NEWARK, N.J., Nov. 1, 2017 – IDT Corporation (NYSE: IDT) today announced that its wholly-owned subsidiary, Rafael Holdings, Inc. (Rafael), has filed a Form 10 Registration Statement with the Securities and Exchange Commission related to the planned spin-off of Rafael to IDT stockholders. 

Rafael will own certain commercial real estate assets and interests in clinical and early stage pharmaceutical companies.  The real estate holdings consist of IDT’s headquarters building and a public garage in Newark, New Jersey, an office/data center building in Piscataway, New Jersey and an office condominium in Israel that hosts offices for IDT and its affiliates.  The pharmaceutical holdings include interests in Rafael Pharmaceuticals, Inc., which is a clinical stage, oncology-focused pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells, and in Lipomedix Pharmaceuticals Ltd., an early stage pharmaceutical development company based in Israel.   

 ”We are very excited to begin the process of spinning Rafael off to our stockholders,” said Howard Jonas, IDT’s Chairman. “We believe that there is significant value in the Rafael assets and separating them from IDT’s core telecom and payments operations will help unlock that value and permit both companies to better operate their businesses.”

The Rafael spin-off is intended to be tax-free to IDT’s shareholders.  Prior to consummation of the spin-off, IDT expects to receive a legal opinion as to the spin-off’s tax-free status.

In connection with the spin-off, each IDT stockholder will receive one share of Rafael Class A common stock for every two shares of IDT Class A common stock and one share of Rafael Class B common stock for every two shares of IDT Class B common stock.  Upon completion of the spin-off, IDT stockholders as of the record date will hold 100 percent of Rafael.

As of October 31, 2017, there were approximately 1.6 million shares of IDT Class A common stock, and 23.3 million shares of IDT Class B common stock issued and outstanding.

No action is required by IDT stockholders to receive the shares of Rafael common stock.

The Form 10 and related materials, including an information statement, are available through the Securities and Exchange Commission’s website at: https://www.sec.gov/Archives/edgar/data/1713863/000121390017011145/0001213900-17-011145-index.htm

Rafael will apply to have the Rafael Class B common stock listed on NYSE American under the ticker symbol “RFL”.  Shares of IDT Class B Common Stock will continue to trade on the New York Stock Exchange under the symbol “IDT”.

Investors are encouraged to consult with their financial advisors regarding the specific implications of buying or selling IDT and Rafael common stock.

About IDT Corporation:
IDT Corporation (NYSE: IDT), through its IDT Telecom division, provides telecommunications and payment services to individuals and businesses primarily through its flagship BOSS Revolution^® and Net2Phone^® brands. IDT Telecom’s wholesale business is a leading global carrier of international long distance calls. For more information on IDT, visit www.idt.net.

About Rafael Holdings, Inc.:
Rafael will own certain commercial real estate assets and interests in clinical and early stage pharmaceutical companies.  Rafael’s pharmaceutical holdings include IDT’s interests in Rafael Pharmaceuticals, Inc., which is a clinical stage, oncology-focused pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells, and in Lipomedix Pharmaceuticals Ltd., an early stage pharmaceutical development company based in Israel.  Its commercial real estate holdings consist of IDT Corporation’s headquarters facilities in Newark, New Jersey, an office/data center building in Piscataway, New Jersey and an office condominium in Israel that hosts offices for IDT and its affiliates. 

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

 

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SOURCE IDT Corporation

NEWARK, N.J., Oct. 31, 2017 – IDT Corporation (NYSE: IDT), a global provider of communication and payment services, today launched BOSS Revolution Mobile^SM, a new U.S. mobile phone service that delivers big cost savings by allowing customers to pay for only what they use. 

BOSS Revolution Mobile customers pay just $5/month for their line and then pay only for what they use. Pay-as-you-go rates are affordable and simple:

• Domestic Airtime – just 1.5 cents per minute
• Domestic Texts – just 0.5 cents, and
• Data – just 1.5 cents per megabyte.

Also, BOSS Revolution Mobile customers’ data spend is capped at only $30 per month.  After a customer spends $30 on data, data is free at speeds of 64 kbps or higher for the remainder of their month, providing big cost savings and eliminating surprise overage charges. 

BOSS Revolution Mobile customers can save even more using the BOSS Revolution Calling app:

• Wi-Fi calls from the app are FREE to any phone in the U.S., Mexico and many other countries
• Wi-Fi app-to-app calling is FREE – anywhere in the world
• Wi-Fi app-to-app messaging is also FREE – anywhere in the world

“BOSS Revolution Mobile offers a different approach to wireless that can lead to substantial savings and no contracts,” said Bill Pereira, CEO of IDT Telecom.  “Using the BOSS Revolution Calling app and Wi-Fi, our customers will enjoy unlimited domestic calling, unlimited calling to Mexico and other popular international destinations, and unlimited messaging — all included with their $5 per month line fee.”

Visit the savings calculator at www.BossRevolutionMobile.com to see how much you can save.

“When using Wi-Fi is not convenient, calls, text and data over the BOSS Revolution Mobile network are extremely affordable,” Pereira added.  “And you can use all the data you want without fear of a ‘gotcha’ phone bill because the monthly data charge is capped at $30.”

