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IDT Corporation Reports First Quarter Fiscal 2016 Results

NEWARK, NJ — December 3, 2015: IDT
Corporation (NYSE: IDT) reported diluted earnings per share (EPS) of $0.18 and
Non-GAAP diluted EPS* of $0.35 on revenue of $390.6 million for the first
quarter of its fiscal year 2016, the three months ended October 31, 2015.


(Results for 1Q16 are compared to 1Q15)

  • Consolidated revenue decreased 5.4% to
    $390.6 million;
  • Consolidated Adjusted EBITDA* increased
    24.6% to $13.0 million;
  • Net cash provided by operating
    activities increased to $14.0 million from $8.3 million;
  • IDT’s Board of Directors increased the
    quarterly dividend to $0.19 for the first quarter of fiscal 2016.

IDT’s Chief Executive Officer Shmuel
Jonas said, “IDT again delivered strong bottom line results increasing Adjusted
EBITDA nearly 25% year over year to $13.0 million. Revenue declined after regulatory changes in
Mexico resulted in substantial, industry-wide rate reductions in the heavily trafficked
US-to-Mexico route. Exclusive of Mexico,
Boss Revolution, our flagship voice calling and payments service, continued to
grow. In light of our continued
operating profitability and strong financial condition, IDT’s Board of
Directors increased the quarterly dividend to $0.19 for the first quarter of
fiscal 2016.

“Earlier today, Zedge, our
popular app to get the coolest ringtones, wallpapers and other content for
mobile devices, was named one of the ‘Best Apps of 2015’ by Google Play. Congratulations to the Zedge team on a job
well done. In the first quarter, Zedge
increased its revenue 26% compared to the year ago quarter. The increase reflects strong advertising
sales driven by continued growth of Zedge’s user base for both Android and iOS.

“Looking ahead, we are making
good progress toward our goal of spinning-off Zedge to our shareholders, and expect
this distribution to occur in the second quarter of calendar 2016. We also have targeted the second quarter for
the launch of a new version of the popular Boss Revolution app, featuring two
exciting new features – peer-to-peer voice calling and instant messaging – that
we expect will drive long term growth,” he concluded.

*Throughout this release, Adjusted EBITDA,
Non-GAAP net income and Non-GAAP diluted EPS 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 reconciliation to the most directly comparable
GAAP measure.


in millions, except EPS











Direct cost





Direct cost as a percentage of revenue





SG&A expense





Depreciation and amortization









Adjusted EBITDA*





Gain on sale of interest in Fabrix



Income from operations





Net income attributable to IDT





Diluted EPS





Non-GAAP net income*





Non-GAAP diluted EPS*





Net cash provided by operating activities






(Results are for 1Q16 and comparisons
are to 1Q15 unless otherwise noted)


IDT’s Telecom Platform Services (TPS) segment accounted for 98.7%
of IDT’s revenue in 1Q16. TPS markets
and distributes multiple communications and payment services across four broad
business verticals: Retail Communications, Wholesale Carrier Services, Payment
Services and Hosted Platform Solutions.

TPS’ quarterly minutes of use were
7.16 billion compared to 7.48 billion (-4.2%) in 1Q15 and to 7.47 billion (-4.0%)
in 4Q15. The decreases primarily reflect
a decline in Retail Communications minutes, triggered primarily by the decline in
traffic in IDT’s US-to-Mexico route.

TPS’ revenue was $385.7 million
compared to $403.8 million (-4.5%) in the year ago quarter and $400.8 million (-3.8%)
in the prior quarter. The decreases are
primarily the result of a decline in minutes in Retail Communications and, year
over year, lower average revenue-per-minute in Wholesale Carrier Services.

