IDT(IDT) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for IDT Corporation, including balance sheets, statements of operations, comprehensive income (loss), equity, and cash flows, along with detailed notes Consolidated Balance Sheets The consolidated balance sheet indicates an increase in total assets to $461.9 million at April 30, 2021, from $404.8 million at July 31, 2020, primarily driven by equity investments and deferred income tax assets | Metric | April 30, 2021 (in thousands) | July 31, 2020 (in thousands) | | :-------------------------- | :---------------------------- | :--------------------------- | | Total assets | $461,899 | $404,750 | | Total liabilities | $334,739 | $333,611 | | Total equity | $127,160 | $71,139 | - Current equity investments increased from $5,964k at July 31, 2020, to $37,586k at April 30, 2021. Deferred income tax assets, net, also saw a notable increase from $8,512k to $22,530k[10] Consolidated Statements of Operations For the three months ended April 30, 2021, revenues increased by 16.3% year-over-year, and net income attributable to IDT Corporation surged to $36.3 million from $0.5 million Consolidated Statements of Operations (Three Months Ended April 30) | Metric | 2021 (in thousands) | 2020 (in thousands) | Change (YoY) | | :----------------------------------- | :------------------ | :------------------ | :------------- | | Revenues | $373,831 | $321,336 | +16.3% | | Income from operations | $13,872 | $3,792 | +265.8% | | Net income (loss) attributable to IDT Corporation | $36,348 | $518 | +6920.8% | | Basic EPS | $1.42 | $0.02 | +7000.0% | | Diluted EPS | $1.39 | $0.02 | +6850.0% | Consolidated Statements of Operations (Nine Months Ended April 30) | Metric | 2021 (in thousands) | 2020 (in thousands) | Change (YoY) | | :----------------------------------- | :------------------ | :------------------ | :------------- | | Revenues | $1,057,022 | $985,425 | +7.3% | | Income from operations | $40,045 | $3,722 | +976.0% | | Net income (loss) attributable to IDT Corporation | $57,744 | $(63) | N/A (from loss to profit) | | Basic EPS | $2.27 | $(0.00) | N/A (from loss to profit) | | Diluted EPS | $2.23 | $(0.00) | N/A (from loss to profit) | Consolidated Statements of Comprehensive Income (Loss) The Company reported a comprehensive income attributable to IDT Corporation of $36.9 million for the three months ended April 30, 2021, a significant turnaround from a loss of $(0.045) million in the prior year Consolidated Statements of Comprehensive Income (Loss) (Three Months Ended April 30) | Metric | 2021 (in thousands) | 2020 (in thousands) | | :----------------------------------- | :------------------ | :------------------ | | Net income (loss) | $36,398 | $385 | | Other comprehensive income (loss) | $567 | $(563) | | Comprehensive income (loss) attributable to IDT Corporation | $36,915 | $(45) | Consolidated Statements of Comprehensive Income (Loss) (Nine Months Ended April 30) | Metric | 2021 (in thousands) | 2020 (in thousands) | | :----------------------------------- | :------------------ | :------------------ | | Net income (loss) | $58,018 | $(133) | | Other comprehensive income (loss) | $(980) | $(2,280) | | Comprehensive income (loss) attributable to IDT Corporation | $56,764 | $(2,343) | Consolidated Statements of Equity Total equity increased substantially from $71.1 million at July 31, 2020, to $127.2 million at April 30, 2021, primarily driven by the period's net income which reduced the accumulated deficit - Total Equity increased from $71,139k at July 31, 2020, to $127,160k at April 30, 2021[21] - Accumulated Deficit decreased from $(139,333)k at July 31, 2020, to $(81,589)k at April 30, 2021, reflecting the period's net income[21] - Repurchases of Class B common stock through the repurchase program totaled $(2,849)k for the nine months ended April 30, 2021[21] Consolidated Statements of Cash Flows For the nine months ended April 30, 2021, net cash provided by operating activities was $38.1 million, a significant improvement from a net cash outflow of $(70.6) million in the prior year Consolidated Statements of Cash Flows (Nine Months Ended April 30) | Activity | 2021 (in thousands) | 2020 (in thousands) | Change (YoY) | | :-------------------------------------------------------------------- | :------------------ | :------------------ | :------------- | | Net cash provided by (used in) operating activities | $38,144 | $(70,643) | +$108,787k | | Net cash used in investing activities | $(46,788) | $(22,784) | $(24,004)k | | Net cash used in financing