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

FOR THE QUARTERLY PERIOD ENDED ~~JANUARY~~OCTOBER 31, 2023

☐	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 every Interactive Data File required to be submitted 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	☐☐	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,~~December 7, 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:	~~23,952,533~~23,586,304 shares outstanding (excluding ~~3,829,654~~4,278,712 treasury shares)

IDT CORPORATION

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		3

Item 1.	Financial Statements (Unaudited)	3

	Consolidated Balance Sheets	3

	Consolidated Statements of Income	4

	Consolidated Statements of Comprehensive Income	5

	Consolidated Statements of Equity	6

	Consolidated Statements of Cash Flows	87

	Notes to Consolidated Financial Statements	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2524

Item 3.	Quantitative and Qualitative Disclosures About Market Risks	3533

Item 4.	Controls and Procedures	3533

PART II. OTHER INFORMATION		3634

Item 1.	Legal Proceedings	3634

Item 1A.	Risk Factors	3634

Item 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	3634

Item 3.	Defaults Upon Senior Securities	3634

Item 4.	Mine Safety Disclosures	3634

Item 5.	Other Information	3634

Item 6.	Exhibits	3635

SIGNATURES		3736

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

~~Item 1. Financial Statements (Unaudited)~~

IDT CORPORATION

CONSOLIDATED BALANCE SHEETS

	January 31, 2023			July 31, 2022			October 31, 2023			July 31, 2023
	(Unaudited)			(Note 1)			(Unaudited)			(Note 1)
	(in thousands, except per share data)						(in thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents	$	117,811		$	98,352		$	121,668		$	103,637
Restricted cash and cash equivalents		89,867			91,210			86,785			95,186
Debt securities		29,777			22,303			33,242			42,414
Equity investments		9,213			17,091			4,761			6,198
Trade accounts receivable, net of allowance for doubtful accounts of $6,255 at January 31, 2023 and $5,882 at July 31, 2022		47,605			64,315
Trade accounts receivable, net of allowance for credit losses of $5,909 at October 31, 2023 and allowance for doubtful accounts of $5,642 at July 31, 2023								35,328			32,092
Settlement assets, net of reserve of $1,469 at October 31, 2023 and $1,143 at July 31, 2023								18,122			32,396
Disbursement prefunding		28,098			21,057			35,733			30,113
Prepaid expenses		14,611			17,526			19,502			16,638
Other current assets		36,559			30,773			27,034			28,394

Total current assets		373,541			362,627			382,175			387,068
Property, plant, and equipment, net		38,303			36,866			38,802			38,655
Goodwill		26,547			26,380			26,311			26,457
Other intangibles, net		8,985			9,609			7,215			8,196
Equity investments		6,687			7,426			8,150			9,874
Operating lease right-of-use assets		6,894			7,210			4,910			5,540
Deferred income tax assets, net		28,913			36,701			20,539			24,101
Other assets		10,641			10,275			10,944			10,919

Total assets	$	500,511		$	497,094		$	499,046		$	510,810

Liabilities, redeemable noncontrolling interest, and equity
Current liabilities:
Trade accounts payable	$	23,229		$	29,080		$	24,469		$	22,231
Accrued expenses		110,580			117,109			100,107			110,796
Deferred revenue		34,998			36,531			34,042			35,343
Customer deposits		86,899			85,764			79,541			86,481
Settlement liabilities								19,268			21,495
Other current liabilities		32,215			36,588			18,507			17,761

Total current liabilities		287,921			305,072			275,934			294,107
Operating lease liabilities		4,243			4,606			2,346			2,881
Other liabilities		4,944			6,588			3,220			3,354

Total liabilities		297,108			316,266			281,500			300,342
Commitments and contingencies								-			-
Redeemable noncontrolling interest		10,389			10,191			10,579			10,472
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, 2023 and July 31, 2022		33			33
Class B common stock, $.01 par value; authorized shares—200,000; 27,782 and 27,725 shares issued and 23,952 and 24,112 shares outstanding at January 31, 2023 and July 31, 2022, respectively		278			277
Class A common stock, $.01 par value; authorized shares—35,000; 3,272 shares issued and 1,574 shares outstanding at October 31, 2023 and July 31, 2023								33			33
Class B common stock, $.01 par value; authorized shares—200,000; 27,865 and 27,851 shares issued and 23,586 and 23,699 shares outstanding at October 31, 2023 and July 31, 2023, respectively								279			279
Common stock, value								279			279
Additional paid-in capital		298,649			296,005			302,351			301,408
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of Class A common stock and 3,830 and 3,613 shares of Class B common stock at January 31, 2023 and July 31, 2022, respectively		(106,906	)		(101,565	)
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of Class A common stock and 4,279 and 4,152 shares of Class B common stock at October 31, 2023 and July 31, 2023, respectively								(118,312	)		(115,461	)
Accumulated other comprehensive loss		(13,711	)		(11,305	)		(16,627	)		(17,192	)
Retained earnings (accumulated deficit)		9,795			(15,830	)
Retained earnings								32,321			24,662

Total IDT Corporation stockholders’ equity		188,138			167,615			200,045			193,729
Noncontrolling interests		4,876			3,022			6,922			6,267

Total equity		193,014			170,637			206,967			199,996

Total liabilities, redeemable noncontrolling interest, and equity	$	500,511		$	497,094		$	499,046		$	510,810

See accompanying notes to consolidated financial statements.

IDT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

													2023			2022
	Three Months Ended January 31,						Six Months Ended January 31,						Three Months Ended October 31,
	2023			2022			2023			2022			2023			2022
	(in thousands, except per share data)												(in thousands, except per share data)

Revenues	$	313,936		$	337,058		$	635,752		$	707,141		$	301,205		$	321,816
Costs and expenses:
Direct cost of revenues (exclusive of depreciation and amortization)		222,394			257,325			454,031			548,950
Direct cost of revenues														206,777			232,670
Gross profit														94,428			89,146
Operating expenses (gains):
Selling, general and administrative (i)		68,153			61,070			134,017			121,177			77,222			69,620
Depreciation and amortization		5,012			4,378			9,801			8,825
Severance		213			29			312			67			525			100
Total costs and expenses		295,772			322,802			598,161			679,019
Other operating gain (expense), net (see Note 10)		17			(442	)		816			(530	)
Other operating gain, net (see Note 10)														(484	)		(800	)

Total operating expenses														77,263			68,920

Income from operations		18,181			13,814			38,407			27,592			17,165			20,226
Interest income, net		810			119			1,320			132			844			509
Other income (expense), net		1,613			(2,949	)		(2,229	)		(19,165	)
Other expense, net														(5,586	)		(3,842	)

Income before income taxes		20,604			10,984			37,498			8,559			12,423			16,893
Provision for income taxes		(5,295	)		(2,734	)		(9,634	)		(2,648	)		(3,947	)		(4,338	)

Net income		15,309			8,250			27,864			5,911			8,476			12,555
Net income attributable to noncontrolling interests		(686	)		(763	)		(2,239	)		(896	)		(817	)		(1,553	)

Net income attributable to IDT Corporation	$	14,623		$	7,487		$	25,625		$	5,015		$	7,659		$	11,002

Earnings per share attributable to IDT Corporation common stockholders:
Basic	$	0.57		$	0.29		$	1.00		$	0.20		$	0.30		$	0.43

Diluted	$	0.57		$	0.28		$	1.00		$	0.19		$	0.30		$	0.43

Weighted-average number of shares used in calculation of earnings per share:
Basic		25,510			25,652			25,556			25,609			25,178			25,603

Diluted		25,538			26,542			25,577			26,580			25,277			25,616

(i) Stock-based compensation included in selling, general and administrative expenses	$	1,286		$	310		$	1,858		$	595
(i) Stock-based compensation included in selling, general and administrative expense													$	771		$	572

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

See accompanying notes to consolidated financial statements.

IDT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	2023			2022			2023			2022			2023			2022
	Three Months Ended January 31,						Six Months Ended January 31,						Three Months Ended October 31,
	2023			2022			2023			2022			2023			2022
	(in thousands)												(in thousands)
Net income	$	15,309		$	8,250		$	27,864		$	5,911		$	8,476		$	12,555
Other comprehensive loss:
Other comprehensive (loss) income:
Change in unrealized loss on available-for-sale securities		188			(212	)		(34	)		(323	)		(66	)		(222	)
Foreign currency translation adjustments		(2,227	)		(1,650	)		(2,372	)		(582	)		631			(145	)
Other comprehensive loss		(2,039	)		(1,862	)		(2,406	)		(905	)

Other comprehensive income (loss)														565			(367	)

Comprehensive income		13,270			6,388			25,458			5,006			9,041			12,188
Comprehensive (income) attributable to noncontrolling interests		(686	)		(763	)		(2,239	)		(896	)
Comprehensive income attributable to noncontrolling interests														(817	)		(1,553	)

Comprehensive income attributable to IDT Corporation	$	12,584		$	5,625		$	23,219		$	4,110		$	8,224		$	10,635

See accompanying notes to consolidated financial statements.

IDT CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	Three Months Ended January 31, 2023 (in thousands)																					Three Months Ended October 31, 2023 (in thousands)
	IDT Corporation Stockholders																					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			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 OCTOBER 31, 2022	$	33	$	278	$	297,191	$	(106,906	)	$	(11,672	)	$	(4,828	)	$	4,343		$	178,439

BALANCE AT JULY 31, 2023																						$	33	$	279	$	301,408	$	(115,461	)	$	(17,192	)	$	24,662	$	6,267		$	199,996
Exercise of stock options		—		—		172		—			—			—			��			172			—		—		172		—			—			—		—			172
Repurchases of Class B common stock through repurchase program																							—		—		—		(2,836	)		—			—		—			(2,836	)
Restricted Class B common stock purchased from employees																							—		—		—		(15	)		—			—		—			(15	)
Stock-based compensation		—		—		1,286		—			—			—			—			1,286			—		—		771		—			—			—		—			771
Distributions to noncontrolling interests		—		—		—		—			—			—			(88	)		(88	)		—		—		—		—			—			—		(55	)		(55	)
Other comprehensive loss		—		—		—		—			(2,039	)		—			—			(2,039	)
Other comprehensive income																							—		—		—		—			565			—		—			565
Stock issued to certain executive officers for bonus payments
Net income		—		—		—		—			—			14,623			621			15,244			—		—		—		—			—			7,659		710			8,369
BALANCE AT JANUARY 31, 2023	$	33	$	278	$	298,649	$	(106,906	)	$	(13,711	)	$	9,795		$	4,876		$	193,014
BALANCE AT OCTOBER 31, 2023																						$	33	$	279	$	302,351	$	(118,312	)	$	(16,627	)	$	32,321	$	6,922		$	206,967

Six Months Ended January 31, 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 — — — (5,006 ) — — — (5,006 )
Restricted Class B common stock purchased from employees — — — (335 ) — — — (335 )
Stock issued to certain executive officers for bonus payments — — 615 — — — — 615
Stock-based compensation — 1 1,857 — — — — 1,858
Distributions to noncontrolling interests — — — — — — (187 ) (187 )
Other comprehensive loss — — — — (2,406 ) — — (2,406 )
Net income — — — — — 25,625 2,041 27,666
BALANCE AT JANUARY 31, 2023 $ 33 $ 278 $ 298,649 $ (106,906 ) $ (13,711 ) $ 9,795 $ 4,876 $ 193,014


	Three Months Ended October 31, 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, 2022	$	33	$	277	$	296,005	$	(101,565	)	$	(11,305	)	$	(15,830	)	$	3,022		$	170,637
BALANCE	$	33	$	277	$	296,005	$	(101,565	)	$	(11,305	)	$	(15,830	)	$	3,022		$	170,637
Repurchases of Class B common stock through repurchase program		—		—		—		(5,006	)		—			—			—			(5,006	)
Restricted Class B common stock purchased from employees		—		—		—		(335	)		—			—			—			(335	)
Stock issued to certain executive officers for bonus payments		—		—		615		—			—			—			—			615
Stock-based compensation		—		1		571		—			—			—			—			572
Distributions to noncontrolling interests		—		—		—		—			—			—			(99	)		(99	)
Other comprehensive loss		—		—		—		—			(367	)		—			—			(367	)
Net income		—		—		—		—			—			11,002			1,420			12,422
BALANCE AT OCTOBER 31, 2022	$	33	$	278	$	297,191	$	(106,906	)	$	(11,672	)	$	(4,828	)	$	4,343		$	178,439
BALANCE	$	33	$	278	$	297,191	$	(106,906	)	$	(11,672	)	$	(4,828	)	$	4,343		$	178,439

See accompanying notes to consolidated financial statements.

IDT CORPORATION

CONSOLIDATED STATEMENTS OF ~~EQUITY—Continued~~CASH FLOWS

~~(Unaudited)~~

Three Months Ended January 31, 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 OCTOBER 31, 2021 $ 33 $ 264 $ 278,306 $ (60,439 ) $ (9,226 ) $ (45,330 ) $ 1,690 $ 165,298
Restricted Class B common stock purchased from employees — — — (8,948 ) — — — (8,948 )
Stock-based compensation — 3 307 — — — — 310
Distributions to noncontrolling interests — — — — — — (15 ) (15 )
Other comprehensive loss — — — — (1,862 ) — — (1,862 )
Net income — — — — — 7,487 710 8,197
BALANCE AT JANUARY 31, 2022 $ 33 $ 267 $ 278,613 $ (69,387 ) $ (11,088 ) $ (37,843 ) $ 2,385 $ 162,980

(Unaudited)

Six Months Ended January 31, 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
Restricted Class B common stock purchased from employees — — — (8,974 ) — — — (8,974 )
Stock-based compensation — 3 592 — — — — 595
Distributions to noncontrolling interests — — — — — — (198 ) (198 )
Other comprehensive loss — — — — (905 ) — — (905 )
Net income — — — — — 5,015 833 5,848
BALANCE AT JANUARY 31, 2022 $ 33 $ 267 $ 278,613 $ (69,387 ) $ (11,088 ) $ (37,843 ) $ 2,385 $ 162,980
Ending balance, value $ 33 $ 267 $ 278,613 $ (69,387 ) $ (11,088 ) $ (37,843 ) $ 2,385 $ 162,980

	2023			2022
	Three Months Ended October 31,
	2023			2022
	(in thousands)
Operating activities
Net income	$	8,476		$	12,555
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,047			4,790
Deferred income taxes		3,561			3,672
Provision for credit losses, doubtful accounts receivable, and reserve for settlement assets		759			430
Net unrealized loss from marketable securities		1,528			1,846
Stock-based compensation		771			572
Other		897			756
Changes in assets and liabilities:
Trade accounts receivable		(4,572	)		2,442
Settlement assets, disbursement prefunding, prepaid expenses, other current assets, and other assets		8,250			(4,380	)
Trade accounts payable, accrued expenses, settlement liabilities, other current liabilities, and other liabilities		(7,061	)		(6,970	)
Customer deposits at IDT Financial Services Limited (Gibraltar-based bank)		(2,326	)		2,865
Deferred revenue		(540	)		(394	)

Net cash provided by operating activities		14,790			18,184
Investing activities
Capital expenditures		(4,322	)		(5,172	)
Purchase of convertible preferred stock in equity method investment		(672	)		—
Purchases of debt securities and equity investments		(7,750	)		(2,058	)
Proceeds from maturities and sales of debt securities and equity investments		17,067			11,472

Net cash provided by investing activities		4,323			4,242
Financing activities
Distributions to noncontrolling interests		(55	)		(99	)
Proceeds from other liabilities		100			300
Repayment of other liabilities		(15	)		(1,916	)
Proceeds from borrowings under revolving credit facility		30,315			—
Repayment of borrowings under revolving credit facility		(30,315	)		—
Proceeds from exercise of stock options		172			—
Repurchases of Class B common stock		(2,851	)		(5,341	)

Net cash used in financing activities		(2,649	)		(7,056	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents		(6,834	)		(6,157	)

Net increase in cash, cash equivalents, and restricted cash and cash equivalents		9,630			9,213
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period		198,823			189,562

Cash, cash equivalents, and restricted cash and cash equivalents at end of period	$	208,453		$	198,775

Supplemental Schedule of Non-Cash Financing Activities
Stock issued to certain executive officers for bonus payments	$	—		$	615

See accompanying notes to consolidated financial statements.

