employed by net2phone. net2phone also continues to expand its direct-to-business channel in each of its markets. net2phone’s channel partners and business customers choose its solutions because of its intuitive products, reliability, track-record of innovation, and accessibility. net2phone’s go-to-market strategy for both channel partners and direct sales is uniquely tailored to each geographic market. net2phone delivers differentiated, local support for channel partners and end users along with customizable packages and a partner-ready portal for seamless onboarding and management.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn that event, the market price of our common stock could decline, and you could lose part or all of your investment. 18 Risk Factor Summary Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our business, financial condition or operating results to be harmed, including, but not limited to, risks regarding the following: Risks Related to our Businesses and Operations ● errors in our technology or technological issues outside our control; ● cyberattacks impacting our networks or systems; ● network disruptions, security breaches, or other significant disruptions or failures of our IT infrastructure and related systems or of those we operate for certain of our customers; ● the failure, or perceived failure, of one or more of our products; ● our international operations subject us to geopolitical and other risks including ongoing developments in Belarus and Ukraine; ● failures in our data center or services; ● our dependence on industry standard protocols and third-party software, including but not limited to open-source software; ● our dependence on a single supplier or small group of suppliers; ● changes to rates by our suppliers and increasing regulatory charges or tariffs; ● our customers, particularly our IDT Global customers, could experience financial difficulties; ● technologies could affect our ability to track the results of ads and/or could block ads online; ● the coronavirus COVID-19 pandemic and the restrictions put in place in connection therewith; Risks Related to Our NRS Business ● the ability of NRS to develop products and services to address the market for POS products and services; ● substantial and increasingly intense competition in the POS industry; ● advertising on the NRS platform; Risks Related to Our net2phone Business ● competition against established well-financed alternative voice communication providers, who may provide comparable services at comparable or lower pricing; ● the capacity, reliability, and performance of several third-party providers and their network infrastructure; ● scaling the business efficiently or quickly enough to meet its customers’ growing needs; ● the acquisition of Integra’s CCaaS business; Risks Related to Our Traditional Communications Business ● each of our BOSS Revolution Calling and IDT Global businesses is highly sensitive to declining prices; ● obtaining sufficient or cost-effective termination capacity to particular destinations; ● the termination of our carrier agreements with partners or our inability to enter into carrier agreements in the future; Risks Related to Our Financial Condition ● we hold cash, cash equivalents, debt securities and equity investments that are subject to various market risks; ● if we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results; Intellectual Property, Tax, Regulatory, and Litigation Risks ● protecting our proprietary technology; ● claims of infringement of intellectual property rights of others; ● tax and regulatory audits; ● legal proceedings; ● our and our disbursement partners’ and our payment processors’ ability to comply with a wide range of laws and regulations intended to help detect and prevent illegal or illicit activity; ● licensing and other requirements imposed by regulators and governments; ● our collection, processing, storage, use, and transmission of personal data; ● collection of sales and use, value added, or similar taxes; ● certain imminent FCC Orders and rules that effect the telecommunications marketplace; ● our ability to comply with requirements for debit card, credit card, and other digital payment methods; Risks Related to Our Capital Structure ● holders of our Class B common stock have significantly less voting power than holders of our Class A common stock; and ● eight trusts for the benefit of sons and daughters of Howard S.
Biggest changeIn that event, the market price of our common stock could decline, and you could lose part or all of your investment. 19 Risk Factor Summary Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our business, financial condition or operating results to be harmed, including, but not limited to, risks regarding the following: Risks Related to our Businesses and Operations ■ errors in our technology or technological issues outside our control; ■ cyberattacks impacting our networks or systems; ■ network disruptions, security breaches, or other significant disruptions or failures of our IT infrastructure and related systems or of those we operate for certain of our customers; ■ the failure, or perceived failure, of one or more of our products; ■ our international operations subject us to geopolitical and other risks including ongoing developments in Belarus and Ukraine; ■ failures in our data center or services; ■ our dependence on industry standard protocols and third-party software, including but not limited to open-source software; ■ our dependence on a single supplier or small group of suppliers; ■ changes to rates by our suppliers and increasing regulatory charges or tariffs; ■ our customers, particularly our IDT Global customers, could experience financial difficulties; ■ technologies could affect our ability to track the results of ads and/or could block ads online; Risks Related to Our NRS Business ■ substantial and increasing competition in the POS industry and payment space; ■ a decline in the advertising on the NRS platform due to macro-economic factors or otherwise; ■ the ability of NRS to develop products and services to address the market for POS products and services; Risks Related to Our net2phone Business ● competition against established well-financed alternative voice communication providers, who may provide comparable services at comparable or lower pricing; ● the capacity, reliability, and performance of several third-party providers and their network infrastructure; ● scaling the business efficiently or quickly enough to meet its customers’ growing needs; ● the integration of Integra’s CCaaS business; Risks Related to Our Traditional Communications Segment ● each of our BOSS Revolution Calling and IDT Global businesses is highly sensitive to declining prices; ● obtaining sufficient or cost-effective termination capacity to particular destinations; ● the termination of our carrier agreements with partners or our inability to enter into carrier agreements in the future; Risks Related to Our Financial Condition ● we hold cash, cash equivalents, debt securities and equity investments that are subject to various market risks; ● if we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results; Intellectual Property, Tax, Regulatory, and Litigation Risks (many of which are related to our Fintech segment, among others) ■ protecting our proprietary technology; ■ claims of infringement of intellectual property rights of others; ■ tax and regulatory audits; ■ legal proceedings; ■ our and our disbursement partners’ and our payment processors’ ability to comply with a wide range of laws and regulations intended to help detect and prevent illegal or illicit activity; ■ licensing and other requirements imposed by regulators and governments; ■ our collection, processing, storage, use, and transmission of personal data; ■ collection of sales and use, value added, or similar taxes; ■ certain imminent FCC Orders and rules that effect the telecommunications marketplace; ■ our ability to comply with requirements for debit card, credit card, and other digital payment methods; 20 Risks Related to Our Capital Structure ■ holders of our Class B common stock have significantly less voting power than holders of our Class A common stock; and ■ eight trusts for the benefit of sons and daughters of Howard S.
The loss of a key customer or a failure of some of them to renew or to continue to recommend net2phone’s products may have a material negative impact on its results. net2phone has a limited history of selling its services to larger businesses and may experience challenges in configuring and providing ongoing support for the products it sells to large customers.
The loss of a key customer or the failure of some of them to renew or to continue to recommend net2phone’s products may have a material negative impact on its results. net2phone has a limited history of selling its services to larger businesses and may experience challenges in configuring and providing ongoing support for the products it sells to large customers.
Failure of our patents, copyrights, trademarks, and trade secret protection, non-disclosure agreements and other measures to provide protection of our technology and our intellectual property rights could enable our competitors to more effectively compete with us and have an adverse effect on our business, financial condition, and results of operations.
Failure of our patents, copyrights, trademarks, and trade secret protection, non-disclosure agreements and other measures to provide protection of our technology and our intellectual property rights could enable our competitors to compete with us more effectively and have an adverse effect on our business, financial condition, and results of operations.
If we were found to be subject to or in violation of any laws or regulations governing money transmitters, we could lose our licenses, be subject to liability or be forced to change our business practices, which could harm our operations, results of operations, and financial condition.
If we were found to be subject to or in violation of any laws or regulations governing money transmitters, we could lose our licenses, be subject to liability or be forced to change our business practices, which could harm our business, results of operations, and financial condition.
There are also numerous other federal, state, local and international laws, such as the California Consumer Privacy Act (CCPA) and the EU’s General Data Protection Regulation (GDPR), regarding privacy and the storing, sharing, use, processing, disclosure and protection of personal information and other customer data, the scope of which are changing, subject to differing interpretations, and may be inconsistent among different jurisdictions or conflict with other applicable rules.
There are also numerous other federal, state, local, and international laws, such as the California Consumer Privacy Act, or CCPA and the EU’s General Data Protection Regulation, or GDPR, regarding privacy and the storing, sharing, use, processing, disclosure, and protection of personal information and other customer data, the scope of which are changing, subject to differing interpretations, and may be inconsistent among different jurisdictions or conflict with other applicable rules.
If interconnected VoIP services become subject to state regulation and/or additional regulation by the FCC, such regulation will likely lead to higher costs and reduce or eliminate the competitive advantage interconnected VoIP holds, by virtue of its lesser regulatory oversight, over traditional telecommunications services.
If interconnected VoIP services become subject to state regulation and/or additional regulation by the FCC, such regulation will likely lead to higher costs and reduce or eliminate the competitive advantage interconnected VoIP holds over traditional telecommunications services by virtue of its lesser regulatory oversight.
Compliance with these requirements is often difficult and costly, and our failure, or our counterparty’s failure, to comply may result in significant fines or civil penalties, regulatory enforcement action, liability under or termination of necessary agreements, each of which could have a material adverse effect on our financial position and/or operations and that of our distributors who could be liable as well.
Compliance with these requirements is often difficult and costly, and our failure, or our counterparty’s failure, to comply may result in significant fines or civil penalties, regulatory enforcement action, or liability under or termination of necessary agreements, each of which could have a material adverse effect on our financial position and/or operations and that of our distributors who could be liable as well.
Subscriptions and related usage by existing customers may decrease if: ■ customers are not satisfied with the services, prices or the functionality of net2phone’s products; ■ the stability, performance or security of net2phone’s products are not satisfactory; ■ the U.S. or global economy declines; 28 ■ net2phone’s customers’ business or demand for net2phone’s services declines due to industry cycles, seasonality, business difficulties or other reasons, including the impact of the COVID-19 pandemic; ■ customers favor products offered by other providers, particularly as competition continues to increase; ■ alternative technologies, products or features emerge or gain popularity that net2phone does not provide; ■ net2phone’s customers or potential customers experience financial difficulties; or ■ fewer customers purchase services from net2phone.
Subscriptions and related usage by existing customers may decrease if: ■ customers are not satisfied with the services, prices or the functionality of net2phone’s products; ■ the stability, performance or security of net2phone’s products are not satisfactory; ■ the U.S. or global economy declines; ■ net2phone’s customers’ business or demand for net2phone’s services declines due to industry cycles, seasonality, business difficulties or other reasons, including the impact of the COVID-19 pandemic; ■ customers favor products offered by other providers, particularly as competition continues to increase; ■ alternative technologies, products or features emerge or gain popularity that net2phone does not provide; ■ net2phone’s customers or potential customers experience financial difficulties; or ■ fewer customers purchase services from net2phone.
Any negative publicity arising out of a data breach or failure to comply with applicable privacy requirements could damage our reputation and cause our customers to lose trust in us, which could harm our business, results of operations, financial position, and potential for growth. 35 We may be harmed by certain imminent FCC Orders and rules that effect the telecommunications marketplace.
Any negative publicity arising out of a data breach or failure to comply with applicable privacy requirements could damage our reputation and cause our customers to lose trust in us, which could harm our business, results of operations, financial position, and potential for growth. We may be harmed by certain imminent FCC Orders and rules that effect the telecommunications marketplace.
While we expect additional regulation of our industry in some or all of these areas, and we expect continuing changes in the regulatory environment as new and proposed regulations are reviewed, revised and amended, we cannot predict with certainty what impact new laws in these areas will have on us, if any. net2phone’s VoIP services are subject to regulation in the United States and Canada.
While we expect additional regulation of our industry in some or all of these areas, and we expect continuing changes in the regulatory environment as new and proposed regulations are reviewed, revised and amended, we cannot predict with certainty what impact new laws in these areas will have on us, if any. 36 net2phone’s VoIP services are subject to regulation in the United States and Canada.
Governmental authorities could seek to impose financial costs or restrictions on foreign companies providing services to customers or companies in the United States. Governmental authorities may attempt to prohibit or otherwise discourage us from sourcing services from offshore labor. The FCPA and other applicable anti-corruption laws and regulations prohibit certain types of payments by our employees, vendors, and agents.
Governmental authorities could seek to impose financial costs or restrictions on foreign companies providing services to customers or companies in the United States. Governmental authorities may attempt to prohibit or otherwise discourage us from sourcing services from offshore labor. 26 The FCPA and other applicable anti-corruption laws and regulations prohibit certain types of payments by our employees, vendors, and agents.
If these trends in pricing continue or accelerate, it could have a material adverse effect on the revenues generated by our BOSS Revolution Calling and IDT Global businesses and/or our profitability. 30 We may not be able to obtain sufficient or cost-effective termination capacity to particular destinations, which could adversely affect our revenues and profits.
If these trends in pricing continue or accelerate, it could have a material adverse effect on the revenues generated by our BOSS Revolution Calling and IDT Global businesses and/or our profitability. We may not be able to obtain sufficient or cost-effective termination capacity to particular destinations, which could adversely affect our revenues and profits.
