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What changed in IDT CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of IDT CORP's 2023 and 2024 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 2024 report.

+419 added−470 removedSource: 10-K (2024-10-15) vs 10-K (2023-10-16)

Top changes in IDT CORP's 2024 10-K

419 paragraphs added · 470 removed · 317 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

116 edited+32 added−40 removed53 unchanged
Biggest changeIncreasingly 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.
Biggest changeBOSS Money’s growth strategy includes: ■ Expansion of our international payout network with a focus on certain popular destinations in Africa and Asia; ■ Expansion of origination beyond the United States and Canada to the United Kingdom and, potentially over the longer term, to European countries with large immigrant populations; ■ Continued migration of our BOSS Revolution and IDT Digital Payments customers from competitors to BOSS Money; ■ Further enhancement to our BOSS Money app, BOSS Revolution app and retailer portal; ■ Increasing the number of BOSS Money retail agents; and ■ Addition of new features and offerings. net2phone net2phone’s revenues were $82.3 million in fiscal 2024 compared to $72.4 million in fiscal 2023. net2phone’s income from operations was $1.7 million in fiscal 2024 compared to loss from operations of $2.8 million in fiscal 2023. 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 operates in the United States, Canada, Mexico, Central and South America and Spain. net2phone’s offerings include: ■ Unified Communications as a Service (UCaaS): 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, AI-powered functionalities including instant call summaries and transcripts, internal team chat, 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. ■ 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, Unite.
(Mobile top-up enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts.) IDT Digital Payments also serves the enterprise space via Zendit, its prepaid-as-a-service platform.
(Mobile airtime top-up enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts.) IDT Digital Payments also serves the enterprise space via Zendit, its prepaid-as-a-service platform.
BOSS Money generates revenues from a per-transaction fee charged to the customer and from foreign exchange differentials. Our transaction costs include commissions paid when the transaction is initiated by a retail agent, payment to the international disbursing agent, banking, compliance, foreign currency exchange costs, and, for digital transfers, credit and debit card processing fees.
BOSS Money generates revenues from a per-transaction fee charged to the customer and from foreign exchange differentials. Our transaction costs include commissions paid when the transaction is initiated by a retail agent, payment to the international disbursing agent, banking, compliance and foreign currency exchange costs, and, for digital transfers, credit and debit card processing fees.
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.
BOSS Revolution 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 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 allows users to place international long-distance calls at affordable rates from the BOSS Revolution Calling app or by calling an access number. Regardless of how the call originates, our customers must first establish and top-up a prepaid BOSS Revolution account that is linked to their phone.
BOSS Revolution allows users to place international long-distance calls at affordable rates from the BOSS Revolution app or by calling an access number. Regardless of how the call originates, our customers must first establish and top-up a prepaid BOSS Revolution account that is linked to their phone.
BOSS Revolution Calling customers’ account balances are debited at a fixed rate per minute or at a fixed amount for calling plans to a specific country over a specified time period. In contrast to certain of our competitors, BOSS Revolution Calling does not charge connection, usage or breakage fees.
BOSS Revolution customers’ account balances are debited at a fixed rate per minute or at a fixed amount for calling plans to a specific country over a specified time period. In contrast to certain of our competitors, BOSS Revolution does not charge connection, usage or breakage fees.
Competition BOSS Revolution Calling is subject to fierce competition. While virtually any company offering communication services is a competitor, we face particularly strong competition from Tier 1 mobile network operators who offer flat-rate international calling plans, other PIN-less prepaid voice offerings, prepaid calling card providers, mobile virtual network operators, and VoIP and other “over the top”, or OTT, service providers.
Competition BOSS Revolution is subject to fierce competition. While virtually any company offering communication services is a competitor, we face particularly strong competition from Tier 1 mobile network operators who offer flat-rate international calling plans, other PIN-less prepaid voice offerings, prepaid calling card providers, mobile virtual network operators, and VoIP and other “over the top”, or OTT, service providers.
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.
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 and our other prepaid calling services.
We expect the popularity of these IP-based services—many of which offer free voice and/or video communications—to continue to increase, which will increase substitution for, and pricing pressure on, our BOSS Revolution Calling and other international prepaid calling offerings. However, free services typically require both the caller and recipient to have a broadband connection.
We expect the popularity of these IP-based services—many of which offer free voice and/or video communications—to continue to increase, which will increase substitution for, and pricing pressure on, our BOSS Revolution and other international prepaid calling offerings. However, free services typically require both the caller and recipient to have a broadband connection.
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.
Traditional Communications comprises the following businesses: ■ IDT Digital Payments, which includes certain consumer 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, 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.
Regional-based customer service and sales teams are a key differentiator and propel net2phone’s international business. ■ Track record and focus on innovative solutions. net2phone’s long track record of innovation includes the development of its proprietary UCaaS platform, including the Huddle video conferencing service, as well as numerous patents around virtualized communication technologies. ■ Employee-friendly culture that allows net2phone to attract and retain talent . net2phone has sought to create a workplace and culture that is entrepreneurial, positive, employee-friendly and encourages its employees to work towards its shared goals of delivering innovative solutions to its customers and supporting its partners.
Regional-based customer service and sales teams are a key differentiator and propel net2phone’s international business. 10 ■ Track record and focus on innovative solutions. net2phone’s long track record of innovation includes the development of its proprietary UCaaS platform, including the Huddle video conferencing service, as well as numerous patents around virtualized communication technologies. ■ Employee-friendly culture that allows net2phone to attract and retain talent . net2phone has sought to create a workplace and culture that is entrepreneurial, positive, employee-friendly and encourages its employees to work towards its shared goals of delivering innovative solutions to its customers and supporting its partners.
Zedge’s stock is listed on the NYSE American with the ticker symbol “ZDGE”. – We launch NRS to provide POS-based services to independent retailers in the United States. – net2phone initiates global expansion of its UCaaS offering with a launch in Brazil. 2017 – We introduce our BOSS Money app for Android and iOS. 2018 – We spin-off our interest in our Rafael Holdings, Inc. subsidiary to our stockholders.
Zedge’s stock is listed on the NYSE American with the ticker symbol “ZDGE”. – We launch NRS to provide POS-based services to independent retailers in the United States. – net2phone initiates global expansion of its UCaaS offering with a launch in Brazil. 2017 – We introduce our BOSS Money app for Android and iOS. 2018 – We spin-off our Rafael Holdings, Inc. subsidiary to our stockholders.
We are committed to diversity and inclusion in the workforce including a policy of non-discriminatory treatment and respect of human rights for all current and prospective employees. We do not permit discrimination based on an individual’s race, religion, creed, color, sex, sexual orientation, age, marital status, disability, national origin or veteran’s status and is illegal in many jurisdictions.
We are committed to diversity and inclusion in the workforce including a policy of non-discriminatory treatment and respect of human rights for all current and prospective employees. We do not permit discrimination based on an individual’s race, religion, creed, color, sex, sexual orientation, age, marital status, disability, national origin or veteran’s status, which is illegal in many jurisdictions.
BOSS Revolution Calling utilizes telephone networks to enable voice communications even when neither party has broadband connectivity. Many mobile operators offer unlimited international long-distance plans that include international destinations to which customers can place direct calls from their mobile phones without time limitation. These plans now include some of our most popular international destinations.
BOSS Revolution utilizes telephone networks to enable voice communications even when neither party has broadband connectivity. Many mobile operators offer unlimited international long-distance plans that include international destinations to which customers can place direct calls from their mobile phones without time limitation. These plans now include some of our most popular international destinations.
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.
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 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.
IDT Global’s customers include our BOSS Revolution Calling and net2phone businesses, major and niche carriers around the globe, mobile network operators, and other service providers such as call aggregators. For many of these customers, particularly the major carriers, we engage in buy-sell relationships, terminating their customers’ traffic in exchange for terminating our traffic with them.
IDT Global’s customers include our BOSS Revolution and net2phone businesses, major and niche carriers around the globe, mobile network operators, and other service providers such as call aggregators. For many of these customers, particularly the major carriers, we engage in buy-sell relationships, terminating their customers’ traffic in exchange for terminating our traffic with them.
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.
We can offer competitively priced termination services in part because of the large volumes of originating minutes generated by our BOSS Revolution 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.
Our technology infrastructure simplifies the storage and processing of large amounts of data, eases the deployment and operation of large-scale global products and services, and automates much of the administration of large-scale clusters of computers. 16 Our technology infrastructure has been designed around industry-standard architectures to reduce downtime in the event of outages or catastrophic occurrences.
Our technology infrastructure simplifies the storage and processing of large amounts of data, eases the deployment and operation of large-scale global products and services, and automates much of the administration of large-scale clusters of computers. Our technology infrastructure has been designed around industry-standard architectures to reduce downtime in the event of outages or catastrophic occurrences.
If even some of these exemptions become unavailable, they could materially increase our federal Universal Service Fund or Other Funds’ contributions and have a material adverse effect on the cost of our operations and, therefore, on our ability to continue to operate profitably, and to develop and grow our business.
If even some of these exemptions become unavailable, they could materially increase our Universal Service Fund or Other Funds’ contributions and have a material adverse effect on the cost of our operations and, therefore, on our ability to continue to operate profitably, and to develop and grow our business.
Accordingly, we, and the products and services that we market in consumer payment services, are subject to a variety of federal and state laws and regulations, including: ■ Banking laws and regulations; ■ Money transmitter and payment instrument laws and regulations; ■ Anti-money laundering laws; ■ Privacy and data security laws and regulations; ■ Consumer protection laws and regulations; ■ Unclaimed property laws; and ■ Card association and network organization rules.
Accordingly, we, and the products and services that we market in consumer payment services, are subject to a variety of federal and state laws and regulations, including: ■ Banking laws and regulations; ■ Money transmitter and payment instrument laws and regulations; 17 ■ Anti-money laundering laws; ■ Privacy and data security laws and regulations; ■ Consumer protection laws and regulations; ■ Unclaimed property laws; and ■ Card association and network organization rules.
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.
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 and BOSS Money.
Our ability to maintain and/or to capture additional market share will remain dependent upon our ability to continue to provide competitively priced services, to maintain our distribution and retail networks, to increase usage through the BOSS Revolution Calling app, and to innovate new products and services to fit the evolving needs of our customers.
Our ability to maintain and/or to capture additional market share will remain dependent upon our ability to continue to provide competitively priced services, to maintain our distribution and retail networks, to increase usage through the BOSS Revolution app, and to innovate new products and services to fit the evolving needs of our customers.
Our technology organization is responsible for the design, development, testing, and delivery of new software, technologies, and features of our products and services, as well as the continued improvement and iteration of our existing products and services. Our technology employees are remotely distributed globally and, in our Newark, Jerusalem, Guatemala, Warsaw, and Minsk offices.
Our technology organization is responsible for the design, development, testing, and delivery of new software, technologies, and features of our products and services, as well as the continued improvement and iteration of our existing products and services. Our technology employees are distributed globally in our Newark, Jerusalem, Guatemala, Warsaw, and Minsk offices.
Due to the manner in which these contributions are calculated, we cannot be assured that we fully recover from our customers all of our contributions. In addition, based on the nature of our current business, we receive certain exemptions from federal Universal Service Fund contributions.
Due to the manner in which these contributions are calculated, we cannot be assured that we fully recover from our customers all of our contributions. In addition, based on the nature of our current business, we receive certain exemptions from Universal Service Fund contributions.
We subsequently repurchased net2phone from AT&T. 2001 – Our common stock is listed on the New York Stock Exchange, or NYSE. 2006 – We sell our Russian telecom business, Corbina, for $129.9 million in cash. 2007 – We complete the sale of IDT Entertainment to Liberty Media for $220.0 million in cash, stock and other considerations. 2008 –We launch BOSS Revolution PIN-less, a pay-as-you-go international calling service.
We subsequently repurchased net2phone from AT&T. 2001 – Our common stock is listed on the New York Stock Exchange, or NYSE. 2006 – We sell our Russian telecom business, Corbina, for $129.9 million in cash. 2007 – We complete the sale of IDT Entertainment to Liberty Media for $220.0 million in cash, stock and other considerations. 2008 –We launch BOSS Revolution, a pay-as-you-go international calling service.
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.
The platform has been deployed in the United States, Brazil, and Mexico to date. ■ 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 its 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.
We respect the human rights of all employees and strive to treat them with dignity consistent with standards and practices recognized by the international community.
We respect the human rights of all employees and strive to treat them with dignity consistent with standards and practices recognized by the international community. 18
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.
In addition, we estimate that approximately 3,000 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.
Zendit enables businesses, entrepreneurs, and developers to offer prepaid digital offerings globally including mobile airtime top-up, mobile data bundles, digital gift cards, and prepaid utility payments; ■ BOSS Revolution Calling : Provides international long-distance voice service marketed primarily to immigrant communities in the United States and Canada.