~~IDT CORPORATION~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

2023 2022

Six Months Ended
January 31,

2023 2022
(in thousands)
Operating activities
Net income $ 27,864 $ 5,911
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 9,801 8,825
Deferred income taxes 7,788 1,683
Provision for doubtful accounts receivable 915 1,289
Net unrealized loss from marketable securities 2,349 16,242
Stock-based compensation 1,858 595
Other 1,359 2,850
Change in assets and liabilities:
Trade accounts receivable 16,298 (8,045 )
Disbursement prefunding, prepaid expenses, other current assets, and other assets (11,492 ) (8,551 )
Trade accounts payable, accrued expenses, other current liabilities, and other liabilities (19,344 ) (6,313 )
Customer deposits at IDT Financial Services Limited (Gibraltar-based bank) 15 (1,862 )
Deferred revenue (1,795 ) (960 )
Net cash provided by operating activities 35,616 11,664
Investing activities
Capital expenditures (10,578 ) (8,991 )
Purchase of convertible preferred stock in equity method investment — (1,051 )
Payments for acquisitions, net of cash acquired — (100 )
Purchases of debt securities and equity investments (28,129 ) (10,825 )
Proceeds from maturities and sales of debt securities and redemptions of equity investments 27,531 6,068
Net cash used in investing activities (11,176 ) (14,899 )
Financing activities
Distributions to noncontrolling interests (187 ) (198 )
Proceeds from other liabilities 300 2,301
Repayment of other liabilities. (2,014 ) (1,291 )
Proceeds from borrowings under revolving credit facility 2,383 2,488
Repayment of borrowings under revolving credit facility. (2,383 ) (2,488 )
Proceeds from sale of redeemable equity in subsidiary — 10,000
Proceeds from exercise of stock options 172 —
Repurchases of Class B common stock (5,341 ) (8,974 )
Net cash (used in) provided by financing activities (7,070 ) 1,838
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents
746
(4,967 )
Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents 18,116 (6,364 )
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 $ 207,678 $ 220,552

Supplemental schedule of non-cash financing activities
Stock issued to certain executive officers for bonus payments $ 615 $ —

~~See accompanying notes to consolidated financial statements.~~

IDT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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 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~~ months ended ~~January~~October 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, ~~2023.~~2024. The balance sheet at July 31, ~~2022~~2023 has been derived from the Company’s audited financial statements at that date but does not include all of the information and 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, ~~2022,~~2023, as filed with the U.S. Securities and Exchange Commission (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 ~~2023~~2024 refers to the fiscal year ending July 31, ~~2023)~~2024).

~~Note 2—~~As of October 31, 2023, the Company owned ~~Business Segment Information~~90.0% of the outstanding shares of its subsidiary, net2phone 2.0, Inc. (“net2phone 2.0”), which owns and operates the net2phone segment, and 80.0% of the outstanding shares of National Retail Solutions (“NRS”), and, on a fully diluted basis assuming all the vesting criteria related to various rights granted have been met and other assumptions, the Company would own 85.8% of net2phone 2.0 and 77.7% of NRS.

Reclassifications

As of August 1, ~~2022,~~2023, the Company ~~revised~~includes depreciation and amortization in “Direct cost of revenues” and “Selling, general and administrative” expense and is reporting gross profit in the consolidated statements of income. Prior to August 1, 2023, depreciation and amortization was a separate caption in the consolidated statements of income. Depreciation and amortization expense of $4.8 million in the three months ended October 31, 2022 was reclassified to conform to the current year’s presentation as follows: $1.0 million was reclassified to “Direct cost of revenues” and $3.8 million was reclassified to “Selling, general and administrative” expense.

In the consolidated statements of cash flows, cash provided by “Trade accounts receivable” in the three months ended October 31, 2022 of $2.7 million was reclassified to “Settlement assets, disbursement prefunding, prepaid expenses, other current assets, and other assets” to conform to the current year’s presentation.

Recently Adopted Accounting Standard

On August 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, that changed the impairment model for most financial assets and certain other instruments. For receivables, entities are required to use a new forward-looking current expected credit loss model to determine its ~~reportable business segments primarily~~allowance for credit losses, which replaced the allowance for doubtful accounts. When determining the allowance for credit losses for its trade accounts receivable, the Company considers the probability of recoverability of accounts receivable based on past experience, taking into account current collection trends and general economic factors, including bankruptcy rates. The Company also considers future economic trends to ~~reflect~~estimate expected credit losses over the ~~growth~~lifetime of ~~its financial technology businesses~~the asset. Credit risks will be assessed based on historical write-offs, net of recoveries, as well as an analysis of the aged accounts receivable balances with allowances generally increasing as the receivable ages. Accounts receivable may be fully reserved for when specific collection issues are known to exist, such as pending bankruptcies. Account balances are written off against the allowance when it is determined that the receivable will not be recovered. For available-for-sale debt securities with unrealized losses, the concept of “other-than-temporary” impairment was replaced by a determination whether any impairment is a result of a credit loss or other factors. The portion of the unrealized loss that is the result of a credit loss is recognized as an allowance and ~~their increased contributions to~~a corresponding expense recorded in “Other expense, net” in the consolidated statements of income. Unrealized loss that is not the result of a credit loss is recorded in “Accumulated other comprehensive loss” in the consolidated balance sheets. The adoption of the new standard did not have a material impact on the Company’s consolidated ~~results.~~ financial statements, and it was not necessary to record a cumulative-effect adjustment to retained earnings as of August 1, 2023.

Note 2—Business Segment Information

The ~~Company’s~~Company has four reportable business segments, NRS, Fintech, ~~National Retail Solutions (“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 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.Communications.

The NRS segment is an operator of a nationwide point-of-sale (“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.

The Fintech segment 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 (“Leaf”), a provider of digital wallet services in emerging markets, a variable interest entity that operates money transfer businesses, and IDT Financial Services Limited (“IDT Financial Services”), the Company’s Gibraltar-based bank.

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

The Traditional Communications segment includes IDT Digital Payments, 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.

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 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, the Company’s variable interest entity (“VIE”) that operates money transfer businesses (see Note 9), and IDT Financial Services Limited (“IDT Financial Services”), the Company’s Gibraltar-based bank.

The NRS segment is an operator of a nationwide point of sale (“POS”) network providing independent retailers with store management software with credit, debit, and other electronic payment processing, as well as with 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 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.

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 business segments of the Company were as follows:

Schedule of Operating Results of Business Segments

(in thousands) Fintech National Retail Solutions net2phone Traditional Communications Corporate Total
Three Months Ended January 31, 2023
Revenues $ 20,321 $ 19,822 $ 17,794 $ 255,999 $ — $ 313,936
(Loss) income from operations (806 ) 5,374 (575 ) 17,008 (2,820 ) 18,181

Three Months Ended January 31, 2022
Revenues $ 14,599 $ 10,620 $ 13,535 $ 298,304 $ — $ 337,058
(Loss) income from operations (2,271 ) 2,058 (2,866 ) 19,897 (3,004 ) 13,814

Six Months Ended January 31, 2023
Revenues $ 40,208 $ 39,135 $ 34,744 $ 521,665 $ — $ 635,752
Income (loss) from operations
706
10,605 (1,631 ) 34,271 (5,544 ) 38,407

Six Months Ended January 31, 2022
Revenues $ 28,829 $ 20,692 $ 26,448 $ 631,172 $ — $ 707,141
(Loss) income from operations (3,866 ) 3,405 (7,059 ) 40,225 (5,113 ) 27,592

(in thousands)	National Retail Solutions		Fintech			net2phone			Traditional Communications		Corporate			Total
Three Months Ended October 31, 2023
Revenues	$	23,995	$	26,563		$	19,927		$	230,720	$	—		$	301,205
Income (loss) from operations		5,460		(1,383	)		(7	)		15,406		(2,311	)		17,165
Depreciation and amortization:
Included in “Direct cost of revenues”		450		22			600			184		—			1,256
Included in “Selling, general and administrative expense”		285		671			840			1,964		31			3,791

Three Months Ended October 31, 2022
Revenues	$	19,313	$	19,887		$	16,950		$	265,666	$	—		$	321,816
Income (loss) from operations		5,231		1,512			(1,056	)		17,263		(2,724	)		20,226
Depreciation and amortization:
Included in “Direct cost of revenues”		320		23			498			193		—			1,034
Included in “Selling, general and administrative expense”		158		598			854			2,128		18			3,756
Total depreciation and amortization		158		598			854			2,128		18			3,756

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~~Money’s 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 ~~Mobile Top-Up,~~IDT Digital Payments, BOSS Revolution Calling, and IDT Global. ~~Mobile Top-Up~~IDT Digital Payments and BOSS Revolution Calling are sold ~~direct-to-consumers~~direct-to-consumer 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
	Three Months Ended January 31,				Six Months Ended January 31,				Three Months Ended October 31,
	2023		2022		2023		2022		2023		2022
	(in thousands)								(in thousands)
National Retail Solutions									$	23,995	$	19,313

BOSS Money	$	17,649	$	12,029	$	35,203	$	24,123		24,239		17,554
Other		2,672		2,570		5,005		4,706		2,324		2,333

Total Fintech		20,321		14,599		40,208		28,829		26,563		19,887
National Retail Solutions		19,822		10,620		39,135		20,692

net2phone		17,794		13,535		34,744		26,448		19,927		16,950
Mobile Top-Up		106,127		116,246		215,176		244,731

IDT Digital Payments										99,986		109,048
BOSS Revolution Calling		82,831		99,951		169,083		205,920		71,222		86,253
IDT Global		58,631		73,117		120,242		162,312		52,034		61,611
Other		8,410		8,990		17,164		18,209		7,478		8,754

Total Traditional Communications		255,999		298,304		521,665		631,172		230,720		265,666

Total	$	313,936	$	337,058	$	635,752	$	707,141	$	301,205	$	321,816
Revenues									$	301,205	$	321,816

109

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		National Retail Solutions		Fintech		net2phone		Traditional Communications		Total
Three Months Ended January 31, 2023
Three Months Ended October 31, 2023
United States	$	19,612	$	19,822	$	9,514	$	176,424	$	225,372	$	23,995	$	25,834	$	10,688	$	162,998	$	223,515
Outside the United States:
United Kingdom		—		—		—		69,000		69,000		—		—		—		58,843		58,843
Other		709		—		8,280		10,575		19,564		—		729		9,239		8,879		18,847

Total outside the United States		709		—		8,280		79,575		88,564		—		729		9,239		67,722		77,690

Total	$	20,321	$	19,822	$	17,794	$	255,999	$	313,936	$	23,995	$	26,563	$	19,927	$	230,720	$	301,205
Revenues											$	23,995	$	26,563	$	19,927	$	230,720	$	301,205

(in thousands) Fintech National Retail Solutions net2phone Traditional Communications Total
Three Months Ended January 31, 2022
United States $ 14,166 $ 10,620 $ 7,157 $ 209,065 $ 241,008
Outside the United States:
United Kingdom — — — 77,337 77,337
Other 433 — 6,378 11,902 18,713
Total outside the United States 433 — 6,378 89,239 96,050
Total $ 14,599 $ 10,620 $ 13,535 $ 298,304 $ 337,058

(in thousands) Fintech National Retail Solutions net2phone Traditional Communications Total
Six Months Ended January 31, 2023
United States $ 38,867 $ 39,135 $ 18,316 $ 361,262 $ 457,580
Outside the United States:
United Kingdom — — — 137,940 137,940
Other 1,341 — 16,428 22,463 40,232
Total outside the United States 1,341 — 16,428 160,403 178,172
Total $ 40,208 $ 39,135 $ 34,744 $ 521,665 $ 635,752


(in thousands)	Fintech		National Retail Solutions		net2phone		Traditional Communications		Total		National Retail Solutions		Fintech		net2phone		Traditional Communications		Total
Six Months Ended January 31, 2022
Three Months Ended October 31, 2022
United States	$	27,966	$	20,692	$	13,981	$	445,992	$	508,631	$	19,313	$	19,255	$	8,802	$	184,838	$	232,208
Outside the United States:
United Kingdom		—		—		—		159,080		159,080		—		—		—		68,940		68,940
Other		863		—		12,467		26,100		39,430		—		632		8,148		11,888		20,668

Total outside the United States		863		—		12,467		185,180		198,510		—		632		8,148		80,828		89,608

Total	$	28,829	$	20,692	$	26,448	$	631,172	$	707,141	$	19,313	$	19,887	$	16,950	$	265,666	$	321,816
Revenues											$	19,313	$	19,887	$	16,950	$	265,666	$	321,816

Remaining Performance Obligations

The ~~Company does not have any significant~~following table includes revenue by business segment expected to be recognized in the future from performance obligations ~~satisfied~~that were unsatisfied or partially ~~satisfied in previous reporting periods.~~unsatisfied as of October 31, 2023. The ~~Company’s remaining performance obligations at January 31, 2023 and July 31, 2022 primarily~~table excludes contracts that had an original expected duration of one year or less.

Schedule of Estimated Revenue by Business Segment

(in thousands)	National Retail Solutions		net2phone		Total
Twelve-month period ending October 31:
2024	$	5,740	$	38,430	$	44,170
2025		4,767		19,092		23,859
Thereafter		4,682		6,718		11,400

Total	$	15,189	$	64,240	$	79,429

Accounts Receivable and Contract Balances

The timing of revenue recognition may differ from the time of billing to the 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 its right to bill and receive consideration. The Company has not currently 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”.

1110

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

Schedule of Information About Contract Liabilities

Three Months Ended
January 31,

Six Months Ended
January 31,

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 $ 17,072 $ 20,152 $ 21,205 $ 24,378

	2023		2022
	Three Months Ended October 31,
	2023		2022
	(in thousands)
Revenue recognized in the period from amounts included in the contract liability balance at the beginning of the period	$	16,089	$	17,906

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 as an asset.~~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 ~~would be~~were one year or less for the asset that would be recognized from deferring these costs, the Company applies the practical expedient whereby the Company charges these costs to expense when incurred. For net2phone sales, the Company defers these costs and amortizes them over the expected customer relationship period when it is expected to exceed one year.

The Company’s costs to fulfill its contracts do not meet the criteria to be recognized as an asset, therefore these costs are charged to expense as incurred.