The failure to port numbers may cause net2phone to lose customers. net2phone faces risks from the outsourcing of the manufacturing of its desktop telephones (“desktop devices”). net2phone primarily sells Polycom, Yealink and Grandstream-branded desktop devices, although, it supports other third-party devices as well. These desktop devices are being manufactured by vendors in China.
The failure to port numbers may cause net2phone to lose customers. 28 net2phone faces risks from the outsourcing of the manufacturing of its desktop telephones (“desktop devices”). net2phone primarily sells Polycom, Yealink and Grandstream-branded desktop devices, although, it supports other third-party devices as well. These desktop devices are being manufactured by vendors in China.
These third-party providers include but are not limited to: 4PSA, an opensource, Kamilio, based platform provider based in Romania and NetSapiens Inc. based in San Diego, CA. 4PSA is net2phone’s current communications platform in South America and continues to serve as a legacy platform for a smaller percentage of customers in the U.S.
These third-party providers include but are not limited to: 4PSA, an opensource, Kamilio-based platform provider based in Romania and NetSapiens Inc. based in San Diego, CA. 4PSA is net2phone’s current communications platform in most of South America and continues to serve as a legacy platform for a smaller percentage of customers in the U.S.
In addition, sales may be made to customers that are subject to additional security requirements. Selling into segments with additional requirements increases potential liability which in some instances may be unlimited. While we believe we meet or exceed all requirements for sales into such segments, there is no assurance that our systems fully comply with all requirements.
In addition, sales may be made to customers that are subject to additional security requirements. Selling into segments with additional requirements increases potential liability that in some instances may be unlimited. While we believe we meet or exceed all requirements for sales to such segments, there is no assurance that our systems fully comply with all requirements.
Jonas, our Chairman and Chairman of the Board, hold shares that, in the aggregate, represent more than a majority of the combined voting power of our outstanding capital stock. 19 Risks Related to Our Businesses and Operations Errors in our technology or technological issues outside our control could cause delays or interruptions to our customers.
Jonas, our Chairman and Chairman of the Board, hold shares that, in the aggregate, represent more than a majority of the combined voting power of our outstanding capital stock. Risks Related to Our Businesses and Operations Errors in our technology or technological issues outside our control could cause delays or interruptions to our customers.
As we conduct business or become deemed to conduct business in foreign jurisdictions, including through websites that we host that may be available in these locations, we may become subject to those laws and regulations. We are also subject to the privacy and data protection-related obligations in our contracts with our customers and other third parties.
As we conduct business or become deemed to conduct business in foreign jurisdictions, including through websites that we host that may be available in these locations, we may become subject to those laws and regulations. We are also subject to privacy and data protection-related obligations in our contracts with our customers and other third parties.
Our upstream carriers, suppliers and vendors may increase their prices thus directly impacting our cost of revenues, which would affect our earnings. Interconnected VoIP traffic may be subject to increased charges. Should this occur, the rates paid to our underlying carriers may increase which could reduce our profitability.
Our upstream carriers, suppliers and vendors may increase their prices thus directly impacting our direct cost of revenues, which would affect our earnings. Interconnected VoIP traffic may be subject to increased charges. Should this occur, the rates paid to our underlying carriers may increase, which could reduce our profitability.
Many of the largest providers of broadband services, like cable companies and traditional telephone companies, have publicly stated that they will not degrade or disrupt their customers’ use of applications and services, like ours. However, there was no guarantee that they will not do so in the future.
Many of the largest providers of broadband services, like cable companies and traditional telephone companies, have publicly stated that they will not degrade or disrupt their customers’ use of applications and services, like ours. However, there was no guarantee that they would not do so in the future.
Regulatory developments such as these could have a material adverse effect on our operating results. 36 In many countries in which we operate, or our services are sold, the status of the laws that may relate to our services is unclear.
Regulatory developments such as these could have a material adverse effect on our operating results. In many countries in which we operate, or our services are sold, the status of the laws that may relate to our services is unclear.
Such disruptions could decrease efficiency, increase our costs and have an adverse effect on our business or results of operations. 25 The practice of utilizing labor based in foreign countries has come under increased scrutiny in the United States.
Such disruptions could decrease efficiency, increase our costs, and have an adverse effect on our business or results of operations. The practice of utilizing labor based in foreign countries has come under increased scrutiny in the United States.
The termination of our carrier agreements with partners or our inability to enter into carrier agreements in the future could materially and adversely affect our ability to compete, which could reduce our revenues and profits. We rely upon our carrier agreements with partners in order to provide our telecommunications services to our customers.
The termination of our carrier agreements with partners or our inability to enter into carrier agreements in the future could materially and adversely affect our ability to compete, which could reduce our revenues and profits. We rely upon our carrier agreements with partners to provide our telecommunications services to our customers.
We may be subject to additional royalties, license or trademark infringement costs or other unknown costs when one or more of these third-party technologies are affected or need to be replaced due to end-of-support or end-of-sale of such third parties. 23 Certain functions related to our business depend on a single supplier or small group of suppliers to carry out our business, and the inability to do business with some or all of these suppliers could have a materially adverse effect on our business and financial results.
We may be subject to additional royalties, license or trademark infringement costs or other unknown costs when one or more of these third-party technologies are affected or need to be replaced due to end-of-support or end-of-sale of such third parties. 24 Certain functions related to our business depend on a single supplier or small group of suppliers to carry out our business, and the inability to do business with some or all of these suppliers could have a materially adverse effect on our business and financial results.
The total destruction or severe impairment of our data center facilities could result in significant downtime of our services and the loss of customer data. Our ability to provide cloud-based communication services is dependent upon our physical and cloud-based infrastructure.
The destruction or severe impairment of our data center facilities could result in significant downtime of our services and the loss of customer data. Our ability to provide cloud-based communication services is dependent upon our physical and cloud-based infrastructure.
Of equal importance, carriers such as us have the right to “sign” their traffic, effectively attesting that the traffic they are transmitting is not illegal robocalls. The FCC’s rules present several concerns to all carriers.
Of equal importance, carriers such as us have the right to “sign” their traffic, effectively attesting that the traffic they are transmitting is not illegal robocalls. 35 The FCC’s rules present several concerns to all carriers.
President Biden and numerous Senators have criticized the current status of net neutrality, at this time we are not aware if there will be legislation that might reimpose the prior regulations.
President Biden and numerous Senators have criticized the status of net neutrality, at this time we are not aware if there will be legislation that might reimpose the prior regulations.
As a result, the ability of holders of our Class B common stock to influence our management is limited. Eight trusts for the benefit of sons and daughters of Howard S.
As a result, the ability of holders of our Class B common stock to influence our management is limited. 40 Eight trusts for the benefit of sons and daughters of Howard S.
New legislation, changes in laws or regulations, implementing rules and regulations, litigation, court rulings, changes in industry practices or standards, changes in systems rules or requirements or other similar events could expose us to increased compliance costs, liability, reputational damage, and could reduce the market value of our money transfer and network branded prepaid card services or render them less profitable or obsolete.
New legislation, changes in laws or regulations, implementing rules and regulations, litigation, court rulings, changes in industry practices or standards, changes in systems rules or requirements or other similar events could expose us to increased compliance costs, liability, reputational damage, and could reduce the market value of our BOSS Money and network branded prepaid card services or render them less profitable or obsolete.
In addition, net2phone’s customers may renew for lower subscription amounts or for shorter contract lengths. net2phone may not accurately predict cancellation rates for its customers. net2phone’s cancellation rates may increase or fluctuate because of a number of factors, including customer needs, pricing changes, number of applications used by its customers, customer satisfaction with its service, the acquisition of net2phone’s customers by other companies and deteriorating general economic conditions.
In addition, net2phone’s customers may renew for lower subscription amounts or for shorter contract lengths. net2phone may not accurately predict cancellation rates for its customers. net2phone’s cancellation rates may increase or fluctuate because of several factors, including customer needs, pricing changes, number of applications used by its customers, customer satisfaction with its service, the acquisition of net2phone’s customers by other companies, and deteriorating general economic conditions.
Risks Related to Our Traditional Communications Business Each of our BOSS Revolution Calling and IDT Global businesses is highly sensitive to declining prices, which may adversely affect our revenues and profitability. The worldwide telecommunications industry is characterized by intense price competition, which has resulted in declines in both our average per-minute price realizations and our average per-minute termination costs.
Risks Related to Our Traditional Communications Segment Each of our BOSS Revolution Calling and IDT Global businesses is highly sensitive to declining prices, which may adversely affect our revenues and profitability. The worldwide telecommunications industry is characterized by intense price competition, which has resulted in declines in both our average per-minute price realizations and our average per-minute termination costs.
In addition, consumer confidence and spending could be adversely affected in response to financial market volatility, negative financial news, conditions in the real estate and mortgage markets, declines in income or asset values, changes to fuel and other energy costs, labor and healthcare costs and other economic factors. 22 Failure in our data center or services could lead to significant costs and disruptions.
In addition, consumer confidence and spending could be adversely affected in response to financial market volatility, negative financial news, conditions in the real estate and mortgage markets, declines in income or asset values, changes to fuel and other energy costs, labor and healthcare costs, and other economic factors. 23 Failure in our data center or services could lead to significant costs and disruptions.
Initially, the FCC concluded that by September 28, 2021, we and other similarly situated carriers would not be able to accept certain IP-based telecommunications traffic from foreign and domestic carrier partners unless those carriers are registered with the FCC. However, the FCC temporarily suspended this obligation while it reconsiders its impact.
Initially, the FCC concluded that by September 28, 2021, we and other similarly situated carriers would not be able to accept certain IP-based telecommunications traffic from foreign and domestic carrier partners unless those carriers were registered with the FCC. However, the FCC temporarily suspended this obligation while it reconsiders its impact.
Our money transfer and network branded prepaid card services are subject to a strict set of legal and regulatory requirements intended to help detect and prevent money laundering, terrorist financing, fraud, and other illicit activity. The interpretation of those requirements by judges, regulatory bodies and enforcement agencies is changing, often quickly and with little notice.
Our BOSS Money and network branded prepaid card services are subject to a strict set of legal and regulatory requirements intended to help detect and prevent money laundering, terrorist financing, fraud, and other illicit activity. The interpretation of those requirements by judges, regulatory bodies and enforcement agencies is changing, often quickly and with little notice.
If there were a failure to respond quickly to problems, or such a catastrophic event were to occur, our customers may experience service interruptions and we may suffer customer losses. Our financial performance is subject to risks associated with changes in the value of the U.S. dollar relative to local currencies.
If there were a failure to respond quickly to problems, or such a catastrophic event were to occur, our customers may experience service interruptions and we may suffer customer losses. Our financial performance is subject to risks associated with changes in the value of the U.S. dollar relative to other currencies.
If our distributors or sales representatives fail to effectively market or distribute our products and services, our ability to generate revenues and profits and grow our customer base in these products and services could be substantially impaired. 21 Our global operations subject us to geopolitical and other risks that may harm our results of operations and financial condition.
If our distributors or sales representatives fail to effectively market or distribute our products and services, our ability to generate revenues and profits and grow our customer base in these products and services could be substantially impaired. 22 Our global operations subject us to geopolitical and other risks that may harm our results of operations and financial condition.
There can be no assurance that net2phone’s efforts to acquire new customers will be successful. net2phone must acquire new customers on an ongoing basis to maintain and increase its customers and revenues while the significant costs to acquire new customers may hinder profitability. net2phone will have to acquire new customers in order to increase revenues. net2phone incurs significant costs to acquire new customers, and those costs are an important factor in determining our profitability.
There can be no assurance that net2phone’s efforts to acquire new customers will be successful. 29 net2phone must acquire new customers on an ongoing basis to maintain and increase its customers and revenues while the significant costs to acquire new customers may hinder profitability. net2phone will have to acquire new customers to increase revenues. net2phone incurs significant costs to acquire new customers, and those costs are an important factor in determining our profitability.
We utilize AWS’s and Google Cloud’s high availability configurations using multiple availability zones and we have services deployed in multiple AWS regions. However, we do not have cross region redundancy, which means we cannot guarantee continued reliability if AWS or Google Cloud suffers a catastrophic event which disrupts a region in which we have our services deployed.
We utilize AWS’ and Google Cloud’s high availability configurations using multiple availability zones and we have services deployed in multiple AWS regions. However, we do not have cross region redundancy, which means we cannot guarantee continued reliability if AWS or Google Cloud suffers a catastrophic event which disrupts a region in which we have our services deployed.
Risks Related to Our NRS Business The long-term success of NRS depends on its ability to develop products and services to address the rapidly evolving market for POS products and services, and, if it is not able to implement successful enhancements and new features for its products and services, our business could be materially and adversely affected.