Zendit enables businesses, entrepreneurs, and developers to offer prepaid digital offerings globally including mobile airtime top-up, mobile data bundles, digital gift cards, eSIMs and prepaid utility payments; ■ BOSS Revolution (formerly BOSS Revolution Calling) : Provides international long-distance voice service marketed primarily to immigrant communities in the United States and Canada.
Competitive Strengths We believe that net2phone’s competitive strengths include: ■ Proprietary communications-as-a-service product suite. net2phone provides a leading, proprietary cloud-based communications and collaboration platform for our customers. Key differentiators include net2phone’s advanced feature sets, proprietary CCaaS offering, white glove customer service, integrations with third-party software, and deep localization.
Competitive Strengths We believe that net2phone’s competitive strengths include: ■ Proprietary communications-as-a-service product suite. net2phone provides a leading, proprietary cloud-based communications and collaboration platform for its customers. Key differentiators include net2phone’s advanced feature sets, proprietary CCaaS offering, white glove customer service, integrations with third-party software, and deep localization.
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. ■ One World, One Platform . net2phone is deploying a single cloud-based platform to provide its unified communications service globally.
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 can easily quote and deliver a net2phone proposal and agreement proceeding directly to onboarding. ■ One World, One Platform . net2phone is deploying a single cloud-based platform to provide its unified communications service globally.
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.
The software defect escape ratio, a measure of quality engineering for our flagship BOSS Revolution brand, was 4% in fiscal 2024, meaning more than 96% of product defects were detected and fixed internally before being released to our customers.
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.
Our technology team consists 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.
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.
As of July 31, 2024, 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.
Customers can open a BOSS Revolution Calling account for free and top-up with a debit or credit card using the BOSS Revolution Calling app, through the BOSS Revolution consumer website (www.bossrevolution.com) or by phone, or with cash at any BOSS Revolution retailer.
Customers can open a BOSS Revolution account for free and top-up with a debit or credit card using the BOSS Revolution app, through the BOSS Revolution website (www.bossrevolution.com) or by phone, or with cash at any BOSS Revolution retailer.
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.
Straight Path was purchased in February 2018 by Verizon Communications Inc. 2 – We introduce our BOSS Revolution 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 Zedge subsidiary to our stockholders.
We believe that IDT Digital Payments’ competitive advantages are: ■ our direct connection to most of the Tier 1 and Tier 2 mobile carriers worldwide; ■ the strength of IDT’s balance sheet, which allows us to compete effectively in a capital intensive prepaid industry; ■ our extensive distribution and retail networks that provide us with a strong presence in communities of foreign-born residents, a significant portion of which purchase our services with cash; and ■ our strong omni channel approach, which includes the BOSS Revolution retailer network, the BOSS digital platform, including the BOSS Money and BOSS Revolution Calling apps and the BOSS Revolution website, and the enterprise and wholesale channel.
We believe that IDT Digital Payments’ competitive advantages include: ■ our direct connection to most of the Tier 1 and Tier 2 mobile carriers worldwide; ■ the strength of IDT’s balance sheet, which allows us to compete effectively in capital intensive prepaid markets; ■ our extensive distribution and retail networks that provide us with a strong presence in communities of foreign-born residents, a significant portion of which purchase our services with cash; and ■ our strong omni channel approach, which includes the BOSS Revolution retailer network, the BOSS digital platform, including the BOSS Money and BOSS Revolution apps and the BOSS Revolution website, and the enterprise and wholesale channel.
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.
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 77% of its personnel at the end of fiscal 2024.
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.
IDT Global accounted for 5.7 billion minutes and 6.3 billion minutes of the total Traditional Communications’ minutes in fiscal 2024 and fiscal 2023, 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.
BOSS Revolution Calling’s retail sales have traditionally been, and continue to be, strongest in the Northeastern United States and in Florida because of our extensive local distribution network. We continue to grow BOSS Revolution Calling’s distributor relationships and expand BOSS Revolution Calling’s retail network in other areas of the United States and Canada, including the Southwest and West Coast.
BOSS Revolution’s retail sales have traditionally been, and continue to be, strongest in the Northeastern United States and in Florida because of our extensive local distribution network. We continue to grow BOSS Revolution’s distributor relationships and expand BOSS Revolution’s retail network in other areas of the United States and Canada, including the Southwest and West Coast.
Through the nationwide network of over 30,000 BOSS Revolution retailers, the BOSS brand has a high-visibility storefront presence in many communities with significant immigrant populations; ■ The BOSS customer eco-system includes the significantly larger customer bases of BOSS Revolution Calling and IDT Digital Payments.
Through the nationwide network of over 28,000 BOSS Revolution retailers, the BOSS brand has a high-visibility storefront presence in many communities with significant immigrant populations; ■ The BOSS customer eco-system includes the significantly larger customer bases of BOSS Revolution and IDT Digital Payments.
BOSS Revolution Calling is provisioned through the popular BOSS Revolution Calling app and ‘calling cards’ sold by a robust network of over 30,000 BOSS Revolution retail agents; and ■ IDT Global : Provides wholesale international voice termination, virtual numbers, and SMS termination solutions to telecoms worldwide. Through its IDT Express self-provisioning portal, IDT Global also serves small and medium businesses.
BOSS Revolution is provisioned through the popular BOSS Revolution app and ‘calling cards’ sold by a robust network of over 28,000 BOSS Revolution retail agents; and ■ IDT Global : Provides wholesale international voice termination, virtual numbers, and SMS termination solutions to telecoms worldwide. Through its IDT Express branded self-provisioning portal, IDT Global also serves small and medium businesses.
We also contribute to several other regulatory funds and programs, most notably Telecommunications Relay Service, FCC Regulatory Fees, and Local Number Portability (collectively, the Other Funds).
We also contribute to several other regulatory funds and programs, most notably Telecommunications Relay Service, or TRS, FCC Regulatory Fees, and Local Number Portability (collectively, the Other Funds).
Leveraging the POS platform, including its customer-facing screens and transaction analytics, NRS also provides advertisers and marketers with unprecedented reach into the U.S.’s predominantly urban, immigrant-centric consumer markets; ■ BOSS Money: Provides international money remittance services marketed to immigrant communities across the United States and Canada.
Leveraging its POS platform, including its customer-facing screens and transaction analytics, NRS also provides advertisers and marketers with unprecedented reach into the U.S.’s predominantly urban, multi-cultural consumer markets; ■ BOSS Money: Provides international money remittance services marketed primarily to immigrant communities across the United States and Canada.
Our platforms incorporate multiple layers of protection, both for continuity purposes and to address cyber-security challenges. We engage in multiple efforts to protect our software platforms against these challenges, including regularly testing our systems to address potential vulnerabilities.
Our platforms incorporate multiple layers of protection, both for continuity purposes and to address cybersecurity challenges. We engage in multiple efforts to protect our software platforms against these challenges, including regularly testing our systems to address potential vulnerabilities.
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.
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 8.0 billion minutes in fiscal 2024, as compared to 9.3 billion minutes in fiscal 2023.
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.
At July 31, 2024, approximately 1.25 million customers per month utilized the BOSS Revolution app. In the United States, we distribute our BOSS Revolution hard cards and other retail products primarily through our network of distributors that, either directly or through sub-distributors, sell to retail locations.
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.
The growth of these “international unlimited” plans adversely affects our revenues as these operators gain subscriber market share. 13 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 BOSS Revolution brand is often highly visible in these communities and has a reputation for quality service and competitive, transparent pricing; ■ our continued migration of our existing customers to our digital platform including the BOSS Revolution app; and ■ our offering of synergistic IDT Digital Payments and BOSS Money over the BOSS Revolution platform that customers can conveniently access from their accounts.
BOSS Money makes it easy and convenient for retail customers to send money to friends and family in 47 countries in Latin America and the Caribbean, Africa, Europe and Asia.
BOSS Money makes it easy and convenient for customers to send money to friends and family in 50 countries in Latin America and the Caribbean, Africa, Europe, and Asia.
BOSS Revolution Calling’s per minute rates vary by the destination country, city, and whether the call is placed to a landline or mobile phone. Rates are published on the BOSS Revolution consumer website and within the BOSS Revolution Calling app. Users of the BOSS Revolution Calling app constitute the majority of our customers to date.
BOSS Revolution’s per minute rates vary by the destination country, city, and whether the call is placed to a landline or mobile phone. Rates are published on the BOSS Revolution website and within the BOSS Revolution app. 12 Users of the BOSS Revolution app constitute the majority of our customers to date.
Our technology organization uses several key performance indicators to track service quality that meet or exceed industry standards for SaaS (Software-as-a-Service) and technology enabled services. As of July 31, 2023, our technology organization maintained an aggregate service uptime of approximately 99.97% in fiscal 2023.
Our technology organization uses several key performance indicators to track service quality that meet or exceed industry standards for Software-as-a-Service and technology enabled services. Our technology organization maintained an aggregate service uptime of approximately 99.97% in fiscal 2024.
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.
Our BOSS Revolution and IDT Global businesses operate in the paid-minute voice communications market. Like other operators in this market, these 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.
Furthermore, this high level of quality was achieved utilizing suites of proprietary tests of which over 90% are fully automated by a combination of proprietary software and technologies provided by third parties.
Furthermore, this high level of quality was achieved utilizing suites of proprietary tests of which the majority are fully automated by a combination of proprietary software and technologies provided by third parties.
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.
They include: ■ Our key brands including NRS, net2phone, BOSS Revolution, BOSS Money, IDT Digital Payments and IDT Global; ■ Our nationwide network of more than 30,000 independent retailers who operate NRS’s POS-based platform and approximately 28,000 BOSS Revolution and BOSS Money retailers 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 approximately 2,300 dedicated personnel working in over 20 countries on four continents including in-house technology and product development teams.
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.
In the United States, BOSS Revolution served, as of July 31, 2024, approximately 1.8 million customers per month. BOSS Revolution is offered through our digital channels – the BOSS Revolution app and website, and through our extensive national network of BOSS Revolution retailers.
We cannot be certain of the stability of the contribution factors for the Other Funds. Significant increases in the contribution factor for the Other Funds in general and the Telecommunications Relay Service Fund in particular can impact our profitability.
We cannot be certain of the stability of the contribution factors for the Other Funds. Significant increases in the contribution factor for the Other Funds in general and the TRS Fund in particular can impact our profitability.
Nevertheless, we expect that the cash-flows generated by the BOSS Revolution Calling and IDT Global businesses will decline appreciably in the coming years as the overall paid communications market continues its decline.
Nevertheless, we expect that the revenues and cash-flows generated by the BOSS Revolution and IDT Global businesses will decline appreciably in the coming years as the overall paid communications market continues to contract.
NRS’ growth strategy includes: ■ Enhanced investment to increase the growth of our POS network through an expanded sales force and distributor network and subsidies on POS equipment; ■ Expansion of our POS terminal network into new retail verticals enabled, in some markets, by the development of new POS hardware formats and software functionalities; ■ For NRS PAY, conversion of current NRS terminal customers, particularly as contracts with their existing credit card processors expire, and conversion of existing NRS PAY customers to higher margin pricing plans; ■ For NRS advertising, integrations with new programmatic advertisers and the development of differentiated offerings that enable us to more effectively leverage the unique strengths of our platform; ■ Develop partnerships to provide NRS retailers with robust home delivery service options; and ■ Build out the NRS digital wholesale supply channel to provide NRS retailers with new cost-effective supply options.
NRS’ growth strategy includes: ■ Expansion of our POS terminal network into new retail verticals enabled, in some markets, by the development of new POS hardware formats and software functionalities; ■ Subsidize the POS hardware, particularly for retailers who also enroll in NRS PAY; ■ For NRS PAY, conversion of current NRS terminal customers, particularly as contracts with their existing credit card processors expire, and conversion of existing NRS PAY customers to higher margin pricing plans; ■ For NRS advertising, integrations with new programmatic advertisers and the development of differentiated offerings that enable us to more effectively leverage the unique strengths of our platform; ■ Develop partnerships to provide NRS retailers with robust home delivery service options; and ■ Build out the NRS digital wholesale supply channel to provide NRS retailers with new cost-effective supply options.
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.
The Traditional Communications segment, which contributed revenue of $899.6 million in fiscal 2024 and $1,002.7 million in fiscal 2023 (74.6% and 81.0% of our total revenues, respectively) includes IDT Digital Payments, BOSS Revolution, and IDT Global, as well as other small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode.
EMPLOYEES AND HUMAN CAPITAL RESOURCES Attracting and retaining qualified personnel familiar with our businesses who head our different businesses units is critical to our success. As of October 1, 2023, we had a total of approximately 1,890 employees, of which approximately 1,880 were full-time employees.
EMPLOYEES AND HUMAN CAPITAL RESOURCES Attracting and retaining qualified personnel familiar with our businesses who head our different businesses units is critical to our success. As of October 1, 2024, we had a total of 1,833 employees, of which 1,820 were full-time employees.
