UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~FORM 10-Q~~

☒ ~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

FOR THE QUARTERLY PERIOD ENDED ~~JANUARY 31, 2018~~APRIL 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ ~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

Commission File Number: 1-16371

IDT CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware		22-3415036
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

520 Broad Street, Newark, New Jersey		07102
(Address of principal executive offices)		(Zip Code)

(973)438-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Class B common stock, par value $.01 per share		New York Stock Exchange

Trading symbol: IDT

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ☐ No ☒

As of ~~March 8, 2018,~~June 6, 2023, the registrant had the following shares outstanding:

~~Class A common stock, $.01 par value:~~		~~1,574,326 shares outstanding (excluding 1,698,000 treasury shares)~~
~~Class B common stock, $.01 par value:~~		~~23,279,953 shares outstanding (excluding 2,302,095 treasury shares)~~

Class A common stock, $.01 par value:1,574,326 shares outstanding (excluding 1,698,000 treasury shares)

Class B common stock, $.01 par value:23,922,011 shares outstanding (excluding 3,921,172 treasury shares)

IDT CORPORATION

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		13

Item 1.	Financial Statements (Unaudited)	13

	Consolidated Balance Sheets	13

	Consolidated Statements of ~~Operations~~Income	24

	Consolidated Statements of Comprehensive Income ~~(Loss)~~	35

	Consolidated Statements of Equity	6

	Consolidated Statements of Cash Flows	48

	Notes to Consolidated Financial Statements	59

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1926

Item 3.	Quantitative and Qualitative Disclosures About Market Risks	3137

Item 4.	Controls and Procedures	3137

PART II. OTHER INFORMATION		3238

Item 1.	Legal Proceedings	3238

Item 1A.	Risk Factors	3238

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3238

Item 3.	Defaults Upon Senior Securities	3238

Item 4.	Mine Safety Disclosures	3238

Item 5.	Other Information	38

Item 6.	Exhibits	38

SIGNATURES		39


~~Item 5.~~	~~Other Information~~	32

~~Item 6.~~	~~Exhibits~~	33

~~SIGNATURES~~		34

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

IDT CORPORATION

CONSOLIDATED BALANCE SHEETS

	January 31, 2018			July 31, 2017			April 30, 2023			July 31, 2022
	(Unaudited)			(Note 1)			(Unaudited)			(Note 1)
	(in thousands)						(in thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents	$	54,055		$	90,344		$	90,722		$	98,352
Marketable securities		46,202			58,272
Trade accounts receivable, net of allowance for doubtful accounts of $2,642 at January 31, 2018 and $2,657 at July 31, 2017		71,652			64,979
Restricted cash and cash equivalents								94,321			91,210
Debt securities								41,987			22,303
Equity investments								5,776			17,091
Trade accounts receivable, net of allowance for doubtful accounts of $6,133 at April 30, 2023 and $5,882 at July 31, 2022								65,942			64,315
Disbursement prefunding								40,428			21,057
Prepaid expenses		15,915			14,506			15,575			17,526
Other current assets		30,733			18,749			35,211			30,773
Assets held for sale		138,700			124,267

Total current assets		357,257			371,117			389,962			362,627
Property, plant and equipment, net		88,621			88,994
Property, plant, and equipment, net								39,083			36,866
Goodwill		11,447			11,326			26,596			26,380
Investments		24,350			26,894
Other intangibles, net								8,483			9,609
Equity investments								10,263			7,426
Operating lease right-of-use assets								6,141			7,210
Deferred income tax assets, net		8,653			11,841			27,501			36,701
Other assets		8,616			3,657			10,197			10,275
Assets held for sale		5,285			5,134

Total assets	$	504,229		$	518,963		$	518,226		$	497,094
Liabilities and equity

Liabilities, redeemable noncontrolling interest, and equity
Current liabilities:
Trade accounts payable	$	37,071		$	40,989		$	29,715		$	29,080
Accrued expenses		113,154			125,359			109,177			117,109
Deferred revenue		71,789			76,451			33,910			36,531
Customer deposits								86,111			85,764
Other current liabilities		4,683			4,659			42,762			36,588
Liabilities held for sale		129,423			115,318

Total current liabilities		356,120			362,776			301,675			305,072
Operating lease liabilities								3,572			4,606
Other liabilities		1,107			1,080			3,527			6,588
Liabilities held for sale		642			550

Total liabilities		357,869			364,406			308,774			316,266
Commitments and contingencies								-			-
Redeemable noncontrolling interest								10,449			10,191
Equity:
IDT Corporation stockholders’ equity:
Preferred stock, $.01 par value; authorized shares—10,000; no shares issued		—			—
Class A common stock, $.01 par value; authorized shares—35,000; 3,272 shares issued and 1,574 shares outstanding at January 31, 2018 and July 31, 2017		33			33
Class B common stock, $.01 par value; authorized shares—200,000; 25,582 and 25,561 shares issued and 23,280 and 23,264 shares outstanding at January 31, 2018 and July 31, 2017, respectively		256			256
Preferred stock, $.01 par value; authorized shares—10,000; no shares issued								—			—
Class A common stock, $.01 par value; authorized shares—35,000; 3,272 shares issued and 1,574 shares outstanding at April 30, 2023 and July 31, 2022								33			33
Class B common stock, $.01 par value; authorized shares—200,000; 27,798 and 27,725 shares issued and 23,892 and 24,112 shares outstanding at April 30, 2023 and July 31, 2022, respectively								278			277
Common stock, value
Additional paid-in capital		396,259			394,462			300,328			296,005
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of Class A common stock and 2,302 and 2,297 shares of Class B common stock at January 31, 2018 and July 31, 2017, respectively		(83,365	)		(83,304	)
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of Class A common stock and 3,906 and 3,613 shares of Class B common stock at April 30, 2023 and July 31, 2022, respectively								(109,410	)		(101,565	)
Accumulated other comprehensive loss		(2,531	)		(2,343	)		(14,475	)		(11,305	)
Accumulated deficit		(173,386	)		(163,370	)
Retained earnings (accumulated deficit)								16,685			(15,830	)

Total IDT Corporation stockholders’ equity		137,266			145,734			193,439			167,615
Noncontrolling interests		9,094			8,823			5,564			3,022

Total equity		146,360			154,557			199,003			170,637
Total liabilities and equity	$	504,229		$	518,963

Total liabilities, redeemable noncontrolling interest, and equity							$	518,226		$	497,094

See accompanying notes to consolidated financial statements.

IDT CORPORATION

CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~
~~(Unaudited)~~INCOME

Three Months Ended
January 31,

Six Months Ended
January 31,

2018 2017 2018 2017
(in thousands, except per share data)

Revenues $ 395,883 $ 367,556 $ 789,438 $ 736,707
Costs and expenses:
Direct cost of revenues (exclusive of depreciation and amortization) 337,229 310,913 673,738 623,941
Selling, general and administrative (i) 52,358 47,325 102,429 92,763
Depreciation and amortization 5,735 5,301 11,408 10,601
Severance 195 — 635 —
Total costs and expenses 395,517 363,539 788,210 727,305
Other operating expense (846 ) (889 ) (1,625 ) (1,088 )
(Loss) income from operations (480 ) 3,128 (397 ) 8,314
Interest income, net 286 309 648 609
Other income (expense), net 370 (419 ) (456 ) 1,974
Income (loss) before income taxes 176 3,018 (205 ) 10,897
Benefit from (provision for) income taxes 1,514 (1,761 ) 99 12,655
Net income (loss) 1,690 1,257 (106 ) 23,552
Net income attributable to noncontrolling interests (174 ) (382 ) (470 ) (758 )
Net income (loss) attributable to IDT Corporation $ 1,516 $ 875 $ (576 ) $ 22,794

Earnings (loss) per share attributable to IDT Corporation common stockholders:
Basic $ 0.06 $ 0.04 $ (0.02 ) $ 1.00
Diluted $ 0.06 $ 0.04 $ (0.02 ) $ 0.99
Weighted-average number of shares used in calculation of earnings (loss) per share:
Basic 24,643 22,768 24,635 22,740
Diluted 24,724 22,963 24,635 22,931

Dividends declared per common share $ 0.19 $ 0.19 $ 0.38 $ 0.38

(i) Stock-based compensation included in selling, general and administrative expenses $ 987 $ 1,426 $ 1,797 $ 2,128

(Unaudited)

	2023			2022			2023			2022
	Three Months Ended April 30,						Nine Months Ended April 30,
	2023			2022			2023			2022
	(in thousands, except per share data)

Revenues	$	299,295		$	328,353		$	935,047		$	1,035,494
Costs and expenses:
Direct cost of revenues (exclusive of depreciation and amortization)		210,250			247,565			664,281			796,516
Selling, general and administrative (i)		68,574			62,772			202,591			183,948
Depreciation and amortization		5,185			4,509			14,986			13,333
Severance		145			—			458			67

Total costs and expenses		284,154			314,846			882,316			993,864
Other operating expense, net (see Note 10)		(4,764	)		(179	)		(3,948	)		(709	)

Income from operations		10,377			13,328			48,783			40,921
Interest income, net		709			85			2,029			217
Other expense, net		(382	)		(5,068	)		(2,610	)		(24,234	)

Income before income taxes		10,704			8,345			48,202			16,904
Provision for income taxes		(2,960	)		(3,239	)		(12,594	)		(5,887	)

Net income		7,744			5,106			35,608			11,017
Net income attributable to noncontrolling interests		(854	)		(335	)		(3,093	)		(1,231	)

Net income attributable to IDT Corporation	$	6,890		$	4,771		$	32,515		$	9,786

Earnings per share attributable to IDT Corporation common stockholders:
Basic	$	0.27		$	0.18		$	1.27		$	0.38
Diluted	$	0.27		$	0.18		$	1.27		$	0.37

Weighted-average number of shares used in calculation of earnings per share:
Basic		25,518			25,901			25,544			25,706
Diluted		25,612			26,205			25,589			26,455

(i) Stock-based compensation included in selling, general and administrative expenses	$	1,679		$	1,245		$	3,537		$	1,840

(i)	Stock-based compensation included in selling, general and administrative expenses

See accompanying notes to consolidated financial statements.

IDT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(Unaudited)

	Three Months Ended January 31,						Six Months Ended January 31,						2023			2022			2023			2022
	2018			2017			2018			2017			Three Months Ended April 30,						Nine Months Ended April 30,
	(in thousands)												2023			2022			2023			2022
Net income (loss)	$	1,690		$	1,257		$	(106	)	$	23,552
													(in thousands)
Net income													$	7,744		$	5,106		$	35,608		$	11,017
Other comprehensive income (loss):
Change in unrealized loss on available-for-sale securities		(120	)		(40	)		(150	)		(63	)		115			(224	)		81			(547	)
Foreign currency translation adjustments		330			459			(38	)		(2,403	)		(879	)		(29	)		(3,251	)		(611	)
Other comprehensive income (loss)		210			419			(188	)		(2,466	)
Comprehensive income (loss)		1,900			1,676			(294	)		21,086
Other comprehensive loss														(764	)		(253	)		(3,170	)		(1,158	)
Comprehensive income														6,980			4,853			32,438			9,859
Comprehensive income attributable to noncontrolling interests		(174	)		(382	)		(470	)		(758	)		(854	)		(335	)		(3,093	)		(1,231	)
Comprehensive income (loss) attributable to IDT Corporation	$	1,726		$	1,294		$	(764	)	$	20,328
Comprehensive income attributable to IDT Corporation													$	6,126		$	4,518		$	29,345		$	8,628

See accompanying notes to consolidated financial statements.

IDT CORPORATION

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS (Unaudited)~~EQUITY

Six Months Ended
January 31,

2018

2017

(in thousands)
Operating activities
Net (loss) income $ (106 ) $ 23,552
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization 11,408 10,601
Deferred income taxes 3,212 (12,868 )
Provision for doubtful accounts receivable 696 126
Realized loss (gain) on marketable securities 9 (305 )
Interest in the equity of investments (77 ) (295 )
Stock-based compensation 1,797 2,128
Change in assets and liabilities:
Restricted cash and cash equivalents (3,663 ) 4,098
Trade accounts receivable (4,568 ) (8,189 )
Prepaid expenses, other current assets and other assets (15,109 ) (1,432 )
Trade accounts payable, accrued expenses, other current liabilities and other liabilities (20,344 ) (15,010 )
Customer deposits 4,481 (1,177 )
Deferred revenue (4,710 ) (2,043 )
Net cash used in operating activities (26,974 ) (814 )
Investing activities
Capital expenditures (10,931 ) (10,543 )
Proceeds from sale of interest in Straight Path IP Group Holding, Inc. 6,000 —
Purchase of IP Interest from Straight Path Communications Inc. (6,000 ) —
Payment for acquisition, net of cash acquired — (1,827 )
Cash used for investments — (8,304 )
Purchases of marketable securities (19,797 ) (17,209 )
Proceeds from maturities and sales of marketable securities 31,610 16,848
Net cash provided by (used in) investing activities 882 (21,035 )
Financing activities
Dividends paid (9,440 ) (8,765 )
Distributions to noncontrolling interests (717 ) (817 )
Proceeds from borrowings under revolving credit facility 19,080 —
Repayments of borrowings under revolving credit facility (19,080 ) —
Proceeds from exercise of stock options — 835
Proceeds from sale of member interests in CS Pharma Holdings, LLC. — 1,250
Repurchases of Class B common stock (61 ) (1,838 )
Net cash used in financing activities (10,218 ) (9,335 )
Effect of exchange rate changes on cash and cash equivalents 592 (829 )
Net decrease in cash and cash equivalents (35,718 ) (32,013 )
Cash and cash equivalents at beginning of period, including $5,716 held for sale at July 31, 2017 96,060 109,537
Cash and cash equivalents at end of period, including $6,287 held for sale at January 31, 2018 $ 60,342 $ 77,524
Supplemental schedule of non-cash investing and financing activities
Reclassification of liability for member interests in CS Pharma Holdings, LLC $ — $ 8,750

(Unaudited)

	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			(Accumulated Deficit) Retained Earnings		Noncontrolling Interests			Total Equity
	Three Months Ended April 30, 2023 (in thousands)
	IDT Corporation Stockholders
	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings		Noncontrolling Interests			Total Equity

BALANCE AT JANUARY 31, 2023	$	33	$	278	$	298,649	$	(106,906	)	$	(13,711	)	$	9,795	$	4,876		$	193,014
Repurchases of Class B common stock through repurchase program		—		—		—		(2,500	)		—			—		—			(2,500	)
Restricted Class B common stock purchased from employees		—		—		—		(4	)		—			—		—			(4	)
Stock-based compensation		—		—		1,679		—			—			—		—			1,679
Distributions to noncontrolling interests		—		—		—		—			—			—		(106	)		(106	)
Stock issued to certain executive officers for bonus payments
Exercise of stock options by Howard S. Jonas
Business acquisition
Other comprehensive loss		—		—		—		—			(764	)		—		—			(764	)
Net income		—		—		—		—			—			6,890		794			7,684
BALANCE AT APRIL 30, 2023	$	33	$	278	$	300,328	$	(109,410	)	$	(14,475	)	$	16,685	$	5,564		$	199,003

	Nine Months Ended April 30, 2023 (in thousands)
	IDT Corporation Stockholders
	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			(Accumulated Deficit) Retained Earnings			Noncontrolling Interests			Total Equity

BALANCE AT JULY 31, 2022	$	33	$	277	$	296,005	$	(101,565	)	$	(11,305	)	$	(15,830	)	$	3,022		$	170,637
Exercise of stock options		—		—		172		—			—			—			—			172
Repurchases of Class B common stock through repurchase program		—		—		—		(7,506	)		—			—			—			(7,506	)
Restricted Class B common stock purchased from employees		—		—		—		(339	)		—			—			—			(339	)
Stock issued to certain executive officers for bonus payments		—		—		615		—			—			—			—			615
Stock-based compensation		—		1		3,536		—			—			—			—			3,537
Distributions to noncontrolling interests		—		—		—		—			—			—			(293	)		(293	)
Other comprehensive loss		—		—		—		—			(3,170	)		—			—			(3,170	)
Net income		—		—		—		—			—			32,515			2,835			35,350
BALANCE AT APRIL 30, 2023	$	33	$	278	$	300,328	$	(109,410	)	$	(14,475	)	$	16,685		$	5,564		$	199,003

IDT CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY—Continued

(Unaudited)

	Three Months Ended April 30, 2022 (in thousands)
	IDT Corporation Stockholders
	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interests			Total Equity

BALANCE AT JANUARY 31, 2022	$	33	$	267	$	278,613	$	(69,387	)	$	(11,088	)	$	(37,843	)	$	2,385		$	162,980
Exercise of stock options by Howard S. Jonas		—		10		14,920		(18,788	)		—			—			—			(3,858	)
Exercise of stock options		—		—		137		—			—			—			—			137
Business acquisition		—		—		1,000		—			—			—			—			1,000
Stock-based compensation		—		—		1,245		—			—			—			—			1,245
Distributions to noncontrolling interests		—		—		—		—			—			—			(161	)		(161	)
Other comprehensive loss		—		—		—		—			(253	)		—			—			(253	)
Net income		—		—		—		—			—			4,771			299			5,070
BALANCE AT APRIL 30, 2022	$	33	$	277	$	295,915	$	(88,175	)	$	(11,341	)	$	(33,072	)	$	2,523		$	166,160

	Nine Months Ended April 30, 2022 (in thousands)
	IDT Corporation Stockholders
	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interests			Total Equity

BALANCE AT JULY 31, 2021	$	33	$	264	$	278,021	$	(60,413	)	$	(10,183	)	$	(42,858	)	$	1,750		$	166,614
Beginning balance value	$	33	$	264	$	278,021	$	(60,413	)	$	(10,183	)	$	(42,858	)	$	1,750		$	166,614
Exercise of stock options by Howard S. Jonas		—		10		14,920		(18,788	)		—			—			—			(3,858	)
Exercise of stock options		—		—		137		—			—			—			—			137
Restricted Class B common stock purchased from employees		—		—		—		(8,974	)		—			—			—			(8,974	)
Business acquisition		—		—		1,000		—			—			—			—			1,000
Stock-based compensation		—		3		1,837		—			—			—			—			1,840
Distributions to noncontrolling interests		—		—		—		—			—			—			(359	)		(359	)
Other comprehensive loss		—		—		—		—			(1,158	)		—			—			(1,158	)
Net income		—		—		—		—			—			9,786			1,132			10,918
BALANCE AT APRIL 30, 2022	$	33	$	277	$	295,915	$	(88,175	)	$	(11,341	)	$	(33,072	)	$	2,523		$	166,160
Ending balance value	$	33	$	277	$	295,915	$	(88,175	)	$	(11,341	)	$	(33,072	)	$	2,523		$	166,160

See accompanying notes to consolidated financial statements.

IDT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	2023			2022
	Nine Months Ended April 30,
	2023			2022
	(in thousands)
Operating activities
Net income	$	35,608		$	11,017
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14,986			13,333
Deferred income taxes		9,200			4,624
Provision for doubtful accounts receivable		1,180			1,578
Net unrealized loss from marketable securities		3,151			19,705
Stock-based compensation		3,537			1,840
Other		2,114			3,486
Change in assets and liabilities:
Trade accounts receivable		(2,084	)		(8,461	)
Disbursement prefunding, prepaid expenses, other current assets, and other assets		(27,043	)		(20,504	)
Trade accounts payable, accrued expenses, other current liabilities, and other liabilities		(6,220	)		(2,566	)
Customer deposits at IDT Financial Services Limited (Gibraltar-based bank)		(2,570	)		(9,843	)
Deferred revenue		(3,160	)		(948	)
Net cash provided by operating activities		28,699			13,261
Investing activities
Capital expenditures		(16,033	)		(13,794	)
Purchase of convertible preferred stock in equity method investment		(168	)		(1,051	)
Payments for acquisitions, net of cash acquired		—			(7,546	)
Purchases of debt securities and equity investments		(44,166	)		(11,277	)
Proceeds from maturities and sales of debt securities and redemptions of equity investments		34,309			7,752

Net cash used in investing activities		(26,058	)		(25,916	)
Financing activities
Distributions to noncontrolling interests		(293	)		(359	)
Proceeds from other liabilities		300			2,301
Repayment of other liabilities.		(2,031	)		(1,319	)
Proceeds from borrowings under revolving credit facility		2,383			2,566
Repayment of borrowings under revolving credit facility.		(2,383	)		(2,566	)
Proceeds from sale of redeemable equity in subsidiary		—			10,000
Proceeds from exercise of stock options		172			137
Repurchases of Class B common stock		(7,845	)		(12,832	)

Net cash used in financing activities		(9,697	)		(2,072	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents		2,537			(14,093	)

Net decrease in cash, cash equivalents, and restricted cash and cash equivalents		(4,519	)		(28,820	)
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period		189,562			226,916
Cash, cash equivalents, and restricted cash and cash equivalents at end of period	$	185,043		$	198,096

Supplemental schedule of non-cash investing and financing activities
Conversion of equity method investment’s secured promissory notes into convertible preferred stock	$	4,038			—
Stock issued to certain executive officers for bonus payments	$	615		$	—
Liabilities incurred for acquisitions	$	—		$	7,849
Shares of the Company’s Class B common stock issued for acquisition	$	—		$	1,000
Cashless exercise of stock options in exchange for shares of the Company’s Class B common stock	$	—		$	14,930

See accompanying notes to consolidated financial statements.

IDT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
~~(Unaudited)~~

(Unaudited)

Note 1—Basis of Presentation

The accompanying unaudited consolidated financial statements of IDT Corporation and its subsidiaries (the “Company” or “IDT”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and ~~footnotes~~notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and ~~six~~nine months ended ~~January 31, 2018~~April 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, ~~2018.~~2023. The balance sheet at July 31, ~~2017~~2022 has been derived from the Company’s audited financial statements at that date but does not include all of the information and ~~footnotes~~notes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017,~~2022, as filed with the U.S. Securities and Exchange Commission ~~(“SEC”~~(the “SEC”).

The Company’s fiscal year ends on July 31 of each calendar year. Each reference below to a fiscal year refers to the fiscal year ending in the calendar year indicated (e.g., fiscal ~~2018~~2023 refers to the fiscal year ending July 31, ~~2018)~~2023).

Note 2— ~~IDT Financial Services Holding Limited Assets~~Business Segment Information

As of August 1, 2022, the Company revised its reportable business segments primarily to reflect the growth of its financial technology businesses and ~~Liabilities Held for Sale~~

~~On June 22, 2017,~~their increased contributions to the Company’s ~~wholly-owned subsidiary IDT Telecom, Inc.~~consolidated results. The Company’s four reportable business segments, Fintech, National Retail Solutions (“IDT Telecom”) entered into a Share Purchase Agreement with JAR Fintech Limited (“JAR Fintech”) and JAR Capital Limited to sell the capital stock of IDT Financial Services Holding Limited, a company incorporated under the laws of Gibraltar and a wholly-owned subsidiary of IDT Telecom (“IDTFS Holding”NRS”), net2phone, and Traditional Communications, reflect management’s current approach to ~~JAR Fintech. IDTFS Holding~~analyzing results, its resource allocation strategy, and its assessment of business performance. NRS was previously included in the Company’s Fintech segment. In addition, certain lines of business were reclassified to the Fintech segment from the Traditional Communications segment. Comparative segment information has been reclassified and restated in all periods to conform to the current period presentation.

The Company’s reportable segments are distinguished by types of service, customers, and methods used to provide their services. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker. The accounting policies of the segments are the same as the accounting policies of the Company as a whole. There are no significant asymmetrical allocations to segments. The Company evaluates the performance of its business segments based primarily on income (loss) from operations.

The Fintech segment is ~~the sole shareholder~~comprised of BOSS Money, a provider of international money remittance and related value/payment transfer services, as well as other, significantly smaller, financial services businesses, including Leaf Global Fintech Corporation (“Leaf”), a provider of digital wallet services in emerging markets, a variable interest entity (“VIE”) that operates money transfer businesses (see Note 9), and IDT Financial Services Limited (“~~IDTFS”~~IDT Financial Services”), the Company’s Gibraltar-based bank.

The NRS segment is an operator of a ~~Gibraltar-based bank~~nationwide point of sale (“POS”) network providing independent retailers with store management software, electronic payment processing, and ~~e-money issuer, providing prepaid card~~other ancillary merchant services. NRS’ POS platform provides marketers with digital out-of-home advertising and transaction data.

The net2phone segment is comprised of net2phone’s cloud communications offerings.

The Traditional Communications segment includes IDT Digital Payments (formerly Mobile Top-Up), which enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts, BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States and Canada, and IDT Global, a wholesale provider of international voice and SMS termination and outsourced traffic management solutions ~~across the European Economic Area. The Share Purchase Agreement provides for an aggregate purchase price~~to telecoms worldwide. Traditional Communications also includes other small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode.

Corporate costs mainly include compensation, consulting fees, treasury, tax and accounting services, human resources, corporate purchasing, corporate governance including Board of Directors’ fees, internal and external audit, investor relations, corporate insurance, corporate legal, and other corporate-related general and administrative expenses. Corporate does not generate any revenues, nor does it incur any direct cost of revenues.

