Quarterly Report for Quarter Ending JANUARY 31, 2026 (Form 10-Q)

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

The following information should be read in conjunction with the accompanying condensed 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 the Form 10-K 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 the 2025 Form 10-K. 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 the 2025 Form 10-K.

Recently Issued Accounting Standards Not Yet Adopted

In September 2025, the FASB issued ASU 2025-06 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which simplifies the capitalization guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The amendments in this update permit an entity to apply the new guidance using a prospective, retrospective or modified transition approach. We are currently in the process of evaluating the effects of this pronouncement on our consolidated financial statements.

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.

As of January 31, 2026, we owned 94.0% of the outstanding shares of our subsidiary, net2phone 2.0, Inc., or net2phone 2.0, which owns and operates the net2phone segment, and 82.3% of the outstanding shares of National Retail Solutions, or NRS. On a fully diluted basis assuming all the vesting criteria related to various rights granted have been met, we would own 90.0% of the equity of net2phone 2.0 and 80.2% of the equity of NRS.

Explanation of Performance Metrics

Our results of operations discussion include the following performance metrics:

	●	for NRS, active point-of-sale, or POS, terminals, payment processing accounts, recurring revenue, and monthly average recurring revenue per terminal;
	●	for the BOSS Money business within the Fintech segment: digital and retail transactions, digital and retail revenue, average BOSS Money revenue per transaction, and send volume;
	●	for net2phone, seats and subscription revenue, and
	●	for Traditional Communications, minutes of use.

NRS uses four key metrics to measure the size of its customer base, including two that are non-GAAP measures: 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 have not been fully installed by the end of the month. Payment processing accounts are accounts that can generate revenue. It excludes accounts that have been approved but not activated. In addition to the foregoing, NRS uses recurring revenue as a performance metric, which consist of NRS' revenue in accordance with U.S. GAAP, excluding its revenue from POS terminal sales and monthly average recurring revenue per terminal.

net2phone's UNITE (UCaaS), uContact (CCaaS) and Coach (a contact center performance optimization tool) offerings are priced on a per-seat basis, with customers paying based on the number of users in their organization. net2phone AI is priced according to interaction credits, a usage-based criterion. 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, payment processing 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'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 31, 2026 Compared to Three and Six Months Ended January 31, 2025

National Retail Solutions Segment

NRS, which represented 12.3% and 10.9% of our total revenues in the three months ended January 31, 2026 and 2025, respectively, and 11.9% and 10.3% of our total revenues in the six months ended January 31, 2026 and 2025, respectively, operates a POS network in the U.S. and Canada that provides independent retailers with POS equipment, store management software, electronic payment processing, and other ancillary merchant services. NRS' POS platform also provides marketers with digital out-of-home advertising and transaction data.

		Three months ended January 31,								Change								Six months ended January 31,								Change
		2026				2025				$/#				%				2026				2025				$/#				%
		(in millions)
Revenues:
Recurring		$	37.5			$	31.6			$	5.9				18.7	%		$	72.7			$	60.5			$	12.2				20.2	%
Other			1.9				1.4				0.5				35.7				3.7				2.8				0.9				32.1
Total revenues			39.4				33.0				6.4				19.4				76.4				63.3				13.1				20.7
Direct cost of revenues			(3.1	)			(2.7	)			(0.4	)			13.2				(6.7	)			(5.4	)			(1.3	)			23.6
Gross profit			36.3				30.3				6.0				19.9				69.7				57.9				11.8				20.4
Selling, general and administrative			(23.5	)			(19.0	)			(4.5	)			23.7				(45.4	)			(38.0	)			(7.4	)			19.4
Technology and development			(2.5	)			(2.2	)			(0.3	)			15.8				(5.2	)			(4.2	)			1.0				23.9
Income from operations		$	10.3			$	9.1			$	1.2				12.9	%		$	19.1			$	15.7			$	3.4				21.7	%
Gross margin percentage			92.2	%			91.8	%			0.4	%							91.3	%			91.4	%			(0.1	)%

		January 31,								Change
		2026				2025				#				%
		(in thousands)
Active POS terminals			38.9				34.8				4.1				12	%
Payment processing accounts			28.1				23.9				4.2				18	%

Revenues. Revenues increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These increases were driven primarily by continued growth in recurring revenue, reflecting the expansion of NRS' retailer network, increased penetration of payment processing services, and increased software revenue per terminal as retailers increasingly adopted premium software as a service (SaaS) features and functionalities.

