~~UNITED STATES~~

~~SECURITIES AND EXCHANGE COMMISSION~~

~~Washington, D.C. 20549~~

~~FORM 10-Q~~UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

☒~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED APRIL 30, ~~2020~~2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

Commission File Number: 1-16371

IDT ~~CORPORATION~~CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware		22-3415036
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

520 Broad Street, Newark, New Jersey		07102
(Address of principal executive offices)		(Zip Code)

(973)438-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Class B common stock, par value $.01 per share		New York Stock ExchangeNYSE

Trading symbol: IDT

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 ~~days.Yes~~xdays. Yes ☒ No¨ ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx ☒ No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):Yes ☐ No ☒

As of June ~~4, 2020,~~2, 2021, the registrant had the following shares outstanding:

~~Class A common stock, $.01 par value: 1,574,326 shares outstanding (excluding 1,698,000 treasury shares)~~

~~Class B common stock, $.01 par value: 24,974,837 shares outstanding (excluding 985,770 treasury shares)~~

Class A common stock, $.01 par value:	1,574,326 shares outstanding (excluding 1,698,000 treasury shares)
Class B common stock, $.01 par value:	24,186,856 shares outstanding (excluding 2,191,634 treasury shares)

~~IDT CORPORATION~~

~~TABLE OF CONTENTS~~

~~PART I. FINANCIAL INFORMATION~~		1

IDT CORPORATION

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		3

Item 1.	Financial Statements (Unaudited)	13

	Consolidated Balance Sheets	13

	Consolidated Statements of Operations	24

	Consolidated Statements of Comprehensive Income (Loss) ~~Income~~	35

	Consolidated Statements of Equity	46

	Consolidated Statements of Cash Flows	68

	Notes to Consolidated Financial Statements	79

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2325

Item 3.	Quantitative and Qualitative Disclosures About Market Risks	3236

Item 4.	Controls and Procedures	36

~~Item 4.~~		~~Controls and Procedures~~	33

PART II. OTHER INFORMATION		3437

Item 1.	Legal Proceedings	~~Legal Proceedings~~	3437

Item 1A.	Risk Factors	~~Risk Factors~~	3437

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3538

Item 3.	Defaults Upon Senior Securities	3538

Item 4.	Mine Safety Disclosures	38

Item 5.	Other Information	38

Item 6.	Exhibits	39

~~Item 4.~~SIGNATURES		~~Mine Safety Disclosures~~	35

~~Item 5.~~	~~Other Information~~	35

~~Item 6.~~	~~Exhibits~~	36

~~SIGNATURES~~		3740

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

IDT CORPORATION

CONSOLIDATED BALANCE SHEETS

	April 30, 2020			July 31, 2019			April 30, 2021			July 31, 2020
	(Unaudited)			(Note 1)			(Unaudited)			(Note 1)
	(in thousands)						(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	51,786		$	80,168		$	84,017		$	84,860
Restricted cash and cash equivalents		114,667			177,031			110,992			116,362
Debt securities		12,948			2,534			16,852			18,363
Equity investments		5,716			5,688			37,586			5,964
Trade accounts receivable, net of allowance for doubtful accounts of $6,286 at April 30, 2020 and $5,444 at July 31, 2019		47,400			58,060
Trade accounts receivable, net of allowance for doubtful accounts of $6,230 at April 30, 2021 and $6,085 at July 31, 2020								42,683			44,166
Prepaid expenses		32,713			20,276			45,960			33,115
Other current assets		26,686			24,704			15,959			19,302

Total current assets		291,916			368,461			354,049			322,132
Property, plant and equipment, net		30,436			34,355			31,110			30,061
Goodwill		12,566			11,209			14,943			12,858
Other intangibles, net		3,913			4,196			6,235			3,959
Equity investments		8,569			9,319			14,922			8,833
Operating lease right-of-use assets		10,307			—			8,363			9,490
Deferred income tax assets, net		1,795			4,589			22,530			8,512
Other assets		12,108			11,574			9,747			8,905
Total assets	$	371,610		$	443,703		$	461,899		$	404,750

Liabilities and equity
Current liabilities:
Trade accounts payable	$	27,738		$	37,077		$	31,386		$	31,147
Accrued expenses		118,065			127,834			126,119			125,544
Deferred revenue		37,808			42,479			42,771			40,114
Customer deposits		114,061			175,028			110,715			115,992
Other current liabilities		10,860			6,652			16,345			12,073
Total current liabilities		308,532			389,070			327,336			324,870
Operating lease liabilities		8,109			—			6,108			7,353
Other liabilities		1,366			1,076			1,295			1,388