Customers can open a BOSS Revolution Mobile account and purchase a system-ready phone (including models from Apple, Samsung and Alcatel) or bring their own phone and purchase a SIM card with cash or credit directly from many of the 35,000 Boss Revolution retailers nationwide, or online at www.BossRevolutionMobile.com.    

“Sprint is proud to be the wireless communication network supporting Boss Revolution Mobile,” said Scott Kalinoski, Vice President of Sprint Wholesale Solutions. “Our nationwide 4G LTE network, together with IDT’s expansive distribution model and their innovative approach to wireless with the Boss Revolution brand, is certain to be a success in the marketplace.”

Visit www.BossRevolutionMobile.com for complete terms and conditions, current rates, network coverage and additional information.   

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

About IDT Corporation:

IDT Corporation (NYSE: IDT), through its IDT Telecom division, provides telecommunications and payment services to individuals and businesses primarily through its flagship BOSS Revolution^® and Net2Phone^® brands.  IDT Telecom’s wholesale business is a leading global carrier of international long distance calls. For more information on IDT, visit www.idt.net.

 

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SOURCE IDT Corporation

NEWARK, N.J., Oct. 3, 2017 – IDT Corporation (NYSE: IDT) reported a $(0.41) loss per share and non-GAAP earnings per share (EPS)* of $0.07 on revenue of $395.0 million for the fourth quarter of FY 2017, the three months ended July 31, 2017.  

For the full FY 2017, IDT reported EPS of $0.35 and non-GAAP EPS of $0.51 on revenue of $1.5 billion.

HIGHLIGHTS  
(4Q17 results are compared to 4Q16.  FY 2017 results refer to full fiscal year 2017 results and are compared to FY 2016)

• 4Q17 revenue of $395.0 million compared to $368.1 million.  FY 2017 revenue of $1,501.7 million compared to $1,496.3 million;
• 4Q17 income from operations of $3.7 million compared to $6.2 million.  FY 2017 income from operations of $5.5 million compared to $26.2 million;
• 4Q17 Adjusted EBITDA* of $8.6 million compared to $10.0 million.  FY 2017 Adjusted EBITDA of $37.7 million compared to $45.0 million;
• 4Q17 loss per share of $(0.41) compared to diluted EPS of $0.48.  FY 2017 diluted EPS of $0.35 compared to $1.03;
• 4Q17 non-GAAP EPS* of $0.07 compared to $0.35.   FY 2017 non-GAAP EPS of $0.51 compared to $1.00;   
• On June 22, 2017, IDT announced an agreement to sell its Gibraltar-based bank.  The deal is awaiting regulatory approval and is expected to close later this calendar year;
• IDT has declared a dividend of $0.19 per share for 4Q17 to be paid on or about October 20, 2017. 

REMARKS BY SHMUEL JONAS, CEO OF IDT CORPORATION
“This quarter showcased the resilience of our core communications and payments businesses while we continued to invest heavily in our growth initiatives including net2phone’s unified communications as a service business, National Retail Solutions, BOSS Revolution international money transfer, and the BOSS Revolution mobile service that we expect to launch later this quarter.

“IDT’s Board of Directors has declared a 4th quarter dividend of $0.19. The dividend will be paid on or about October 20th.

“We continue to work toward the spin-off our non-core assets to IDT stockholders, including our real estate assets, our interests in Rafael Pharmaceuticals, Inc. and other investments, and $50 to $60 million in cash.”

4Q17 AND FY 2017 CONSOLIDATED RESULTS  
The IDT Corporation FY 2017 audit by its independent auditors is ongoing and has not yet been completed.

 

Consolidated results in 4Q16 and FY 2016 include the results of Zedge, which was spun off to IDT stockholders on June 1, 2016.  In 4Q16, Zedge contributed revenue of $812 thousand, a loss from operations of $32 thousand and Adjusted EBITDA of $15 thousand.  In FY 2016, Zedge contributed revenue of $9.5 million, income from operations of $2.3 million and Adjusted EBITDA of $2.6 million. 

Consolidated results for all periods presented include corporate overhead.  In 4Q17, corporate G&A expense decreased 17.4% to $2.2 million from $2.7 million in the year ago quarter.  For FY 2017, corporate G&A expense decreased 20.5% to $8.0 million from $10.1 million in FY 2016.

Income from operations in 4Q17 totaled $3.7 million including a gain of $0.8 million related to certain regulatory and legal matters.   Income from operations in 4Q16 of $6.2 million included a gain of $7.5 million on the sale of IDT’s Gibraltar-based bank’s member interest in Visa Europe and $6.3 million in severance expense.  Income from operations in FY 2017 was $5.5 million including a charge of $10.1 million related to a legal settlement.  Income from operations in FY 2016 was $26.2 million, including gains totaling $8.2 million and severance expense of $6.5 million.

IDT’s loss per share in 4Q17 was $(0.41), which included income tax expense of $11.1 million from a decrease in the book value of deferred tax assets, compared to diluted EPS of $0.48 in 4Q16 including a $2.7 million gain on foreign currency transactions and a benefit from income taxes of $2.1 million.  IDT’s diluted EPS in FY 2017 was $0.35 compared to $1.03.

