IDT Shares Decline After Q2 Results Even With Increases in Revenue and Earnings Per Share

IDT Corporation Stock Performance Following Q2 Earnings

Since announcing its quarterly results for the period ending January 31, 2026, IDT Corporation’s share price has fallen by 3.1%. In comparison, the S&P 500 Index declined by 1.7% over the same span. However, over the past month, IDT’s stock edged up 0.8%, while the S&P 500 dropped 2.3%.

Highlights from IDT’s Second Quarter Results

For the fiscal 2026 second quarter, IDT reported revenue of $320.5 million, representing a 5.7% increase from $303.3 million in the same quarter last year. GAAP earnings per share climbed 5% to $0.84, up from $0.80, while non-GAAP EPS jumped 19% to $1.00 from $0.84. Gross profit improved by 8.2% year-over-year to $121.3 million, with the gross margin rising to 37.8% from 37%. Adjusted EBITDA reached $38 million, up 9% from $34.9 million a year earlier.

• National Retail Solutions (NRS): Revenue rose 19% to $39.4 million.
• Fintech (including BOSS Money): Revenue increased 12% to $41.2 million.
• net2phone: Revenue grew 11% to $23.9 million.
• Traditional Communications: Revenue was $216.1 million, up 2%, though profitability in this segment declined.

Segment Performance and Key Metrics

The NRS platform expanded its merchant network and recurring revenue streams. Active POS terminals rose 12% to 38,900, and payment processing accounts increased 18% to 28,100. Recurring revenue climbed 18% to $37.5 million, fueled by a 32% jump in merchant services revenue and a 26% rise in SaaS fees. However, advertising and data revenue dropped 10% due to weaker ad pricing. NRS gross profit surged 20% to $36.3 million, and adjusted EBITDA improved 15% to $11.8 million.

Within Fintech, BOSS Money processed 6.4 million transactions, up 13% from the prior year. Digital channel transactions increased 17%, while retail channel transactions fell 4%. Segment revenue advanced 12% to $41.2 million, with digital revenue up 14%. Gross profit in Fintech rose 15% to $25 million, and adjusted EBITDA soared 44% to $5.6 million, reflecting better efficiency and digital adoption.

net2phone’s unified communications business saw revenue rise 11% to $23.9 million, driven by a 12% increase in subscription revenue. The number of seats served grew 6% to 435,000. Gross profit was up 13% to $19.3 million, and operating income nearly doubled to $2.2 million, thanks to operational leverage and cost discipline.

Traditional Communications posted a 2% revenue gain to $216.1 million, supported by growth in IDT Digital Payments and IDT Global. However, gross profit fell 6% to $40.7 million, and adjusted EBITDA declined 9% to $18.8 million, mainly due to a shift toward lower-margin business and reduced BOSS Revolution calling revenue.

IDT Corporation Price, Consensus, and EPS Surprise

Management Insights and Growth Drivers

IDT’s leadership credited the company’s results to robust expansion in its higher-margin segments—NRS, Fintech, and net2phone. These divisions now make up a larger portion of the company’s profitability, signaling a shift away from legacy telecom operations. In the latest quarter, these growth areas contributed 53% of consolidated adjusted EBITDA less capital expenditures, up from 45% a year ago.

In the Fintech segment, management noted that a new federal remittance tax introduced on January 1 has accelerated the shift from retail-based remittance to digital channels. While digital transactions typically yield lower revenue per transaction, they offer higher margins. BOSS Money’s digital growth is already reflecting this trend, with further benefits expected in future quarters.

For NRS, ongoing growth in merchant services and SaaS revenue continued to drive results, though lower advertising rates impacted ad revenue. At net2phone, improved gross margins, operational leverage, and favorable currency movements supported profitability. The company is also rolling out AI-powered communication tools to better serve small and mid-sized businesses.

Updated Guidance and Capital Management

IDT has raised its adjusted EBITDA forecast for fiscal 2026 to between $147 million and $149 million, up from its previous range of $141 million to $145 million. This midpoint represents a 12% increase over fiscal 2025. Management attributed the improved outlook to stronger-than-expected results in segments like net2phone and Fintech.

Shareholder returns were also a focus, with IDT repurchasing about 149,000 shares for $7.4 million in the second quarter and spending $15 million on buybacks in the first half of fiscal 2026. The board also approved a 17% increase in the annual dividend, raising it to $0.28 per share.

Additional Updates

At quarter’s end, IDT reported $246.2 million in cash, cash equivalents, debt securities, and current equity investments, with no outstanding debt. Operating cash flow improved significantly, as net cash from operating activities rose to $38.3 million from $20.2 million a year earlier.

During the quarter, net2phone introduced a HIPAA-compliant AI communications solution for healthcare providers and later launched another AI-driven product for the hospitality sector. These initiatives highlight IDT’s commitment to integrating AI into its communications offerings as it broadens its technology portfolio.