Total liabilities		318,007			390,146			334,739			333,611
Commitments and contingencies								-
Equity:
IDT Corporation stockholders’ equity:
Preferred stock, $.01 par value; authorized shares—10,000; no shares issued		—			—
Class A common stock, $.01 par value; authorized shares—35,000; 3,272 shares issued and 1,574 shares outstanding at April 30, 2020 and July 31, 2019		33			33
Class B common stock, $.01 par value; authorized shares—200,000; 25,961 and 25,803 shares issued and 24,975 and 24,895 shares outstanding at April 30, 2020 and July 31, 2019, respectively		260			258
Preferred stock, $.01 par value; authorized shares—10,000; 0 shares issued								—			—
Class A common stock, $.01 par value; authorized shares—35,000; 3,272 shares issued and 1,574 shares outstanding at April 30, 2021 and July 31, 2020								33			33
Class B common stock, $.01 par value; authorized shares—200,000; 26,343 and 25,961 shares issued and 24,151 and 24,345 shares outstanding at April 30, 2021 and July 31, 2020, respectively								263			260
Additional paid-in capital		276,928			273,313			277,125			277,443
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of Class A common stock and 986 and 908 shares of Class B common stock at April 30, 2020 and July 31, 2019, respectively		(52,217	)		(51,739	)
Treasury stock, at cost, consisting of 1,698 and 1,698 shares of Class A common stock and 2,192 and 1,616 shares of Class B common stock at April 30, 2021 and July 31, 2020, respectively								(60,413	)		(56,221	)
Accumulated other comprehensive loss		(7,138	)		(4,858	)		(8,390	)		(7,410	)
Accumulated deficit		(160,826	)		(160,763	)		(81,589	)		(139,333	)
Total IDT Corporation stockholders’ equity		57,040			56,244			127,029			74,772
Noncontrolling interests		(3,437	)		(2,687	)		131			(3,633	)
Total equity		53,603			53,557			127,160			71,139
Total liabilities and equity	$	371,610		$	443,703		$	461,899		$	404,750

See accompanying notes to consolidated financial statements.

~~IDT CORPORATION~~

IDT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
~~(Unaudited)~~

Three Months Ended
April 30,

Nine Months Ended
April 30,

2020

2019

2020

2019

(in thousands, except per share data)
Revenues $ 321,336 $ 341,255 $ 985,425 $ 1,053,044
Costs and expenses:
Direct cost of revenues (exclusive of depreciation and amortization) 258,839 282,791 801,016 878,661
Selling, general and administrative (i) 52,630 49,518 159,853 150,970
Depreciation and amortization 5,239 5,524 15,718 16,881
Severance 602 553 1,714 553
Total costs and expenses 317,310 338,386 978,301 1,047,065
Other operating expense, net (see Note 9) (234 ) (2,420 ) (3,402 ) (5,805 )
Income from operations 3,792 449 3,722 174
Interest income, net 56 177 525 472
Other (expense) income, net (2,144 ) 360 (1,360 ) (494 )
Income before income taxes 1,704 986 2,887 152
(Provision for) benefit from income taxes (1,319 ) 1,471 (3,020 ) (704 )
Net income (loss) 385 2,457 (133 ) (552 )
Net loss (income) attributable to noncontrolling interests 133 (287 ) 70 (888 )
Net income (loss) attributable to IDT Corporation $ 518 $ 2,170 $ (63 ) $ (1,440 )

Earnings (loss) per share attributable to IDT Corporation common stockholders:
Basic $ 0.02 $ 0.08 $ (0.00 ) $ (0.06 )
Diluted $ 0.02 $ 0.08 $ (0.00 ) $ (0.06 )
Weighted-average number of shares used in calculation of earnings (loss) per share:
Basic 26,371 26,263 26,323 24,970
Diluted 26,506 26,263 26,323 24,970

(i) Stock-based compensation included in selling, general and administrative expenses $ 810 $ 332 $ 3,341 $ 1,212

(Unaudited)

	2021			2020			2021			2020
	Three Months Ended April 30,						Nine Months Ended April 30,
	2021			2020			2021			2020
	(in thousands, except per share data)

Revenues	$	373,831		$	321,336		$	1,057,022		$	985,425
Costs and expenses:
Direct cost of revenues (exclusive of depreciation and amortization)		300,797			258,839			843,116			801,016
Selling, general and administrative (i)		55,148			52,630			161,591			159,853
Depreciation and amortization		4,425			5,239			13,381			15,718
Severance		184			602			439			1,714
Total costs and expenses		360,554			317,310			1,018,527			978,301
Other operating gain (expense), net (see Note 10)		595			(234	)		1,550			(3,402	)
Income from operations		13,872			3,792			40,045			3,722
Interest income, net		125			56			223			525
Other income (expense), net		3,815			(2,144	)		5,608			(1,360	)
Income before income taxes		17,812			1,704			45,876			2,887
Benefit from (provision for) income taxes		18,586			(1,319	)		12,142			(3,020	)
Net income (loss)		36,398			385			58,018			(133	)
Net (income) loss attributable to noncontrolling interests		(50	)		133			(274	)		70
Net income (loss) attributable to IDT Corporation	$	36,348		$	518		$	57,744		$	(63	)
Earnings (loss) per share attributable to IDT Corporation common stockholders:
Basic	$	1.42		$	0.02		$	2.27		$	(0.00	)
Diluted	$	1.39		$	0.02		$	2.23		$	(0.00	)

Weighted-average number of shares used in calculation of earnings (loss) per share:
Basic		25,530			26,371			25,475			26,323
Diluted		26,136			26,506			25,903			26,323

(i) Stock-based compensation included in selling, general and administrative expenses	$	275		$	810		$	1,215		$	3,341

See accompanying notes to consolidated financial statements.