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

Schedule of Deferred Customer Contract Acquisition Costs


	January 31, 2023		July 31, 2022		October 31, 2023		July 31, 2023
	(in thousands)				(in thousands)
Deferred customer contract acquisition costs included in “Other current assets”	$	4,265	$	4,085	$	4,180	$	4,460
Deferred customer contract acquisition costs included in “Other assets”		3,465		3,469		3,744		3,734

Total	$	7,730	$	7,554	$	7,924	$	8,194

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

Three Months Ended
January 31,

Six Months Ended
January 31,

2023 2022 2023 2022
(in thousands)
Amortization of deferred customer contract acquisition costs $ 1,228 $ 1,030 $ 2,405 $ 2,042


	Three Months Ended October 31,
	2023		2022
	(in thousands)
Amortization of deferred customer contract acquisition costs	$	1,215	$	1,176

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 reasonably certain that it would exercise any of these options.

net2phone is the lessee under equipment leases that are classified as finance leases. The assets and liabilities related to these finance leases are not material to the Company’s consolidated balance sheets.

The Company 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 Company’s former subsidiary, Rafael Holdings, Inc. (“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 new owner. The Company leases office space in Israel from Rafael. Howard S. Jonas, the Chairman of the Company (an executive officer position) and the Chairman of the Company’s Board of Directors, is also the Chairman of the Board of Directors and Executive Chairman of Rafael. ~~The Newark lease expires in April 2025 and the Israel lease expires in July 2025.~~ ~~In the three and six months ended January 31, 2023, the Company incurred lease costs of $32,000~~ ~~and $0.2~~ million, respectively, in connection with the Rafael leases, which excludes Newark lease costs after August 22, 2022. In the three and six months ended January 31, 2022, the Company incurred lease costs of $~~0.5~~ ~~million and $0.9~~ ~~million, respectively, in connection with the Rafael leases. Lease costs incurred in connection with the Rafael leases is included in operating lease cost in the table below.~~

1211

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

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


	Three Months Ended January 31,				Six Months Ended January 31,				Three Months Ended October 31,
	2023		2022		2023		2022		2023		2022
	(in thousands)								(in thousands)
Operating lease cost	$	799	$	687	$	1,566	$	1,387	$	758	$	767
Short-term lease cost		259		253		528		600		326		269

Total lease cost	$	1,058	$	940	$	2,094	$	1,987	$	1,084	$	1,036

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	824	$	670	$	1,588	$	1,365	$	791	$	764
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases		824		670		1,588		1,365	$	791	$	764

Schedule of Supplemental Disclosures Related Weighted Average Operating Leases

	January 31, 2023			July 31, 2022			October 31, 2023			July 31, 2023
Weighted-average remaining lease term-operating leases		2.7 years			2.8 years			2.1 years			2.3 years

Weighted-average discount rate-operating leases		3.6	%		3.0	%		3.9	%		3.7	%

In the ~~six~~three months ended ~~January~~October 31, 2023 and 2022, the Company obtained right-of-use assets of $~~1.7~~0.1 million and $~~0.7~~0.4 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


	January 31, 2023		July 31, 2022		October 31, 2023		July 31, 2023
	(in thousands)				(in thousands)
Operating lease liabilities included in “Other current liabilities”	$	2,917	$	2,899
Operating lease liabilities included in “Other current liabilities”					$	2,732	$	2,861
Operating lease liabilities included in noncurrent liabilities		4,243		4,606		2,346		2,881

Total	$	7,160	$	7,505	$	5,078	$	5,742

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

Schedule of Future Minimum Maturities of Operating Lease Liabilities


Twelve-month period ending January 31:
(in thousands)
Twelve-month period ending October 31:
2024	$	3,135		$	2,883
2025		2,739			1,713
2026		1,076			478
2027		454			220
2028		137			12
Thereafter		—			—

Total lease payments		7,541			5,306
Less imputed interest		(381	)		(228	)

Total operating lease liabilities	$	7,160		$	5,078

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


	January 31, 2023		July 31, 2022		October 31, 2023		July 31, 2023
	(in thousands)				(in thousands)
Cash and cash equivalents	$	117,811	$	98,352	$	121,668	$	103,637
Restricted cash and cash equivalents		89,867		91,210		86,785		95,186

Total cash, cash equivalents, and restricted cash and cash equivalents	$	207,678	$	189,562	$	208,453	$	198,823

At ~~January~~October 31, 2023 and July 31, ~~2022,~~2023, restricted cash and cash equivalents included $~~87.7~~80.1 million and $~~86.6~~87.3 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.

1312

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 international money transfer services in the United States, as substantially restricted and unavailable for other purposes. At ~~January~~October 31, 2023 and July 31, ~~2022,~~2023, “Cash and cash equivalents” in the Company’s consolidated balance sheets included an aggregate of $~~31.2~~35.1 million and $~~17.3~~20.6 million, respectively, held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC, that was unavailable for other purposes.

Note 6—Debt Securities

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

Schedule of Available-for-sale Securities

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)									(in thousands)
January 31, 2023:
October 31, 2023:
Certificates of deposit*										$	1,920	$	—	$	(3	)	$	1,917
U.S. Treasury bills and notes	$	23,854	$	4	$	(94	)	$	23,764		25,085		—		(141	)		24,944
Government sponsored enterprises notes		2,512		—		(4	)		2,508
Government sponsored enterprise notes											3,047		—		(3	)		3,044
Corporate bonds		3,991		1		(487	)		3,505		3,901		—		(564	)		3,337

Total	$	30,357	$	5	$	(585	)	$	29,777	$	33,953	$	—	$	(711	)	$	33,242

July 31, 2022:
July 31, 2023:
Certificates of deposit*	$	2,000	$	—	$	(14	)	$	1,986	$	4,080	$	—	$	(4	)	$	4,076
U.S. Treasury bills and notes		13,848		—		(114	)		13,734		31,186		—		(148	)		31,038
Government sponsored enterprise notes											3,881		—		(8	)		3,873
Corporate bonds		3,966		1		(416	)		3,551		3,912		—		(485	)		3,427
Municipal bonds		3,035		—		(3	)		3,032

Total	$	22,849	$	1	$	(547	)	$	22,303	$	43,059	$	—	$	(645	)	$	42,414

*	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.

The gross unrealized losses in the table above are recorded in “Accumulated other comprehensive loss” in the consolidated balance sheets. As of October 31, 2023, the Company determined that the unrealized losses were due to changes in interest rates or market liquidity and were not due to credit losses. In addition, the Company does not intend to sell any of the securities with unrealized losses, and it is not more likely than not that the Company will be required to sell any of the securities with unrealized losses.

Proceeds from maturities and sales of debt securities and redemptions of equity investments were $~~16.1~~17.1 million and $~~2.2~~11.5 million in the three months ended ~~January 31, 2023 and 2022, respectively, and $27.5~~ ~~million and $6.1~~ ~~million in the six months ended January~~October 31, 2023 and 2022, respectively. There were no realized gains or realized losses from sales of debt securities in the three ~~and six~~ months ended ~~January~~October 31, 2023 and 2022. The Company uses the specific identification method in computing the realized gains and realized losses on the sales of debt securities.

The contractual maturities of the Company’s available-for-sale debt securities at ~~January~~October 31, 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	$	22,521	$	26,185
After one year through five years		5,973		5,904
After five years through ten years		1,236		1,110
After ten years		47		43

Total	$	29,777	$	33,242

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

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

	Unrealized Losses		Fair Value		Unrealized Losses		Fair Value
	(in thousands)				(in thousands)
January 31, 2023:
October 31, 2023:
Certificates of deposit					$	3	$	1,917
U.S. Treasury bills and notes	$	94	$	11,315		141		24,944
Government sponsored enterprises notes		4		2,508
Government sponsored enterprise notes						3		3,044
Corporate bonds		487		3,450		564		3,337

Total	$	585	$	17,273	$	711	$	33,242

July 31, 2022:
July 31, 2023:
Certificates of deposit	$	14	$	1,986	$	4	$	3,356
U.S. Treasury bills and notes		114		13,734		148		31,038
Government sponsored enterprise notes						8		3,873
Corporate bonds		416		3,514		485		3,368
Municipal bonds		3		2,412

Total	$	547	$	21,646	$	645	$	41,635

The following available-for-sale debt securities included in the ~~tables~~table 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		Unrealized Losses		Fair Value
	(in thousands)				(in thousands)
January 31, 2023:
October 31, 2023:
U.S. Treasury bills and notes	$	87	$	874	$	66	$	639
Corporate bonds		475		3,286		556		3,216

Total	$	562	$	4,160	$	622	$	3,855

July 31, 2022:
July 31, 2023:
U.S. Treasury bills and notes	$	72	$	892	$	86	$	816
Corporate bonds		234		1,731		484		3,299

Total	$	306	$	2,623	$	570	$	4,115

At ~~January~~October 31, 2023 and July 31, ~~2022,~~2023, the Company did not intend to sell any of the debt securities included in the table above, and it is not more likely than not that the Company will be required to sell any of these securities before recovery of the unrealized losses, which may be at maturity.

Note 7—Equity Investments

Equity investments consist of the following:

Schedule of Equity Investments


	January 31, 2023		July 31, 2022		October 31, 2023		July 31, 2023
	(in thousands)				(in thousands)
Zedge, Inc. Class B common stock, 42,282 shares at January 31, 2023 and July 31, 2022	$	93	$	117
Rafael Holdings, Inc. Class B common stock, 278,810 and 290,214 shares at January 31, 2023 and July 31, 2022, respectively		574		586
Zedge, Inc. Class B common stock, 42,282 shares at October 31, 2023 and July 31, 2023					$	81	$	89
Rafael Holdings, Inc. Class B common stock, 278,810 shares at October 31, 2023 and July 31, 2023						496		558
Other marketable equity securities		1,872		4,089		281		1,497
Fixed income mutual funds		6,674		12,299		3,903		4,054

Current equity investments	$	9,213	$	17,091	$	4,761	$	6,198

Visa Inc. Series C Convertible Participating Preferred Stock (“Visa Series C Preferred”)	$	1,225	$	1,132	$	1,249	$	1,263
Visa Inc. Series A Convertible Participating Preferred Stock (“Visa Series A Preferred”)		—		1,230
Series B and Series C convertible preferred stock—equity method investment		—		1,001
Convertible preferred stock—equity method investment						2,444		2,784
Hedge funds		3,137		3,238		3,002		3,002
Other		2,325		825		1,455		2,825

Noncurrent equity investments	$	6,687	$	7,426	$	8,150	$	9,874

~~The Company received~~Howard S. Jonas, the ~~shares of Zedge, Inc. (“Zedge”) Class B common stock and~~ ~~28,320~~Chairman of the ~~shares of Rafael Class B common stock set forth in~~Company (an executive officer position) and the ~~table above in connection with the lapsing of restrictions on Zedge and Rafael restricted stock held by certain~~Chairman of the Company’s ~~employees and the Company’s payment~~Board 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~~Directors, is also the Vice-Chairman of the Board of Directors of ~~Zedge.~~Zedge, Inc. and the Chairman of the Board of Directors and Executive Chairman of Rafael Holdings, Inc.

~~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 of Equity Investments


	Three Months Ended January 31,				Six Months Ended January 31,					Three Months Ended October 31,
	2023		2022		2023		2022			2023			2022
	(in thousands)									(in thousands)
Balance, beginning of period	$	1,374	$	2,397	$	1,401	$	2,743		$	1,632		$	1,501
Adjustment for observable transactions involving a similar investment from the same issuer		120		142		93		(204	)		(14	)		(27	)
Upward adjustment											129			—
Impairments		—		—		—		—			—			—

Balance, end of the period	$	1,494	$	2,539	$	1,494	$	2,539		$	1,747		$	1,474

The ~~Company increased the carrying value of the shares of Visa Series C Preferred it held by $0.1~~ ~~million in each of the three months ended January 31, 2023 and 2022 and in the six months ended January 31, 2023, and the~~ Company decreased the carrying value of the shares of Visa Series C Preferred it held ~~by $0.2~~ ~~million in the six months ended January 31, 2022,~~ based on the fair value of Visa Class A common stock, including a discount for lack of current ~~marketability.~~marketability, which is classified as “Adjustment for observable transactions involving a similar investment from the same issuer” in the table above. In addition, in connection with the acquisition of Regal Bancorp by SR Bancorp in September 2023, the Company adjusted the carrying value of its shares of Regal Bancorp common stock.

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

Schedule of Unrealized (losses) Gains for All Equity Investments


	Three Months Ended January 31,						Six Months Ended January 31,						Three Months Ended October 31,
	2023			2022			2023			2022			2023			2022
	(in thousands)												(in thousands)
Net losses recognized during the period on equity investments	$	(228	)	$	(2,952	)	$	(2,169	)	$	(17,446	)	$	(917	)	$	(1,941	)
Less: net gains recognized during the period on equity investments sold during the period		22			25			18			10
Plus: net losses recognized during the period on equity investments sold during the period														—			4

Unrealized losses recognized during the period on equity investments still held at the reporting date	$	(250	)	$	(2,977	)	$	(2,187	)	$	(17,456	)	$	(917	)	$	(1,937	)

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


	Three Months Ended January 31,						Six Months Ended January 31,						Three Months Ended October 31,
	2023			2022			2023			2022			2023			2022
	(in thousands)												(in thousands)
Unrealized gains (losses) recognized during the period on equity investments:
Unrealized losses recognized during the period on equity investments:

Rafael Class B common stock	$	82		$	(993	)	$	9		$	(13,486	)	$	(62	)	$	(72	)


Zedge Class B common stock	$	3		$	(168	)	$	(24	)	$	(330	)	$	(8	)	$	(27	)
Unrealized losses recognized during the period on equity investments still held at the reporting date	$	(250	)	$	(2,977	)	$	(2,187	)	$	(17,456	)	$	(917	)	$	(1,937	)

Equity Method Investment

~~On February 2, 2021, the~~The Company ~~paid $4.0~~ ~~million to purchase~~has an investment in shares of ~~series B~~ convertible preferred stock of a communications company (the equity method investee, or “EMI”),. As of both October 31, 2023 and ~~on August 10, 2021,~~July 31, 2023, the ~~Company paid $~~Company’s ownership was ~~1.1~~33.3 ~~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 accounts for this investment using the equity method since ~~the series B and series C convertible preferred stock are in-substance common stock, and~~ the Company can exercise significant influence over the operating and financial policies of the ~~EMI.~~EMI but does not have a controlling interest.

The Company determined that on the dates of the acquisitions of the EMI’s shares, there were differences ~~of $3.4~~ ~~million and $1.0~~ ~~million~~ 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 ~~income (expense),~~expense, net” (see Note 17).

~~As of January 31, 2023 and July 31, 2022, the Company was the holder of secured promissory notes made by the EMI in exchange for loans of an aggregate of $3.7~~ ~~million and $2.5~~ ~~million, respectively. The notes provide for interest on the principal amount at~~ 15~~% per annum payable monthly. The notes were due and payable in~~ ~~February 2023~~. The Company, the EMI, and the EMI’s other lenders are in the process of converting all the EMI’s equity and promissory notes into new shares of the EMI’s participating preferred stock. As of January 31, 2023 and July 31, 2022, the notes were included in “Other current assets” in the accompanying consolidated balance sheets.