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.
In addition, our internal sales force sells BOSS Revolution and other platform products directly to retailers. At July 31, 2024, approximately 28,000 retailers per month utilized our digital retailer platform to provision customers, the substantial majority of whom pay the retailer in cash.
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.
We believe that IDT Global derives a competitive advantage over some participants on certain routes from several inter-related factors: ■ our BOSS Revolution business generates 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 marketplace; ■ 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. 15 Communications and Payment Network Infrastructure and Technology Development Our products and services utilize a combination of proprietary software and services as well as technologies and services provided by third parties.
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.
We continue to expand our BOSS Money customer base at rates well above the domestic remittance industry’s average by marketing to 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, but also through online, media and events advertising.
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®.
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®, BOSS Money®, net2phone® and zendit®.
BOSS Money transfers are initiated both digitally, through the popular BOSS Money and BOSS Revolution Calling apps and BOSS Money website, and through licensed BOSS Money retail agents who can accept cash payments; ■ net2phone: Provides businesses in North America, Latin America, the Caribbean and Spain with cloud communications offerings marketed under its UNITE brand and contact center offerings under its uContact brand, as well as other, smaller offerings to enable intelligent business communications; ■ IDT Digital Payments: Provides a wide range of prepaid digital products including mobile airtime top-up, mobile data bundles, digital gift cards and other offerings directly to consumers through BOSS’ retail and digital channels.
BOSS Money transfers are initiated both digitally, through the popular BOSS Money and BOSS Revolution apps, and through a nationwide network of licensed BOSS Money retail agents who can accept cash payments; ■ net2phone: Operates a global, cloud platform that provides businesses in North America, South America, and many other countries around the world with unified communications as a service (UCaaS) offerings marketed under its Unite brand and contact center as a service (CCaaS) offerings under its uContact brand, as well as other, smaller offerings to enable intelligent business communications; ■ IDT Digital Payments: Provides a wide range of prepaid digital products including mobile airtime top-up, mobile data bundles, digital gift cards, eSIMs and other offerings directly to consumers through BOSS’ retail and digital channels.
Our 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.
We believe that NRS’ competitive advantages include: ■ Our purpose-built package of hardware and software is tailored specifically to the needs of independent retailers; ■ 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 inch hi-definition customer-facing screen for displaying advertising and promotions provisioned via the NRS platform, and established relationships with supply side advertising platforms; ■ 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; 5 ■ 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 credit card terminals, no hidden fees and lower total cost to operate than most competitors; ■ In certain states, NRS PAY’s solution is licensed to accept governmental 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.
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.
IDT Global IDT Global’s revenues were $201.1 million in fiscal 2024 compared to $230.3 million in fiscal 2023, contributing 22.4% and 23.0% of Traditional Communications’ revenues in fiscal 2024 and fiscal 2023, respectively. IDT Global is one of the larger wholesale carriers of international long-distance minutes in the world.
We have worked to counter the impacts of these trends by continually innovating and deploying new features and enhancements to augment the contributions of these offerings while reducing their associated overhead and operating expenditures.
We have worked to counter the impacts of these trends by continually innovating and deploying new features and enhancements to augment the contributions of these offerings while reducing their associated overhead and operating expenditures. To date, these efforts have significantly offset the bottom-line impacts of these offerings’ revenue declines.
The Fintech segment, which contributed revenue of $86.6 million in fiscal 2023 and $64.6 million in fiscal 2022 (7.0% and 4.7% of our total revenues, respectively), comprises our BOSS Money remittance business and other, significantly smaller, financial services businesses, offerings and technologically innovative initiatives.
The Fintech segment, which contributed revenue of $120.7 million in fiscal 2024 and $86.6 million in fiscal 2023 (10.0% and 7.0% of our total revenues, respectively), comprises our BOSS Money remittance business and other, significantly smaller, financial services businesses.
Fintech’s loss from operations was $2.5 million in fiscal 2023 compared to $6.9 million in fiscal 2022. BOSS Money revenues were $76.9 million in fiscal 2023, an increase of 38.5% from revenues of $55.6 million in fiscal 2022. BOSS Money enables customers in the United States to send money conveniently and affordably to third parties around the world.
Fintech’s loss from operations was $0.1 million in fiscal 2024 compared to $2.5 million in fiscal 2023. BOSS Money revenues were $108.3 million in fiscal 2024, an increase of 40.8% from revenues of $76.9 million in fiscal 2023. BOSS Money enables customers in the United States and Canada to send money conveniently and affordably to third parties around the world.
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.
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. CTM Media Holdings was subsequently renamed IDW Media Holdings, Inc. 2011 – We spin-off our Genie Energy Ltd. subsidiary to our stockholders.
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.
The net2phone segment, which contributed revenue of $82.3 million in fiscal 2024 and $72.4 million in fiscal 2023 (6.8% and 5.8% of our total revenues, respectively), offers unified communications as a service, or UCaaS, and contact center as a service, or CCaaS, and other significantly smaller offerings that leverage the cloud to enable intelligent business communications.
Termination rates charged by Tier 1 and other providers of international long-distance traffic have been declining for many years. Nevertheless, termination rates charged to us by individual Tier 1 carriers and mobile operators can be volatile. Termination price volatility on heavily trafficked routes can significantly impact our minutes of use and wholesale revenues.
Termination rates charged by Tier 1 and other providers of international long-distance traffic have been declining for many years. Nevertheless, termination rates charged to us by individual Tier 1 carriers and mobile operators can be volatile.
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.
Item 1. Business. OVERVIEW IDT is a provider of point-of-sale terminal-based solutions, international money remittances and other financial technology, or fintech, offerings, cloud communications and traditional communications services. Our businesses leverage one or more of our core strategic assets to serve differentiated markets with innovative offerings.
Its payout network included over 237,000 cash payout locations worldwide in addition to bank deposits, mobile money wallets, credit to debit cards, and home delivery payout options. 6 BOSS Money is offered directly to consumers via our digital channels including the BOSS Money app, the BOSS Revolution Calling app, and the BOSS Money consumer website.
At July 31, 2024, BOSS Money provided its remittance service to 49 countries through approximately 1,300 payer entities and its payout network included over 235,000 cash payout locations worldwide in addition to bank deposits, mobile money wallets, credit to debit cards, and home delivery payout options. 6 BOSS Money is offered directly to consumers via our digital channels including the BOSS Money app and the BOSS Revolution app.
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.
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.
We continue to compete successfully in part by migrating customers from our other BOSS offerings to BOSS Money leveraging our highly regarded BOSS brand, insights into our customers, and cross-marketing capabilities.
We continue to compete successfully in part by migrating customers from our other BOSS offerings to BOSS Money leveraging our highly regarded BOSS brand, insights into our customers, and cross-marketing capabilities. We compete for customers outside the BOSS ecosystem primarily based on brand reputation, low fees, and competitive foreign exchange rates.
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.
We also continue to enhance the BOSS Money retailer portal and platform to make transaction execution more convenient for retailers, the majority of whom host multiple remittance providers.
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.
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. 8 These offerings include advanced feature sets ideal for many mid-market scale businesses with 50 to 1000 seats.
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.
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.

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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. 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.
Biggest changeRisk 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, Ukraine and Israel; ■ 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, and partners 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 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 BOSS Money Business ■ BOSS Money faces a complex and dynamic regulatory landscape; ■ BOSS Money depends on a licensed network of agents for its retail money remittance business; ■ adverse fluctuations in exchange rates can materially impact revenue and profitability; ■ money transfer services can be vulnerable to illegal activities and fraud schemes; ■ BOSS Money has less brand recognition in the money remittance space compared to larger players, which could make it harder to attract and retain customers; 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 customers’ growing needs; ■ the integration of Integra’s CCaaS business; Risks Related to Our Traditional Communications Segment ● each of our BOSS Revolution and IDT Global businesses is highly sensitive to declining demand and prices; 19 ● 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 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 ■ Howard S.
If some or all of NRS’ competitors focus additional resources on our target markets, NRS’ growth may slow, or we may lose customers due to the competition. NRS may also face pricing pressures from competitors, which may result in the need for NRS to alter the pricing that it offers and could reduce our profitability.
If some or all of NRS’ competitors focus additional resources on NRS’ target markets, NRS’ growth may slow, or we may lose customers due to the competition. NRS may also face pricing pressures from competitors, which may result in the need for NRS to alter the pricing that it offers and could reduce our profitability.
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.
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.
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.
Risks Related to Our Traditional Communications Segment Each of our BOSS Revolution 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.
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.
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.
Economic and trade sanctions programs that are administered by the U.S. Treasury Department’s Office of Foreign Assets Control, or OFAC, prohibit or restrict transactions to or from or dealings with specified countries, their governments, and in certain circumstances, with individuals and entities that are specially designated nationals of those countries, narcotics traffickers and terrorists or terrorist organizations.
Economic and trade sanctions programs that are administered by the U.S. Treasury Department’s Office of Foreign Assets Control prohibit or restrict transactions to or from or dealings with specified countries, their governments, and in certain circumstances, with individuals and entities that are specially designated nationals of those countries, narcotics traffickers and terrorists or terrorist organizations.
We cannot predict the ultimate outcome of these disputes. States are adding regulation for VoIP providers which could increase our costs and change certain aspects of our service. Certain states take the position that offerings by VoIP providers may include intrastate communications and should therefore be subject to state regulation including state taxes or surcharges.
We cannot predict the ultimate outcome of these disputes. States are adding regulations for VoIP providers which could increase our costs and change certain aspects of our service. Certain states take the position that offerings by VoIP providers may include intrastate communications and should therefore be subject to state regulation including state taxes or surcharges.
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.
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 to increase revenues. net2phone incurs significant costs to acquire new customers, and those costs are an important factor in determining our profitability.
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.
Specifically, issues that must be addressed in integrating the operations of Ucontact 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.
Failure to comply with these laws could result in action being taken by federal and state agencies or offices responsible for consumer protection, like the Federal Trade Commission, or FTC, which could have a materially adverse effect on our results of operations, financial condition, revenues, and profits. We may be adversely affected if we fail to protect our proprietary technology.
Failure to comply with these laws could result in action being taken by federal and state agencies or offices responsible for consumer protection, like the Federal Trade Commission, or FTC, which could have a material adverse effect on our results of operations, financial condition, revenues, and profits. We may be adversely affected if we fail to protect our proprietary technology.
Announcements, or expectations, as to the introduction of new products and technologies by net2phone’s competitors or net2phone could cause customers to defer purchases of net2phone’s existing products, which also could have a material adverse effect on our business, financial condition, or operating results. net2phone depends in part upon the capacity, reliability, and performance of several third-party providers and their network infrastructure, the failure of which could cause delays or interruptions of net2phone’s service and impact our revenue and profitability. net2phone depends on several third-party providers to provide uninterrupted and error-free service to maintain its operations. net2phone does not have control over these providers, and some of these providers are also its competitors. net2phone may be subject to interruptions or delays in their service and its reputation and business may be harmed.
Announcements, or expectations, as to the introduction of new products and technologies by net2phone’s competitors or net2phone could cause customers to defer purchases of net2phone’s existing products, which also could have a material adverse effect on our business, financial condition, or operating results. net2phone depends in part upon the capacity, reliability, and performance of several third-party providers and their network infrastructure, the failure of which could cause delays or interruptions of net2phone’s service and impact our revenue and profitability. net2phone depends on several third-party providers to provide service to maintain its operations. net2phone does not have control over these providers, and some of these providers are also its competitors. net2phone may be subject to interruptions or delays in their service and its reputation and business may be harmed.
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.
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 cyberattacks in the past. We have researched these situations and do not believe any material internal, or customer information has been compromised.
The Integra CCaaS platform is layered with a development surface which allows for custom deployments and sophisticated work force management, where the solution is tailored to the center’s work-flow requirements. This customization will provide for an additional layer of stickiness, which is expected to translate into longer term service periods with the end user.
The Ucontact CCaaS platform is layered with a development surface which allows for custom deployments and sophisticated work force management, where the solution is tailored to the center’s work-flow requirements. This customization will provide for an additional layer of stickiness, which is expected to translate into longer term service periods with the end user.
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.
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 for 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.
Our telecommunications services are required to comply with industry standards, FCC regulations, privacy laws as well as certain state and local jurisdiction specific regulations. Failure to comply with existing laws and any new laws that may become applicable to us may subject us to penalties, increase our operation costs, and may also require us to modify existing products and/or service.
Our telecommunications services are required to comply with industry standards, FCC regulations, privacy laws as well as certain state and local jurisdiction specific regulations. Failure to comply with existing laws and any new laws that may become applicable to us may subject us to penalties, increase our operating costs, and may also require us to modify existing products and/or service.
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.
Jonas, our Chairman and Chairman of the Board, holds 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.
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.
