IDT Q3 FY26 earnings call IDT

IDT reported consolidated revenue growth of 5% to $315.7 million and a 9% increase in gross profit to $122.5 million. The gross margin expanded by 170 basis points to a record 38.8%, reflecting the increasing contribution from higher-margin businesses. Income from operations also grew 12% to $29.8 million, demonstrating strong operating leverage.

The company's three growth segments (NRS, FinTech, and net2phone) contributed $107 million in revenue, representing 34% of the consolidated total, up from 30% a year ago. These segments' combined gross profit contribution increased to 67% from 61% year-over-year, and their combined adjusted EBITDA grew 27% to $20.5 million, accounting for 55% of IDT's consolidated adjusted EBITDA.

NRS recurring revenue increased 22% year-over-year, with monthly average recurring revenue per terminal up approximately 10% due to merchant services and SaaS fees. The active POS terminal network now exceeds 39,000, and payment processing accounts are over 29,000, up 14% year-over-year. Post-quarter, IDT acquired a controlling stake in OnCore Digital for approximately $6 million, aiming to integrate its platform with NRS' screen network for a more competitive retail offering.

The digital channel revenue growth rate accelerated, with digital transactions growing 20% year-over-year and digital send volume (dollars moved) increasing 40%. The company gained market share following the implementation of a new federal remittance tax, offering reliable and cost-effective alternatives. Management noted May 2026 as the strongest transaction and gross profit month ever for BOSS Money, driven by better customer understanding, pricing, FX management, and AI features.

Netphone continued its growth trajectory with subscription revenue up 12% and total revenue up 11%. Seats served reached 441,000, a 6% year-over-year increase, with CCaaS seats growing faster and driving higher revenue per seat. Gross margins expanded 130 basis points to 80.6%, and income from operations surged 76%. The company is integrating AI offerings, expecting them to be accretive growth drivers in FY27, and recently released 'Integrate by Netphone' for seamless client tool integration.

The Traditional Communications segment continued to be a reliable cash generator, with SG&A declining $2.6 million year-over-year due to cost structure rightsizing. Adjusted EBITDA for this segment remained essentially flat at $19.7 million, partially offsetting the expected decline in BOSS Revolution calling with 11% global revenue growth.

IDT ended the quarter with $251 million in cash, cash equivalents, and current debt and equity securities. The Board declared a quarterly cash dividend of $0.07 per share. The company also repurchased approximately 84,000 shares for $4 million during the quarter, continuing its opportunistic share buyback program while maintaining a debt-free balance sheet.