IDT Stock Slips Following Q4 Earnings Despite Strong Segment Growth

Core Viewpoint - IDT Corporation's stock has significantly underperformed since its earnings report, with a 20.3% decline compared to a 0.9% gain in the S&P 500 Index during the same period [1] Financial Performance Overview - For Q4 fiscal 2025, IDT reported consolidated revenues of $316.6 million, a 3% increase year over year [2] - Gross profit increased by 12% to $114.5 million, with margins improving by 310 basis points to 36.2% [2] - Income from operations rose 9% to $21.9 million, while adjusted EBITDA surged 33% to $33.4 million from $25.2 million [2] - GAAP EPS fell 53.8% to $0.67 due to the absence of a prior-year tax benefit, but non-GAAP EPS increased by 33.3% to $0.76 [2] Full Fiscal Year Performance - For the full fiscal 2025, revenues increased by 2.1% to $1.23 billion, marking IDT's first annual revenue increase since 2021 [3] - Net income attributable to IDT rose 18.1% to $76.1 million, driving GAAP EPS up by 18.5% to $3.01 [3] - Non-GAAP EPS jumped 63.6% to $3.19, while adjusted EBITDA surged 43% to a record $128.7 million [3] Segmental Results - National Retail Solutions (NRS) saw recurring revenues grow 22% year over year in Q4 to $32.6 million, driven by merchant services and SaaS fees [4] - BOSS Money transactions increased by 22% year over year, with segment revenues rising 21% to $42.1 million [5] - net2phone's subscription revenues rose 8% to $22.2 million in Q4, with adjusted EBITDA increasing 42% to $3.5 million [6] - Traditional Communications revenues declined 3% to $217.4 million, primarily due to a 21% drop in BOSS Revolution calling revenues [7] Key Business Metrics - NRS achieved a monthly average recurring revenue per terminal of $299, up 4.9% year over year [8] - BOSS Money's digital channel revenues expanded 31% in Q4, accounting for over 80% of total remittance volume [8] Management Commentary - CEO Shmuel Jonas highlighted progress in digital initiatives across NRS, BOSS Money, and net2phone, including partnerships and upcoming digital capabilities [10] - Management emphasized a shift from retail to digital channels for BOSS Money, with plans for WhatsApp integration and a new digital wallet [10] Factors Influencing Results - The decline in GAAP net income was attributed to the absence of a one-off tax benefit from the prior year [11] - Increased churn in NRS's terminal base was noted, along with structural declines in international voice calling [11] Guidance - For fiscal 2026, IDT projects adjusted EBITDA of $141 million–$145 million, representing a 7% to 10% increase from fiscal 2025 levels [12] Other Developments - During fiscal 2025, IDT repurchased 221,823 shares for $10.1 million and maintained a quarterly dividend of $0.06 per share [13]