We utilize AWS’ and Google Cloud’s high availability configurations using multiple availability zones and, in some cases, 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 have attempted to control our operating expenses by utilizing lower-cost labor in foreign countries such as Belarus, Guatemala, and Israel and we may in the future expand our reliance on offshore labor to other countries. Our employees in Belarus and Israel primarily help develop, test, and maintain certain of our technology.
We have attempted to control our operating expenses by utilizing lower-cost labor in foreign countries such as Belarus, Guatemala, Dominican Republic and Israel and we may in the future expand our reliance on offshore labor to other countries. Our employees in Belarus and Israel primarily help develop, test, and maintain certain of our technology.
Cyberattacks may cause equipment failures, loss of information, including sensitive personal information of customers or employees or valuable technical and marketing information, as well as disruptions to our or our customers’ operations. Furthermore, ransomware could potentially deny the use of our systems until a ransom is paid.
Cyberattacks may cause equipment failures, loss of information (including sensitive personal information of customers or employees or valuable technical and marketing information), or disruptions to our or our customers’ operations. Furthermore, ransomware could potentially deny the use of our systems until a ransom is paid.
As a provider of communications and payment services to consumers, such as BOSS Revolution Calling or BOSS Money, we are subject to various federal and state laws and regulations relating to the manner in which we advertise our services, describe and present the terms of our services, and communicate with our customers and consumers in general.
As a provider of communications and payment services to consumers, such as BOSS Revolution and BOSS Money, we are subject to various federal and state laws and regulations relating to the manner in which we advertise our services, describe and present the terms of our services, and communicate with our customers and consumers in general.
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.
A number of states and territories have enacted legislation regulating money transmitters, with 49 states requiring a license as of July 31, 2024. At July 31, 2024, we had obtained licenses to operate as a money transmitter in 48 U.S. states and Washington, D.C.
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 Ucontact 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 Dodd-Frank Act, which became law in the United States on July 21, 2010, calls for significant structural reforms and substantive regulation across the financial services industry. In addition, the Dodd-Frank Act created the Consumer Financial Protection Bureau, or CFPB, whose purpose is to issue and enforce consumer protection initiatives governing financial products and services, including money transfer services.
The Dodd-Frank Act, which became law in the United States on July 21, 2010, enacted significant structural reforms and substantive regulation across the financial services industry. In addition, the Dodd-Frank Act created the Consumer Financial Protection Bureau, or CFPB, whose purpose is to issue and enforce consumer protection initiatives governing financial products and services, including money transfer services.
We have international operations with revenues outside the United States representing a substantial amount of our total revenues. As a result, our operations and performance depend significantly on global and regional economic conditions.
We have international operations with revenues outside the United States representing a significant amount of our total revenues. As a result, our operations and performance depend significantly on global and regional economic conditions.
We face the risk, as does any company, of a security breach, whether through cyber-attack, malware, computer viruses, sabotage, or other significant disruption of our IT infrastructure. As such, there is a risk of a security breach or disruption of the systems we operate, including possible unauthorized access to our and our customers’ proprietary or classified information.
We face the risk, as does any company, of a security breach, whether through cyberattack, malware, computer viruses, sabotage, or other significant disruption of our IT infrastructure. As such, there is a risk of a security breach or disruption of the systems we operate, including possible unauthorized access to our and our customers’ proprietary or classified information.
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.
The target market for the Ucontact CCaaS solution is two-fold: (i) businesses and other entities with embedded service and support centers; and (ii) contact centers / BPO providers.
Should the military conflict expand to Belarus, our operations there could likely be impacted, including due to availability of personnel, electrical outages, cyber-attacks, and actual battles in areas where we have personnel.
Should the military conflict expand to Belarus, our operations there could likely be impacted, including due to availability of personnel, electrical outages, cyberattacks, and actual battles in areas where we have personnel.
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 and the Dominican Republic 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.
The Dodd-Frank Act establishes a Financial Stability Oversight Counsel that is authorized to designate as “systemically important” non-bank financial companies and payment systems. Companies designated under either standard will become subject to new regulation and regulatory supervision.
The Dodd-Frank Act established a Financial Stability Oversight Council that is authorized to designate as “systemically important” non-bank financial companies and payment systems. Companies designated under either standard will become subject to new regulation and regulatory supervision.
If one or more of our products fail, or is perceived to fail, or if there are technical defects, our reputation could be harmed, our market share may decline, and we could be subject to various liability claims.
If technology that drives one or more of our products fails, or is perceived to fail, or if there are technical defects, our reputation could be harmed, our market share may decline, and we could be subject to various liability claims.
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.
While our most significant customers, from a revenue perspective, vary from quarter to quarter, our five largest IDT Global customers collectively accounted for 4.0% and 4.7% of our total revenues in fiscal 2024 and fiscal 2023, respectively.
NRS’ ability to develop new products and services may be inhibited by industry-wide standards, existing and future laws and regulations, resistance to change from its customers, which includes NRS’ sellers and their buyers, or third parties’ intellectual property rights.
NRS’ ability to develop new products and services may be inhibited by industry-wide standards, existing and future laws and regulations, resistance to change from its customers, or third parties’ intellectual property rights.
Risk Related to Our Financial Condition We hold cash, cash equivalents, debt securities and equity investments that are subject to various market risks. At July 31, 2023, we had cash, cash equivalents, debt securities, and current equity investments of $152.2 million.
Risk Related to Our Financial Condition We hold cash, cash equivalents, debt securities and equity investments that are subject to various market risks. At July 31, 2024, we had cash, cash equivalents, debt securities, and current equity investments of $193.0 million.
Technologies have been developed to make tracking the results of our online advertisements more difficult or to block the display of advertisements altogether and some providers of online services have integrated technologies that could potentially impair the core functionality of third-party digital advertising. As a result, such technologies and tools could adversely affect our operating results.
Technologies have been developed to make tracking the results of our online advertisements more difficult or to block the display of advertisements altogether and some providers of online services have integrated technologies that could potentially impair the core functionality of third-party digital advertising.
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.
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.
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.
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.
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.
Price is often a substantial motivating 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.
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.
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 used the trade name Integra, which we have rebranded as Ucontact. Ucontact provides cloud-based CCaaS in the Americas and Europe.
All data centers, including ours, are subject to various points of failure. Problems with cooling equipment, generators, uninterruptible power supply, routers, switches, or other equipment, whether or not within our control, could result in service interruptions for our customers as well as equipment damage. Any failure or downtime could affect a significant percentage of our customers.
Problems with cooling equipment, generators, uninterruptible power supply, routers, switches, or other equipment, whether or not within our control, could result in service interruptions for our customers as well as equipment damage. Any failure or downtime could affect a significant percentage of our customers.
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.
Our IDT Global customers with the five largest receivables balances collectively accounted for 9.4% and 1.6% of our total gross trade accounts receivable on July 31, 2024 and 2023, respectively.
In the case of some international calling locations, when average per minute termination cost decline to a nominal amount, indirect competitors, such as wireless carriers, may include calls to those locations at no extra cost, which increases our risk of losing customers.
In the case of some international calling locations, indirect competitors, such as wireless carriers, may include calls to those locations at no extra cost, which increases our risk of losing customers.
In the conduct of such audits, we may be required to disclose information of a sensitive nature and, in general, to modify the way we have conducted business with our distributors until the present, which may affect our business in an adverse manner.
We are subject to value added tax, or VAT, audits from time-to-time in various jurisdictions. In the conduct of such audits, we may be required to disclose information of a sensitive nature and, in general, to modify the way we have conducted business with our distributors until the present, which may affect our business in an adverse manner.
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.
Our financial performance is subject to risks associated with changes in the value of the U.S. dollar relative to other currencies. 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.
These network footprints do not guarantee continued reliability if a catastrophic event occurs. Despite implementation of network security measures, our servers may be vulnerable to computer viruses, break-ins, and similar disruptions from unauthorized tampering with our computer systems including, but not limited to, denial of service attacks.
Despite implementation of network security measures, our servers may be vulnerable to computer viruses, break-ins, and similar disruptions from unauthorized tampering with our computer systems including, but not limited to, denial of service attacks.
In addition, since telecommunications billing and associated telecom taxes, and the related calculations and billing of telecom taxes, are inherently complex and require highly sophisticated information systems to administer, our billing system may experience errors or we may improperly operate the system, which could result in the system incorrectly calculating the fees owed by our customers or related taxes and administrative fees.
Product performance problems could result in loss of market share, reputational harm, failure to achieve market acceptance and the diversion of development resources. 21 In addition, since telecommunications billing and associated telecom taxes, and the related calculations and billing of telecom taxes, are inherently complex and require highly sophisticated information systems to administer, our billing system may experience errors or we may improperly operate the system, which could result in the system incorrectly calculating the fees owed by our customers or related taxes and administrative fees.
In February 2022, in connection with escalating tensions involving Russia and Ukraine, Russian military personnel stationed in Belarus were part of an invasion force by Russian forces into Ukraine.
We have a significant number of R&D personnel in Belarus. Belarus shares borders with both Russia and Ukraine. In February 2022, in connection with escalating tensions involving Russia and Ukraine, Russian military personnel stationed in Belarus were part of an invasion force by Russian forces into Ukraine.
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.
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 cyberattacks and intrusions sponsored by state or other interests.
The quality of some broadband Internet connections may be too poor for customers to use net2phone’s services properly. In addition, if there is any interruption to a customer’s broadband Internet service or electrical power supply, that customer will be unable to make or receive calls, including emergency calls, using net2phone’s service.
In addition, if there is any interruption to a customer’s broadband Internet service or electrical power supply, that customer will be unable to make or receive calls, including emergency calls, using net2phone’s service.
Our success depends in part upon our ability to provide customer service that effectively supports the needs of our customers. Providing customer service effectively requires that our customer support personnel have industry-specific technical knowledge and expertise.
Accordingly, any of these events could materially and negatively impact our business, our revenues, our profits, and our relationships with customers. 24 Our success depends in part upon our ability to provide customer service that effectively supports the needs of our customers. Providing customer service effectively requires that our customer support personnel have industry-specific technical knowledge and expertise.
Most of our telecommunications’ traffic is terminated through third-party providers. In order to support our minutes of use demands and geographic footprint, we may need to obtain additional termination capacity or destinations. We may not be able to obtain sufficient termination capacity from high-quality carriers to particular destinations or may have to pay significant amounts to obtain such capacity.
We may not be able to obtain sufficient or cost-effective termination capacity to particular destinations, which could adversely affect our revenues and profits. Most of our telecommunications’ traffic is terminated through third-party providers. In order to support our minutes of use demands and geographic footprint, we may need to obtain additional termination capacity or destinations.
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.
Our capacity to realize these anticipated benefits is subject to certain risks, including, among others, our ability to successfully integrate the CCaaS business, and the risk that the CCaaS business will not perform as expected. 30 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.
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.
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. In that event, the market price of our common stock could decline, and you could lose part or all of your investment.
NetSapiens is net2phone’s current platform for its customers in Canada. Internet Bandwidth Providers. net2phone’s cloud-based communications service requires its customers to have an operative broadband Internet connection and an electrical power supply, which are provided by the customer’s broadband Internet service provider and electric utility company and not by net2phone.
Internet Bandwidth Providers. net2phone’s cloud-based communications service requires its customers to have an operative broadband Internet connection and an electrical power supply, which are provided by the customer’s broadband Internet service provider and electric utility company and not by net2phone. The quality of some broadband Internet connections may be too poor for customers to use net2phone’s services properly.
Until that takes place, the customer will have to verbally advise the emergency dispatcher of his or her actual location at the time of an E-911 call. This can lead to delays in the delivery of emergency services. Interruptions in service from these vendors could also cause failures in net2phone’s customers’ access to E-911 services and expose it to liability.
Until that takes place, the customer will have to verbally advise the emergency dispatcher of his or her actual location at the time of an E-911 call. This can lead to delays in the delivery of emergency services.
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.
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; ■ 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. 29 If net2phone’s existing customers’ subscriptions and related usage decrease or are terminated, net2phone will need to spend more money to acquire new customers and still may not be able to maintain its existing level of revenues. net2phone incurs significant costs and expenses, including sales and marketing expenses, to acquire new customers, and those costs and expenses are an important factor in determining our profitability.
As a result, these competitors may have greater credibility with net2phone’s existing and potential customers. net2phone’s competitors may also offer bundled service arrangements that present a more differentiated or better integrated product to customers.
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 net2phone has. As a result, these competitors may have greater credibility with net2phone’s existing and potential customers. net2phone’s competitors may also offer bundled service arrangements that present a more differentiated or better integrated product to customers.
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.
Jonas has voting power over 1,574,326 shares of our Class A common stock (which are convertible into shares of our Class B common stock on a 1-for-1 basis) and 2,645,360 shares of our Class B common stock, representing approximately 70.4% of the combined voting power of our outstanding capital stock. Mr.