~~IDT CORPORATION~~

IDT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ~~INCOME~~

~~(Unaudited)~~

Three Months Ended
April 30, Nine Months Ended
April 30,
2020 2019 2020 2019
(in thousands)
Net income (loss) $ 385 $ 2,457 $ (133 ) $ (552 )
Other comprehensive (loss) income:
Change in unrealized loss on available-for-sale securities 84 — 84 1
Foreign currency translation adjustments (647 ) (10 ) (2,364 ) 473
Other comprehensive (loss) income (563 ) (10 ) (2,280 ) 474
Comprehensive (loss) income (178 ) 2,447 (2,413 ) (78 )
Comprehensive loss (income) attributable to noncontrolling interests 133 (287 ) 70 (888 )
Comprehensive (loss) income attributable to IDT Corporation $ (45 ) $ 2,160 $ (2,343 ) $ (966 )

(Unaudited)

	2021			2020			2021			2020
	Three Months Ended April 30,						Nine Months Ended April 30,
	2021			2020			2021			2020
	(in thousands)
Net income (loss)	$	36,398		$	385		$	58,018		$	(133	)
Other comprehensive income (loss):
Change in unrealized loss on available-for-sale securities		(180	)		84			(163	)		84
Foreign currency translation adjustments		747			(647	)		(817	)		(2,364	)
Other comprehensive income (loss)		567			(563	)		(980	)		(2,280	)
Comprehensive income (loss)		36,965			(178	)		57,038			(2,413	)
Comprehensive (income) loss attributable to noncontrolling interests		(50	)		133			(274	)		70
Comprehensive income (loss) attributable to IDT Corporation	$	36,915		$	(45	)	$	56,764		$	(2,343	)

See accompanying notes to consolidated financial statements.

IDT CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

~~(Unaudited)~~

	Class A Common Stock		Class B Common Stock			Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interests			Total Equity
	Three Months Ended April 30, 2021 (in thousands)
	IDT Corporation Stockholders
	Class A Common Stock		Class B Common Stock			Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interests			Total Equity
BALANCE AT JANUARY 31, 2021	$	33	$	263		$	276,871		$	(60,413	)	$	(8,957	)	$	(117,937	)	$	556		$	90,416
Business acquisition		—		—	��		(21	)		—			—			—			(247	)		(268	)
Stock-based compensation		—		—			275			—			—			—			—			275
Distributions to noncontrolling interests		—		—			—			—			—			—			(228	)		(228	)
Other comprehensive loss		—		—			—			—			567			—			—			567
Exercise of stock options
Repurchases of Class B common stock through repurchase program		-
Restricted Class B common stock purchased from employees
Grant of restricted equity in subsidiary (see Note 11).
Net income		—		—			—			—			—			36,348			50			36,398
BALANCE AT APRIL 30, 2021	$	33	$	263		$	277,125		$	(60,413	)	$	(8,390	)	$	(81,589	)	$	131		$	127,160

Three Months Ended April 30, 2020
(in thousands)
IDT Corporation Stockholders
Class A
Common Stock Class B
Common Stock Additional
Paid-In
Capital Treasury
Stock Accumulated
Other
Comprehensive
Loss Accumulated
Deficit Noncontrolling
Interests Total
Equity
BALANCE AT JANUARY 31, 2020 $ 33 $ 260 $ 276,118 $ (52,005 ) $ (6,575 ) $ (161,344 ) $ (3,094 ) $ 53,393
Repurchases of Class B common stock through repurchase program — — — (212 ) — — — (212 )
Stock-based compensation — — 810 — — — — 810
Distributions to noncontrolling interests — — — — — — (210 ) (210 )
Other comprehensive loss — — — — (563 ) — — (563 )
Net income — — — — — 518 (133 ) 385
BALANCE AT APRIL 30, 2020 $ 33 $ 260 $ 276,928 $ (52,217 ) $ (7,138 ) $ (160,826 ) $ (3,437 ) $ 53,603