The long-term success of NRS depends on its ability to develop products and services to address the rapidly evolving market for POS products and services, and, if it is not able to implement successful enhancements and new features for its products and services, our business could be materially and adversely affected.
From time to time we may be subject to claims and legal proceedings from third parties regarding alleged infringement by us of trademarks, copyrights, patents and other intellectual property rights. Such suits can be expensive and time consuming and could distract us and our management from focusing on our businesses.
From time to time, we may be subject to claims and legal proceedings from third parties regarding alleged infringement by us of trademarks, copyrights, patents, and other intellectual property rights. Such lawsuits can be expensive and time-consuming and could distract us and our management from focusing on our businesses.
Further, loss of such suits could result in financial burdens and the requirement to modify our modes of operation, which could materially adversely affect our business. We are subject to tax and regulatory audits which could result in the imposition of liabilities that may or may not have been reserved.
Further, the loss of such lawsuits could result in financial burdens and the requirement to modify our modes of operation, which could materially adversely affect our business. We are subject to tax and regulatory audits which could result in the imposition of liabilities that may or may not have been reserved.
A number of states and territories have enacted legislation regulating money transmitters, with 49 states requiring a license as of July 31, 2022. At July 31, 2022, we had obtained licenses to operate as a money transmitter in 48 U.S. states and Washington, D.C.
A number of states and territories have enacted legislation regulating money transmitters, with 49 states requiring a license as of July 31, 2023. At July 31, 2023, we had obtained licenses to operate as a money transmitter in 48 U.S. states and Washington, D.C.
Further, certain of our businesses, such as those offering cloud services to business customers, could be negatively affected if our ability to protect our own networks and systems is called into question as a result of a cyberattack.
Further, certain of our businesses, such as those offering cloud services to business customers, could be negatively affected if our ability to protect our own networks and systems is called into question because of a cyberattack.
While our services are not directly regulated by governments outside the United States, except with respect to our Gibraltar bank as discussed below, it is possible that in some cases we could be liable for the failure of our disbursement partners or their sub-disbursement partners to comply with laws, which also could harm our business, financial condition, and results of operations.
While our services are not directly regulated by governments outside the United States, except with respect to IDT Financial Services Limited, or IDTFS, our Gibraltar-based bank as discussed below, it is possible that in some cases we could be liable for the failure of our disbursement partners or their sub-disbursement partners to comply with laws, which also could harm our business, financial condition, and results of operations.
We must comply with certain federal, state, and local requirements regarding how we interact with our customers, including marketing practices, consumer protection, privacy, and billing issues, the provision of 9-1-1 emergency service and the quality of service we provide to our customers.
We must comply with certain federal, state, and local requirements regarding how we interact with our customers, including marketing practices, consumer protection, privacy, and billing issues, the provision of emergency 911 service, and the quality of service we provide to our customers.
IDTFS in Gibraltar is regulated by the Gibraltar FSC, and, as such, is subject to Gibraltarian and EU laws relating to financial institutions. As an issuer of prepaid debit cards for programs operated by other entities, commonly known as program managers, IDTFS is responsible, inter alia, for anti-money laundering laws oversight and compliance.
IDTFS is regulated by the Gibraltar Financial Services Commission, or FSC, and, as such, is subject to Gibraltarian and EU laws relating to financial institutions. As an issuer of prepaid debit cards for programs operated by other entities, commonly known as program managers, IDTFS is responsible, inter alia, for anti-money laundering laws oversight and compliance.
Our collection, processing, storage, use, and transmission of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements, differing views on data privacy, or security breaches. We engage in electronic billing and processing of our customers using secure transmission of sometimes confidential information over public networks.
Our collection, processing, storage, use, and transmission of personal data could give rise to liabilities because of governmental regulation, conflicting legal requirements, differing views on data privacy, or security breaches. We engage in electronic billing and processing of our customers using secure transmission of sometimes confidential information over public networks.
Based on the outcome of examinations by relevant tax authorities, or as a result of the expiration of statutes of limitations for specific jurisdictions, it is reasonably possible that the related tax reserves for tax positions taken regarding previously filed tax returns will materially change from those recorded in our financial statements.
Based on the outcome of examinations by relevant tax authorities, or because of the expiration of statutes of limitations for specific jurisdictions, it is reasonably possible that the related tax reserves for tax positions taken regarding previously filed tax returns will materially change from those recorded in our financial statements.
As a result, the ability of any of our other stockholders to influence our management may be limited. In addition, our dual class structure has an anti-takeover effect, and accordingly, the holders of the shares of Class A common stock have the ability to prevent any change in control transactions that may otherwise be in the best interest of stockholders.
As a result, the ability of any of our other stockholders to influence our management may be limited. In addition, our dual class structure has an anti-takeover effect, and accordingly, the holders of the shares of Class A common stock can prevent any change in control transactions that may otherwise be in the best interest of stockholders. Item 1B.
The risks and uncertainties described below may not be the only ones we face. If any of the risks actually occurs, our business, financial condition, operating results, cash flows and prospects could be materially and adversely affected.
The risks and uncertainties described below may not be the only ones we face. If any of the risks occur, our business, financial condition, operating results, cash flows and prospects could be materially and adversely affected.
We are responding to the global outbreak of COVID-19 by taking steps to mitigate the potential risks to us posed by its spread and the impact of the restrictions put in place by governments to protect the population.
We responded to the global outbreak of COVID-19 by taking steps to mitigate the potential risks to us posed by its spread and the impact of the restrictions put in place by governments to protect the population.
In the United States, the California PUC has initiated a proceeding under which we believe the PUC will expand its authority to regulate interconnected VOIP. Other states are near-certain to follow the California PUC’s lead.
In the United States, the California PUC has initiated a proceeding under which we believe the PUC will expand its authority to regulate interconnected VOIP. Other states are expected to follow the California PUC’s lead.
We have systems and processes in place that we deem sufficient and industry standard that are designed to protect consumer information and prevent fraudulent credit card transactions and other security breaches. However, there is no guarantee that such systems and processes will not experience a failure.
We have systems and processes in place that are designed to protect consumer information and prevent fraudulent credit card transactions and other security breaches. However, there is no guarantee that such systems and processes will not experience a failure.
Our primary exposure to movements in foreign currency exchange rates relates to non–U.S. dollar–denominated revenues and operating expenses. The strengthening of foreign currencies may increase our cost of product components denominated in those currencies, thus adversely affecting our earnings.
Our primary exposure to movements in foreign currency exchange rates relates to non–U.S. dollar–denominated revenues and operating expenses. The strengthening of foreign currencies may increase our costs denominated in those currencies, thus adversely affecting our earnings.
While our most significant customers, from a revenue perspective, vary from quarter to quarter, our five largest IDT Global customers collectively accounted for 4.6% and 4.5% of our total revenues in fiscal 2022 and fiscal 2021, respectively.
While our most significant customers, from a revenue perspective, vary from quarter to quarter, our five largest IDT Global customers collectively accounted for 4.7% and 4.6% of our total revenues in fiscal 2023 and fiscal 2022, respectively.
If we are not able to successfully integrate Integra’s CCaaS business within the anticipated time frame, or at all, the anticipated synergies, operational efficiencies and other benefits of the acquisition may not be realized fully or may take longer to realize than expected, and we may not perform as expected.
If we are not able to successfully integrate Integra’s CCaaS business within the anticipated time frame, or at all, the anticipated synergies, operational efficiencies and other benefits of the acquisition may not be realized fully or may take longer to realize than expected, and we may not perform as expected. 30 Integrating Integra’s CCaaS business may be more difficult, time-consuming or costly than expected.
In Canada, the Canadian Radio-Television and Telecommunications Commission, or CRTC, regulates VoIP Service. These regulated services are similar to those regulated in the United States discussed above. We are subject to a variety of other federal, state and international laws and regulations as well as oversight from a variety of governmental agencies and public service commissions.
In Canada, the CRTC regulates VoIP Service. These regulated services are similar to those regulated in the United States discussed above. We are subject to a variety of other federal, state and international laws and regulations as well as oversight from a variety of governmental agencies and public service commissions.
As of January 1, 2020, the CCPA requires, among other things, covered companies to provide new disclosures to California consumers, and afford such consumers new abilities to opt-out of certain sales of personal information.
The CCPA requires, among other things, covered companies to provide new disclosures to California consumers, and afford such consumers new abilities to opt-out of certain sales of personal information.
Jonas serves as our Chairman, which is an executive officer position, and our Chairman of the Board, which is a Board of Directors position. As of October 12, 2022, eight trusts for the benefit of children of Howard S.
Jonas serves as our Chairman, which is an executive officer position, and our Chairman of the Board, which is a Board of Directors position. As of October 11, 2023, eight trusts for the benefit of children of Howard S.
Jonas (the “Trusts”), collectively have voting power over 1,574,326 shares of our Class A common stock, (which is all the issued and outstanding shares of the Class A common stock), which are convertible into shares of our Class B common stock on a 1-for-1 basis, and 2,382,371 shares of our Class B common stock, representing approximately 69.7% of the combined voting power of our outstanding capital stock, as of October 12, 2022.
Jonas (the “Trusts”), collectively have voting power over 1,574,326 shares of our Class A common stock, (which is all the issued and outstanding shares of the Class A common stock), which are convertible into shares of our Class B common stock on a 1-for-1 basis, and 2,382,371 shares of our Class B common stock, representing approximately 70% of the combined voting power of our outstanding capital stock, as of October 11, 2023.
Integra provides cloud-based CCaaS in the Americas and Europe. 29 The success of the acquisition of Integra will depend, in part, on net2phone’s ability to provide its customers and channel partners with a robust stand-alone contact center solution or an intelligently integrated UCaaS and CCaaS solution.
The success of the acquisition of Integra will depend, in part, on net2phone’s ability to provide its customers and channel partners with a robust stand-alone contact center solution or an intelligently integrated UCaaS and CCaaS solution.
We have researched the situations and do not believe any material internal, or customer information has been compromised. 20 Network disruptions, security breaches and other significant failures of the above-described systems could (i) disrupt the proper functioning of our networks and systems and therefore our operations or those of certain of our customers; (ii) result in the unauthorized use of our services or products without payment; (iii) result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or our customers, including trade secrets, which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; and (iv) require significant management attention or financial resources to remedy the damages that result or to change our systems and processes.
Network disruptions, security breaches and other significant failures of the above-described systems could (i) disrupt the proper functioning of our networks and systems and therefore our operations or those of certain of our customers; (ii) result in the unauthorized use of our services or products without payment; (iii) result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or our customers, including trade secrets, which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; and (iv) require significant management attention or financial resources to remedy the damages that result or to change our systems and processes.
Price is often a substantial motivation factor in a customer’s decision to switch to net2phone’s cloud-based communications products and services. net2phone’s competitors may reduce their rates, which may require it to reduce its rates, which would affect our revenues and profitability, or otherwise make our pricing non-competitive. net2phone may be at a disadvantage compared with those competitors who have substantially greater resources than us or may otherwise be better positioned to withstand an extended period of downward pricing pressure.
Price is often a substantial motivation factor in a customer’s decision to switch to net2phone’s cloud-based communications products and services. net2phone’s competitors may reduce their rates, which may require it to reduce its rates, which would affect our revenues and profitability, or otherwise make our pricing non-competitive. net2phone may be at a disadvantage compared with those competitors who have substantially greater resources than us or may otherwise be better positioned to withstand an extended period of downward pricing pressure. 27 Many of net2phone’s current and potential competitors have longer operating histories, significantly greater resources and brand awareness, and a larger base of customers than we have.
It is possible that the integration process could result in the loss of key employees, the disruption of net2phone’s ongoing UCaaS business or unexpected integration issues, such as higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated.
There can be no assurances that Integra’s CCaaS business can be integrated successfully. It is possible that the integration process could result in the loss of key employees, the disruption of net2phone’s ongoing UCaaS business or unexpected integration issues, such as higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated.
The Supreme Court’s Wayfair decision has removed a significant impediment to the enactment and enforcement of these laws, and it is possible that states may seek to tax out-of-state sellers on sales that occurred in prior tax years, which could create additional administrative burdens for us, put us at a competitive disadvantage if such states do not impose similar obligations on our competitors, and decrease our future sales, which would adversely impact our business, financial condition, and results of operations. 40 Risks Related to Our Capital Structure Holders of our Class B common stock have significantly less voting power than holders of our Class A common stock.
The Supreme Court’s Wayfair decision has removed a significant impediment to the enactment and enforcement of these laws, and it is possible that states may seek to tax out-of-state sellers on sales that occurred in prior tax years, which could create additional administrative burdens for us, put us at a competitive disadvantage if such states do not impose similar obligations on our competitors, and decrease our future sales, which would adversely impact our business, financial condition, and results of operations.