At July 31, 2017, IDT reported $148.6 million in unrestricted cash, cash equivalents and marketable securities. Current assets totaled $371.1 million and current liabilities totaled $362.8 million.  Reflecting IDT’s agreement to sell its Gibraltar-based bank, all of the bank’s assets and liabilities at July 31, 2017 and 2016 are classified as “Held for sale” in the consolidated balance sheets.

Net cash provided by operating activities during 4Q17 was $18.5 million compared to $13.2 million in 4Q16. In the corresponding periods, capital expenditures were $5.9 million and $4.4 million, respectively.  FY 2017 net cash provided by operating activities totaled $19.0 million compared to $49.1 million in FY 2016. In the corresponding periods, capital expenditures were $22.9 million and $18.4 million, respectively.

4Q17 AND FY 2017 RESULTS BY SEGMENT
(Results are for 4Q17 unless otherwise noted).

 

 

Telecom Platform Services (TPS)
The TPS segment contributed 97.4% of IDT’s revenue in 4Q17 and 97.5% of IDT’s revenue in FY 2017.  TPS markets and distributes multiple communications and payment services across three verticals each comprised of multiple offerings: Retail Communications, Wholesale Carrier Services and Payment Services. 

TPS’ 4Q17 revenue increased 7.4% to $384.8 million – the highest level in two years – while TPS’ revenue less direct costs declined 3.7% to $51.3 million.  The Wholesale Carrier Services and Payment Services verticals achieved robust revenue growth – more than offsetting a decline in Retail Communications revenues.  TPS’ FY 2017 revenue increased by 0.9% to $1,464.1 million, while revenue less direct costs decreased 8.7% to $203.1 million.

 

Retail Communications:  IDT’s flagship BOSS Revolution® calling service – which accounted for over 90% of Retail Communications’ revenue in 4Q17 – continued to be impacted by increased adoption of over-the-top voice and messaging, unlimited calling plans, as well as decreased immigration into the US.  These secular trends and events resulted in a 4.8% reduction in BOSS Revolution calling service revenues compared to the year ago quarter and a 5.4% reduction compared to FY 2016.  Revenues from the sale of traditional ‘hard’ prepaid calling cards in the US and overseas as well as other legacy offerings also continued to decrease in line with expectations.

Wholesale Carrier Services:  Wholesale Carrier Services grew revenue in the fourth quarter compared to 4Q16 and full fiscal year compared to FY 2016 by 20.4% and 7.3% respectively, and increased overall minutes of use by 4.4% compared to the year ago quarter and by 2.9% compared to the prior fiscal year.  Wholesale Carrier Services’ operations are managed to maximize gross profit.  Wholesale Carrier Service’s revenues have historically been more volatile than Retail Communications revenues, and changes in revenue do not necessarily generate corresponding changes in gross profit.

Payment Services:  Payment Services revenue increased by $10.5 million in the fourth quarter and by $25.9 million in fiscal 2017. The recent introduction of new mobile partners has contributed to the renewed growth of mobile top-up revenues, which achieved a record level in 4Q17. The continued growth of the BOSS Revolution international money transfer service and National Retail Solutions’ merchant services offerings also contributed to the robust growth of Payment Services’ revenue. 

TPS’ direct cost of revenue in 4Q17, expressed as a percentage of TPS’ revenue, increased to 86.7% from 85.1% in 4Q16, and to 86.1% in FY2017 from 84.7% in FY 2016.  This increase primarily reflects a mix shift within TPS towards Wholesale Carrier Services revenue, which generates relatively lower gross margins than Retail Communications’ offerings.

TPS’ SG&A expense in 4Q17 – $41.9 million – was unchanged compared to the year ago quarter as increases in legal and marketing costs were offset by lower personnel and bad debt expense.  TPS’ full fiscal year SG&A expense decreased 7.1% to $162.4 million on reduced personnel expense. SG&A expense expressed as a percentage of revenue decreased 80 basis points to 10.9% in 4Q17 compared to the year ago quarter.  For the full fiscal year 2017, SG&A expense as a percentage of revenue decreased 90 basis points to 11.1% compared to the prior year.

TPS’ D&A expense increased to $4.0 million in 4Q17 from $3.9 million in the year ago quarter, and increased to $16.1 million in FY 2017 from $15.8 million in FY 2016.

TPS’ income from operations decreased to $5.4 million in 4Q17 from $9.1 million in 4Q16.  Income from operations in 4Q16 included a gain of $7.5 million on the sale of IDT’s Gibraltar-based bank’s member interest in Visa Europe, and severance expense of $6.0 million.  TPS’ income from operations in FY 2017 was $24.4 million compared to income from operations of $32.8 million in FY 2016 (that included other gains of $7.1 million – primarily from the sale of the member interest in Visa Europe – and severance expense of $6.2 million).   

TPS’ Adjusted EBITDA decreased to $9.4 million in 4Q17 from $11.4 million in 4Q16 reflecting the increase in the direct cost of revenue as a percentage of revenue.  The same factor – partially offset by the reduction in SG&A expense – reduced FY 2017’s Adjusted EBITDA to $40.6 million from $47.7 million in FY 2016.

Unified Communications as a Service (UCaaS)
The UCaaS segment is comprised of offerings from IDT’s net2phone^® division, including cable telephony, hosted PBX, and SIP trunking.