1615

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

Summary of Changes in Equity Method Investments


	Three Months Ended January 31,						Six Months Ended January 31,						Three Months Ended October 31,
	2023			2022			2023			2022			2023			2022
	(in thousands)												(in thousands)
Balance, beginning of period	$	349		$	3,329		$	1,001		$	2,901		$	2,784		$	1,001
Purchase of convertible preferred stock		—			—			—			1,051			672			—
Equity in the net loss of investee		(542	)		(639	)		(1,012	)		(1,080	)		(670	)		(470	)
Amortization of equity method basis difference		(181	)		(181	)		(363	)		(363	)		(342	)		(182	)

Balance, end of the period	$	(374	)	$	2,509		$	(374	)	$	2,509
Balance, end of period													$	2,444		$	349

~~As of January 31, 2023, the balance of the Company’s investment in the EMI was included in “Other current liabilities” in the accompanying consolidated balance sheet.~~

Summarized financial information of the EMI was as follows:

Summary of Statements of Operations


	Three Months Ended January 31,						Six Months Ended January 31,
	2023			2022			2023			2022			Three Months Ended October 31,
	(in thousands)												2023			2022
													(in thousands)
Revenues	$	1,818		$	1,380		$	3,691		$	3,071		$	2,551		$	1,873
Costs and expenses:
Direct cost of revenues		1,535			1,443			3,228			2,905			2,193			1,694
Selling, general and administrative		1,772			774			3,408			2,663			2,093			1,636

Total costs and expenses		3,307			2,217			6,636			5,568			4,286			3,330

Loss from operations		(1,489	)		(837	)		(2,945	)		(2,497	)		(1,735	)		(1,457	)
Other expense		(498	)		—			(842	)		(1	)

Other expense, net														(104	)		(344	)
Net loss	$	(1,987	)	$	(837	)	$	(3,787	)	$	(2,498	)	$	(1,839	)	$	(1,801	)

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)
October 31, 2023
Debt securities	$	24,944	$	8,298	$	—		$	33,242
Equity investments included in current assets		4,761		—		—			4,761
Equity investments included in noncurrent assets		—		1,230		1,249			2,479

Total	$	29,705	$	9,528	$	1,249		$	40,482

Acquisition consideration included in:
Other current liabilities	$	—	$	—	$	(1,834	)	$	(1,834	)
Other noncurrent liabilities		—		—		(2,754	)		(2,754	)

Total	$	—	$	—	$	(4,588	)	$	(4,588	)

July 31, 2023
Debt securities	$	31,038	$	11,376	$	—		$	42,414
Equity investments included in current assets		6,198		—		—			6,198
Equity investments included in noncurrent assets		—		2,500		1,263			3,763

Total	$	37,236	$	13,876	$	1,263		$	52,375

Acquisition consideration included in:
Other current liabilities	$	—	$	—	$	(2,032	)	$	(2,032	)
Other noncurrent liabilities		—		—		(2,773	)		(2,773	)

Total	$	—	$	—	$	(4,805	)	$	(4,805	)

Level 1 (1)

Level 2 (2)

Level 3 (3)

Total

(in thousands)
January 31, 2023
Debt securities $ 23,764 $ 6,013 $ — $ 29,777
Equity investments included in current assets 9,213 — — 9,213
Equity investments included in noncurrent assets — — 1,225 1,225

Total $ 32,977 $ 6,013 $ 1,225 $ 40,215

Acquisition consideration included in:
Other current liabilities $ — $ — $ (2,275 ) $ (2,275 )
Other noncurrent liabilities — — (4,334 ) (4,334 )

Total $ — $ — $ (6,609 ) $ (6,609 )

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 — 1,230 1,132 2,362

Total $ 30,825 $ 9,799 $ 1,132 $ 41,756

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

At ~~January~~both October 31, 2023 and July 31, ~~2022,~~2023, the Company had $~~3.1~~3.0 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 measured at fair value.

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):

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


	Three Months Ended January 31,				Six Months Ended January 31,					Three Months Ended October 31,
	2023		2022		2023		2022			2023			2022
	(in thousands)									(in thousands)
Balance, beginning of period	$	1,105	$	2,119	$	1,132	$	2,465		$	1,263		$	1,132
Total gains (losses) recognized in “Other income (expense), net”		120		142		93		(204	)
Total losses included in “Other expense, net”											(14	)		(27	)

Balance, end of period	$	1,225	$	2,261	$	1,225	$	2,261		$	1,249		$	1,105

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)


	Three Months Ended January 31,					Six Months Ended January 31,						Three Months Ended October 31,
	2023		2022			2023			2022			2023			2022
	(in thousands)											(in thousands)
Balance, beginning of period	$	6,603	$	1,015		$	8,546		$	1,025		$	4,805		$	8,546
Payments		—		—			(375	)		—			(214	)		(375	)
Total (gains) losses included in:
“Other operating gain (expense), net”		—		(303	)		(1,565	)		(303	)
“Foreign currency translation adjustment”		6		(9	)		3			(19	)
Total gain included in:
“Other operating gain, net”													—			(1,565	)
“Foreign currency translation adjustment”													(3	)		(3	)

Balance, end of period	$	6,609	$	703		$	6,609		$	703		$	4,588		$	6,603

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

In the ~~six~~three months ended ~~January~~October 31, 2023, the Company paid an aggregate of $~~0.4~~0.2 million in contingent consideration related to a prior acquisition. In the three months ended October 31, 2022, the Company paid an aggregate of $0.4 million in contingent consideration related to prior acquisitions. In addition, in ~~the six months ended January 31, 2023,~~September 2022, 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 three months ended January 31, 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.met. The Company recorded ~~gains~~a gain of $1.6 ~~million and $0.3~~million on the write-off of ~~these~~this contingent consideration payment ~~obligations,~~obligation, which ~~were~~was included in “Other operating gain, ~~(expense),~~ net” in the accompanying consolidated statements of income. ~~There were no other changes in the estimated fair value of contingent consideration in the six months ended January 31, 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, settlement assets, other current assets, customer deposits, settlement liabilities, and other current liabilities. At ~~January~~October 31, 2023 and July 31, ~~2022,~~2023, 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 settlement assets, other current assets, customer deposits, settlement liabilities, and other current liabilities were classified as Level 2 of the fair value hierarchy.

Other assets and other liabilities. At ~~January~~October 31, 2023 and July 31, ~~2022,~~2023, 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~~variable interest entity (“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 ~~(loss)~~ and aggregate funding ~~(repaid to)~~ provided by the Company were as follows:

Schedule of Net Income and Aggregate Funding ~~Repaid~~ to the Company by VIE


	Three Months Ended October 31,
	2023		2022
	(in thousands)
Net income of the VIE	$	81	$	140

Aggregate funding provided by the Company, net	$	114	$	97

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

VIE’s Summarized Consolidated Balance Sheet


	January 31,2023			July 31,2022			October 31, 2023		July 31, 2023
	(in thousands)						(in thousands)
Assets:
Cash and equivalents	$	3,286		$	1,808		$	1,881	$	1,596
Restricted cash		2,064			4,490			6,578		7,848
Trade accounts receivable, net		13			31			23		62
Disbursement prefunding								1,037		585
Prepaid expenses		179			14			294		197
Other current assets		1,038			1,387			383		317
Due from the Company		—			86
Property, plant, and equipment, net		375			467			219		272
Other intangibles, net		813			889			699		737

Total assets	$	7,768		$	9,172		$	11,114	$	11,614

Liabilities and noncontrolling interests:
Trade accounts payable	$	—		$	—		$	—	$	—
Accrued expenses		25			20			86		70
Other current liabilities		3,990			5,559
Settlement liabilities								6,882		7,573
Due to the Company		1			—			140		26
Accumulated other comprehensive loss		(15	)		(9	)
Accumulated other comprehensive income								1		21
Noncontrolling interests		3,767			3,602			4,005		3,924

Total liabilities and noncontrolling interests	$	7,768		$	9,172		$	11,114	$	11,614

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 Gain, ~~(Expense),~~ Net

The following table summarizes the other operating gain, ~~(expense),~~ net by business segment:

Schedule of Other Operating ~~Expense,~~Gain, Net

2023

2022

2023

2022

Three Months Ended
January 31,

Six Months Ended
January 31,

2023

2022

2023

2022

(in thousands)
Corporate—Straight Path Communications Inc. class action legal fees $ (1,597 ) $ (2,694 ) $ (4,109 ) $ (3,671 )
Corporate—Straight Path Communications Inc. class action insurance claims 1,263 1,972 2,988 2,887
Fintech—write-off of contingent consideration liability — — 1,565 —
Fintech— government grants 349 — 382 —
net2phone—write-off of contingent consideration liability — 303 — 303
net2phone—other — (10 ) — (10 )
Traditional Communications— cable telephony customer indemnification claim (1 ) (12 ) (12 ) (36 )
Traditional Communications—other 3 (1 ) 2 (3 )

Total other operating gain (expense), net $ 17 $ (442 ) $ 816 $ (530 )


	Three Months Ended October 31,
	2023			2022
	(in thousands)
Corporate—Straight Path Communications Inc. class action legal fees	$	(212	)	$	(2,512	)
Corporate—Straight Path Communications Inc. class action insurance claims		684			1,725
Corporate—other		12			—
Fintech—write-off of contingent consideration liability		—			1,565
Fintech—government grants		—			33
Traditional Communications—cable telephony customer indemnification claim		—			(11	)

Total	$	484		$	800

Straight Path Communications Inc. Class Action

As discussed in Note 16, the Company (as well as other defendants) ~~has been~~was 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 six~~ months ended ~~January~~October 31, 2023 and 2022. On October 3, 2023, the Court of Chancery of the State of Delaware dismissed all claims against the Company, and found that, contrary to the plaintiffs’ allegations, the class suffered no damages. The plaintiffs will have 30 days from entry of the final order to file an appeal.

Write-off of Contingent Consideration ~~Liabilities~~Liability

In ~~the six months ended January 31, 2023,~~September 2022, the Company determined that the requirements for a portion of the contingent consideration payments related to the Leaf acquisition would not be met. The Company recognized a gain on the write-off of this contingent consideration payment obligation.

Government Grants

In ~~addition, in~~ the three months ended ~~January~~October 31, 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.

~~Government Grants~~

~~In the three and six months ended January 31, 2023,~~ 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, which was recorded as an expense in the third quarter of fiscal 2023.

Note 11—Revolving Credit Facility

The Company’s 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. As of July 28, 2023, IDT Telecom and TD Bank, N.A. amended certain terms of the credit agreement. IDT Telecom may use the proceeds to finance working capital requirements and for certain closing costs of the facility. At ~~January~~October 31, 2023 and July 31, ~~2022,~~2023, there were no amounts outstanding under this facility. In the ~~six~~three months ended ~~January~~October 31, 2023 and 2022, IDT Telecom borrowed and repaid an aggregate of $~~2.4~~30.3 million and $~~2.5~~nil ~~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~~secured overnight financing rate published by the ~~Regulation D maximum reserve requirement~~Federal Reserve Bank of New York plus ~~125 to 175~~10 basis points, plus depending upon IDT Telecom’s leverage ratio as computed for the most recent fiscal ~~quarter.~~quarter, 125 to 175 basis points. Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest is due on May 16, ~~2024.~~2026. IDT Telecom pays a quarterly unused commitment fee on the average daily balance of the unused portion of the $25.0 million 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 targets based on financial ratios during the term of the revolving credit facility. As of ~~January~~October 31, 2023 and July 31, ~~2022,~~2023, IDT Telecom was in compliance with all of the covenants.

Note 12—Equity

~~Note 12—~~2024 Equity

~~Stock Issued to Certain Executive Officers for Bonus Payments~~ Incentive Plan

InOn October 26, 2023, the ~~six months ended January 31, 2023, certain executive~~Company’s Board of Directors adopted the Company’s 2024 Equity Incentive Plan (the “2024 Plan”), which is intended to provide incentives to officers, employees, directors, and consultants of the Company, ~~received performance bonuses for fiscal 2022~~including stock options, stock appreciation rights, deferred stock units (“DSUs”), and restricted stock. The number of ~~an aggregate of $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. The Company issued~~ ~~24,543~~ ~~shares of its Class B common~~ stock ~~with an issue date value of $0.6~~ ~~million~~available for the ~~bonus payments.~~grant of awards under the 2024 Plan will be 250,000 shares. The 2024 Plan is subject to approval by the Company’s stockholders at its annual meeting of stockholders on December 13, 2023. The Company’s current equity incentive plan, the 2015 Stock Option and Incentive Plan (the “2015 Plan”), is scheduled to expire on September 16, 2024.

2015 Stock Option and Incentive Plan

On ~~December 14, 2022,~~October 11, 2023, the Company’s ~~stockholders approved an amendment to~~Board of Directors amended 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 ~~50,000~~250,000 shares. The amendment is subject to approval by the Company’s stockholders at its annual meeting of stockholders on December 13, 2023.

In the ~~six~~three months ended ~~January~~October 31, 2023, the Company received cash from the exercise of stock options of $0.2 million for which the Company issued 12,500 shares of its Class B common stock. There were no stock option exercises in the ~~six~~three months ended ~~January~~October 31, 2022.

~~In the six months ended January 31, 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.~~

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 ~~six~~three months ended ~~January~~October 31, 2023, the Company repurchased 125,470 shares of its Class B common stock for an aggregate purchase price of $2.8 million. In the three months ended October 31, 2022, the Company repurchased 203,436 shares of its Class B common stock for an aggregate purchase price of $5.0 million. ~~There were no repurchases under the program in the six months ended January 31, 2022.~~ At ~~January~~October 31, 2023, ~~5.0~~4.6 million shares remained available for repurchase under the stock repurchase program.

In the ~~six~~three months ended ~~January~~October 31, 2023 and 2022, the Company paid $~~0.3~~15,000 ~~million~~ and $~~9.0~~0.3 million, respectively, to repurchase ~~13,403~~654 and ~~200,438~~13,403 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 ~~deferred stock units (“DSUs”), and~~DSUs, the lapsing of restrictions on restricted ~~stock.~~stock, and shares issued for bonus payments. 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.

~~Deferred Stock Units Equity Incentive Program~~

On November 30, 2022, the Company adopted an equity incentive program (under its 2015 Stock Option and Incentive Plan) in the form of grants of DSUs that, upon vesting, will entitle the grantees to receive shares of the Company’s Class B common stock. On December 5, 2022, the Company granted ~~187,975~~ DSUs to certain of its executive officers and other employees. Subject to continued full time employment or other service to the Company, the DSUs are scheduled to vest in three equal amounts on each of May 17, 2023, February 21, 2024, and February 25, 2025. 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 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 grant). In addition, the grantee will have the right to elect a later vesting date no later than April 14, 2023 for the May 17, 2023 vesting date, and 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 the then upcoming vesting date and any DSUs that do not vest based on the grantee’s election, will be eligible to vest on the subsequent scheduled vesting date. The Company estimated that the fair value of the DSUs on the date of grant was $~~5.1~~ 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 January 31, 2023, there was $4.2~~ ~~million of total unrecognized compensation cost related to non-vested DSUs.~~

The Company had an existing 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.~~

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 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
January 31,

Six Months Ended
January 31,

2023

2022

2023

2022

(in thousands)
Net income of NRS attributable to the mezzanine equity’s noncontrolling interest $ 65 $ 53 $ 198 $ 63

Three Months Ended
October 31,

2023 2022
(in thousands)
Net income of NRS attributable to the mezzanine equity’s noncontrolling interest $ 107 $ 133

Note 14— Earnings 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 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
October 31,

2023

2022

2023

2022
2023 2022
(in thousands) (in thousands)
Basic weighted-average number of shares 25,510 25,652 25,556 25,609 25,178 25,603
Effect of dilutive securities:
Stock options 9 715 11 711 3 12
Non-vested restricted Class B common stock 19 175 10 260 96 1

Diluted weighted-average number of shares 25,538 26,542 25,577 26,580 25,277 25,616

There were no shares excluded from the calculation of diluted earnings per share in the three ~~and six~~ months ended ~~January~~October 31, 2023 and 2022.