Operating results for the ~~outstanding equity interests~~business segments of ~~IDTFS Holding~~the Company were as follows:

Schedule of ~~approximately $4.1 million plus~~Operating Results of Business Segments

(in thousands)	Fintech			National Retail Solutions		net2phone			Traditional Communications		Corporate			Total
Three Months Ended April 30, 2023
Revenues	$	21,787		$	18,073	$	18,392		$	241,043	$	—		$	299,295
(Loss) income from operations		(1,318	)		2,079		(377	)		12,924		(2,931	)		10,377

Three Months Ended April 30, 2022
Revenues	$	17,215		$	11,383	$	15,555		$	284,200	$	—		$	328,353
(Loss) income from operations		(1,112	)		1,078		(2,257	)		17,579		(1,960	)		13,328

Nine Months Ended April 30, 2023
Revenues	$	61,995		$	57,208	$	53,136		$	762,708	$	—		$	935,047
(Loss) income from operations		(613	)		12,684		(2,008	)		47,195		(8,475	)		48,783

Nine Months Ended April 30, 2022
Revenues	$	46,044		$	32,075	$	42,003		$	915,372	$	—		$	1,035,494
(Loss) income from operations		(4,978	)		4,483		(9,315	)		57,804		(7,073	)		40,921

Note 3—Revenue Recognition

The Company earns revenue from contracts with customers, primarily through the provision of retail telecommunications and payment offerings as well as wholesale international voice and SMS termination. BOSS Money, NRS, and net2phone are technology-driven, synergistic businesses that leverage the Company’s core assets. BOSS Money and NRS’ revenues are primarily recognized at a point in time, and net2phone’s revenue is mainly recognized over time. Traditional Communications are mostly minute-based, paid-voice communications services, and revenue is primarily recognized at a point in time. The Company’s most significant revenue streams are from IDT Digital Payments, BOSS Revolution Calling, and IDT Global. IDT Digital Payments and BOSS Revolution Calling are sold direct-to-consumers and through distributors and retailers.

Disaggregated Revenues

The following table shows the Company’s revenues disaggregated by business segment and service offered to customers:

Schedule of Revenues Disaggregated by Business Segment and Service Offered to Customers

	2023		2022		2023		2022
	Three Months Ended April 30,				Nine Months Ended April 30,
	2023		2022		2023		2022
	(in thousands)
BOSS Money	$	19,441	$	15,084	$	54,644	$	39,207
Other		2,346		2,131		7,351		6,837
Total Fintech		21,787		17,215		61,995		46,044
National Retail Solutions		18,073		11,383		57,208		32,075
net2phone		18,392		15,555		53,136		42,003
IDT Digital Payments		101,030		115,864		316,207		360,594
BOSS Revolution Calling		77,646		91,768		246,729		297,688
IDT Global		54,473		67,094		174,715		229,407
Other		7,894		9,474		25,057		27,683
Total Traditional Communications		241,043		284,200		762,708		915,372
Total	$	299,295	$	328,353	$	935,047	$	1,035,494
Revenues	$	299,295	$	328,353	$	935,047	$	1,035,494

The following table shows the Company’s revenues disaggregated by geographic region, which is determined based on selling location:

Schedule of Revenues Disaggregated by Geographic Region


(in thousands)	Fintech		National Retail Solutions		net2phone		Traditional Communications		Total
Three Months Ended April 30, 2023
United States	$	21,124	$	18,073	$	9,571	$	166,854	$	215,622
Outside the United States:
United Kingdom		—		—		—		64,415		64,415
Other		663		—		8,821		9,774		19,258
Total outside the United States		663		—		8,821		74,189		83,673
Total	$	21,787	$	18,073	$	18,392	$	241,043	$	299,295
Revenues	$	21,787	$	18,073	$	18,392	$	241,043	$	299,295


(in thousands)	Fintech		National Retail Solutions		net2phone		Traditional Communications		Total
Three Months Ended April 30, 2022
United States	$	16,716	$	11,383	$	7,732	$	198,174	$	234,005
Outside the United States:
United Kingdom		—		—		—		74,567		74,567
Other		499		—		7,823		11,459		19,781
Total outside the United States		499		—		7,823		86,026		94,348
Total	$	17,215	$	11,383	$	15,555	$	284,200	$	328,353
Revenues	$	17,215	$	11,383	$	15,555	$	284,200	$	328,353


(in thousands)	Fintech		National Retail Solutions		net2phone		Traditional Communications		Total
Nine Months Ended April 30, 2023
United States	$	59,991	$	57,208	$	27,888	$	528,116	$	673,203
Outside the United States:
United Kingdom		—		—		—		202,355		202,355
Other		2,004		—		25,248		32,237		59,489
Total outside the United States		2,004		—		25,248		234,592		261,844
Total	$	61,995	$	57,208	$	53,136	$	762,708	$	935,047
Revenues	$	61,995	$	57,208	$	53,136	$	762,708	$	935,047


(in thousands)	Fintech		National Retail Solutions		net2phone		Traditional Communications		Total
Nine Months Ended April 30, 2022
United States	$	44,683	$	32,075	$	21,713	$	644,166	$	742,637
Outside the United States:
United Kingdom		—		—		—		233,647		233,647
Other		1,361		—		20,290		37,559		59,210
Total outside the United States		1,361		—		20,290		271,206		292,857
Total	$	46,044	$	32,075	$	42,003	$	915,372	$	1,035,494
Revenues	$	46,044	$	32,075	$	42,003	$	915,372	$	1,035,494

Remaining Performance Obligations

The Company does not have any significant revenue from performance obligations satisfied or partially satisfied in previous reporting periods. The Company’s remaining performance obligations at April 30, 2023 and July 31, 2022 primarily had an ~~amount equal~~original expected duration of one year or less.

Accounts Receivable and Contract Balances

The timing of revenue recognition may differ from the time of billing to the ~~value~~Company’s customers. Trade accounts receivable in the Company’s consolidated balance sheets represent unconditional rights to consideration. The Company would record a contract asset when revenue is recognized in advance of ~~IDTFS’ net assets,~~its right to bill and receive consideration. The Company has not identified any contract assets.

Contract liabilities arise when the Company receives consideration or bills its customers prior to providing the goods or services promised in the contract. The Company’s contract liability balance is primarily payments received for prepaid BOSS Revolution Calling. Contract liabilities are recognized as revenue when services are provided to the customer. The contract liability balances are presented in the Company’s consolidated balance sheets as “Deferred revenue”.

The following table presents information about the Company’s contract liability balance:

Schedule of Information About Contract Liabilities

	2023		2022		2023		2022
	Three Months Ended April 30,				Nine Months Ended April 30,
	2023		2022		2023		2022
	(in thousands)
Revenue recognized in the period from amounts included in the contract liability balance at the beginning of the period	$	16,772	$	18,751	$	21,890	$	25,437

Deferred Customer Contract Acquisition and Fulfillment Costs

The Company recognizes as an asset its incremental costs of obtaining a contract with a customer that it expects to recover. The Company’s incremental costs of obtaining a contract with a customer are sales commissions paid to employees and third parties on sales to end users. If the amortization period were one year or less for the asset that would be ~~paid at closing, subject~~recognized from deferring these costs, the Company applies the practical expedient whereby the Company charges these costs to ~~adjustments relating to~~expense when incurred. For net2phone sales, the Company defers these costs and amortizes them over the expected customer assets of IDTFS. The net asset value of IDTFS was $14.5 million at January 31, 2018. A portion of the purchase price will be placed in escrow at closing and released to IDT Telecom once all of the conditions have been met under the Share Purchase Agreement. The salerelationship period when it is expected to ~~close in the second quarter of calendar 2018, subject~~exceed one year.

The Company’s costs to regulatory approval and other customary conditions set forth in the Share Purchase Agreement. The remaining closing conditions are outside of the Company’s control and there can be no assurance that the sale will be completed.

~~The pending disposition of IDTFS Holding did~~fulfill its contracts do not meet the criteria to be ~~reported~~recognized as ~~a discontinued operation and accordingly, its results~~an asset, therefore these costs are charged to expense as incurred.

The Company’s deferred customer contract acquisition costs were as follows:

Schedule of ~~operations and cash flows~~Deferred Customer Contract Acquisition Costs


	April 30, 2023		July 31, 2022
	(in thousands)
Deferred customer contract acquisition costs included in “Other current assets”	$	4,343	$	4,085
Deferred customer contract acquisition costs included in “Other assets”		3,542		3,469
Total	$	7,885	$	7,554

The Company’s amortization of deferred customer contract acquisition costs during the periods were as follows:

Schedule of Amortization of Deferred Customer Contract Acquisition Costs

	2023		2022		2023		2022
	Three Months Ended April 30,				Nine Months Ended April 30,
	2023		2022		2023		2022
	(in thousands)
Amortization of deferred customer contract acquisition costs	$	1,226	$	1,121	$	3,631	$	3,163

Note 4—Leases

The Company’s leases primarily consist of operating leases for office space. These leases have remaining terms from less than one year to five years. net2phone also has operating leases for office equipment. Certain of these leases contain renewal options that may be exercised and/or options to terminate the lease. The Company has concluded that it is not ~~been reclassified.~~reasonably certain that it would exercise any of these options.

net2phone is the lessee under equipment leases that are classified as finance leases. The ~~IDTFS Holding~~ assets and liabilities ~~held for sale included the following:~~

January 31,
2018

July 31,
2017

(in thousands)
Current assets held for sale:
Cash and cash equivalents $ 6,287 $ 5,716
Restricted cash and cash equivalents 128,153 115,609
Trade accounts receivable, net of allowance for doubtful accounts of $3,239 and $2,550 at January 31, 2018 and July 31, 2017, respectively 2,919 1,844
Prepaid expenses 854 758
Other current assets 487 340
Total current assets held for sale $ 138,700 $ 124,267

Noncurrent assets held for sale:
Property, plant and equipment, net $ 19 $ 24
Other intangibles, net 164 165
Other assets 5,102 4,945
Total noncurrent assets held for sale $ 5,285 $ 5,134

Current liabilities held for sale:
Trade accounts payable $ 2,007 $ 372
Accrued expenses 252 226
Customer deposits 127,107 114,689
Other current liabilities 57 31
Total current liabilities held for sale $ 129,423 $ 115,318

Noncurrent liabilities held for sale:
Other liabilities $ 642 $ 550
Total noncurrent liabilities held for sale $ 642 $ 550

~~IDTFS Holding is included in the Telecom Platform Services segment. IDTFS Holding’s (loss) income before income taxes and (loss) income before income taxes attributable~~related to these finance leases are not material to the Company’s consolidated balance sheets.

The Company ~~which is included~~leases office and parking space in a building and parking garage located at 520 Broad Street, Newark, New Jersey that was previously owned by the ~~accompanying consolidated statements of operations, were as follows:~~

Three Months Ended
January 31,

Six Months Ended
January 31,

2018

2017

2018

2017

(in thousands)
(Loss) income before income taxes $ (559 ) $ (421 ) $ (1,009 ) $ 174

(Loss) income before income taxes attributable to IDT Corporation $ (559 ) $ (421 ) $ (1,009 ) $ 174

~~Note 3—Spin-Off of Rafael Holdings, Inc. and Investment in Rafael Pharmaceuticals, Inc.~~

~~On or about March 26, 2018, the Company expects to spin-off its~~Company’s former subsidiary, Rafael Holdings, Inc. (“~~RHI”~~Rafael”),. On August 22, 2022, Rafael sold the building and parking garage to an unrelated third party. The Company’s lease in that building continues with the ~~Company’s stockholders, so that RHI will be a separate publicly traded company. Approval~~new owner. The Company leases office space in Israel from Rafael. Howard S. Jonas, the Chairman of the ~~spin-off by~~Company (an executive officer position) and the ~~Company’s stockholders is not required. The~~Chairman of the Company’s Board of Directors, ~~believes that~~is also the spin-off will allow RHI to better focus on its strategic mission and that its potential can be better realized as an independent entity. The spin-off of RHI will occur by way of a pro rata distribution of RHI’s capital stock to the Company’s stockholders. On the distribution date, each of the Company’s stockholders as of the record date for the distribution of March 13, 2018 will receive one share of RHI Class A common stock for every two shares of the Company’s Class A common stock and one share of RHI Class B common stock for every two shares of the Company’s Class B common stock. Completion of the RHI spin-off is subject to receipt of a favorable opinion as to the spin-off’s tax-free status.

RHI owns the commercial real estate assets held by the Company and interests in two clinical stage pharmaceutical companies. The commercial real estate holdings consist of the Company’s headquarters building and its associated public garage in Newark, New Jersey, an office/data center building in Piscataway, New Jersey and a portion of a building in Israel that hosts offices for the Company and certain affiliates. The pharmaceutical holdings include debt interests and warrants in Rafael Pharmaceuticals, Inc. (“Rafael Pharma”), which is a clinical stage, oncology-focused pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells, and a majority equity interest in Lipomedix Pharmaceuticals Ltd., a pharmaceutical development company based in Israel. In addition, prior to the spin-off, the Company intends to transfer assets to RHI such that, at the time of the spin-off, RHI will have approximately $44 million in cash, cash equivalents, and marketable securities, plus $6 million in hedge fund and other investments.

RHI’s interests in Rafael Pharma, which are held through a 90%-owned non-operating subsidiary, IDT-Rafael Holdings, LLC (“IDT-Rafael Holdings”), include convertible notes issued by Rafael Pharma, and a warrant held by the Company and certain minority holders to purchase up to a majority equity stake in Rafael Pharma at the Company’s discretion in accordance with the terms of the convertible note and the warrant. The remaining 10% of IDT-Rafael Holdings is held by Howard S. Jonas, the Company’s Chairman of the Board, and Chairman of the Board of ~~Rafael Pharma.~~

~~IDT-Rafael Holdings had the contractual right to receive additional shares~~Directors and Executive Chairman of Rafael Pharma representing 10% of the outstanding capital stock of Rafael Pharma that will be issued upon the occurrence of any of the following: (i) Food and Drug Administration approval of a Rafael Pharma drug application, (ii) an initial public offering of Rafael Pharma at a valuation of over $500 million, or (iii) a sale of Rafael Pharma above certain valuations. Currently, none of the conditions have been satisfiedRafael. The Newark lease expires in April 2025 and the ~~right remains contingent. On September 14, 2017, IDT-Rafael Holdings distributed this right to its members on a pro rata basis such that~~Israel lease expires in July 2025. In the three and nine months ended April 30, 2023, the Company ~~received~~incurred lease costs of $33,000 and $0.2 million, respectively, in connection with the ~~right to 9% of~~Rafael leases, which excludes Newark lease costs after August 22, 2022. In the ~~outstanding capital stock of Rafael Pharma~~three and Howard Jonas received the right to 1% of the outstanding capital stock of Rafael Pharma. In addition, as compensation for assuming the role of Chairman of the Board of Rafael Pharma, and to create additional incentive to contribute to the success of Rafael Pharma, on September 19, 2017,nine months ended April 30, 2022, the Company ~~transferred its right to receive 9%~~incurred lease costs of $0.5 million and $1.4 million, respectively, in connection with the ~~outstanding capital stock of~~ Rafael ~~Pharma to Mr. Jonas. The right~~leases. Lease costs incurred in connection with the Rafael leases is ~~further transferable at the discretion of Mr. Jonas.~~

Howard Jonas and his wife Deborah Jonas jointly own $525,000 of Series C Convertible Notes of Rafael Pharma, and The Howard S. and Deborah Jonas Foundation own an additional $525,000 of Series C Convertible Notes of Rafael Pharma.

IDT-Rafael Holdings’ controlled 50%-owned subsidiary, CS Pharma Holdings, LLC (“CS Pharma”), holds Rafael Pharma’s Series D convertible promissory note with a principal amount of $10 million (the “Series D Note”). The Series D Note earns interest at 3.5% per annum, with principal and accrued interest due and payable on September 16, 2018. The Series D Note is convertible at the holder’s option into shares of Rafael Pharma’s Series D Preferred Stock. The Series D Note also includes a mandatory conversion into Rafael Pharma common stock upon a qualified initial public offering, and conversion at the holder’s option upon an unqualified financing event. In all cases, the Series D Note conversion price is based on the applicable financing purchase price.

~~IDT-Rafael Holdings and CS Pharma hold warrants to purchase shares of capital stock of Rafael Pharma representing~~included in operating lease cost in the aggregate up to 56% of the then issued and outstanding capital stock of Rafael Pharma, on an as-converted and fully diluted basis. The right to exercise warrants as to the first $10 million thereof is held by CS Pharma. The exercise price of the warrant is the lower of 70% of the price sold in an equity financing, or $1.25 per share, subject to certain adjustments. The minimum initial and subsequent exercises of the warrant shall be for such number of shares that will result in at least $5 million of gross proceeds to Rafael Pharma, or such lesser amount as represents 5% of the outstanding capital stock of Rafael Pharma, or such lesser amount as may then remain unexercised. The warrant will expire upon the earlier of December 31, 2020 or a qualified initial public offering or liquidation event. table below.

Supplemental disclosures related to the Company’s operating leases were as follows:

Schedule of Supplemental Disclosures Related to the Company's Operating Leases

	2023		2022		2023		2022
	Three Months Ended April 30,				Nine Months Ended April 30,
	2023		2022		2023		2022
	(in thousands)
Operating lease cost	$	817	$	743	$	2,384	$	2,130
Short-term lease cost		256		277		784		877
Total lease cost	$	1,073	$	1,020	$	3,168	$	3,007

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	842	$	724	$	2,431	$	2,089
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases		842		724		2,431		2,089

Schedule of Supplemental Disclosures Related Weighted Average Operating Leases

April 30, 2023

July 31, 2022

Weighted-average remaining lease term-operating leases

2.5 years

2.8 years

Weighted-average discount rate-operating leases

3.6

3.0

In the nine months ended April 30, 2023 and 2022, the Company obtained right-of-use assets of $1.7 million and $2.2 million, respectively, in exchange for new operating lease liabilities.

The Company’s aggregate operating lease liability was as follows:

Schedule of Aggregate Operating Lease Liability

	April 30, 2023		July 31, 2022
		(in thousands)
Operating lease liabilities included in “Other current liabilities”	$	2,811	$	2,899
Operating lease liabilities included in noncurrent liabilities		3,572		4,606

Total	$	6,383	$	7,505

Future minimum maturities of operating lease liabilities were as follows (in thousands):

Schedule of Future Minimum Maturities of Operating Lease Liabilities


Twelve-month period ending April 30:
2024	$	3,001
2025		2,658
2026		569
2027		379
2028		95
Thereafter		—
Total lease payments		6,702
Less imputed interest		(319	)

Total operating lease liabilities	$	6,383

Note 5—Cash, Cash Equivalents, and Restricted Cash and Cash Equivalents

The following table provides a reconciliation of cash, cash equivalents, and restricted cash and cash equivalents reported in the consolidated balance sheets that equals the total of the same amounts reported in the consolidated statements of cash flows:

Schedule of Cash, Cash Equivalents, and Restricted Cash and Cash Equivalents

	April 30, 2023		July 31, 2022
	(in thousands)
Cash and cash equivalents	$	90,722	$	98,352
Restricted cash and cash equivalents		94,321		91,210
Total cash, cash equivalents, and restricted cash and cash equivalents	$	185,043	$	189,562

At April 30, 2023 and July 31, 2022, restricted cash and cash equivalents included $86.9 million and $86.6 million, respectively, in restricted cash and cash equivalents for customer deposits held by IDT Financial Services. Certain of the electronic money financial services regulations in Gibraltar require IDT Financial Services to safeguard cash held for customer deposits, segregate cash held for customer deposits from any other cash that IDT Financial Services holds and utilize the cash only for the intended payment transaction.

613

Company Restricted Cash and Cash Equivalents

The Company treats unrestricted cash and cash equivalents held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC, which provide the Company’s ~~investment in Rafael Pharma, which was included in “Investments”~~international money transfer services in the ~~accompanying~~United States, as substantially restricted and unavailable for other purposes. At April 30, 2023 and July 31, 2022, “Cash and cash equivalents” in the Company’s consolidated balance sheets ~~consists~~included an aggregate of ~~the following:~~

January 31,
2018

July 31,
2017

(in thousands)
Series D Note (at fair value) $ 6,300 $ 6,300
Warrants (at cost) 5,400 5,400
Right to receive additional shares (at cost) — 400
Total investment in Rafael Pharma $ 11,700 $ 12,100

$16.9 million and $17.3 million, respectively, held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC, that was unavailable for other purposes.

Rafael Pharma is a variable interest entity, however, the Company has determined that it is not the primary beneficiary as the Company does not have the power to direct the activities of Rafael Pharma that most significantly impact Rafael Pharma’s economic performance. At January 31, 2018, the Company’s maximum exposure to loss as a result of its involvement with Rafael Pharma was its $11.7 million investment, since there were no other arrangements, events or circumstances that could expose the Company to additional loss.

Note 6—Debt Securities

~~Note 4—Marketable Securities~~

The following is a summary of ~~marketable~~available-for-sale debt securities:

Schedule of Available-for-sale Securities

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair Value

(in thousands)
Available-for-sale securities:
January 31, 2018:
Certificates of deposit* $ 24,441 $ 2 $ (1 ) $ 24,442
Federal Government Sponsored Enterprise notes 3,216 — (26 ) 3,190
International agency notes 399 — (9 ) 390
Mutual funds 5,425 40 — 5,465
Corporate bonds 3,332 — (39 ) 3,293
Equity 79 — (3 ) 76
U.S. Treasury notes 5,397 — (76 ) 5,321
Municipal bonds 4,029 — (4 ) 4,025
Total $ 46,318 $ 42 $ (158 ) $ 46,202
July 31, 2017:
Certificates of deposit* $ 29,011 $ 1 $ (7 ) $ 29,005
Federal Government Sponsored Enterprise notes 3,992 — (14 ) 3,978
International agency notes 291 — — 291
Mutual funds 5,353 77 — 5,430
Corporate bonds 4,643 — — 4,643
Equity 74 — (26 ) 48
U.S. Treasury notes 6,673 — — 6,673
Municipal bonds 8,201 4 (1 ) 8,204
Total $ 58,238 $ 82 $ (48 ) $ 58,272

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
April 30, 2023:
Certificates of deposit*	$	4,080	$	4	$	(1	)	$	4,083
U.S. Treasury bills and notes		30,560		85		(93	)		30,552
Government sponsored enterprises notes		3,858		—		(6	)		3,852
Corporate bonds		3,954		2		(456	)		3,500
Total	$	42,452	$	91	$	(556	)	$	41,987
July 31, 2022:
Certificates of deposit^*	$	2,000	$	—	$	(14	)	$	1,986
U.S. Treasury bills and notes		13,848		—		(114	)		13,734
Corporate bonds		3,966		1		(416	)		3,551
Municipal bonds		3,035		—		(3	)		3,032
Total	$	22,849	$	1	$	(547	)	$	22,303

*	Each of the Company’s certificates of deposit has a CUSIP, was purchased in the secondary market through a broker and may be sold in the secondary market.

~~At January 31, 2018 and July 31, 2017, the Company owned 24,923 and 23,227 shares, respectively, of Zedge, Inc. Class B common stock that had a fair value of $76,000 and $48,000, respectively.~~

Proceeds from maturities and sales of ~~available-for-sale~~debt securities and redemptions of equity investments were ~~$12.1~~$6.8 million and ~~$10.8~~$1.7 million in the three months ended ~~January 31, 2018~~April 30, 2023 and ~~2017,~~2022, respectively, and ~~$31.6~~$34.3 million and ~~$16.8~~$7.8 million in the ~~six~~nine months ended ~~January 31, 2018~~April 30, 2023 and ~~2017,~~2022, respectively. ~~The gross~~There were no realized gains or realized losses ~~that were included in earnings as a result~~from sales of ~~sales were $16,000 and $9,000~~debt securities in the three and ~~six~~nine months ended ~~January 31, 2018, respectively. The gross realized gains that were included in earnings as a result of sales were $0.3 million in the three~~April 30, 2023 and ~~six months ended January 31, 2017.~~2022. The Company uses the specific identification method in computing the ~~gross~~ realized gains and ~~gross~~ realized losses on the sales of ~~marketable~~debt securities.

The contractual maturities of the Company’s available-for-sale debt securities at ~~January 31, 2018~~April 30, 2023 were as follows:

Schedule of Contractual Maturities of Available-for-sale Debt Securities

	Fair Value		Fair Value
	(in thousands)			(in thousands)
Within one year	$	25,771	$	34,705
After one year through five years		14,890		6,109
After five years through ten years		—		1,127
After ten years		—		46

Total	$	40,661	$	41,987

The following available-for-sale debt securities were in an unrealized loss position for which other-than-temporary impairments ~~have~~were not ~~been~~ recognized:

Schedule of Available-for-sale Securities, Unrealized Loss Position

Unrealized Losses Fair Value
(in thousands)
January 31, 2018:
Certificates of deposit $ 1 $ 5,340
Federal Government Sponsored Enterprise notes 26 3,190
International agency notes 9 390
Corporate bonds 39 3,293
Equity 3 76
U.S. Treasury notes 76 5,321
Municipal bonds 4 3,067
Total $ 158 $ 20,677
July 31, 2017:
Certificates of deposit $ 7 $ 12,155
Federal Government Sponsored Enterprise notes 14 3,529
Equity 26 48
Municipal bonds 1 3,349
Total $ 48 $ 19,081

	Unrealized Losses		Fair Value
	(in thousands)
April 30, 2023:
Certificates of deposit	$	1	$	960
U.S. Treasury bills and notes		93		15,998
Government sponsored enterprises notes		6		3,852
Corporate bonds		456		3,444
Total	$	556	$	24,254
July 31, 2022:
Certificates of deposit	$	14	$	1,986
U.S. Treasury bills and notes		114		13,734
Corporate bonds		416		3,514
Municipal bonds		3		2,412
Total	$	547	$	21,646

~~At July 31, 2017, there were no securities in a continuous unrealized loss position for 12 months or longer. At January 31, 2018, the~~

The following available-for-sale debt securities included in the ~~table~~tables above were in a continuous unrealized loss position for 12 months or longer:

Schedule of Continuous Unrealized Loss Position for 12 Months or Longer

Unrealized Losses Fair Value
(in thousands)
Federal Government Sponsored Enterprise notes $ 13 $ 1,810
Municipal bonds 1 348
Total $ 14 $ 2,158

	Unrealized Losses		Fair Value
		(in thousands)
April 30, 2023:
U.S. Treasury bills and notes	$	78	$	880
Corporate bonds		454		3,400
Total	$	532	$	4,280
July 31, 2022:
U.S. Treasury bills and notes	$	72	$	892
Corporate bonds		234		1,731
Total	$	306	$	2,623

At ~~January~~April 30, 2023 and July 31, ~~2018,~~2022, the Company did not intend to sell any of the debt securities ~~that were~~included in ~~a continuous unrealized loss position for 12 months or longer,~~the table above, and it is not more likely than not that the Company will be required to sell ~~the~~any of these securities before recovery of ~~their amortized cost bases,~~the unrealized losses, which may be at maturity.