UCaaS’ 4Q17 revenue increased to $7.8 million from $7.0 million in 4Q16.  UCaaS’ FY 2017 revenue increased to $29.4 million from $26.4 million in FY 2016.  The quarterly and full year revenue growth was driven by sales of net2phone’s cloud-based communications offering and, to a lesser extent, by SIP trunking and cable telephony. 

UCaaS’ loss
from operations in 4Q17 increased to $771 thousand from $190 thousand in 4Q16.  UCaaS’ loss from operation in FY 2017 increased to $1.9 million from $1.6 million in FY 2016.  The increases in the quarterly and full year losses primarily reflect increased employee compensation and commission expense as IDT increased investment in net2phone sales and technical personnel and increased depreciation and amortization expense, partially offset by a significant decrease in direct costs. 

Consumer Phone Services (CPS)
The Consumer Phone Services segment sells postpaid local and long-distance services in the U.S., marketed under the brand name IDT America.  CPS has been in harvest mode for more than a decade – maximizing revenue from current customers while maintaining SG&A and other expenses at the minimum levels essential to operate the business.  CPS’ financial results are provided in the segment results chart above and conformed to expectations.

All Other
All Other includes IDT’s real estate holdings, comprised of its public garage in Newark and commercial properties in Newark, Piscataway and Jerusalem, as well as other small businesses and investments, including an investment in Rafael Pharmaceuticals, Inc., (formerly Cornerstone Pharmaceuticals, Inc.).

Rafael Pharmaceuticals is a clinical stage, oncology-focused pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells.

All Other previously included Zedge, a platform and mobile app centered on self-expression.  Zedge was fully spun off from IDT to IDT’s shareholders on June 1, 2016.  Because the disposition of IDT’s interest in Zedge did not meet the criteria to be reported as a discontinued operation, Zedge’s results of operations and cash flows continue to be included in prior comparative periods.

All Other’s financial results are provided in the segment results chart above and conformed to expectations.

IDT intends to spin-off the real estate and pharmaceutical holdings included in All Other to its shareholders under the name Rafael Holdings, Inc.

DIVIDEND
On September 28^th, 2017, IDT’s Board of Directors declared a quarterly dividend of $0.19 per share of Class A and Class B common stock for 4Q17 to be paid on or about October 20, 2017.  The dividend will be paid to stockholders of record as of the close of business on October 16^th.  The ex-dividend date will be October 12^th.  This distribution will be treated as a return of capital for tax purposes.

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

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

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

A recording of the conference call can be accessed beginning one hour after the call concludes through October 10, 2017 by dialing 1-844-512-2921 (toll free from the US) or 1-412-317-6671 (international) and providing this pin code: 10111313.  The recording will also be available via streaming audio at the IDT investor relations website (www.idt.net/ir) following the call.

ABOUT IDT:
IDT Corporation (NYSE: IDT), through its IDT Telecom division, provides telecommunications and payment services to individuals and businesses primarily through its flagship BOSS Revolution^® and net2phone^® brands.  IDT Telecom’s wholesale business is a leading global carrier of international long-distance calls.  For more information on IDT, visit www.idt.net.

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

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Financial Measures for the Fourth Quarter Fiscal 2017 and 2016

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States of America (GAAP), IDT also disclosed, for 4Q17, 3Q17 and 4Q16, Adjusted EBITDA, non-GAAP net income and non-GAAP diluted earnings per share, or EPS, which are non-GAAP measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.

IDT’s measure of Adjusted EBITDA consists of revenues less direct cost of revenues and selling, general and administrative expense. Another way of calculating Adjusted EBITDA is to start with income from operations, add depreciation and amortization, severance expense and other operating expenses, and subtract other operating gain, the gain on the sale of member interest in Visa Europe Ltd. and the gain on sale of interest in Fabrix Systems Ltd.

IDT’s measure of non-GAAP net income s
tarts with net income in accordance with GAAP and adds severance expense, stock-based compensation, other operating expenses, and the tax expense from the increase in the valuation allowance on deferred tax assets, and subtracts other operating gain, the gain on the sale of member interest in Visa Europe Ltd., the gain on sale of interest in Fabrix Systems Ltd. and the tax benefit from the release of the valuation allowance and full recognition of deferred tax assets. 

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

Beginning in 4Q17, depreciation and amortization expense is no longer an adjustment to net income in IDT’s measure of non-GAAP net income. Comparative results have been restated in all periods presented.

These additions and subtractions are non-cash and/or non-routine items in the relevant fiscal 2017 and fiscal 2016 periods.

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

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

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

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

Other operating expenses and other operating gain, the gains on the sale of member interest in Visa Europe Ltd. and the sale of interest in Fabrix Systems Ltd. are components of income from operations. In fiscal 2017, other operating expenses included a non-routine expense for a settlement and mutual release, and the associated legal fees, related to potential liabilities and claims under agreements related to IDT’s spin-off of Straight Path Communications Inc. in 2013. In the fourth quarter of fiscal 2017, the other operating gain was primarily the result of insurance proceeds related to the claims. In fiscal 2016, other operating expenses included a loss on disposal of property, plant and equipment. Other operating expenses, other operating gain, and the gains on the sale of member interest in Visa Europe Ltd. and the sale of interest in Fabrix Systems Ltd. are excluded from the calculation of Adjusted EBITDA, non-GAAP net income and non-GAAP EPS. From time-to-time, IDT may incur costs related to non-routine legal and regulatory matters or disposal of certain assets. In addition, IDT may select and incubate promising early stage businesses outside of its core business for eventual sale or spin-off to its stockholders. However, such legal and regulatory matters and disposals do not occur each quarter. IDT does not believe the gains or losses from asset sales or from non-routine legal and regulatory matters are components of IDT’s or the relevant segment’s core operating results.