2221

Note 15—Accumulated Other Comprehensive Loss
The accumulated balances for each classification of other comprehensive ~~loss~~income were as follows:
Schedule of Accumulated Balances for Each Classification of Other Comprehensive Loss

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 loss attributable to IDT Corporation (34 ) (2,372 ) (2,406 )

Balance, January 31, 2023 $ (580 ) $ (13,131 ) $ (13,711 )
Unrealized Loss on Available-for-Sale Securities Foreign Currency Translation Accumulated Other Comprehensive Loss
(in thousands)
Balance, July 31, 2023 $ (645 ) $ (16,547 ) $ (17,192 )
Other comprehensive (loss) income attributable to IDT Corporation (66 ) 631 565

Balance, October 31, 2023 $ (711 ) $ (15,916 ) $ (16,627 )

Note 16—Commitments and Contingencies
~~Coronavirus Disease (COVID-19)~~COVID-19

~~The~~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, the Company continues to monitor ~~and respond to~~ the ~~impacts~~situation. The Company cannot predict with certainty the potential impact of ~~the~~ COVID-19 ~~pandemic~~if it re-invigorates on ~~all aspects of its business, including its customers, employees, suppliers, vendors, and business partners.~~
~~Operationally,~~ the Company’s ~~employees transitioned to work-from-home during the third quarter~~results of fiscal 2020. Beginning in the fourth quarter of fiscal 2021, certain of the Company’s employees returned to work in the Company’s offices on a hybrid basis. The Company’s salespeople, customer service employees, technicians, and delivery employees continue to serve its independent retailers, channel partners, and customers with minimal interruption.
~~COVID-19 had mixed~~operations, financial ~~impacts on the Company beginning in the third quarter of fiscal 2020 and continuing through the third quarter of fiscal 2022.~~
condition, or cash flows.
Legal Proceedings
On April 24, 2018, Sprint Communications Company L.P. filed a patent infringement claim against the Company and certain of its affiliates in the U.S. District Court for the District of Delaware alleging infringement of U.S. Patent Nos. 6,298,064; 6,330,224; 6,343,084; 6,452,932; 6,463,052; 6,473,429; 6,563,918; 6,633,561; 6,697,340; 6,999,463; 7,286,561; 7,324,534; 7,327,728; 7,505,454; and 7,693,131. Plaintiff was seeking damages and injunctive relief. On June 28, 2018, Sprint dismissed the complaint without prejudice. The Company is evaluating the underlying claim, and at this stage, is unable to estimate its potential liability, if any. The Company intends to vigorously defend any claim of infringement of the listed patents.
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~~alleged 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 sale of Straight Path’s subsidiary Straight Path IP Group, Inc. 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,~~sought, 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 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. The trial was held in August and December 2022, and closing arguments were presented on May 3, 2023. On ~~September 24, 2017,~~October 3, 2023, the Court of Chancery of the State of Delaware dismissed all claims against the Company, ~~filed a motion~~and found that, contrary to ~~dismiss~~ the ~~amended complaint, which was ultimately denied, and which denial was affirmed by~~plaintiffs’ allegations, the ~~Delaware Supreme Court. On February 17, 2022,~~class suffered no damages. The plaintiffs will have 30 days from entry of the ~~court denied the Company’s motion for summary judgment. On March 10, 2022, JDS1, LLC withdrew its application~~final order 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 five days, followed by another five-day period in December 2022. The parties are in the midst of post-trial briefing. Closing statements are scheduled to take place in May 2023. The Company is vigorously defending this matter (see Note 10). At this stage, the Company is unable to estimate its potential liability, if any.file an appeal.

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.

23
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, was audited 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 Fund. The final decision upheld the imposition of~~imposed a $2.9 million charge toon the Company for the Federal Telecommunications Relay Service (“TRS”) Fund. The Company ~~intends to appeal~~has appealed the USAC’s final decision to the FCC and does not intend to remit payment for the ~~Federal Telecommunications~~TRS Fund fees unless and until a negative decision on its appeal has been issued. ~~In response to the aforementioned preliminary audit findings, the~~The Company has made certain changes to its filing policies and procedures for years that remain potentially under audit. At ~~January~~October 31, 2023 and July 31, ~~2022,~~2023, the Company’s accrued expenses included $~~31.4~~23.9 million and $~~33.2~~26.8 million, respectively, for FCC-related regulatory fees for the year covered by the audit, as well as prior and subsequent years.
22
Purchase Commitments
At ~~January~~October 31, 2023, the Company had purchase commitments of $~~5.9~~18.6 million primarily for equipment and services.
Performance Bonds
The Company has 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. At ~~January~~October 31, 2023, the Company had aggregate performance bonds of $~~24.2~~29.0 million outstanding.

Note 17—Other ~~Income (Expense),~~Expense, Net
Other ~~income (expense),~~expense, net consists of the following:
Schedule of Other (Expense) Income, Net

2023

2022

2023

2022

Three Months Ended
January 31,

Six Months Ended
January 31,

2023

2022

2023

2022

(in thousands)
Foreign currency transaction gains $ 2,480 $ 848 $ 1,451 $ 598
Equity in net loss of investee (723 ) (820 ) (1,375 ) (1,443 )
Losses on investments, net (228 ) (2,952 ) (2,169 ) (17,446 )
Other 84 (25 ) (136 ) (874 )

Total other income (expense), net $ 1,613 $ (2,949 ) $ (2,229 ) $ (19,165 )

Three Months Ended
October 31,

2023 2022
(in thousands)
Foreign currency transaction losses $ (3,499 ) $ (1,030 )
Equity in net loss of investee (1,012 ) (652 )
Losses on investments (917 ) (1,941 )
Other (158 ) (219 )

Total $ (5,586 ) $ (3,842 )
Note 18—Income Taxes
~~At January~~The Company’s income tax expense in the three months ended October 31, 2023 ~~the Company’s best estimate of the~~was based on an effective tax rate ~~expected~~of 31.8% compared to ~~be applicable~~27.0% for fiscal ~~2023 was~~ ~~27.7%~~ ~~compared to~~ ~~16.9%~~ ~~at July 31, 2022.~~2023. The ~~changes~~change in the estimated effective tax rate ~~were~~was mainly due to ~~stock-based compensation and~~ differences in the amount of taxable income earned in the various taxing jurisdictions.

Note 19—Recently Issued Accounting Standards Not Yet Adopted
In ~~June 2022,~~November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, to improve the disclosures about reportable segments and add more detailed information about a reportable segment’s expenses. The amendments in the ASU require public entities to disclose on an annual and interim basis significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, other segment items by reportable segment, the title and position of the CODM, and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The ASU does not change the definition of a segment, the method for determining segments, the criteria for aggregating operating segments into reportable segments, or the current specifically enumerated segment expenses that are required to be disclosed. The Company will adopt the amendments in this ASU for its fiscal year beginning on August 1, 2024 applied retrospectively to all prior periods presented. The Company is evaluating the impact that this ASU will have on its consolidated financial statements.
In June 2022, the FASB issued ~~Accounting Standards Update (“ASU”)~~ASU No. 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions,that clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The ASU also requires specific disclosures related to equity securities that are subject to contractual sales restrictions. The Company will adopt the amendments in this ASU prospectively on August 1, 2024. The Company is evaluating the impact that this ASU will have on its consolidated financial statements.

~~In June 2016, the FASB issued 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 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, 2023. The Company does not expect the new standard to have a material impact on its consolidated financial statements.
23

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, ~~2022,~~2023, 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, ~~2022.~~2023. 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, ~~2022.~~2023.

Recently Issued Accounting Standards Not Yet Adopted
In ~~June 2022,~~November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, to improve the disclosures about reportable segments and add more detailed information about a reportable segment’s expenses. The amendments in the ASU require public entities to disclose on an annual and interim basis significant segment expenses that are regularly provided to the chief operating decision maker, or CODM, and included within each reported measure of segment profit or loss, other segment items by reportable segment, the title and position of the CODM, and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The ASU does not change the definition of a segment, the method for determining segments, the criteria for aggregating operating segments into reportable segments, or the current specifically enumerated segment expenses that are required to be disclosed. We will adopt the amendments in this ASU for our fiscal year beginning on August 1, 2024 applied retrospectively to all prior periods presented. We are evaluating the impact that this ASU will have on our consolidated financial statements.
In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, that clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The ASU also requires specific disclosures related to equity securities that are subject to contractual sales restrictions. We will adopt the amendments in this ASU prospectively on August 1, 2024. We are evaluating the impact that this ASU will have on our consolidated financial statements.

~~In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Financial Instruments—Credit Losses (Topic 326)~~, ~~Measurement~~Results 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 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, 2023. We do not expect the new standard to have a material impact on our consolidated financial statements.Operations

~~Results of Operations~~
We evaluate the performance of our 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.

~~Coronavirus Disease (COVID-19)~~
~~We continue to monitor and respond to the impacts~~As of October 31, 2023, we owned 90.0% of the ~~COVID-19 pandemic on all aspects~~outstanding shares of our ~~business, including our customers, employees, suppliers, vendors,~~subsidiary, net2phone 2.0, Inc., or net2phone 2.0, which owns and ~~business partners.~~
~~Operationally, our employees transitioned to work-from-home during~~operates the third quarter of fiscal 2020. Beginning in the fourth quarter of fiscal 2021, certain of our employees returned to work in our offices on a hybrid basis. Our salespeople, customer service employees, technicians,net2phone segment, and ~~delivery employees continue to serve our independent retailers, channel partners, and customers with minimal interruption.~~
25
COVID-19 has had mixed financial impacts on our businesses beginning in the third quarter of fiscal 2020 and continuing through the third quarter of fiscal 2022. It drove increases in demand for our consumer offerings, principally BOSS Money, BOSS Revolution Calling and Mobile Top-Up, through our digital channels beginning in the latter half of March 2020. Subsequently, digital transaction levels have continued to increase relative to retailer originated transactions. Correspondingly, sales of consumer offerings originating through retailers and channel partners slowed modestly in late March and April 2020 before stabilizing in the fourth quarter of fiscal 2020. COVID-19-related demand slowed the rate of decline in BOSS Revolution Calling revenue that we had experienced in prior periods, however, that impact was less significant beginning in the first quarter of fiscal 2022 compared to the similar periods in fiscal 2021, and the surge in demand for voice calls that began with the onset80.0% of the ~~COVID-19 pandemic had eroded by the third quarter~~outstanding shares of ~~fiscal 2022.~~ National Retail Solutions, or NRS, and, on a fully diluted basis assuming all the vesting criteria related to various rights granted have been met and other assumptions, we would own 85.8% of net2phone 2.0 and 77.7% of NRS.
As of August 1, 2023, we include depreciation and amortization in “Direct cost of revenues” and “Selling, general and administrative” expense. Prior to August 1, 2023, depreciation and amortization was ~~immaterially impacted by the closure of some of its retailers~~a separate caption in the ~~third quarter~~consolidated statements of ~~fiscal 2020, but most re-opened quickly~~income. In addition, as of August 1, 2023, we are reporting gross profit and ~~many attracted increased foot traffic following~~gross margin percentage in our “Results of Operations.” Depreciation and amortization expense of $4.8 million in the ~~onset~~three months ended October 31, 2022 was reclassified to conform to the current year’s presentation as follows: $1.0 million was reclassified to “Direct cost of ~~COVID-19~~revenues” and $3.8 million was reclassified to “Selling, general and administrative” expense. Depreciation and amortization expense included in our business segments was as local retailers were typically more accessible to pedestrian traffic than big box retailers. The resilience of local retailers has enabled NRS to continue to expand sales of terminals, payment processing, and advertising services. IDT Global’s revenue, which had been declining as communications globally transition away from traditional international long-distance voice, declined more rapidly following the onset of follows:
(in millions) National Retail Solutions Fintech net2phone Traditional Communications Corporate Total
Three Months Ended October 31, 2023
Depreciation and amortization:
Included in “Direct cost of revenues” $ 0.5 $ — $ 0.6 $ 0.2 $ — $ 1.3
Included in “Selling, general and administrative expense” 0.3 0.7 0.8 2.0 — 3.8

Three Months Ended October 31, 2022
Depreciation and amortization:
Included in “Direct cost of revenues” $ 0.3 $ — $ 0.5 $ 0.2 $ — $ 1.0
Included in “Selling, general and administrative expense” 0.2 0.6 0.9 2.1 — 3.8
COVID-19 ~~as business communications shifted from calling to video conferencing and other collaboration platforms.~~

AtIn May 2023, the ~~onset of the~~World Health Organization declared an end to COVID-19 ~~pandemic, the transition from offices to~~as a more flexible workforce increased the demand for net2phone’s offerings. Customers transitioned from their on-premises phone system to net2phone’s cloud solution, ported their phone numbers, and quickly set-up their employees to work remotely. In April 2020, the release of Huddle, net2phone’s integrated video conferencing solution, significantly improved net2phone’s functionality for remote work, which also increased the demand for its services. COVID-19 had mixed financial impacts on net2phone’s business beginning in the third quarter of fiscal 2020. Its customer base growth slowed somewhat in the second half of fiscal 2020 in certain Latin American markets due to decreased levels of economic activity in those markets. However, Latin American sales rebounded in the first quarter of fiscal 2021 and sales have remained strong in its United States and Canadian markets.
public health emergency. As of the date of this Quarterly Report, ~~including~~we continue to monitor the impact of COVID-19, we expect that our cash from operations and the balance of cash, cash equivalents, debt securities, and current equity investments that we held on January 31, 2023 will be sufficient to meet our anticipated working capital and capital expenditure requirements during the twelve-month period ending January 31, 2024. However, the situation remains fluid and wesituation. We cannot predict with certainty the potential impact of COVID-19 if it re-invigorates on our ~~business,~~ results of operations, financial condition, ~~and~~or cash flows.

Explanation of Performance Metrics
Our results of operations discussion include the following performance metrics:

● for NRS, active ~~point of sale,~~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.
24

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.~~have not been fully installed by the end of the month. 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 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.

Three ~~and Six~~ Months Ended ~~January~~October 31, 2023 Compared to Three ~~and Six~~ Months Ended ~~January~~October 31, 2022
As of August 1, 2022, we revised our reportable business segments primarily to reflect the growth of 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 included in our 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.
26

~~Fintech~~National Retail Solutions Segment

~~Fintech,~~NRS, which represented ~~6.5%~~8.0% and ~~4.3%~~6.0% of our total revenues in the three months ended ~~January~~October 31, 2023 and 2022, respectively, is an operator of a nationwide POS network providing independent retailers with store management software, electronic payment processing, and ~~6.3%~~other ancillary merchant services. NRS’ POS platform provides marketers with digital out-of-home advertising and ~~4.1%~~transaction data.