activities | $(4,221) | $(1,331) | $(2,890)k | | Net decrease in cash, cash equivalents, and restricted cash and cash equivalents | $(6,213) | $(90,746) | +$84,533k | - Significant investing outflows included purchases of debt securities and equity investments ($39,347k in 2021 vs $14,790k in 2020) and payments for acquisitions ($2,656k in 2021 vs $450k in 2020)[30] Notes to Consolidated Financial Statements The notes provide detailed explanations of the Company's accounting policies, business segments, revenue recognition, leases, cash management, debt and equity investments, fair value measurements, acquisitions, and other financial items Note 1—Basis of Presentation The unaudited interim financial statements are prepared in accordance with U.S. GAAP for interim information and Form 10-Q instructions, and do not include all disclosures required for complete annual financial statements - Interim financial statements are unaudited and prepared in accordance with U.S. GAAP for interim information and Form 10-Q[32] - The Company's fiscal year ends on July 31[33] Note 2—Business Segment Information Effective August 1, 2020, the Company revised its reportable business segments to Fintech, net2phone-UCaaS, and Traditional Communications, reflecting the growth and increased contributions of its financial technology and cloud communications businesses - Revised reportable segments as of August 1, 2020: Fintech, net2phone-UCaaS, and Traditional Communications[34] - Fintech includes BOSS Revolution Money Transfer and National Retail Solutions (NRS). net2phone-UCaaS comprises net2phone's cloud communications offerings. Traditional Communications includes Mobile Top-Up, BOSS Revolution Calling, Carrier Services, and net2phone-Platform Services[36][37][38] Segment Revenues and Income (Loss) from Operations (Three Months Ended April 30) | Segment | Revenues 2021 (in thousands) | Revenues 2020 (in thousands) | Income (Loss) from Operations 2021 (in thousands) | Income (Loss) from Operations 2020 (in thousands) | | :------------------------- | :--------------------------- | :--------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Fintech | $16,644 | $14,684 | $(1,403) | $142 | | net2phone-UCaaS | $11,255 | $8,103 | $(3,684) | $(3,643) | | Traditional Communications | $345,932 | $298,549 | $20,074 | $9,503 | | Corporate | $— | $— | $(1,115) | $(2,210) | | Total | $373,831 | $321,336 | $13,872 | $3,792 | Note 3—Revenue Recognition Revenue is primarily recognized at a point in time for retail telecommunications and payment offerings, and wholesale international voice and SMS termination, with deferred revenue increasing to $42.8 million at April 30, 2021 - The most significant revenue streams are from Mobile Top-Up, BOSS Revolution Calling, and Carrier Services[41] Disaggregated Revenues by Service (Three Months Ended April 30) | Service | 2021 (in thousands) | 2020 (in thousands) | | :-------------------------- | :------------------ | :------------------ | | BOSS Revolution Money Transfer | $10,259 | $11,817 | | National Retail Solutions | $6,385 | $2,867 | | net2phone-UCaaS | $11,255 | $8,103 | | Mobile Top-Up | $132,603 | $85,139 | | BOSS Revolution Calling | $111,412 | $112,536 | | Carrier Services | $88,643 | $87,435 | | Total | $373,831 | $321,336 | - Deferred revenue increased to $42,771k at April 30, 2021, from $40,114k at July 31, 2020. Amortization of deferred customer contract acquisition costs increased to $950k for the three months ended April 30, 2021, from $616k in the prior year[10][48][51] Note 4—Leases The Company's leases primarily consist of operating leases for office space, with remaining terms from one to five years, and an aggregate operating lease liability of $8.6 million at April 30, 2021 - Primary leases are operating leases for office space with remaining terms from one to five years[52] Total Lease Cost | Period | 2021 (in thousands) | 2020 (in thousands) | | :---------------------- | :------------------ | :------------------ | | Three Months Ended April 30 | $917 | $773 | | Nine Months Ended April 30 | $2,537 | $2,328 | - Total operating lease liabilities were $8,624k at April 30, 2021, compared to $9,703k at July 31, 2020[55] Note 5—Cash, Cash Equivalents, and Restricted Cash and Cash Equivalents Total cash, cash equivalents, and restricted cash and cash equivalents decreased to $195.0 million at April 30, 2021, from $201.2 million at July 31, 2020, with restricted cash primarily comprising customer deposits Cash, Cash Equivalents, and Restricted Cash and Cash Equivalents | Metric | April 30, 2021 (in thousands) | July 31, 2020 (in thousands) | | :---------------------------------------------------------- | :---------------------------- | :--------------------------- | | Cash and cash equivalents | $84,017 | $84,860 | | Restricted cash and cash equivalents | $110,992 | $116,362 | | Total | $195,009 | $201,222 | - Restricted cash and cash equivalents primarily include customer deposits held by IDT Financial Services Limited[56] Note 6—Debt Securities Available-for-sale debt securities totaled $16.9 million at April 30, 2021, down from $18.4 million at July 31, 2020, primarily consisting of corporate bonds, municipal bonds, and U.S. Treasury bills and notes Available-for-Sale Debt Securities | Metric | April 30, 2021 (in thousands) | July 31, 2020 (in thousands) | | :-------------------------- | :---------------------------- | :--------------------------- | | Total Fair Value | $16,852 | $18,363 | | Gross Unrealized Losses | $(142) | $(16) | Contractual Maturities of Debt Securities (April 30, 2021) | Maturity Period | Fair Value (in thousands) | | :-------------------------- | :------------------------ | | Within one year | $5,048 | | After one year through five years | $5,986 | | After five years through ten years | $5,399 | | After ten years | $419 | | Total | $16,852 | Note 7—Equity Investments Current equity investments significantly increased to $37.6 million at April 30, 2021, from $6.0 million at July 31, 2020, primarily due to increased holdings in fixed income mutual funds and Rafael Holdings, Inc. Class B common stock Equity Investments | Metric | April 30, 2021 (in thousands) | July 31, 2020 (in thousands) | | :-------------------------- | :---------------------------- | :--------------------------- | | Current equity investments | $37,586 | $5,964 | | Noncurrent equity investments | $14,922 | $8,833 | - The Company purchased 218,245 newly issued shares of Rafael Holdings, Inc. Class B common stock and a warrant for $5.0 million in December 2020, and exercised the warrant for $1.0 million in March 2021[62] Net Gains (Losses) Recognized on Equity Investments | Period | 2021 (in thousands) | 2020 (in thousands) | | :----------------------------------- | :------------------ | :------------------ | | Three Months Ended April 30 | $5,435 | $(1,226) | | Nine Months Ended April 30 | $5,822 | $(817) | - On February 2, 2021, the Company paid $4.0 million to purchase shares of series B convertible preferred stock in a communications company, representing 23.95% of its outstanding shares, and accounts for it using the equity method[67] Note 8—Fair Value Measurements The Company measures certain assets and liabilities at fair value on a recurring basis, categorized into Level 1, 2, and 3 inputs, with total assets measured at fair value increasing to $59.7 million at April 30, 2021 Assets Measured at Fair Value (April 30, 2021) | Category | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :----------------------------------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | Debt securities | $1,644 | $15,208 | $— | $16,852 | | Equity investments (current assets) | $26,759 | $10,827 | $— | $37,586 | | Equity investments (noncurrent assets) | $— | $2,920 | $2,343 | $5,263 | | Total | $28,403 | $28,955 | $2,343 | $59,701 | - Contingent consideration included in other noncurrent liabilities (Level 3) increased to $(795)k at April 30, 2021, from $(396)k at July 31, 2020[71] - Investments in hedge funds ($3.5 million at April 30, 2021) are accounted for using the equity method and are not measured at fair value[72] Note 9—Acquisitions In December 2020, IDTIT acquired 51% of a digital distribution platform company for $2.4 million cash plus $0.4 million in contingent consideration, resulting in $2.0 million in goodwill assigned to the Traditional Communications segment - IDTIT acquired 51% of a digital distribution platform company on December 3, 2020, for $2,388k cash (net of cash acquired) and $393k contingent consideration[78] - Goodwill of $2,025k was assigned to the Traditional Communications segment from the December 2020 acquisition[79] - net2phone acquired 100% of Ringsouth Europa, S.L. on December 11, 2019, for $450k cash and $375k contingent consideration[81] Note 10—Other Operating Gain (Expense), Net Other operating gain (expense), net, significantly improved to a gain of $0.6 million for the three months ended April 30, 2021, from an expense of $(0.2) million in the prior year, driven by insurance claims and a gain from the sale of lawsuit rights Other Operating