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

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

In 1Q17, IDT recorded a foreign income tax benefit of $16.6 million from the release of the valuation allowance and full recognition of certain deferred tax assets, and in 4Q17, IDT recorded a federal income tax expense of $11.1 million from the increase in the valuation allowance on deferred tax assets. The income tax benefit and expense are excluded from IDT’s calculation of non-GAAP net income and non-GAAP EPS because neither was directly related to the current results of IDT’s core operations. These income tax benefit and expense are not expected to be reoccurring items.

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

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

 

 

 

 

 

 

 

 

 

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SOURCE IDT Corporation

NEWARK, N.J., Sept. 21, 2017 — Following the devastating earthquakes that recently struck Mexico, BOSS Revolution is offering free calling and no-fee money transfers from the US to Mexico through Saturday, September 30, 2017. 

BOSS Revolution’s offer of free calls to Mexico applies to any call made from the popular BOSS Revolution Calling app for the remainder of September.

BOSS Revolution is also waiving all fees on money transfers to Mexico made from its website (www.bossrevolution.com/MoneyTransfer) and from the BOSS Revolution Money app.  (BOSS Revolution’s money transfer service will return to its low rates to Mexico – as low as $3.99 – on October 1^st.)   Funds can be sent directly to bank accounts with many of Mexico’s largest banks or to any of the 23,900 BOSS Revolution payout locations throughout Mexico for cash pick-up.

Both the BOSS Revolution Calling and BOSS Revolution Money apps are free and available on the iTunes App Store and on Google Play – and through the BOSS Revolution (www.bossrevolution.com) and BOSS Revolution Money Transfer (www.bossrevolution.com/moneytransfer) websites, respectively.   

“IDT Telecom serves millions of immigrants, including many with family and friends in Mexico.  In response to the horrific damage done by the earthquakes there, we are pitching-in to help our customers and anyone with family in Mexico by offering our money transfer and calling services at no charge,” said Bill Pereira, CEO of IDT Telecom.

About IDT:

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

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SOURCE IDT Corporation

NEWARK, N.J., Sept. 19, 2017 – IDT Corporation (NYSE: IDT), a global provider of communications and payment services, has scheduled its report of fourth quarter and full fiscal year 2017 financial and operational results for Tuesday, October 3, 2017.

The fourth quarter and full fiscal year (the three and twelve months, respectively, ended July 31, 2017) earnings release will be issued and posted on the IDT investor relations website (www.idt.net/ir) at approximately 4:30 PM ET.

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

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

A recording of the conference call can be accessed one hour after the call concludes through October 10, 2017, by dialing 1-844-512-2921 (toll-free from the US) or 1-412-317-6671 (international) and providing this call number: 10111313.  The recording will also be available via streaming audio at the IDT investor relations website (www.idt.net/ir) following the call.

IDT Corporation:   
IDT Corporation (NYSE: IDT), through its IDT Telecom division, provides telecommunications and payment services to individuals and businesses primarily through its flagship Boss Revolution^® and Net2Phone^® brands.  IDT Telecom’s wholesale business is a leading global carrier of international long distance calls.  For more information on IDT, visit www.idt.net.

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SOURCE IDT Corporation

SAO PAULO and BUENOS AIRES, Argentina, Aug. 16, 2017 – WeWork Brazil and WeWork Argentina today named IDT/net2phone as their preferred partner for voice communications. 

“We are delighted to have been selected by WeWork Brazil and WeWork Argentina as their preferred provider for voice communications,” said Daniel Londynski, Managing Director of IDT Latin America.  “Our hosted PBX service will provide WeWork with the key features and flexibility of enterprise communications systems at a fraction of the cost.  It’s an ideal solution for creative businesses that depend on collaboration and innovation.”

net2phone, a leading cloud based telephony provider, offers a full suite of voice over IP solutions to businesses and other organizations in Brazil, Argentina and over 160 other countries around the world.  net2phone is a subsidiary of IDT Corporation, a global provider of communications and payment services.

“We are happy to work with IDT/net2phone to make its hosted PBX solution available to WeWork members in Brazil and Argentina. We are confident that anyone within our network who signs up with IDT/net2phone will get the best services provided by a dedicated support staff,” said Lucas Mendes, General Manager of WeWork Brazil.

WeWork is a platform for creators, providing more than 130,000 members around the world with space, community, and services through both physical and digital offerings. The company currently has 163+ physical locations in more than 52 cities and 16 countries around the world. WeWork’s innovative shared office spaces landed in Brazil last month, with the opening of WeWork Paulista in Sao Paulo, and in May this year in Argentina with Torre Bellini.  Before the end of 2017, WeWork will have four buildings in Sao Paulo, two in Rio de Janeiro, and two locations in Buenos Aires.  For more information, visit www.wework.com.