Three months ended
October 31,
Change
2023 2022 $/# %
(in millions)
Revenues:
Recurring $ 22.4 $ 17.8 $ 4.6 24.2 %
Other 1.6 1.5 0.1 1.4

Total revenues 24.0 19.3 4.7 24.2
Direct cost of revenues (3.1 ) (2.3 ) 0.8 35.1
Gross profit 20.9 17.0 3.9 22.8
Selling, general and administrative (15.4 ) (11.8 ) 3.6 30.9

Income from operations $ 5.5 $ 5.2 $ 0.3 4.4 %
Gross margin percentage 87.1 % 88.1 % (1.0 )%
October 31, Change
2023 2022 # %
(in thousands)
Active POS terminals 27.2 20.8 6.4 31 %
Payment processing accounts 17.1 11.3 5.8 51 %
Revenues. Revenues increased in the three months ended October 31, 2023 compared to the similar period in fiscal 2023 driven primarily by revenue growth from NRS’ merchant services, as well as the expansion of NRS’ POS network.
Direct Cost of Revenues. Direct cost of revenues increased in the three months ended October 31, 2023 compared to the similar period in fiscal 2023 primarily due to the increase in the direct costs of NRS’ POS terminal sales.
Selling, General and Administrative. Selling, general and administrative expense increased in the three months ended October 31, 2023 compared to the similar period in fiscal 2023 primarily due to increases in sales commissions and employee compensation. As a percentage of NRS’ revenue, NRS’ selling, general and administrative expense increased to 64.3% from 61.0% in the three months ended October 31, 2023 and 2022, respectively.
25
Fintech Segment
Fintech, which represented 8.8% and 6.2% of our total revenues in the ~~six~~three months ended ~~January~~October 31, 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, ~~our~~a variable interest entity, or VIE, that operates money transfer businesses, and IDT Financial Services Limited, or IDT Financial Services, our Gibraltar-based bank.
Three months ended January 31, Change Six months ended January 31, Change

2023

2022

$

%

2023

2022

$

%

(in millions)
Revenues:
BOSS Money $ 17.6 $ 12.0 $ 5.6 46.7 % $ 35.2 $ 24.1 $ 11.1 45.9 %
Other 2.7 2.6 0.1 4.0 5.0 4.7 0.3 6.4

Total revenues 20.3 14.6 5.7 39.2 40.2 28.8 11.4 39.5
Direct cost of revenues (8.0 ) (6.1 ) 1.9 30.7 (16.3 ) (12.1 ) 4.2 34.9
Selling, general and administrative (12.8 ) (10.2 ) 2.6 25.7 (23.9 ) (19.5 ) 4.4 22.4
Depreciation and amortization (0.6 ) (0.6 ) — 23.3 (1.2 ) (1.0 ) 0.2 22.7
Severance — — — — — (0.1 ) (0.1 ) (100.0 )
Other operating gain 0.3 — (0.3 ) nm 1.9 — (1.9 ) nm

(Loss) income from operations $ (0.8 ) $ (2.3 ) $ 1.5 64.5 % $ 0.7 $ (3.9 ) $ 4.6 (118.2 )%

Three months ended
October 31,
Change
2023 2022 $/# %
(in millions)
Revenues:
BOSS Money $ 24.3 $ 17.6 $ 6.7 38.1 %
Other 2.3 2.3 — (0.4 )

Total revenues 26.6 19.9 6.7 33.6
Direct cost of revenues (11.8 ) (8.3 ) 3.5 41.2
Gross profit 14.8 11.6 3.2 28.1
Selling, general and administrative (16.2 ) (11.7 ) 4.5 39.0
Other operating gain — 1.6 (1.6 ) (100.0 )

(Loss) income from operations $ (1.4 ) $ 1.5 $ (2.9 ) (191.5 )%
Gross margin percentage 55.9 % 58.2 % (2.3 )%
~~nm—not meaningful~~
Revenues. Revenues from BOSS Money increased in the three ~~and six~~ months ended ~~January~~October 31, 2023 compared to the similar ~~periods~~period in fiscal ~~2022~~2023 primarily because of increased transaction volume in BOSS Money’s ~~direct-to-consumer~~retail and digital and retail channels in the three and six months ended January 31, 2023 compared to the similar periods in fiscal 2022. The increase included unusually favorable economics on certain high-volume African corridors that dissipated late in the three months ended January 31, 2023, as well as the development and introduction of new platform functionalities enabling more flexible and granular pricing strategies.channels. BOSS Money continues to benefit from the ~~continued~~ongoing expansion of its ~~disbursement networks, particularly in Africa~~retail agent network and ~~the Caribbean.~~cross-marketing to BOSS Revolution Calling customers.
Direct Cost of Revenues. Direct cost of revenues increased in the three ~~and six~~ months ended ~~January~~October 31, 2023 compared to the similar ~~periods~~period in fiscal ~~2022~~2023 primarily due to ~~increased~~an increase BOSS Money’s direct cost of revenues, ~~in BOSS Money’s direct-to-consumer digital and retail channels,~~ which reflected the increase in BOSS Money’s revenue.

Selling, General and Administrative. Selling, general and administrative expense increased in the three ~~and six~~ months ended ~~January~~October 31, 2023 compared to the similar ~~periods~~period in fiscal ~~2022~~2023 primarily due to increases in debit and credit card processing charges, employee compensation, ~~stock-based compensation expense,~~ and ~~sales commissions.~~bank fees. 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~~increased to ~~63.0%~~61.1% from ~~69.7%~~58.7% in the three months ended ~~January 31, 2023 and 2022, respectively, and decreased to 59.4% from 67.6% in the six months ended January~~October 31, 2023 and 2022, respectively.

~~Depreciation and Amortization.~~ Depreciation and amortization expense increased in the three and six months ended January 31, 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 Gain. In the three and six months ended January 31, 2023, Leaf received payments of $0.3 million and $0.4 million, respectively, from government grants for the development and commercialization of blockchain-backed financial technologies. In addition, in the six months ended January 31, 2023,September 2022, we determined that the requirements for a portion of the contingent consideration payments related to 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.

26
~~National Retail Solutions Segment~~
NRS, which represented 6.3% and 3.2% of our total revenues in the three months ended January 31, 2023 and 2022, respectively, and 6.2% and 2.9% of our total revenues in the six months ended January 31, 2023 and 2022, respectively, is an operator of a nationwide POS network providing independent retailers with store management software with credit, debit, and other electronic payment processing, as well as with other ancillary merchant services. NRS’ POS platform provides marketers with digital out-of-home advertising and transaction data.
Three months ended January 31, Change Six months ended January 31, Change
2023 2022 $ % 2023 2022 $ %
(in millions)
Revenues:
Recurring $ 18.3 $ 9.0 $ 9.3 103.1 % $ 36.2 $ 17.6 $ 18.6 105.1 %
Other 1.5 1.6 (0.1 ) (6.6 ) 2.9 3.1 (0.2 ) (2.8 )

Total revenues 19.8 10.6 9.2 86.6 39.1 20.7 18.4 89.1
Direct cost of revenues (2.2 ) (1.3 ) 0.9 25.0 (4.2 ) (2.7 ) 1.5 54.8
Selling, general and administrative (11.6 ) (7.1 ) 4.5 64.1 (23.2 ) (14.3 ) 8.9 63.4
Depreciation and amortization (0.6 ) (0.1 ) 0.5 224.0 (1.1 ) (0.3 ) 0.8 211.9

Income from operations $ 5.4 $ 2.1 $ 3.3 161.1 % $ 10.6 $ 3.4 $ 7.2 211.4 %
January 31, Change
2023 2022 # %

(in thousands)
Active POS terminals 22.4 16.5 5.9 35 %
Payment processing accounts 12.5 8.0 4.5 55 %
~~Revenues.~~ Revenues increased in the three and six months ended January 31, 2023 compared to the similar periods in fiscal 2022 driven primarily by revenue growth from NRS’ digital out-of-home advertising and payment processing services, as well as the expansion of NRS’ POS network.
~~Direct Cost of Revenues~~. Direct cost of revenues increased in the three and six months ended January 31, 2023 compared to the similar periods in fiscal 2022 primarily due to increases in the direct costs of NRS’ POS terminal sales.
~~Selling, General and Administrative~~. Selling, general and administrative expense increased in the three and six months ended January 31, 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 58.7% from 66.7% in the three months ended January 31, 2023 and 2022, respectively, and decreased to 59.4% from 68.8% in the six months ended January 31, 2023 and 2022, respectively.
~~Depreciation and Amortization.~~ Depreciation and amortization expense increased in the three and six months ended January 31, 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.
net2phone Segment

The net2phone segment, which represented ~~5.7%~~6.6% and ~~4.0%~~5.3% of our total revenues in the three months ended ~~January 31, 2023 and 2022, respectively, and 5.5% and 3.7% of our total revenues in the six months ended January~~October 31, 2023 and 2022, respectively, is comprised of net2phone’s cloud communications and contact center offerings.

Three months ended
October 31,
Change
2023 2022 $/# %
(in millions)
Revenues:
Subscription $ 18.5 $ 15.5 $ 3.0 19.0 %
Other 1.4 1.4 — 1.6

Total revenues 19.9 16.9 3.0 17.6
Direct cost of revenues (3.8 ) (3.3 ) 0.5 13.8
Gross profit 16.1 13.6 2.5 18.5
Selling, general and administrative (16.1 ) (14.7 ) 1.4 10.0

Loss from operations $ — $ (1.1 ) $ 1.1 99.3 %
Gross margin percentage 80.9 % 80.3 % 0.6 %
Three months ended January 31, Change Six months ended January 31, Change
2023 2022 $ % 2023 2022 $ %
(in millions)
Revenues:
Subscription $ 16.3 $ 12.5 $ 3.8 30.3 % $ 31.8 $ 24.2 $ 7.6 31.4 %
Other 1.5 1.0 0.5 45.4 2.9 2.2 0.7 30.9

Total revenues 17.8 13.5 4.3 31.5 34.7 26.4 8.3 31.4
Direct cost of revenues (3.0 ) (2.4 ) 0.6 26.7 (5.8 ) (4.8 ) 1.0 20.8
Selling, general and administrative (14.0 ) (13.0 ) 1.0 6.9 (27.8 ) (26.4 ) 1.4 5.3
Depreciation and amortization (1.4 ) (1.3 ) 0.1 10.4 (2.7 ) (2.6 ) 0.1 6.0
Other operating gain, net — 0.3 (0.3 ) (100.0 ) — 0.3 (0.3 ) (100.0 )

Loss from operations $ (0.6 ) $ (2.9 ) $ 2.3 79.9 % $ (1.6 ) $ (7.1 ) $ 5.5 76.9 %
January 31, Change
2023 2022 # %

(in thousands)
Seats served 327 258 69 27 %
October 31, Change
2023 2022 # %
(in thousands)
Seats served 364 309 55 18 %
Revenues. net2phone’s revenues increased in the three ~~and six~~ months ended ~~January~~October 31, 2023 compared to the similar ~~periods~~period in fiscal ~~2022~~2023 driven primarily by the growth in subscription revenue in the U.S. ~~market. The~~and Latin American markets, which reflected the increase in seats served at ~~January~~October 31, 2023 compared to ~~January~~October 31, ~~2022 was led by growth in net2phone’s Latin American markets, and included approximately 9,000 seats from net2phone’s contact center as a service business.~~2022.

Direct Cost of Revenues. Direct cost of revenues increased in the three ~~and six~~ months ended ~~January~~October 31, 2023 compared to the similar ~~periods~~period in fiscal ~~2022~~2023 primarily due to the increase in revenues, with the largest ~~increases~~increase in the U.S. ~~market.~~markets. 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 six~~ months ended ~~January~~October 31, 2023 compared to the similar ~~periods~~period in fiscal ~~2022~~2023 primarily due to increases in sales commissions, ~~partially offset by decreases in~~ employee ~~compensation.~~compensation, and consulting expense. As a percentage of net2phone’s revenues, net2phone’s selling, general and administrative ~~expenses~~expense decreased to ~~78.4%~~81.0% from ~~96.4%~~86.5% in the three months ended ~~January 31, 2023 and 2022, respectively, and decreased to 79.9% from 99.6% in the six months ended January~~October 31, 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~~expense will remain a significant percentage of net2phone’s revenues for the foreseeable future.
~~Depreciation and Amortization.~~ The increase in depreciation and amortization expense in the three and six months ended January 31, 2023 compared to the similar periods 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 three months ended January 31, 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 three months ended January 31, 2022 on the write-off of this contingent consideration payment obligation.
29

Traditional Communications Segment
The Traditional Communications segment, which represented ~~81.5%~~76.6% and ~~88.5%~~82.5% of our total revenues in the three months ended ~~January 31, 2023 and 2022, respectively, and 82.0% and 89.3% of our total revenues in the six months ended January~~October 31, 2023 and 2022, respectively, includes ~~Mobile Top-Up,~~IDT Digital Payments, 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.

27
Traditional Communications’ most significant revenue streams are from ~~Mobile Top-Up,~~IDT Digital Payments, BOSS Revolution Calling, and IDT Global. ~~Mobile Top-Up~~IDT Digital Payments and BOSS Revolution Calling are sold ~~direct-to-consumers~~directly to consumers and through distributors and retailers. We receive payments for BOSS Revolution Calling, traditional calling cards, and ~~Mobile Top-Up~~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
October 31,
Change

2023

2022

$/#

%

(in millions)
Revenues:
IDT Digital Payments $ 100.0 $ 109.0 $ (9.0 ) (8.3 )%
BOSS Revolution Calling 71.2 86.3 (15.1 ) (17.4 )
IDT Global 52.0 61.6 (9.6 ) (15.5 )
Other 7.5 8.8 (1.3 ) (14.6 )

Total revenues 230.7 265.7 (35.0 ) (13.2 )
Direct cost of revenues (188.1 ) (218.8 ) (30.7 ) (14.0 )
Gross profit 42.6 46.9 (4.3 ) (9.3 )
Selling, general and administrative (26.7 ) (29.5 ) (2.8 ) (9.9 )
Severance (0.5 ) (0.1 ) 0.4 423.5

Income from operations $ 15.4 $ 17.3 $ (1.9 ) (10.8 )%

Gross margin percentage 18.4 % 17.7 % 0.7 %

Minutes of use:
BOSS Revolution Calling 496 626 (130 ) (21 )%
IDT Global 1,401 1,706 (305 ) (18 )%
Three months ended January 31, Change Six months ended January 31, Change
2023 2022 $/# %
2023
2022 $/# %
(in millions)
Revenues:
Mobile Top-Up $ 106.1 $ 116.2 $ (10.1 ) (8.7 )% $ 215.2 $ 244.7 $ (29.5 ) (12.1 )%
BOSS Revolution Calling 82.9 100.0 (17.1 ) (17.1 ) 169.1 205.9 (36.8 ) (17.9 )
IDT Global 58.6 73.1 (14.5 ) (19.8 ) 120.2 162.3 (42.1 ) (25.9 )
Other 8.4 9.0 (0.6 ) (6.5 ) 17.2 18.3 (1.1 ) (5.7 )

Total revenues 256.0 298.3 (42.3 ) (14.2 ) 521.7 631.2 (109.5 ) (17.3 )
Direct cost of revenues (209.1 ) (247.5 ) (38.4 ) (15.5 ) (427.7 ) (529.3 ) (101.6 ) (19.2 )
Selling, general and administrative (27.3 ) (28.5 ) (1.2 ) (4.2 ) (54.7 ) (56.8 ) (2.1 ) (3.6 )
Depreciation and amortization (2.4 ) (2.4 ) — (1.3 ) (4.7 ) (4.9 ) (0.2 ) (2.9 )
Severance (0.2 ) — 0.2 nm (0.3 ) — 0.3 nm

Income from operations $ 17.0 $ 19.9 $ (2.9 ) (14.5 )% $ 34.3 $ 40.2 $ (5.9 ) (14.8 )%

Minutes of use:
BOSS Revolution Calling 591 758 (167 ) (22.0 )% 1,217 1,562 (345 ) (22.1 )%
IDT Global 1,605 1,958 (353 ) (18.0 ) 3,311 4,018 (707 ) (17.6 )
~~nm—not meaningful~~
Revenues. Revenues from ~~Mobile Top-Up~~IDT Digital Payments decreased in the three ~~and six~~ months ended ~~January~~October 31, 2023 compared to the similar ~~periods~~period in fiscal ~~2022~~2023 primarily from the deterioration of a key international corridor that was particularly impactful to revenues in the ~~business-to-business~~ wholesale ~~and retail channels, partially offset by an increase in direct-to-consumer channel revenue.~~channel.