We believe that our corporate culture fosters innovation, creativity, and teamwork. Our performance largely depends on the talents and efforts of highly skilled individuals. Our future success depends on our continuing ability to identify, hire, develop, motivate, and retain highly skilled personnel for all areas of our organization, in particular our technology and software engineering organization.
Our future success depends on our continuing ability to identify, hire, develop, motivate, and retain highly skilled personnel for all areas of our organization, in particular our technology and software engineering organization.
Future changes in tariffs by regulatory agencies or application of tariff requirements to currently un-tariffed products or services could affect the price and sales of our products for a certain set of customers.
Our upstream carriers, suppliers and vendors may increase their prices thus directly impacting our direct cost of revenues, which would affect our earnings. Future changes in tariffs by regulatory agencies or application of tariff requirements to currently un-tariffed products or services could affect the price and sales of our products for a certain set of customers.
While, to date, we have not been subject to cyberattacks that, individually or in the aggregate, have been material to our operations or financial condition, the preventive actions we take to reduce the risks associated with cyberattacks, including protection of our systems and networks, may be insufficient to repel or mitigate the effects of a cyberattack in the future.
While, to date, we have not been subject to cyberattacks that, individually or in the aggregate, have been material to our operations or financial condition, the preventive actions we take to reduce the risks associated with cyberattacks, including protection of our systems and networks, may be insufficient to repel or mitigate the effects of a cyberattack in the future. 20 The inability to operate or use our networks and systems or those of our suppliers, vendors, and other service providers as a result of cyberattacks, even for a limited period of time, may result in significant expenses to us and/or a loss of revenue and market share.
This could result in our not being able to support our minutes of use demands or in higher cost-per-minute to particular destinations, which could adversely affect our revenues and profits.
We may not be able to obtain sufficient termination capacity from high-quality carriers to particular destinations or may have to pay significant amounts to obtain such capacity. This could result in our not being able to support our minutes of use demands or in higher cost-per-minute to particular destinations, which could adversely affect our revenues and profits.
Local number portability providers. net2phone has agreements with companies that initiate its local number portability, which allows new customers to retain their existing telephone numbers when subscribing to its services. net2phone needs to work with these companies to properly port numbers.
Interruptions in service from these vendors could also cause failures in net2phone’s customers’ access to E-911 services and expose it to liability. 28 Local number portability providers. net2phone has agreements with companies that initiate its local number portability, which allows new customers to retain their existing telephone numbers when subscribing to its services. net2phone needs to work with these companies to properly port numbers.
Our products may contain undetected errors or defects that may result in failures or otherwise cause our products to fail to perform in accordance with customer expectations and contractual obligations. Moreover, our customers could incorrectly implement or inadvertently misuse our products, which could result in customer dissatisfaction and harm the perceived utility of our products and our brand.
The technology that drives and supports our products may contain undetected errors or defects that may result in failures or otherwise cause our products to fail to perform in accordance with customer expectations and contractual obligations.
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.
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. 23 Our research and development (“R&D”) may be adversely affected by ongoing developments in Belarus and Ukraine.
We utilize a network of several hundred sub-distributors that sell our BOSS products and services to retail outlets throughout most of the United States. NRS’ POS terminal sales and marketing efforts are targeted, in part, to our nationwide network of BOSS Revolution retailers.
We rely on our distributors and representatives to market and distribute our BOSS products and services and NRS’ POS terminals and portfolio of services. We utilize a network of several hundred sub-distributors that sell our BOSS products and services to retail outlets throughout most of the United States.
This concentration of revenues and receivables increases our exposure to non-payment by our larger customers, and we may experience significant write-offs if any of our large customers fail to pay their outstanding balances, which could adversely affect our revenues and profitability. 25 We rely on highly skilled personnel and, if we are unable to retain or motivate key personnel, hire qualified personnel, or maintain our corporate culture, we may not be able to grow effectively.
This concentration of revenues and receivables increases our exposure to non-payment by our larger customers, and we may experience significant write-offs if any of our large customers fail to pay their outstanding balances, which could adversely affect our cash flow and profitability.
Any price increase by either our BOSS Revolution Calling, or IDT Global business may result in our prices becoming less attractive to customers, which may result in a reduction of revenue.
Any price increase by either our BOSS Revolution or IDT Global business may result in our prices becoming less attractive to customers, which may result in a reduction of revenue. If these trends in pricing continue or accelerate, it could have a material adverse effect on the revenues generated by our BOSS Revolution and IDT Global businesses and/or our profitability.
Jonas along with holders of the Class A common stock would be able to control matters requiring approval by our stockholders, including the election of all of the directors, amendment of organizational documents, and the approval of significant corporate transactions, including any merger, consolidation or sale of all or substantially all of our assets.
Jonas will be able to control matters requiring approval by our stockholders, including the election of all of the directors and the approval of significant corporate matters, including any merger, consolidation or sale of all or substantially all of our assets. As a result, the ability of any of our other stockholders to influence our management is limited. Item 1B.
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.
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 have appealed the USAC’s final decision to the FCC. As of July 31, 2023, our accrued expenses included $26.8 million for FCC-related regulatory fees for the year covered by the audit, as well as prior and subsequent years.
As of July 31, 2024, our accrued expenses included $25.9 million for FCC-related regulatory fees for the year covered by the audit, as well as prior and subsequent years. If we do not properly calculate, or have not properly calculated, the amount payable by us to the FCC, we may be subject to interest and penalties.
Risks Related to Our net2phone Business net2phone’s VoIP or cloud-based communications service competes against established well financed alternative voice communication providers (such as Ring Central, 8x8 and Five9), who may provide comparable services at comparable or lower pricing. Pricing in the telecommunications industry is very fluid and competitive.
Disruptions in these systems due to political or economic issues, or regulatory changes, could severely and negatively impact the company’s ability to provide services. 27 Risks Related to Our net2phone Business net2phone’s VoIP or cloud-based communications service competes against established well financed alternative voice communication providers who may provide comparable services at comparable or lower pricing or deploy new services that net2phone is unable to offer.
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.
As a result, the ability of holders of our Class B common stock to influence our management is limited. 40 We are controlled by our principal stockholder, which limits the ability of other stockholders to affect the management of the Company. Howard S.
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 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 revenues and profits will suffer if our distributors and sales representatives fail to effectively market and distribute our products and services.
Our ability to recover from disasters or failures, if and when they occur, is paramount to offering continued service to our existing customers. We maintain redundant physical infrastructure between our data centers in Newark, New Jersey and Somerset, New Jersey for disaster recovery.
Our ability to recover from disasters or failures, if and when they occur, is paramount to offering continued service to our existing customers. We maintain telecommunications points of presence in Brazil, Canada, and Spain. These network footprints do not guarantee continued reliability if a catastrophic event occurs.
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. Our international operations subject us to additional risks which could have an adverse effect on our business, operating results, and financial condition.
Although we have policies, controls, and procedures designed to ensure compliance with these laws, our employees, contractors, or agents may violate our policies. Our global operations subject us to additional risks which could have an adverse effect on our business, operating results, and financial condition.
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.
Our 2017 FCC Form 499-A, which reported our calendar year 2016 revenue was audited by the Universal Service Administrative Company, or USAC. The USAC’s final decision imposed a $2.9 million charge on us for the Federal TRS Fund.
We rely on non-proprietary third-party software, some of which may be open source.
We rely on non-proprietary third-party software, some of which may be open source. 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.
Removed
The inability to operate or use our networks and systems or those of our suppliers, vendors, and other service providers as a result of cyberattacks, even for a limited period of time, may result in significant expenses to us and/or a loss of market share.
Added
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.
Removed
Product performance problems could result in loss of market share, reputational harm, failure to achieve market acceptance and the diversion of development resources.

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Item 2. Properties

Properties — owned and leased real estate

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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.
Biggest changeWe also lease approximately 3,600 square feet of office space in Jerusalem, Israel that is owned by Rafael Holdings. The Newark lease expires in April 2025 and the Israel lease expires in July 2025. 41 We lease space in New York, New York for corporate purposes as well as a number of other locations in metropolitan areas.
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.
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.
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.
Item 2. Properties. Our headquarters is in a building located at 520 Broad Street, Newark, New Jersey. We occupy approximately 57,000 square feet of office space in this building and have parking rights in a parking garage located across the street at 36 Atlantic Street, Newark, New Jersey, both of which were previously owned by Rafael Holdings.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 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.
Biggest changeAll shares of Class A common stock are beneficially owned by Howard S. Jonas, our Chairman and the Chairman of the Board. 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.
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.
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, 2024, 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 2024.
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.
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 since fiscal 2018 until fiscal 2024.
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.
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 7, 2024, there were 268 holders of record of our Class B common stock and one holder of record of our Class A common stock.
Total 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.
Total 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, 2024 1,479 $ 36.09 1,479 4,496,621 June 1 – 30, 2024 80,507 $ 36.13 80,507 4,416,114 July 1 – 31, 2024 12,328 $ 36.22 12,328 4,403,786 Total 94,314 $ 36.15 94,314 (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. 43 Item 6. [Reserved]
Removed
All shares of Class A common stock are beneficially owned by eight trusts for the benefit of children of Howard S. Jonas, our Chairman and the Chairman of the Board.
Added
On October 7, 2024, the last sales price reported on the New York Stock Exchange for our Class B common stock was $38.10 per share.
Removed
(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.
Added
In March 2024, our Board of Directors initiated a quarterly cash dividend of $0.05 per share on our Class A and Class B common stock. In fiscal 2024, we paid aggregate cash dividends of $2.5 million on our Class A and Class B common stock.
Removed
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]
Added
We paid a dividend of $0.05 per share on our Class A and Class B common stock on October 7, 2024 to stockholders of record as of the close of business on September 30, 2024.

Item 7. Management's Discussion & Analysis

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

112 edited+39 added−81 removed30 unchanged
Biggest change(in millions) 2023 change from 2022 2022 change from 2021 Year ended July 31 2023 2022 2021 $/# % $/# % Revenues: IDT Digital Payments $ 417.1 $ 473.2 $ 461.6 $ (56.1 ) (11.9 )% $ 11.6 2.5 % BOSS Revolution Calling 322.1 387.9 455.2 (65.8 ) (17.0 ) (67.3 ) (14.8 ) IDT Global 230.3 292.4 361.0 (62.1 ) (21.2 ) (68.6 ) (19.0 ) Other 33.2 36.5 42.3 (3.3 ) (8.8 ) (5.8 ) (13.7 ) Total revenues 1,002.7 1,190.0 1,320.1 (187.3 ) (15.7 ) (130.1 ) (9.9 ) Direct cost of revenues (818.2 ) (991.2 ) (1,118.7 ) (173.0 ) (17.4 ) (127.5 ) (11.4 ) Selling, general and administrative (107.0 ) (113.3 ) (109.3 ) (6.3 ) (5.5 ) 4.0 3.7 Depreciation and amortization (9.4 ) (9.5 ) (10.6 ) (0.1 ) (1.0 ) (1.1 ) (10.1 ) Severance (0.9 ) (0.1 ) (0.5 ) 0.8 nm (0.4 ) (87.5 ) Other operating (expense) gain, net (5.9 ) (0.1 ) 1.0 5.8 nm 1.1 110.6 Income from operations $ 61.3 $ 75.8 $ 82.0 $ (14.5 ) (19.2 )% $ (6.2 ) (7.6 )% Minutes of use: BOSS Revolution Calling 2,299 2,926 3,554 (627 ) (21.4 )% (628 ) (17.7 )% IDT Global 6,328 7,720 10,511 (1,392 ) (18.0 ) (2,791 ) (26.6 ) Revenues.
Biggest change(in millions) 2024 change from 2023 2023 change from 2022 Year ended July 31 2024 2023 2022 $/# % $/# % Revenues: IDT Digital Payments $ 407.4 $ 417.1 $ 473.2 $ (9.7 ) (2.3 )% $ (56.1 ) (11.9 )% BOSS Revolution 263.2 322.1 387.9 (58.9 ) (18.3 ) (65.8 ) (17.0 ) IDT Global 201.1 230.3 292.4 (29.2 ) (12.7 ) (62.1 ) (21.2 ) Other 27.9 33.2 36.5 (5.3 ) (16.4 ) (3.3 ) (8.8 ) Total revenues 899.6 1,002.7 1,190.0 (103.1 ) (10.3 ) (187.3 ) (15.7 ) Direct cost of revenues (733.4 ) (819.0 ) (992.2 ) (85.6 ) (10.5 ) (173.2 ) (17.5 ) Gross profit 166.2 183.7 197.8 (17.5 ) (9.5 ) (14.1 ) (7.1 ) Selling, general and administrative (84.9 ) (89.9 ) (93.6 ) (5.0 ) (5.6 ) (3.7 ) (3.9 ) Technology and development (23.1 ) (25.7 ) (28.2 ) (2.6 ) (10.2 ) (2.5 ) (8.7 ) Severance (1.6 ) (0.9 ) (0.1 ) 0.7 78.6 0.8 nm Other operating expense, net (0.2 ) (5.9 ) (0.1 ) (5.7 ) (96.9 ) 5.8 nm Income from operations $ 56.4 $ 61.3 $ 75.8 $ (4.9 ) (7.9 )% $ (14.5 ) (19.2 )% Gross margin percentage 18.5 % 18.3 % 16.6 % 0.2 % 1.7 % Minutes of use: BOSS Revolution 1,772 2,299 2,926 (527 ) (22.9 )% (627 ) (21.4 )% IDT Global 5,702 6,328 7,720 (626 ) (9.9 ) (1,392 ) (18.0 ) nm—not meaningful Revenues.