The target market for the Integra CCaaS solution is two-fold: (i) businesses and other entities with embedded service and support centers; and (ii) contact centers / business process optimization, or BPO, providers (outsourced call centers).
The target market for the Integra CCaaS solution is two-fold: (i) businesses and other entities with embedded service and support centers; and (ii) contact centers / BPO providers.
While we try to comply with all applicable data protection laws, regulations, standards, and codes of conduct, as well as our own posted privacy policies and contractual commitments to the extent possible, any failure by us to protect our customers’ privacy and data, including as a result of our systems being compromised by hacking or other malicious or surreptitious activity, could result in a loss of customer confidence in our services and ultimately in a loss of customers, which could materially and adversely affect our business as well as subject us to law suits, civil fines and criminal penalties.
While we try to comply with all applicable data protection laws, regulations, standards, and codes of conduct, as well as our own posted privacy policies and contractual commitments to the extent possible, any failure by us to protect our customers’ privacy and data, including as a result of our systems being compromised by hacking or other malicious or surreptitious activity, could result in a loss of customer confidence in our services and ultimately in a loss of customers, which could materially and adversely affect our business as well as subject us to law suits, civil fines and criminal penalties. 37 Governmental entities, class action lawyers, and consumer advocates are reviewing the data collection and use by companies that must maintain such data.
Our employees in Belarus and Israel primarily help develop, test, and maintain certain of our technology. Our labor source in Guatemala primarily performs certain call center, administrative, and customer acquisition functions. We also have significant operations in Brazil, Uruguay, and Argentina as a result of net2phone’s growth.
Our labor source in Guatemala primarily performs certain call center, administrative, and customer acquisition functions. We also have significant operations in Brazil, Uruguay, and Argentina as a result of net2phone’s growth.
If NRS is unable to provide enhancements and new features for its products and services or to develop new products and services that achieve market acceptance or that keep pace with rapid technological developments and evolving industry standards, our business would be materially and adversely affected. Substantial and increasingly intense competition in the POS industry may harm NRS’ business.
If NRS is unable to provide enhancements and new features for its products and services or to develop new products and services that achieve market acceptance or that keep pace with rapid technological developments and evolving industry standards, our business would be materially and adversely affected.
Any contract or product liability claims successfully brought against us would harm our business. Our revenues and profits will suffer if our distributors and sales representatives fail to effectively market and distribute our products and services.
Any contract or product liability claims successfully brought against us would harm our business. Our revenues and profits will suffer if our distributors and sales representatives fail to effectively market and distribute our products and services. We rely on our distributors and representatives to market and distribute our BOSS products and services and NRS’ POS terminals and portfolio of services.
Failure to comply with any of these requirements by us, our regulated retailers or our disbursement partners could result in the suspension or revocation of a money transmitter license, the limitation, suspension or termination of our services, the seizure and/or forfeiture of our assets and/or the imposition of civil and criminal penalties, including fines.
Failure to comply with any of these requirements by us, our regulated retailers or our disbursement partners could result in the suspension or revocation of a money transmitter license, the limitation, suspension or termination of our services, the seizure and/or forfeiture of our assets and/or the imposition of civil and criminal penalties, including fines. 33 Furthermore, failure by us or our agents to comply with applicable laws and regulations could also result in termination of contracts with our banks and/or merchant payment processors.
Weakness of the United States dollar in relation to the currencies used in these foreign countries may also reduce the savings achievable through this strategy and could have an adverse effect on our business, financial condition, and results of operations.
Weakness of the United States dollar in relation to the currencies used in these foreign countries may also reduce the savings achievable through this strategy and could have an adverse effect on our business, financial condition, and results of operations. Risks Related to Our NRS Business Substantial and increasingly intense competition in the POS industry may harm NRS’ business.
Our IDT Global customers with the five largest receivables balances collectively accounted for 7.8% and 8.8% of our total gross trade accounts receivable at July 31, 2022 and 2021, respectively.
Our IDT Global customers with the five largest receivables balances collectively accounted for 1.6% and 12.2% of our total gross trade accounts receivable at July 31, 2023 and 2022, respectively.
On March 3, 2022, net2phone purchased all of the outstanding shares of Onwaba S.R.L. and Gem S.R.L. Onwaba S.R.L. and Gem S.R.L. are located in Uruguay and use the trade name Integra CCS, or Integra.
On March 3, 2022, net2phone purchased all of the outstanding shares of Onwaba S.R.L. and Gem S.R.L. Onwaba S.R.L. and Gem S.R.L. are located in Uruguay and use the trade name Integra. Integra provides cloud-based CCaaS in the Americas and Europe.
Each of the Trusts has a different, independent trustee. In addition, as of October 12, 2022, The HSJ 2020 IDT Annuity Trust holds 1,811,711 shares of our Class B common stock and The HSJ 2022 Annuity Trust holds 608,092 shares of our Class B common stock. Both of these trusts have an independent trustee. Howard S.
Each of the Trusts has a different, independent trustee. In addition, as of October 11, 2023, The HSJ Remainder 2019 Trust holds 1,811,711 shares of our Class B common stock and The HSJ 2022 Annuity Trust holds 78,016 shares of our Class B common stock. Both of these trusts have an independent trustee. Howard S.
Although we make significant efforts to maintain the security and integrity of these types of information and systems, there can be no assurance that our respective security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber-attacks and intrusions sponsored by state or other interests.
As a result, our or our customers’ information may be lost, disclosed, accessed, or taken without our or our customers’ consent, or our product and service may be used without payment. 21 Although we make significant efforts to maintain the security and integrity of these types of information and systems, there can be no assurance that our respective security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber-attacks and intrusions sponsored by state or other interests.
Specifically, issues that must be addressed in integrating the operations of Integra in order to realize the anticipated benefits of the acquisition, so net2phone performs as expected include, among others: ■ combining Integra’s operational, financial, reporting and corporate functions with net2phone; ■ integrating the companies’ technologies, products and services; ■ identifying and eliminating redundant and underperforming operations and assets; ■ harmonizing the companies’ operating practices, employee development, compensation and benefit programs, internal controls and other policies, procedures and processes; ■ addressing the differences of a foreign culture and management philosophies; ■ maintaining employee morale and retaining key management and other employees; ■ attracting and recruiting prospective employees; ■ maintaining existing agreements with customers and vendors and avoiding delays in entering into new agreements with prospective customers and vendors; and ■ coordinating and servicing geographically dispersed organizations.
Specifically, issues that must be addressed in integrating the operations of Integra in order to realize the anticipated benefits of the acquisition, so net2phone performs as expected include, among others: ■ integrating the companies’ technologies, products and services; ■ harmonizing the companies’ operating practices, employee development, compensation and benefit programs, internal controls and other policies, procedures and processes; ■ attracting and recruiting prospective employees; ■ maintaining existing agreements with customers and vendors and avoiding delays in entering into new agreements with prospective customers and vendors; and ■ coordinating and servicing geographically dispersed organizations.
Our 2017 FCC Form 499-A, which reports our calendar year 2016 revenue is currently under audit by the Universal Service Administrative Company, or USAC. The Internal Audit Division of USAC issued preliminary audit findings and we have, in accordance with audit procedures, appealed certain of the findings. We are awaiting a final decision by USAC on the preliminary audit findings.
Our 2017 FCC Form 499-A, which reports our calendar year 2016 revenue was audited by the Universal Service Administrative Company, or USAC. The Internal Audit Division of USAC issued preliminary audit findings and, in accordance with USAC’s audit procedures, we appealed certain of the findings.
If weakness in the telecommunications industry or the global economy reduces our ability to collect our accounts receivable from our major customers, particularly our wholesale customers, our profitability may be substantially reduced.
The wholesale telecommunications market continues to feature many smaller, less financially stable companies. If weakness in the telecommunications industry or the global economy reduces our ability to collect our accounts receivable from our major customers, particularly our wholesale customers, our profitability may be substantially reduced.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis We cannot be certain that we will continue to maintain an effective system of internal control over our financial reporting in future periods.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
We may be unable to anticipate all potential types of attacks or intrusions or to implement adequate security barriers or other preventative measures. Certain of our business units have been the subject of attempted and successful cyber-attacks in the past.
We may be unable to anticipate all potential types of attacks or intrusions or to implement adequate security barriers or other preventative measures. Certain of our business units have been the subject of attempted and successful cyber-attacks in the past. We have researched these situations and do not believe any material internal, or customer information has been compromised.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease approximately 3,600 square feet of office space in Jerusalem, Israel that was also previously owned by Rafael Holdings. The Newark lease expires in April 2025 and the Israel lease expires in July 2025. We lease space in New York, New York for corporate purposes as well as a number of other locations in metropolitan areas.
Biggest changeThe Newark lease expires in April 2025 and the Israel lease expires in July 2025. We lease space in New York, New York for corporate purposes as well as a number of other locations in metropolitan areas. These leased spaces are utilized primarily to house telecommunications equipment and retail operations. We maintain our European headquarters in London, England.
Item 2. Properties. Our headquarters is located in a building in Newark, New Jersey that was previously owned by Rafael Holdings. We lease approximately 80,000 square feet of office space plus a portion of the 800-car public parking garage located across the street from the building.
Item 2. Properties. Our headquarters is located in a building in Newark, New Jersey. We lease approximately 80,000 square feet of office space plus a portion of the 800-car public parking garage located across the street from the building. We also lease approximately 3,600 square feet of office space in Jerusalem, Israel that is owned by Rafael Holdings.
These leased spaces are utilized primarily to house telecommunications equipment and retail operations. We maintain our European headquarters in London, England. We also maintain other international office locations and telecommunications facilities in regions of Europe, Latin America, the Middle East, Asia, and Africa where we conduct operations.
We also maintain other international office locations and telecommunications facilities in regions of Europe, Latin America, the Middle East, Asia, and Africa where we conduct operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTotal Number of Shares Purchased Average Price per Share Total Number of Shares Purchased as part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(1) May 1 – 31, 2022 — — — 5,768,497 June 1 – 30, 2022 347,835 $ 23.67 347,835 5,420,662 July 1 – 31, 2022 206,909 $ 24.84 206,909 5,213,753 Total 554,744 $ 24.11 554,744 (1) On January 22, 2016, our Board of Directors approved a stock repurchase program to purchase up to 8.0 million shares of our Class B common stock.
Biggest changeTotal Number of Shares Purchased Average Price per Share Total Number of Shares Purchased as part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) May 1 – 31, 2023 (2) 14,680 $ 32.37 — 4,933,623 June 1 – 30, 2023 — — — 4,933,623 July 1 – 31, 2023 231,416 $ 24.07 231,416 4,702,207 Total 246,096 $ 24.56 231,416 (1) On January 22, 2016, our Board of Directors approved a stock repurchase program to purchase up to 8.0 million shares of our Class B common stock.
In fiscal 2018, our Board of Directors discontinued our quarterly dividend, electing instead to repurchase shares of our Class B common stock when warranted by market conditions, available resources, and our business outlook and results, as well as to invest in our growth business initiatives. Accordingly, no dividends were paid in fiscal 2022 or fiscal 2021.
In fiscal 2018, our Board of Directors discontinued our quarterly dividend, electing instead to repurchase shares of our Class B common stock when warranted by market conditions, available resources, and our business outlook and results, as well as to invest in our growth business initiatives. Accordingly, no dividends were paid in fiscal 2023 or fiscal 2022.
The information required by Item 201(d) of Regulation S-K will be contained in our Proxy Statement for our Annual Stockholders Meeting, which we will file with the Securities and Exchange Commission within 120 days after July 31, 2022, and which is incorporated by reference herein. 41 Performance Graph of Stock Issuer Purchases of Equity Securities The following table provides information with respect to purchases by us of our shares during the fourth quarter of fiscal 2022.
The information required by Item 201(d) of Regulation S-K will be contained in our Proxy Statement for our Annual Stockholders Meeting, which we will file with the Securities and Exchange Commission within 120 days after July 31, 2023, and which is incorporated by reference herein. 42 Performance Graph of Stock Issuer Purchases of Equity Securities The following table provides information with respect to purchases by us of our shares during the fourth quarter of fiscal 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our Class B common stock trades on the New York Stock Exchange under the symbol “IDT.” On October 12, 2022, there were 270 holders of record of our Class B common stock and eight holders of record of our Class A common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our Class B common stock trades on the New York Stock Exchange under the symbol “IDT.” On October 11, 2023, there were 271 holders of record of our Class B common stock and eight holders of record of our Class A common stock.
The number of holders of record of our Class B common stock does not include the number of persons whose shares are in nominee or in “street name” accounts through brokers. On October 12, 2022, the last sales price reported on the New York Stock Exchange for the Class B common stock was $26.97 per share.
The number of holders of record of our Class B common stock does not include the number of persons whose shares are in nominee or in “street name” accounts through brokers. On October 11, 2023, the last sales price reported on the New York Stock Exchange for the Class B common stock was $27.37 per share.