TPS Revenue by Business Vertical

($ in




1Q16 -1Q15

% Change in Revenue

% Change in Minutes of Use

1Q16 Revenue as a % of all TPS Revenue

Retail Communications







Wholesale Carrier Services







Payment Services







Hosted Platform Solutions







Total TPS







Retail Communications revenue
totaled $173.7 million in 1Q16 compared to $184.4 million (-5.8%) in the year
ago quarter. Growth in IDT’s flagship Boss
Revolution international calling service, which is the dominant offering in the
Retail Communications vertical, was 0.5% year over year but declined 3.9% sequentially.
Following regulatory changes intended to
increase domestic competition in the Mexican telecommunications market, the cost
of terminating international calls to Mexico has declined significantly. As a result, many of IDT’s competitors –
including some of the large US mobile operators – began offering free or low
cost unlimited Mexico calling as part of their monthly pricing plans. These dynamics negatively impacted Retail
Communications revenue generated on the heavily used US-to-Mexico
corridor. Exclusive of the US-to-Mexico
route, Boss Revolution’s international calling service revenue increased in
1Q16 by approximately 5% compared to the year ago quarter.

Wholesale Carrier Services’ revenue
decreased to $148.1 million (-6.2%) in 1Q16, primarily resulting from a
decrease in revenue-per-minute, reflecting a shift to lower revenue, higher
margin corridors.

Payment Services’ revenue in 1Q16 increased to $55.5 million
(+8.5%) on growth in international airtime top-up sales.

Hosted Platform Solutions’ revenue decreased to $8.4 million
in 1Q16 (-19.0%). The decrease was
in-line with expectations and primarily reflects reductions in rates for
telephony services provided by IDT to its cable operator customers.

TPS’ direct cost of revenue as a percentage of TPS’ revenue was
83.8% in 1Q16, a decrease of 80 basis points year over year and 50 basis points
sequentially. The improvement is due primarily
to higher revenue-per-minute in Retail Communications, and to a shift in
Wholesale Carrier Services’ traffic to lower revenue but higher margin routes.

TPS’ SG&A expense decreased to $48.2 million from $51.2
million (-5.9%) in 1Q15 and from $49.4 million (-2.4%) in 4Q15. Expressed as a percentage of TPS’ revenue,
TPS’ 1Q16 SG&A decreased to 12.5% from 12.7% in 1Q15 and increased from 12.3%
in 4Q15. The year over year decrease primarily
reflects reduced employee compensation costs, after headcount reductions
implemented in fiscal 2015, and reduced marketing and advertising expense
compared to the year ago quarter.

TPS’ Adjusted EBITDA increased to $14.1 million from $11.0
million (+28.5%) in 1Q15 and from $13.4 million (+5.6%) in 4Q15. The year over year and sequential increases were
driven by the reduction in SG&A expense, which more than compensated for
decreases in revenue.

TPS’ depreciation and amortization expense was $4.4 million
in 1Q16, an increase from $3.8 million (+16.6%) in 1Q15 and $4.3 million (+1.6%)
in 4Q15. Depreciation increased due to higher
levels of capital expenditures in recent periods to support new product
developments, including IDT Messaging, Net2Phone Office, and the Boss
Revolution Calling App.

TPS’ income from operations increased to $9.7 million from
$5.7 million (+71.5%) in 1Q15 and $8.8 million (+10.4%) in 4Q15. Severance expense was nil, $1.5 million and $0.2
million in 1Q16, 1Q15 and 4Q15, respectively.


Consumer Phone Services
(CPS) sells local and long distance services domestically in 11 states,
marketed under the brand name IDT America.
CPS has been in harvest mode for the last decade, maximizing revenue
from current customers while maintaining SG&A and other expenses at the
minimum levels essential to operate the business. Results this quarter conformed to

CPS’ revenue was $1.8 million
compared to $2.3 million (-20.9%) in 1Q15 and $2.0 million (-7.5%) in the prior
quarter. CPS’ income from operations
was $339 thousand in 1Q16, compared $355 thousand (-4.5%) in 1Q15 and $273
thousand (+24.1%) in 4Q15.


All Other includes Zedge – a popular platform for mobile
phone consumers to obtain free customization content – IDT’s real estate
holdings and other small businesses. All
Other previously included Fabrix, a software development company specializing
in highly efficient cloud-based video processing, storage and delivery. Fabrix’s operations were consolidated into
IDT for all periods up to and including the first two months of 1Q15, at which
point Fabrix was sold and deconsolidated.