Direct Cost of Revenues. Direct cost of revenues increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These increases were driven primarily by higher direct costs associated with NRS' operations and increased sales, including increased costs related to POS terminal sales and merchant services.

Selling, General and Administrative. Selling, general and administrative expense increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These increases were primarily driven by increases in personnel-related costs and other operating expenses supporting NRS' continued growth. As a percentage of NRS' revenue, NRS' selling, general and administrative expense increased to 59.7% from 57.6% in the three months ended January 31, 2026 and 2025, and decreased to 59.4% from 60.0% in the six months ended January 31, 2026 and 2025, respectively

Technology and Development. Technology and development expense increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These increases were primarily driven by general ongoing business investments to develop premium software services provided through the NRS platform, and in other development and operations supporting our business platforms.

Fintech Segment

Fintech, which represented 12.8% and 12.1% of our total revenues in the three months ended January 31, 2026 and 2025, respectively, and 13.0% and 12.1% of our total revenues in the six months ended January 31, 2026 and 2025, respectively, is comprised of: (i) BOSS Money, a provider of international money remittance and related value/payment transfer services; and (ii) other, significantly smaller, financial services businesses, including a variable interest entity ("VIE"), that processes disbursement payments, which we refer to as the Disbursement Payments VIE, (iii) IDT Financial Services Limited, or IDT Financial Services, a Gibraltar-based bank and (iv) IDT Services Limited ("IDTS"), a Malta-based electronic money institution.

		Three months ended January 31,								Change								Six months ended January 31,								Change
		2026				2025				$/#				%				2026				2025				$/#				%
		(in millions)
Revenues:
BOSS Money		$	36.3			$	33.5			$	2.8				8.3	%		$	74.6			$	67.2			$	7.4				11.0	%
Other			4.9				3.3				1.6				49.1				9.4				6.7				2.7				39.6
Total revenues			41.2				36.8				4.4				11.9				84.0				73.9				10.1				13.7
Direct cost of revenues			(16.2	)			(15.1	)			(1.1	)			7.5				(33.4	)			(30.6	)			(2.8	)			9.2
Gross profit			25.0				21.7				3.3				15.0				50.6				43.3				7.3				16.8
Selling, general and administrative			(18.2	)			(16.3	)			(1.9	)			11.7				(34.9	)			(32.4	)			(2.5	)			7.6
Technology and development			(2.7	)			(2.3	)			(0.4	)			16.0				(5.1	)			(4.6	)			(0.5	)			11.8
Income (loss) from operations		$	4.1			$	3.1			$	1.0				31.6	%		$	10.6			$	6.3			$	4.3				67.7	%
Gross margin percentage			60.6	%			58.9	%			1.7	%							60.2	%			58.5	%			1.7	%

Revenues. Revenues from BOSS Money increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These increases were primarily driven by higher digital transaction volumes initiated on the BOSS Money and BOSS Revolution Calling apps. BOSS Money continued to benefit from cross-marketing to BOSS Revolution and IDT Digital Payments retail customers.

Direct Cost of Revenues. Direct cost of revenues increased in the three and six months ended January 31, 2026 from the comparative prior-year periods primarily due to increases in BOSS Money's direct cost of revenues, consistent with the growth in revenue. As transaction volumes increase associated payout and processing fees also increase.

Selling, General and Administrative. Selling, general and administrative expense increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These modest increases primarily reflected higher debit and credit card processing charges, and other operating costs associated with growth in BOSS Money's app and digital transaction activity. As a percentage of Fintech's revenue, Fintech's selling, general and administrative expense remained flat at 44.2% for both the three months ended January 31, 2026 and 2025, respectively, and decreased to 41.6% from 43.8% in the six months ended January 31, 2026 and 2025, respectively. The decrease reflects, in part, the efficiencies derived from BOSS Money's ongoing integration of AI and machine learning in its workflows to enhance customer service and to prevent potential chargebacks, among other priorities.