Revenues and minutes of use from BOSS Revolution Calling decreased in the three ~~and six~~ months ended ~~January~~October 31, 2023 compared to the similar ~~periods~~period in fiscal ~~2022.~~2023. 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 six~~ months ended ~~January~~October 31, 2023 compared to the similar ~~periods~~period in fiscal ~~2022~~2023 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 six~~ months ended ~~January~~October 31, 2023 compared to the similar ~~periods~~period in fiscal ~~2022~~2023 primarily due to the decreases in ~~IDT Global, Mobile Top-Up,~~minutes of use and ~~BOSS Revolution Calling’s direct cost of revenues in the three and six months ended January 31, 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 six~~ months ended ~~January~~October 31, 2023 compared to the similar ~~periods~~period in fiscal ~~2022~~2023 primarily due to decreases in employee compensation, sales commissions, marketing expense, and debit and credit card processing ~~charges, employee compensation, and sales commissions, partially offset by increases in marketing expense and stock-based compensation expense.~~charges. As a percentage of Traditional Communications’ revenue, Traditional Communications’ selling, general and administrative expense increased to ~~10.7%~~11.5% from ~~9.6%~~11.1% in the three months ended ~~January 31, 2023 and 2022, respectively, and increased to 10.5% from 9.0% in the six months ended January~~October 31, 2023 and 2022, respectively.
Severance Expense. In the three months ended October 31, 2023 and 2022, Traditional Communications incurred severance expense of $0.5 million and $0.1 million, respectively.
3028

~~Depreciation and Amortization.~~ Depreciation and amortization expense was substantially unchanged in the three months ended January 31, 2023 compared to the similar period in fiscal 2022. Depreciation and amortization expense decreased in the six months ended January 31, 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.
Corporate

Three months ended
October 31,
Change
2023 2022 $ %
(in millions)
General and administrative $ (2.8 ) $ (1.9 ) $ 0.9 44.3 %
Other operating gain (expense), net 0.5 (0.8 ) (1.3 ) (161.4 )

Loss from operations $ (2.3 ) $ (2.7 ) $ 0.4 15.2 %
Three months ended January 31, Change Six months ended January 31, Change
2023 2022 $ % 2023 2022 $ %
(in millions)
General and administrative $ (2.5 ) $ (2.3 ) $ 0.2 9.1 % $ (4.4 ) $ (4.3 ) $ 0.1 2.3 %
Other operating expense, net (0.3 ) (0.7 ) (0.4 ) (53.7 ) (1.1 ) (0.8 ) 0.3 43.0
Loss from operations $ (2.8 ) $ (3.0 ) $ (0.2 ) (6.1 )% $ (5.5 ) $ (5.1 ) $ 0.4 8.4 %
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.
General and Administrative. Corporate general and administrative expense increased in the three months ended ~~January~~October 31, 2023 compared to the similar period in fiscal ~~2022~~2023 primarily because of increases in audit and accounting fees and employee compensation, stock-based compensation expense, and consulting fees. Corporate general and administrative expense increased in the six months ended January 31, 2023 compared to the similar period in fiscal 2022 primarily because of an increase in consulting fees.compensation. As a percentage of our consolidated revenues, Corporate general and administrative expense was ~~0.8%~~0.9% and ~~0.7%~~0.6% in the three months ended ~~January~~October 31, 2023 and 2022, ~~respectively, and 0.7% and 0.6% in the six months ended January 31, 2023 and 2022,~~ respectively.

Other Operating Expense, net. 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~~were named in a ~~pending~~ class action on behalf of the stockholders of our former subsidiary, Straight Path Communications Inc., or Straight Path. We incurred legal fees of ~~$1.6~~$0.2 million and ~~$2.7~~$2.5 million in the three months ended ~~January 31, 2023 and 2022, respectively, and $4.1 million and $3.7 million in the six months ended January~~October 31, 2023 and 2022, respectively, related to this action. Also, we recorded offsetting gains from insurance claims for this matter of ~~$1.3~~$0.7 million and ~~$2.0~~$1.7 million in the three months ended ~~January~~October 31, 2023 and 2022, ~~respectively,~~respectively. On October 3, 2023, the Court of Chancery of the State of Delaware dismissed all claims against us, and ~~$3.0 million and $2.9 million in~~found that, contrary to the ~~six months ended January 31, 2023 and 2022, respectively.~~plaintiffs’ allegations, the class suffered no damages. The plaintiffs will have 30 days from entry of the final order to file an appeal.

Consolidated

The following is a discussion of ~~certain of~~ our consolidated ~~expenses,~~stock-based compensation expense, 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 six months ended January 31, 2023, we incurred lease costs of $32,000 and $0.2 million, respectively, in connection with the Rafael leases, which excludes Newark lease costs after August 22, 2022. In the three and six months ended January 31, 2022, we incurred lease costs of $0.5 million and $0.9 million, respectively, in connection with the Rafael leases. Lease costs incurred in connection with the Rafael leases is included in consolidated selling, general and administrative expenses.
Stock-Based Compensation Expense. Stock-based compensation expense included in consolidated selling, general and administrative ~~expenses~~expense was ~~$1.3~~$0.8 million and ~~$0.3~~$0.6 million in the three months ended ~~January 31, 2023 and 2022, respectively, and $1.9 million and $0.6 million in the six months ended January~~October 31, 2023 and 2022, respectively. The ~~increases were~~increase in stock-based compensation expense was primarily due to the grant in fiscal 2023 of deferred stock units, or DSUs, that, upon vesting, will entitle the grantees to receive shares of our Class B common stock. On December 5, 2022, we granted 187,975 DSUs to certain of our executive officers and other employees. Subject to continued full time employment or other service to us, the DSUs are scheduled to vest in three equal amounts on each of May 17, 2023, February 21, 2024, and February 25, 2025. 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 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 grant). In addition, the grantee will have the right to elect a later vesting date no later than April 14, 2023 for the May 17, 2023 vesting date, and 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 the then upcoming vesting date and any DSUs that do not vest based on the grantee’s election, will be eligible to vest on the subsequent scheduled vesting date. We estimated that the fair value of the DSUs on the date of ~~grant~~grants was ~~$5.1~~an aggregate of $5.4 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~~October 31, 2023, there was ~~$4.2~~$1.6 million of total unrecognized compensation cost related to non-vested 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~~is being recognized over the vesting period. At ~~January~~October 31, 2023, unrecognized compensation cost related to NRS’ non-vested Class B common stock was an aggregate of ~~$2.9~~$2.4 million. The unrecognized compensation cost is expected to be recognized over the remaining vesting ~~periods~~period that ~~end~~ends in fiscal 2027.

Three months ended
October 31,
Change
2023 2022 $ %
(in millions)
Income from operations $ 17.2 $ 20.2 $ (3.0 ) (15.1 )%
Interest income, net 0.8 0.5 0.3 65.8
Other expense, net (5.6 ) (3.8 ) (1.8 ) (45.4 )
Provision for income taxes (3.9 ) (4.3 ) 0.4 9.0

Net income 8.5 12.6 (4.1 ) (32.5 )
Net income attributable to noncontrolling interests (0.8 ) (1.6 ) 0.8 47.4

Net income attributable to IDT Corporation $ 7.7 $ 11.0 $ (3.3 ) (30.4 )%
3129

Three months ended January 31, Change Six months ended January 31, Change
2023 2022 $ % 2023 2022 $ %
(in millions)
Income from operations $ 18.2 $ 13.8 $ 4.4 31.6 % $ 38.4 $ 27.6 $ 10.8 39.2 %
Interest income, net 0.8 0.1 0.7 580.7 1.3 0.1 1.2 900.0
Other income (expense), net 1.6 (2.9 ) 4.5 154.7 (2.2 ) (19.2 ) 17.0 88.4
Provision for income taxes (5.3 ) (2.7 ) (2.6 ) (93.7 ) (9.6 ) (2.6 ) (7.0 ) (263.8 )

Net income 15.3 8.3 7.0 85.6 27.9 5.9 22.0 371.4
Net (income) attributable to noncontrolling interests (0.7 ) (0.8 ) 0.1 10.1 (2.3 ) (0.9 ) (1.4 ) (149.9 )

Net income attributable to IDT Corporation $ 14.6 $ 7.5 $ 7.1 95.3 % $ 25.6 $ 5.0 $ 20.6 411.0 %
Other ~~Income (Expense),~~Expense, net. Other ~~income (expense),~~expense, net consists of the following:
Three months ended January 31, Six months ended January 31,
2023 2022 2023 2022
(in millions)
Foreign currency transaction gains $ 2.5 $ 0.8 $ 1.5 $ 0.6
Equity in the net loss of investee (0.7 ) (0.8 ) (1.4 ) (1.4 )
Losses on investments, net (0.2 ) (2.9 ) (2.2 ) (17.5 )
Other — — (0.1 ) (0.9 )
Total other income (expense), net $ 1.6 $ (2.9 ) $ (2.2 ) $ (19.2 )

Three months ended
October 31,

2023 2022
(in millions)
Foreign currency transaction losses $ (3.5 ) $ (1.0 )
Equity in the net loss of investee (1.0 ) (0.7 )
Losses on investments (0.9 ) (1.9 )
Other (0.2 ) (0.2 )

Total $ (5.6 ) $ (3.8 )

We have an investment in ~~series B and series C~~shares of convertible preferred stock of a communications company (the equity method investee, or EMI). As of October 31, 2023 and 2022, our ownership was 33.3% and 26.57%, ~~that represents 26.57%~~respectively, of the EMI’s outstanding shares ~~of the EMI~~ on an as converted basis. We account for this investment using the equity method since ~~the series B and series C convertible preferred stock are in-substance common stock, and~~ we can exercise significant influence over the operating and financial policies of the EMI but do not have a controlling interest. We determined that on the dates of the acquisitions of the EMI’s shares, there were differences between our investment in the EMI and our 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 our interest in the EMI. These basis differences are being amortized over the 6-year estimated life of the customer list. “Equity in the net loss of investee” includes the amortization of equity method basis difference.

The losses on investments, net in the three months ended January 31, 2023 and 2022 included unrealized gains (losses) of $0.1 million and $(1.0) million, respectively, on shares of Rafael’s Class B common stock. The losses on investments, net in the six months ended January 31, 2023 and 2022 included unrealized gains (losses) of $9,000 and $(13.5) million, respectively, on shares of Rafael’s Class B common stock.
Provision for Income Taxes. The ~~increase~~change in income tax expense in the three ~~and six~~ months ended ~~January~~October 31, 2023 compared to the similar ~~periods~~period in fiscal ~~2022~~2023 was primarily due to differences in the amount of taxable income earned in the various taxing jurisdictions.
Net Income Attributable to Noncontrolling Interests. The change in the net income attributable to noncontrolling interests in the three months ended ~~January~~October 31, 2023 compared to the similar period in fiscal ~~2022~~2023 was primarily due to ~~a decline~~changes in the net income of certain subsidiaries, partially offset by increases in the net income of NRS as well as a reductions in the net loss of net2phone 2.0, Inc., which owns and operates our net2phone segment. The change in the net incomeamounts attributable to the noncontrolling interests in ~~the six months ended January 31, 2023 compared to the similar period in fiscal 2022 was primarily due to increases in the net income of~~ NRS, ~~as well as a reductions in the net loss of~~ net2phone 2.0, ~~Inc., partially offset by a decline in~~and the ~~net income of certain other subsidiaries.~~VIE.

Liquidity and Capital Resources

As of the date of this Quarterly Report, ~~including the impact of COVID-19,~~ we expect our cash flow from operations and the balance of cash, cash equivalents, debt securities, and current equity investments that we held on ~~January~~October 31, 2023 will be sufficient to meet our currently anticipated working capital and capital expenditure requirements during the twelve-month period ending ~~January~~October 31, 2024.

At ~~January~~October 31, 2023, we had cash, cash equivalents, debt securities, and current equity investments of ~~$156.8~~$159.7 million and working capital (current assets in excess of current liabilities) of ~~$85.6~~$106.2 million.
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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~~October 31, 2023, “Cash and cash equivalents” in our consolidated balance sheet included an aggregate of ~~$31.2~~$35.1 million held by IDT Payment Services, Inc. and IDT Payment Services of New York, LLC that was unavailable for other purposes.

Contractual Obligations and Commitments
The following table includes our anticipated material cash requirements from contractual obligations and other commitments at ~~January~~October 31, 2023:

Payments Due by Period
(in millions)
Total Less than 1 year
1–3 years
4–5 years After 5 years Total
Less than
1 year
1–3 years 4–5 years
After
5 years

Purchase commitments $ 5.9 $ 5.9 $ — $ — $ — $ 18.6 $ 18.6 $ — $ — $ —
Connectivity obligations under service agreements 0.7 0.5 0.2 — — 0.7 0.6 0.1 — —
Operating leases including short-term leases 8.1 3.5 4.0 0.6 — 6.5 3.7 2.6 0.2 —

Total (1) $ 14.7 $ 9.9 $ 4.2 $ 0.6 $ — $ 25.8 $ 22.9 $ 2.7 $ 0.2 $ —

(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 ~~$24.2~~$29.0 million in performance bonds, and up to ~~$11.1~~$8.8 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.
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Consolidated Financial Condition

Six months ended January 31,
Three months ended
October 31,

2023 2022 2023 2022
(in millions) (in millions)
Cash flows provided by (used in):
Operating activities $ 35.6 $ 11.7 $ 14.8 $ 18.2
Investing activities (11.2 ) (14.9 ) 4.3 4.2
Financing activities (7.1 ) 1.8 (2.6 ) (7.1 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents 0.8 (5.0 ) (6.9 ) (6.1 )

Increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents $ 18.1 $ (6.4 )
Increase in cash, cash equivalents, and restricted cash and cash equivalents $ 9.6 $ 9.2

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 ~~decreased~~increased to ~~$53.9~~$41.2 million at ~~January~~October 31, 2023 from ~~$70.2~~$37.7 million at July 31, ~~2022~~2023 primarily due to amounts ~~collected~~billed in the ~~six~~three months ended ~~January~~October 31, 2023 that were greater than ~~billings~~collections during the period.