Note ~~5—Fair~~7—Equity Investments

Equity investments consist of the following:

Schedule of Equity Investments

	April 30, 2023		July 31, 2022
	(in thousands)
Zedge, Inc. Class B common stock, 42,282 shares at April 30, 2023 and July 31, 2022	$	84	$	117
Zedge, Inc. Class B common stock, 42,282 shares at April 30, 2023 and July 31, 2022	$	84	$	117
Rafael Holdings, Inc. Class B common stock, 278,810 and 290,214 shares at April 30, 2023 and July 31, 2022, respectively		586		586
Other marketable equity securities		1,112		4,089
Fixed income mutual funds		3,994		12,299

Current equity investments	$	5,776	$	17,091

Visa Inc. Series C Convertible Participating Preferred Stock (“Visa Series C Preferred”)	$	1,238	$	1,132
Visa Inc. Series A Convertible Participating Preferred Stock (“Visa Series A Preferred”)		—		1,230
Convertible preferred stock—equity method investment		3,064		1,001
Hedge funds		3,136		3,238
Other		2,825		825
Noncurrent equity investments	$	10,263	$	7,426

The Company received the shares of Zedge, Inc. (“Zedge”) Class B common stock and 28,320 of the shares of Rafael Class B common stock set forth in the table above in connection with the lapsing of restrictions on Zedge and Rafael restricted stock held by certain of the Company’s employees and the Company’s payment of taxes on behalf of its employees related thereto. The Company purchased 261,894 shares of Rafael Class B common stock in fiscal 2021. The Company sold 11,404 shares of Rafael Class B common stock in November 2022. Howard S. Jonas is the Vice-Chairman of the Board of Directors of Zedge.

On July 28, 2022, in connection with Visa Inc.’s second mandatory release assessment, the Company received 58 shares of Visa Series A Preferred and the conversion adjustment for Visa Series C Preferred was reduced to 3.645. In August 2022, the 58 shares of Visa Series A Preferred were converted into 5,800 shares of Visa Class A common stock, which the Company sold for $1.3 million.

The changes in the carrying value of the Company’s equity investments without readily determinable fair values for which the Company elected the measurement alternative was as follows:

Schedule of Carrying Value ~~Measurements~~of Equity Investments

	2023		2022			2023		2022
	Three Months Ended April 30,					Nine Months Ended April 30,
	2023		2022			2023		2022
	(in thousands)
Balance, beginning of period	$	1,494	$	2,539		$	1,401	$	2,743
Adjustment for observable transactions involving a similar investment from the same issuer		13		(130	)		106		(334	)
Impairments		—		—			—		—

Balance, end of the period	$	1,507	$	2,409		$	1,507	$	2,409

The Company increased the carrying value of the shares of Visa Series C Preferred it held by $13,000 and $0.1 million in the three and nine months ended April 30, 2023, respectively, and the Company decreased the carrying value of the shares of Visa Series C Preferred it held by $0.1 million and $0.3 million in the three and nine months ended April 30, 2022, respectively, based on the fair value of Visa Class A common stock, including a discount for lack of current marketability.

Unrealized gains and losses for all equity investments measured at fair value included the following:

Schedule of Unrealized (losses) Gains for All Equity Investments

	2023			2022			2023			2022
	Three Months Ended April 30,						Nine Months Ended April 30,
	2023			2022			2023			2022
	(in thousands)
Net losses recognized during the period on equity investments	$	(480	)	$	(3,416	)	$	(2,649	)	$	(20,862	)
Less: net gains recognized during the period on equity investments sold during the period		—			—			18			10
Unrealized losses recognized during the period on equity investments still held at the reporting date	$	(480	)	$	(3,416	)	$	(2,667	)	$	(20,872	)

The unrealized gains and losses for all equity investments measured at fair value in the table above included the following:

	2023			2022			2023			2022
	Three Months Ended April 30,						Nine Months Ended April 30,
	2023			2022			2023			2022
	(in thousands)
Unrealized gains (losses) recognized during the period on equity investments:
Rafael Class B common stock	$	11		$	(578	)	$	20		$	(14,064	)

Zedge Class B common stock	$	(9	)	$	(102	)	$	(33	)	$	(432	)
Unrealized losses recognized during the period on equity investments still held at the reporting date	$	(480	)	$	(3,416	)	$	(2,667	)	$	(20,872	)

Equity Method Investment

On February 2, 2021, the Company paid $4.0 million to purchase shares of Series B convertible preferred stock of a communications company (the equity method investee, or “EMI”), and on August 10, 2021, the Company paid $1.1 million to purchase shares of the EMI’s Series C convertible preferred stock and additional shares of the EMI’s Series B convertible preferred stock. The initial shares purchased represented 23.95% of the outstanding shares of the EMI on an as converted basis. The subsequent purchases increased the Company’s ownership to 26.57% on an as converted basis.

The Company accounted for this investment using the equity method since the Series B and Series C convertible preferred stock were in-substance common stock, and the Company could exercise significant influence over the operating and financial policies of the EMI.

As of July 31, 2022, the Company was the holder of secured promissory notes made by the EMI in exchange for loans of an aggregate of $2.5 million, which increased to an aggregate of $4.0 million including accrued interest as of April 6, 2023. The notes provided for interest on the principal amount at 15% per annum payable monthly. The notes were due and payable in February 2023 and April 2023.

On April 6, 2023, in accordance with an Agreement and Plan of Merger dated as of April 5, 2023, the EMI merged with and into its subsidiary, with the subsidiary being the surviving corporation. Effective with the merger, the EMI has no common stock outstanding, each share of the EMI’s convertible preferred stock was converted into shares of the subsidiary’s Series A Convertible Preferred Stock (“EMI Preferred Stock”), and the principal and accrued interest of the EMI’s secured promissory notes was converted into shares of EMI Preferred Stock (the “Conversions”). In addition, each of the EMI’s shareholders agreed to purchase additional shares of EMI Preferred Stock, for which the Company paid $0.2 million in April 2023 and $0.7 million in May 2023 to purchase the additional shares. Following the merger, the Conversions, and the purchases of additional shares of EMI Preferred Stock, the Company’s ownership increased to 33.3% of the EMI’s outstanding shares.

The Company accounts for this investment using the equity method since the Company can exercise significant influence over the operating and financial policies of the EMI but it does not have a controlling interest.

The Company determined that on the dates of the acquisitions, there were differences between its investment in the EMI and its proportional interest in the equity of the EMI of an aggregate of $8.2 million, which represented the share of the EMI’s customer list on the dates of the acquisitions attributed to the Company’s interest in the EMI. These basis differences are being amortized over the 6-year estimated life of the customer list. In the accompanying consolidated statements of income, amortization of equity method basis difference is included in the equity in the net loss of investee, which is recorded in “Other expense, net” (see Note 17).

The following ~~tables present~~table summarizes the change in the balance of the Company’s equity method investment:

Summary of Changes in Equity Method Investments

	2023			2022			2023			2022
	Three Months Ended April 30,						Nine Months Ended April 30,
	2023			2022			2023			2022
		(in thousands)
Balance, beginning of period	$	(374	)	$	2,509		$	1,001		$	2,901
Purchase of convertible preferred stock		168			—			168			1,051
Conversion of secured promissory notes into convertible preferred stock		4,038			—			4,038			—
Equity in the net loss of investee		(532	)		(583	)		(1,544	)		(1,662	)
Amortization of equity method basis difference		(236	)		(182	)		(599	)		(546	)

Balance, end of the period	$	3,064		$	1,744		$	3,064		$	1,744

Summarized financial information of the EMI was as follows:

Summary of Statements of Operations

	2023			2022			2023			2022
	Three Months Ended April 30,						Nine Months Ended April 30,
	2023			2022			2023			2022
	(in thousands)

Revenues	$	2,115		$	2,689		$	5,806		$	5,760
Costs and expenses:
Direct cost of revenues		1,693			4,402			4,921			7,307
Selling, general and administrative		2,080			1,265			5,488			3,928

Total costs and expenses		3,773			5,667			10,409			11,235

Loss from operations		(1,658	)		(2,978	)		(4,603	)		(5,475	)
Other expense		(266	)		(82	)		(1,108	)		(83	)

Net loss	$	(1,924	)	$	(3,060	)	$	(5,711	)	$	(5,558	)

Note 8—Fair Value Measurements

The following table presents the balance of assets and liabilities measured at fair value on a recurring basis:

Schedule of Balance of Assets Measured at Fair Value on a Recurring Basis

Level 1 (1)

Level 2 (2)

Level 3 (3)

Total

(in thousands)
January 31, 2018
Available-for-sale securities:
Marketable securities $ 10,862 $ 35,340 $ — $ 46,202
Rafael Pharma Series D Note — — 6,300 6,300
Total $ 10,862 $ 35,340 $ 6,300 $ 52,502
July 31, 2017
Available-for-sale securities:
Marketable securities $ 12,151 $ 46,121 $ — $ 58,272
Rafael Pharma Series D Note — — 6,300 6,300
Total $ 12,151 $ 46,121 $ 6,300 $ 64,572

	Level 1 (1)		Level 2 (2)		Level 3 (3)			Total
	(in thousands)
April 30, 2023
Debt securities	$	30,552	$	11,435	$	—		$	41,987
Equity investments included in current assets		5,776		—		—			5,776
Equity investments included in noncurrent assets		—		2,500		1,238			3,738
Total	$	36,328	$	13,935	$	1,238		$	51,501

Acquisition consideration included in:
Other current liabilities	$	—	$	—	$	(2,351	)	$	(2,351	)
Other noncurrent liabilities		—		—		(2,773	)		(2,773	)
Total	$	—	$	—	$	(5,124	)	$	(5,124	)

July 31, 2022
Debt securities	$	13,734	$	8,569	$	—		$	22,303
Equity investments included in current assets		17,091		—		—			17,091
Equity investments included in noncurrent assets		—		1,730		1,132			2,862
Total	$	30,825	$	10,299	$	1,132		$	42,256

Acquisition consideration included in:
Other current liabilities	$	—	$	—	$	(2,578	)	$	(2,578	)
Other noncurrent liabilities		—		—		(5,968	)		(5,968	)
Total	$	—	$	—	$	(8,546	)	$	(8,546	)

(1)	– quoted prices in active markets for identical assets or liabilities

(2)	– observable inputs other than quoted prices in active markets for identical assets and liabilities

(3)	– no observable pricing inputs in the market

~~(1) – quoted prices in active markets for identical assets or liabilities~~

~~(2) – observable inputs other than quoted prices in active markets for identical assets and liabilities~~

~~(3) – no observable pricing inputs in the market~~

At ~~January 31, 2018~~April 30, 2023 and July 31, ~~2017,~~2022, the Company ~~did~~had $3.1 million and $3.2 million, respectively, in investments in hedge funds, which were included in noncurrent “Equity investments” in the accompanying consolidated balance sheets. The Company’s investments in hedge funds were accounted for using the equity method, therefore they were not ~~have any liabilities~~ measured at fair ~~value on a recurring basis.~~value.

At January 31, 2018 and July 31, 2017, the fair value of the Rafael Pharma Series D Note, which was classified as Level 3, was estimated based on a valuation of Rafael Pharma and other factors that could not be corroborated by the market.

The following table summarizes the change in the balance of the Company’s assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)~~. There were no~~:

Schedule of Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

	2023		2022			2023		2022
	Three Months Ended April 30,					Nine Months Ended April 30,
	2023		2022			2023		2022
	(in thousands)
Balance, beginning of period	$	1,225	$	2,261		$	1,132	$	2,465
Total gains (losses) recognized in “Other expense, net”		13		(130	)		106		(334	)

Balance, end of period	$	1,238	$	2,131		$	1,238	$	2,131

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the period	$	—	$	—		$	—	$	—

The following table summarizes the change in the balance of the Company’s liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

Schedule of Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

	2023			2022			2023			2022
	Three Months Ended April 30,						Nine Months Ended April 30,
	2023			2022			2023			2022
	(in thousands)
Balance, beginning of period	$	6,609		$	703		$	8,546		$	1,025
Transfer into Level 3 from acquisitions		—			7,849			—			7,849
Payments		(1,800	)		—			(2,175	)		—
Total losses (gains) included in:
“Other operating expense, net”		216			—			(1,349	)		(303	)
Interest expense included in “Interest income, net”		97			—			97			—
“Foreign currency translation adjustment”		2			(4	)		5			(23	)

Balance, end of period	$	5,124		$	8,548		$	5,124		$	8,548

Change in unrealized gains or losses for the period included in earnings for liabilities held at the end of the period	$	—		$	—		$	—		$	—

In the nine months ended April 30, 2023, the Company paid an aggregate of $2.2 million in contingent consideration related to prior acquisitions. In addition, in the nine months ended April 30, 2023, the Company determined that the requirements for a portion of the contingent consideration payments related to the acquisition of Leaf would not be met, and, in the nine months ended April 30, 2022, the Company determined that the requirements for a contingent consideration payment related to an acquisition in December 2019 would not be met before the expiration date. The Company recorded gains of $1.6 million and $0.3 million in the nine months ended April 30, 2023 and 2022, respectively, on the write-off of these contingent consideration payment obligations, which were included in “Other operating expense, net” in the accompanying consolidated statements of income. Also, in the three and ~~six~~nine months ended ~~January 31, 2018 and 2017.~~

Three Months Ended
January 31,

Six Months Ended
January 31,

2018

2017

2018

2017

(in thousands)
Balance, beginning of period $ 6,300 $ 4,200 $ 6,300 $ 2,000
Purchases — — — 2,200
Balance, end of period $ 6,300 $ 4,200 $ 6,300 $ 4,200

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the period $ — $ — $ — $ —

~~At January 31, 2018 and July 31, 2017,~~April 30, 2023, the Company ~~had $8.8~~increased the estimated fair value of acquisition-related contingent consideration by $0.2 million, ~~and $8.6 million, respectively, in investments in hedge funds,~~ which ~~were~~was included in ~~“Investments”~~“Other operating expense, net” in the accompanying consolidated ~~balance sheets. The Company’s investments~~statements of income. There were no other changes in ~~hedge funds are accounted for using~~ the ~~equity method or~~estimated fair value of contingent consideration in the ~~cost method, therefore investments in hedge funds are not measured at fair value.~~nine months ended April 30, 2023 and 2022.

Fair Value of Other Financial Instruments

The estimated fair value of the Company’s other financial instruments was determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting these data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

Cash and cash equivalents, restricted cash and cash equivalents, other current assets, customer deposits, and other current liabilities.At ~~January 31, 2018~~April 30, 2023 and July 31, ~~2017,~~2022, the carrying amount of these assets and liabilities approximated fair value because of the short period of time to maturity. The fair value estimates for cash, cash equivalents, and restricted cash and cash equivalents were classified as Level 1 and other current assets, customer deposits, and other current liabilities were classified as Level 2 of the fair value hierarchy.

Other assets and other liabilities.At ~~January 31, 2018~~April 30, 2023 and July 31, ~~2017,~~2022, the carrying amount of these assets and liabilities approximated fair value. The fair values were estimated based on the Company’s assumptions, which were classified as Level 3 of the fair value hierarchy.

Note 9—Variable Interest Entity

The Company is the primary beneficiary of a VIE that operates money transfer businesses. The Company determined that, effective May 31, 2021, it had the power to direct the activities of the VIE that most significantly impact its economic performance, and the Company has the obligation to absorb losses of and the right to receive benefits from the VIE that could potentially be significant to it. As a result, the Company consolidates the VIE. The Company does not currently own any interest in the VIE and thus the net income incurred by the VIE was attributed to noncontrolling interests in the accompanying consolidated statements of income.

The VIE’s net income and aggregate funding provided by (repaid to) the Company were as follows:

Schedule of Net Income and Aggregate Funding Provided by (Repaid to) the Company by VIE

	2023		2022		2023		2022
	Three Months Ended April 30,				Nine Months Ended April 30,
	2023		2022		2023		2022
		(in thousands)
Net income of the VIE	$	43	$	72	$	208	$	72

Aggregate funding provided by (repaid to) the Company, net	$	—	$	1	$	87	$	(95	)

The VIE’s summarized consolidated balance sheet amounts are as follows:

VIE’s Summarized Consolidated Balance Sheet

	April 30, 2023		July 31, 2022
		(in thousands)
Assets:
Cash and equivalents	$	2,607	$	1,808
Restricted cash		7,379		4,490
Trade accounts receivable, net		5		31
Prepaid expenses		101		14
Other current assets		1,240		1,387
Due from the Company		—		86
Property, plant, and equipment, net		325		467
Other intangibles, net		775		889

Total assets	$	12,432	$	9,172

Liabilities and noncontrolling interests:
Trade accounts payable	$	—	$	—
Accrued expenses		19		20
Other current liabilities		8,553		5,559
Due to the Company		1		—
Accumulated other comprehensive loss		49		(9	)
Noncontrolling interests		3,810		3,602

Total liabilities and noncontrolling interests	$	12,432	$	9,172

The VIE’s assets may only be used to settle the VIE’s obligations and may not be used for other consolidated entities. The VIE’s liabilities are non-recourse to the general credit of the Company’s other consolidated entities.

Note 10—Other Operating Expense, Net

The following table summarizes the other operating expense, net by business segment:

Schedule of Other Operating Expense, Net

	2023			2022			2023			2022
	Three Months Ended April 30,						Nine Months Ended April 30,
	2023			2022			2023			2022
	(in thousands)
Corporate—Straight Path Communications Inc. class action legal fees	$	(973	)	$	(1,410	)	$	(5,082	)	$	(5,081	)
Corporate—Straight Path Communications Inc. class action insurance claims		337			1,252			3,325			4,139
Fintech—write-off of contingent consideration liability		—			—			1,565			—
Fintech— government grants		—			13			382			13
net2phone—write-off of contingent consideration liability		—			—			—			303
net2phone—other		—			—			—			(10	)
Traditional Communications— cable telephony customer indemnification claim		(3,912	)		(33	)		(3,925	)		(68	)
Traditional Communications—contingent consideration liability		(216	)		—			(216	)		—
Traditional Communications—other		—			(1	)		3			(5	)

Total other operating expense, net	$	(4,764	)	$	(179	)	$	(3,948	)	$	(709	)

Straight Path Communications Inc. Class Action

As discussed in Note 16, the Company (as well as other defendants) has been named in a pending class action on behalf of the stockholders of the Company’s former subsidiary, Straight Path Communications Inc. (“Straight Path”). The Company incurred legal fees and recorded offsetting gains from insurance claims related to this action in the three and nine months ended April 30, 2023 and 2022.

Contingent Consideration Liabilities

In the nine months ended April 30, 2023, the Company determined that the requirements for a portion of the contingent consideration payments related to the Leaf acquisition would not be met. In addition, in the nine months ended April 30, 2022, the Company determined that the requirements for a contingent consideration payment related to an acquisition in December 2019 would not be met before the expiration date. The Company recognized gains on the write-off of these contingent consideration payment obligations in the Fintech and net2phone segments, respectively. Also, in the three and nine months ended April 30, 2023, the Company increased the estimated fair value of acquisition-related contingent consideration in its Traditional Communications segment by $0.2 million.

Government Grants

In the nine months ended April 30, 2023 and in the three and nine months ended April 30, 2022, Leaf received payments from government grants for the development and commercialization of blockchain-backed financial technologies.

Indemnification Claim

Beginning in June 2019, as part of a commercial resolution, the Company indemnified a cable telephony customer related to patent infringement claims brought against the customer. On May 8, 2023, the Company and the customer agreed to release the Company from the indemnification agreement in exchange for $3.9 million, of which $1.9 million was paid on May 10, 2023 and the remainder will be paid in five monthly invoice deductions of $0.4 million each.

Note 11—Revolving Credit Facility

The Company’s ~~investments at January 31, 2018~~subsidiary, IDT Telecom, Inc. (“IDT Telecom”), entered into a credit agreement, dated as of May 17, 2021, with TD Bank, N.A. for a revolving credit facility for up to a maximum principal amount of $25.0 million. IDT Telecom may use the proceeds to finance working capital requirements and for certain closing costs of the facility. At April 30, 2023 and July 31, ~~2017 included investments in~~2022, there were no amounts outstanding under this facility. In the ~~equity~~nine months ended April 30, 2023 and 2022, IDT Telecom borrowed and repaid an aggregate of ~~certain privately held entities~~$2.4 million and ~~other investments that are accounted~~$2.6 million, respectively, under the facility. The revolving credit facility is secured by primarily all of IDT Telecom’s assets. The principal outstanding bears interest per annum at the Intercontinental Exchange Benchmark Administration Ltd. LIBOR multiplied by the Regulation D maximum reserve requirement plus 125 to 175 basis points, depending upon IDT Telecom’s leverage ratio as computed for ~~at cost. It~~the most recent fiscal quarter. Interest is ~~not practicable to estimate~~payable monthly, and all outstanding principal and any accrued and unpaid interest is due on May 16, 2024. IDT Telecom pays a quarterly unused commitment fee on the ~~fair value of these investments because~~average daily balance of the ~~lack~~unused portion of ~~a quoted market price~~the $25.0 million commitment of 30 to 85 basis points, depending upon IDT Telecom’s leverage ratio as computed for the ~~shares~~most recent fiscal quarter. IDT Telecom is required to comply with various affirmative and negative covenants as well as maintain certain targets based on financial ratios during the term of ~~these entities, and~~ the ~~inability to estimate their fair value without incurring excessive cost. The carrying value~~revolving credit facility. As of ~~these investments was $10.4 million and $10.8 million at January 31, 2018~~April 30, 2023 and July 31, ~~2017, respectively, which~~2022, IDT Telecom was in compliance with all of the covenants.

Note 12—Equity

Stock Issued to Certain Executive Officers for Bonus Payments

In the nine months ended April 30, 2023, certain executive officers of the Company ~~believes was not impaired.~~

~~Note 6— Equity~~

~~Changes in the components~~received performance bonuses for fiscal 2022 of ~~equity were as follows:~~

Six Months Ended
January 31, 2018
Attributable to IDT Corporation Noncontrolling Interests Total
(in thousands)
Balance, July 31, 2017 $ 145,734 $ 8,823 $ 154,557
Dividends declared ($0.38 per share) (9,440 ) — (9,440 )
Restricted Class B common stock purchased from employees (61 ) — (61 )
Transfer of right to receive equity to Howard S. Jonas — (40 ) (40 )
Consolidation of Lipomedix Pharmaceuticals Ltd. — 558 558
Distributions to noncontrolling interests — (717 ) (717 )
Stock-based compensation 1,797 — 1,797
Comprehensive income:
Net loss (576 ) 470 (106 )
Other comprehensive loss (188 ) — (188 )
Comprehensive income (764 ) 470 (294 )
Balance, January 31, 2018 $ 137,266 $ 9,094 $ 146,360

~~Dividend Payments~~

In the six months ended January 31, 2018, the Company paid cash dividends of $0.38 per share on its Class A common stock and Class B common stock, or $9.4 million in total. In the six months ended October 31, 2016, the Company paid cash dividends of $0.38 per share on its Class A common stock and Class B common stock, or $8.8 million in total.

On March 5, 2018, the Company’s Board of Directors declared a dividend of $0.09 per share for the second quarter of fiscal 2018 to holders of the Company’s Class A common stock and Class B common stock. The dividend will be paid on or about March 23, 2018 to stockholders of record as of the close of business on March 19, 2018.

~~Stock Repurchases~~

~~The Company has a stock repurchase program for the repurchase of up to~~ an aggregate of ~~8.0~~ $ 1.2 million, of which one-half was paid in cash and one-half was paid in shares of the Company’s Class B common stock. ~~There were no repurchases under the program in the six months ended January 31, 2018 or 2017. At January 31, 2018, 8.0 million~~The Company issued 24,543 shares ~~remained available for repurchase under the stock repurchase program.~~

~~In the six months ended January 31, 2018 and 2017, the Company paid $0.1 million and $1.8 million, respectively, to repurchase 5,170 shares and 94,338 shares, respectively,~~ of its Class B common stock ~~that were tendered by employees~~with an issue date value of $0.6 million for the bonus payments.

2022Deferred Stock Units Equity Incentive Program

On November 30, 2022, the Company to satisfy the employees’ tax withholding obligations in connection with the lapsing of restrictions on awards of restricted stock. Such shares were repurchased by the Company based on their fair market value on the trading day immediately prior to the vesting date.

adopted an equity incentive program (under its 2015 Stock Option and Incentive ~~Plan~~Plan) in the form of grants of deferred stock units (“DSUs”) that, upon vesting, will entitle the grantees to receive shares of the Company’s Class B common stock. In the nine months ended April 30, 2023, the Company granted an aggregate of 193,225 DSUs to certain of its executive officers and other employees. The number of shares that will be issuable on each vesting date will vary between 50% to 200% of the number of DSUs that vest on that vesting date, depending on the market price for the underlying Class B common stock on the vesting date relative to the base price approved by the Compensation Committee of the Company’s Board of Directors of $25.45 per share (which was based on the market price at the time of the initial grants under this program). On May 17, 2023, the first vesting date under the program, in accordance with the program and based on certain elections made by grantees, the Company issued 41,945 shares of its Class B common stock for vested DSUs. Based on those elections, vesting for 30,909 DSUs was delayed until February 21, 2024. Subject to continued full time employment or other service to the Company, the remaining DSUs are scheduled to vest on February 21, 2024 and February 25, 2025. The grantees will have the right to elect a later vesting date no later than January 19, 2024 for the February 21, 2024 vesting date. A grantee will have the option to elect a later vesting date for one-half or all of the shares scheduled to vest on February 21, 2024 and any DSUs that do not vest based on the grantee’s election, will be eligible to vest on February 25, 2025. The Company estimated that the fair value of the DSUs on the date of grants was an aggregate of $5.2 million, which is being recognized on a graded vesting basis over the requisite service periods ending in February 2025. The Company used a risk neutral Monte Carlo simulation method in its valuation of the DSUs, which simulated the range of possible future values of the Company’s Class B common stock over the life of the DSUs. The weighted average grant date fair value per DSU was $27.20. At April 30, 2023, there was $2.9 million of total unrecognized compensation cost related to non-vested DSUs.