Nine Months Ended April 30, 2020
(in thousands)
IDT Corporation Stockholders
Class A
Common Stock Class B
Common Stock Additional
Paid-In
Capital Treasury
Stock Accumulated
Other
Comprehensive
Loss Accumulated
Deficit Noncontrolling
Interests Total
Equity
BALANCE AT JULY 31, 2019 $ 33 $ 258 $ 273,313 $ (51,739 ) $ (4,858 ) $ (160,763 ) $ (2.687 ) $ 53,557
Exercise of stock options — — 276 — — — — 276
Repurchases of Class B common stock through repurchase program — — — (212 ) — — — (212 )
Restricted Class B common stock purchased from employees — — — (266 ) — — — (266 )
Stock-based compensation — 2 3,339 — — — — 3,341
Distributions to noncontrolling interests — — — — — — (680 ) (680 )
Other comprehensive loss — — — — (2,280 ) — — (2,280 )
Net loss — — — — — (63 ) (70 ) (133 )
BALANCE AT APRIL 30, 2020 $ 33 $ 260 $ 276,928 $ (52,217 ) $ (7,138 ) $ (160,826 ) $ (3,437 ) $ 53,603

~~IDT CORPORATION~~

	Nine Months Ended April 30, 2021 (in thousands)
	IDT Corporation Stockholders
	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interests			Total Equity
BALANCE AT JULY 31, 2020	$	33	$	260	$	277,443		$	(56,221	)	$	(7,410	)	$	(139,333	)	$	(3,633	)	$	71,139
Exercise of stock options		—		—		686			—			—			—			—			686
Repurchases of Class B common stock through repurchase program		—		—		—			(2,849	)		—			—			—			(2,849	)
Restricted Class B common stock purchased from employees		—		—		—			(1,343	)		—			—			—			(1,343	)
Grant of restricted equity in subsidiary (see Note 11).		—		—		(2,195	)		—			—			—			2,195			—
Business acquisition		—		—		(21	)		—			—			—			1,941			1,920
Stock-based compensation		—		3		1,212			—			—			—			—			1,215
Distributions to noncontrolling interests		—		—		—			—			—			—			(646	)		(646	)
Other comprehensive loss		—		—		—			—			(980	)		—			—			(980	)
Net income		—		—		—			—			—			57,744			274			58,018
BALANCE AT APRIL 30, 2021	$	33	$	263	$	277,125		$	(60,413	)	$	(8,390	)	$	(81,589	)	$	131		$	127,160

IDT CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)—Continued

	Three Months Ended April 30, 2019 (in thousands)																					Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interests			Total Equity
	IDT Corporation Stockholders																					Three Months Ended April 30, 2020 (in thousands)
	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interests			Total Equity			IDT Corporation Stockholders
BALANCE AT JANUARY 31, 2019	$	33	$	256	$	271,959	$	(51,727	)	$	(4,455	)	$	(166,509	)	$	503		$	50,060
Restricted Class B common stock purchased from employees		—		—		—		(12	)		—			—			—			(12	)
																						Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interests			Total Equity
BALANCE AT JANUARY 31, 2020																						$	33	$	260	$	276,118	$	(52,005	)	$	(6,575	)	$	(161,344	)	$	(3,094	)	$	53,393
Repurchases of Class B common stock through repurchase program																							—		—		—		(212	)		—			—			—			(212	)
Stock-based compensation		—		—		332		—			—			—			—			332			—		—		810		—			—			—			—			810
Distributions to noncontrolling interests		—		—		—		—			—			—			(450	)		(450	)		—		—		—		—			—			—			(210	)		(210	)
Other comprehensive loss		—		—		—		—			(10	)		—			—			(10	)		—		—		—		—			(563	)		—			—			(563	)
Net income		—		—		—		—			—			2,170			287			2,457			—		—		—		—			—			518			(133	)		385
BALANCE AT APRIL 30, 2019	$	33	$	256	$	272,291	$	(51,739	)	$	(4,465	)	$	(164,339	)	$	340		$	52,377
BALANCE AT APRIL 30, 2020																						$	33	$	260	$	276,928	$	(52,217	)	$	(7,138	)	$	(160,826	)	$	(3,437	)	$	53,603

Nine Months Ended April 30, 2019
(in thousands)
IDT Corporation Stockholders
Class A
Common Stock Class B
Common Stock Additional
Paid-In
Capital Treasury
Stock Accumulated
Other
Comprehensive
Loss Accumulated
Deficit Noncontrolling
Interests Total
Equity
BALANCE AT JULY 31, 2018 $ 33 $ 256 $ 294,047 $ (85,597 ) $ (4,972 ) $ (173,103 ) $ 639 $ 31,303
Adjustment from the adoption of change in revenue recognition — — — — — 9,064 — 9,064
Adjustment from the adoption of change in accounting for equity investments — — — — 33 1,140 — 1,173
BALANCE AT AUGUST 1, 2018 33 256 294,047 (85,597 ) (4,939 ) (162,899 ) 639 41,540
Repurchases of Class B common stock through repurchase program — — — (3,854 ) — — — (3,854 )
Sale of Class B common stock to Howard S. Jonas — — (22,968 ) 37,740 — — — 14,772
Restricted Class B common stock purchased from employees — — — (28 ) — — — (28 )
Stock-based compensation — — 1,212 — — — — 1,212
Distributions to noncontrolling interests — — — — — — (1,187 ) (1,187 )
Other comprehensive income — — — — 474 — — 474
Net loss — — — — — (1,440 ) 888 (552 )
BALANCE AT APRIL 30, 2019 $ 33 $ 256 $ 272,291 $ (51,739 ) $ (4,465 ) $ (164,339 ) $ 340 $ 52,377

