IDT Aims for $126M Adjusted EBITDA with NRS, BOSS Money, and AI-Driven net2phone Growth

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Updated: 08 Jun, 2025 • 0 • min read

Table of Contents

Earnings Call Insights: IDT Corporation (IDT) Q3 2025

Management View

CEO Samuel Jonas described the third quarter as "solid with strong year-over-year gains while slightly softer than our second quarter, in part because of expected seasonal factors." He highlighted a 133% year-over-year increase in consolidated income from operations, a 57% increase in consolidated adjusted EBITDA, and a 290% increase in EPS. Jonas pointed to NRS's 23% recurring revenue growth, driven by a 37% jump in merchant services and a 33% rise in SaaS fees, which offset a 12% drop in advertising and data revenue. He stated, "We continue to focus on developing new offerings that leverage the NRS platform to enable retailers to compete more effectively with large retail chains." Jonas also emphasized BOSS Money's 27% increase in transactions and 25% revenue growth, noting the shift toward higher gross profit per transaction and larger send amounts. At net2phone, Jonas detailed the launch of AI agents and the upcoming "Coach" service, saying, "We think will be very successful." For Traditional Communications, Jonas said, "income from operations and adjusted EBITDA both jumped over 30% year-over-year to $17.3 million and $19.3 million, respectively, underscoring that this segment continues to be a long-term cash generator." Jonas concluded, "we continue to scale our 3 primary growth businesses and their operating leverage in combination with the resilient contributions of our Traditional Communications businesses are driving expansion in IDT's cash generation and earnings."
CFO Marcelo Fischer stated, "Gross profit increased 15% year-over-year, reflecting increased contributions from each of our 4 reporting segments and was just under last quarter's record level. Our gross profit margin reached another record high of 37.1%." Fischer also noted, "Traditional Communications adjusted EBITDA margin for Q3 grew to 9.2% from 6.7% 1 year ago." He discussed a $1.4 million bad debt expense provision relating to a programmatic platform client and explained a $0.5 million compensation cost from the purchase of deferred stock units from NRS employees. Fischer confirmed, "Given our results to date, we remain fully on track to meeting that goal" of doubling first half adjusted EBITDA to $126 million for the full fiscal year.

Outlook

IDT's leadership confirmed guidance for full year fiscal 2025, reiterating, "we expected to double our first half $63 million adjusted EBITDA total for the full year to $126 million." Fischer said, "Given our results to date, we remain fully on track to meeting that goal." Jonas indicated ongoing investment in new offerings for NRS, BOSS Money, and net2phone, with specific focus on AI-powered services and delivery integrations. No new long-term targets or numerical projections beyond the adjusted EBITDA goal were disclosed. Fischer added, "we are now in the midst of our fiscal 2026 budgeting process, and I look forward to providing guidance for our next fiscal year during our fourth quarter earnings call in late September."

Financial Results

Jonas reported, "NRS' largest vertical, merchant services," saw 37% revenue growth, with SaaS fees up 33%. NRS generated $32 million in adjusted EBITDA over the past 12 months. BOSS Money transactions increased by 27% and revenue by 25%. The Fintech segment posted over $5 million in adjusted EBITDA, up from $244,000 a year ago. net2phone's adjusted EBITDA margins reached 15%, and subscription revenue increased 7% to $21.5 million. In Traditional Communications, income from operations reached $17.3 million and adjusted EBITDA $19.3 million. Fischer said, "Gross profit increased 15% year-over-year... just under last quarter's record level." IDT ended the quarter with $224 million in cash, cash equivalents, and current investments, up from $171 million, largely due to BOSS Money's weekly working capital cycle. Fischer disclosed the repurchase of 6 million employee-owned shares to satisfy tax obligations.

Q&A

Unidentified Analyst asked about NRS terminal revenue and sales strategy. Jonas responded, "more effort was put on bringing both new as well as existing retailers that don't yet have our merchant processing to take it this quarter, and that was definitely helped by many of the new salespeople that we brought on."
On net2phone's AI Agent customer profile, Jonas explained, "Most of the customers right now are existing net2phone customers... we're making a bigger effort in the future to sort of verticalize it into some of those areas."
Regarding the BOSS Money earnings program, Jonas said, "I'm not honestly sure about the results of the program so far. So I don't feel comfortable commenting."
In response to M&A strategy, Jonas stated, "we are definitely looking at acquisitions. We believe that you have to pay the right price to really extract the most value out of an acquisition."
On capital allocation, Fischer said, "we believe that repurchasing our stock is a good way of allocating our capital... At the same time, okay, we protect our cash to be able to deploy it towards growing the business towards acquisitions."
William Vaughan, Corient, asked about the pace of NRS additions. Jonas replied, "I don't know if I would agree that it's a slowing pace... the numbers are still very strong."
Vaughan inquired about food delivery integration; Jonas provided technical details and said, "there's a lot of features and functionalities that it has that help get more orders."
Vaughan asked about BOSS Money growth and profit maximization. Jonas replied, "It's on both. I mean what I would say is this, there is a dynamic happening... year-over-year, like our send volume is up 40%."
Alexander Rohr, Emmett, inquired about NRS ads business after reducing exposure to a major client. Jonas said, "we are definitely seeing better numbers so far this quarter than we did last quarter... our other ad partners are making up quite a fair share of it."
Rohr asked about net2phone EBITDA margin potential. Jonas explained, "it's not a simple question to answer... my own personal opinion is that they should be accretive by a substantial amount, but it might take a year or 2."

Sentiment Analysis

Analysts maintained a positive tone, with congratulatory remarks and probing on growth pacing, new products, and capital allocation. Questions were constructive, seeking clarity on growth drivers and margin potential.
Management was confident but occasionally cautious, especially around new initiatives' results and M&A. Jonas frequently emphasized ongoing investments, future plans, and the strength of current results, with statements such as "we expect it to get a little bit more verticalized over the next year or so."
Compared to the previous quarter, analyst sentiment remained optimistic, while management continued to express confidence but highlighted operational caution regarding acquisitions and capital allocation.

Quarter-over-Quarter Comparison

Guidance for adjusted EBITDA remains unchanged, with management reiterating the full-year $126 million target. The focus on operational leverage and high-growth business scaling is consistent with previous remarks.
The introduction of AI-powered services at net2phone and delivery integrations at NRS were highlighted as new strategic initiatives this quarter.
Analysts sustained their focus on growth drivers, margin expansion, and capital allocation. Management's tone was similar to last quarter, with continued emphasis on discipline in investment and capital returns.
Key metric changes include further growth in NRS recurring revenue, BOSS Money digital transaction volume, and continued margin improvements across segments.

Risks and Concerns

Fischer disclosed a $1.4 million bad debt expense provision related to a programmatic ad platform client, along with a deliberate reduction in sales to that client to manage receivables risk.
Management addressed the need for caution in capital allocation, balancing share repurchases with acquisition opportunities.
Jonas noted ongoing assessment of pricing optimization for BOSS Money, acknowledging that customers are sending fewer, larger transactions, which may impact growth and profitability dynamics.
Both Jonas and Fischer highlighted the impact of seasonality and working capital cycles, particularly in BOSS Money.

Final Takeaway

IDT reported strong year-over-year growth in income from operations, adjusted EBITDA, and EPS, with leadership reiterating confidence in reaching the full-year $126 million adjusted EBITDA target. The company advanced new initiatives in AI-powered services, online ordering, and delivery integrations, while maintaining discipline in capital allocation and M&A strategy. Management addressed operational risks, including receivables exposure and seasonality, and underscored the continued expansion and profitability of its core business segments.

Read the full Earnings Call Transcript