2019 Deferred Stock Units Equity Incentive Program

The Company had a prior equity incentive program in the form of DSUs that, upon vesting, entitled the grantees to receive shares of the Company’s Class B common stock. On January 5, 2022, the third and final vesting date under the program, the Company issued 301,296 shares of its Class B common stock in respect of DSUs that vested on that date.

Stock Option and Incentive Plan—Other

On December 14, ~~2017,~~2022, the Company’s stockholders approved an amendment to the Company’s 2015 Stock Option and Incentive Plan to increase the number of shares of the Company’s Class B common stock available for the grant of awards thereunder by an additional ~~0.3 million~~50,000 shares.

In the ~~six~~nine months ended ~~January 31, 2017,~~April 30, 2023, the Company received ~~proceeds~~cash from the exercise of ~~its~~ stock options of ~~$0.8 million. There were no stock option exercises in the six months ended January 31, 2018. In the six months ended January 31, 2017,~~$0.2 million, for which the Company issued ~~73,471~~12,500 shares of its Class B common stock. In the nine months ended April 30, 2022, the Company received cash from the exercise of stock options of $0.1 million, for which the Company issued 10,000 shares of its Class B common stock. In addition, in April 2022, Howard S. Jonas exercised stock options for 1.0 million shares of the Company’s Class B common stock that were granted on May 2, 2017. The exercise price of these options was $14.93 per share and the expiration date was May 1, 2022. Mr. Jonas used 528,635 shares of the Company’s Class B common stock with a value of $14.9 million to pay the aggregate exercise price of the options. Mr. Jonas tendered 137,364 shares of the Company’s Class B common stock with a value of $3.9 million to satisfy a portion of his tax obligations in connection with his stock option exercises.

In the nine months ended April 30, 2023, the Company granted 15,000 shares of its Class B common stock to an employee. The Company recorded stock-based compensation expense and an increase in “Additional paid-in capital” of $0.4 million for this grant, which was the fair value of the shares on the grant date. In addition, in the nine months ended April 30, 2023, the Company granted 16,000 restricted shares of its Class B common stock to an executive officer. The Company estimated that the grant date fair value of the shares was $0.3 million, which is being recognized on a straight-line basis over the remaining vesting period that ends in February 2025.

Stock Repurchases

The Company has an existing stock repurchase program authorized by its Board of Directors for the repurchase of shares of the Company’s Class B common stock. The Board of Directors authorized the repurchase of up to 8.0 million shares in the aggregate. In the nine months ended April 30, 2023, the Company repurchased 280,130 shares of its Class B common stock for an aggregate purchase price of $7.5 million. There were no repurchases under the program in the nine months ended April 30, 2022. At April 30, 2023, 4.9 million shares remained available for repurchase under the stock repurchase program.

In the nine months ended April 30, 2023 and 2022, the Company paid $0.3 million and $9.0 million, respectively, to repurchase 13,547 and 200,438 shares, respectively, of the Company’s Class B common stock that were tendered by employees of the Company to satisfy the employees’ tax withholding obligations in connection with shares issued for bonus payments, the vesting of DSUs, and lapsing of restrictions on restricted stock. Such shares were repurchased by the Company based on their fair market value as of the close of business on the trading day immediately prior to the vesting date.

Note 13—Redeemable Noncontrolling Interest

On September 29, 2021, NRS sold shares of its Class B common stock representing 2.5% of its outstanding capital stock on a fully diluted basis to Alta Fox Opportunities Fund LP (“Alta Fox”) for cash of $10 million. Alta Fox has the right to request that NRS redeem all or any portion of the NRS common shares that it purchased at the per share purchase price during a period of 182 days following the fifth anniversary of this transaction. The redemption right shall terminate upon the consummation of (i) a sale of NRS or its assets for cash or securities that are listed on a national securities exchange, (ii) a public offering of NRS’ securities, or (iii) a distribution of NRS’ capital stock following which NRS’ common shares are listed on a national securities exchange.

The shares of NRS’ Class B common stock sold to Alta Fox have been classified as mezzanine equity in the accompanying consolidated balance sheets because they may be redeemed at the option ~~exercises.~~of Alta Fox, although the shares are not mandatorily redeemable. The carrying amount of the shares includes the noncontrolling interest in the net income of NRS. The net income attributable to the mezzanine equity’s noncontrolling interest during the periods were as follows:

Schedule of Net Income Attributable to Mezzanine Equity’s Noncontrolling Interest

	2023		2022		2023		2022
	Three Months Ended April 30,				Nine Months Ended April 30,
	2023		2022		2023		2022
	(in thousands)
Net income of NRS attributable to the mezzanine equity’s noncontrolling interest	$	60	$	36	$	258	$	99

Note 7— 14— Earnings ~~(Loss)~~ Per Share

Basic earnings per share is computed by dividing net income attributable to all classes of common stockholders of the Company by the weighted average number of shares of all classes of common stock outstanding during the applicable period. Diluted earnings per share is computed in the same manner as basic earnings per share, except that the number of shares is increased to include restricted stock still subject to risk of forfeiture and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase is anti-dilutive.

The weighted-average number of shares used in the calculation of basic and diluted earnings ~~(loss)~~ per share attributable to the Company’s common stockholders consists of the following:

Schedule of Weighted-average Number of Shares Used in the Calculation of Basic and Diluted Earnings Per Share

									2023		2022		2023		2022
	Three Months Ended January 31,				Six Months Ended January 31,				Three Months Ended April 30,				Nine Months Ended April 30,
	2018		2017		2018		2017		2023		2022		2023		2022
	(in thousands)								(in thousands)
Basic weighted-average number of shares		24,643		22,768		24,635		22,740		25,518		25,901		25,544		25,706
Effect of dilutive securities:
Stock options		10		77		—		58		7		301		9		575
Non-vested restricted Class B common stock		71		118		—		133		87		3		36		174

Diluted weighted-average number of shares		24,724		22,963		24,635		22,931		25,612		26,205		25,589		26,455

~~The following~~There were no shares ~~were~~or options excluded from the calculation of diluted earnings per share ~~computation:~~

Three Months Ended
January 31,

Six Months Ended
January 31,

2018

2017

2018

2017

(in thousands)
Stock options 1,160 3 1,273 18
Non-vested restricted Class B common stock — — 191 —
Shares excluded from the calculation of diluted earnings per share 1,160 3 1,464 18

~~In the three months ended January 31, 2018, and~~ in the three and ~~six~~nine months ended January 31, 2017, stock options with an exercise price that was greater than the average market price of the Company’s stock during the period were excluded from the diluted earnings per share computation.April 30, 2023 and 2022.

In the six months ended January 31, 2018, the diluted loss per share computation equals basic loss per share because the Company had a net loss and the impact of the assumed exercise of stock options and the vesting of restricted stock would have been anti-dilutive.

Note ~~8—Revolving Credit Facility~~

The Company’s subsidiary, IDT Telecom, entered into a credit agreement, dated July 12, 2012, with TD Bank, N.A. for a line of credit facility for up to a maximum principal amount of $25.0 million. The credit agreement was amended as of January 31, 2018. IDT Telecom may use the proceeds to finance working capital requirements, acquisitions and for other general corporate purposes. The line of credit facility is secured by primarily all of IDT Telecom’s assets. The principal outstanding bears interest per annum, at the option of IDT Telecom, at either (a) the U.S. Prime Rate less 125 basis points, or (b) the LIBOR rate adjusted by the Regulation D maximum reserve requirement plus 125 basis points. Interest is payable monthly and all outstanding principal and any accrued and unpaid interest is due on the maturity date of January 31, 2020. At January 31, 2018 and July 31, 2017, there were no amounts outstanding under the facility. The Company intends to borrow under the facility from time to time. IDT Telecom pays a quarterly unused commitment fee of 0.325% per annum on the average daily balance of the unused portion of the $25.0 million commitment. IDT Telecom is required to comply with various affirmative and negative covenants as well as maintain certain financial targets and ratios during the term of the line of credit, including restrictions on dividend payments on IDT Telecom capital stock and restrictions on IDT Telecom’s aggregate loans and advances to affiliates or subsidiaries.

~~Note 9—~~15—Accumulated Other Comprehensive Loss

The accumulated balances for each classification of other comprehensive ~~loss~~income (loss) were as follows:

Schedule of Accumulated Balances for Each Classification of Other Comprehensive Loss

Unrealized Gain (Loss) on Available-for-Sale Securities

Foreign Currency Translation

Accumulated Other Comprehensive Loss

Location of (Gain) Loss Recognized
(in thousands)
Balance, July 31, 2017 $ 2,134 $ (4,477 ) $ (2,343 )
Other comprehensive loss attributable to IDT Corporation before reclassifications (159 ) (38 ) (197 )
Less: reclassification for loss included in net loss 9 — 9 Other income (expense), net
Net other comprehensive loss attributable to IDT Corporation (150 ) (38 ) (188 )
Balance, January 31, 2018 $ 1,984 $ (4,515 ) $ (2,531 )

	Unrealized Loss on Available-for-Sale Securities			Foreign Currency Translation			Accumulated Other Comprehensive Loss
	(in thousands)
Balance, July 31, 2022	$	(546	)	$	(10,759	)	$	(11,305	)
Other comprehensive income (loss) attributable to IDT Corporation		81			(3,251	)		(3,170	)

Balance, April 30, 2023	$	(465	)	$	(14,010	)	$	(14,475	)

~~At both January 31, 2018~~

Note 16—Commitments and ~~July 31, 2017, unrealized gain on available-for-sale securities included unrealized gain~~Contingencies

COVID-19

In May 2023, the World Health Organization declared an end to COVID-19 as a public health emergency. As of ~~$2.1 million~~the date of this Quarterly Report, the Company continues to monitor the situation. The Company cannot predict with certainty the potential impact of COVID-19 if it re-invigorates on the ~~Rafael Pharma Series D Note.~~

~~Note 10—Business Segment Information~~

~~The Company has two reportable business segments, Telecom Platform Services and net2phone-Unified Communications as a Service (“net2phone-UCaaS”) (formerly known as UCaaS). The~~ Company’s ~~reportable segments are distinguished by types of service, customers and methods used to provide their services. The operating~~ results of ~~these business segments are regularly reviewed by the Company’s chief operating decision maker.~~operations, financial condition, or cash flows.

Telecom Platform Services and net2phone-UCaaS comprise the IDT Telecom division. The Telecom Platform Services segment provides retail telecommunications and payment offerings as well as wholesale international long distance traffic termination. The net2phone-UCaaS segment is comprised of (1) cable telephony, (2) cloud-based private branch exchange, or PBX, services offered to enterprise customers exclusively through value-added resellers, service providers, telecom agents and managed service providers, (3) Session Initiation Protocol, or SIP, trunking, which supports inbound and outbound domestic and international calling from an IP PBX, and (4) PicuP, a highly-automated business phone service that answers, routes and manages voice calls.

Beginning in the first quarter of fiscal 2018, the Telecom Platform Services segment includes Consumer Phone Services, which was previously reported as a separate segment. Consumer Phone Services provides consumer local and long distance services in certain U.S. states. Comparative results have been reclassified and restated as if Consumer Phone Services was included in Telecom Platform Services in all periods presented.

Operating segments not reportable individually are included in All Other. All Other includes the Company’s real estate holdings and other smaller businesses. Corporate costs include certain services, such as compensation, consulting fees, treasury and accounts payable, tax and accounting services, human resources and payroll, corporate purchasing, corporate governance including Board of Directors’ fees, internal and external audit, investor relations, corporate insurance, corporate legal, business development, and other corporate-related general and administrative expenses including, among others, facilities costs, charitable contributions and travel, as well as depreciation expense on corporate assets. Corporate does not generate any revenues, nor does it incur any direct cost of revenues.

The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its business segments based primarily on income (loss) from operations. IDT Telecom depreciation and amortization are allocated to Telecom Platform Services and net2phone-UCaaS because the related assets are not tracked separately by segment. There are no other significant asymmetrical allocations to segments.

~~Operating results for the business segments of the Company are as follows:~~

(in thousands) Telecom
Platform
Services net2phone-UCaaS All Other Corporate Total
Three Months Ended January 31, 2018
Revenues $ 387,065 $ 8,299 $ 519 $ — $ 395,883
Income (loss) from operations 4,589 (790 ) (1,019 ) (3,260 ) (480 )
Severance 195 — — — 195
Other operating expense — — — (846 ) (846 )

Three Months Ended January 31, 2017
Revenues $ 359,924 $ 7,142 $ 490 $ — $ 367,556
Income (loss) from operations 7,187 (464 ) 82 (3,677 ) 3,128
Other operating expense — — — (889 ) (889 )

Six Months Ended January 31, 2018
Revenues $ 772,129 $ 16,087 $ 1,222 $ — $ 789,438
Income (loss) from operations 9,150 (1,464 ) (1,650 ) (6,433 ) (397 )
Severance 605 — — 30 635
Other operating expense — — — (1,625 ) (1,625 )

Six Months Ended January 31, 2017
Revenues $ 721,435 $ 14,278 $ 994 $ — $ 736,707
Income (loss) from operations 13,732 (639 ) 172 (4,951 ) 8,314
Other operating expense — — — (1,088 ) (1,088 )

~~Note 11—Commitments and Contingencies~~

Legal Proceedings

On July 31, 2013, the Company completed a pro rata distribution of the common stock of the Company’s subsidiary Straight Path Communications Inc. (“Straight Path”) to the Company’s stockholders of record as of the close of business on July 25, 2013 (the “Straight Path Spin-Off”). On July 5, 2017, plaintiff JDS1, LLC, on behalf of itself and all other similarly situated stockholders of Straight Path, and derivatively on behalf of Straight Path as nominal defendant, filed a putative class action and derivative complaint in the Court of Chancery of the State of Delaware against the Company, The Patrick Henry Trust (a trust formed by Howard S. Jonas that held record and beneficial ownership of certain shares of Straight Path he formerly held), Howard S. Jonas, and each of Straight Path’s directors. The complaint alleges that the Company aided and abetted Straight Path Chairman of the Board and Chief Executive Officer Davidi Jonas, and Howard S. Jonas in his capacity as controlling stockholder of Straight Path, in breaching their fiduciary duties to Straight Path in connection with the settlement of claims between Straight Path and the Company related to potential indemnification claims concerning Straight Path’s obligations under the Consent Decree it entered into with the Federal Communications Commission (“FCC”), as well as the ~~proposed~~ sale of Straight Path’s subsidiary Straight Path IP Group, Inc. ~~(“SPIP”)~~ to the Company in connection with that settlement. That action was consolidated with a similar action that was initiated by The Arbitrage Fund. The Plaintiffs are seeking, among other things, (i) a declaration that the action may be maintained as a class action or in the alternative, that demand on the Straight Path Board is excused; (ii) that the term sheet is invalid; (iii) awarding damages for the unfair price stockholders ~~are receiving~~received in the merger between Straight Path and Verizon Communications Inc. for their shares of Straight Path’s Class B common stock; and (iv) ordering Howard S. Jonas, Davidi Jonas, and the Company to disgorge any profits for the benefit of the class Plaintiffs. On August 28, 2017, the Plaintiffs filed an amended complaint. On September 24, 2017, the Company filed a motion to dismiss the amended ~~complaint. The Company intends to vigorously defend the action. On November 20, 2017,~~complaint, which was ultimately denied, and which denial was affirmed by the Delaware ~~Chancery Court issued an order staying~~Supreme Court. On February 17, 2022, the case pending the closing of the transaction between Verizon and Straight Path on the grounds that the claims are not ripe. That transaction closed on February 28, 2018 and the Court was so notified. In the three and six months ended January 31, 2018, the Company incurred legal fees of $0.2 million and $1.0 million, respectively, related to this putative class action, which is included in “Other operating expense” in the accompanying consolidated statement of operations.

On May 5, 2004, the Company filed a complaint in the Supreme Court of the State of New York, County of New York, seeking injunctive relief and damages against Tyco Group, S.A.R.L., Tyco Telecommunications (US) Inc. (f/k/a TyCom (US) Inc.), Tyco International, Ltd., Tyco International (US) Inc., and TyCom Ltd. (collectively “Tyco”). The Company alleged that Tyco breached a settlement agreement that it had entered into with the Company to resolve certain disputes and civil actions among the parties. The Company alleged that Tyco did not provide the Company, as required under the settlement agreement, free of charge and for the Company’s exclusive use, a 15-year indefeasible right to use four Wavelengths in Ring Configuration (as defined in the settlement agreement) on a global undersea fiber optic network that Tyco was deploying at that time. After extensive proceedings, including several decisions and appeals, the New York Court of Appeals affirmed a lower court ~~decision to dismiss the Company’s claim and~~ denied the Company’s motion for ~~re-argument~~summary judgment. On March 10, 2022, JDS1, LLC withdrew its application to serve as class representative and lead plaintiff. On May 16, 2022, the court denied The Arbitrage Fund’s motion to serve as class representative and lead plaintiff, and approved intervenor Ardell Howard’s motion to serve as class representative. The trial commenced on August 29, 2022 for a period of ~~that decision. On June 23, 2015,~~five days, followed by another five-day period in December 2022. The court held closing arguments on May 3, 2023. The Company is vigorously defending this matter (see Note 10). At this stage, the Company filed a new summons and complaint against Tyco in the Supreme Court of the State of New York, County of New York alleging that Tyco breached the settlement agreement. In September 2015, Tyco filed a motionis unable to dismiss the complaint, which the Company opposed. Oral argument was held on March 9, 2016. On October 17, 2016, the judge granted Tyco’s motion and dismissed the complaint. In August 2017, the Company filed an appeal, which Tyco opposed. On November 22, 2017, oral argument was held on the appeal. On December 21, 2017, the Company’s appeal was denied. On January 22, 2018, the Company filed a motion for leave to appeal to the New York Court of Appeals. On February 6, 2018, Tyco opposed the Company’s motion. The Company awaits the court’s decision.estimate its potential liability, if any.

In addition to the foregoing, the Company is subject to other legal proceedings that have arisen in the ordinary course of business and have not been finally adjudicated. Although there can be no assurance in this regard, the Company believes that none of the other legal proceedings to which the Company is a party will have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

Sales Tax Contingency

On June 21, 2018, the United States Supreme Court rendered a decision in South Dakota v. Wayfair, Inc., holding that a state may require a remote seller with no physical presence in the state to collect and remit sales tax on goods and services provided to purchasers in the state, overturning certain existing court precedent. It is possible that one or more jurisdictions may assert that the Company has liability for periods for which it has not collected sales, use or other similar taxes, and if such an assertion or assertions were successful it could materially and adversely affect the Company’s business, financial position, and operating results. One or more jurisdictions may change their laws or policies to apply their sales, use or other similar taxes to the Company’s operations, and if such changes were made it could materially and adversely affect the Company’s business, financial position, and operating results.

Regulatory Fees Audit

The Company’s 2017 FCC Form 499-A, which reports its calendar year 2016 revenue, ~~related to payments due to~~was audited by the ~~FCC, is currently under audit by the~~Universal Service Administrative Company (“USAC”). The Internal Audit Division of USAC issued preliminary audit findings and the Company, in accordance with USAC’s audit procedures, appealed certain of the findings. USAC issued a final decision, and the final decision overturned one of the initial findings but left the remaining initial findings in place. The reversal will result in the elimination of a $1.8 million charge by the Universal Service ~~Administrative Company.~~Fund. The final decision upheld the imposition of a $2.9 million charge to the Federal Telecommunications Fund. The Company intends to appeal the USAC’s final decision to the FCC and does not intend to remit payment for the Federal Telecommunications Fund fees unless and until a negative decision on its appeal has been issued. In response to the aforementioned preliminary audit findings, the Company made certain changes to its filing policies and procedures for years that remain potentially under audit. At ~~January 31, 2018~~April 30, 2023 and July 31, ~~2017,~~2022, the Company’s accrued expenses included ~~$39.7~~$29.1 million and ~~$43.5~~$33.2 million, respectively, for ~~these~~FCC-related regulatory fees for the ~~years~~year covered by the audit, as well as prior and subsequent years.

Purchase Commitments

~~The~~At April 30, 2023, the Company had purchase commitments of ~~$18.7~~$7.9 million ~~at January 31, 2018, including the aggregate commitment under the Reciprocal Services Agreement described below.~~primarily for equipment and services.

~~Reciprocal Services Agreement~~Performance Bonds

In August 2017, the Company entered into a Reciprocal Services Agreement with a telecom operator in Central America for a full range of services, including, but not limited to, termination of inbound and outbound international long-distance voice calls. The Company has committed to pay such telecom operator monthly committed amounts during the term of the agreement. In addition, under certain limited circumstances, the parties may renegotiate the amount of the monthly payments. In the event the parties do not agree on re-pricing terms after good faith negotiations, then either party has the right to terminate the agreement. Pursuant to the agreement, in September 2017, the Company deposited $11.75 million into an escrow account as security for the benefit of the telecom operator, which is included in “Other current assets” in the accompanying consolidated balance sheet.

~~Performance Bonds~~

~~IDT Payment Services and IDT Telecom have~~ performance bonds issued through third parties for the benefit of various states in order to comply with the states’ financial requirements for money remittance licenses and telecommunications ~~resellers, respectively.~~resellers. At ~~January 31, 2018,~~April 30, 2023, the Company had aggregate performance bonds of ~~$15.1~~$25.8 million outstanding.

~~Substantially Restricted Cash and Cash Equivalents~~Note 17—Other Expense, Net

The Company treats unrestricted cash and cash equivalents held by IDT Payment Services, which provides the Company’s international money transfer services in the United States, as substantially restricted and unavailable for other purposes. At January 31, 2018 and July 31, 2017, “Cash and cash equivalents” in the Company’s consolidated balance sheets included an aggregate of $10.0 million and $10.8 million, respectively, held by IDT Payment Services that was unavailable for other purposes.

~~Straight Path Communications Inc. Settlement Agreement and Mutual Release~~

The Company entered into various agreements with Straight Path prior to the Straight Path Spin-Off including a Separation and Distribution Agreement to effect the separation and provide a framework for the Company’s relationship with Straight Path after the spin-off. On September 20, 2016, the Company received a letter of inquiry from the Enforcement Bureau of the FCC requesting certain information and materials related to an investigation of potential violations by Straight Path Spectrum LLC (formerly a subsidiary of the Company and currently a subsidiary of Straight Path) in connection with licenses to operate on the 28 GHz and 39 GHz bands of the Fixed Microwave Services. The Company has cooperated with the FCC in this matter and has responded to the letter of inquiry. If the FCC were to pursue separate action against the Company, the FCC could seek to fine or impose regulatory penalties or civil liability on the Company related to activities during the period of ownership by the Company.

The Separation and Distribution Agreement provides for the Company and Straight Path to indemnify each other for certain liabilities. The Company and Straight Path each communicated that it was entitled to indemnification from the other in connection with the inquiry described above and related matters. On October 24, 2017, the Company, Straight Path, SPIP and PR-SP IP Holdings LLC (“PR-SP”), an entity owned by Howard Jonas, entered into a Settlement Agreement and Release that provides for, among other things, the settlement and mutual release of potential liabilities and claims that may exist or arise under the Separation and Distribution Agreement between the Company and Straight Path. In exchange for the mutual release, the Company paid Straight Path an aggregate of $16 million in cash, Straight Path transferred to the Company its majority ownership interest in Straight Path IP Group Holding, Inc. (“New SPIP”), which holds the equity of SPIP, the entity that holds intellectual property primarily related to communications over computer networks, subject to the right to receive 22% of the net proceeds, if any, received by SPIP from licenses, settlements, awards or judgments involving any of the patent rights and certain transfers of the patents or related rights, that will be retained by Straight Path’s stockholders (such equity interest, subject to the retained interest right, the “IP Interest”), and the Company undertook certain funding and other obligations related to SPIP. The Settlement Agreement and Release allocates (i) $10 million of the payment and the retained interest right to the settlement of claims and the mutual release and (ii) $6 million to the transfer of the IP Interest.

Consistent with the contemplated arrangement that was previously disclosed, on October 24, 2017, the Company sold its entire majority interests in New SPIP to PR-SP in exchange for $6 million and the assumption by PR-SP of the funding and other obligations undertaken by the Company.