	Nine Months Ended April 30, 2020 (in thousands)
	IDT Corporation Stockholders
	Class A Common Stock		Class B Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interests			Total Equity
BALANCE AT JULY 31, 2019	$	33	$	258	$	273,313	$	(51,739	)	$	(4,858	)	$	(160,763	)	$	(2,687	)	$	53,557
Exercise of stock options		—		—		276		—			—			—			—			276
Repurchases of Class B common stock through repurchase program		—		—		—		(212	)		—			—			—			(212	)
Restricted Class B common stock purchased from employees		—		—		—		(266	)		—			—			—			(266	)
Stock-based compensation		—		2		3,339		—			—			—			—			3,341
Distributions to noncontrolling interests		—		—		—		—			—			—			(680	)		(680	)
Other comprehensive loss		—		—		—		—			(2,280	)		—			—			(2,280	)
Net loss		—		—		—		—			—			(63	)		(70	)		(133	)
BALANCE AT APRIL 30, 2020	$	33	$	260	$	276,928	$	(52,217	)	$	(7,138	)	$	(160,826	)	$	(3,437	)	$	53,603

See accompanying notes to consolidated financial statements.

IDT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

							2021			2020
	Nine Months Ended April 30,						Nine Months Ended April 30,
	2020			2019			2021			2020
	(in thousands)						(in thousands)
Operating activities
Net loss	$	(133	)	$	(552	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Net income (loss)							$	58,018		$	(133	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		15,718			16,881			13,381			15,718
Deferred income taxes		2,912			699			(13,811	)		2,912
Provision for doubtful accounts receivable		2,282			1,218			1,220			2,282
Stock-based compensation		3,341			1,212			1,215			3,341
Other		814			(700	)
(Gain) loss on investments								(4,923	)		814
Change in assets and liabilities:
Trade accounts receivable		8,374			14,045			1,626			8,374
Prepaid expenses, other current assets and other assets		(13,080	)		213
Trade accounts payable, accrued expenses, other current liabilities and other liabilities		(18,894	)		(13,032	)
Prepaid expenses, other current assets, and other assets								(7,961	)		(13,080	)
Trade accounts payable, accrued expenses, other current liabilities, and other liabilities								(2,154	)		(18,894	)
Customer deposits at IDT Financial Services Limited (Gibraltar-based bank)		(67,273	)		33,086			(11,078	)		(67,273	)
Deferred revenue		(4,704	)		(5,716	)		2,611			(4,704	)
Net cash (used in) provided by operating activities		(70,643	)		47,354
Net cash provided by (used in) operating activities								38,144			(70,643	)
Investing activities
Capital expenditures		(11,861	)		(13,724	)		(13,455	)		(11,861	)
Payments for acquisitions, net of cash acquired		(450	)		(5,526	)		(2,656	)		(450	)
Purchase of Rafael Holdings, Inc. Class B common stock and warrant								(5,000	)		—
Exercise of warrant to purchase shares of Rafael Holdings, Inc. Class B common stock								(1,000	)		—
Purchase of series B convertible preferred stock in equity method investment								(4,000	)		—
Purchases of debt securities and equity investments		(14,790	)		(1,007	)		(39,347	)		(14,790	)
Proceeds from maturities and sales of debt securities and redemptions of equity investments		4,317			6,312			18,670			4,317
Net cash used in investing activities		(22,784	)		(13,945	)		(46,788	)		(22,784	)
Financing activities
Distributions to noncontrolling interests		(680	)		(1,187	)		(646	)		(680	)
Proceeds from sale of Class B common stock to Howard S. Jonas		—			13,272
Repayment of other liabilities.		(449	)		(635	)		(69	)		(449	)
Proceeds from note payable		10,000			—			—			10,000
Repayment of note payable		(10,000	)		—			—			(10,000	)
Repayments of borrowings under revolving credit facility		(1,429	)		(3,000	)		—			(1,429	)
Proceeds from borrowings under revolving credit facility		1,429			3,000			—			1,429
Proceeds from exercise of stock options		276			—			686			276
Repurchases of Class B common stock		(478	)		(3,882	)		(4,192	)		(478	)
Net cash (used in) provided by financing activities		(1,331	)		7,568
Net cash used in financing activities								(4,221	)		(1,331	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents		4,012			(2,000	)		6,652			4,012
Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents		(90,746	)		38,977
Net decrease in cash, cash equivalents, and restricted cash and cash equivalents								(6,213	)		(90,746	)
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period		257,199			203,197			201,222			257,199
Cash, cash equivalents, and restricted cash and cash equivalents at end of period	$	166,453		$	242,174		$	195,009		$	166,453

Supplemental schedule of non-cash investing and financing activities
Liabilities incurred for acquisition	$	375		$	—		$	393		$	375
Howard S. Jonas’ advance payment used for sale of Class B common stock	$	—		$	1,500

See accompanying notes to consolidated financial statements.