Technology and Development. Technology and development expense increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These modest increases primarily reflected higher depreciation and amortization expense, partially offset by lower employee compensation and development-related costs.

net2phone Segment

The net2phone segment, which represented 7.5% and 7.1% of our total revenues in the three months ended January 31, 2026 and 2025, respectively, and 7.4% and 7.0% of our total revenues in the six months ended January 31, 2026 and 2025, respectively, is comprised of net2phone's communications and workflow solutions including its UCaaS, CCaas, net2phone AI, and Coach solutions.

		Three months ended January 31,								Change								Six months ended January 31,								Change
		2026				2025				$/#				%				2026				2025				$/#				%
		(in millions)
Revenues:
Subscription		$	23.4			$	21.0			$	2.4				11.4	%		$	47.0			$	42.0			$	5.0				11.9	%
Other			0.2				0.5				(0.3	)			(60.0	)			0.4				1.1				(0.7	)			(63.6	)
Total revenues			23.6				21.5				2.1				9.8				47.4				43.1				4.3				10.0
Direct cost of revenues			(4.6	)			(4.5	)			(0.1	)			2.3				(9.3	)			(9.0	)			(0.3	)			3.6
Gross profit			19.0				17.0				2.0				11.7				38.1				34.1				4.0				11.7
Selling, general and administrative			(13.9	)			(12.9	)			(1.0	)			8.1				(27.7	)			(26.1	)			(1.6	)			6.1
Technology and development			(3.1	)			(2.8	)			(0.3	)			9.8				(6.1	)			(5.7	)			(0.4	)			7.1
Other operating (expense) income, net			(0.1	)			(0.2	)			0.1				(49.0	)			(0.1	)			(0.2	)			0.1				(42.0	)
Income from operations		$	1.9			$	1.1			$	0.8				70.0	%		$	4.2			$	2.1			$	2.1				98.0	%
Gross margin percentage			80.5	%			79.2	%			1.3	%							80.3	%			79.1	%			1.2	%

		January 31,								Change
		2026				2025				#				%
		(in thousands)
Seats served			435				410				25				6	%

Revenues. net2phone's revenues increased in the three and six months ended January 31, 2026 from the comparative prior-year periods primarily due to sales in its UCaaS and CCaas services revenue, reflecting an increase in seats served during the respective periods and gains from foreign exchange.

Direct Cost of Revenues. Direct cost of revenues increased in the three and six months ended January 31, 2026 from the comparative prior-year periods primarily due to higher revenues, net2phone's continued focus on mid-sized businesses, multi-channel strategies, and localized offerings supported 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 31, 2026 from the comparative prior-year periods. These increases were primarily driven by higher sales commissions and depreciation and amortization, partially offset by decreases in marketing, consulting and bad debt expenses. As a percentage of net2phone's revenues, net2phone's selling, general and administrative expense decreased to 59.1% from 60.3% in the three months ended January 31, 2026 and 2025, respectively, and to 58.4% from 60.5% in the six months ended January 31, 2026 and 2025, respectively.

Technology and Development. Technology and development expense increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. While certain costs, including employee compensation, software licenses and maintenance, cloud services, and depreciation and amortization increased, these were largely offset by disciplined cost management and the timing of project-related expenditures, resulting in overall modest increased expenses for the period.

Traditional Communications Segment

The Traditional Communications segment, which represented 67.4% and 69.9% of our total revenues in the three months ended January 31, 2026 and 2025, respectively, and 67.7% and 70.6% of our total revenues in the six months ended January 31, 2026 and 2025, respectively, includes: (i) IDT Digital Payments, which enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts; (ii) BOSS Revolution, an international long-distance calling service marketed primarily to immigrant communities in the United States and Canada; and (iii) IDT Global, a wholesale provider of international voice and SMS termination and outsourced traffic management solutions to telecoms worldwide. Traditional Communications also includes other small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode.