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.
We receive payments for BOSS Revolution, traditional calling cards, and IDT Digital Payments prior to providing the services. We recognize the revenue when services are provided to the customer.
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.
When determining the allowance for trade accounts receivable, we will consider the probability of recoverability of accounts receivable based on past experience, taking into account current collection trends and general economic factors, including bankruptcy rates. We will also consider future economic trends to estimate expected credit losses over the lifetime of the asset.
When determining the allowance for trade accounts receivable, we consider the probability of recoverability of accounts receivable based on past experience, taking into account current collection trends and general economic factors, including bankruptcy rates. We also consider future economic trends to estimate expected credit losses over the lifetime of the asset.
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.
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.
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.
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 reported our calendar year 2016 revenue, was audited by the USAC.
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.
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, 2024 will be sufficient to meet our currently anticipated working capital and capital expenditure requirements during fiscal 2025.
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.
There were no such events or changes in circumstances in fiscal 2024 or fiscal 2023. 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.
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.
Traditional Communications also includes other small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode. 51 Traditional Communications’ most significant revenue streams are from IDT Digital Payments, BOSS Revolution, and IDT Global. IDT Digital Payments and BOSS Revolution are sold directly to consumers and through distributors and retailers.
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.
Selling, general and administrative expense decreased in fiscal 2024 compared to fiscal 2023 primarily due to decreases in sales commissions, employee compensation, and debit and credit card processing charges, partially offset by an increase in stock-based compensation.
Effective with the adoption of ASU 2016-13, we will record an expense based on a forward-looking current expected credit loss model to maintain an allowance for credit losses.
Effective with the adoption of ASU 2016-13, we record an expense based on a forward-looking current expected credit loss model to maintain our allowance for credit losses.
Minutes of use is a nonfinancial metric that measures aggregate customer usage during a reporting period. Minutes of use is an important factor in BOSS Revolution Calling’s and IDT Global’s revenue recognition since satisfaction of our performance obligation occurs when the customer uses our service.
Minutes of use is a nonfinancial metric that measures aggregate customer usage during a reporting period. Minutes of use is an important factor in BOSS Revolution’s and IDT Global’s revenue recognition since satisfaction of our performance obligation occurs when the customer uses our service.
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.
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) were named in a class action on behalf of the stockholders of our former subsidiary Straight Path.
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.
We determined that on the dates of the acquisitions of the EMI’s shares, there were differences 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.
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.
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 2024 compared to fiscal 2023 primarily because of increases in audit and accounting fees and employee compensation.
The key assumptions and judgments underlying our quantitative assessment include the discount rates and terminal growth rates used in our discounted cash flow analysis, the revenue and EBITDA projections for our reporting units, estimates of future levels of gross and operating profits and capital expenditures, and the selection of comparable companies for the market approach.
The key assumptions and judgments underlying our quantitative assessment include the discount rates and terminal growth rates used in our discounted cash flow analysis, the revenue and EBITDA projections for our reporting units, and estimates of future levels of gross and operating profits and capital expenditures.
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.
At July 31, 2024, we had cash, cash equivalents, debt securities, and current equity investments of $193.0 million and working capital (current assets in excess of current liabilities) of $143.2 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.
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).
Other expense, net consists of the following: (in millions) Year ended July 31 2024 2023 2022 Foreign currency transaction (losses) gains $ (3.8 ) $ 3.3 $ (1.7 ) Equity in net loss of investee (3.5 ) (3.1 ) (3.0 ) Gains (losses) on investments 0.2 (2.6 ) (19.3 ) Other (0.5 ) (0.7 ) (1.4 ) TOTAL $ (7.6 ) $ (3.1 ) $ (25.4 ) We have an investment in shares of convertible preferred stock of a communications company (the equity method investee, or EMI).
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.
While they may vary from quarter to quarter, our five largest customers collectively accounted for 10.3%, 10.8%, and 12.5% of our consolidated revenues in fiscal 2024, fiscal 2023, and fiscal 2022, respectively. Our customers with the five largest receivables balance collectively accounted for 22.7% and 16.7% of our consolidated gross trade accounts receivable at July 31, 2024 and 2023, respectively.
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.
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.
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.
Consolidated Financial Condition (in millions) Year ended July 31 2024 2023 2022 Cash flows provided by (used in): Operating activities $ 78.2 $ 54.1 $ 29.4 Investing activities (0.8 ) (33.4 ) (33.8 ) Financing activities (17.2 ) (15.8 ) (15.6 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents (3.6 ) 4.4 (17.4 ) Increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents $ 56.6 $ 9.3 $ (37.4 ) 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.
The valuation allowance on our deferred income tax assets was $10.6 million and $11.6 million at July 31, 2023 and 2022, respectively.
The valuation allowance on our deferred income tax assets was $13.6 million and $10.6 million at July 31, 2024 and 2023, respectively.
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.
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 Credit Losses on Accounts Receivable Our allowance for credit losses was $6.4 million at July 31, 2024 and our allowance for doubtful accounts was $5.6 million at July 31, 2023.
NRS uses two key metrics, among others, to measure the size of its customer base: active POS terminals and payment processing accounts. Active POS terminals are the number of POS terminals that have completed at least one transaction in the calendar month. It excludes POS terminals that are being installed.
NRS uses two key metrics to measure the size of its customer base: active POS terminals and payment processing accounts. Active POS terminals are the number of POS terminals that have completed at least one transaction in the calendar month. It excludes POS terminals that have not been fully installed by the end of the month.
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.
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.
BOSS Revolution Calling continues to be impacted by persistent, market-wide trends, including the proliferation of unlimited calling plans offered by wireless carriers and mobile virtual network operators, and the increasing penetration of free and paid over-the-top voice, video conferencing, and messaging services.
Revenues and minutes of use from BOSS Revolution decreased in fiscal 2024 compared to fiscal 2023. BOSS Revolution continues to be impacted by persistent, market-wide trends, including the proliferation of unlimited calling plans offered by wireless carriers and mobile virtual network operators, and the increasing penetration of free and paid over-the-top voice, video conferencing, and messaging services.
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.
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.
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.
Traditional Communications Segment The Traditional Communications segment, which represented 74.6%, 81.0%, and 87.2% of our total revenues in fiscal 2024, fiscal 2023, and fiscal 2022, respectively, includes: (i) IDT Digital Payments, which enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts; (ii) BOSS Revolution, an international long-distance calling service marketed primarily to immigrant communities in the United States and Canada; and (iii) IDT Global, a wholesale provider of international voice and SMS termination and outsourced traffic management solutions to telecoms worldwide.
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.
Direct Cost of Revenues. Direct cost of revenues increased in fiscal 2024 compared to fiscal 2023 primarily due to the increase in revenues, with the largest increase in the U.S. market. 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.
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 2024 and fiscal 2023, we paid $1.5 million and $0.8 million, respectively, to repurchase 41,994 and 28,227 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 DSUs, the lapsing of restrictions on restricted stock shares, and shares issued for bonus payments.
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.
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.
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.
At July 31, 2024, “Cash and cash equivalents” in our consolidated balance sheet included an aggregate of $55.9 million held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC that was unavailable for other purposes. 54 Contractual Obligations and Commitments The following table includes our anticipated material cash requirements from contractual obligations and other commitments at July 31, 2024: Payments due by period (in millions) Total Less than 1 year 1—3 years 4—5 years After 5 years Purchase commitments $ 2.9 $ 2.6 $ 0.3 $ — $ — Connectivity obligations under service agreements 1.4 0.7 0.7 — — Operating leases including short-term leases 4.7 2.7 1.5 0.4 0.1 TOTAL (1) $ 9.0 $ 6.0 $ 2.5 $ 0.4 $ 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 $32.4 million in performance bonds, and up to $3.0 million for potential contingent consideration payments related to business acquisitions, due to the uncertainty of the amount and/or timing of any such payments.
In addition, in fiscal 2023, fiscal 2022, and fiscal 2021, Leaf received payments of $0.4 million, $20,000, and nil, respectively, from government grants for the development and commercialization of blockchain-backed financial technologies. 49 net2phone Segment The net2phone segment, which represented 5.8%, 4.3%, and 3.1% of our total revenues in fiscal 2023, fiscal 2022, and fiscal 2021, respectively, is comprised of net2phone’s cloud communications and contact center offerings.
In fiscal 2023, Leaf received $0.4 million from government grants for the development and commercialization of blockchain-backed financial technologies. 50 net2phone Segment The net2phone segment, which represented 6.8%, 5.8%, and 4.3% of our total revenues in fiscal 2024, fiscal 2023, and fiscal 2022, respectively, is comprised of net2phone’s integrated cloud communications and contact center services.
Investing Activities Our capital expenditures were $22.0 million in fiscal 2023, $21.9 million in fiscal 2022, and $16.8 million in fiscal 2021. We currently anticipate that total capital expenditures in fiscal 2024 will be $21 million to $23 million.
Investing Activities Our capital expenditures were $18.9 million in fiscal 2024 and $22.0 million in fiscal 2023. We currently anticipate that total capital expenditures in fiscal 2025 will be $18 million to $20 million.
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.
We incurred legal fees of $7.2 million and $5.8 million in fiscal 2024 and fiscal 2023, respectively, related to this action. Also, we recorded offsetting gains from insurance claims for this matter of $2.9 million and $3.8 million in fiscal 2024 and fiscal 2023, respectively. In fiscal 2024, we received the final payment from our insurance policy for these claims.
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting estimates are estimates made in accordance with U.S.
CRITICAL ACCOUNTING ESTIMATES Our financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses as well as the disclosure of contingent assets and liabilities.
The change in income tax expense in fiscal 2023 and fiscal 2022 compared to the prior fiscal year, excluding the benefit from the valuation allowance released in fiscal 2021, was primarily due to differences in the amount of taxable income earned in the various taxing jurisdictions. 54 Net Income Attributable to Noncontrolling Interests.
The change in income tax expense in fiscal 2024 compared to fiscal 2023, excluding the income tax benefit in fiscal 2024, was primarily due to differences in the amount of taxable income earned in the various taxing jurisdictions. Net Income Attributable to Noncontrolling Interests.
(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.
(in millions) 2024 change from 2023 2023 change from 2022 Year ended July 31 2024 2023 2022 $/# % $/# % Revenues: Subscription $ 78.4 $ 66.8 $ 53.6 $ 11.6 17.3 % $ 13.2 24.8 % Other 3.9 5.6 4.6 (1.7 ) (28.9 ) 1.0 20.3 Total revenues 82.3 72.4 58.2 9.9 13.7 14.2 24.4 Direct cost of revenues (17.2 ) (15.3 ) (12.8 ) 1.9 12.9 2.5 19.1 Gross profit 65.1 57.1 45.4 8.0 14.0 11.7 25.9 Selling, general and administrative (52.6 ) (49.7 ) (47.5 ) 2.9 5.8 2.2 4.6 Technology and development (10.8 ) (10.0 ) (9.3 ) 0.8 8.1 0.7 7.8 Severance (0.1 ) (0.1 ) — — 72.1 0.1 nm Other operating gain (expense), net 0.1 (0.1 ) 0.3 0.2 142.3 (0.4 ) (145.4 ) Income (loss) from operations $ 1.7 $ (2.8 ) $ (11.1 ) $ 4.5 161.0 % $ 8.3 75.3 % Gross margin percentage 79.1 % 78.9 % 78.0 % 0.2 % 0.9 % nm—not meaningful (in thousands) 2024 change from 2023 2023 change from 2022 July 31 2024 2023 2022 # % # % Seats served 396 352 291 44 12.6 % 61 21.1 % Revenues. net2phone’s revenues increased in fiscal 2024 compared to fiscal 2023 driven primarily by the growth in subscription revenue in the U.S. and Latin American markets, which reflected the increase in seats served at July 31, 2024 compared to July 31, 2023.
On May 8, 2023, we and the customer agreed to a release from the indemnification agreement in exchange for $3.9 million, of which $1.9 million was paid on May 10, 2023, and the remainder will be paid in five monthly invoice deductions of $0.4 million each.
On May 8, 2023, we and the customer agreed to a release from the indemnification agreement in exchange for $3.9 million, of which $1.9 million was paid on May 10, 2023, and the remainder was paid in five monthly invoice deductions of $0.4 million each. 55 On June 21, 2018, the United States Supreme Court rendered a decision in South Dakota v.
