IDT (NYSE:IDT) highlighted the expanding contribution of its higher-margin growth businesses during a company presentation, while executives said the company intends to wait for larger business scale and more favorable capital-market conditions before reconsidering a potential net2phone spin-off.
Bill Ulrey, IDT’s vice president of investor relations and external affairs, said the company’s fiscal year ends July 31 and that the presentation covered the third quarter of fiscal 2026, ended April 30. IDT expects to report fourth-quarter and full-year results in the last week of September.
IDT operates six primary businesses, with management emphasizing three higher-margin growth operations: National Retail Solutions, BOSS Money and net2phone. These businesses collectively account for about one-third of revenue and two-thirds of gross profit, Ulrey said. The company’s traditional communications operations continue to provide cash flow that has supported the development of those growth businesses.
National Retail Solutions expands recurring revenue
National Retail Solutions, or NRS, provides point-of-sale technology to independent retailers including bodegas, convenience stores, liquor stores and tobacco shops. The business operated about 40,000 POS terminals across 34,000 retail locations at the end of the quarter.
NRS generated $36 million in recurring revenue in the most recent quarter, excluding hardware sales. Merchant services accounted for more than two-thirds of that total, while advertising and data sales contributed 16% and software subscription charges represented 12%.
Ulrey said NRS estimates its U.S. addressable market at roughly 200,000 convenience stores, bodegas, independent liquor stores and tobacco shops, putting its current market penetration near 20%.
Annual recurring revenue increased from $45 million in 2022 to $141 million over the trailing 12 months. Average monthly revenue per terminal rose to $307 in the latest quarter from $279 a year earlier. NRS generated more than $41 million of trailing-12-month adjusted EBITDA, representing a 28% margin, and recorded a “rule of 40” score of 50% in the latest quarter, Ulrey said.
BOSS Money benefits from digital remittance growth
BOSS Money, IDT’s international remittance offering within its Fintech segment, serves primarily first- and second-generation immigrants in the U.S. and Canada sending money to family and friends abroad. Nearly 90% of transfers now originate through the BOSS Money or BOSS Revolution Calling apps, according to Ulrey.
Digital-channel revenue increased 27% year over year in the third quarter, supported by a 20% rise in transaction volume and a 40% increase in send volume. Ulrey attributed part of the acceleration to a federal remittance tax on transactions paid in cash, typically at retail locations, which took effect Jan. 1.
BOSS Money was the primary contributor to the Fintech segment’s 30% increase in adjusted EBITDA to $6.6 million in the third quarter. Trailing-12-month adjusted EBITDA for the segment exceeded $25 million.
net2phone reaches profitability milestone
net2phone offers unified communications, contact-center services, AI-powered customer-interaction tools and coaching software. The company focuses on small- and mid-market businesses with fewer than 1,000 seats and distributes primarily through technology service distributors and channel partners.
Nearly half of net2phone’s seats are in Latin America, where Ulrey said the company sees relatively underserved markets. Subscription revenue grew at a 17% compound annual growth rate over the past four years and reached $93.5 million over the trailing 12 months. Quarterly subscription revenue increased 12% to $24 million.
At quarter-end, net2phone served 441,000 UCaaS and CCaaS seats. The business generated more than $15 million of trailing-12-month adjusted EBITDA, while its adjusted EBITDA margin reached a record 17% in the latest quarter.
Chief Financial Officer Marcelo Fischer addressed a question about a possible net2phone spin-off, which IDT postponed in 2022 amid lower valuations for technology companies. Fischer said net2phone has since surpassed $100 million in revenue and is generating roughly $16 million in EBITDA.
While IDT believes monetizing segments can unlock shareholder value, Fischer said management wants its businesses to become larger before pursuing such moves and is looking for attractive capital-market conditions. He also said the businesses benefit from IDT’s capital, management support and portfolio synergies.
At the consolidated level, IDT reported 5% year-over-year revenue growth in the most recent quarter. The NRS, Fintech and net2phone segments collectively increased revenue by 17%, according to the presentation, and contributed 34% of consolidated revenue versus 30% a year earlier. Consolidated adjusted EBITDA rose 13% to $37.5 million, while adjusted EBITDA margin increased 90 basis points to a record 11.9%.
About IDT (NYSE:IDT)
IDT Corporation, founded in 1990 and headquartered in Newark, New Jersey, is a diversified global provider of telecommunications and payment services. The company operates through its primary communications arm, IDT Telecom, and a digital solutions segment that encompasses cross-border money transfers and related fintech offerings. Since its inception, IDT has built an international network infrastructure to support voice and data transmission across more than 200 countries and territories.
Through IDT Telecom, the company offers a suite of voice communication products, including prepaid phone cards, VoIP services, SIP trunking and operator-assisted calling.