Gain (Expense), Net | Period | 2021 (in thousands) | 2020 (in thousands) | | :----------------------------------- | :------------------ | :------------------ | | Three Months Ended April 30 | $595 | $(234) | | Nine Months Ended April 30 | $1,550 | $(3,402) | - Includes a $2.0 million gain from the sale of rights under the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation in the nine months ended April 30, 2021[84] - Corporate segment recorded $605k gain (net of legal fees) from Straight Path Communications Inc. class action insurance claims for the three months ended April 30, 2021[82] Note 11—Equity The Company repurchased 463,792 shares of Class B common stock for $2.8 million under its stock repurchase program in the nine months ended April 30, 2021, with 5.8 million shares remaining available - Repurchased 463,792 shares of Class B common stock for $2.8 million in the nine months ended April 30, 2021, under a program with 5.8 million shares remaining[88] - Issued 283,838 shares of Class B common stock for vested Deferred Stock Units (DSUs) on January 5, 2021[90] - Granted restricted shares in net2phone 2.0, Inc. (5% of outstanding common stock) to Howard S. Jonas and Shmuel Jonas, vesting upon achieving $18 million in subscription revenue or a $100 million valuation by October 31, 2023[92] Note 12—Earnings (Loss) Per Share Basic EPS for the three months ended April 30, 2021, was $1.42, up from $0.02 in the prior year, reflecting the Company's improved profitability Earnings (Loss) Per Share (Three Months Ended April 30) | Metric | 2021 | 2020 | | :----------- | :--- | :--- | | Basic EPS | $1.42 | $0.02 | | Diluted EPS | $1.39 | $0.02 | Earnings (Loss) Per Share (Nine Months Ended April 30) | Metric | 2021 | 2020 | | :----------- | :--- | :--- | | Basic EPS | $2.27 | $(0.00) | | Diluted EPS | $2.23 | $(0.00) | - The weighted-average number of shares used in the diluted EPS calculation for the three months ended April 30, 2021, was 26,136k, compared to 26,506k in 2020[96] Note 13—Accumulated Other Comprehensive Loss Accumulated other comprehensive loss increased to $(8.4) million at April 30, 2021, from $(7.4) million at July 31, 2020, primarily due to foreign currency translation adjustments and unrealized losses on available-for-sale securities Accumulated Other Comprehensive Loss | Metric | April 30, 2021 (in thousands) | July 31, 2020 (in thousands) | | :----------------------------------- | :---------------------------- | :--------------------------- | | Accumulated Other Comprehensive Loss | $(8,390) | $(7,410) | - Other comprehensive loss attributable to IDT Corporation for the nine months ended April 30, 2021, was $(980)k[97] Note 14—Commitments and Contingencies The Company is monitoring COVID-19 impacts, involved in legal proceedings, and has accrued $41.6 million for FCC-related regulatory fees at April 30, 2021 - COVID-19 led to significant increases in demand for digital consumer offerings (BOSS Revolution Money Transfer, Calling, Mobile Top-Up) and resilience in NRS, but accelerated decline in Carrier Services[127] - A pending putative class action on behalf of Straight Path's stockholders and derivative complaint naming the Company is scheduled for trial in December 2021[102] - Accrued expenses included $41.6 million at April 30, 2021, for FCC-related regulatory fees. The Company also has aggregate performance bonds of $19.8 million outstanding[105][107] Note 15—Other Income (Expense), Net Other income (expense), net, improved significantly to a gain of $3.8 million for the three months ended April 30, 2021, from an expense of $(2.1) million in the prior year, primarily driven by substantial gains on investments Other Income (Expense), Net | Period | 2021 (in thousands) | 2020 (in thousands) | | :----------------------------------- | :------------------ | :------------------ | | Three Months Ended April 30 | $3,815 | $(2,144) | | Nine Months Ended April 30 | $5,608 | $(1,360) | Gain (Loss) on Investments | Period | 2021 (in thousands) | 2020 (in thousands) | | :----------------------------------- | :------------------ | :------------------ | | Three Months Ended April 30 | $5,435 | $(1,226) | | Nine Months Ended April 30 | $5,822 | $(817) | - Equity in the net loss of investee was $(528)k for both the three and nine months ended April 30, 2021[111] Note 16—Income Taxes The Company released $24.0 million of its valuation allowance on deferred income tax assets in the three and nine months ended April 30, 2021, based on three consecutive years of profitability in the United