Traditional Communications' largest businesses by revenue are IDT Digital Payments, IDT Global, and BOSS Revolution. IDT Digital Payments and BOSS Revolution are sold directly to consumers and through the BOSS Money and BOSS Revolution apps as well as through distributors and retailers. We receive payments for BOSS Revolution and IDT Digital Payments prior to providing the services. We recognize the revenue when services are provided to the customer. Traditional Communications' revenues tend to be somewhat seasonal, with the second fiscal quarter (which contains Christmas and New Year's Day) and the fourth fiscal quarter (which contains Mother's Day and Father's Day) typically showing higher minute volumes.

		Three months ended January 31,								Change								Six months ended January 31,								Change
		2026				2025				$/#				%				2026				2025				$/#				%
		(in millions)
Revenues:
IDT Digital Payments		$	104.4			$	101.6			$	2.8				2.7	%		$	211.4			$	206.7			$	4.7				2.3	%
IDT Global			60.2				51.3				8.9				17.4				119.8				103.7				16.1				15.5
BOSS Revolution			45.7				53.3				(7.6	)			(14.2	)			92.7				110.2				(17.5	)			(15.9	)
Other			5.8				5.8				-				(0.1	)			11.6				12.0				(0.4	)			(3.0	)
Total revenues			216.1				212.0				4.1				1.9				435.5				432.6				2.9				0.7
Direct cost of revenues			(175.4	)			(168.9	)			(6.5	)			3.8				(354.4	)			(348.1	)			(6.3	)			1.8
Gross profit			40.7				43.1				(2.4	)			(5.5	)			81.1				84.5				(3.4	)			(4.0	)
Selling, general and administrative			(20.3	)			(19.4	)			(0.9	)			4.9				(39.4	)			(39.4	)			-				(0.1	)
Technology and development			(5.8	)			(5.4	)			(0.4	)			8.0				(11.3	)			(10.9	)			(0.4	)			(3.7	)
Other			(0.3	)			(0.2	)			(0.1	)			42.5				(0.4	)			-				(0.4	)			-
Income from operations		$	14.3			$	18.1			$	(3.8	)			(21.1	)%		$	30.0			$	34.2			$	(4.2	)			(12.2	)%
Gross margin percentage			18.9	%			20.3	%			1.4	%							18.6	%			19.5	%			0.9	%
Minutes of use:
IDT Global			1,545				1,351				194				14.4				3,098				2,788				310				11.1
BOSS Revolution			254				337				(83	)			(24.6	)%			523				701				(178	)			(25.4	)%

Revenues. Revenues for the Traditional Communications segment increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These increases were driven primarily by higher revenues from IDT Digital Payments and IDT Global. IDT Global revenues increased primarily due to higher international long-distance traffic volumes and improved product mix. The increases in IDT Digital Payments revenues reflected higher transaction volumes and continued growth in digital payment channels. These increases were partially offset by a decline in BOSS Revolution revenues, reflecting industry-wide trends, including the proliferation of unlimited calling plans and free over-the-top voice and messaging services, which have reduced demand for prepaid international calling plans. Revenues from Other offerings remained flat and decreased slightly for the three and six months ended January 31, 2026 from the comparative prior-year periods, respectively.

Direct Cost of Revenues. Direct cost of revenues increased in the three and six months ended January 31, 2026 from the comparative prior-year periods, reflecting higher minutes of use for IDT Global and associated network and carrier costs offset by lower minutes of use and associated network and settlement costs in BOSS Revolution.

Selling, General and Administrative. Selling, general and administrative expense increased in the three months ended and remained flat for the six months ended January 31, 2026 from the comparative prior-year periods. The modest increase reflects relatively stable sales commissions and debit and credit processing charges, partially offset by minor fluctuations in bad debt expense. As a percentage of Traditional Communications' revenue, Traditional Communications' selling, general and administrative expense increased to 9.4% from 9.2% in the three months ended January 31, 2026 and 2025, respectively, and decreased to 9.0% from 9.1% in the six months ended January 31, 2026 and 2025, respectively.