As of October 31, 2015, Zedge’s app, available on Android,
iOS and Windows Mobile, had surpassed 173 million cumulative installs,
increasing from 120 million (+44%) a year earlier and 159 million (+9%) at July
31, 2015. Zedge has averaged among the
top thirty most popular apps in the Google Play store in the U.S. for the last
five years and is currently ranked in the top ten most popular free apps in the
iTunes Entertainment category. As a
result of Zedge’s large, active user base, it offers advertisers, game
developers, musicians and artists a scalable, non-incentivized, user
acquisition platform with global reach.

Zedge’s revenue in 1Q16 was $2.6 million, an increase from $2.0
million (+26.4%) in 1Q15 and from $2.4 million (+5.4%) in 4Q15. The year over year and sequential revenue
increases were driven by continued growth in users and impressions, and
increased revenue per impression, across both the Android and iOS platforms.

All Other’s revenue was $3.1 million in 1Q16 compared to $6.8
million (-54.8%) in 1Q15 and $3.0 million (+3.0%) in 4Q15. (Fabrix contributed $4.2
million to All Other’s revenue in 1Q15 prior to its sale.) Excluding Zedge, IDT’s real estate holdings
generated the balance of All Other’s revenue in 1Q16.

All Other’s income from operations in 1Q16 was $430 thousand
compared to $76.5 million in 1Q15 and $449 thousand in 4Q15. All Other’s income from operations in 1Q15
included a gain on the sale of IDT’s interest in Fabrix of $75.1 million.


Consolidated results for all periods presented include
corporate overhead. In 1Q16, corporate G&A
expense was $2.6 million compared to $3.0 million (-13.1%) in the year ago
quarter and $2.3 million (+12.0%) in the prior quarter.

1Q16 net income attributable to IDT decreased to $4.2
million from $80.2 million in the year ago quarter and increased from $1.3
million in 4Q15. Net income in 1Q15
reflected a gain on the sale of IDT’s interest in Fabrix of $75.1 million. Net income attributable to IDT in 1Q16
included income tax expense of $2.9 million compared to $486 thousand in 1Q15
and $3.8 million in 4Q15.

At October 31, 2015, IDT had $152.8 million in unrestricted
cash, cash equivalents and marketable securities. Additionally, at that date,
IDT reported $81.7 million in current restricted cash and cash equivalents,
which included $81.0 million of customer deposits held by IDT’s Gibraltar-based
bank. Notes payable, which consisted of
a $6.4 million mortgage on real estate at July 31, 2015, was reduced to zero after
the mortgage was paid on the maturity date.
Current assets totaled $327.6 million and current liabilities were
$331.4 million.

Net cash provided by operating activities during 1Q16 increased
to $14.0 million compared to $8.3 million during 1Q15 and $2.8 million in 4Q15. For the same periods, capital expenditures
declined to $5.5 million compared to $6.1 million and $5.7 million,


IDT has increased its quarterly dividend to $0.19 per share
of Class A and Class B common stock for the first quarter of its fiscal year 2016. The dividend will be paid on or about
December 18, 2015 to stockholders of record as of the close of business on December
14th. The ex-dividend date will be December 10th. This distribution is an ordinary dividend for
tax purposes.


IDT will host a conference call at 5:30 PM ET today, December
3rd, beginning with management’s discussion of financial and
operational results, business outlook and strategy, followed by Q&A.

To listen to the call and participate in the Q&A, dial
toll-free 1-877-300-8521 (from U.S.) or 1-412-317-6026 (international) and
request the IDT Corporation call.

An audio replay of the conference call will be available one
hour after the call concludes through December 11, 2015 by dialing
1-877-870-5176 (toll free from the U.S.) or 1-858-384-5517 (international) and
providing the replay conference code: 10076314.
An audio replay will also be available by streaming from the IDT website
investor relations site: shortly
after the call concludes.

Copies of this release – including the reconciliation of the
non-GAAP financial measures that are both used herein and referenced during
management’s discussion of results – are also available in the Investor
Relations portion of IDT’s website.

About IDT Corporation:

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. IDT also holds a majority interest in Zedge
(, developer of the popular eponymous app for mobile content
discovery and acquisition. For more
information on IDT, visit

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.

IDT Corporation Investor Relations
Bill Ulrey