IDT Q4 FY2026 Earnings: Higher-Margin Segments Drive Faster Profit Growth

IDT Corporation (NYSE: IDT) reported fiscal Q4 2026 revenue of $339.0 million, up 7% year over year, while diluted GAAP EPS rose to $0.87 from $0.67. For the quarter ended July 31, 2026, gross margin expanded 360 basis points to 39.8% and operating income increased 52%, primarily as the higher-margin NRS, Fintech, and net2phone businesses grew faster than Traditional Communications.

Core Earnings Results

Profit growth substantially outpaced revenue growth. Gross profit increased 18% to $134.8 million, while operating income reached $33.2 million and adjusted EBITDA rose 22% to $41.2 million.

Net income attributable to IDT increased 29% to $21.7 million. Reported operating cash flow also rose, although movements in Fintech customer deposits accounted for the improvement and masked a decline in IDT’s deposit-adjusted cash generation.

Business and Segment Performance

NRS, Fintech, and net2phone generated combined revenue of $117.0 million, up from $99.2 million. These three businesses contributed approximately four-fifths of IDT’s consolidated revenue increase and virtually all of its gross profit growth, helping shift the company toward higher-margin operations.

NRS

NRS was the fastest-growing segment, with revenue increasing 31% to $45.0 million. Merchant Services and Other revenue rose 31% to $28.5 million, while Advertising and Data revenue increased 49% to $10.1 million, supported in part by a recent acquisition.

NRS gross margin expanded from 89.0% to 94.8%. Average monthly gross profit per retailer location rose 22% to $383, primarily reflecting growth in NRS Pay, while the number of retailer locations increased to 35,400 from 32,700. Despite SG&A rising 37%, operating income more than doubled to $12.0 million and adjusted EBITDA increased 47% to $14.0 million.

Fintech and BOSS Money

Fintech revenue increased 12% to $47.1 million, led by continued migration toward BOSS Money’s digital channel. Digital revenue rose 22% to $33.7 million, while retail-channel revenue declined 17% to $8.7 million.

Digital transactions accounted for 88.1% of total BOSS Money transactions, compared with 83.3% a year earlier. IDT attributed the shift to its digital customer-acquisition investments and an industry migration away from retail following the introduction of a federal tax on retail remittances beginning January 1, 2026.

The more favorable channel mix helped Fintech gross margin expand 650 basis points to 65.6%. Gross profit rose 24%, but SG&A increased 28%, limiting operating income growth to 15% and adjusted EBITDA growth to 17%.

net2phone

net2phone revenue increased 9% to $24.9 million, including a 10% increase in subscription revenue to $24.5 million. Subscription growth was 7% on a constant-currency basis, indicating that weakness in the U.S. dollar against currencies in key markets supported reported growth.

Seats increased 6% to 447,000, gross margin expanded 140 basis points to 81.0%, and operating income rose 75% to $2.6 million. Management attributed the profitability improvement to operating leverage and incremental contributions from AI-powered offerings.

Traditional Communications

Traditional Communications remained IDT’s largest revenue source, but quarterly revenue grew only 2% to $222.0 million. IDT Digital Payments revenue increased 6%, while BOSS Revolution revenue declined 10%.

Segment gross profit was nearly flat at $41.1 million, and gross margin declined 30 basis points to 18.5%. Operating income nevertheless increased 8% to $16.6 million, aided by an 8% reduction in SG&A, while adjusted EBITDA rose 12% to $19.9 million.

Reported Cash Flow Rose, but Deposit-Adjusted Cash Generation Fell

GAAP operating cash flow increased to $44.4 million from $31.0 million, but the reconciliation shows that changes in Fintech customer deposits contributed $18.0 million in Q4 FY2026. In the prior-year quarter, customer deposit movements reduced reported operating cash flow by $6.1 million.

Excluding those movements, adjusted operating cash flow declined to $26.4 million from $37.1 million. IDT notes that customer deposits are restricted by regulation and are not available to finance its operating activities, making the adjusted measure useful for assessing cash generated by the core businesses.

At July 31, 2026, IDT held $271.9 million in unrestricted cash, cash equivalents, debt securities, and current equity investments, up $20.5 million from the previous quarter. The company had no outstanding debt. Quarterly capital expenditures increased to $6.0 million from $5.3 million, and IDT spent approximately $2.0 million to repurchase 30,752 Class B shares.

Fiscal 2027 Guidance

IDT introduced fiscal 2027 guidance calling for continued gross profit and adjusted EBITDA growth, with management expecting every operating segment to contribute to the increase. At the midpoint, the outlook implies adjusted EBITDA growth of approximately 15% from fiscal 2026.

Management Priorities

CEO Shmuel Jonas said NRS is developing additional products for existing retailers and seeking to expand its network, following integrations with Uber Eats, DoorDash, and Grubhub. BOSS Money recently introduced transfers through WhatsApp and deployed a U.S. digital wallet. At net2phone, management is emphasizing AI products and a new integration layer and expects the business to surpass $100 million in annual recurring revenue during the current quarter.

Recent Insider Transactions

The supplied insider data lists several sales between June and July 2026, along with three stock gifts and one stock grant. The largest disclosed sale by value was CFO Marcelo Fischer’s $1.329 million transaction; the records alone do not establish the insiders’ motives.

Risks for Investors to Monitor

• Core cash conversion weakened: Adjusted operating cash flow declined despite higher earnings, while customer deposit movements made reported cash flow appear stronger.
• Traditional Communications remains uneven: Segment gross profit was nearly flat, gross margin contracted, and BOSS Revolution revenue fell 10%, leaving cost control as an important contributor to profit growth.
• Fintech is increasingly dependent on digital growth: Retail transactions declined 20% and retail revenue fell 17%. The digital shift is improving margins, but continued segment expansion depends heavily on sustaining digital transaction growth.
• Currency supported net2phone’s reported results: Subscription revenue grew 10% as reported but 7% at constant currency, making the underlying operational growth rate lower than the reported figure.
• Fiscal 2027 targets require broad execution: IDT expects every operating segment to contribute to the projected increase in adjusted EBITDA.

Summary

IDT’s fiscal Q4 2026 results showed a clear shift toward its higher-margin growth businesses. NRS delivered the largest increase, Fintech benefited from digital-channel migration, and net2phone converted moderate subscription growth into faster profit growth, while Traditional Communications remained comparatively stable. The expanded gross margin and fiscal 2027 outlook support continued profit growth, but deposit-adjusted cash generation, retail remittance declines, and the slower underlying growth rate at net2phone remain important measures to follow.