Technology and Development. Technology and development expense increased in the three and six months ended January 31, 2026 from the comparative prior-year periods. Modest increases in certain operating costs were offset by decreases in employee compensation, cloud services, and depreciation and amortization expense, resulting in overall modest increases for the periods.

Corporate

		Three months ended January 31,								Change								Six months ended January 31,								Change
		2026				2025				$				%				2026				2025				$				%
		(in millions)
General and administrative		$	(2.8	)		$	(3.1	)		$	0.3				(8.6	)%		$	(5.5	)		$	(6.0	)		$	0.5				(7.9	)%
Other operating expense, net			(0.7	)			-				(0.7	)			-				(0.1	)			-				(0.1	)			-
Loss from operations		$	(3.5	)		$	(3.1	)		$	(0.4	)			12.8	%		$	(5.6	)		$	(6.0	)		$	0.4				(7.5	)%

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 decreased in the three and six months ended January 31, 2026 from the comparative prior-year periods. These modest decreases primarily reflect employee-related costs and decreased overhead expenses during the periods. As a percentage of our consolidated revenues, Corporate general and administrative expense was 0.9% and 1.0% in the three months ended January 31, 2026 and 2025, respectively, and 0.9% and 1.0% in the six months ended January 31, 2026 and 2025, respectively.

Other Operating Expense, net.Other operating expense consists primarily of legal fees in excess of related insurance proceeds. Management views these proceeds and charges as non-core and related to occasional corporate-level expenses that are not expected to recur regularly.

Consolidated

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

Stock-Based Compensation Expense. Total stock-based compensation expense included in consolidated selling, general and administrative expense and technology and development expense was $4.3 million and $0.9 million in the three months ended January 31, 2026 and $6.4 million and $1.8 million in the six months ended January 31, 2026 and 2025, respectively. These increases primarily reflect the expense recognized during the period related to DSUs granted to executive officers and employees under the Company's long-term incentive programs. As of January 31, 2026, there was $9.6 million of total unrecognized compensation cost related to non-vested DSUs, which is being recognized on a graded vesting basis over the requisite service periods that end in February 2028.

		Three months ended January 31,								Change								Six months ended January 31,								Change
		2026				2025				$				%				2026				2025				$				%
		(in millions)
Income from operations		$	27.2			$	28.3			$	(1.1	)			(3.8	)%		$	58.2			$	52.0			$	6.2				11.9	%
Interest income, net			1.6				1.4				0.2				17.1				3.3				2.8				0.5				19.6
Other income (expense), net			0.2				0.2				-				(7.0	)			(0.3	)			(0.1	)			(0.2	)			181.0
Provision for income taxes			(6.2	)			(7.7	)			1.5				(18.9	)			(14.3	)			(14.0	)			(0.3	)			2.3
Net income			22.8				22.2				0.6				2.7				46.9				40.7				6.2				15.3
Net income attributable to noncontrolling interests			(1.9	)			(1.9	)			-				(1.3	)			(3.6	)			(3.2	)			(0.4	)			12.8
Net income attributable to IDT Corporation		$	20.9			$	20.3			$	0.6				3.1	%		$	43.3			$	37.5			$	5.8				15.5	%

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

		Three months ended January 31,								Six months ended January 31,
		2026				2025				2026				2025
		(in millions)
Foreign currency transaction gains		$	0.7			$	0.3			$	0.8			$	0.4
Equity in the net loss of investee			(0.4	)			(0.5	)			(0.8	)			(1.3	)
(Losses) gains on investments, net			(0.2	)			0.4				(0.4	)			0.8
Other			0.1				-				0.2				-
Total		$	0.2			$	0.2			$	(0.2	)		$	(0.1	)

We have an investment in shares of convertible preferred stock of MarketSpark Inc., a communications company("MarketSpark"). As of both January 31, 2026 and 2025, our ownership was 33.4% of MarketSpark's outstanding shares on an as converted basis. We account for this investment using the equity method since we can exercise significant influence over the operating and financial policies of MarketSpark but do not have a controlling interest. We determined that on the dates of the acquisitions of MarketSpark's shares, there were differences between our investment in MarketSpark and our proportional interest in the equity of MarketSpark of an aggregate of $8.2 million, which represented the share of MarketSpark's customer list on the dates of the acquisitions attributed to our interest in MarketSpark. 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.