“Net2Phone looks forward to enhancing collaboration among WeWork’s clients, suppliers, partners and members with releases including a full suite of unified communication services such as messaging, collaboration, WebRTC, SMS, CRM integration, and more,” said Jonah Fink, President of net2phone.  “WeWork Argentina and WeWork Brazil are leading the way to create more innovative work spaces and communities in their respective countries.  We are proud that net2phone’s innovative communications services will be part of the WeWork experience.”

For more information on IDT/net2phone Brazil’s Hosted PBX offerings, visit: www.idtpabx.com.br.

For more information on IDT/net2phone Argentina’s Hosted PBX offerings, visit: www.net2phoneunlimited.com.ar.

About WeWork:
WeWork is the platform for creators. We provide beautiful workspace, an inspiring community, and meaningful business services to hundreds of thousands of members around the world. From startups and freelancers to small businesses and large corporations, our community is united by a desire for our members to create meaningful work and lead meaningful lives-to be a part of something greater than ourselves.

Co-founded by Adam Neumann and Miguel McKelvey in New York City in 2010, WeWork is a privately held company with over 2000 employees.

About net2phone:
net2phone, a leading cloud based telephony provider, offers a full suite of UCaaS solutions in over 160 countries.  net2phone routes millions of minutes daily over data networks, offering high quality voice services and saving consumers and businesses up to 90% off international calling rates.  For more information about net2phone’s products and services, please visit www.net2phone.com. net2phone is a subsidiary of IDT Corporation (NYSE: IDT). 

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

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SOURCE IDT Corporation

NEWARK, N.J., June 22, 2017 – IDT Corporation (NYSE: IDT), a global provider of communications and payment services, today said that it has agreed to sell its IDT Financial Services Holdings Limited subsidiary (IDT Finance) to JAR Fintech Limited (JAR), a Gibraltar entity controlled by JAR Capital Limited, a UK based wealth and asset manager authorized and regulated by the UK’s Financial Conduct Authority.

IDT Finance is the sole shareholder of IDT Financial Services Limited, a Gibraltar-based bank and e-money issuer, providing prepaid card solutions across the European Economic Area. IDT Finance Services Limited is licensed and regulated by the Gibraltar Financial Services Commission (GFSC), and its sale to JAR is subject to GFSC approval, as well as the approval of the Gibraltar Minister with responsibility for financial services.

The agreed-upon purchase price consists of the value of IDT Finance’s net assets at closing plus an additional amount of approximately £3 million.

About IDT:

IDT Corporation (NYSE: IDT), through its IDT Telecom division, provides telecommunications and payment services to individuals and businesses primarily through its flagship BOSS Revolution^® and Net2Phone^® brands.  IDT Telecom’s wholesale business is a leading global carrier of international long distance calls.  For more information on IDT, visit www.idt.net.

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

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SOURCE IDT Corporation

NEWARK, N.J., June 6, 2017 – IDT Corporation (NYSE: IDT) reported a loss per share of $0.21 and Non-GAAP earnings per share (EPS)* of $0.28 on revenue of $370.0 million for the third quarter of its fiscal year 2017, the three months ended April 30, 2017.  

HIGHLIGHTS  
(Results for 3Q17 compared to 3Q16)

• Revenue of $370.0 million compared to $355.2 million;
• Loss from operations of $6.5 million, including a charge of $10.2 million for a legal settlement, compared to income from operations of $5.7 million, including a gain of $1.1 million on the sale of Fabrix;
• Adjusted EBITDA* of $9.1 million compared to $10.3 million;
• Loss per share of $0.21 compared to EPS of $0.19;
• Non-GAAP EPS* of $0.28 compared to $0.38;   
• IDT has declared a dividend of $0.19 per share for 3Q17 to be paid on or about June 30, 2017.

*Throughout this release, Non-GAAP EPS, Adjusted EBITDA, and Non-GAAP Net Income for all periods presented are Non-GAAP measures intended to provide useful information that supplements IDT’s or the relevant segment’s core results in accordance with GAAP.  Please refer to the Reconciliation of Non-GAAP Financial Measures at the end of this release for an explanation of these terms and their respective reconciliations to the most directly comparable GAAP measure.  

REMARKS BY SHMUEL JONAS, CEO OF IDT CORPORATION

“I am very pleased by the growth of our early stage business initiatives during the third quarter, even as we took steps to strengthen our core business offerings and further streamline operations.  

“National Retail Solutions continues to expand rapidly and is developing new ways to leverage our point-of-sale network to create additional value for our retailers, consumer package good suppliers and our BR Club members.  At net2phone, our cloud-based PBX offering is on track to double the number of seats it serves in the first six months of the year. We also successfully launched the offering in Brazil in January and in Argentina in May. 

“Our Boss Revolution money transfer business completed its best quarter ever.  We expect to drive additional retail growth by gradually expanding our presence beyond our original focus on ten states.  In addition, the fastest increase in transaction volumes is coming from our direct to consumer digital channel, including the Boss Revolution Money app, which is doubling in volume every three to four months and already contributes more than one in four transactions.