~~Note 12—~~Other ~~Income (Expense), Net~~

~~Other income (expense),~~expense, net consists of the following:

Three Months Ended
January 31,

Six Months Ended
January 31,

2018

2017

2018

2017

(in thousands)
Foreign currency transaction gains (losses) $ 169 $ (729 ) $ (559 ) $ 1,330
(Loss) gain on sale of marketable securities (16 ) 305 (9 ) 305
Gain on investments 179 32 59 295
Other 38 (27 ) 53 44
Total other income (expense), net $ 370 $ (419 ) $ (456 ) $ 1,974

Schedule of Other (Expense) Income, Net

	2023			2022			2023			2022
	Three Months Ended April 30,						Nine Months Ended April 30,
	2023			2022			2023			2022
	(in thousands)
Foreign currency transaction gains (losses)	$	893		$	(857	)	$	2,344		$	(259	)
Equity in net loss of investee		(768	)		(765	)		(2,143	)		(2,208	)
Losses on investments, net		(480	)		(3,416	)		(2,649	)		(20,862	)
Other		(27	)		(30	)		(162	)		(905	)

Total other expense, net	$	(382	)	$	(5,068	)	$	(2,610	)	$	(24,234	)

Note ~~13—~~18—Income ~~Tax and New Jersey Corporation Business Tax~~Taxes

~~Tax Cuts and Jobs Act~~

~~On December 22, 2017,~~At April 30, 2023, the ~~U.S. government enacted “An Act to Provide for Reconciliation Pursuant to Titles II and V~~Company’s best estimate of the Concurrent Resolution on the Budget for Fiscal Year 2018”, which is commonly referred to as “The Tax Cuts and Jobs Act” (the “Tax Act”). The Tax Act reduces the U.S. federal statutory corporateeffective tax rate ~~from 35.0%~~expected to ~~21.0%~~be applicable for fiscal 2023 was 28.7% compared to 16.9% at July 31, 2022. The changes in the estimated effective ~~January 1, 2018, requires companies~~tax rate were mainly due to ~~pay~~stock-based compensation and differences in the amount of taxable income earned in the various taxing jurisdictions.

Note 19—Defined Contribution Plan

The Company maintains a ~~one-time repatriation tax on earnings of~~401(k) Plan available to all employees meeting certain ~~foreign subsidiaries that were previously tax deferred (“transition tax”), and makes other changes~~eligibility criteria. The plan permits participants to contribute up to the ~~U.S. income tax code. Due~~maximum amount allowed by law. The plan provides for discretionary matching contributions that vest over the first five years of employment. The plan permits the discretionary matching contributions to be granted as of December 31 of each year. All contributions made by participants vest immediately into the participant’s account. In April 2023, the Company contributed cash of $1.1 million to the Company’s ~~July 31 fiscal year-end, the lower corporate income tax rate is phased in, resulting in a blended U.S. federal statutory tax rate of approximately 26.9%~~401(k) Plan for ~~the Company’s fiscal year ending July 31, 2018, and 21.0% for the Company’s fiscal years thereafter.~~matching contributions.

~~On December 22, 2017, the SEC issued Staff~~Note 20—Recently Issued Accounting ~~Bulletin No. 118 (“SAB 118”), expressing its views regarding~~Standards Not Yet Adopted

In June 2022, the Financial Accounting Standards Board (“FASB”)’s, issued Accounting Standards ~~Codification 740,~~Update (“ASU”) No. 2022-03, ~~Income Taxes~~Fair Value Measurement (Topic 820), inFair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, that clarifies that a contractual restriction on the ~~reporting period that includes the enactment date~~sale of an equity security is not considered part of the ~~Tax Act. SAB 118 recognizes that a registrant’s review~~unit of ~~certain income tax effects~~account of the Tax Act may be incomplete at the time financial statements are issued for the reporting period that includes the enactment date, including interim periods therein. Specifically, SAB 118 allows a company to report provisional estimates in the reporting period that includes the enactment date if the company does not have the necessary information available, prepared, or fully analyzed for certain income tax effects of the Tax Act. The provisional estimates would be adjusted during a measurement period not to exceed 12 months from the enactment date of the Tax Act, at which time the accounting for the income tax effects of the Tax Act is required to be completed.

As of January 31, 2018, the Company had not completed its accounting for the income tax effects of the Tax Act; however, the Company had made a reasonable estimate of the effect on its existing AMT credit carryover. Because the AMT credit will be refundable if not utilized in the next four years, the Company reversed the valuation allowance that offset the AMT credit. As a result, in the three months ended January 31, 2018, the Company recorded a noncurrent receivableequity security and, ~~an income tax benefit of $3.3 million for the anticipated refund. The reduction in the corporate tax rate~~therefore, is not ~~expected~~considered in measuring fair value. The ASU also requires specific disclosures related to ~~impact the Company’s results of operations or financial position in the foreseeable future because the income tax benefit from the reduced tax rate will be offset by the valuation allowance.~~

The transition tax is based on total post-1986 earnings and profits which were previously deferred from U.S. income taxes. The Company expects to utilize net operating loss carryforwards to offset any transition taxequity securities that it may incur. Therefore the Company did not record any provisional income tax expense for the transition tax for its foreign subsidiaries. At January 31, 2018, the undistributed earnings of the Company’s foreign subsidiaries continued to be permanently reinvested and the Company does not intend to repatriate any of the amounts. As a result, the Company has not provided for additional income or withholding taxes for the undistributed earnings or for any additional outside basis differences with respect to the foreign entities. The Company continues to review the anticipated impacts of the global intangible low taxed income (“GILTI”) and base erosion anti-abuse tax (“BEAT”), which are not effective until August 1, 2018. The Company has not recorded any impact associated with either GILTI or BEAT in the three months ended January 31, 2018.

The Company anticipates that its assumptions and estimates may change as a result of future guidance and interpretation from the Internal Revenue Service, the SEC, the FASB, and various other taxing jurisdictions. In particular, the Company anticipates that the U.S. state jurisdictions will continue to determine and announce their conformity or decoupling from the Tax Act, either in its entirety or with respect to specific provisions. Legislative and interpretive actions could result in adjustments to the Company’s provisional estimates when the accounting for the income tax effects of the Tax Act is completed. The Company will continue to evaluate the impact of the Tax Act on its financial statements, and will record the effect of any reasonable changes in its estimates and adjustments.

~~Elmion Netherlands B.V. Deferred Tax Assets~~

In the six months ended January 31, 2017, the Company determined that its valuation allowance on the losses of Elmion Netherlands B.V., a Netherlands subsidiary, was no longer required due to an internal reorganization that generated income and a projection of income in future periods. The Company recorded a benefit from income taxes of $16.6 million in the six months ended January 31, 2017 from the full recognition of the Elmion Netherlands B.V. deferred tax assets.

~~New Jersey Corporation Business Tax~~

In September 2017, the Company, IDT Domestic Telecom, Inc. (a subsidiary of the Company) and certain other affiliates, were certified by the New Jersey Economic Development Authority as having met all of the requirements of the Grow New Jersey Assistance Act Tax Credit Program. The corporation business tax credits to be received are a maximum of $21.1 million. The Company may claim a tax credit each tax year for ten years beginning in 2017. The tax credit can be applied to 100% of the Company’s New Jersey tax liability each year, and the unused amount of the annual credit can be carried forward. In addition, the Company may apply for a tax credit transfer certificate to sell unused tax credits to another business. The tax credits must be sold for no less than 75% of the value of the tax credits. The tax credits are subject to ~~reduction, forfeiture and recapture if, among other things, the number of full-time employees declines below the program or statewide minimum.~~

~~Note 14—Recently Issued Accounting Standard Not Yet Adopted~~

In May 2014, the FASB and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard that will supersede most of the current revenue recognition guidance under U.S. GAAP and International Financial Reporting Standards (“IFRS”). The goals of the revenue recognition project were to clarify and converge the revenue recognition principles under U.S. GAAP and IFRS and to develop guidance that would streamline and enhance revenue recognition requirements. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. The Company expects to adopt this standard on August 1, 2018 using the modified retrospective approach. The Company has identified its main revenue streams, which include Boss Revolution PIN-less international calling revenue, wholesale carrier services revenue, and domestic and international airtime top-up revenue. The Company is currently reviewing contracts and other relevant documents related to its wholesale carrier services revenue to determine how to apply the new standard to this revenue stream. The Company expects to continue its review and evaluation for its other revenue streams in fiscal 2018. Currently, the Company cannot reasonably estimate the impact that the adoption of the standard will have on its consolidated financial statements.

In January 2016, the FASB issued an ASU to provide more information about recognition, measurement, presentation and disclosure of financial instruments. The amendments in the ASU include, among other changes, the following: (1) equity investments (except those accounted for under the equity method or that result in consolidation) will be measured at fair value with changes in fair value recognized in net income, (2) a qualitative assessment each reporting period to identify impairment of equity investments without readily determinable fair values, (3) financial assets and financial liabilities will be presented separately by measurement category and form of financial asset on the balance sheet or the notes to the financial statements, and (4) an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. Entities will no longer be able to recognize unrealized holding gains and losses on equity securities classified as available-for-sale in other comprehensive income. In addition, a practicability exception will be available for equity investments that do not have readily determinable fair values and do not qualify for the net asset value practical expedient. These investments may be measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Entities will have to reassess at each reporting period whether an investment qualifies for this practicability exception.contractual sales restrictions. The Company will adopt the amendments in this ASU prospectively on August 1, ~~2018.~~2024. The Company is evaluating the impact that ~~the~~this ASU will have on its consolidated financial statements.

In February 2016, the FASB issued an ASU related to the accounting for leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company will adopt the new standard on August 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.

In June 2016, the FASB issued an ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking ~~“expected loss”~~current expected credit loss model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators, and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. The Company will adopt the new standard on August 1, ~~2020.~~2023. The Company ~~is evaluating the impact that~~does not expect the new standard ~~will~~to have a material impact on its consolidated financial statements.

In November 2016, the FASB issued an ASU that includes specific guidance on the classification and presentation of changes in restricted cash and cash equivalents in the statement of cash flows. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash or restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of the period and end of the period total amounts shown on the statement of cash flows. The ASU will be applied using a retrospective transition method to each period presented. The Company will adopt the amendments in this ASU on August 1, 2018. The adoption will impact the Company’s beginning of the period and end of the period cash and cash equivalents balance in its statement of cash flows, as well as its net cash provided by operating activities.

In January 2017, the FASB issued an ASU to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the current guidance, there are three elements of a business—inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a “set”) that is a business usually has outputs, outputs are not required to be present. In addition, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs, for example, by integrating the acquired set with their own inputs and processes. The amendments in this ASU provide a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this ASU (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the FASB has developed more stringent criteria for sets without outputs. Lastly, the ASU narrows the definition of the term output. The Company will adopt the amendments in this ASU on August 1, 2018. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.

17Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

In May 2017, the FASB issued an ASU to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Pursuant to this ASU, an entity should account for the effects of a modification unless all the following are met: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified (if the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification); (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The Company will adopt the amendments in this ASU prospectively to an award modified on or after on August 1, 2018. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.

In August 2017, the FASB issued an ASU intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the ASU includes certain targeted improvements to simplify the application of hedge accounting guidance in U.S. GAAP. The amendments in this ASU are effective for the Company on August 1, 2019. Early application is permitted. Entities will apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements will be applied prospectively. The Company is evaluating the impact that this ASU will have on its consolidated financial statements.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

The following information should be read in conjunction with the accompanying consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017,~~2022, as filed with the U.S. Securities and Exchange Commission (or SEC).

As used below, unless the context otherwise requires, the terms “the Company,” “IDT,” “we,” “us,” and “our” refer to IDT Corporation, a Delaware corporation, its predecessor, International Discount Telecommunications, Corp., a New York corporation, and their subsidiaries, collectively.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends,” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks, and uncertainties that could result in those differences include, but are not limited to, those discussed under Item 1A to Part I “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017.~~2022. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the SEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017.~~2022.

~~Overview~~

We are a multinational holding company with operations primarily in the telecommunications and payment industries. We have two reportable business segments, Telecom Platform Services and net2phone-Unified Communications as a Service, or net2phone-UCaaS (formerly known as UCaaS). The Telecom Platform Services segment provides retail telecommunications and payment offerings as well as wholesale international long distance traffic termination. The net2phone-UCaaS segment is comprised of (1) cable telephony, (2) cloud-based private branch exchange, or PBX, services offered to enterprise customers exclusively through value-added resellers, service providers, telecom agents and managed service providers, (3) Session Initiation Protocol, or SIP, trunking, which supports inbound and outbound domestic and international calling from an IP PBX, and (4) PicuP, a highly-automated business phone service that answers, routes and manages voice calls. Telecom Platform Services and net2phone-UCaaS comprise our IDT Telecom division. Operating segments not reportable individually are included in All Other. All Other includes our real estate holdings and other smaller businesses.

Since our inception, we have derived the majority of our revenues and operating expenses from IDT Telecom’s businesses. IDT Telecom’s revenues represented 99.8% and 99.9% of our total revenues in the six months ended January 31, 2018 and 2017, respectively.

On or about March 26, 2018, we expect to spin-off our subsidiary Rafael Holdings, Inc., or RHI, to our stockholders, so that RHI will be a separate publicly traded company. Approval of the spin-off by our stockholders is not required. Our Board of Directors believes that the spin-off will allow RHI to better focus on its strategic mission and that its potential can be better realized as an independent entity. The spin-off of RHI will occur by way of a pro rata distribution of RHI’s capital stock to our stockholders. On the distribution date, each of our stockholders as of the record date for the distribution of March 13, 2018 will receive one share of RHI Class A common stock for every two shares of our Class A common stock and one share of RHI Class B common stock for every two shares of our Class B common stock. Completion of the RHI spin-off is subject to receipt of a favorable opinion as to the spin-off’s tax-free status.

RHI owns the commercial real estate assets held by us and interests in two clinical stage pharmaceutical companies. The commercial real estate holdings consist of our headquarters building and its associated public garage in Newark, New Jersey, an office/data center building in Piscataway, New Jersey and a portion of a building in Israel that hosts offices for us and certain affiliates. The pharmaceutical holdings include debt interests and warrants in Rafael Pharmaceuticals, Inc., or Rafael Pharma, which is a clinical stage, oncology-focused pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells, and a majority equity interest in Lipomedix Pharmaceuticals Ltd., or Lipomedix, a pharmaceutical development company based in Israel. In addition, prior to the spin-off, we intend to transfer assets to RHI such that, at the time of the spin-off, RHI will have approximately $44 million in cash, cash equivalents, and marketable securities, plus $6 million in hedge fund and other investments.

~~Critical Accounting Policies~~

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our significant accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for fiscal 2017. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require application of management’s most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to the allowance for doubtful accounts, goodwill, valuation of long-lived and intangible assets, income taxes and regulatory agency fees, and IDT Telecom direct cost of revenues—disputed amounts. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for fiscal 2017.

Recently Issued Accounting ~~Standard~~Standards Not Yet Adopted

In ~~May 2014,~~June 2022, the Financial Accounting Standards Board, or FASB, ~~and the International~~issued Accounting Standards ~~Board jointly issued~~Update, or ASU, No. 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, that clarifies that a ~~comprehensive new revenue recognition standard that will supersede most~~contractual restriction on the sale of an equity security is not considered part of the ~~current revenue recognition guidance under U.S. GAAP and International Financial Reporting Standards, or IFRS. The goals~~unit of account of the ~~revenue recognition project were to clarify~~equity security and, converge the revenue recognition principles under U.S. GAAP and IFRS and to develop guidance that would streamline and enhance revenue recognition requirements. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. We expect to adopt this standard on August 1, 2018 using the modified retrospective approach. We have identified our main revenue streams, which include Boss Revolution PIN-less international calling revenue, wholesale carrier services revenue, and domestic and international airtime top-up revenue. We are currently reviewing contracts and other relevant documentstherefore, is not considered in measuring fair value. The ASU also requires specific disclosures related to our wholesale carrier services revenue to determine how to apply the new standard to this revenue stream. We expect to continue our review and evaluation for our other revenue streams in fiscal 2018. Currently, we cannot reasonably estimate the impact that the adoption of the standard will have on our consolidated financial statements.

In January 2016, the FASB issued an ASU to provide more information about recognition, measurement, presentation and disclosure of financial instruments. The amendments in the ASU include, among other changes, the following: (1) equity investments (except those accounted for under the equity method or that result in consolidation) will be measured at fair value with changes in fair value recognized in net income, (2) a qualitative assessment each reporting period to identify impairment of equity investments without readily determinable fair values, (3) financial assets and financial liabilities will be presented separately by measurement category and form of financial asset on the balance sheet or the notes to the financial statements, and (4) an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. Entities will no longer be able to recognize unrealized holding gains and losses on equity securities ~~classified as available-for-sale in other comprehensive income. In addition, a practicability exception will be available for equity investments~~ that do not have readily determinable fair values and do not qualify for the net asset value practical expedient. These investments may be measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Entities will haveare subject to ~~reassess at each reporting period whether an investment qualifies for this practicability exception.~~contractual sales restrictions. We will adopt the amendments in this ASU prospectively on August 1, ~~2018.~~2024. We are evaluating the impact that ~~the~~this ASU will have on our consolidated financial statements.

In February 2016, the FASB issued an ASU related to the accounting for leases. The new standard establishes a right-of-use, or ROU, model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. We will adopt the new standard on August 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are evaluating the impact that the new standard will have on our consolidated financial statements.

In June 2016, the FASB issued an ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking ~~“expected loss”~~current expected credit loss model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators, and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. We will adopt the new standard on August 1, ~~2020.~~2023. We ~~are evaluating the impact that~~do not expect the new standard ~~will~~to have a material impact on our consolidated financial statements.

In November 2016, the FASB issued an ASU that includes specific guidance on the classification and presentation of changes in restricted cash and cash equivalents in the statement of cash flows. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash or restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of the period and end of the period total amounts shown on the statement of cash flows. The ASU will be applied using a retrospective transition method to each period presented. We will adopt the amendments in this ASU on August 1, 2018. The adoption will impact our beginning of the period and end of the period cash and cash equivalents balance in our statement of cash flows, as well as our net cash provided by operating activities.

In January 2017, the FASB issued an ASU to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the current guidance, there are three elements of a business—inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a “set”) that is a business usually has outputs, outputs are not required to be present. In addition, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs, for example, by integrating the acquired set with their own inputs and processes. The amendments in this ASU provide a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this ASU (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the FASB has developed more stringent criteria for sets without outputs. Lastly, the ASU narrows the definition of the term output. We will adopt the amendments in this ASU on August 1, 2018. We are evaluating the impact that the new standard will have on our consolidated financial statements.

In May 2017, the FASB issued an ASU to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Pursuant to this ASU, an entity should account for the effects of a modification unless all the following are met: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified (if the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification); (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. We will adopt the amendments in this ASU prospectively to an award modified on or after on August 1, 2018. We are evaluating the impact that the new standard will have on our consolidated financial statements.

In August 2017, the FASB issued an ASU intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the ASU includes certain targeted improvements to simplify the application of hedge accounting guidance in U.S. GAAP. The amendments in this ASU are effective for us on August 1, 2019. Early application is permitted. Entities will apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements will be applied prospectively. We are evaluating the impact that this ASU will have on our consolidated financial statements.

Results of Operations

~~Three and Six Months Ended January 31, 2018 Compared to Three and Six Months Ended January 31, 2017~~

We evaluate the performance of our ~~operating~~ business segments based primarily on income (loss) from operations. Accordingly, the income and expense line items below income (loss) from operations are only included in our discussion of the consolidated results of operations.

COVID-19

In May 2023, the World Health Organization declared an end to COVID-19 as a public health emergency. As of the date of this Quarterly Report, we continue to monitor the situation. We cannot predict with certainty the potential impact of COVID-19 if it re-invigorates on our results of operations, financial condition, or cash flows.

Explanation of Performance Metrics

Our results of operations discussion include the following performance metrics:

	●	for National Retail Solutions, or NRS, active point of sale, or POS, terminals, payment processing accounts, and recurring revenue,
	●	for net2phone, seats and subscription revenue, and
	●	for Traditional Communications, minutes of use.

NRS uses two key metrics, among others, to measure the size of its customer base: active POS terminals and payment processing accounts. Active POS terminals are the number of POS terminals that have completed at least one transaction in the calendar month. It excludes POS terminals that are being installed. Payment processing accounts are NRS PAY accounts that can generate revenue. It excludes accounts that have been approved but not activated. NRS’ recurring revenue is NRS’ revenue in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, excluding its revenue from POS terminal sales.

net2phone’s cloud communications offerings are priced on a per-seat basis, with customers paying based on the number of users in their organization. net2phone’s subscription revenue is its revenue in accordance with U.S. GAAP excluding its equipment revenue and revenue generated by a legacy SIP trunking offering in Brazil.

The trends and comparisons between periods for the number of active POS terminals, NRS PAY accounts, seats served, recurring revenue, and subscription revenue are used in the analysis of NRS’ or net2phone’s revenues and direct cost of revenues and are strong indications of the top-line growth and performance of the business.

Minutes of use is a nonfinancial metric that measures aggregate customer usage during a reporting period. Minutes of use is an important factor in BOSS Revolution Calling’s and IDT Global’s revenue recognition since satisfaction of our performance obligation occurs when the customer uses our service. Minutes of use trends and comparisons between periods are used in the analysis of revenues and direct cost of revenues.

~~Telecom Platform Services Segment~~Three and Nine Months Ended April 30, 2023 Compared to Three and Nine Months Ended April 30, 2022

~~Beginning in~~As of August 1, 2022, we revised our reportable business segments primarily to reflect the ~~first quarter~~growth of ~~fiscal 2018, the Telecom Platform Services segment includes Consumer Phone Services, which~~our financial technology businesses and their increased contributions to our consolidated results. Our four reportable business segments, Fintech, NRS, net2phone, and Traditional Communications, reflect management’s current approach to analyzing results, its resource allocation strategy, and its assessment of business performance. NRS was previously ~~reported as a separate~~included in our Fintech segment. ~~Consumer Phone Services provides consumer local and long distance services in~~In addition, certain ~~U.S. states.~~lines of business were reclassified to the Fintech segment from the Traditional Communications segment. Comparative ~~results have~~segment information has been reclassified and restated ~~as if Consumer Phone Services was included in Telecom Platform Services~~ in all periods ~~presented.~~to conform to the current period presentation.

~~Telecom Platform Services,~~Fintech Segment

Fintech, which represented ~~97.8%~~7.3% and ~~97.9%~~5.2% of our total revenues in the ~~six~~three months ended ~~January 31, 2018~~April 30, 2023 and ~~2017,~~2022, respectively, and 6.6% and 4.4% of our total revenues in the nine months ended April 30, 2023 and 2022, respectively, is comprised of BOSS Money, a provider of international money remittance and related value/payment transfer services, as well as other, significantly smaller, financial services businesses, including Leaf Global Fintech Corporation, or Leaf, a provider of digital wallet services in emerging markets, a variable interest entity, or VIE, that operates money transfer businesses, and ~~distributes multiple communications and payment services across three broad business verticals:~~IDT Financial Services Limited, or IDT Financial Services, our Gibraltar-based bank.

●

~~Retail Communications provides international long-distance calling products primarily to foreign-born communities worldwide, with its core markets in the United States;~~

●

Wholesale Carrier Services is a global telecom carrier, terminating international long distance calls around the world for Tier 1 fixed line and mobile network operators, as well as other service providers; and

●

~~Payment Services provides payment offerings, including international and domestic airtime top-up and international money transfer.~~

	Three months ended April 30,						Change						Nine months ended April 30,						Change
	2023			2022			$			%			2023			2022			$			%
	(in millions)
Revenues:
BOSS Money	$	19.5		$	15.1		$	4.4			28.9	%	$	54.6		$	39.2		$	15.4			39.4	%
Other		2.3			2.1			0.2			10.1			7.4			6.8			0.6			7.5

Total revenues		21.8			17.2			4.6			26.6			62.0			46.0			16.0			34.6
Direct cost of revenues		(9.2	)		(6.6	)		2.6			39.8			(25.5	)		(18.6	)		6.9			36.6
Selling, general and administrative		(13.2	)		(11.1	)		2.1			18.0			(37.0	)		(30.7	)		6.3			20.8
Depreciation and amortization		(0.7	)		(0.6	)		0.1			23.0			(2.0	)		(1.6	)		0.4			22.8
Severance		—			—			—			—			—			(0.1	)		(0.1	)		(100.0	)
Other operating gains		—			—			—			—			1.9			—			(1.9	)		nm

Loss from operations	$	(1.3	)	$	(1.1	)	$	(0.2	)		(18.5	)%	$	(0.6	)	$	(5.0	)	$	4.4			87.7	%

Three months ended
January 31, Change Six months ended
January 31, Change
2018 2017 $ % 2018 2017 $ %
(in millions)
Revenues $ 387.1 $ 359.9 $ 27.2 7.5 % $ 772.1 $ 721.4 $ 50.7 7.0 %
Direct cost of revenues 334.6 308.0 26.6 8.6 668.6 617.7 50.9 8.2
Selling, general and administrative 43.6 40.7 2.9 6.8 85.7 81.8 3.9 4.7
Depreciation 4.1 4.0 0.1 3.5 8.1 8.2 (0.1 ) (0.7 )
Severance 0.2 — 0.2 nm 0.6 — 0.6 nm
Income from operations $ 4.6 $ 7.2 $ (2.6 ) (36.2 )% $ 9.1 $ 13.7 $ (4.6 ) (33.4 )%

~~nm—not meaningful~~

~~Revenues.~~ ~~Telecom Platform Services’ revenues, minutes of use and average revenue per minute for the three months ended January 31, 2018 and 2016 consisted of the following:~~

Three months ended
January 31,

Change

Six months ended
January 31,

Change

2018

2017

$/#

%

2018

2017

$/#

%

(in millions, except revenue per minute)
Telecom Platform Services Revenues
Retail Communications $ 145.2 $ 154.6 $ (9.4 ) (6.1 )% $ 291.4 $ 313.1 $ (21.7 ) (6.9 )%
Wholesale Carrier Services 172.5 145.8 26.7 18.3 343.0 289.1 53.9 18.6
Payment Services 69.4 59.5 9.9 16.5 137.7 119.2 18.5 15.5
Total Telecom Platform Services revenues $ 387.1 $ 359.9 $ 27.2 7.5 % $ 772.1 $ 721.4 $ 50.7 7.0 %
Minutes of use
Retail Communications 1,416 1,708 (292 ) (17.1 )% 2,889 3,537 (648 ) (18.3 )%
Wholesale Carrier Services 5,385 5,057 328 6.5 10,601 9,405 1,196 12.7
Total minutes of use 6,801 6,765 36 0.5 % 13,490 12,942 548 4.2 %
Average revenue per minute
Retail Communications $ 0.1026 $ 0.0905 $ 0.0121 13.3 % $ 0.1009 $ 0.0885 $ 0.0124 14.0 %
Wholesale Carrier Services 0.0320 0.0288 0.0032 11.1 0.0324 0.0307 0.0017 5.2

nm—not meaningful

~~Retail Communications’ revenue decreased 6.1% and 6.9%~~Revenues. Revenues from BOSS Money increased in the three and ~~six~~nine months ended ~~January 31, 2018, respectively,~~April 30, 2023 compared to the similar periods in fiscal ~~2017,~~2022 primarily because of increased transaction volume in BOSS Money’s direct-to-consumer digital and ~~Retail Communications’ minutes of use decreased 17.1% and 18.3%~~retail channels in the three and ~~six~~nine months ended ~~January 31, 2018, respectively,~~April 30, 2023 compared to the similar periods in fiscal 2017. The decrease in Retail Communications’ revenues and minutes of use was primarily due to increased competition from wireless network operators, mobile virtual network operators and alternative communications solutions such as over-the-top voice and messaging services. Revenue from our Boss Revolution international calling service, which is Retail Communications’ most significant offering, declined 4.2% and 4.8% in the three and six months ended January 31, 2018, respectively, compared to the similar periods in fiscal 2017, and Boss Revolution’s minutes of use declined 14.1% and 15.3% in the three and six months ended January 31, 2018, respectively, compared to the similar periods in fiscal 2017. In addition, the decrease in Retail Communications’ revenue and minutes of use in the three and six months ended January 31, 2018 compared to the similar periods in fiscal 2017 was due to continuing declines in Europe, South America and Asia, and continuing declines from traditional disposable calling cards in the U.S. Retail Communications’ revenue comprised 37.8% and 43.4% of Telecom Platform Services’ revenue in the six months ended January 31, 2018 and 2017, respectively.