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(2) Shares of our Class B common stock that were tendered by employees of ours to satisfy the employees’ tax withholding obligations in connection with the lapsing of restrictions on deferred stock units.
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Such shares were repurchased by us based on their fair market value as of the close of business on the trading day immediately prior to the vesting date. 43 Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(in millions) 2022 change from 2021 2021 change from 2020 Year ended July 31 2022 2021 2020 $ % $ % Revenues $ 58.2 $ 44.5 $ 32.5 $ 13.7 30.7 % $ 12.0 37.1 % Direct cost of revenues (10.0 ) (8.7 ) (6.9 ) 1.3 15.9 1.8 26.5 Selling, general and administrative (54.2 ) (46.1 ) (37.7 ) 8.1 17.4 8.4 22.8 Depreciation and amortization (5.4 ) (5.1 ) (4.1 ) 0.3 6.4 1.0 21.9 Other operating gain (expense), net 0.3 (0.1 ) (0.6 ) (0.4 ) (393.2 ) (0.5 ) (84.3 ) Loss from operations $ (11.1 ) $ (15.5 ) $ (16.8 ) $ 4.4 28.0 % $ 1.3 7.8 % Revenues. net2phone’s revenues increased in fiscal 2022 and fiscal 2021 compared to the prior fiscal year driven primarily by growth in the United States, although revenue increased in all net2phone regions.
Biggest change(in millions) 2023 change from 2022 2022 change from 2021 Year ended July 31 2023 2022 2021 $ % $ % Revenues: Subscription $ 66.8 $ 53.6 $ 38.8 $ 13.2 24.8 % $ 14.8 38.0 % Other 5.6 4.6 5.7 1.0 20.3 (1.1 ) (18.7 ) Total revenues 72.4 58.2 44.5 14.2 24.4 13.7 30.7 Direct cost of revenues (12.0 ) (10.0 ) (8.7 ) 2.0 19.6 1.3 15.9 Selling, general and administrative (57.4 ) (54.2 ) (46.1 ) 3.2 5.8 8.1 17.4 Depreciation and amortization (5.6 ) (5.4 ) (5.1 ) 0.2 4.4 0.3 6.4 Severance (0.1 ) — — 0.1 nm — — Other operating (expense) gain, net (0.1 ) 0.3 (0.1 ) 0.4 145.4 (0.4 ) (393.2 ) Loss from operations $ (2.8 ) $ (11.1 ) $ (15.5 ) $ 8.3 75.3 % $ 4.4 28.0 % nm—not meaningful (in thousands) 2023 change from 2022 2022 change from 2021 July 31 2023 2022 2021 # % # % Seats served 352 291 226 61 21.1 % 65 28.4 % Revenues. net2phone’s revenues increased in each of fiscal 2023 and fiscal 2022 compared to the prior fiscal year driven primarily by the growth in subscription revenue in the U.S. and Latin American markets, which reflects the increases in seats served at July 31, 2023 and July 31, 2022 compared to the prior fiscal year ends.
The primary factors that resulted in the valuation allowance release were the three consecutive years of profitability in the United States and expected future profitability in both the United States and the United Kingdom that will utilize a significant portion of the net operating losses. Our tax planning strategies were not a significant factor in the analysis.
The primary factors that resulted in the valuation allowance release were the three consecutive years of profitability in the United States and expected future profitability in both the United States and the United Kingdom that will utilize a significant portion of the net operating losses. Our tax planning strategies were not a significant factor in the analysis.
It is possible that one or more jurisdictions may assert that we have liability for periods for which we have not collected sales, use or other similar taxes, and if such an assertion or assertions were successful it could materially and adversely affect our business, financial position, and operating results.
It is possible that one or more jurisdictions may assert that we have liability for periods for which we have not collected sales, use or other similar taxes, and if such an assertion or assertions were successful it could materially and adversely affect our business, financial position, and operating results.
We expect to fund our capital expenditures with our net cash provided by operating activities and cash, cash equivalents, debt securities, and current equity investments on hand. 54 On March 3, 2022, net2phone 2.0 purchased all of the outstanding shares of Onwaba S.R.L. and Gem S.R.L. for cash of $7.1 million, net of cash acquired.
We expect to fund our capital expenditures with our net cash provided by operating activities and cash, cash equivalents, debt securities, and current equity investments on hand. On March 3, 2022, net2phone 2.0 purchased all of the outstanding shares of Onwaba S.R.L. and Gem S.R.L. for cash of $7.1 million, net of cash acquired.
The contingent consideration is an aggregate of up to $3.5 million based on annual cumulative incremental recurring seat revenue over a four-year period, payable in cash and/or equity at net2phone 2.0’s discretion.
The contingent consideration is an aggregate of up to $3.5 million based on annual cumulative incremental recurring seat revenue of the net2phone segment over a four-year period, payable in cash and/or equity at net2phone 2.0’s discretion.
We also recorded an aggregate of $4.5 million for the estimated fair value of future payments subject to holdback and contingent consideration. Onwaba S.R.L. and Gem S.R.L. are located in Uruguay and use the trade name Integra CCS.
We also recorded an aggregate of $4.5 million for the estimated fair value of future payments subject to holdback and contingent consideration. Onwaba S.R.L. and Gem S.R.L. are located in Uruguay and use the trade name Integra.
We expect that IDT Global will continue to be adversely impacted by these trends, and minutes of use and revenues will likely continue to decline from quarter-to-quarter, as we seek to maximize economics rather than necessarily sustain minutes of use or revenues. Direct Cost of Revenues.
We expect that IDT Global will continue to be adversely impacted by these trends, and minutes of use and revenues will likely continue to decline from quarter-to-quarter, as we seek to maximize economics rather than necessarily sustain minutes of use or revenues. 51 Direct Cost of Revenues.
Also, pursuant to a Put/Call Option Agreement related to the 5% of the issued shares of Sochitel that the seller did not initially sell to IDTIT, or the Option Shares, the seller exercised its option and on March 22, 2021, IDTIT purchased the Option Shares for $0.3 million.
Pursuant to a Put/Call Option Agreement related to the 5% of the issued shares of Sochitel that the seller did not initially sell to IDTIT, or the Option Shares, the seller exercised its option and on March 22, 2021, IDTIT purchased the Option Shares for $0.3 million.
There were no such events or changes in circumstances in fiscal 2022 or fiscal 2021. If we determine that events or changes in circumstances indicate the carrying value of certain long-lived assets may not be recoverable, we test for impairment based on the projected undiscounted cash flows to be derived from such asset.
There were no such events or changes in circumstances in fiscal 2023 or fiscal 2022. If we determine that events or changes in circumstances indicate the carrying value of certain long-lived assets may not be recoverable, we test for impairment based on the projected undiscounted cash flows to be derived from such asset.
Our qualitative assessments considered several factors including (i) the business enterprise value of the reporting unit from the last quantitative test at May 1, 2020 and the excess of the fair value over carrying value, (ii) macroeconomic conditions including changes in interest rates and discount rates, (iii) industry and market considerations including industry revenue, EBITDA margins, and multiples based on business enterprise value to revenues and to EBITDA, and (iv) the recent financial performance and budget of the reporting unit, as well as other factors. 43 For our quantitative assessment, we calculate the fair value of the reporting unit using a discounted cash flow method as a form of the income approach, and a market approach that incorporates comparative multiples to corroborate discounted cash flow results.
Our qualitative assessments considered several factors including (i) the business enterprise value of the reporting unit from the last quantitative test at May 1, 2020 and the excess of the fair value over carrying value, (ii) macroeconomic conditions including changes in interest rates and discount rates, (iii) industry and market considerations including industry revenue, EBITDA margins, and multiples based on business enterprise value to revenues and to EBITDA, and (iv) the recent financial performance and budget of the reporting unit. 44 For our quantitative assessment, we calculate the fair value of the reporting unit using a discounted cash flow method as a form of the income approach, and a market approach that incorporates comparative multiples to corroborate discounted cash flow results.
Historically, when we have issued credit, we have not required collateral to support trade accounts receivables from our customers. However, when necessary, we have imposed stricter credit restrictions on our customers. In some cases, this has resulted in our sharply curtailing, or ceasing completely, sales to certain customers.
Historically, when we have issued credit, we have not required collateral to support trade accounts receivable from our customers. However, when necessary, we have imposed stricter credit restrictions on our customers. In some cases, this has resulted in our sharply curtailing, or ceasing completely, sales to certain customers.
IDT Telecom is required to comply with various affirmative and negative covenants as well as maintain certain targets based on financial ratios during the term of the revolving credit facility. As of July 31, 2022, IDT Telecom was in compliance with all of the covenants.
IDT Telecom is required to comply with various affirmative and negative covenants as well as maintain certain targets based on financial ratios during the term of the revolving credit facility. As of July 31, 2023, IDT Telecom was in compliance with all of the covenants.
Our estimates include separately providing for customer receivables based on specific circumstances and credit conditions, and when it is deemed probable that the balance is uncollectible. Account balances are written off against the allowance when it is determined that the receivable will not be recovered.
Our estimates included separately providing for customer receivables based on specific circumstances and credit conditions, and when it was deemed probable that the balance was uncollectible. Account balances are written off against the allowance when it is determined that the receivable will not be recovered.
Contractual Obligations and Commitments The following table includes our anticipated material cash requirements from contractual obligations and other commitments at July 31, 2022: Payments due by period (in millions) Total Less than 1 year 1—3 years 4—5 years After 5 years Purchase commitments $ 4.7 $ 4.7 $ — $ — $ — Connectivity obligations under service agreements 0.5 0.4 0.1 — — Operating leases including short-term leases 8.3 3.5 4.4 0.3 0.1 TOTAL (1) $ 13.5 $ 8.6 $ 4.5 $ 0.3 $ 0.1 (1) The above table does not include up to $10 million for the potential redemption of shares of NRS’ Class B common stock, an aggregate of $22.0 million in performance bonds, and up to $14.0 million for other potential payments including contingent consideration related to business acquisitions, due to the uncertainty of the amount and/or timing of any such payments.
Contractual Obligations and Commitments The following table includes our anticipated material cash requirements from contractual obligations and other commitments at July 31, 2023: Payments due by period (in millions) Total Less than 1 year 1—3 years 4—5 years After 5 years Purchase commitments $ 10.8 $ 10.8 $ — $ — $ — Connectivity obligations under service agreements 0.6 0.1 0.5 — — Operating leases including short-term leases 7.0 3.6 3.0 0.4 — TOTAL (1) $ 18.4 $ 14.5 $ 3.5 $ 0.4 $ — (1) The above table does not include up to $10 million for the potential redemption of shares of NRS’ Class B common stock, an aggregate of $27.1 million in performance bonds, and up to $9.0 million for other potential payments including contingent consideration related to business acquisitions, due to the uncertainty of the amount and/or timing of any such payments.
It is therefore expected that selling, general and administrative expenses will remain a significant percentage of net2phone’s revenues for the foreseeable future. Depreciation and Amortization .
It is therefore expected that selling, general and administrative expense will remain a significant percentage of net2phone’s revenues for the foreseeable future. Depreciation and Amortization .
The increases in depreciation and amortization expense in fiscal 2022 and fiscal 2021 compared to the prior fiscal year was due to increased depreciation of net2phone’s telephone equipment leased to customers and increased depreciation of capitalized costs of consultants and employees developing internal use software. Other Operating Gain (Expense), net.
The increases in depreciation and amortization expense in each of fiscal 2023 and fiscal 2022 compared to the prior fiscal year was due to increased depreciation of net2phone’s telephone equipment leased to customers and increased depreciation of capitalized costs of consultants and employees developing internal use software. Other Operating (Expense) Gain, net.
On March 1, 2022, our subsidiary, IDT International Telecom, Inc., or IDTIT, purchased all of the outstanding shares of Leaf Global Fintech Corporation, or Leaf, for cash of $0.3 million, net of cash acquired. We also recorded $3.3 million for the estimated fair value of contingent consideration.
On March 1, 2022, our subsidiary, IDT International Telecom, Inc., or IDTIT, purchased all of the outstanding shares of Leaf for cash of $0.3 million, net of cash acquired. We also recorded $3.3 million for the estimated fair value of contingent consideration.
RECENTLY ISSUED ACCOUNTING STANDARDS NOT YET ADOPTED In June 2022, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2022-03, Fair Value Measurement (Topic 820) , Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, that clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.
RECENTLY ISSUED ACCOUNTING STANDARD NOT YET ADOPTED In June 2022, the Financial Accounting Standards Board issued ASU No. 2022-03, Fair Value Measurement (Topic 820) , Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, that clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.