“From a corporate perspective, we continue to streamline our operations and tighten our strategic focus.  As part of this effort, we expect to spin-off our real estate assets together with our interests in Rafael Pharmaceuticals, Inc. (formerly Cornerstone Pharmaceuticals, Inc.) and certain other investments as Rafael Holdings later this year.”

3Q17 CONSOLIDATED RESULTS 

 

Consolidated results in 3Q16 include the results of Zedge, which was spun off to IDT stockholders on June 1, 2016.  Zedge contributed $2.6 million in revenue, $239 thousand in income from operations, and $392 thousand in Adjusted EBITDA in 3Q16.  Zedge did not contribute to results in fiscal 2017.

Consolidated results for all periods presented include corporate overhead.  In 3Q17, corporate G&A expense decreased 30.2% to $2.0 million from $2.8 million in the year ago quarter.  Consolidated results also included a loss of $10.1 million in 3Q17, resulting from the previously announced agreement with Straight Path Communications Inc. (SPCI), to settle potential liabilities and claims under agreements related to the spin-off of SPCI from IDT in 2013, as well as associated legal costs.

At April 30, 2017, IDT had $132.3 million in unrestricted cash, cash equivalents and marketable securities. In addition, the company reported $93.3 million in current restricted cash and cash equivalents, nearly all of which represents customer deposits held by IDT’s Gibraltar-based bank.  Current assets totaled $327.0 million and current liabilities were $332.7 million.

Net cash provided by operating activities during 3Q17 was $1.3 million compared to $10.7 million in 3Q16. For the same periods, capital expenditures were $6.5 million compared to $4.7 million, respectively.

3Q17 RESULTS BY SEGMENT
(Results are for 3Q17 unless otherwise noted).

 

Telecom Platform Services (TPS)
The Telecom Platform Services segment accounted for 97.5% of IDT’s revenue in 3Q17 compared to 96.9% in 3Q16.  TPS markets and distributes multiple communications and payment services across three broad business categories: Retail Communications, Wholesale Carrier Services and Payment Services. 

TPS’ minutes of use (MOU) in 3Q17 were 6.98 billion, an increase of 3.1% from 6.77 billion in 3Q16.  Retail Communications’ MOU decreased 20.4% compared to the year ago quarter, while Wholesale Carrier Services’ MOU increased 12.8%.

TPS’ revenue in 3Q17 was $360.8 million, a 4.8% increase from $344.2 million in the year ago quarter. 

 

Retail Communications’ revenue declined 8.9% year over year to $148.6 million.  TPS’ dominant offering, the popular BOSS Revolution® calling service, has been negatively impacted by increased competition from wireless operators’ “unlimited” offerings and the rise of over-the-top voice and messaging. 

Wholesale Carrier Services’ revenue increased 20.6% year over year to $152.1 million, reflecting growth in traffic carried to higher revenue per minute destinations in Africa and the Middle East. 

Payment Services’ revenue increased 9.2% to $60.1 million.  Sales of international mobile top-up services, the dominant offering in this vertical, increased 8.0% year over year, while revenues generated by IDT’s international money transfer and retail point-of-sale network businesses, both of which are early stage initiatives with immaterial impact on TPS’ overall results, increased robustly. 

TPS’ direct cost of revenue in 3Q17, expressed as a percentage of TPS’ revenue, increased to 86.2% from 84.0%, reflecting continuing competitive margin pressure on both our BOSS Revolution and wholesale carrier offerings.

TPS’ SG&A expense in 3Q17 was $39.8 million compared to $43.8 million in 3Q16, a decrease of $4.0 million primarily resulting from reduced headcount.  In 3Q17, TPS’ SG&A expense expressed as a percentage of revenue was 11.0%, a 170 basis points decrease compared to the year ago quarter.

TPS’ depreciation and amortization expense was $4.0 million compared to $4.2 million in the year ago period.

TPS’ income from operations was $5.8 million in 3Q17 compared to $6.9 million in 3Q16, while Adjusted EBITDA for the same periods was $9.8 million and $11.3 million, respectively, primarily as a result of the margin contraction, which was mostly offset by the reduction in SG&A expense.

Unified Communications as a Service (UCaaS)
The UCaaS segment is comprised of offerings from IDT’s net2phone^® division, including (1) cable telephony, (2) hosted PBX, (3) SIP trunking, which supports inbound and outbound domestic and international calling from an IP PBX, and (4) PicuP, a highly-automated business phone service that answers, routes and manages voice calls.

UCaaS’ revenue in 3Q17 increased t
o $7.4 million from $6.2 million in 3Q16, including a 189% increase in revenue from net2phone’s hosted PBX offering.  The segment’s two largest offerings – cable telephony and SIP trunking – also posted year over year gains. 

UCaaS’ direct cost of revenue expressed as a percentage of revenue decreased to 39.7% from 48.7% in 3Q16 as its business continued to scale.

SG&A expense for the UCaaS segment increased to $3.9 million in 3Q17 from $3.0 million (+30.0%) in 3Q16.  As a percentage of UCaaS’ revenue, SG&A in 3Q17 increased 420 basis points year over year to 52.2%, as net2phone ramped up its investment in technology, expanded its product suite and boosted its sales and marketing programs.