Wholesale Carrier Services’ revenue increased 18.3% and 18.6% in the three and six months ended January 31, 2018, respectively, compared to the similar periods in fiscal 2017, and Wholesale Carrier Services’ minutes of use increased 6.5% and 12.7% in the three and six months ended January 31, 2018, respectively, compared to the similar periods in fiscal 2017, due to an increase in traditional carrier minutes of use and revenues. Wholesale Carrier Services’ revenue comprised 44.4% and 40.1% of Telecom Platform Services’ revenue in the six months ended January 31, 2018 and 2017, respectively.

Payment Services’ revenue increased 16.5% and 15.5% in the three and six months ended January 31, 2018, respectively, compared to the similar periods in fiscal 2017 due to increases in revenue from our international and domestic airtime top-up service, our international money transfer service (specifically transactions originating from our direct to consumer channels), and our National Retail Solutions point-of-sale terminal business. The increase in revenues from airtime top-up in the three and six months ended January 31, 2018 compared to the similar periods in fiscal 2017 reflected growth from new mobile partners and diversification of airtime top-up offerings. We have money transmitter licenses in 47 of the 49 states that require such a license,2022, as well as ~~in Puerto Rico~~the development and ~~Washington, D.C. Future growth in Payment Services is expected~~introduction of new platform functionalities enabling more flexible and granular pricing strategies. BOSS Money continues to benefit from the ~~Boss Revolution Money app that features international money transfers, airtime top-up~~expansion of its disbursement networks, particularly in Africa and ~~electronic gift cards. National Retail Solutions is also expected to continue expanding. Payment Services’ revenue comprised 17.8% and 16.5% of Telecom Platform Services’ revenue in~~ the ~~six months ended January 31, 2018 and 2017, respectively.~~Caribbean.

Three months ended
January 31, Six months ended
January 31,
2018 2017 Change 2018 2017 Change
Telecom Platform Services
Direct cost of revenues as a percentage of revenues 86.5 % 85.6 % 0.9 % 86.6 % 85.6 % 1.0 %

Direct Cost of Revenues. Direct cost of revenues ~~in Telecom Platform Services~~ increased in the three and ~~six~~nine months ended ~~January 31, 2018~~April 30, 2023 compared to the similar periods in fiscal 2017 mainly due to the 6.5% and 12.7% increase in Wholesale Carrier Services’ minutes of use in the three and six months ended January 31, 2018, respectively, compared to the similar periods in fiscal 2017. Direct cost of revenues as a percentage of revenues in Telecom Platform Services increased 90 and 100 basis points in the three and six months ended January 31, 2018, respectively, compared to the similar periods in fiscal 20172022 primarily due to a shift in the revenue mix within our Telecom Platform Services segment towards Wholesale Carrier Services, which typically exhibits higher direct cost of revenues as a percentage of revenues than our Retail Communications’ offerings.

~~Selling, General and Administrative~~~~. Selling, general and administrative expense in our Telecom Platform Services segment~~ increased in the three months ended January 31, 2018 compared to the similar period in fiscal 2017 primarily due to increases in employee compensation and credit card charges. Selling, general and administrative expense in our Telecom Platform Services segment increased in the six months ended January 31, 2018 compared to the similar period in fiscal 2017 primarily due to increases in employee compensation and credit card charges, partially offset by a decrease in marketing expense. The increase in credit card charges relates to increases in Boss Revolution and international money transfer direct to consumer transactions. As a percentage of Telecom Platform Services’ revenue, Telecom Platform Services’ selling, general and administrative expense decreased to 11.2% from 11.3% in the three months ended January 31, 2018 and 2017, respectively, and decreased to 11.1% from 11.3% in the six months ended January 31, 2018 and 2017, respectively.

~~Depreciation and Amortization.~~ Depreciation and amortization expense increased 3.5% in the three months ended January 31, 2018 compared to the similar period in fiscal 2017, and was substantially unchanged in the six months ended January 31, 2018 compared to the similar period in fiscal 2017. Depreciation and amortization expense increased due to increases in depreciation of capitalized costs of consultants and employees developing internal use software.

~~Severance.~~ ~~In the three and six months ended January 31, 2018, Telecom Platform Services completed an adjustment to its workforce and incurred severance expense of $0.2 million and $0.6 million, respectively.~~

~~net2phone-UCaaS Segment~~

Three months ended
January 31, Change Six months ended
January 31, Change
2018 2017 $ % 2018 2017 $ %
(in millions)
Revenues $ 8.3 $ 7.1 $ 1.2 16.2 % $ 16.1 $ 14.3 $ 1.8 12.7 %
Direct cost of revenues 2.6 2.9 (0.3 ) (10.7 ) 5.1 6.2 (1.1 ) (17.7 )
Selling, general and administrative 5.3 3.8 1.5 40.0 10.0 7.1 2.9 41.0
Depreciation 1.2 0.9 0.3 31.4 2.5 1.6 0.9 51.5
Loss from operations $ (0.8 ) $ (0.5 ) $ (0.3 ) (70.3 )% $ (1.5 ) $ (0.6 ) $ (0.9 ) (129.3 )%

~~Revenues.~~ net2phone-UCaaS’ revenue increased 16.2% and 12.7% in the three and six months ended January 31, 2018, respectively, compared to the similar periods in fiscal 2017 primarily due to continued growth from its cloud-based communications offering – both in the U.S. and in South America. In light of the strong growth in the cloud-based communications offering in Argentina and Brazil, net2phone-UCaaS anticipates additional international expansion in South America and Asia in fiscal 2018.

Three months ended
January 31, Six months ended
January 31,
2018 2017 Change 2018 2017 Change
net2phone-UCaaS
Direct cost of revenues as a percentage of revenues 31.5 % 41.0 % (9.5 )% 31.8 % 43.5 % (11.7 )%

~~Direct Cost of Revenues~~~~. Direct cost of revenues in net2phone-UCaaS decreased in the three and six months ended January 31, 2018 compared to the similar periods in fiscal 2017 primarily because of a decrease in the~~ direct cost of revenues in ~~cable telephony service, partially offset by an~~BOSS Money’s direct-to-consumer digital and retail channels, which reflected the increase in the direct cost of revenues of cloud-based communications. Direct cost of revenues as a percentage of revenues in net2phone-UCaaS decreased 950 and 1,170 basis points in the three and six months ended January 31, 2018, respectively, compared to the similar periods in fiscal 2017 primarily because of the decrease in the direct cost of revenues in cable telephony service, as well as decreases in direct cost of revenues as a percentage of revenues in cloud-based communications and SIP trunking.BOSS Money’s revenue.

~~Selling, General and Administrative~~. Selling, general and administrative expense in our net2phone-UCaaS segment increased in the three and six months ended January 31, 2018 compared to the similar periods in fiscal 2017 due to an increase in employee compensation resulting from an increase in the number of sales and information technology employees. We increased employees and compensation in our net2phone-UCaaS segment as we invested in the growth of net2phone-UCaaS’ lines of business.

~~Depreciation.~~ The increase in depreciation expense in the net2phone-UCaaS segment in the three and six months ended January 31, 2018 compared to the similar periods in fiscal 2017 was due to increases in depreciation of capitalized costs of consultants and employees developing internal use software to support our new products.

~~All Other~~

~~Currently, operating segments not reportable individually are included in All Other.~~

Three months ended
January 31, Change Six months ended
January 31, Change
2018 2017 $ % 2018 2017 $ %
(in millions)
Revenues $ 0.5 $ 0.5 $ — 5.8 % $ 1.2 $ 1.0 $ 0.2 23.0 %
Direct cost of revenues — — — — — — — —
Selling, general and administrative 1.1 — 1.1 nm 2.0 — 2.0 nm
Depreciation 0.4 0.4 — 3.4 0.8 0.8 — 3.2
(Loss) income from operations $ (1.0 ) $ 0.1 $ (1.1 ) nm $ (1.6 ) $ 0.2 $ (1.8 ) nm

~~nm—not meaningful~~

~~Revenues.~~In April 2016, we entered into two leases with tenants for space in our headquarters building at 520 Broad Street, Newark, New Jersey. One lease is for a portion of the sixth floor for an eleven-year term, of which the first six years are non-cancellable. The other lease is for a portion of the ground floor and basement for a term of ten years and seven months. The tenant under this lease has the right to extend the term for three consecutive periods of five years each. Rental income from the first lease commenced in December 2016, and rental income from the second lease commenced in March 2017. In addition, in April 2017, we entered into a third lease for another portion of the ground floor for a term of ten years, four months. Rental income from the third lease commenced in March 2018.

Selling, General and Administrative. Selling, general and administrative expense increased in the three and ~~six~~nine months ended ~~January 31, 2018~~April 30, 2023 compared to the similar periods in fiscal ~~2017~~2022 primarily due to increases in ~~expenses~~debit and credit card processing charges, employee compensation, and marketing expenses. The increase in card processing charges was the result of increased credit and debit card transactions through our BOSS Money app and other digital channels. As a percentage of Fintech’s revenue, Fintech’s selling, general and administrative expense decreased to 60.5% from 64.9% in the three months ended April 30, 2023 and 2022, respectively, and decreased to 59.8% from 66.6% in the nine months ended April 30, 2023 and 2022, respectively.

Depreciation and Amortization. Depreciation and amortization expense increased in the three and nine months ended April 30, 2023 compared to the similar periods in fiscal 2022 primarily due to increased depreciation of capitalized costs of consultants and employees developing internal use software.

Other Operating Gains. In the three months ended April 30, 2023 and 2022, Leaf received payments of nil and $13,000, respectively, and in the nine months ended April 30, 2023 and 2022, Leaf received payments of $0.3 million and $13,000, respectively, from government grants for the development and commercialization of blockchain-backed financial technologies. In addition, in the nine months ended April 30, 2023, we determined that the requirements for a portion of the contingent consideration payments related to ~~RHI, including Lipomedix,~~the Leaf acquisition would not be met. We recognized a gain of $1.6 million on the write-off of this contingent consideration payment obligation.

National Retail Solutions Segment

NRS, which represented 6.0% and 3.5% of our ~~commercial real estate. We began consolidating Lipomedix~~total revenues in ~~November 2017 after we purchased additional shares~~the three months ended April 30, 2023 and 2022, respectively, and 6.1% and 3.1% of our total revenues in the nine months ended April 30, 2023 and 2022, respectively, is an operator of a nationwide POS network providing independent retailers with store management software, electronic payment processing, and other ancillary merchant services. NRS’ POS platform provides marketers with digital out-of-home advertising and transaction data.

	Three months ended April 30,						Change					Nine months ended April 30,						Change
	2023			2022			$		%			2023			2022			$		%
	(in millions)
Revenues:
Recurring	$	16.5		$	10.0		$	6.5		65.4	%	$	52.6		$	27.6		$	25.0		90.8	%
Other		1.6			1.4			0.2		12.2			4.6			4.5			0.1		2.0

Total revenues		18.1			11.4			6.7		58.8			57.2			32.1			25.1		78.4
Direct cost of revenues		(2.6	)		(1.7	)		0.9		51.1			(6.8	)		(4.4	)		2.4		53.4
Selling, general and administrative		(12.8	)		(8.4	)		4.4		52.5			(36.0	)		(22.6	)		13.4		59.4
Depreciation and amortization		(0.6	)		(0.2	)		0.4		197.4			(1.7	)		(0.6	)		1.1		206.5

Income from operations	$	2.1		$	1.1		$	1.0		92.9	%	$	12.7		$	4.5		$	8.2		182.9	%

	April 30,				Change
	2023		2022		#		%

	(in thousands)
Active POS terminals		23.9		17.9		6.0		34	%
Payment processing accounts		14.1		9.2		4.9		53	%

Revenues. Revenues increased ~~our ownership~~in the three and nine months ended April 30, 2023 compared to ~~50.6%~~the similar periods in fiscal 2022 driven primarily by revenue growth from NRS’ merchant services and advertising and data, as well as the expansion of NRS’ POS network.

Direct Cost of Revenues. Direct cost of revenues increased in the ~~issued~~three and ~~outstanding ordinary shares~~nine months ended April 30, 2023 compared to the similar periods in fiscal 2022 primarily due to increases in the direct costs of ~~Lipomedix.~~NRS’ POS terminal sales.

Selling, General and Administrative. Selling, general and administrative expense ~~of Lipomedix~~increased in the three and ~~six~~nine months ended ~~January 31, 2018~~April 30, 2023 compared to the similar periods in fiscal 2022 primarily due to increases in sales commissions, as well as increases in employee compensation. As a percentage of NRS’ revenue, NRS’ selling, general and administrative expense decreased to 70.6% from 73.5% in the three months ended April 30, 2023 and 2022, respectively, and decreased to 63.0% from 70.5% in the nine months ended April 30, 2023 and 2022, respectively.

net2phone Segment

The net2phone segment, which represented 6.2% and 4.7% of our total revenues in the three months ended April 30, 2023 and 2022, respectively, and 5.7% and 4.1% of our total revenues in the nine months ended April 30, 2023 and 2022, respectively, is comprised of net2phone’s cloud communications offerings.

	Three months ended April 30,						Change						Nine months ended April 30,						Change
	2023			2022			$			%			2023			2022			$			%
	(in millions)
Revenues:
Subscription	$	17.1		$	14.2		$	2.9			20.1	%	$	49.0		$	38.5		$	10.5			27.2	%
Other		1.3			1.4			(0.1	)		(2.0	)		4.1			3.5			0.6			18.7

Total revenues		18.4			15.6			2.8			18.2			53.1			42.0			11.1			26.5
Direct cost of revenues		(3.0	)		(2.7	)		0.3			13.7			(8.9	)		(7.5	)		1.4			18.3
Selling, general and administrative		(14.4	)		(13.8	)		0.6			3.9			(42.1	)		(40.2	)		1.9			4.8
Depreciation and amortization		(1.4	)		(1.4	)		—			4.3			(4.1	)		(3.9	)		0.2			5.4
Other operating gain, net		—			—			—			—			—			0.3			(0.3	)		(100.0	)

Loss from operations	$	(0.4	)	$	(2.3	)	$	1.9			83.3	%	$	(2.0	)	$	(9.3	)	$	7.3			78.4	%

	April 30,				Change
	2023		2022		#		%
	(in thousands)
Seats served		340		279		61		22	%

Revenues. net2phone’s revenues increased in the three and nine months ended April 30, 2023 compared to the similar periods in fiscal 2022 driven primarily by the growth in subscription revenue in the U.S. and Latin American markets, which reflects the increase in seats served at April 30, 2023 compared to April 30, 2022 in those markets.

Direct Cost of Revenues. Direct cost of revenues increased in the three and nine months ended April 30, 2023 compared to the similar periods in fiscal 2022 primarily due to the increase in revenues, with the largest increases in the U.S. market. net2phone’s focus on mid-sized businesses, multi-channel strategies, and localized offerings generated revenue growth that exceeded the increase in direct cost of revenues.

Selling, General and Administrative. Selling, general and administrative expense increased in the three and nine months ended April 30, 2023 compared to the similar periods in fiscal 2022 primarily due to increases in sales commissions. As a percentage of net2phone’s revenues, net2phone’s selling, general and administrative expenses decreased to 78.1% from 88.8% in the three months ended April 30, 2023 and 2022, respectively, and decreased to 79.3% from 95.6% in the nine months ended April 30, 2023 and 2022, respectively.

net2phone derives a significant portion of its revenues from existing customers. Attracting new customers usually involves additional costs compared to retention of existing customers. If existing customers’ subscriptions and related usage decrease or are terminated, net2phone will need to spend more money to acquire new customers and still may not be able to maintain its existing level of revenues or profitability. In addition, net2phone needs to acquire new customers to increase its revenues. net2phone incurs significant sales and marketing expenses to acquire new customers. It is therefore expected that selling, general and administrative expenses will remain a significant percentage of net2phone’s revenues for the foreseeable future.

Depreciation and Amortization. Depreciation and amortization expense was ~~$0.4 million.~~substantially unchanged in the three months ended April 30, 2023 compared to the similar period in fiscal 2022. The increase in depreciation and amortization expense in the nine months ended April 30, 2023 compared to the similar period in fiscal 2022 was due to increased depreciation of net2phone’s telephone equipment leased to customers and increased depreciation of capitalized costs of consultants and employees developing internal use software.

Other Operating Gain, net. In the nine months ended April 30, 2022, we determined that the requirements for a contingent consideration payment related to an acquisition in December 2019 would not be met before the expiration date. net2phone recognized a gain of $0.3 million in the nine months ended April 30, 2022 on the write-off of this contingent consideration payment obligation.

Traditional Communications Segment

The Traditional Communications segment, which represented 80.5% and 86.6% of our total revenues in the three months ended April 30, 2023 and 2022, respectively, and 81.6% and 88.4% of our total revenues in the nine months ended April 30, 2023 and 2022, respectively, includes IDT Digital Payments (formerly Mobile Top-Up), which enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts, BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States and Canada, and IDT Global, a wholesale provider of international voice and SMS termination and outsourced traffic management solutions to telecoms worldwide. Traditional Communications also includes other small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode.

Traditional Communications’ most significant revenue streams are from IDT Digital Payments, BOSS Revolution Calling, and IDT Global. IDT Digital Payments and BOSS Revolution Calling are sold direct-to-consumers and through distributors and retailers. We receive payments for BOSS Revolution Calling, traditional calling cards, and IDT Digital Payments prior to providing the services. We recognize the revenue when services are provided to the customer. Traditional Communications’ revenues tend to be somewhat seasonal, with the second fiscal quarter (which contains Christmas and New Year’s Day) and the fourth fiscal quarter (which contains Mother’s Day and Father’s Day) typically showing higher minute volumes.

	Three months ended April 30,						Change						Nine months ended April 30,						Change
	2023			2022			$/#			%			2023			2022			$/#			%
	(in millions)
Revenues:
IDT Digital Payments	$	101.0		$	115.9		$	(14.9	)		(12.8	)%	$	316.2		$	360.6		$	(44.4	)		(12.3	)%
BOSS Revolution Calling		77.6			91.8			(14.2	)		(15.4	)		246.7			297.7			(51.0	)		(17.1	)
IDT Global		54.5			67.1			(12.6	)		(18.8	)		174.7			229.4			(54.7	)		(23.8	)
Other		7.9			9.4			(1.5	)		(16.7	)		25.1			27.7			(2.6	)		(9.5	)

Total revenues		241.0			284.2			(43.2	)		(15.2	)		762.7			915.4			(152.7	)		(16.7	)
Direct cost of revenues		(195.4	)		(236.6	)		(41.2	)		(17.4	)		(623.1	)		(765.9	)		(142.8	)		(18.6	)
Selling, general and administrative		(26.0	)		(27.6	)		(1.6	)		(6.0	)		(80.7	)		(84.4	)		(3.7	)		(4.4	)
Depreciation and amortization		(2.5	)		(2.4	)		0.1			4.0			(7.1	)		(7.2	)		(0.1	)		(0.6	)
Severance		(0.1	)		—			0.1			nm			(0.5	)		—			0.5			nm
Other operating expense		(4.1	)		—			4.1			nm			(4.1	)		(0.1	)		4.0			nm

Income from operations	$	12.9		$	17.6		$	(4.7	)		(26.5	)%	$	47.2		$	57.8		$	(10.6	)		(18.4	)%

Minutes of use:
BOSS Revolution Calling		549			690			(141	)		(20.4	)%		1,766			2,252			(486	)		(21.6	)%
IDT Global		1,428			1,864			(436	)		(23.4	)		4,739			5,882			(1,143	)		(19.4	)

nm—not meaningful

Revenues. Revenues from IDT Digital Payments decreased in the three and nine months ended April 30, 2023 compared to the similar periods in fiscal 2022 primarily from the deterioration of a key corridor that was particularly impactful to revenues in the business-to-business wholesale and retail channels.

Revenues and minutes of use from BOSS Revolution Calling decreased in the three and nine months ended April 30, 2023 compared to the similar periods in fiscal 2022. BOSS Revolution Calling continues to be impacted by persistent, market-wide trends, including the proliferation of unlimited calling plans offered by wireless carriers and mobile virtual network operators, and the increasing penetration of free and paid over-the-top voice, video conferencing, and messaging services.

Revenues and minutes of use from IDT Global decreased in the three and nine months ended April 30, 2023 compared to the similar periods in fiscal 2022 as communications globally continued to transition away from international voice calling. This trend was accelerated by the impact of COVID-19 as business communications shifted from calling to video conferencing and other collaboration platforms. We expect that IDT Global will continue to be adversely impacted by these trends, and minutes of use and revenues will likely continue to decline from quarter-to-quarter, as we seek to maximize economics rather than necessarily sustain minutes of use or revenues.

Direct Cost of Revenues. Direct cost of revenues decreased in the three and nine months ended April 30, 2023 compared to the similar periods in fiscal 2022 primarily due to decreases in IDT Global, IDT Digital Payments, and BOSS Revolution Calling’s direct cost of revenues in the three and nine months ended April 30, 2023 compared to the similar periods in fiscal 2022, mostly due to the decrease in revenues.

Selling, General and Administrative. Selling, general and administrative expense decreased in the three and nine months ended April 30, 2023 compared to the similar periods in fiscal 2022 primarily due to decreases in debit and credit card processing charges, employee compensation, and sales commissions, partially offset by increases in marketing expense and stock-based compensation expense. As a percentage of Traditional Communications’ revenue, Traditional Communications’ selling, general and administrative expense increased to 10.8% from 9.7% in the three months ended April 30, 2023 and 2022, respectively, and increased to 10.6% from 9.2% in the nine months ended April 30, 2023 and 2022, respectively.

Depreciation and Amortization. Depreciation and amortization expense increased in the three months ended April 30, 2023 compared to the similar period in fiscal 2022 primarily due to increases in depreciation of equipment added to our telecommunications network and capitalized costs of consultants and employees developing internal use software. Depreciation and amortization expense decreased in the nine months ended April 30, 2023 compared to the similar period in fiscal 2022 primarily due to decreases in depreciation as more of our property, plant, and equipment became fully depreciated, partially offset by increases in depreciation of equipment added to our telecommunications network and capitalized costs of consultants and employees developing internal use software.

Other Operating Expense. Other operating expense included $3.9 million and $33,000 in the three months ended April 30, 2023 and 2022, respectively, and $3.9 million and $0.1 million in the nine months ended April 30, 2023 and 2022, respectively, for the indemnification of one of our cable telephony customers related to patent infringement claims brought against the customer. On May 8, 2023, we and the customer agreed to a release from the indemnification agreement in exchange for $3.9 million, of which $1.9 million was paid on May 10, 2023, and the remainder will be paid in five monthly invoice deductions of $0.4 million each. Also, in the three and nine months ended April 30, 2023, we increased the estimated fair value of acquisition-related contingent consideration by $0.2 million.

Corporate

	Three months ended April 30,						Change					Nine months ended April 30,						Change
	2023			2022			$		%			2023			2022			$		%
	(in millions)
General and administrative	$	(2.3	)	$	(1.8	)	$	0.5		28.7	%	$	(6.7	)	$	(6.1	)	$	0.6		10.0	%
Other operating expense, net		(0.6	)		(0.2	)		0.4		301.6			(1.8	)		(1.0	)		0.8		86.5

Loss from operations	$	(2.9	)	$	(2.0	)	$	0.9		49.5	%	$	(8.5	)	$	(7.1	)	$	1.4		19.8	%

Three months ended
January 31,

Change

Six months ended
January 31,

Change

2018

2017

$

%

2018

2017

$

%

(in millions)
General and administrative $ 2.4 $ 2.8 $ (0.4 ) (13.4 )% $ 4.8 $ 3.9 $ 0.9 23.7 %
Other operating expense 0.9 0.9 — 4.8 1.6 1.1 0.5 49.3

Loss from operations $ 3.3 $ 3.7 $ (0.4 ) (11.4 )% $ 6.4 $ 5.0 $ 1.4 29.9 %

Corporate costs mainly include compensation, consulting fees, treasury, ~~and accounts payable,~~ tax and accounting services, human resources, ~~and payroll,~~ corporate purchasing, corporate governance including Board of Directors’ fees, internal and external audit, investor relations, corporate insurance, corporate legal, ~~business development,~~ and other corporate-related general and administrative ~~expenses, including, among others, facilities costs, charitable contributions and travel.~~expenses. Corporate does not generate any revenues, nor does it incur any direct cost of revenues.