IDT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1—Basis of Presentation

The accompanying unaudited consolidated financial statements of IDT Corporation and its subsidiaries (the “Company” or “IDT”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended April 30, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, ~~2020.~~2021. The balance sheet at July 31, ~~2019~~2020 has been derived from the Company’s audited financial statements at that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2019,~~2020, as filed with the U.S. Securities and Exchange Commission ~~(“SEC”~~(the “SEC”).

The Company’s fiscal year ends on July 31 of each calendar year. Each reference below to a fiscal year refers to the fiscal year ending in the calendar year indicated (e.g., fiscal ~~2020~~2021 refers to the fiscal year ending July 31, ~~2020)~~2021).

Note 2—Business Segment Information

As of August 1, 2020, the Company revised its reportable business segments to reflect the growth of its financial technology and cloud communications businesses and their increased contributions to the Company’s consolidated results. The Company now has three reportable business segments, Fintech, net2phone-Unified Communications as a Service (“UCaaS”), and Traditional Communications. The revised reportable business segments reflect management’s approach to analyzing results, its resource allocation strategy, and its assessment of business performance. Comparative segment information has been reclassified and restated in all periods to conform to the current period presentation.

The Company’s reportable segments are distinguished by types of service, customers, and methods used to provide their services. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker. The accounting policies of the segments are the same as the accounting policies of the Company as a whole. There are no significant asymmetrical allocations to segments. The Company evaluates the performance of its business segments based primarily on income (loss) from operations.

The Fintech segment comprises BOSS Revolution Money Transfer, a provider of international money remittance and related value/payment transfer services, and National Retail Solutions (“NRS”), operator of a nationwide point of sale (“POS”) retail network providing payment processing, digital advertising, transaction data, and ancillary services. BOSS Revolution Money Transfer and NRS were previously included in the Company’s Telecom & Payment Services segment.

The net2phone-UCaaS segment comprises net2phone’s cloud communications offerings, which were previously included in the Company’s net2phone segment.

The Traditional Communications segment includes Mobile Top-Up, which enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts, BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States, and Carrier Services, a wholesale provider of international voice and SMS termination and outsourced traffic management solutions to telecoms worldwide. Traditional Communications also includes net2phone-Platform Services, which provides telephony services to cable operators and other offerings that leverage a common technology platform, as well as smaller communications and payments offerings, many in harvest mode. Most of the Traditional Communications segment was previously included in the Company’s Telecom & Payment Services segment except for net2phone-Platform Services, which was previously included in the Company’s net2phone segment.

Corporate costs include compensation, consulting fees, treasury, tax and accounting services, human resources, corporate purchasing, corporate governance including Board of Directors’ fees, internal and external audit, investor relations, corporate insurance, corporate legal, business development, charitable contributions, travel, and other corporate-related general and administrative expenses. Corporate does not generate any revenues, nor does it incur any direct cost of revenues.

Operating results for the business segments of the Company were as follows:

Schedule of Operating Results of Business Segments

(in thousands)	Fintech			net2phone-UCaaS			Traditional Communications		Corporate			Total
Three Months Ended April 30, 2021
Revenues	$	16,644		$	11,255		$	345,932	$	—		$	373,831
(Loss) income from operations		(1,403	)		(3,684	)		20,074		(1,115	)		13,872

Three Months Ended April 30, 2020
Revenues	$	14,684		$	8,103		$	298,549	$	—		$	321,336
Income (loss) from operations		142			(3,643	)		9,503		(2,210	)		3,792

Nine Months Ended April 30, 2021
Revenues	$	55,229		$	31,621		$	970,172	$	—		$	1,057,022
Income (loss) from operations		1,487			(10,744	)		54,575		(5,273	)		40,045

Nine Months Ended April 30, 2020
Revenues	$	33,982		$	23,225		$	928,218	$	—		$	985,425
(Loss) income from operations		(5,705	)		(11,137	)		27,771		(7,207	)		3,722

Note 2—3—Revenue Recognition

The Company earns revenue from contracts with customers, primarily through the provision of retail telecommunications and payment offerings as well as wholesale international ~~long-distance traffic~~voice and SMS termination. The Company has two reportable business segments, Telecom & Payment Services and net2phone. The Telecom & Payment Services segment is comprised of Core and Growth verticals. Core includes BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States, Carrier Services, which provides international long-distance termination and outsourced traffic management solutions to telecoms worldwide, and Mobile Top-Up, which enables customers to transfer airtime and bundles of airtime, messaging and data credits to mobile accounts internationally and domestically. Core also includes smaller communications and payment offerings, many in harvest mode. Growth includes National Retail Solutions, which operates a point-of-sale terminal-based network for independent retailers, BOSS Revolution Money Transfer, ~~an international money remittance service for customers in~~NRS, and net2phone-UCaaS are technology-driven, synergistic businesses that leverage the United States, and BOSS Revolution Mobile, a mobile virtual network operator in the United States. The net2phone segment is comprised of net2phone-Unified Communications as a Service (“UCaaS”), a unified cloud-based communications service for businesses in North and South America and certain other international markets, and net2phone-Platform Services, which provides telephony services to cable operators and other businesses by leveraging a common technology platform.