UCaaS’ loss from operations narrowed to $456 thousand in 3Q17 from $531 thousand in 3Q16 while Adjusted EBITDA increased to $601 thousand from $204 thousand over the same period.

Consumer Phone Services (CPS)
The Consumer Phone Services segment sells postpaid local and long-distance services in the U.S., marketed under the brand name IDT America.  CPS has been in harvest mode for more than a decade – maximizing revenue from current customers while maintaining SG&A and other expenses at the minimum levels essential to operate the business.  CPS’ financial results are provided in the segment results chart above and conformed to expectations.

All Other
All Other includes IDT’s real estate holdings, comprised of its public garage in Newark and commercial properties in Newark, Piscataway and Jerusalem, as well as other small businesses and investments, including an investment in Rafael Pharmaceuticals, Inc., (formerly Cornerstone Pharmaceuticals, Inc.).

Rafael Pharmaceuticals is a clinical stage, oncology-focused pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells.

All Other previously included Zedge, a platform and mobile app centered on self-expression.  Zedge was fully spun off from IDT to IDT’s shareholders on June 1, 2016.  Because the disposition of IDT’s interest in Zedge did not meet the criteria to be reported as a discontinued operation, Zedge’s results of operations and cash flows continue to be included in prior comparative periods.

All Other’s financial results are provided in the segment results chart above and conformed to expectations.

IDT expects to spin-off the real estate and pharmaceutical holdings included in All Other to its shareholders in CY 2017 under the name Rafael Holdings.

DIVIDEND

IDT’s Board of Directors has declared a quarterly dividend of $0.19 per share of Class A and Class B common stock for 3Q17 to be paid on or about June 30, 2017.  The dividend will be paid to stockholders of record as of the close of business on June 19^th.  The ex-dividend date will be June 15^th.  This distribution will be treated as a return of capital for tax purposes.

IDT EARNINGS ANNOUNCEMENT & SUPPLEMENTAL INFORMATION

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

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

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

A recording of the conference call can be accessed beginning one hour after the call concludes through June 13, 2017 by dialing 1-844-512-2921 (toll free from the US) or 1-412-317-6671 (international) and providing this pin code: 10106686.  The recording will also be available via streaming audio at the IDT investor relations website (www.idt.net/ir) following the call.

About IDT:

IDT Corporation (NYSE: IDT), through its IDT Telecom division, provides telecommunications and payment services to individuals and businesses primarily through its flagship BOSS Revolution^® and net2phone^® brands.  IDT Telecom’s wholesale business is a leading global carrier of international long distance calls.  For more information on IDT, visit www.idt.net.

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

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Financial Measures for the Third Quarter Fiscal 2017 and 2016

In
addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States of America (GAAP), IDT also disclosed, for 3Q17, 2Q17 and 3Q16, Adjusted EBITDA, non-GAAP net income and non-GAAP diluted earnings per share, or EPS, which are non-GAAP measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.

IDT’s measure of Adjusted EBITDA consists of revenues less direct cost of revenues and selling, general and administrative expense. Another way of calculating Adjusted EBITDA is to start with income from operations, add depreciation and amortization, severance expense and other operating expense, and subtract the gain on sale of interest in Fabrix Systems Ltd.

IDT’s measure of non-GAAP net income starts with net income in accordance with GAAP and adds depreciation and amortization, severance expense, stock-based compensation and other operating expense, and subtracts the gain on sale of interest in Fabrix Systems Ltd. and the tax benefit from the release of the valuation allowance and full recognition of deferred tax assets.

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

These additions and subtractions are non-cash and/or non-routine items in the relevant fiscal 2017 and fiscal 2016 periods.

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

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

While depreciation and amortization are considered operating costs under GAAP, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. IDT’s operating results exclusive of depreciation and amortization charges are useful indicators of its current performance.

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

Other operating expense and gain on the sale of interest in Fabrix Systems Ltd. are components of income from operations. In fiscal 2017, other operating expense includes a non-routine expense for a settlement and mutual release, and the associated legal fees, related to potential liabilities and claims under agreements related to the spin-off of SPCI from IDT in 2013. In fiscal 2016, other operating expense includes a loss on disposal of property, plant and equipment. Other operating expense and gain on the sale of interest in Fabrix Systems Ltd. are excluded from the calculation of Adjusted EBITDA, non-GAAP net income and non-GAAP EPS. From time-to-time, IDT may incur costs related to non-routine legal and regulatory matters or disposal of certain assets. In addition, IDT may select and incubate promising early stage businesses outside of its core business for eventual sale or spin-off to its stockholders. However, such legal and regulatory matters and disposals do not occur each quarter. IDT does not believe the gains or losses from asset sales or from non-routine legal and regulatory matters should be included in IDT’s or the relevant segment’s core operating results.

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

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

The income tax benefit in fiscal 2017 from the release of the valuation allowance and full recognition of deferred tax assets is excluded from IDT’s calculation of non-GAAP net income and non-GAAP EPS because it is not directly related to the current results of IDT’s core operations.  The income tax benefit was recorded by Elmion Netherlands B.V., a Netherlands subsidiary. This release was due to an internal reorganization and will not be a reoccurring item.

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

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

 

 

 

 

 

 

 

 

 

 

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SOURCE IDT Corporation