Year Ended July 31, 2023 compared to Year Ended July 31, 2022 and Year Ended July 31, 2022 compared to Year Ended July 31, 2021 As of July 31, 2023, we owned 90.0% of the outstanding shares of our subsidiary, net2phone 2.0, Inc., or net2phone 2.0, which owns and operates the net2phone segment, and 80.0% of the outstanding shares of NRS, and, on a fully diluted basis assuming all the vesting criteria related to various rights granted have been met and other assumptions, we would own 85.8% of net2phone 2.0 and 77.7% of NRS.
As of July 31, 2024, we owned 94.0% of the outstanding shares of our subsidiary, net2phone 2.0, Inc., or net2phone 2.0, which owns and operates the net2phone segment, and 81.5% of the outstanding shares of NRS, and, on a fully diluted basis assuming all the vesting criteria related to various rights granted have been met, we would own 90.0% of net2phone 2.0 and 79.3% of NRS.
Revenues increased in each of fiscal 2023 and fiscal 2022 compared to the prior fiscal year driven primarily by revenue growth from NRS’ merchant services and sales of advertising and data, as well as the expansion of NRS’ POS network. Direct Cost of Revenues.
Revenues increased in fiscal 2024 compared to fiscal 2023 driven primarily by revenue growth from NRS’ merchant services, as well as the expansion of NRS’ POS network. Direct Cost of Revenues. Direct cost of revenues increased in fiscal 2024 compared to fiscal 2023 primarily due to the increase in the direct costs of NRS’ POS terminal sales.
On October 3, 2023, the Court of Chancery of the State of Delaware dismissed all claims against us, and found that, contrary to the plaintiffs’ allegations, the class suffered no damages.
On October 3, 2023, the Court of Chancery of the State of Delaware dismissed all claims against us, and found that, contrary to the plaintiffs’ allegations, the class suffered no damages. The plaintiffs will have 30 days from entry of the final order to file an appeal.
However, we may elect to perform the quantitative goodwill impairment test even if no indications of a potential impairment exist.
We have the option to perform a qualitative assessment to determine whether it is necessary to perform the quantitative goodwill impairment test. However, we may elect to perform the quantitative goodwill impairment test even if no indications of a potential impairment exist.
On May 17, 2023, the first vesting date under the program, in accordance with the program and based on certain elections made by grantees, we issued 41,945 shares of our Class B common stock for vested DSUs. Based on those elections, vesting for 31,909 DSUs was delayed until February 21, 2024.
On February 21, 2024, the second vesting date under the program, in accordance with the program and based on certain elections made by grantees, we issued 53,706 shares of our Class B common stock for vested DSUs.
Comparative segment information has been reclassified and restated in all periods to conform to the current period presentation. 47 The following table sets forth certain items in our statements of income as a percentage of our total revenues: Year ended July 31 2023 2022 2021 REVENUES: National Retail Solutions 6.2 % 3.8 % 1.7 % Fintech 7.0 4.7 4.0 net2phone 5.8 4.3 3.1 Traditional Communications 81.0 87.2 91.2 TOTAL REVENUES 100.0 100.0 100.0 COSTS AND EXPENSES: Direct cost of revenues (exclusive of depreciation and amortization) 70.7 75.8 79.8 Selling, general and administrative 22.4 18.4 15.1 Depreciation and amortization 1.6 1.3 1.2 Severance — — — TOTAL COSTS AND EXPENSES 94.7 95.5 96.1 Other operating (expense) gain, net (0.4 ) (0.1 ) 0.1 INCOME FROM OPERATIONS 4.9 4.4 4.0 Interest income, net 0.3 — — Other (expense) income, net (0.3 ) (1.8 ) 0.5 INCOME BEFORE INCOME TAXES 4.9 % 2.6 % 4.5 % National Retail Solutions Segment NRS, which represented 6.2%, 3.8%, and 1.7% of our total revenues in fiscal 2023, fiscal 2022, and fiscal 2021, respectively, is an operator of a nationwide POS network providing independent retailers with store management software, electronic payment processing, and other ancillary merchant services.
Year Ended July 31, 2024 compared to Year Ended July 31, 2023 The following table sets forth certain items in our statements of income as a percentage of our total revenues: Year ended July 31 2024 2023 2022 REVENUES: National Retail Solutions 8.6 % 6.2 % 3.8 % Fintech 10.0 7.0 4.7 net2phone 6.8 5.8 4.3 Traditional Communications 74.6 81.0 87.2 TOTAL REVENUES 100.0 100.0 100.0 DIRECT COST OF REVENUES 67.6 71.2 76.2 GROSS PROFIT 32.4 28.8 23.8 OPERATING EXPENSES: Selling, general and administrative 22.4 19.6 15.9 Technology and development 4.2 3.9 3.4 Severance 0.1 — — Other operating expense, net 0.3 0.4 0.1 TOTAL OPERATING EXPENSES 27.0 23.9 19.4 INCOME FROM OPERATIONS 5.4 4.9 4.4 Interest income, net 0.4 0.3 — Other expense, net (0.7 ) (0.3 ) (1.8 ) INCOME BEFORE INCOME TAXES 5.1 % 4.9 % 2.6 % 48 National Retail Solutions Segment NRS, which represented 8.6%, 6.2%, and 3.8% of our total revenues in fiscal 2024, fiscal 2023, and fiscal 2022, respectively, is an operator of a nationwide POS network providing independent retailers with store management software, electronic payment processing, and other ancillary merchant services.
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.
Total stock-based compensation expense included in consolidated selling, general and administrative expense and technology and development expense was $7.4 million and $4.5 million in fiscal 2024 and fiscal 2023, respectively.
Our subsidiary, IDT Telecom, Inc., or IDT Telecom, entered into a credit agreement, dated as of May 17, 2021, with TD Bank, N.A. for a revolving credit facility for up to a maximum principal amount of $25.0 million. As of July 28, 2023, IDT Telecom and TD Bank, N.A. amended certain terms of the credit agreement.
In fiscal 2023, we received proceeds from notes payable of $0.3 million, and we repaid notes payable of $2.0 million. Our subsidiary, IDT Telecom, Inc., or IDT Telecom, entered into a credit agreement, dated as of May 17, 2021, with TD Bank, N.A. for a revolving credit facility for up to a maximum principal amount of $25.0 million.
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.
We considered several factors in these qualitative assessments including (i) the business enterprise value of the reporting unit from the last quantitative test 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.
Effective with the merger, among other things, the notes receivable from the EMI that we held with an aggregate principal and accrued interest of $4.0 million were converted into shares of the subsidiary’s Series A Convertible Preferred Stock, or EMI Preferred Stock.
Effective with the merger, among other things, the notes receivable from the EMI that we held with an aggregate principal and accrued interest of $4.0 million were converted into shares of the EMI’s convertible preferred stock. As of August 22, 2024, the EMI’s shareholders including us agreed to purchase additional shares of the EMI’s convertible preferred stock.
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.
Also, in fiscal 2023, we increased the estimated fair value of acquisition-related contingent consideration by $0.2 million. 52 Corporate (in millions) 2024 change from 2023 2023 change from 2022 Year ended July 31 2024 2023 2022 $ % $ % General and administrative $ (10.5 ) $ (9.4 ) $ (7.9 ) $ 1.1 12.2 % $ 1.5 18.1 % Other operating expense, net (4.4 ) (0.3 ) (1.0 ) 4.1 nm (0.7 ) (67.2 ) Loss from operations $ (14.9 ) $ (9.7 ) $ (8.9 ) $ (5.2 ) (53.9 )% $ (0.8 ) (8.2 )% nm—not meaningful 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.
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.
The change in the net income attributable to noncontrolling interests in fiscal 2024 compared to fiscal 2023 was primarily due to changes in amounts attributable to the noncontrolling interests in the VIE and net2phone 2.0, partially offset by the change in the amounts attributable to the noncontrolling interests in NRS.
In August 2023, we sold the certificate for cash of $1.6 million. 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 Straight Path’s stockholders.
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) were named in a class action on behalf of the stockholders of our former subsidiary Straight Path.
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.
In fiscal 2024, we repurchased 298,421 shares of Class B common stock for an aggregate purchase price of $9.1 million, and in fiscal 2023, we repurchased 511,546 shares of Class B common stock for an aggregate purchase price of $13.1 million. At July 31, 2024, 4.4 million shares remained available for repurchase under the stock repurchase program.
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%.
The allowance as a percentage of gross trade accounts receivable decreased to 13.1% at July 31, 2024 from 15.0% at July 31, 2023 because, at July 31, 2024 compared to July 31, 2023, gross trade accounts receivable increased 28.7% and the allowance increased 12.6%.
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. We recognized a gain of $1.6 million on the write-off of this contingent consideration payment obligation.
In fiscal 2024 and fiscal 2023, we determined that the requirements for the contingent consideration payments related to the Leaf Global Fintech Corporation, or Leaf, acquisition would likely not be met. We recognized gains of $1.8 million and $1.6 million in fiscal 2024 and fiscal 2023, respectively, on the write-off of these contingent consideration payment obligations.
In the first quarter of fiscal 2024 through October 11, 2023, we repurchased 124,530 shares of Class B common stock for an aggregate purchase price of $2.8 million.
In the first quarter of fiscal 2025 through October 7, 2024, we repurchased 37,714 shares of our Class B common stock for an aggregate purchase price of $1.3 million.
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.
In fiscal 2024 and fiscal 2023, Traditional Communications recorded expense of $0.2 million and $1.4 million, respectively, for internal use software that was taken out of service. In addition, in fiscal 2023, other operating expense, net included $3.9 million for the indemnification of one of our cable telephony customers related to patent infringement claims brought against the customer.
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 .
As a percentage of Traditional Communications’ revenue, Traditional Communications’ selling, general and administrative expense was 9.4%, 9.0%, and 7.9% in fiscal 2024, fiscal 2023, and fiscal 2022, respectively. Technology and Development .
(in millions) 2023 change from 2022 2022 change from 2021 Year ended July 31 2023 2022 2021 $ % $ % Revenues: BOSS Money $ 76.9 $ 55.6 $ 49.3 $ 21.3 38.5 % $ 6.3 12.7 % Other 9.7 9.0 8.3 0.7 7.2 0.7 8.8 Total revenues 86.6 64.6 57.6 22.0 34.1 7.0 12.1 Direct cost of revenues (36.5 ) (26.1 ) (21.8 ) 10.4 40.0 4.3 19.7 Selling, general and administrative (51.9 ) (43.1 ) (35.9 ) 8.8 20.3 7.2 20.2 Depreciation and amortization (2.6 ) (2.2 ) (1.5 ) 0.4 20.2 0.7 47.3 Severance — (0.1 ) — (0.1 ) (100.0 ) 0.1 nm Other operating gain (expense) 1.9 — (0.3 ) (1.9 ) nm (0.3 ) (105.4 ) Loss from operations $ (2.5 ) $ (6.9 ) $ (1.9 ) $ 4.4 63.4 % $ (5.0 ) (253.7 )% nm—not meaningful Revenues.
(in millions) 2024 change from 2023 2023 change from 2022 Year ended July 31 2024 2023 2022 $/# % $/# % Revenues: BOSS Money $ 108.3 $ 76.9 $ 55.6 $ 31.4 40.8 % $ 21.3 38.5 % Other 12.4 9.7 9.0 2.7 28.0 0.7 7.2 Total revenues 120.7 86.6 64.6 34.1 39.4 22.0 34.1 Direct cost of revenues (53.4 ) (36.6 ) (26.2 ) 16.8 45.9 10.4 39.8 Gross profit 67.3 50.0 38.4 17.3 34.6 11.6 30.2 Selling, general and administrative (59.6 ) (47.2 ) (39.5 ) 12.4 26.3 7.7 19.4 Technology and development (9.5 ) (7.2 ) (5.7 ) 2.3 30.6 1.5 27.5 Severance — — (0.1 ) — — (0.1 ) (100.0 ) Other operating gain, net 1.7 1.9 — (0.2 ) (13.2 ) (1.9 ) nm Loss from operations $ (0.1 ) $ (2.5 ) $ (6.9 ) $ 2.4 94.9 % $ 4.4 63.2 % Gross margin percentage 55.8 % 57.7 % 59.5 % (1.9 )% (1.8 )% nm—not meaningful Revenues.
Fintech Segment Fintech, which represented 7.0%, 4.7%, and 4.0% of our total revenues in fiscal 2023, fiscal 2022, and fiscal 2021, respectively, is comprised of BOSS Money, a provider of international money remittance and related value/payment transfer services, as well as other, significantly smaller, financial services businesses, including Leaf, a provider of digital wallet services in emerging markets, a variable interest entity, or VIE, that operates money transfer businesses, and IDTFS, our Gibraltar-based bank.