Deferred revenue arises from sales of prepaid products and varies from period to period depending on the mix and the timing of revenues. Deferred revenue decreased to ~~$35.0~~$34.0 million at ~~January~~October 31, 2023 from ~~$36.5~~$35.3 million at July 31, ~~2022~~2023 primarily due to decreases in the BOSS Revolution Calling and ~~Mobile Top-Up~~IDT Digital Payments deferred revenue balances.

Customer deposit liabilities at IDT Financial Services ~~increased~~decreased to ~~$86.9~~$79.5 million at ~~January~~October 31, 2023 from ~~$85.8~~$86.5 million at July 31, ~~2022.~~2023. Our restricted cash and cash equivalents included ~~$87.7~~$80.1 million and ~~$86.6~~$87.3 million at ~~January~~October 31, 2023 and July 31, ~~2022,~~2023, respectively, held by ~~IDT Financial Services.~~the bank.
In September 2017, we and certain of our subsidiaries were certified by the New Jersey Economic Development Authority, or NJEDA, as having met the requirements of the Grow New Jersey Assistance Act Tax Credit Program. The program provides for credits against a corporation’s New Jersey corporate business tax liability for maintaining a minimum number of employees in New Jersey, and that tax credits may be sold subject to certain conditions. On June 5, 2023, we received a 2019 tax credit certificate for $1.8 million from the NJEDA. In August 2023, we sold the certificate for cash of $1.6 million.
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 we 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.
33

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~~were named in a ~~pending~~ class action on behalf of the stockholders of our former subsidiary, Straight Path. ~~We are vigorously defending this matter. At this stage, we are unable to estimate our potential liability, if any. In addition, in connection with our spin-off~~On October 3, 2023, the Court of ~~Straight Path in July 2013, we~~Chancery of the State of Delaware dismissed all claims against us, and ~~Straight Path entered into various agreements prior~~found that, contrary to the ~~spin-off including a Separation and Distribution Agreement to effect~~plaintiffs’ allegations, 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 failureclass suffered no damages. The plaintiffs will have 30 days from entry of the ~~other~~final order 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.file an appeal.
31
Investing Activities

Our capital expenditures were ~~$10.6~~$4.3 million and ~~$9.0~~$5.2 million in the ~~six~~three months ended ~~January~~October 31, 2023 and 2022, respectively. We currently anticipate that total capital expenditures in the twelve-month period ending ~~January~~October 31, 2024 will be ~~$20~~$21 million to ~~$22~~$23 million. We expect to fund our capital expenditures with our net cash provided by operating activities and cash, cash equivalents, debt securities, and current equity investments on hand.

~~On August 10, 2021, we paid $1.1 million~~As of July 27, 2023, the EMI’s shareholders including us agreed 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 purchases increased our ownership~~We subscribed to purchase additional shares for an aggregate of $1.0 million. In the three months ended October 31, 2023, we paid $0.7 million to purchase a portion of the ~~EMI’s outstanding shares to 26.57% from 23.95% on an as converted basis.~~shares.

Purchases of debt securities and equity investments were ~~$28.1~~$7.8 million and ~~$10.8~~$2.1 million in the ~~six~~three months ended ~~January~~October 31, 2023 and 2022, respectively. Proceeds from maturities and sales of debt securities and redemptions of equity investments were ~~$27.5~~$17.1 million and ~~$6.1~~$11.5 million in the ~~six~~three months ended ~~January~~October 31, 2023 and 2022, respectively.

Financing Activities

We distributed cash of ~~$0.2 million and $0.2~~$0.1 million in both the ~~six~~three months ended ~~January~~October 31, 2023 and 2022 ~~respectively,~~ to the noncontrolling interests in certain of our subsidiaries.

In the ~~six~~three months ended ~~January~~October 31, 2023 and 2022, we received proceeds from financing-related other liabilities of ~~$0.3~~$0.1 million and ~~$2.3~~$0.3 million, respectively.

In the ~~six~~three months ended ~~January~~October 31, 2023 and 2022, we repaid financing-related other liabilities of ~~$2.0 million~~$15,000 and ~~$1.3~~$1.9 million, respectively.

Our subsidiary, IDT Telecom, Inc., or 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. As of July 28, 2023, IDT Telecom and TD Bank, N.A. amended certain terms of the credit agreement. IDT Telecom may use the proceeds to finance working capital requirements and for certain closing costs of the facility. At ~~January~~October 31, 2023 and July 31, ~~2022,~~2023, there were no amounts outstanding under this facility. In the ~~six~~three months ended ~~January~~October 31, 2023 and 2022, IDT Telecom borrowed and repaid an aggregate of ~~$2.4~~$30.3 million and ~~$2.5 million,~~nil, 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~~secured overnight financing rate published by the ~~Regulation D maximum reserve requirement~~Federal Reserve Bank of New York plus ~~125 to 175~~10 basis points, plus depending upon IDT Telecom’s leverage ratio as computed for the most recent fiscal ~~quarter.~~quarter, 125 to 175 basis points. Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest is due on May 16, ~~2024.~~2026. IDT Telecom pays a quarterly unused commitment fee on the average daily balance of the unused portion of the $25.0 million 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 targets based on financial ratios during the term of the revolving credit facility. As of ~~January~~October 31, 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.
34
In the ~~six~~three months ended ~~January~~October 31, 2023, we received cash from the exercise of stock options of $0.2 million for which we issued 12,500 shares of our Class B common stock. There were no stock option exercises in the ~~six~~three months ended ~~January~~October 31, 2022.

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~~three months ended ~~January~~October 31, 2023, we repurchased 125,470 shares of Class B common stock for an aggregate purchase price of $2.8 million. In the three months ended October 31, 2022, we repurchased 203,436 shares of Class B common stock for an aggregate purchase price of $5.0 million. ~~There were no repurchases under the program in the six months ended January 31, 2022.~~ At ~~January~~October 31, 2023, ~~5.0~~4.6 million shares remained available for repurchase under the stock repurchase program.

In the ~~six~~three months ended ~~January~~October 31, 2023 and 2022, we paid ~~$0.3 million~~$15,000 and ~~$9.0~~$0.3 million, respectively, to repurchase ~~13,403~~654 and ~~200,438~~13,403 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~~the lapsing of restrictions on restricted ~~stock.~~stock, and shares issued for bonus payments. 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.
Other Sources and Uses of Resources

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 significant amount of cash, cash equivalents, debt securities, and/or equity securities to the subsidiary prior to the spin-off, which would reduce our capital resources. There is no assurance ~~at this time~~ that any of these transactions 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~~We cannot guarantee that we will be presented with acquisition opportunities that meet our return-on-investment criteria, or that our efforts to make acquisitions that meet our criteria will be successful.
32

Item 3. Quantitative and Qualitative Disclosures About Market Risks

Foreign Currency Risk

Revenues from our international operations were 26% and 28% of our consolidated revenues in ~~each of~~ the three ~~and six~~ months ended ~~January~~October 31, 2023 and ~~2022. Therefore, a~~2022, respectively. A significant portion of 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 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
We hold a portion of our assets in debt and equity securities, including hedge funds, for strategic and speculative purposes. At ~~January~~October 31, 2023 and July 31, ~~2022,~~2023, the value of our debt and equity security holdings was an aggregate of ~~$45.7~~$46.2 million and ~~$46.8~~$58.5 million, respectively, which represented 9% and 11% of our total assets at ~~both dates.~~October 31, 2023 and July 31, 2023, respectively. Investments in debt and equity securities 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 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 Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of ~~January~~October 31, 2023.

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

3533

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Legal proceedings in which we are involved are described in Note 16 to the Consolidated Financial Statements included in Item 1 to Part I of this Quarterly 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, ~~2022.~~2023.

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~~first quarter of fiscal ~~2023:~~2024:

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)
August 1-31, 2023 32,772 $ 22.95 32,772 4,669,435
September 1–30, 2023 (2) 61,178 $ 22.61 60,524 4,608,911
October 1–31, 2023 32,174 $ 22.12 32,174 4,576,737

Total 126,124 $ 22.57 125,470
~~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, 2022~~ — $ — — ~~5,010,317~~
~~December 1-31, 2022~~ — $ — — ~~5,010,317~~
~~January 1–31, 2023~~ — $ — — ~~5,010,317~~
~~Total~~ — $ — —
(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.
(2) Total number of shares purchased includes 654 shares of our Class B common stock that were tendered by an employee of ours to satisfy the employee’s tax withholding obligations in connection with the lapsing of restrictions on deferred stock units. 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.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None
34

Item 6. Exhibits

Exhibit
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.~~2002.
31.2* Certification of Chief Financial Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of ~~2002.~~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 Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of ~~2002.~~2002.
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.
* Filed herewith.

3635

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 13,~~December 11, 2023 By: /s/ SHMUEL JONAS

Shmuel Jonas
Chief Executive Officer

~~March 13,~~December 11, 2023 By: /s/ MARCELO FISCHER

Marcelo Fischer
Chief Financial Officer

3736

	Level 1 (1)		Level 2 (2)		Level 3 (3)			Total
	(in thousands)
January 31, 2023
Debt securities	$	23,764	$	6,013	$	—		$	29,777
Equity investments included in current assets		9,213		—		—			9,213
Equity investments included in noncurrent assets		—		—		1,225			1,225

Total	$	32,977	$	6,013	$	1,225		$	40,215

Acquisition consideration included in:
Other current liabilities	$	—	$	—	$	(2,275	)	$	(2,275	)
Other noncurrent liabilities		—		—		(4,334	)		(4,334	)

Total	$	—	$	—	$	(6,609	)	$	(6,609	)

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		—		1,230		1,132			2,362

Total	$	30,825	$	9,799	$	1,132		$	41,756

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

Total	$	—	$	—	$	(8,546	)	$	(8,546	)

	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 loss attributable to IDT Corporation		(34	)		(2,372	)		(2,406	)

Balance, January 31, 2023	$	(580	)	$	(13,131	)	$	(13,711	)

	Unrealized Loss on Available-for-Sale Securities			Foreign Currency Translation			Accumulated Other Comprehensive Loss
	(in thousands)
Balance, July 31, 2023	$	(645	)	$	(16,547	)	$	(17,192	)
Other comprehensive (loss) income attributable to IDT Corporation		(66	)		631			565

Balance, October 31, 2023	$	(711	)	$	(15,916	)	$	(16,627	)

(in millions)	National Retail Solutions		Fintech		net2phone		Traditional Communications		Corporate		Total
Three Months Ended October 31, 2023
Depreciation and amortization:
Included in “Direct cost of revenues”	$	0.5	$	—	$	0.6	$	0.2	$	—	$	1.3
Included in “Selling, general and administrative expense”		0.3		0.7		0.8		2.0		—		3.8

Three Months Ended October 31, 2022
Depreciation and amortization:
Included in “Direct cost of revenues”	$	0.3	$	—	$	0.5	$	0.2	$	—	$	1.0
Included in “Selling, general and administrative expense”		0.2		0.6		0.9		2.1		—		3.8

	●	for NRS, active ~~point of sale,~~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.

	Three months ended October 31,						Change
	2023			2022			$/#			%
	(in millions)
Revenues:
Recurring	$	22.4		$	17.8		$	4.6			24.2	%
Other		1.6			1.5			0.1			1.4

Total revenues		24.0			19.3			4.7			24.2
Direct cost of revenues		(3.1	)		(2.3	)		0.8			35.1
Gross profit		20.9			17.0			3.9			22.8
Selling, general and administrative		(15.4	)		(11.8	)		3.6			30.9

Income from operations	$	5.5		$	5.2		$	0.3			4.4	%
Gross margin percentage		87.1	%		88.1	%		(1.0	)%

	October 31,				Change
	2023		2022		#		%
	(in thousands)
Active POS terminals		27.2		20.8		6.4		31	%
Payment processing accounts		17.1		11.3		5.8		51	%

	Three months ended January 31,						Change						Six months ended January 31,						Change
	2023			2022			$			%			2023			2022			$			%
										(in millions)
Revenues:
BOSS Money	$	17.6		$	12.0		$	5.6			46.7	%	$	35.2		$	24.1		$	11.1			45.9	%
Other		2.7			2.6			0.1			4.0			5.0			4.7			0.3			6.4

Total revenues		20.3			14.6			5.7			39.2			40.2			28.8			11.4			39.5
Direct cost of revenues		(8.0	)		(6.1	)		1.9			30.7			(16.3	)		(12.1	)		4.2			34.9
Selling, general and administrative		(12.8	)		(10.2	)		2.6			25.7			(23.9	)		(19.5	)		4.4			22.4
Depreciation and amortization		(0.6	)		(0.6	)		—			23.3			(1.2	)		(1.0	)		0.2			22.7
Severance		—			—			—			—			—			(0.1	)		(0.1	)		(100.0	)
Other operating gain		0.3			—			(0.3	)		nm			1.9			—			(1.9	)		nm

(Loss) income from operations	$	(0.8	)	$	(2.3	)	$	1.5			64.5	%	$	0.7		$	(3.9	)	$	4.6			(118.2	)%

	January 31,				Change
	2023		2022		#		%

				(in thousands)
Active POS terminals		22.4		16.5		5.9		35	%
Payment processing accounts		12.5		8.0		4.5		55	%

Payments Due by Period (in millions)	Total		Less than 1 year		1–3 years		4–5 years		After 5 years		Total		Less than 1 year		1–3 years		4–5 years		After 5 years
Purchase commitments	$	5.9	$	5.9	$	—	$	—	$	—	$	18.6	$	18.6	$	—	$	—	$	—
Connectivity obligations under service agreements		0.7		0.5		0.2		—		—		0.7		0.6		0.1		—		—
Operating leases including short-term leases		8.1		3.5		4.0		0.6		—		6.5		3.7		2.6		0.2		—

Total (1)	$	14.7	$	9.9	$	4.2	$	0.6	$	—	$	25.8	$	22.9	$	2.7	$	0.2	$	—

	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)
August 1-31, 2023		32,772	$	22.95		32,772		4,669,435
September 1–30, 2023 (2)		61,178	$	22.61		60,524		4,608,911
October 1–31, 2023		32,174	$	22.12		32,174		4,576,737

Total		126,124	$	22.57		125,470

	(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.

	(2)	Total number of shares purchased includes 654 shares of our Class B common stock that were tendered by an employee of ours to satisfy the employee’s tax withholding obligations in connection with the lapsing of restrictions on deferred stock units. 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.

Exhibit 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.~~2002.

31.2*		Certification of Chief Financial Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of ~~2002.~~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 Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of ~~2002.~~2002.

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)

	IDT CORPORATION

~~March 13,~~December 11, 2023	By:	/s/ SHMUEL JONAS
		Shmuel Jonas Chief Executive Officer

~~March 13,~~December 11, 2023	By:	/s/ MARCELO FISCHER
		Marcelo Fischer Chief Financial Officer