States and expected future profitability - Released $24.0 million of valuation allowance on deferred income tax assets in the three and nine months ended April 30, 2021[112] - The primary factors for the release were three consecutive years of profitability in the United States and expected future profitability in both the United States and the United Kingdom[112] Note 17—Recently Issued Accounting Standards Not Yet Adopted The Company is evaluating the impact of new accounting standards, including ASU No. 2016-13 (Credit Losses), ASU No. 2019-12 (Income Taxes), and ASU No. 2020-01 (Equity Investments), all to be adopted in future fiscal years - ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), will be adopted on August 1, 2023[113] - ASU No. 2019-12, Income Taxes (Topic 740), will be adopted on August 1, 2021[114] - ASU No. 2020-01, Investments—Equity Securities (Topic 321), will be adopted on August 1, 2021[115] Note 18— Revolving Credit Facility—Subsequent Event Subsequent to the quarter, IDT Telecom, Inc. entered into a new $25.0 million revolving credit facility with TD Bank, N.A. on May 17, 2021, secured by its assets and maturing in May 2024 - IDT Telecom, Inc. entered into a new $25.0 million revolving credit facility with TD Bank, N.A. on May 17, 2021 (subsequent event)[116] - The facility is secured by primarily all of IDT Telecom's assets, bears interest based on the LIBO rate, and all outstanding principal is due in May 2024[116] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, including the impact of COVID-19, segment performance, and liquidity - The Company will transition from scaled disclosure available to smaller reporting companies to disclosure requirements applicable to all other companies beginning with its Quarterly Report on Form 10-Q for its first quarter in fiscal 2022, due to its public float exceeding $200 million[119] - COVID-19 had mixed financial impacts, driving significant increases in demand for consumer offerings through digital channels but accelerating the decline in Carrier Services[127] - The Company expects its cash from operations and current liquid assets to be sufficient to meet working capital and capital expenditure requirements for the twelve-month period ending April 30, 2022[128][173] Results of Operations The Company's overall results of operations improved significantly, with total revenues increasing and income from operations surging for both the three and nine months ended April 30, 2021 Consolidated Income from Operations | Period | 2021 (in millions) | 2020 (in millions) | Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Three Months Ended April 30 | $13.9 | $3.8 | +265.8% | | Nine Months Ended April 30 | $40.0 | $3.7 | +975.9% | - Stock-based compensation expense included in consolidated selling, general and administrative expenses decreased to $0.3 million (3 months) and $1.2 million (9 months) in 2021, from $0.8 million and $3.3 million in 2020, respectively[167] Fintech Segment Fintech revenues increased by 13.3% for the three months and 62.5% for the nine months ended April 30, 2021, primarily driven by the expansion of National Retail Solutions (NRS) POS network Fintech Segment Revenues | Period | 2021 (in millions) | 2020 (in millions) | Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Three Months Ended April 30 | $16.6 | $14.7 | +13.3% | | Nine Months Ended April 30 | $55.2 | $34.0 | +62.5% | - NRS revenues increased by 122.7% (3 months) and 126.3% (9 months) due to POS network expansion and growth in payment processing and digital advertising[133] - BOSS Revolution Money Transfer revenues decreased by 13.2% (3 months) due to transient foreign exchange market conditions ceasing, but increased by 45.0% (9 months) due to increased digital transaction volume[133] Fintech Segment (Loss) Income from Operations | Period | 2021 (in millions) | 2020 (in millions) | | :----------------------------------- | :----------------- | :----------------- | | Three Months Ended April 30 | $(1.4) | $0.1 | | Nine Months Ended April 30 | $1.5 | $(5.7) | net2phone-UCaaS Segment net2phone-UCaaS revenues increased by 38.9% for the three months and 36.1% for the nine months ended April 30, 2021, primarily driven by a 51% growth in seats served and strong subscription revenue growth net2phone-UCaaS Segment Revenues | Period | 2021 (in millions) | 2020 (in millions) | Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Three Months Ended April 30 | $11.3 | $8.1 | +38.9% | | Nine Months Ended April 30 | $31.6 | $23.2 | +36.1% | - Seats served