IDT raises 2026 adjusted EBITDA guidance to $147M-$149M as digital and AI initiatives accelerate

Earnings Call Insights: IDT Corporation (IDT) Q2 2026

MANAGEMENT VIEW

* CEO Samuel Jonas highlighted strong overall results, attributing performance to top and bottom line expansion in NRS, BOSS Money, and net2phone. NRS recurring revenue increased, "powered by large increases in Merchant Services and SaaS fee revenues," while BOSS Money saw digital transactions grow 17% year-over-year. Jonas noted the impact of the new federal remittance tax: "the tax implementation has accelerated customer migration from the lower-margin retail channel to the higher-margin digital channel, and you will begin to see those positive impacts next quarter."
* Jonas emphasized net2phone's strengthening margins and AI-driven growth, with positive customer reviews for new AI offerings and an upcoming launch of agentic AI integrated with unified communications. He also referenced the continued strong cash generation of Traditional Communications and announced a 17% increase in the annual dividend to $0.28 per year alongside ongoing stock buybacks.
* CFO Marcelo Fischer stated, "IDT achieved record levels in several key consolidated financial metrics in the second quarter, gross profit, gross profit margin, adjusted EBITDA, adjusted EBITDA margin and non-GAAP EPS." He explained that the three higher-margin growth segments now comprise a growing share of consolidated adjusted EBITDA less CapEx, at 53% in Q2, up from 45% a year ago. Fischer added, "we have begun to increase our allocation to shareholder returns," noting a $15 million stock repurchase in the first half of fiscal 2026.

OUTLOOK

* Marcelo Fischer announced an increase in consolidated adjusted EBITDA guidance for fiscal 2026 to $147 million to $149 million, up from the prior $141 million to $145 million range. He described this as "a $5 million adjusted EBITDA increase and a 12% increase compared to fiscal 2025 actuals."
* Fischer outlined that net2phone's adjusted EBITDA growth outpaced initial expectations due to disciplined AI investment, while BOSS Money benefited from the accelerated migration to digital channels and cost advantages. He also confirmed that NRS remains on track for a 20% to 25% growth in adjusted EBITDA for fiscal 2026.

FINANCIAL RESULTS

* Fischer reported that the three growth segments contributed 53% of consolidated adjusted EBITDA less CapEx in Q2, compared to 45% a year ago. He detailed that net2phone delivered a 37% year-over-year increase in adjusted EBITDA to $3.9 million in Q2. BOSS Money achieved a 44% increase in adjusted EBITDA, driven by the shift to digital and operational efficiencies. Traditional Communications contributed $19 million in adjusted EBITDA, consistent with the prior two quarters, despite a year-over-year decrease.
* The company executed $15 million in stock repurchases during the first six months of fiscal 2026, surpassing the pace of $18 million for all of fiscal 2025.

Q&A

* Iñigo Alonso, Stoic Capital: Asked about the absence of the NRS monthly report, execution on growth opportunities, SG&A increases, and advertising dynamics. Jonas responded that hiring ahead of a new product launch and increased reseller activity contributed to higher SG&A. Fischer added the NRS report would be released shortly. On advertising, Jonas acknowledged challenges but expects improved ad performance as data integration strengthens.
* Alonso followed up on BOSS Money and the impact of the remittance tax, asking about revenue decreases and user growth. Jonas cited weaker November and December performance but noted a strong rebound in January. Fischer explained that digital transactions increased significantly post-tax, with continued strong momentum into March.
* Alonso inquired about the MarketSpark investment and any plans for future acquisition. Jonas declined to comment due to board membership.
* On M&A, Alonso asked about progress. Jonas stated, "Not right now."
* William Vaughan, Corient: Asked about trends among single-store operators and bodegas. Fischer indicated economics are more dependent on broader economic trends than immigration, with retailer growth continuing. Vaughan also queried about BOSS Money's competition; Jonas emphasized the app's strong customer ratings and competitive pricing, while Fischer noted higher margins in digital despite lower revenue per transaction.
* Vaughan questioned capital allocation and future buybacks. Jonas said, "I don't expect cash to materially decline from where it is. I think we prefer having more cash available for lots of different purposes, including potential acquisitions."

SENTIMENT ANALYSIS

* Analysts maintained a generally inquisitive and constructive tone, with focused questions on segment dynamics, capital allocation, and growth levers. Their concerns centered on execution, competition, and capital deployment, but the tone remained neutral to slightly positive.
* Management demonstrated confidence, particularly in prepared remarks. Jonas and Fischer used phrases like "we are very pleased with our financial results so far this year and are continuing to build on our momentum." During Q&A, management was transparent about challenges and upcoming initiatives, though more reserved when commenting on M&A and investments.
* Compared to the previous quarter, analyst tone remained consistent, with continued focus on capital allocation and competitive positioning. Management tone became slightly more optimistic, especially with upward guidance revisions.

QUARTER-OVER-QUARTER COMPARISON

* The increased adjusted EBITDA guidance for fiscal 2026 represents a key change from the previous quarter, where guidance remained at $141 million to $145 million. The current call placed greater emphasis on the migration to digital channels, AI product integration, and shareholder return initiatives like dividend hikes and accelerated buybacks.
* While both quarters highlighted strong growth in NRS, Fintech, and net2phone, this quarter's remarks more directly attributed margin expansion and cash flow gains to digital acceleration and AI efficiencies. Analyst focus shifted further toward execution under new tax and regulatory dynamics, as well as capital deployment priorities.
* Management sentiment was more upbeat, reflected by increased guidance and continued investment in growth segments, contrasting with a slightly more cautious tone previously regarding M&A and regulatory changes.

RISKS AND CONCERNS

* Management cited lower-than-expected performance in Advertising & Data, pressures from declining CPM rates, and ongoing uncertainty from the new federal remittance tax's impact on retail transactions.
* Jonas acknowledged, "we had a weaker November and December than we had planned for. Frankly, we don't know why."
* Fischer noted it is "a bit early to tell" how significant the digital migration will be for BOSS Money, but current trends are favorable.
* Analyst questions reflected concerns about SG&A growth, advertising performance, competitive threats in digital remittance, and capital allocation discipline.

FINAL TAKEAWAY

IDT management underscored another quarter of record performance, driven by robust growth in its higher-margin segments and substantial progress in digital and AI-driven initiatives. Strong digital migration in BOSS Money, disciplined execution in net2phone, and sustained NRS growth led to improved profitability and prompted management to raise adjusted EBITDA guidance for the year. Enhanced shareholder returns through dividend increases and accelerated buybacks signal confidence in the business trajectory, while management remains attentive to execution challenges and evolving competitive dynamics across its core segments.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/idt/earnings/transcripts]

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* IDT Corporation (IDT) Q2 2026 Earnings Call Transcript [https://seekingalpha.com/article/4880788-idt-corporation-idt-q2-2026-earnings-call-transcript]
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