IDT NYSE: IDT raised its full-year fiscal 2026 profit outlook after reporting higher third-quarter revenue, record gross profit and expanding margins, driven by growth in its higher-margin NRS, Fintech and net2phone segments.
Chief Executive Officer Shmuel Jonas said the company’s year-over-year revenue and earnings growth was “again powered by the continued expansion and operating leverage” of those three businesses, alongside steady cash generation from its traditional communications segment.
For the three months ended April 30, 2026, consolidated revenue rose 5% year over year to $315.7 million. Gross profit increased 9% to $122.5 million, while gross margin expanded 170 basis points to 38.8%, which Jonas described as a record quarterly high. Income from operations rose 12% to $29.8 million, and adjusted EBITDA increased 13% to $37.5 million.
Chief Financial Officer Marcelo Fischer said IDT’s business mix continues to shift toward higher-margin growth segments. NRS, Fintech and net2phone generated $107 million of revenue in the quarter, representing about 34% of consolidated revenue, compared with 30% a year earlier. Their gross profit contribution rose to 67% of the company total from 61% a year ago, while combined adjusted EBITDA increased 27% to $20.5 million.
“Because these segments still account for only about one third of our revenue, that rotation has a long way left to run,” Fischer said.
IDT Raises Adjusted EBITDA Guidance
Management raised fiscal 2026 consolidated adjusted EBITDA guidance to a range of $150 million to $152 million, up from the prior range of $147 million to $149 million. At the midpoint, the updated forecast represents 15% growth from fiscal 2025 adjusted EBITDA of $131.7 million.
Fischer said the increase reflects operating leverage in the growth businesses and the continued resilience of traditional communications. He also said the company ended the quarter with $251 million in cash equivalents and current debt and equity securities, excluding restricted cash. IDT’s board declared a quarterly cash dividend of $0.07 per share, and the company repurchased approximately 84,000 shares for $4 million during the quarter.
NRS Growth Continues, OnCore Deal Adds Advertising Capabilities
Jonas said NRS recurring revenue grew 22% year over year, while monthly average recurring revenue per terminal increased about 10%, driven by merchant services and SaaS fees. The NRS network now includes more than 39,000 active point-of-sale terminals, and payment processing accounts exceeded 29,000, up 14% year over year. NRS’s Rule of 40 score was 50 in the quarter.
After the quarter closed, IDT acquired a controlling stake in OnCore Digital, a digital media brokerage. Jonas said OnCore’s platform demand relationships and publisher network will be integrated with NRS’s screen network and first-party transaction data to strengthen its retail advertising offering.
During the Q&A session, Fischer said IDT acquired an 80% controlling position in OnCore at a valuation of about $6 million, with an earn-out component. He described the transaction as a small tuck-in acquisition intended to help monetize NRS’s screen inventory.
Asked about NRS’s first terminal outside North America, in Colombia, Fischer said the company had partners in the country who suggested testing the market there. Jonas also acknowledged that competition in point-of-sale systems has increased and has affected new sign-ups, but said NRS remains focused on improving its offering for convenience stores, liquor stores and similar verticals rather than expanding broadly into new categories.
BOSS Money Digital Channel Gains Momentum
IDT’s digital remittance business also showed growth. Jonas said digital channel revenue growth accelerated compared with the second quarter. Digital transactions increased 20% year over year, and digital send volume rose 40%.
Jonas said IDT gained market share following the implementation of a new federal remittance tax as customers sought reliable and cost-effective alternatives. In response to an analyst question about margins in BOSS Money, Jonas said the company tries to be opportunistic while remaining sensitive to pricing and customer retention.
Fischer added that the digital channel carries higher margins than the retail channel, and that the company is improving its customer understanding, pricing, corridor management and cost structure. He said the company is also using AI tools to make workflows more efficient. Fischer noted that after a previously announced record Mother’s Day weekend, May was on track to be BOSS Money’s strongest transaction month and strongest gross profit month ever.
net2phone Revenue, Margins and AI Offerings Advance
net2phone continued to expand during the quarter, with subscription revenue up 12% and total revenue up 11%, Jonas said. Seats served reached 441,000, up 6% year over year, while contact center-as-a-service seats grew faster than new seats overall, helping drive revenue per seat higher. Gross margin expanded 130 basis points to 80.6%, and income from operations rose 76%.
Jonas said net2phone is gaining traction with AI offerings, which management expects to become accretive growth drivers in fiscal 2027. He also highlighted the release of Integrate by net2phone, a no-code integration layer designed to connect net2phone offerings with tools such as CRM and ERP systems.
Asked about the possibility of revisiting a net2phone spin-off, Jonas declined to provide a definitive answer but said it is “becoming more appealing to possibly do something.” He added that he believes net2phone will perform better than investors currently expect.
On AI adoption, Jonas said IDT is using its own products internally, handling about 30% of customer service calls and more than 50% of chats with those tools. He said the products are also generating “tens of thousands of dollars a month” in sales to customers outside IDT, though Fischer cautioned that it is still too early for the impact to be meaningful in reported numbers.
Traditional Communications Remains Cash Generator
Management said traditional communications continued to provide reliable cash flow. Jonas said SG&A in the segment declined $2.6 million year over year, while adjusted EBITDA was essentially flat at $19.7 million. IDT Global revenue grew 11%, partially offsetting the expected decline in BOSS Revolution Calling.
Fischer said traditional communications slightly increased its adjusted EBITDA contribution year over year despite slightly lower revenue, and he expects it to remain a reliable cash generator for years.
Jonas also emphasized IDT’s broader use of machine learning and AI across business segments, including customer service, pricing, product development, marketing and back-office operations. He said some of those efforts could eventually become AI offerings that IDT can sell to customers.
About IDT NYSE: IDT
IDT Corporation, founded in 1990 and headquartered in Newark, New Jersey, is a diversified global provider of telecommunications and payment services. The company operates through its primary communications arm, IDT Telecom, and a digital solutions segment that encompasses cross-border money transfers and related fintech offerings. Since its inception, IDT has built an international network infrastructure to support voice and data transmission across more than 200 countries and territories.
Through IDT Telecom, the company offers a suite of voice communication products, including prepaid phone cards, VoIP services, SIP trunking and operator-assisted calling.
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