In fiscal 2022, we determined that the requirements for a contingent consideration payment related to an acquisition consummated in December 2019 would not be met before the expiration date for such contingency. net2phone recognized a gain of $0.3 million on the write-off of the contingent consideration payment obligation.
In fiscal 2022, we determined that the requirements for a contingent consideration payment related to an acquisition in December 2019 would not be met before the expiration date. net2phone recognized a gain of $0.3 million on the write-off of this contingent consideration payment obligation.
See Note 1 to the Consolidated Financial Statements in Item 8 to Part II of this Annual Report for a complete discussion of our significant accounting policies. Goodwill Impairment Testing Goodwill is not amortized in accordance with U.S. GAAP. Instead, goodwill is reviewed annually for impairment at a level of reporting referred to as a reporting unit.
See Note 1 to the Consolidated Financial Statements in Item 8 to Part II of this Annual Report for a complete discussion of our significant accounting policies. Goodwill Impairment Testing Under U.S. GAAP, goodwill is not amortized but is reviewed annually for impairment at a level of reporting referred to as a reporting unit.
One or more jurisdictions may change their laws or policies to apply their sales, use or other similar taxes to our operations, and if such changes were made it could materially and adversely affect our business, financial position, and operating results. Our 2017 FCC Form 499-A, which reports our calendar year 2016 revenue, is currently under audit by the USAC.
One or more jurisdictions may change their laws or policies to apply their sales, use or other similar taxes to our operations, and if such changes were made it could materially and adversely affect our business, financial position, and operating results. Our 2017 FCC Form 499-A, which reports our calendar year 2016 revenue, was audited by the USAC.
We incurred legal fees of $7.7 million, $2.9 million, and $3.6 million in fiscal 2022, fiscal 2021, and fiscal 2020, respectively, related to this action. Also, we recorded offsetting gains from insurance claims for this matter of $6.7 million, $3.1 million, and $3.1 million in fiscal 2022, fiscal 2021, and fiscal 2020, respectively.
We incurred legal fees of $5.8 million, $7.7 million, and $2.9 million in fiscal 2023, fiscal 2022, and fiscal 2021, respectively, related to this action. Also, we recorded offsetting gains from insurance claims for this matter of $3.8 million, $6.7 million, and $3.1 million in fiscal 2023, fiscal 2022, and fiscal 2021, respectively.
IDT Telecom may use the proceeds to finance working capital requirements and for certain closing costs of the facility. At July 31, 2022 and 2021, there were no amounts outstanding under this facility. In fiscal 2022, IDT Telecom borrowed and repaid an aggregate of $2.6 million under the facility.
IDT Telecom may use the proceeds to finance working capital requirements and for certain closing costs of the facility. At July 31, 2023 and 2022, there were no amounts outstanding under this facility. In fiscal 2023 and fiscal 2022, IDT Telecom borrowed and repaid an aggregate of $27.4 million and $2.6 million, respectively, under the facility.
Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest is due on May 16, 2024.
Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest is due on May 16, 2026.
At this time, we cannot guarantee that we will be presented with acquisition opportunities that meet our return-on-investment criteria, or that our efforts to make acquisitions that meet our criteria will be successful.
We cannot guarantee that we will be presented with acquisition opportunities that meet our return-on-investment criteria, or that our efforts to make acquisitions that meet our criteria will be successful.
LIQUIDITY AND CAPITAL RESOURCES As of the date of this Annual Report, including the impact of COVID-19, we currently expect our cash from operations and the balance of cash, cash equivalents, debt securities, and current equity investments that we held on July 31, 2022 will be sufficient to meet our currently anticipated working capital and capital expenditure requirements during fiscal 2023.
LIQUIDITY AND CAPITAL RESOURCES As of the date of this Annual Report, we expect our cash from operations and the balance of cash, cash equivalents, debt securities, and current equity investments that we held on July 31, 2023 will be sufficient to meet our currently anticipated working capital and capital expenditure requirements during fiscal 2024.
Jonas exercised stock options for 1.0 million shares of our Class B common stock that were granted on May 2, 2017. The exercise price of these options was $14.93 per share and the expiration date was May 1, 2022. Mr.
In addition, in April 2022, Howard S. Jonas exercised stock options for 1.0 million shares of our Class B common stock that were granted on May 2, 2017. The exercise price of these options was $14.93 per share and the expiration date was May 1, 2022. Mr.
Corporate (in millions) 2022 change from 2021 2021 change from 2020 Year ended July 31 2022 2021 2020 $ % $ % General and administrative $ (7.8 ) $ (7.5 ) $ (9.1 ) $ 0.3 3.6 % $ (1.6 ) (16.6 )% Depreciation and amortization (0.1 ) (0.1 ) (0.1 ) — 1.6 — 64.4 Other operating (expense) gain, net (1.0 ) 0.2 (0.5 ) 1.2 560.0 (0.7 ) (142.4 ) Loss from operations $ (8.9 ) $ (7.4 ) $ (9.7 ) $ (1.5 ) (20.7 )% $ 2.3 23.5 % Corporate costs mainly include compensation, consulting fees, treasury, tax and accounting services, human resources, corporate purchasing, corporate governance including Board of Directors’ fees, internal and external audit, investor relations, corporate insurance, corporate legal, and other corporate-related general and administrative expenses.
Corporate (in millions) 2023 change from 2022 2022 change from 2021 Year ended July 31 2023 2022 2021 $ % $ % General and administrative $ (9.3 ) $ (7.8 ) $ (7.5 ) $ 1.5 18.6 % $ 0.3 3.6 % Depreciation and amortization (0.1 ) (0.1 ) (0.1 ) — (30.5 ) — 1.6 Other operating (expense) gain, net (0.3 ) (1.0 ) 0.2 (0.7 ) (67.2 ) 1.2 560.0 Loss from operations $ (9.7 ) $ (8.9 ) $ (7.4 ) $ (0.8 ) (8.2 )% $ (1.5 ) (20.7 )% Corporate costs mainly include compensation, consulting fees, treasury, tax and accounting services, human resources, corporate purchasing, corporate governance including Board of Directors’ fees, internal and external audit, investor relations, corporate insurance, corporate legal, and other corporate-related general and administrative expenses.
Financing Activities We distributed cash of $0.5 million, $0.8 million, and $0.9 million in fiscal 2022, fiscal 2021, and fiscal 2020, respectively, to the noncontrolling interests in certain of our subsidiaries. 55 In fiscal 2022, fiscal 2021, and fiscal 2020, we received proceeds from financing-related other liabilities of $2.3 million, $0.7 million, and nil, respectively.
Financing Activities We distributed cash of $0.3 million, $0.5 million, and $0.8 million in fiscal 2023, fiscal 2022, and fiscal 2021, respectively, to the noncontrolling interests in certain of our subsidiaries. In fiscal 2023, fiscal 2022, and fiscal 2021, we received proceeds from financing-related other liabilities of $0.3 million, $2.3 million, and $0.7 million, respectively.
Consolidated Financial Condition (in millions) Year ended July 31 2022 2021 2020 Cash flows provided by (used in): Operating activities $ 29.4 $ 66.6 $ (29.6 ) Investing activities (33.8 ) (44.1 ) (32.5 ) Financing activities (15.6 ) (4.5 ) (5.6 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents (17.4 ) 7.7 11.7 (Decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents $ (37.4 ) $ 25.7 $ (56.0 ) 53 Operating Activities Our cash flows from operations vary significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable.
Consolidated Financial Condition (in millions) Year ended July 31 2023 2022 2021 Cash flows provided by (used in): Operating activities $ 54.1 $ 29.4 $ 66.6 Investing activities (33.4 ) (33.8 ) (44.1 ) Financing activities (15.8 ) (15.6 ) (4.5 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents 4.4 (17.4 ) 7.7 Increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents $ 9.3 $ (37.4 ) $ 25.7 Operating Activities Our cash flows from operations vary significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable.
In fiscal 2022, fiscal 2021, and fiscal 2020, we incurred lease costs of $2.0 million, $1.9 million, and $1.9 million, respectively, in connection with the Rafael Holdings’ leases, which is included in consolidated selling, general and administrative expenses. Stock-Based Compensation Expense.
In fiscal 2022 and fiscal 2021, we incurred lease costs of $2.0 million and $1.9 million, respectively, in connection with the Rafael Holdings’ leases. Lease costs incurred in connection with the Rafael Holdings’ leases are included in consolidated selling, general and administrative expense. Stock-Based Compensation Expense.
The contingent consideration is an aggregate of up to $5.5 million based on annual gross profit over a five-year period. In September 2022, we determined that the requirements for a portion of the contingent consideration payments related to the Leaf acquisition would not be met.
The contingent consideration was an aggregate of up to $5.5 million based on annual gross profit over a five-year period. In fiscal 2023, we determined that the requirements for a portion of the contingent consideration payments related to the Leaf acquisition would not be met.
The potential future payments are an aggregate of up to $3.3 million, half of which will be paid at the end of 12 months after closing and the remainder will be paid at the end of 24 months after closing, subject to holdback for the settlement of claims against the sellers, if any.
The potential future payments were an aggregate of up to $3.3 million, half of which was paid in fiscal 2023 at the end of 12 months after closing and the remainder will be paid at the end of 24 months after closing, subject to holdback for the settlement of claims against the sellers, if any.
Direct cost of revenues increased in fiscal 2021 compared to fiscal 2020 primarily due to the increase in revenues, with the largest increases in the United States and Latin America. net2phone’s focus on mid-sized businesses, multi-channel strategies, and localized offerings generated revenue growth that exceeded the increase in direct cost of revenues. Selling, General and Administrative.
Direct cost of revenues increased in fiscal 2022 compared to fiscal 2021 primarily due to the increase in revenues, with the largest increases in Latin American markets. net2phone’s focus on mid-sized businesses, multi-channel strategies, and localized offerings generated revenue growth that exceeded the increase in direct cost of revenues. Selling, General and Administrative.
Should our estimates and assumptions prove to be incorrect, we may be required to record impairments in future periods and such impairments could be material. Allowance for Doubtful Accounts Receivable Our allowance for doubtful accounts was $5.9 million at July 31, 2022 and $4.4 million at July 31, 2021.
Should our estimates and assumptions prove to be incorrect, we may be required to record impairments in future periods and such impairments could be material. Allowance for Doubtful Accounts Receivable Our allowance for doubtful accounts was $5.6 million at July 31, 2023 and $5.3 million at July 31, 2022.
At July 31, 2022, “Cash and cash equivalents” in our consolidated balance sheet included an aggregate of $17.3 million held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC that was unavailable for other purposes.
At July 31, 2023, “Cash and cash equivalents” in our consolidated balance sheet included an aggregate of $20.6 million held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC that was unavailable for other purposes.
The net gains on investments in fiscal 2021 included an unrealized gain of $8.3 million on shares of Rafael Holdings’ Class B common stock. The net losses on investments in fiscal 2020 included an unrealized loss of $0.2 million on shares of Rafael Holdings’ Class B common stock. (Provision for) Benefit from Income Taxes.
The net losses on investments in fiscal 2022 included an unrealized loss of $14.1 million on shares of Rafael Holdings’ Class B common stock. The net gains on investments in fiscal 2021 included an unrealized gain of $8.3 million on shares of Rafael Holdings’ Class B common stock. (Provision for) Benefit from Income Taxes.
Traditional Communications also includes other small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode. Traditional Communications’ most significant revenue streams are from Mobile Top-Up, BOSS Revolution Calling, and IDT Global. Mobile Top-Up and BOSS Revolution Calling are sold direct-to-consumers and through distributors and retailers.
Traditional Communications also includes other small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode. Traditional Communications’ most significant revenue streams are from IDT Digital Payments, BOSS Revolution Calling, and IDT Global. IDT Digital Payments and BOSS Revolution Calling are sold directly to consumers and through distributors and retailers.
Selling, general and administrative expense increased in fiscal 2022 compared to fiscal 2021 primarily due to increases in sales commissions, employee compensation, stock-based compensation, and debit and credit card processing charges.
Selling, general and administrative expense increased in fiscal 2023 compared to fiscal 2022 primarily due to increases in debit and credit card processing charges, employee compensation, sales commissions, and marketing expenses. Selling, general and administrative expense increased in fiscal 2022 compared to fiscal 2021 primarily due to increases in debit and credit card processing charges, employee compensation, and sales commissions.
As a percentage of net2phone’s revenues, net2phone’s selling, general and administrative expenses decreased to 93.1% from 103.7% and 115.8% in fiscal 2022, fiscal 2021, and fiscal 2020, respectively. net2phone derives a significant portion of its revenues from existing customers. Attracting new customers usually involves additional costs compared to retention of existing customers.