In fiscal 2024, NRS recorded expense of $0.2 million for capitalized internal use software costs for software that was taken out of service, as well as certain other assets no longer in use. 49 Fintech Segment Fintech, which represented 10.0%, 7.0%, and 4.7% of our total revenues in fiscal 2024, fiscal 2023, and fiscal 2022, respectively, is comprised of: (i) BOSS Money, a provider of international money remittance and related value/payment transfer services; and (ii) other, significantly smaller, financial services businesses, including a variable interest entity, or VIE, that operates money transfer businesses, and IDTFS, our Gibraltar-based bank.
Credit risks will be assessed based on historical write-offs, net of recoveries, as well as an analysis of the aged accounts receivable balances with allowances generally increasing as the receivable ages.
Credit risks are assessed based on historical write-offs, net of recoveries, as well as an analysis of the aged accounts receivable balances with allowances generally increasing as the receivable ages. Accounts receivable may be fully reserved for when specific collection issues are known to exist, such as pending bankruptcies.
The carrying amount of our goodwill by reporting unit was as follows: (in millions) July 31 2023 2022 Retail Communications $ 11.2 $ 11.1 net2phone 9.9 9.7 Fintech 3.2 3.2 IDT Digital Payments 2.2 2.4 TOTAL $ 26.5 $ 26.4 For our annual goodwill impairment tests as of May 1, 2023 and 2022, we performed qualitative assessments for all of our reporting units that indicated that it was more likely than not that the fair values of our reporting units exceeded their respective carrying values and, therefore, did not result in an impairment.
The carrying amount of our goodwill by reporting unit was as follows: (in millions) July 31 2024 2023 Retail Communications $ 11.2 $ 11.2 net2phone 9.8 9.9 Fintech 3.2 3.2 IDT Digital Payments 2.1 2.2 TOTAL $ 26.3 $ 26.5 44 For our annual goodwill impairment test as of May 1, 2024, we performed quantitative assessments of our Retail Communications and net2phone reporting units and qualitative assessments for our Fintech and IDT Digital Payments reporting units.
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.
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.
In fiscal 2023, we recorded an expense of $0.1 million for telephone equipment that was taken out of service.
We recognized a gain of $0.1 million on the write-off of this contingent consideration payment obligation. In fiscal 2023, we recorded an expense of $0.1 million for telephone equipment that was taken out of service.
We use a discount rate based on the weighted-average cost of capital of comparable companies by Standard Industrial Classification, or SIC, code that represents our estimate of the expected return a marketplace participant would have required. Calculating the fair value of a reporting unit requires significant estimates and assumptions by management.
The terminal value represents the expected normalized future cash flows of the reporting unit beyond the projection period. We use a discount rate based on the weighted-average cost of capital of comparable companies by Global Industry Classification Standard code that represents our estimate of the expected return a marketplace participant would have required.
Gross trade accounts receivable decreased to $37.7 million at July 31, 2023 from $44.9 million at July 31, 2022 primarily due to collections in fiscal 2023 that were greater than amounts billed during fiscal 2023.
Gross trade accounts receivable increased to $48.6 million at July 31, 2024 from $37.7 million at July 31, 2023 primarily due to amounts billed in fiscal 2024 that were greater than collections during fiscal 2024, partially offset by changes in foreign currency exchange rates.
Selling, general and administrative expense increased in each of fiscal 2023 and fiscal 2022 compared to the prior fiscal year primarily due to increases in sales commissions, as well as increases in employee compensation. As a percentage of NRS’ revenue, NRS’ selling, general and administrative expense was 66.7%, 62.5%, and 79.3% in fiscal 2023, fiscal 2022, and fiscal 2021, respectively.
Selling, General and Administrative. Selling, general and administrative expense increased in fiscal 2024 compared to fiscal 2023 primarily due to increases in sales commissions, employee compensation, and bad debt expense. As a percentage of NRS’ revenue, NRS’ selling, general and administrative expense was 60.7%, 61.0%, and 55.3% in fiscal 2024, fiscal 2023, and fiscal 2022, respectively. Technology and Development.
(in millions) 2023 change from 2022 2022 change from 2021 Year ended July 31 2023 2022 2021 $ % $ % Revenues: Recurring $ 71.4 $ 45.3 $ 19.7 $ 26.1 57.8 % $ 25.6 129.2 % Other 5.7 6.0 5.0 (0.3 ) (6.0 ) 1.0 20.8 Total revenues 77.1 51.3 24.7 25.8 50.3 26.6 107.3 Direct cost of revenues (8.9 ) (7.1 ) (4.8 ) 1.8 25.5 2.3 47.1 Selling, general and administrative (51.4 ) (32.1 ) (19.6 ) 19.3 60.3 12.5 63.3 Depreciation and amortization (2.4 ) (0.9 ) (0.6 ) 1.5 160.9 0.3 74.3 Income (loss) from operations $ 14.4 $ 11.2 $ (0.3 ) $ 3.2 28.5 % $ 11.5 nm nm—not meaningful (in thousands) 2023 change from 2022 2022 change from 2021 July 31 2023 2022 2021 # % # % Active POS terminals 25.7 19.4 14.0 6.3 32.6 % 5.4 37.8 % Payment processing accounts 15.8 10.3 5.9 5.5 52.9 % 4.4 76.1 % Revenues.
(in millions) 2024 change from 2023 2023 change from 2022 Year ended July 31 2024 2023 2022 $/# % $/# % Revenues: Recurring $ 96.9 $ 71.4 $ 45.3 $ 25.5 35.6 % $ 26.1 57.8 % Other 6.2 5.7 6.0 0.5 10.5 (0.3 ) (6.0 ) Total revenues 103.1 77.1 51.3 26.0 33.7 25.8 50.3 Direct cost of revenues (11.6 ) (10.7 ) (7.9 ) 0.9 8.3 2.8 36.0 Gross profit 91.5 66.4 43.4 25.1 37.9 23.0 52.9 Selling, general and administrative (62.6 ) (47.0 ) (28.3 ) 15.6 33.3 18.7 65.8 Technology and development (7.1 ) (5.0 ) (3.9 ) 2.1 42.5 1.1 28.8 Other operating expense (0.2 ) — — 0.2 nm — — Income from operations $ 21.6 $ 14.4 $ 11.2 $ 7.2 50.2 % $ 3.2 28.5 % Gross margin percentage 88.7 % 86.1 % 84.6 % 2.6 % 1.5 % nm—not meaningful (in thousands) 2024 change from 2023 2023 change from 2022 July 31 2024 2023 2022 # % # % Active POS terminals 32.1 25.7 19.4 6.4 25.1 % 6.3 32.6 % Payment processing accounts 21.3 15.8 10.3 5.5 35.3 % 5.5 52.9 % Revenues.
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.
(in millions) 2024 change from 2023 2023 change from 2022 Year ended July 31 2024 2023 2022 $ % $ % Income from operations $ 64.7 $ 60.7 $ 60.1 $ 4.0 6.6 % $ 0.6 1.1 % Interest income, net 4.8 3.2 0.2 1.6 51.5 3.0 nm Other expense, net (7.6 ) (3.1 ) (25.4 ) (4.5 ) (146.9 ) 22.3 87.8 Benefit from (provision for) income taxes 6.4 (16.4 ) (5.9 ) 22.8 138.6 (10.5 ) (179.7 ) Net income 68.3 44.4 29.0 23.9 53.9 15.4 53.0 Net income attributable to noncontrolling interests (3.8 ) (3.9 ) (2.0 ) 0.1 1.7 (1.9 ) (96.0 ) Net income attributable to IDT Corporation $ 64.5 $ 40.5 $ 27.0 $ 24.0 59.2 % $ 13.5 49.8 % nm—not meaningful Other Expense, net.
At July 31, 2023 and 2022, our accrued expenses included $26.8 million and $33.2 million, respectively, for FCC-related regulatory fees for the year covered by the audit, as well as prior and subsequent years.
We have made certain changes to our filing policies and procedures for years that remain potentially under audit. At July 31, 2024 and 2023, our accrued expenses included $25.9 million and $26.8 million, respectively, for FCC-related regulatory fees for the year covered by the audit, as well as prior and subsequent years.
We account for this investment using the equity method since we can exercise significant influence over the operating and financial policies of the EMI but we do not have a controlling interest.
As of July 31, 2024 and 2023, our ownership was 33.4% and 33.3%, respectively, of the EMI’s outstanding shares on an as converted basis. We account for this investment using the equity method since we can exercise significant influence over the operating and financial policies of the EMI but do not have a controlling interest.
On April 6, 2023, in accordance with an Agreement and Plan of Merger dated as of April 5, 2023, the EMI merged with and into its subsidiary, with the subsidiary being the surviving corporation. Each of the EMI’s shareholders agreed to purchase additional shares of the EMI’s convertible preferred stock through May 31, 2023.
In fiscal 2024 and fiscal 2023, we paid an aggregate of $2.0 million and $0.8 million, respectively, to purchase the additional shares. On April 6, 2023, in accordance with an Agreement and Plan of Merger dated as of April 5, 2023, the EMI merged with and into its subsidiary, with the subsidiary being the surviving corporation.
The goodwill impairment test compares the fair value of a reporting unit with its carrying amount. We would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized would not exceed the total amount of goodwill.
We would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized would not exceed the total amount of goodwill. Additionally, we consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.
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.
As a percentage of our consolidated revenues, Corporate general and administrative expense was 0.9%, 0.8%, and 0.6% in fiscal 2024, fiscal 2023, and fiscal 2022, respectively. Other Operating Expense, net.
In the first quarter of fiscal 2024, we borrowed and repaid $25.0 million under the facility. 57 In fiscal 2023, fiscal 2022, and fiscal 2021, we received cash from the exercise of stock options of $0.2 million, $0.1 million, and $0.7 million, respectively, for which we issued 12,500; 10,000; and 81,041 shares, respectively, of our Class B common stock.
In each of fiscal 2024 and fiscal 2023, we received cash from the exercise of stock options of $0.2 million for which we issued 12,500 shares of our Class B common stock in each of the periods.
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.
Fintech’s other revenues increased in fiscal 2024 compared to fiscal 2023 primarily because of an increase in IDTFS’ revenues. Direct Cost of Revenues. Direct cost of revenues increased in fiscal 2024 compared to fiscal 2023 primarily due to increases in BOSS Money’s and IDTFS’ direct cost of revenues, which reflected the increases in revenues. Selling, General and Administrative.
Revenues from IDT Digital Payments decreased in fiscal 2023 compared to fiscal 2022 primarily from the deterioration of a key corridor that was particularly impactful to revenues in the wholesale and retail channels.
Revenues from IDT Digital Payments decreased in fiscal 2024 compared to fiscal 2023 primarily from the deterioration of a key international corridor that was particularly impactful to revenues in the wholesale channel, however, this corridor has not been a significant factor since the second quarter of fiscal 2024.
This trend was accelerated by the impact of COVID-19 as business communications shifted from calling to video conferencing and other collaboration platforms.
Revenues and minutes of use from IDT Global decreased in fiscal 2024 compared to fiscal 2023 as communications globally continued to transition away from international voice calling. This trend was accelerated by the impact of COVID-19 as business communications shifted from calling to video conferencing and other collaboration platforms.
On May 8, 2023, we and the customer agreed to a release from the indemnification agreement in exchange for $3.9 million, of which $1.9 million was paid on May 10, 2023, and the remainder will be paid in five monthly invoice deductions of $0.4 million each.
On May 8, 2023, we and the customer agreed to a release from the indemnification agreement in exchange for $3.9 million.
Our restricted cash and cash equivalents included $87.3 million, $86.6 million, and $115.8 million at July 31, 2023, 2022, and 2021, respectively, held by the bank. Beginning in June 2019, as part of a commercial resolution, we indemnified one of our cable telephony customers related to patent infringement claims brought against the customer.
In August 2023, we sold the certificate for cash of $1.6 million. Beginning in June 2019, as part of a commercial resolution, we indemnified one of our cable telephony customers related to patent infringement claims brought against the customer.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−1 removed2 unchanged
Biggest changeOn 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.
Biggest changeOur 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.
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.
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. 57 Investment Risk We hold a portion of our assets in debt and equity securities, including hedge funds, for strategic and speculative purposes.
At 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.
At July 31, 2024 and 2023, the value of our debt and equity security holdings was an aggregate of $35.0 million and $58.5 million, respectively, which represented 6% and 11% of our total assets at July 31, 2024 and 2023, 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.
Item 7A. Quantitative and Qualitative Disclosures about Market Risks. Foreign Currency Risk Revenues from our international operations were 23%, 28%, and 29% of our consolidated revenues in fiscal 2024, fiscal 2023, and fiscal 2022, respectively. A significant portion of our revenues is in currencies other than the U.S. Dollar.
Removed
Dollar-denominated revenues with operating expenses that are paid in the same currencies.

Other IDT 10-K year-over-year comparisons