~~The~~ Company’s core ~~operations~~assets, and revenue is primarily recognized at a point in time, and in some cases (mainly net2phone-UCaaS) is recognized over time. Traditional Communications are mostly minute-based, paid-voice communications services, and revenue is primarily recognized at a point in time. Telecom & Payment Services’ growth initiatives and net2phone-UCaaS are technology-driven, synergistic businesses that leverage the Company’s core assets, and revenue, in some cases, is recognized over time. The Company’s most significant revenue streams are from ~~BOSS Revolution Calling, Carrier Services, and~~ Mobile ~~Top-Up.~~Top-Up, BOSS Revolution Calling, and Carrier Services. Mobile Top-Up and BOSS Revolution Calling are sold direct-to-consumers and through distributors and retailers.

Disaggregated Revenues

The following table shows the Company’s revenues disaggregated by business segment and service offered to customers:

Schedule of Revenues Disaggregated by Business Segment and Service Offered to Customers

	Three Months Ended April 30,				Nine Months Ended April 30,				Three Months Ended April 30,				Nine Months Ended April 30,
	2020		2019		2020		2019		2021		2020		2021		2020
	(in thousands)								(in thousands)
Core Operations:
BOSS Revolution Money Transfer									$	10,259	$	11,817	$	38,697	$	26,679
National Retail Solutions										6,385		2,867		16,532		7,303
Total Fintech										16,644		14,684		55,229		33,982
net2phone-UCaaS										11,255		8,103		31,621		23,225
Mobile Top-Up										132,603		85,139		325,001		237,808
BOSS Revolution Calling	$	111,541	$	120,455	$	340,557	$	366,114		111,412		112,536		342,665		343,731
Carrier Services		87,306		120,955		302,482		391,073		88,643		87,435		263,571		302,613
Mobile Top-Up		85,109		67,567		237,741		197,189
Other		10,127		12,202		32,484		43,730		13,274		13,439		38,935		44,066
Growth		14,707		7,659		34,078		20,531
Total Telecom & Payment Services		308,790		328,838		947,342		1,018,637
net2phone-UCaaS		8,137		6,651		23,298		17,483
net2phone-Platform Services		4,409		5,766		14,785		16,924
Total net2phone		12,546		12,417		38,083		34,407
Total Traditional Communications										345,932		298,549		970,172		928,218
Total	$	321,336	$	341,255	$	985,425	$	1,053,044	$	373,831	$	321,336	$	1,057,022	$	985,425

The following table shows the Company’s revenues disaggregated by geographic region, which is determined based on selling ~~location:~~location. On July 31, 2020, the Company restructured certain operations for tax purposes resulting in the change of geographic sourcing of revenues from the Netherlands to the United States.

(in thousands) Telecom & Payment Services net2phone Total
Three Months Ended April 30, 2020
United States $ 216,310 $ 8,344 $ 224,654
Outside the United States:
United Kingdom 26,360 3 26,363
Netherlands 52,237 — 52,237
Other 13,883 4,199 18,082
Total outside the United States 92,480 4,202 96,682
Total $ 308,790 $ 12,546 $ 321,336

(in thousands) Telecom & Payment Services net2phone Total
Three Months Ended April 30, 2019
United States $ 216,271 $ 8,833 $ 225,104
Outside the United States:
United Kingdom 44,476 3 44,479
Netherlands 48,817 — 48,817
Other 19,274 3,581 22,855
Total outside the United States 112,567 3,584 116,151
Total $ 328,838 $ 12,417 $ 341,255

(in thousands) Telecom & Payment Services net2phone Total
Nine Months Ended April 30, 2020
United States $ 645,909 $ 25,452 $ 671,361
Outside the United States:
United Kingdom 98,304 10 98,314
Netherlands 156,870 — 156,870
Other 46,259 12,621 58,880
Total outside the United States 301,433 12,631 314,064
Total $ 947,342 $ 38,083 $ 985,425

Schedule of Revenues Disaggregated by Geographic Region

(in thousands) Telecom & Payment Services net2phone Total
Nine Months Ended April 30, 2019
United States $ 673,141 $ 24,857 $ 697,998
Outside the United States:
United Kingdom 143,887 19 143,906
Netherlands 147,796 — 147,796
Other 53,813 9,531 63,344
Total outside the United States 345,496 9,550 355,046
Total $ 1,018,637 $ 34,407 $ 1,053,044