As a percentage of net2phone’s revenues, net2phone’s selling, general and administrative expense decreased to 79.2% from 93.1% and 103.7% in fiscal 2023, fiscal 2022, and fiscal 2021, respectively. net2phone derives a significant portion of its revenues from existing customers. Attracting new customers usually involves additional costs compared to retention of existing customers.
Depreciation and amortization expense decreased in fiscal 2022 and fiscal 2021 compared to the prior fiscal year as more of our property, plant, and equipment became fully depreciated, partially offset by depreciation of equipment added to our telecommunications network and capitalized costs of consultants and employees developing internal use software. Severance Expense.
Depreciation and amortization expense decreased in each of fiscal 2023 and fiscal 2022 compared to the prior fiscal year primarily due to decreases in depreciation as more of our property, plant, and equipment became fully depreciated, partially offset by increases in depreciation of equipment added to our telecommunications network and capitalized costs of consultants and employees developing internal use software.
In fiscal 2022, fiscal 2021, and fiscal 2020, we paid $9.0 million, $1.3 million, and $0.3 million, respectively, to repurchase 200,438; 109,381; and 37,348 shares, respectively, of our Class B common stock that were tendered by employees of ours to satisfy the employees’ tax withholding obligations in connection with the vesting of deferred stock units and the lapsing of restrictions on restricted stock.
In fiscal 2023, fiscal 2022, and fiscal 2021, we paid $0.8 million, $9.0 million, and $1.3 million, respectively, to repurchase 28,227; 200,438; and 109,381 shares, respectively, of our Class B common stock that were tendered by employees of ours to satisfy the employees’ tax withholding obligations in connection with shares issued for bonus payments, the vesting of deferred stock units, and the lapsing of restrictions on restricted stock.
In fiscal 2022, fiscal 2021, and fiscal 2020, we repaid financing-related other liabilities of $1.3 million, $0.1 million, and $0.5 million, respectively.
In fiscal 2023, fiscal 2022, and fiscal 2021, we repaid financing-related other liabilities of $2.0 million, $1.3 million, and $0.1 million, respectively.
We receive payments for BOSS Revolution Calling, traditional calling cards, and Mobile Top-Up prior to providing the services. We recognize the revenue when services are provided to the customer.
We receive payments for BOSS Revolution Calling, traditional calling cards, and IDT Digital Payments prior to providing the services. We recognize the revenue when services are provided to the customer.
Stock-based compensation expense included in consolidated selling, general and administrative expenses was $1.9 million, $1.5 million, and $3.9 million in fiscal 2022, fiscal 2021, and fiscal 2020, respectively.
Stock-based compensation expense included in consolidated selling, general and administrative expense was $4.5 million, $1.9 million, and $1.5 million in fiscal 2023, fiscal 2022, and fiscal 2021, respectively.
At July 31, 2022, we had cash, cash equivalents, debt securities, and current equity investments of $137.7 million and working capital (current assets in excess of current liabilities) of $57.6 million. We treat unrestricted cash and cash equivalents held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC as substantially restricted and unavailable for other purposes.
At July 31, 2023, we had cash, cash equivalents, debt securities, and current equity investments of $152.2 million and working capital (current assets in excess of current liabilities) of $93.0 million. We treat unrestricted cash and cash equivalents held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC as substantially restricted and unavailable for other purposes.
GAAP, excluding its revenue from POS terminal sales. net2phone’s cloud communications offerings are priced on a per-seat basis, with customers paying based on the number of users in their organization. net2phone’s subscription revenue is its revenue in accordance with U.S.
GAAP excluding its revenue from POS terminal sales. net2phone’s cloud communications offerings are priced on a per-seat basis, with customers paying based on the number of users in their organization. net2phone’s subscription revenue is its revenue in accordance with U.S. GAAP excluding its equipment revenue and revenue generated by a legacy SIP trunking offering in Brazil.
While they may vary from quarter to quarter, our five largest customers collectively accounted for 12.5%, 14.5%, and 12.7% of our consolidated revenues in fiscal 2022, fiscal 2021, and fiscal 2020, respectively. Our customers with the five largest receivables balance collectively accounted for 17.3% and 9.7% of our consolidated gross trade accounts receivable at July 31, 2022 and 2021, respectively.
While they may vary from quarter to quarter, our five largest customers collectively accounted for 10.8%, 12.5%, and 14.5% of our consolidated revenues in fiscal 2023, fiscal 2022, and fiscal 2021, respectively. Our customers with the five largest receivables balance collectively accounted for 16.7% and 27.1% of our consolidated gross trade accounts receivable at July 31, 2023 and 2022, respectively.
The Board of Directors authorized the repurchase of up to 8.0 million shares in the aggregate. In fiscal 2022, we repurchased 554,744 shares of Class B common stock for an aggregate purchase price of $13.4 million. In fiscal 2021, we repurchased 463,792 shares of Class B common stock for an aggregate purchase price of $2.8 million.
The Board of Directors authorized the repurchase of up to 8.0 million shares in the aggregate. In fiscal 2023, we repurchased 511,546 shares of Class B common stock for an aggregate purchase price of $13.1 million. In fiscal 2022, we repurchased 554,744 shares of Class B common stock for an aggregate purchase price of $13.4 million.
However, the situation remains fluid and we cannot predict with certainty the potential impact of COVID-19 on our business, results of operations, financial condition, and cash flows. Concentration of Customers Our most significant customers typically include telecom operators to whom we provide wholesale services and distributors of our retail calling products.
We cannot predict with certainty the potential impact of COVID-19 if it re-invigorates on our results of operations, financial condition, or cash flows. Concentration of Customers Our most significant customers typically include telecom operators to whom we provide wholesale services and distributors of our retail calling products.
The change in the net (income) loss attributable to noncontrolling interests in fiscal 2022 compared to fiscal 2021 was primarily due to increases in the net income of NRS and our variable interest entity, or VIE, partially offset by an increase in the net loss of net2phone 2.0, Inc., or net2phone 2.0, which owns and operates our net2phone segment.
The change in the net income attributable to noncontrolling interests in fiscal 2022 compared to fiscal 2021 was primarily due to increases in the net income of NRS and our VIE, partially offset by an increase in the net loss of net2phone 2.0.
As discussed in Note 23 to the Consolidated Financial Statements included in Item 8 to Part II of this Annual Report, we (as well as other defendants) have been named in a pending putative class action on behalf of Straight Path’s stockholders and a derivative complaint.
As discussed in Note 23 to the Consolidated Financial Statements included in Item 8 to Part II of this Annual Report, we (as well as other defendants) have been named in a class action on behalf of the stockholders of our former subsidiary, Straight Path.
Selling, general and administrative expense decreased in fiscal 2021 compared to fiscal 2020 primarily due to decreases in employee compensation, stock-based compensation, marketing expense, and bad debt expense, partially offset by an increase in debit and credit card processing charges.
Selling, general and administrative expense decreased in fiscal 2023 compared to fiscal 2022 primarily due to decreases in debit and credit card processing charges, sales commissions, and employee compensation, partially offset by an increase in stock-based compensation.
Other operating (expense) gain, net included expense for the indemnification of a net2phone cable telephony customer related to patent infringement claims brought against the customer of $0.1 million, $0.5 million, and $1.2 million in fiscal 2022, fiscal 2021, and fiscal 2020, respectively.
Other operating (expense) gain, net included $3.9 million, $0.1 million, and $0.5 million in fiscal 2023, fiscal 2022, and fiscal 2021, respectively for the indemnification of one of our cable telephony customers related to patent infringement claims brought against the customer.
Wayfair, Inc., holding that a state may require a remote seller with no physical presence in the state to collect and remit sales tax on goods and services provided to purchasers in the state, overturning certain existing court precedent.
On June 21, 2018, the United States Supreme Court rendered a decision in South Dakota v. Wayfair, Inc., holding that a state may require a remote seller with no physical presence in the state to collect and remit sales tax on goods and services provided to purchasers in the state, overturning certain existing court precedent.
GAAP excluding its equipment revenue and revenue generated by a legacy SIP trunking offering in Brazil. 46 The trends and comparisons between periods for the number of active POS terminals, NRS PAY accounts, seats served, recurring revenue, and subscription revenue are used in the analysis of NRS’ or net2phone’s revenues and direct cost of revenues and are strong indications of the top-line growth and performance of the business.
The trends and comparisons between periods for the number of active POS terminals, NRS PAY accounts, seats served, recurring revenue, and subscription revenue are used in the analysis of NRS’ or net2phone’s revenues and direct cost of revenues and are strong indications of the top-line growth and performance of the business.
A spin-off may include the contribution of a significant amount of cash, cash equivalents, debt securities, and/or equity securities to the subsidiary prior to the spin-off, which would reduce our capital resources. There is no assurance at this time that any of these transactions will be completed.
Some of the transactions under consideration are in early stages and others are more advanced. A spin-off may include the contribution of a significant amount of cash, cash equivalents, debt securities, and/or equity securities to the subsidiary prior to the spin-off, which would reduce our capital resources. There is no assurance that any of these transactions will be completed.
We determined that on the dates of the acquisitions, there were differences of $3.4 million and $1.0 million between our investment in the EMI and our proportional interest in the equity of the EMI, which represented the share of the EMI’s customer list on the dates of the acquisitions attributed to our interest in the EMI.
We determined that on the dates of the acquisitions, there were difference between our investment in the EMI and our proportional interest in the equity of the EMI of an aggregate of $8.2 million, which represented the share of the EMI’s customer list on the dates of the acquisitions attributed to our interest in the EMI.
As a percentage of Traditional Communications’ revenue, Traditional Communications’ selling, general and administrative expense was 10.1%, 8.8%, and 10.6% in fiscal 2022, fiscal 2021, and fiscal 2020, respectively. Depreciation and Amortization .
As a percentage of Traditional Communications’ revenue, Traditional Communications’ selling, general and administrative expense was 10.7%, 9.5%, and 8.3% in fiscal 2023, fiscal 2022, and fiscal 2021, respectively. Depreciation and Amortization .
Corporate does not generate any revenues, nor does it incur any direct cost of revenues. General and Administrative. Corporate general and administrative expense increased in fiscal 2022 compared to fiscal 2021 primarily because of an increase in employee compensation.
Corporate does not generate any revenues, nor does it incur any direct cost of revenues. General and Administrative. Corporate general and administrative expense increased in fiscal 2023 compared to fiscal 2022 primarily because of increases in audit and accounting fees, employee compensation, and stock-based compensation expense.
Traditional Communications Segment The Traditional Communications segment, which represented 87.7%, 91.8%, and 93.1% of our total revenues in fiscal 2022, fiscal 2021, and fiscal 2020, respectively, includes Mobile Top-Up, which enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts, BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States and Canada, and IDT Global, a wholesale provider of international voice and SMS termination and outsourced traffic management solutions to telecoms worldwide.
Other operating expense, net in fiscal 2021 was due to the settlement of a legal matter. 50 Traditional Communications Segment The Traditional Communications segment, which represented 81.0%, 87.2%, and 91.2% of our total revenues in fiscal 2023, fiscal 2022, and fiscal 2021, respectively, includes IDT Digital Payments, which enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts, BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States and Canada, and IDT Global, a wholesale provider of international voice and SMS termination and outsourced traffic management solutions to telecoms worldwide.
Proceeds from maturities and sales of debt securities and redemptions of equity investments were $21.2 million, $26.2 million, and $6.5 million in fiscal 2022, fiscal 2021, and fiscal 2020, respectively.
Purchases of debt securities and equity investments were $59.9 million, $24.5 million, and $43.2 million in fiscal 2023, fiscal 2022, and fiscal 2021, respectively. Proceeds from maturities and sales of debt securities and redemptions of equity investments were $49.2 million, $21.2 million, and $26.2 million in fiscal 2023, fiscal 2022, and fiscal 2021, respectively.
The unrecognized compensation cost is expected to be recognized over the remaining vesting periods that end in fiscal 2027. 51 (in millions) 2022 change from 2021 2021 change from 2020 Year ended July 31 2022 2021 2020 $ % $ % Income from operations $ 60.1 $ 57.0 $ 17.9 $ 3.1 5.4 % $ 39.1 217.6 % Interest income, net 0.2 0.3 1.1 (0.1 ) (54.1 ) (0.8 ) (69.5 ) Other (expense) income, net (25.4 ) 7.9 (1.3 ) (33.3 ) (420.3 ) 9.2 724.8 (Provision for) benefit from income taxes (5.9 ) 31.7 3.7 (37.6 ) (118.6 ) 28.0 755.9 Net income 29.0 96.9 21.4 (67.9 ) (70.1 ) 75.5 352.4 Net (income) loss attributable to noncontrolling interests (2.0 ) (0.4 ) — (1.6 ) (375.2 ) (0.4 ) nm Net income attributable to IDT Corporation $ 27.0 $ 96.5 $ 21.4 $ (69.5 ) (72.0 )% $ 75.1 350.2 % nm—not meaningful Other (Expense) Income, net.