Provision for Income Taxes. The change in income tax expense in the three and six months ended January 31, 2026 compared to the comparable prior-year periods 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 and six months ended January 31, 2026 compared to the comparable prior-year periods was primarily due to changes in net income attributable to the noncontrolling interests in NRS and the VIE.

Liquidity and Capital Resources

As of the date of this Quarterly Report, we believe that our cash flow from operations and the balance of cash, cash equivalents, debt securities, and current equity investments that we held on January 31, 2026 will be sufficient to meet our currently anticipated working capital and capital expenditure requirements during the twelve-month period ending January 31, 2027.

At January 31, 2026, we had cash, cash equivalents, debt securities, and current equity investments of $246.2 million (excluding restricted cash and cash equivalents) and working capital (current assets in excess of current liabilities) of $264.4 million.

Contractual Obligations and Commitments

The following table includes our anticipated material cash requirements from contractual obligations and other commitments at January 31, 2026:

Payments Due by Period (in millions)		Total				Less than 1 year				1-3 years				4-5 years				After 5 years
Purchase commitments		$	12.6			$	4.5			$	8.1			$	-			$	-
Connectivity obligations under service agreements			1.4				1.1				0.3				-				-
Operating leases including short-term leases			2.3				1.3				0.8				0.2				-
Total (1)		$	16.3			$	6.9			$	9.2			$	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 $24.6 million in performance bonds, and up to $2.7 million for potential contingent consideration payments related to a business acquisition, due to the uncertainty of the amount and/or timing of any such payments.

Consolidated Financial Condition

		Six months ended January 31,
		2026				2025
		(in millions)
Cash flows provided by (used in):
Operating activities		$	28.2			$	20.3
Investing activities			(21.4	)			(10.0	)
Financing activities			(17.9	)			(14.0	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents			(6.2	)			(4.1	)
Decrease in cash, cash equivalents, and restricted cash and cash equivalents		$	(4.9	)		$	(7.8	)

Operating Activities

Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, generally trade accounts receivable and trade accounts payable. During the six months ended January 31, 2026, net cash provided by operating activities was $28.2 million, compared to $20.3 million for the prior-year period, which includes the impact of settlement assets and disbursements prefunding and customer fund deposits.

Settlement assets and disbursements prefunding increased $42.0 million and $8.3 million, respectively, during the six months ended January 31, 2026, compared to the prior-year period. The increase in settlement assets reflects a higher level of funds due from customers for pending money-remittances at BOSS Money. The increase in disbursements prefunding reflects, for the most part, higher levels of funds pre-paid to disbursement partners to fulfill expected customer remittance obligations at BOSS Money, and, to a smaller extent, higher levels of pre-payments made to providers of goods and services to fulfill expected customer purchases of goods and services obligations at IDT Digital Payments.

Towards the end of each week, IDT needs to prefund BOSS Money disbursement partners for remittances expected during the upcoming weekend. As a result, Friday is typically the day of the week on which IDT's cash balance is at its lowest level, after prefunding disbursements for the upcoming weekend. Conversely, Wednesday is typically the day of the week on which IDT's cash balance is at its highest level, after IDT collects cash from digital processors and retailers for all of the remittances originated during the preceding weekend but before the new weekly cycle of prefunding disbursements for the upcoming weekend begins again. This weekly cycle constitutes a significant working capital use of the Company's cash, and, as such, the day of the week on which the quarter ends can have significant impact on the cash balance reported at the balance sheet date.

Customer fund deposits decreased $9.6 million during the six months ended January 31, 2026 reflecting balances held on behalf of customers across our prepaid, digital payments, and disbursements programs. These balances are supported by restricted cash and cash equivalents held by IDT Financial Services and our Disbursement Payments VIE and fluctuate based on transaction volume and program activity

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.