increased 51% to 210,000 at April 30, 2021, from 139,000 at April 30, 2020. Subscription revenue increased 39.4% (3 months) and 35.9% (9 months), led by growth in the U.S. market[142] net2phone-UCaaS Segment Loss from Operations | Period | 2021 (in millions) | 2020 (in millions) | | :----------------------------------- | :----------------- | :----------------- | | Three Months Ended April 30 | $(3.7) | $(3.6) | | Nine Months Ended April 30 | $(10.7) | $(11.1) | Traditional Communications Segment Traditional Communications revenues increased by 15.9% for the three months and 4.5% for the nine months ended April 30, 2021, primarily due to significant growth in Mobile Top-Up, with income from operations more than doubling for both periods Traditional Communications Segment Revenues | Period | 2021 (in millions) | 2020 (in millions) | Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Three Months Ended April 30 | $345.9 | $298.5 | +15.9% | | Nine Months Ended April 30 | $970.2 | $928.2 | +4.5% | - Mobile Top-Up revenues increased by 55.8% (3 months) and 36.7% (9 months) due to product expansion and growth across distribution channels[151] - Carrier Services revenues increased by 1.4% (3 months) but decreased by 12.9% (9 months), with minutes of use declining by 26.5% (3 months) and 29.4% (9 months) due to global transition away from international voice calling, accelerated by COVID-19[151][153] Traditional Communications Segment Income from Operations | Period | 2021 (in millions) | 2020 (in millions) | | :----------------------------------- | :----------------- | :----------------- | | Three Months Ended April 30 | $20.1 | $9.5 | | Nine Months Ended April 30 | $54.6 | $27.8 | Corporate Corporate loss from operations decreased for both the three and nine months ended April 30, 2021, primarily due to decreases in stock-based compensation and employee compensation, and offsetting gains from insurance claims Corporate Loss from Operations | Period | 2021 (in millions) | 2020 (in millions) | Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Three Months Ended April 30 | $(1.1) | $(2.2) | +49.6% | | Nine Months Ended April 30 | $(5.3) | $(7.2) | +26.8% | - Corporate general and administrative expense decreased due to lower stock-based compensation and employee compensation[163] - Recorded offsetting gains from insurance claims for the Straight Path class action of $0.9 million (3 months) and $2.6 million (9 months) in 2021[164] Liquidity and Capital Resources The Company's liquidity position is strong, with $127.6 million in cash, cash equivalents, debt securities, and unrestricted current equity investments, and $26.7 million in working capital at April 30, 2021 - At April 30, 2021, the Company had $127.6 million in cash, cash equivalents, debt securities, and unrestricted current equity investments, and working capital of $26.7 million[174] Cash Flows (Nine Months Ended April 30) | Activity | 2021 (in millions) | 2020 (in millions) | | :----------------------------------- | :----------------- | :----------------- | | Operating activities | $38.1 | $(70.6) | | Investing activities | $(46.8) | $(22.8) | | Financing activities | $(4.2) | $(1.3) | - Capital expenditures were $13.5 million for the nine months ended April 30, 2021, with an anticipated $18 million to $20 million for the next twelve months[183] - The Company repurchased 463,792 shares of Class B common stock for $2.8 million in the nine months ended April 30, 2021[195] Other Sources and Uses of Resources The Company intends to pursue strategic investments and acquisitions to complement, expand, and/or enter into new businesses, seeking opportunities that meet its return-on-investment criteria and contribute to profitable growth and diversification - The Company intends to make strategic investments and acquisitions to complement, expand, and/or enter into new businesses[198] Contractual Obligations and Other Commercial Commitments Total contractual obligations at April 30, 2021, amounted to $13.9 million, primarily comprising purchase commitments, connectivity obligations, and operating leases Total Contractual Obligations (April 30, 2021) | Obligation Type | Total (in millions) | Less than 1 year (in millions) | 1–3 years (in millions) | 4–5 years (in millions) | After 5 years (in millions) | | :----------------------------------- | :------------------ | :----------------------------- | :---------------------- | :---------------------- | :-------------------------- | | Purchase commitments | $3.4 | $3.4 | $— | $— | $— | | Connectivity obligations | $1.1 | $0.8 | $0.3 | $— | $— | | Operating leases | $9.4 | $3.1 | $4.4 | $1.9 | $— | | Total | $13.9 | $7.3 | $4.7 | $1.9 | $— | - The table excludes an aggregate of $19.8 million in performance bonds and $1.3 million in potential contingent consideration related to business acquisitions due to the uncertainty of the amount and/or timing of any such payments[199] Off-Balance Sheet Arrangements The Company has no significant off-balance sheet arrangements, as defined by SEC regulations, other than indemnification agreements related to the Straight Path spin-off and $19.8 million in performance bonds outstanding - The Company has indemnification agreements with Straight Path related to its spin-off, covering liabilities for federal, state, local, and foreign taxes for periods before and including the spin-off[201] - Aggregate performance bonds of $19.8 million were outstanding at April 30, 2021, issued through third parties for money remittance licenses and telecommunications resellers[202] Item 3. Quantitative and Qualitative Disclosures About Market Risks As a smaller reporting company, IDT Corporation is not required to provide quantitative and qualitative disclosures about market risks in this Quarterly Report on Form 10-Q - The Company is not required to provide quantitative and qualitative disclosures about market risks as it qualifies as a smaller reporting company[203] Item 4. Controls and Procedures The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of April 30, 2021, with no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer evaluated and concluded that the Company's disclosure controls and procedures were effective as of April 30, 2021[204] - There were no material changes in internal control over financial reporting during the quarter ended April 30, 2021[205] PART II. OTHER INFORMATION Item 1. Legal Proceedings Information regarding legal proceedings in which the Company is involved is detailed in Note 14 to the Consolidated Financial Statements - Legal proceedings in which the Company is involved are described in Note 14 to the Consolidated Financial Statements[208] Item 1A. Risk Factors The Company faces new and ongoing risks, including those related to Brexit's impact on its U.K.-based businesses and financial services, the concentrated voting power of trusts benefiting Howard S. Jonas's children, and potential harm from imminent FCC Orders and rules - Brexit poses risks to U.K.-based businesses, including regulatory complexities, higher costs, and the loss of passporting rights for IDT Financial Services Limited (IDTFS), which previously serviced EU customers[209][211] - Eight trusts for the benefit of Howard S. Jonas's children collectively hold approximately 69.5% of the combined voting power, which may limit the ability of other stockholders to affect management and creates an anti-takeover effect[212][215] - Imminent FCC Orders and rules, specifically the STIR/SHAKEN caller identification framework, could harm the telecommunications marketplace and the Company, particularly concerning foreign carrier compliance and potential penalties[216][218] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or purchases of shares under the publicly announced repurchase program occurred during the third quarter of fiscal 2021 (February 1 - April 30, 2021) - No shares were purchased under the stock repurchase program during the three months ended April 30, 2021[219] - As of April 30, 2021, 5.8 million shares remained available for repurchase under the stock repurchase program[219] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reported period - None[220] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Not applicable[221] Item 5. Other Information There is no other information to report under this item - None[221] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, as well as XBRL taxonomy extension documents - Includes certifications of the Chief Executive Officer and Chief Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2)[222] - Includes XBRL Taxonomy Extension Schema, Calculation, Definition, Label, and Presentation Linkbase Documents (Exhibits 101.SCH, CAL, DEF, LAB, PRE) and Cover Page Interactive Data File (Exhibit 104)[222] SIGNATURES SIGNATURES The Quarterly Report on Form 10-Q was duly signed on behalf of IDT Corporation by Shmuel Jonas, Chief Executive Officer, and Marcelo Fischer, Chief Financial Officer, on June 9, 2021 - The report was signed by Shmuel Jonas, Chief Executive Officer, and Marcelo Fischer, Chief Financial Officer, on June 9, 2021[226]