General and Administrative. ~~The decrease in~~ Corporate general and administrative expense increased in the three and nine months ended ~~January 31, 2018~~April 30, 2023 compared to the similar ~~period~~periods in fiscal ~~2017 was~~2022 primarily ~~due to decreases~~because of increases in employee compensation and stock-based compensation expense, partially offset by an increase in legal fees. The increase in Corporate general and administrative expense in the six months ended January 31, 2018 compared to the similar period in fiscal 2017 was primarily due to increases in legal fees and employee compensation, partially offset by a decrease in stock-based compensation expense. As a percentage of our ~~total~~ consolidated revenues, Corporate general and administrative expense ~~were 0.6%~~was 0.8% and ~~0.8%~~0.5% in the three months ended ~~January 31, 2018~~April 30, 2023 and ~~2017,~~2022, respectively, and ~~0.6%~~0.7% and ~~0.5%~~0.6% in the ~~six~~nine months ended ~~January 31, 2018~~April 30, 2023 and ~~2017,~~2022, respectively.

Other Operating Expense, net. On July 31, 2013, we completed a pro rata distribution of the common stock of our former subsidiary Straight Path Communications Inc., or Straight Path, to our stockholders. In the three and six months ended January 31, 2018, we incurred legal fees of $0.2 million and $1.0 million, respectively, related to the Straight Path stockholders’ putative class action and derivative complaint. In addition, As discussed in the three and six months ended January 31, 2018, we incurred fees of $0.6 million related to other legal matters. In the three and six months ended January 31, 2017, we incurred legal fees of $0.9 million and $1.1 million, respectively, related to a letter of inquiry from the Federal Communications Commission, or FCC, in connection with its investigation of potential license violations by Straight Path Spectrum LLC (a subsidiary of Straight Path and formerly a subsidiary of ours). (See Note 1116 to the Consolidated Financial Statements included in Item 1 to Part I of ~~the~~this Quarterly Report, we (as well as other defendants) have been named in a pending class action on ~~Form 10-Q).~~behalf of the stockholders of our former subsidiary, Straight Path Communications Inc., or Straight Path. We incurred legal fees of $1.0 million and $1.4 million in the three months ended April 30, 2023 and 2022, respectively, and $5.1 million in both the nine months ended April 30, 2023 and 2022 related to this action. Also, we recorded offsetting gains from insurance claims for this matter of $0.4 million and $1.2 million in the three months ended April 30, 2023 and 2022, respectively, and $3.3 million and $4.1 million in the nine months ended April 30, 2023 and 2022, respectively.

Consolidated

The following is a discussion of certain of our consolidated ~~stock-based compensation expense,~~expenses, and our consolidated income and expense line items below income from operations.

Related Party Lease Costs. We lease office and parking space in a building and parking garage located at 520 Broad Street, Newark, New Jersey that was previously owned by our former subsidiary, Rafael Holdings, Inc., or Rafael. On August 22, 2022, Rafael sold the building and parking garage to an unrelated third party. Our lease in that building continues with the new owner. We lease office space in Israel from Rafael. The Newark lease expires in April 2025 and the Israel lease expires in July 2025. In the three and nine months ended April 30, 2023, we incurred lease costs of $33,000 and $0.2 million, respectively, in connection with the Rafael leases, which excludes Newark lease costs after August 22, 2022. In the three and nine months ended April 30, 2022, we incurred lease costs of $0.5 million and $1.4 million, respectively, in connection with the Rafael leases. Lease costs incurred in connection with the Rafael leases are included in consolidated selling, general and administrative expenses.

Stock-Based Compensation Expense. Stock-based compensation expense included in consolidated selling, general and administrative expenses was ~~$1.0~~$1.7 million and ~~$1.4~~$1.2 million in the three months ended ~~January 31, 2018~~April 30, 2023 and ~~2017,~~2022, respectively, and $3.5 million and $1.8 million ~~and $2.1 million~~ in the ~~six~~nine months ended April 30, 2023 and 2022, respectively. The increases were primarily due to the grant of deferred stock units, or DSUs, that, upon vesting, will entitle the grantees to receive shares of our Class B common stock. In the nine months ended April 30, 2023, we granted an aggregate of 193,225 DSUs to certain of our executive officers and other employees. The number of shares that will be issuable on each vesting date will vary between 50% to 200% of the number of DSUs that vest on that vesting date, depending on the market price for the underlying Class B common stock on the vesting date relative to the base price approved by the Compensation Committee of our Board of Directors of $25.45 per share (which was based on the market price at the time of the initial grants under this program). On May 17, 2023, the first vesting date under the program, in accordance with the program and based on certain elections made by grantees, we issued 41,945 shares of our Class B common stock for vested DSUs. Based on those elections, vesting for 30,909 DSUs was delayed until February 21, 2024. Subject to continued full time employment or other service to us, the remaining DSUs are scheduled to vest on February 21, 2024 and February 25, 2025. The grantees will have the right to elect a later vesting date no later than January ~~31, 2018~~19, 2024 for the February 21, 2024 vesting date. A grantee will have the option to elect a later vesting date for one-half or all of the shares scheduled to vest on February 21, 2024 and ~~2017, respectively.~~any DSUs that do not vest based on the grantee’s election, will be eligible to vest on February 25, 2025. We estimated that the fair value of the DSUs on the date of grants was an aggregate of $5.2 million, which is being recognized on a graded vesting basis over the requisite service periods ending in February 2025. We used a risk neutral Monte Carlo simulation method in our valuation of the DSUs, which simulated the range of possible future values of our Class B common stock over the life of the DSUs. The weighted average grant date fair value per DSU was $27.20. At ~~January 31, 2018,~~April 30, 2023, there was $2.9 million of total unrecognized compensation cost related to non-vested ~~stock-based~~DSUs.

Effective as of June 30, 2022, restricted shares of NRS’ Class B common stock were granted to certain NRS employees. The restrictions on the shares will lapse in three installments on each of June 1, 2024, 2026, and 2027. The estimated fair value of the restricted shares on the grant date was $3.3 million, which will be recognized over the vesting period. At April 30, 2023, unrecognized compensation ~~including stock options and restricted~~cost related to NRS’ non-vested Class B common stock was an aggregate of ~~$4.1~~$2.8 million. The unrecognized compensation cost is expected to be recognized over the remaining vesting period that ~~ends~~end in ~~2020.~~fiscal 2027.

	Three months ended April 30,						Change						Nine months ended April 30,						Change
	2023			2022			$			%			2023			2022			$			%
	(in millions)
Income from operations	$	10.4		$	13.3		$	(2.9	)		(22.1	)%	$	48.8		$	40.9		$	7.9			19.2	%
Interest income, net		0.7			0.1			0.6			734.1			2.0			0.2			1.8			835.0
Other expense, net		(0.4	)		(5.1	)		4.7			92.5			(2.6	)		(24.2	)		21.6			89.2
Provision for income taxes		(3.0	)		(3.2	)		0.2			8.6			(12.6	)		(5.9	)		(6.7	)		(113.9	)

Net income		7.7			5.1			2.6			51.7			35.6			11.0			24.6			223.2
Net income attributable to noncontrolling interests		(0.8	)		(0.3	)		(0.5	)		(154.9	)		(3.1	)		(1.2	)		(1.9	)		(151.3	)

Net income attributable to IDT Corporation	$	6.9		$	4.8		$	2.1			44.4	%	$	32.5		$	9.8		$	22.7			232.3	%

Three months ended
January 31,

Change

Six months ended
January 31,

Change

2018
2017

$

%

2018

2017

$

%

(in millions)
(Loss) income from operations $ (0.5 ) $ 3.1 $ (3.6 ) (115.3 )% $ (0.4 ) $ 8.3 $ (8.7 ) (104.8 )%
Interest income, net 0.3 0.3 — (7.4 ) 0.6 0.6 — 6.4
Other income (expense), net 0.4 (0.4 ) 0.8 188.3 (0.4 ) 2.0 (2.4 ) (123.1 )
Benefit from (provision for) income taxes 1.5 (1.7 ) 3.2 186.0 0.1 12.7 (12.6 ) (99.2 )
Net income (loss) 1.7 1.3 0.4 34.4 (0.1 ) 23.6 (23.7 ) (100.5 )
Net income attributable to noncontrolling interests (0.2 ) (0.4 ) 0.2 54.5 (0.5 ) (0.8 ) 0.3 38.0
Net income (loss) attributable to IDT Corporation $ 1.5 $ 0.9 $ 0.6 73.3 % $ (0.6 ) $ 22.8 $ (23.4 ) (102.5 )%

Other ~~Income (Expense),~~Expense, net. Other ~~income (expense),~~expense, net consists of the following:

	Three months ended April 30,						Nine months ended April 30,
	2023			2022			2023			2022
	(in millions)
Foreign currency transaction gains (losses)	$	0.9		$	(0.9	)	$	2.3		$	(0.2	)
Equity in the net loss of investee		(0.8	)		(0.8	)		(2.1	)		(2.2	)
Losses on investments, net		(0.5	)		(3.4	)		(2.6	)		(20.9	)
Other		—			—			(0.2	)		(0.9	)

Total other expense, net	$	(0.4	)	$	(5.1	)	$	(2.6	)	$	(24.2	)

Three months ended
January 31,

Six months ended
January 31,

2018

2017

2018

2017

(in millions)
Foreign currency transaction gains (losses) $ 0.2 $ (0.7 ) $ (0.6 ) $ 1.3
Gain on sale of marketable securities — 0.3 — 0.3
Gain on investments 0.2 — 0.1 0.3
Other — — 0.1 0.1
Total other income (expense), net $ 0.4 $ (0.4 ) $ (0.4 ) $ 2.0

We have an investment in convertible preferred stock of a communications company (the equity method investee, or EMI), that represented 26.57% of the outstanding shares of the EMI on an as converted basis. On April 6, 2023, in accordance with an Agreement and Plan of Merger dated as of April 5, 2023, the EMI merged with and into its subsidiary, with the subsidiary being the surviving corporation. Each of the EMI’s shareholders agreed to purchase additional shares of the EMI’s convertible preferred stock through May 31, 2023. Following the merger, the conversion of our notes receivable into EMI shares described below, and the purchases of the additional EMI’s shares, our ownership interest increased to 33.3% of the EMI’s outstanding shares. We account for this investment using the equity method since we can exercise significant influence over the operating and financial policies of the EMI but we do not have a controlling interest.

The losses on investments, net in the three and nine months ended April 30, 2023 included unrealized gains of $11,000 and $20,000, respectively, and in the three and nine months ended April 30, 2022 included unrealized losses of $0.6 million and $14.1 million, respectively, on shares of Rafael’s Class B common stock.

~~Benefit from (Provision for)~~Provision for Income Taxes. On December 22, 2017, the U.S. government enacted “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018”, which is commonly referred to as “The Tax Cuts and Jobs Act”, or the Tax Act. The Tax Act provides for comprehensive tax legislation that reduces the U.S. federal statutory corporate tax rate from 35.0% to 21.0% effective January 1, 2018, requires companies to pay a one-time repatriation tax, or transition tax, on earnings of certain foreign subsidiaries that were previously tax deferred, and makes other changes to the U.S. income tax code. Due to our July 31 fiscal year-end, the lower corporate income tax rate is phased in, resulting in a blended U.S. federal statutory tax rate of approximately 26.9% for our fiscal year ending July 31, 2018, and 21.0% for our fiscal years thereafter.

~~On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118, or SAB 118, expressing its views regarding the FASB’s Accounting Standards Codification 740,~~~~Income Taxes~~, in the reporting period that includes the enactment date of the Tax Act. SAB 118 recognizes that a registrant’s review of certain income tax effects of the Tax Act may be incomplete at the time financial statements are issued for the reporting period that includes the enactment date, including interim periods therein. Specifically, SAB 118 allows a company to report provisional estimates in the reporting period that includes the enactment date if the company does not have the necessary information available, prepared, or fully analyzed for certain income tax effects of the Tax Act. The provisional estimates would be adjusted during a measurement period not to exceed 12 months from the enactment date of the Tax Act, at which time the accounting for the income tax effects of the Tax Act is required to be completed.

As of January 31, 2018, we had not completed our accounting for the income tax effects of the Tax Act; however, we had made a reasonable estimate of the effect on our existing AMT credit carryover. Because the AMT credit will be refundable if not utilized in the next four years, we reversed the valuation allowance that offset the AMT credit. As a result, in the three months ended January 31, 2018, we recorded a noncurrent receivable and an income tax benefit of $3.3 million for the anticipated refund. The reduction in the corporate tax rate is not expected to impact our results of operations or financial position in the foreseeable future because the income tax benefit from the reduced tax rate will be offset by the valuation allowance.

The transition tax is based on total post-1986 earnings and profits which were previously deferred from U.S. income taxes. We expect to utilize net operating loss carryforwards to offset any transition tax that we may incur. Therefore we did not record any provisional income tax expense for the transition tax for our foreign subsidiaries. At January 31, 2018, the undistributed earnings of our foreign subsidiaries continued to be permanently reinvested and we do not intend to repatriate any of the amounts. As a result, we have not provided for additional income or withholding taxes for the undistributed earnings or for any additional outside basis differences with respect to the foreign entities. We continue to review the anticipated impacts of the global intangible low taxed income, or GILTI, and base erosion anti-abuse tax, or BEAT, which are not effective until August 1, 2018. We have not recorded any impact associated with either GILTI or BEAT in the three months ended January 31, 2018.

We anticipate that our assumptions and estimates may change as a result of future guidance and interpretation from the Internal Revenue Service, the SEC, the FASB, and various other taxing jurisdictions. In particular, we anticipate that the U.S. state jurisdictions will continue to determine and announce their conformity or decoupling from the Tax Act, either in its entirety or with respect to specific provisions. Legislative and interpretive actions could result in adjustments to our provisional estimates when the accounting for the income tax effects of the Tax Act is completed. We will continue to evaluate the impact of the Tax Act on our financial statements, and will record the effect of any reasonable changes in our estimates or adjustments.

In the six months ended January 31, 2017, we determined that our valuation allowance on the losses of Elmion Netherlands B.V., or Elmion, a Netherlands subsidiary, was no longer required due to an internal reorganization that generated income and a projection that the income would continue. We recorded a benefit from income taxes of $16.6 million in the six months ended January 31, 2017 from the full recognition of the Elmion deferred tax assets.

The change in income tax expense in the three and ~~six~~nine months ended ~~January 31, 2018~~April 30, 2023 compared to the similar periods in fiscal ~~2017, excluding the benefits from income taxes in the three and six months ended January 31, 2018 and in the six months ended January 31, 2017,~~2022 was ~~generally~~primarily due to ~~the~~ differences in the ~~tax rates~~amount of taxable income earned in the ~~jurisdictions where the results were recorded.~~various taxing jurisdictions.

Net Income Attributable to Noncontrolling Interests. The change in the net income attributable to noncontrolling interests in the three and ~~six~~nine months ended ~~January 31, 2018~~April 30, 2023 compared to the similar periods in fiscal ~~2017~~2022 was primarily due to ~~a decrease~~increases in the net income ~~attributable to the noncontrolling interests in certain IDT Telecom subsidiaries,~~of NRS as well as a reductions in the net loss ~~attributable to the noncontrolling interests in Lipomedix in the three~~of net2phone 2.0, Inc. and ~~six months ended January 31, 2018. We began consolidating Lipomedix in November 2017.~~certain other subsidiaries.

Liquidity and Capital Resources

~~General~~

~~We currently~~As of the date of this Quarterly Report, we expect our cash from operations ~~in the next twelve months~~ and the balance of cash, cash equivalents, debt securities, and ~~marketable securities~~current equity investments that we held ~~at January 31, 2018 to~~on April 30, 2023 will be sufficient to meet our currently anticipated working capital and capital expenditure requirements during the twelve-month period ending ~~January 31, 2019.~~April 30, 2024.

At ~~January 31, 2018,~~April 30, 2023, we had cash, cash equivalents, debt securities, and ~~marketable securities~~current equity investments of ~~$100.3~~$138.5 million and working capital (current assets in excess of current liabilities) of ~~$1.1~~$88.3 million. ~~At January 31, 2018, we also had $8.8 million in investments in hedge funds, which were included in “Investments” in our consolidated balance sheet.~~

On or about March 26, 2018, we expect to spin-off our wholly-owned subsidiary, RHI, to our stockholders. RHI owns certain commercial real estate assets and interests in Rafael Pharma and Lipomedix. Prior to the spin-off, we intend to transfer assets to RHI such that, at the time of the spin-off, RHI will have approximately $44 million in cash, cash equivalents, and marketable securities, plus $6 million in hedge fund and other investments.

We treat unrestricted cash and cash equivalents held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC as substantially restricted and unavailable for other purposes. At ~~January 31, 2018,~~April 30, 2023, “Cash and cash equivalents” in our consolidated balance sheet included an aggregate of ~~$10.0~~$16.9 million held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC that was unavailable for other purposes.

~~We have not recorded U.S. income tax expense for foreign earnings, since such earnings are permanently reinvested outside the United States. Upon distribution of these foreign earnings to~~Contractual Obligations and Commitments

The following table includes our ~~domestic entities, we may be subject to U.S. income taxes~~anticipated material cash requirements from contractual obligations and ~~withholding of foreign taxes, however, it is not practicable to determine the amount, if any, which would be paid.~~other commitments at April 30, 2023:

Six months ended
January 31,

2018

2017

(in millions)
Cash flows (used in) provided by:
Operating activities $ (27.0 ) $ (0.8 )
Investing activities 0.9 (21.0 )
Financing activities (10.2 ) (9.3 )
Effect of exchange rate changes on cash and cash equivalents 0.6 (0.9 )
Decrease in cash and cash equivalents $ (35.7 ) $ (32.0 )

Payments Due by Period (in millions)	Total		Less than 1 year		1–3 years		4–5 years		After 5 years
Purchase commitments	$	7.9	$	7.9	$	—	$	—	$	—
Connectivity obligations under service agreements		0.6		0.4		0.2		—		—
Operating leases including short-term leases		7.6		3.5		3.6		0.5		—

Total (1)	$	16.1	$	11.8	$	3.8	$	0.5	$	—

(1)

The above table does not include up to $10 million for the potential redemption of shares of NRS’ Class B common stock, an aggregate of $25.8 million in performance bonds, and up to $9.0 million for other potential payments including contingent consideration related to business acquisitions, due to the uncertainty of the amount and/or timing of any such payments.

Consolidated Financial Condition

	Nine months ended April 30,
	2023			2022
	(in millions)
Cash flows provided by (used in):
Operating activities	$	28.7		$	13.3
Investing activities		(26.0	)		(25.9	)
Financing activities		(9.7	)		(2.1	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents		2.5			(14.1	)

Decrease in cash, cash equivalents, and restricted cash and cash equivalents	$	(4.5	)	$	(28.8	)

Operating Activities

Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable.

Gross trade accounts receivable increased to ~~$74.3~~$72.1 million at ~~January 31, 2018~~April 30, 2023 from ~~$67.6~~$70.2 million at July 31, ~~2017~~2022 primarily due to ~~a $6.8 million increase in IDT Telecom’s gross trade accounts receivable balance. The increase in IDT Telecom’s gross trade accounts receivable balance was primarily due to amounts billed in~~billings in the ~~six~~nine months ended ~~January 31, 2018 in excess of collections~~April 30, 2023 that were greater than amounts collected during the ~~period, and the effect of changes in foreign currency exchange rates.~~period.

Deferred revenue ~~as a percentage~~arises from sales of ~~total revenues~~prepaid products and varies from period to period depending on the mix and the timing of revenues. Deferred revenue ~~arises from IDT Telecom’s sales of prepaid products. Deferred revenue~~ decreased to ~~$71.8~~$33.9 million at ~~January 31, 2018~~April 30, 2023 from ~~$76.5~~$36.5 million at July 31, ~~2017~~2022 primarily due to ~~a decrease~~decreases in the BOSS Revolution Calling and IDT ~~Telecom U.S. Boss Revolution balance.~~Digital Payments deferred revenue balances.

Customer deposit liabilities at IDT Financial Services increased to $86.1 million at April 30, 2023 from $85.8 million at July 31, 2022. Our restricted cash and cash equivalents included $86.9 million and $86.6 million at April 30, 2023 and July 31, 2022, respectively, held by IDT Financial Services.

On ~~September 20, 2016,~~June 21, 2018, the United States Supreme Court rendered a decision in South Dakota v. Wayfair, Inc., holding that a state may require a remote seller with no physical presence in the state to collect and remit sales tax on goods and services provided to purchasers in the state, overturning certain existing court precedent. It is possible that one or more jurisdictions may assert that we ~~received~~have liability for periods for which we have not collected sales, use or other similar taxes, and if such an assertion or assertions were successful it could materially and adversely affect our business, financial position, and operating results. One or more jurisdictions may change their laws or policies to apply their sales, use or other similar taxes to our operations, and if such changes were made it could materially and adversely affect our business, financial position, and operating results.

As discussed in Note 16 to the Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report, we (as well as other defendants) have been named in a ~~letter of inquiry from the Enforcement Bureau~~pending class action on behalf of the ~~FCC requesting certain information and materials related to an investigation~~stockholders of potential violations by Straight Path Spectrum LLC in connection with licenses to operate on the 28 GHz and 39 GHz bands of the Fixed Microwave Services. We have cooperated with the FCC in this matter and have responded to the letter of inquiry. The FCC could seek to fine or impose regulatory penalties or civil liability on us related to activities during the period of ownership by us.

The Separation and Distribution Agreement related to the spin-off of Straight Path provides for us and Straight Path to indemnify each other for certain liabilities. We and Straight Path each communicated that it was entitled to indemnification from the other in connection with the inquiry described above and related matters. On October 24, 2017, we, Straight Path, Straight Path IP Group, Inc., or SPIP, and PR-SP IP Holdings LLC, or PR-SP, an entity owned by Howard Jonas, entered into a Settlement Agreement and Release that provides for, among other things, the settlement and mutual release of potential liabilities and claims that may exist or arise under the Separation and Distribution Agreement between us andour former subsidiary, Straight Path. ~~In exchange for the mutual release,~~We are vigorously defending this matter. At this stage, we ~~paid Straight Path an aggregate of $16 million in cash, Straight Path transferred~~are unable to us its majority ownership interest in Straight Path IP Group Holding, Inc., or New SPIP, which holds the equity of SPIP, the entity that holds intellectual property primarily related to communications over computer networks, subject to the right to receive 22% of the net proceeds,estimate our potential liability, if any, received by SPIP from licenses, settlements, awards or judgments involving any of the patent rights and certain transfers of the patents or related rights, that will be retained by Straight Path’s stockholders (such equity interest, subject to the retained interest right, the “IP Interest”), and we undertook certain funding and other obligations related to SPIP. The Settlement Agreement and Release allocates (i) $10 million of the payment and the retained interest right to the settlement of claims and the mutual release and (ii) $6 million to the transfer of the IP Interest. In the accompanying consolidated statement of cash flows in the six months ended January 31, 2018, $10 million of the aggregate payment to Straight Path was included in operating activities and $6 million of the aggregate payment was included in investing activities.any.

In August 2017, we entered into a Reciprocal Services Agreement with a telecom operator in Central America for a full range of services, including, but not limited to, termination of inbound and outbound international long-distance voice calls. We have committed to pay such telecom operator monthly committed amounts during the term of the agreement. In addition, under certain limited circumstances, the parties may renegotiate the amount of the monthly payments. In the event the parties do not agree on re-pricing terms after good faith negotiations, then either party has the right to terminate the agreement. Pursuant to the agreement, in September 2017, we deposited $11.75 million into an escrow account as security for the benefit of the telecom operator, which was included in operating activities in the accompanying consolidated statement of cash flows.

Investing Activities

Our capital expenditures were ~~$10.9~~$16.0 million and ~~$10.5~~$13.8 million in the ~~six~~nine months ended ~~January 31, 2018~~April 30, 2023 and ~~2017,~~2022, respectively. We currently anticipate that total capital expenditures ~~for~~in the twelve-month period ending ~~January 31, 2019~~April 30, 2024 will be ~~between~~ $21 million to ~~$23~~$22 million. We expect to fund our capital expenditures with our net cash provided by operating activities and cash, cash equivalents, debt securities, and ~~marketable securities~~current equity investments on hand.

On ~~October 24, 2017,~~April 6, 2023, in accordance with an Agreement and Plan of Merger dated as of April 5, 2023, the EMI merged with and into its subsidiary, with the subsidiary being the surviving corporation. Effective with the merger, among other things, the notes receivable from the EMI that we ~~sold our entire majority interests in New SPIP to PR-SP in exchange for $6~~held with an aggregate principal and accrued interest of $4.0 million ~~and the assumption by PR-SP~~were converted into shares of ~~our funding and other obligations. As described above, $6 million~~EMI Preferred Stock. In addition, each of the ~~aggregate payment~~EMI’s shareholders agreed to ~~Straight Path that was allocated~~purchase additional shares of EMI Preferred Stock, for which we paid $0.2 million in April 2023 and $0.7 million in May 2023 to purchase the ~~transfer~~additional shares. On August 10, 2021, we paid $1.1 million to purchase shares of the ~~IP Interest was included in investing activities in~~EMI’s Series C convertible preferred stock and additional shares of the ~~six months ended January 31, 2018.~~EMI’s Series B convertible preferred stock.