As discussed in Note 16 to the Condensed Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report, we and other parties were named in a putative class action and derivative complaint related to Straight Path Communications Inc. filed in the Court of Chancery of the State of Delaware. The Court dismissed all claims against us, and found that, contrary to the plaintiffs' allegations, the class suffered no damages. The plaintiffs filed an appeal to which we answered. Oral argument was held on October 22, 2025, and on December 3, 2025, the Delaware Supreme Court affirmed the favorable decision of the Court of Chancery that dismissed all claims against us and found that Plaintiff and the class suffered no damages.

As of July 31, 2025, we fully utilized our remaining U.S. federal net operating loss carryforwards and, as a result, starting with fiscal 2026 we have become subject to U.S. federal income tax. We anticipate, based on current tax rates, that our federal cash taxes liability will approximate 21% of our estimated full-year pretax income.

Investing Activities

During the six months ended January 31, 2026, we deployed $12.0 million for capital expenditures. We currently anticipate that total capital expenditures in the twelve-month period ending January 31, 2027 will be $22 million to $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.

In February 2025, we entered into a loan agreement with MarketSpark for a revolving credit facility. The aggregate principal amount available under the facility is $2.0 million. The loans incur interest at 12% per annum payable semiannually and are due and payable in February 2027. In February 2025, the Company loaned MarketSpark $0.5 million under the revolving credit facility. In May 2025, the Company loaned MarketSpark an additional $0.4 million for an aggregate of $1.9 million under the revolving credit facility.

During the six months ended January 31, 2026, purchases of debt securities and equity investments were $25.8 million and proceeds from maturities and sales of debt securities and redemptions of equity investments were $17.3 million.

Financing Activities

In the six months ended January 31, 2026, we paid aggregate cash dividends of $0.12 per share on our Class A and Class B common stock for an aggregate amount of $3.0 million. In the six months ended January 31, 2025, we paid aggregate cash dividends of $0.10 per share on our Class A and Class B common stock for an aggregate cash dividends of $2.5 million.

On March 9, 2026, our Board of Directors declared a cash dividend on our Class A and Class B common stock of $0.07 per share payable on or about March 31, 2026 to stockholders of record as of the close of business on March 19, 2026.

IDT Telecom, Inc. ("IDT Telecom"), a subsidiary of us, maintains a $25.0 million revolving credit facility with TD Bank, N.A. maturing on May 16, 2026. The revolving credit facility is secured by primarily all of IDT Telecom's assets and bears interest at the secured overnight financing rate ("SOFR") plus a margin of 125-175 basis points, depending on leverage. At January 31, 2026 and July 31, 2025, there were no amounts outstanding under this facility. During the six months ended January 31, 2026 and 2025, IDT Telecom borrowed and repaid $16.0 million and $24.5 million, respectively.

We have an existing stock repurchase program authorized by our Board of Directors for the repurchase of shares of our Class B common stock. In January 2016, the Board of Directors authorized the repurchase of up to 8.0 million shares in the aggregate. In the six months ended January 31, 2026, we repurchased 307,533 shares of our Class B common stock for an aggregate purchase price of $15.0 million. In the six months ended January 31, 2025, we repurchased 217,052 shares of our Class B common stock for an aggregate purchase price of $9.9 million. At January 31, 2026, 3.9 million shares remained available for repurchase under the stock repurchase program.

In the six months ended January 31, 2026 and 2025, the Company withheld nil shares and 32,022 shares, valued at nil and $1.5 million, respectively, of the Company's Class B common stock from employees to satisfy the employees' tax withholding obligations in connection with the vesting of deferred stock units ("DSUs") and the lapsing of restrictions on restricted stock. The value of the shares is based on the fair market value as of the close of business on the trading day immediately prior to the vesting date. These shares are not repurchased under the Company's share repurchase program.

Other Sources and Uses of Resources

From time to time, we consider spin-offs and other potential dispositions of certain of our subsidiaries. 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 that a transaction 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. 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.