The unrecognized compensation cost is expected to be recognized over the remaining vesting period that ends in fiscal 2027. 53 (in millions) 2023 change from 2022 2022 change from 2021 Year ended July 31 2023 2022 2021 $ % $ % Income from operations $ 60.7 $ 60.1 $ 57.0 $ 0.6 1.1 % $ 3.1 5.4 % Interest income, net 3.2 0.2 0.3 3.0 nm (0.1 ) (54.1 ) Other (expense) income, net (3.1 ) (25.4 ) 7.9 22.3 87.8 (33.3 ) (420.3 ) (Provision for) benefit from income taxes (16.4 ) (5.9 ) 31.7 (10.5 ) (179.7 ) (37.6 ) (118.6 ) Net income 44.4 29.0 96.9 15.4 53.0 (67.9 ) (70.1 ) Net income attributable to noncontrolling interests (3.9 ) (2.0 ) (0.4 ) (1.9 ) (96.0 ) (1.6 ) (375.2 ) Net income attributable to IDT Corporation $ 40.5 $ 27.0 $ 96.5 $ 13.5 49.8 % $ (69.5 ) (72.0 )% nm—not meaningful Other (Expense) Income, net.
As a percentage of our consolidated revenues, Corporate general and administrative expense was 0.6%, 0.5%, and 0.7% in fiscal 2022, fiscal 2021, and fiscal 2020, respectively. Other Operating (Expense) Gain, net.
Corporate general and administrative expense increased in fiscal 2022 compared to fiscal 2021 primarily because of an increase in employee compensation. As a percentage of our consolidated revenues, Corporate general and administrative expense was 0.7%, 0.6%, and 0.5% in fiscal 2023, fiscal 2022, and fiscal 2021, respectively. Other Operating (Expense) Gain, net.
The most significant increases in the gross trade accounts receivable balance at July 31, 2022 compared to July 31, 2021 were in BOSS Money and NRS. We estimate the balance of our allowance for doubtful accounts by analyzing accounts receivable balances by age and applying historical write-off and collection trend rates.
The most significant decrease in the gross trade accounts receivable balance at July 31, 2023 compared to July 31, 2022 was in IDT Digital Payments. We estimated the balance of our allowance for doubtful accounts by analyzing accounts receivable balances by age and applying historical write-off and collection trend rates.
Such shares are repurchased by us based on their fair market value on the trading day immediately prior to the vesting date. 56 Other Sources and Uses of Resources We are considering spin-offs and other potential dispositions of certain of our subsidiaries. Some of the transactions under consideration are in early stages and others are more advanced.
Such shares were repurchased by us based on their fair market value as of the close of business on the trading day immediately prior to the vesting date. Other Sources and Uses of Resources We are considering spin-offs and other potential dispositions of certain of our subsidiaries.
We incurred severance expense of $0.1 million, $0.5 million, and $3.5 million in fiscal 2022, fiscal 2021, and fiscal 2020, respectively. 50 Other Operating (Expense) Gain, net.
Severance Expense. Traditional Communications incurred severance expense of $0.9 million, $0.1 million, and $0.5 million in fiscal 2023, fiscal 2022, and fiscal 2021, respectively. Other Operating (Expense) Gain, net.
In fiscal 2020, we repurchased 671,117 shares of our Class B common stock for an aggregate purchase price of $4.2 million. At July 31, 2022, 5.2 million shares remained available for repurchase under the stock repurchase program.
In fiscal 2021, we repurchased 463,792 shares of Class B common stock for an aggregate purchase price of $2.8 million. At July 31, 2023, 4.7 million shares remained available for repurchase under the stock repurchase program.
The valuation allowance on our deferred income tax assets was $11.6 million and $11.5 million at July 31, 2022 and 2021, respectively. In fiscal 2021, we released $46.5 million of our valuation allowance on the portion of the deferred income tax assets that we are more likely than not going to utilize.
In fiscal 2021, we released $46.5 million of our valuation allowance on the portion of the deferred income tax assets that we are more likely than not going to utilize. This release was mostly related to domestic deferred income tax assets.
The allowance for doubtful accounts as a percentage of gross trade accounts receivable decreased to 8.4% at July 31, 2022 from 8.7% at July 31, 2021 because, at July 31, 2022 compared to July 31, 2021, gross trade accounts receivable increased 37.4% and the allowance for doubtful accounts increased 32.5%.
The allowance for doubtful accounts as a percentage of gross trade accounts receivable increased to 15.0% at July 31, 2023 from 11.9% at July 31, 2022 because, at July 31, 2023 compared to July 31, 2022, gross trade accounts receivable decreased 15.9% and the allowance for doubtful accounts increased 5.9%.
Direct cost of revenues decreased in fiscal 2022 compared to fiscal 2021 primarily due to decreases in BOSS Revolution Calling’s and IDT Global’s direct cost of revenues in fiscal 2022 compared to fiscal 2021, partially offset by an increase in Mobile Top-Up’s direct cost of revenues in fiscal 2022 compared to fiscal 2021 as a result of the increase in Mobile Top-Up’s revenues.
Direct cost of revenues decreased in fiscal 2022 compared to fiscal 2021 primarily due to decreases in BOSS Revolution Calling’s and IDT Global’s revenues, partially offset by an increase in IDT Digital Payments’ direct cost of revenues in fiscal 2022 compared to fiscal 2021 because of the increase in IDT Digital Payments’ revenues. Selling, General and Administrative.
Selling, general and administrative expense increased in fiscal 2021 compared to fiscal 2020 primarily due to increases in employee compensation and sales commissions.
Selling, general and administrative expense increased in fiscal 2023 compared to fiscal 2022 primarily due to increases in sales commissions and consulting expense.
These basis differences are being amortized over the 6-year estimated life of the customer list. The net losses on investments in fiscal 2022 included an unrealized loss of $14.1 million on shares of Rafael Holdings’ Class B common stock.
These basis differences are being amortized over the 6-year estimated life of the customer list. “Equity in net loss of investee” also includes the amortization of the equity method basis difference. The net losses on investments in fiscal 2023 included an unrealized loss of $7,000 on shares of Rafael Holdings’ Class B common stock.
The initial shares purchased represented 23.95% of the outstanding shares of the EMI on an as converted basis. The subsequent purchases increased our ownership to 26.57% on an as converted basis.
Our initial investment represented 23.95% of the outstanding shares of the EMI on an as converted basis, and on August 10, 2021, our investment increased to 26.57% of the outstanding shares of the EMI on an as converted basis.
NRS’ direct cost of revenues increased in fiscal 2022 and fiscal 2021 compared to the prior fiscal year primarily due to the increases in its revenues in such periods. Selling, General and Administrative.
Direct cost of revenues increased in each of fiscal 2023 and fiscal 2022 compared to the prior fiscal year primarily due to increases in the direct costs of NRS’ POS terminal sales. 48 Selling, General and Administrative.
The revolving credit facility is secured by primarily all of IDT Telecom’s assets. The principal outstanding bears interest per annum at the Intercontinental Exchange Benchmark Administration Ltd. LIBOR multiplied by the Regulation D maximum reserve requirement plus 125 to 175 basis points, depending upon IDT Telecom’s leverage ratio as computed for the most recent fiscal quarter.
The revolving credit facility is secured by primarily all of IDT Telecom’s assets. The principal outstanding bears interest per annum at the secured overnight financing rate published by the Federal Reserve Bank of New York plus 10 basis points, plus depending upon IDT Telecom’s leverage ratio as computed for the most recent fiscal quarter, 125 to 175 basis points.
Revenues from Mobile Top-Up increased in fiscal 2022 compared to fiscal 2021 primarily from an increase in direct-to-consumer channel revenues, partially offset by a decrease in retail channel revenues.
Revenues from IDT Digital Payments increased in fiscal 2022 compared to fiscal 2021 primarily from an increase in direct-to-consumer channel revenues, partially offset by a decrease in retail channel revenues. Our acquisition of Sochitel in fiscal 2021 contributed to our increased penetration into the mobile top-up market in Africa.
BOSS Money’s direct cost of revenues increased in fiscal 2022 compared to fiscal 2021 due to increased direct cost of revenues in its direct-to-consumer digital and retail channels, which reflected the increase in BOSS Money’s revenue.
Direct cost of revenues increased in each of fiscal 2023 and fiscal 2022 compared to the prior fiscal year primarily due to increased direct cost of revenues in BOSS Money’s direct-to-consumer digital and retail channels, which reflected the increases in BOSS Money’s revenue. Selling, General and Administrative.
Revenues from BOSS Money increased in fiscal 2022 and fiscal 2021 compared to the prior fiscal year primarily because of increased transaction volume in BOSS Money’s direct-to-consumer digital and retail channels.
Revenues from BOSS Money increased in each of fiscal 2023 and fiscal 2022 compared to the prior fiscal year primarily because of increased transaction volume in BOSS Money’s direct-to-consumer digital and retail channels and, in fiscal 2023, from the development and introduction of new platform functionalities enabling more flexible and granular pricing strategies.
Other (expense) income, net consists of the following: (in millions) Year ended July 31 2022 2021 2020 Foreign currency transaction (losses) gains $ (1.7 ) $ 1.0 $ 0.4 Equity in net loss of investee (3.0 ) (1.1 ) — Write-off of tax assets related to prior periods — — (1.3 ) (Losses) gains on investments (19.3 ) 8.8 (0.3 ) Other (1.4 ) (0.8 ) (0.1 ) TOTAL $ (25.4 ) $ 7.9 $ (1.3 ) On February 2, 2021, we paid $4.0 million to purchase shares of series B convertible preferred stock of a communications company (the equity method investee, or EMI), and on August 10, 2021, we paid $1.1 million to purchase shares of the EMI’s series C convertible preferred stock and additional shares of the EMI’s series B convertible preferred stock.
Other (expense) income, net consists of the following: (in millions) Year ended July 31 2023 2022 2021 Foreign currency transaction gains (losses) $ 3.3 $ (1.7 ) $ 1.0 Equity in net loss of investee (3.1 ) (3.0 ) (1.1 ) (Losses) gains on investments (2.6 ) (19.3 ) 8.8 Other (0.7 ) (1.4 ) (0.8 ) TOTAL $ (3.1 ) $ (25.4 ) $ 7.9 As of February 2, 2021, we have an investment in convertible preferred stock of a communications company (the equity method investee, or EMI).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInvestment Risk We hold a portion of our assets in debt and equity securities, including hedge funds, for strategic and speculative purposes. At July 31, 2022 and 2021, the value of our debt and equity securities was an aggregate of $46.8 million and $68.1 million, respectively, which represented 9% and 13%, respectively, of our total assets.
Biggest changeAt July 31, 2023 and 2022, the value of our debt and equity security holdings was an aggregate of $58.5 million and $46.8 million, respectively, which represented 11% and 9% of our total assets at July 31, 2023 and 2022, respectively.
Item 7A. Quantitative and Qualitative Disclosures about Market Risks. Foreign Currency Risk Revenues from our international operations were 29%, 22%, and 31% of our consolidated revenues in fiscal 2022, fiscal 2021, and fiscal 2020, respectively.
Item 7A. Quantitative and Qualitative Disclosures about Market Risks. Foreign Currency Risk Revenues from our international operations were 28%, 29%, and 22% of our consolidated revenues in fiscal 2023, fiscal 2022, and fiscal 2021, respectively.
On July 31, 2020, we restructured certain operations for tax purposes resulting in the change of geographic sourcing of revenues from the Netherlands to the United States, and on February 1, 2021, geographic sourcing was changed from the United States to the United Kingdom. A significant portion of our revenues is in currencies other than the U.S. Dollar.
On February 1, 2021, we restructured certain operations for tax purposes resulting in the change of geographic sourcing of revenues from the United States to the United Kingdom. A significant portion of our revenues is in currencies other than the U.S. Dollar. Our foreign currency exchange risk is somewhat mitigated by our ability to offset a portion of these non-U.S.
While the impact from fluctuations in foreign exchange rates affects our revenues and expenses denominated in foreign currencies, the net amount of our exposure to foreign currency exchange rate changes at the end of each reporting period is generally not material.
While the impact from fluctuations in foreign exchange rates affects our revenues and expenses denominated in foreign currencies, the net amount of our exposure to foreign currency exchange rate changes at the end of each reporting period is generally not material. 58 Investment Risk We hold a portion of our assets in debt and equity securities, including hedge funds, for strategic and speculative purposes.
Our foreign currency exchange risk is somewhat mitigated by our ability to offset a portion of these non-U.S. Dollar-denominated revenues with operating expenses that are paid in the same currencies.
Dollar-denominated revenues with operating expenses that are paid in the same currencies.

Other IDT 10-K year-over-year comparisons