On ~~December 23, 2016, we acquired~~March 3, 2022, net2phone 2.0, Inc. purchased all of the outstanding shares of ~~Live Ninja, a business communications company that provides chat and messaging capabilities~~the owners of Integra CCS for ~~small and medium-sized businesses with the ability to transfer a conversation from one channel~~cash of ~~communications (for example, the web) to another (such as a mobile phone). We paid $2.0~~$7.1 million, ~~at closing, and expect to pay an additional $2.5 million through December 2018 for fixed and contingent payment obligations. The cash paid for the acquisition,~~ net of cash ~~acquired was $1.8 million.~~acquired. We also recorded aggregate liabilities of $4.5 million for the estimated fair value of future payments including contingent consideration. The purchase price also included 27,765 shares of our Class B common stock with a value of $1.0 million that were issued at closing.

InOn March 1, 2022, our subsidiary, IDT International Telecom, Inc., purchased all of the ~~six months ended January 31, 2017, we used~~outstanding shares of Leaf for cash of ~~$8.3~~$0.3 million, net of cash acquired. We also recorded liabilities of $3.3 million for ~~additional investments. In September 2016, Rafael Pharma issued to our 50%-owned subsidiary, CS Pharma Holdings, LLC, or CS Pharma, its convertible Series D Note with a principal amount~~the estimated fair value of ~~$10 million, representing the $8 million investment funded on such date plus the conversion of $2 million principal amount convertible promissory notes issued in connection with a prior funding.~~contingent consideration.

Purchases of ~~marketable~~debt securities and equity investments were ~~$19.8~~$44.2 million and ~~$17.2~~$11.3 million in the ~~six~~nine months ended ~~January 31, 2018~~April 30, 2023 and ~~2017,~~2022, respectively. Proceeds from maturities and sales of ~~marketable~~debt securities and redemptions of equity investments were ~~$31.6~~$34.3 million and ~~$16.8~~$7.8 million in the ~~six~~nine months ended ~~January 31, 2018~~April 30, 2023 and ~~2017,~~2022, respectively.

Financing Activities

In the six months ended January 31, 2018, we paid cash dividends of $0.38 per share on our Class A common stock and Class B common stock, or $9.4 million in total. In the six months ended January 31, 2017, we paid cash dividends of $0.38 per share on our Class A common stock and Class B common stock, or $8.8 million in total. On March 5, 2018, our Board of Directors declared a dividend of $0.09 per share for the second quarter of fiscal 2018 to holders of our Class A common stock and Class B common stock. The dividend will be paid on or about March 23, 2018 to stockholders of record as of the close of business on March 19, 2018. In light of our intention to continue to invest in our growth initiatives and the impact of the RHI spin-off on our balance sheet, our Board of Directors reduced the dividend for the second quarter of fiscal 2018 from the quarterly dividend of $0.19 per share that was paid in the first two quarters of fiscal 2018.

We distributed cash of ~~$0.7~~$0.3 million and ~~$0.8~~$0.4 million in the ~~six~~nine months ended ~~January 31, 2018~~April 30, 2023 and ~~2017,~~2022, respectively, to the ~~holders of~~ noncontrolling interests in certain of our subsidiaries.

In the nine months ended April 30, 2023 and 2022, we received proceeds from financing-related other liabilities of $0.3 million and $2.3 million, respectively.

In the nine months ended April 30, 2023 and 2022, we repaid financing-related other liabilities of $2.0 million and $1.3 million, respectively.

Our subsidiary, IDT Telecom, Inc., or IDT Telecom, entered into a credit agreement, dated ~~July 12, 2012,~~as of May 17, 2021, with TD Bank, N.A. for a ~~line of~~revolving credit facility for up to a maximum principal amount of $25.0 million. ~~The credit agreement was amended as of January 31, 2018.~~ IDT Telecom may use the proceeds to finance working capital requirements ~~acquisitions~~ and for ~~other general corporate purposes.~~certain closing costs of the facility. At April 30, 2023 and July 31, 2022, there were no amounts outstanding under this facility. In the nine months ended April 30, 2023 and 2022, IDT Telecom borrowed and repaid an aggregate of $2.4 million and $2.6 million, respectively, under the facility. The ~~line of~~revolving credit facility is secured by primarily all of IDT Telecom’s assets. The principal outstanding bears interest per annum at the ~~option of IDT Telecom, at either (a) the U.S. Prime Rate less 125 basis points, or (b) the~~Intercontinental Exchange Benchmark Administration Ltd. LIBOR ~~rate adjusted~~multiplied by the Regulation D maximum reserve requirement plus 125 to 175 basis ~~points.~~points, depending upon IDT Telecom’s leverage ratio as computed for the most recent fiscal quarter. Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest is due on the maturity date of January 31, 2020. At January 31, 2018 and July 31, 2017, there were no amounts outstanding under the facility. We intend to borrow under the facility from time to time. In the six months ended January 31, 2018, we borrowed and repaid an aggregate of $19.1 million under the facility.May 16, 2024. IDT Telecom pays a quarterly unused commitment fee ~~of 0.325% per annum~~ on the average daily balance of the unused portion of the $25.0 million ~~commitment.~~commitment of 30 to 85 basis points, depending upon IDT Telecom’s leverage ratio as computed for the most recent fiscal quarter. IDT Telecom is required to comply with various affirmative and negative covenants as well as maintain certain ~~financial~~ targets ~~and~~based on financial ratios during the term of the ~~line~~revolving credit facility. As of ~~credit, including restrictions on dividend payments on~~April 30, 2023, IDT Telecom was in compliance with all of the covenants.

On September 29, 2021, NRS sold shares of its Class B common stock representing 2.5% of its outstanding capital stock on a fully diluted basis to Alta Fox Opportunities Fund LP, or Alta Fox, for cash of $10 million. Alta Fox has the right to request that NRS redeem all or any portion of the NRS common shares that it purchased at the per share purchase price during a period of 182 days following the fifth anniversary of this transaction. The redemption right shall terminate upon the consummation of (i) a sale of NRS or its assets for cash or securities that are listed on a national securities exchange, (ii) a public offering of NRS’ securities, or (iii) a distribution of NRS’ capital stock following which NRS’ common shares are listed on a national securities exchange.

In the nine months ended April 30, 2023 and ~~restrictions on IDT Telecom’s aggregate loans and advances to affiliates or subsidiaries.~~

We2022, we received ~~proceeds~~cash from the exercise of ~~our~~ stock options of ~~$0.8~~$0.2 million ~~in the six months ended January 31, 2017,~~and $0.1 million, respectively, for which we issued ~~73,471~~12,500 and 10,000 shares, respectively, of our Class B common stock. In addition, in April 2022, Howard S. Jonas, our Chairman (an executive officer position) and the Chairman of our Board of Directors, exercised stock options for 1.0 million shares of our Class B common ~~stock.~~

~~In connection~~stock that were granted on May 2, 2017. The exercise price of these options was $14.93 per share and the expiration date was May 1, 2022. Mr. Jonas used 528,635 shares of our Class B common stock with ~~our investment in Rafael Pharma, our subsidiary CS Pharma issued member interests~~a value of $14.9 million to ~~third parties in exchange for cash investment in CS Pharma of $10 million. We hold a 50% interest in CS Pharma and we are~~pay the ~~managing member. At July 31, 2016, CS Pharma had received $8.8 million, which was included in “Other current liabilities” pending the issuance~~aggregate exercise price of the ~~member interests.~~options.

We have an existing stock repurchase program authorized by our Board of Directors for the repurchase of shares of our Class B common stock. The Board of Directors authorized the repurchase of up to 8.0 million shares in the aggregate. In the ~~six~~nine months ended ~~January 31, 2017, CS Pharma received~~April 30, 2023, we repurchased 280,130 shares of our Class B common stock for an ~~additional $1.2~~aggregate purchase price of $7.5 million. There were no repurchases under the program in the nine months ended April 30, 2022. At April 30, 2023, 4.9 million ~~from~~shares remained available for repurchase under the ~~sale of its member interests.~~stock repurchase program.

In the ~~six~~nine months ended ~~January 31, 2018~~April 30, 2023 and ~~2017,~~2022, we paid ~~$0.1~~$0.3 million and ~~$1.8~~$9.0 million, respectively, to repurchase ~~5,170~~13,547 and ~~94,338~~200,438 shares, respectively, of our Class B common stock that were tendered by employees of ours to satisfy the employees’ tax withholding obligations in connection with shares issued for bonus payments, the vesting of DSUs, and lapsing of restrictions on ~~awards~~restricted stock. In addition, in April 2022, Mr. Jonas tendered 137,364 shares of ~~restricted stock.~~our Class B common stock with a value of $3.9 million to satisfy a portion of his tax obligations in connection with his stock option exercises. Such shares were repurchased by us based on their fair market value as of the close of business on the trading day immediately prior to the vesting date.

We have a stock repurchase program for the repurchase of up to an aggregate of 8.0 million shares of our Class B common stock. There were no repurchases under the program in the six months ended January 31, 2018 or 2017. At January 31, 2018, 8.0 million shares remained available for repurchase under the stock repurchase program.

Other Sources and Uses of Resources

~~On June 22, 2017, IDT Telecom, Inc. entered into~~We are considering spin-offs and other potential dispositions of certain of our subsidiaries. Some of the transactions under consideration are in early stages and others are more advanced. A spin-off may include the contribution of a ~~Share Purchase Agreement with JAR Fintech Limited and JAR Capital Limited to sell the capital stock~~significant amount of IDT Financial Services Holding Limited, a company incorporated under the laws of Gibraltar and a wholly-owned subsidiary of IDT Telecom, to JAR Fintech Limited. IDT Financial Services Holding Limited is the sole shareholder of IDT Financial Services Limited, our Gibraltar-based bank. The Share Purchase Agreement provides for an aggregate purchase price for the outstandingcash, cash equivalents, debt securities, and/or equity ~~interests of IDT Financial Services Holding Limited of £2.9 million ($4.1 million at January 31, 2018) plus an amount equal~~securities to the ~~value~~subsidiary prior to the spin-off, which would reduce our capital resources. There is no assurance at this time that any of IDT Financial Services Holding Limited’s net assets, to be paid at closing, subject to adjustments relating to customer assets of IDT Financial Services Holding Limited. The net asset value of IDT Financial Services Holding Limited was $14.5 million at January 31, 2018. A portion of the purchase pricethese transactions will be placed in escrow and released to IDT Telecom once all of the conditions have been met under the Share Purchase Agreement. The sale is expected to close in the second quarter of calendar 2018, subject to regulatory approval and other customary conditions set forth in the Share Purchase Agreement. The remaining closing conditions are outside of our control and there can be no assurance that the sale will be completed.

We intend to, where appropriate, make strategic investments and acquisitions to complement, expand, and/or enter into new businesses. In considering acquisitions and investments, we search for opportunities to profitably grow our existing businesses and/or to add qualitatively to the range and diversification of businesses in our portfolio. At this time, we cannot guarantee that we will be presented with acquisition opportunities that meet our ~~return on investment~~return-on-investment criteria, or that our efforts to make acquisitions that meet our criteria will be successful.

~~Contractual Obligations and Other Commercial Commitments~~

~~The following table quantifies our future contractual obligations and commercial commitments at January 31, 2018:~~

Payments Due by Period
(in millions)
Total Less than
1 year 1–3 years 4–5 years After 5 years
Operating leases $ 6.4 $ 2.9 $ 2.1 $ 0.7 $ 0.7
Revolving credit facility (1) 0.2 0.1 0.1 — —
Purchase commitments (2) 18.7 18.7 — — —

Total contractual obligations (3) $ 25.3 $ 21.7 $ 2.2 $ 0.7 $ 0.7

~~(1)~~

~~Revolving credit facility includes estimated fees on the unused commitment at January 31, 2018.~~

~~(2)~~

Purchase commitments include the aggregate commitment under the Reciprocal Services Agreement with a telecom operator in Central America for a full range of services, including, but not limited to, termination of inbound and outbound international long-distance voice calls.

~~(3)~~

~~The above table does not include an aggregate of $15.1 million in performance bonds due to the uncertainty of the amount and/or timing of any such payments.~~

~~Off-Balance Sheet Arrangements~~

We do not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources, other than the following.

In connection with our spin-off of Straight Path, in July 2013, we and Straight Path entered into various agreements prior to the spin-off including a Separation and Distribution Agreement to effect the separation and provide a framework for our relationship with Straight Path after the spin-off, and a Tax Separation Agreement, which sets forth the responsibilities of us and Straight Path with respect to, among other things, liabilities for federal, state, local and foreign taxes for periods before and including the spin-off, the preparation and filing of tax returns for such periods and disputes with taxing authorities regarding taxes for such periods. Pursuant to the Separation and Distribution Agreement, we indemnify Straight Path and Straight Path indemnifies us for losses related to the failure of the other to pay, perform or otherwise discharge, any of the liabilities and obligations set forth in the agreement. Pursuant to the Tax Separation Agreement, we indemnify Straight Path from all liability for taxes of Straight Path or any of its subsidiaries or relating to the Straight Path business with respect to taxable periods ending on or before the spin-off, from all liability for taxes of ours, other than Straight Path and its subsidiaries, for any taxable period, and from all liability for taxes due to the spin-off. (See Note 11 to the Consolidated Financial Statements included in Item 1 to Part I of the Quarterly Report on Form 10-Q).

In connection with our spin-off of Zedge, Inc., or Zedge, in June 2016, we and Zedge entered into various agreements prior to the spin-off including a Separation and Distribution Agreement to effect the separation and provide a framework for our relationship with Zedge after the spin-off, and a Tax Separation Agreement, which sets forth the responsibilities of us and Zedge with respect to, among other things, liabilities for federal, state, local and foreign taxes for periods before and including the spin-off, the preparation and filing of tax returns for such periods and disputes with taxing authorities regarding taxes for such periods. Pursuant to Separation and Distribution Agreement, among other things, we indemnify Zedge and Zedge indemnifies us for losses related to the failure of the other to pay, perform or otherwise discharge, any of the liabilities and obligations set forth in the agreement. Pursuant to the Tax Separation Agreement, among other things, Zedge indemnifies us from all liability for taxes of Zedge and any of Zedge’s subsidiaries or relating to Zedge’s business accruing after the spin-off, and we indemnify Zedge from all liability for taxes of Zedge and any of Zedge’s subsidiaries or relating to Zedge’s business with respect to taxable periods ending on or before the spin-off.

IDT Payment Services and IDT Telecom have performance bonds issued through third parties for the benefit of various states in order to comply with the states’ financial requirements for money remittance licenses and telecommunications resellers, respectively. At January 31, 2018, we had aggregate performance bonds of $15.1 million outstanding.

Item 3.

Quantitative and Qualitative Disclosures About Market Risks

Foreign Currency Risk

Revenues from our international operations were ~~32%~~28% and ~~31%~~29% of our consolidated revenues ~~for~~in the ~~six~~three months ended ~~January 31, 2018~~April 30, 2023 and ~~2017,~~2022, respectively, and 28% and 28% of our consolidated revenues in the nine months ended April 30, 2023 and 2022, respectively. ATherefore, a significant portion of ~~these~~our revenues is in currencies other than the U.S. Dollar. Our foreign currency exchange risk is somewhat mitigated by our ability to offset a portion of these non-U.S. Dollar-denominated revenues with operating expenses that are paid in the same currencies. While the impact from fluctuations in foreign exchange rates affects our ~~revenue~~revenues and expenses denominated in foreign currencies, the net amount of our exposure to foreign currency exchange rate changes at the end of each reporting period is generally not material.

Investment Risk

~~In addition to, but separate from our primary business, we~~We hold a portion of our assets in ~~marketable~~debt and equity securities, ~~and~~including hedge funds, for strategic and speculative purposes. At ~~January~~April 30, 2023 and July 31, ~~2018,~~2022, the ~~carrying~~ value of our ~~marketable securities~~debt and ~~investments in hedge funds~~equity security holdings was ~~$46.2~~an aggregate of $58.0 million and ~~$8.8~~$46.8 million, respectively, which represented 11% and 9% of our total assets at April 30, 2023 and July 31, 2022, respectively. Investments in ~~marketable~~debt and equity securities ~~and hedge funds~~ carry a degree of risk and depend to a great extent on correct assessments of the future course of price movements of securities and other instruments. There can be no assurance that our investment managers will be able to accurately predict these price movements. The securities markets have in recent years been characterized by great volatility and unpredictability. Accordingly, the value of our investments may go down as well as up and we may not receive the amounts originally invested upon redemption.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and ~~Principal~~Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and ~~Principal~~Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of ~~January 31, 2018.~~April 30, 2023.

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended ~~January 31, 2018~~April 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

Legal proceedings in which we are involved are ~~more fully~~ described in Note 1116 to the Consolidated Financial Statements included in Item 1 to Part I of this Quarterly ~~Report on Form 10-Q.~~Report.

Item 1A.

Risk Factors

There are no material changes from the risk factors previously disclosed in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017.~~2022.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to purchases by us of our shares during the ~~second~~third quarter of fiscal ~~2018:~~2023:

Total
Number of
Shares
Purchased

Average
Price
per Share

Total Number
of Shares
Purchased as
part of
Publicly
Announced
Plans or
Programs

Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Plans or
Programs (1)

November 1-30, 2017 — $ — — 8,000,000
December 1-31, 2017 — $ — — 8,000,000
January 1–31, 2018 (2) 3,502 $ 10.77 — 8,000,000

Total 3,502 $ 10.77 —

	Total Number of Shares Purchased		Average Price per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
February 1–28, 2023		—	$	—		—		5,010,317
March 1–31, 2023 (2)		144	$	30.56		—		5,010,317
April 1–30, 2023		76,694	$	32.57		76,694		4,933,623
Total		76,838	$	32.56		76,694

(1)	On January 22, 2016, our Board of Directors approved a stock repurchase program to purchase up to 8.0 million shares of our Class B common ~~stock and cancelled the previous stock repurchase program originally approved by the Board of Directors on June 13, 2006, which had 4,636,741 shares remaining available for repurchase.~~stock.
(2)

~~(2)~~

~~Consists~~Shares of ~~shares of~~our Class B common stock that were tendered by ~~employees~~an employee of ours to satisfy the ~~employees’~~employee’s tax withholding obligations in connection with the lapsing of restrictions on ~~awards of~~ restricted stock. Such shares were repurchased by us based on their fair market value as of the close of business on the trading day immediately prior to the vesting ~~date and the proceeds utilized to pay the taxes due upon such vesting event.~~date.

Item 3.

Defaults Upon Senior Securities

None

Item 4.

Mine Safety Disclosures

Not applicable

Item 5.

Other Information

None

Item 6.

~~Item 6~~Exhibits.

~~Exhibits~~

Exhibit ~~Number~~ Number		Description

31.1*		Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of ~~Principal~~Chief Financial Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of ~~Principal~~Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

101.INS101.SCH		~~XBRL Instance Document~~

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Filed or furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	IDT CORPORATION

~~March 12, 2018~~June 9, 2023	By:	/s/ SHMUEL JONAS
		~~/s/~~ Shmuel Jonas Chief Executive Officer
		~~Shmuel Jonas~~ ~~Chief Executive Officer~~
June 9, 2023	By:	/s/ MARCELO FISCHER
~~March 12, 2018~~	~~By:~~	~~/s/~~ Marcelo Fischer
		~~Marcelo Fischer~~ ~~Senior Vice President of Finance~~ ~~(Principal~~Chief Financial ~~Officer)~~Officer

	January 31, 2018		July 31, 2017
	(in thousands)
Current assets held for sale:
Cash and cash equivalents	$	6,287	$	5,716
Restricted cash and cash equivalents		128,153		115,609
Trade accounts receivable, net of allowance for doubtful accounts of $3,239 and $2,550 at January 31, 2018 and July 31, 2017, respectively		2,919		1,844
Prepaid expenses		854		758
Other current assets		487		340
Total current assets held for sale	$	138,700	$	124,267

Noncurrent assets held for sale:
Property, plant and equipment, net	$	19	$	24
Other intangibles, net		164		165
Other assets		5,102		4,945
Total noncurrent assets held for sale	$	5,285	$	5,134

Current liabilities held for sale:
Trade accounts payable	$	2,007	$	372
Accrued expenses		252		226
Customer deposits		127,107		114,689
Other current liabilities		57		31
Total current liabilities held for sale	$	129,423	$	115,318

Noncurrent liabilities held for sale:
Other liabilities	$	642	$	550
Total noncurrent liabilities held for sale	$	642	$	550

	Unrealized Losses		Fair Value
	(in thousands)
January 31, 2018:
Certificates of deposit	$	1	$	5,340
Federal Government Sponsored Enterprise notes		26		3,190
International agency notes		9		390
Corporate bonds		39		3,293
Equity		3		76
U.S. Treasury notes		76		5,321
Municipal bonds		4		3,067
Total	$	158	$	20,677
July 31, 2017:
Certificates of deposit	$	7	$	12,155
Federal Government Sponsored Enterprise notes		14		3,529
Equity		26		48
Municipal bonds		1		3,349
Total	$	48	$	19,081

	Six Months Ended January 31, 2018
	Attributable to IDT Corporation			Noncontrolling Interests			Total
	(in thousands)
Balance, July 31, 2017	$	145,734		$	8,823		$	154,557
Dividends declared ($0.38 per share)		(9,440	)		—			(9,440	)
Restricted Class B common stock purchased from employees		(61	)		—			(61	)
Transfer of right to receive equity to Howard S. Jonas		—			(40	)		(40	)
Consolidation of Lipomedix Pharmaceuticals Ltd.		—			558			558
Distributions to noncontrolling interests		—			(717	)		(717	)
Stock-based compensation		1,797			—			1,797
Comprehensive income:
Net loss		(576	)		470			(106	)
Other comprehensive loss		(188	)		—			(188	)
Comprehensive income		(764	)		470			(294	)
Balance, January 31, 2018	$	137,266		$	9,094		$	146,360

	Unrealized Gain (Loss) on Available-for-Sale Securities			Foreign Currency Translation			Accumulated Other Comprehensive Loss			Location of (Gain) Loss Recognized
	(in thousands)
Balance, July 31, 2017	$	2,134		$	(4,477	)	$	(2,343	)
Other comprehensive loss attributable to IDT Corporation before reclassifications		(159	)		(38	)		(197	)
Less: reclassification for loss included in net loss		9			—			9		Other income (expense), net
Net other comprehensive loss attributable to IDT Corporation		(150	)		(38	)		(188	)
Balance, January 31, 2018	$	1,984		$	(4,515	)	$	(2,531	)

(in thousands)	Telecom Platform Services		net2phone-UCaaS			All Other			Corporate			Total
Three Months Ended January 31, 2018
Revenues	$	387,065	$	8,299		$	519		$	—		$	395,883
Income (loss) from operations		4,589		(790	)		(1,019	)		(3,260	)		(480	)
Severance		195		—			—			—			195
Other operating expense		—		—			—			(846	)		(846	)

Three Months Ended January 31, 2017
Revenues	$	359,924	$	7,142		$	490		$	—		$	367,556
Income (loss) from operations		7,187		(464	)		82			(3,677	)		3,128
Other operating expense		—		—			—			(889	)		(889	)

Six Months Ended January 31, 2018
Revenues	$	772,129	$	16,087		$	1,222		$	—		$	789,438
Income (loss) from operations		9,150		(1,464	)		(1,650	)		(6,433	)		(397	)
Severance		605		—			—			30			635
Other operating expense		—		—			—			(1,625	)		(1,625	)

Six Months Ended January 31, 2017
Revenues	$	721,435	$	14,278		$	994		$	—		$	736,707
Income (loss) from operations		13,732		(639	)		172			(4,951	)		8,314
Other operating expense		—		—			—			(1,088	)		(1,088	)

	Three months ended January 31,				Change						Six months ended January 31,				Change
	2018		2017		$/#			%			2018		2017		$/#			%
	(in millions, except revenue per minute)
Telecom Platform Services Revenues
Retail Communications	$	145.2	$	154.6	$	(9.4	)		(6.1	)%	$	291.4	$	313.1	$	(21.7	)		(6.9	)%
Wholesale Carrier Services		172.5		145.8		26.7			18.3			343.0		289.1		53.9			18.6
Payment Services		69.4		59.5		9.9			16.5			137.7		119.2		18.5			15.5
Total Telecom Platform Services revenues	$	387.1	$	359.9	$	27.2			7.5	%	$	772.1	$	721.4	$	50.7			7.0	%
Minutes of use
Retail Communications		1,416		1,708		(292	)		(17.1	)%		2,889		3,537		(648	)		(18.3	)%
Wholesale Carrier Services		5,385		5,057		328			6.5			10,601		9,405		1,196			12.7
Total minutes of use		6,801		6,765		36			0.5	%		13,490		12,942		548			4.2	%
Average revenue per minute
Retail Communications	$	0.1026	$	0.0905	$	0.0121			13.3	%	$	0.1009	$	0.0885	$	0.0124			14.0	%
Wholesale Carrier Services		0.0320		0.0288		0.0032			11.1			0.0324		0.0307		0.0017			5.2

Payments Due by Period (in millions)	Total		Less than 1 year		1–3 years		4–5 years		After 5 years
Operating leases	$	6.4	$	2.9	$	2.1	$	0.7	$	0.7
Revolving credit facility (1)		0.2		0.1		0.1		—		—
Purchase commitments (2)		18.7		18.7		—		—		—

Total contractual obligations (3)	$	25.3	$	21.7	$	2.2	$	0.7	$	0.7

	Total Number of Shares Purchased		Average Price per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
November 1-30, 2017		—	$	—		—		8,000,000
December 1-31, 2017		—	$	—		—		8,000,000
January 1–31, 2018 (2)		3,502	$	10.77		—		8,000,000

Total		3,502	$	10.77		—