IDT (NYSE:IDT) executives highlighted record profitability metrics in the company’s fiscal 2026 second quarter, citing continued expansion at NRS, BOSS Money, and net2phone and a steady cash contribution from Traditional Communications. Management also raised full-year Adjusted EBITDA guidance, increased its dividend, and continued share repurchases.
Record consolidated profitability metrics and a shifting mix
Chief Financial Officer Marcelo Fischer said IDT reached record levels during the quarter for several consolidated measures, including gross profit, gross profit margin, Adjusted EBITDA, Adjusted EBITDA margin, and non-GAAP earnings per share. Fischer attributed the performance to a long-running shift in the company’s earnings mix, with growing contributions from higher-margin segments—NRS, Fintech (BOSS Money), and net2phone—while the larger, lower-margin Traditional Communications segment becomes “relatively less impactful.”
NRS: merchant services and SaaS strength, advertising pressured by CPM declines
Chief Executive Officer Shmuel Jonas said NRS recurring revenue grew year-over-year, driven by “large increases in merchant services and SaaS fee revenues.” He added that the company is continuing initiatives to drive additional growth in those areas, expand delivery partnerships, and develop offerings for “differentiated retailer verticals.”
However, Jonas said advertising and data results were lower than expected as decreases in CPM rates pressured revenue. In the Q&A, management said it expects to do a better job connecting its data with ad sales efforts, which Jonas said should become a “much bigger contributor to volume going forward,” though he acknowledged it “wasn’t yet a big enough contributor” this period.
Asked about NRS operating expenses, Jonas pointed to several factors behind higher SG&A, including hiring ahead of a new product launch and a higher percentage of sales coming through resellers, which carry a higher revenue share. On the company’s monthly NRS reporting, he said he would check on the timing and suggested it would likely be released shortly after the call.
On broader retailer conditions, management said results across its base of more than 35,000 retailers have remained strong. Fischer said the economics of single-store operators are influenced more by the broader economy and affordability than by immigration issues, though he noted there could be market-specific impacts.
BOSS Money: remittance tax accelerates shift toward digital transactions
Jonas and Fischer discussed the impact of a new federal remittance tax that took effect January 1 and applies mainly to cash-originated transactions. Jonas said the tax has accelerated customer migration from the lower-margin retail channel to the higher-margin digital channel, with positive impacts expected to become more visible in the next quarter.
Fischer said the policy shift and tax change have had a “massive impact” on the industry and have been felt primarily on transactions initiated through retailer agents rather than digitally. He said IDT benefited from an “accelerated rotation” from higher-revenue but lower-margin retail transactions to lower-revenue but higher-margin digital transactions. IDT’s higher-margin digital transactions increased 17% year-over-year in the quarter, contributing to a 15% increase in Fintech segment gross profit and a 44% year-over-year increase in adjusted EBITDA, which Fischer said was ahead of the pace embedded in the company’s original guidance.
In Q&A, Jonas said BOSS Money had a weaker November and December than expected, though management did not specify a cause. Fischer said activity improved significantly after the remittance tax took effect, and the company continued to see an uptick in digital transactions during February and into March. He also said IDT is seeing some retail customers migrate to its app and believes it is also picking up users from competitors. As one data point, Fischer said the prior week was BOSS Money’s “third-best week ever” for transactions, behind the week of Christmas and the week of Mother’s Day.
On competition, Jonas described the market as competitive, with strong traditional and digital-only rivals. He emphasized the company’s app experience, ratings, and competitive pricing, while also noting increased spending on customer acquisition compared with the past.
net2phone: AI investment discipline supports margin and EBITDA gains
Management said net2phone’s profitability continued to improve due to strengthening gross margins, operating leverage, and a benefit from favorable foreign exchange rates during the quarter. Jonas added that the company’s AI offerings have received “very positive customer reviews” and are driving increased customer spend.
Fischer said IDT’s initial fiscal 2026 guidance had assumed increased AI product investment would pressure net2phone’s Adjusted EBITDA growth, but that “it has not worked out that way.” He credited disciplined execution and “only modest increases in spend,” which supported a 37% year-over-year rise in Adjusted EBITDA to $3.9 million in the second quarter. Fischer said he expects net2phone’s growth rate to moderate in the second half as investment in growth initiatives increases.
Jonas also said the company is developing a new “Agentic AI” offering integrated with unified communications, with a go-to-market strategy aimed at both direct and channel sales to small and medium-sized businesses.
Traditional Communications: steady cash generation and improved unit economics
Jonas said Traditional Communications remained a strong cash generator, contributing $19 million in Adjusted EBITDA in the quarter. He said this was down from the year-ago period but approximately the same as the prior two quarters.
Fischer said IDT has been pleased with its ability to extract cash from the telecom businesses. He highlighted the BOSS Revolution calling business as a standout: while revenue is down by double digits as expected, gross profit has remained “rock steady” over the past year. He said new international prepaid calling plans have improved unit economics, helping Traditional Communications adjusted EBITDA decline by just 3.5% in the first six months of the year compared with the same period last year—less than management expected in its original outlook.
Guidance raised; dividend increased and buybacks continue
IDT raised its consolidated Adjusted EBITDA guidance for fiscal 2026 to $147 million to $149 million, up from its prior range of $141 million to $145 million. Fischer said the increase reflects developments across segments, including stronger-than-expected profitability at net2phone and BOSS Money and a slower-than-anticipated decline at Traditional Communications, while NRS remains on track with its original guidance of 20% to 25% Adjusted EBITDA growth for the fiscal year despite softer advertising CPMs.
On capital returns, Jonas said the company repurchased stock during the quarter and that the board increased the annual dividend by 17% to $0.28 per year. Fischer added that this marks the second consecutive year of dividend increases. He also said $15 million in stock repurchases during the first six months of fiscal 2026 puts the company on track to exceed repurchase levels from prior years, citing $18 million in buybacks for all of fiscal 2025 and $11 million in fiscal 2024.
In Q&A, management said it expects to remain opportunistic with repurchases, depending on share price, while maintaining a sizable cash position for flexibility, including potential acquisitions.
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.