R~~emaining Performance Obligations~~

(in thousands)	Fintech		net2phone-UCaaS		Traditional Communications		Total
Three Months Ended April 30, 2021
United States	$	16,644	$	5,839	$	240,442	$	262,925
Outside the United States:
United Kingdom		—		—		92,800		92,800
Netherlands		—		—		7		7
Other		—		5,416		12,683		18,099
Total outside the United States		—		5,416		105,490		110,906
Total	$	16,644	$	11,255	$	345,932	$	373,831

(in thousands)	Fintech		net2phone-UCaaS		Traditional Communications		Total
Three Months Ended April 30, 2020
United States	$	14,684	$	3,988	$	205,982	$	224,654
Outside the United States:
United Kingdom		—		3		26,360		26,363
Netherlands		—		—		52,237		52,237
Other		—		4,112		13,970		18,082
Total outside the United States		—		4,115		92,567		96,682
Total	$	14,684	$	8,103	$	298,549	$	321,336

(in thousands)	Fintech		net2phone-UCaaS		Traditional Communications		Total
Nine Months Ended April 30, 2021
United States	$	55,229	$	16,597	$	776,391	$	848,217
Outside the United States:
United Kingdom		—		—		154,150		154,150
Netherlands		—		—		14		14
Other		—		15,024		39,617		54,641
Total outside the United States		—		15,024		193,781		208,805
Total	$	55,229	$	31,621	$	970,172	$	1,057,022

(in thousands)	Fintech		net2phone-UCaaS		Traditional Communications		Total
Nine Months Ended April 30, 2020
United States	$	33,982	$	10,954	$	626,424	$	671,360
Outside the United States:
United Kingdom		—		10		98,304		98,314
Netherlands		—		—		156,870		156,870
Other		—		12,261		46,620		58,881
Total outside the United States		—		12,271		301,794		314,065
Total	$	33,982	$	23,225	$	928,218	$	985,425

Remaining Performance Obligations

The Company does not have any significant revenue from performance obligations satisfied or partially satisfied in previous reporting periods. The Company’s remaining performance obligations at April 30, 2021 and July 31, 2020 had an original expected duration of one year or less.

Accounts Receivable and Contract Balances

The timing of revenue recognition may differ from the time of billing to the Company’s customers. Trade accounts receivable in the Company’s consolidated balance sheets represent unconditional rights to consideration. An entity records a contract asset when revenue is recognized in advance of the entity’s right to bill and receive consideration. The Company has not identified any contract assets.

Contract liabilities arise when the Company receives consideration or bills its customers prior to providing the goods or services promised in the contract. The primary component of the Company’s contract liability balance is ~~the~~ payments received for ~~its~~ prepaid BOSS Revolution ~~Calling, traditional calling cards, and Mobile Top-Up services.~~Calling. Contract liabilities are recognized as revenue when services are provided to the customer. The contract liability balances are presented in the Company’s consolidated balance ~~sheet~~sheets as “Deferred revenue”.

The following table presents information about the Company’s contract liability balance:

Schedule of Information About Contract Liability Balance

Three Months Ended
April 30, Nine Months Ended
April 30,
2020 2019 2020 2019
(in thousands)
Revenue recognized in the period from amounts included in the contract liability balance at the beginning of the period $ 23,600 $ 25,282 $ 31,306 $ 30,363

	2021		2020		2021		2020
	Three Months Ended April 30,				Nine Months Ended April 30,
	2021		2020		2021		2020
	(in thousands)
Revenue recognized in the period from amounts included in the contract liability balance at the beginning of the period	$	21,926	$	23,572	$	27,665	$	31,288

Deferred Customer Contract Acquisition and Fulfillment Costs

The Company recognizes as an asset its incremental costs of obtaining a contract with a customer that it expects to recover. The Company charges its direct costs to fulfill contracts to expense as incurred. The Company’s incremental costs of obtaining a contract with a customer are sales commissions paid to acquire customers. ~~For Telecom & Payment Services, the~~The Company applies the practical expedient whereby the Company primarily charges these costs to expense when incurred because the amortization period would be one year or less for the asset that would have been recognized from deferring these costs. For net2phone-UCaaS sales, employees and third parties receive commissions on sales to end users. The Company amortizes the deferred costs over the expected customer relationship period when it is expected to exceed one year.

The Company’s deferred customer contract acquisition costs were as follows:

Schedule of Deferred Customer Contract Acquisition Costs

	April 30, 2020		July 31, 2019		April 30, 2021		July 31, 2020
	(in thousands)				(in thousands)
Deferred customer contract acquisition costs included in “Other current assets”	$	2,156	$	1,474	$	3,493	$	2,350
Deferred customer contract acquisition costs included in “Other assets”		2,162		1,716		3,206		2,384
Total	$	4,318	$	3,190	$	6,699	$	4,734

The Company’s amortization of deferred customer contract acquisition costs during the periods were as follows:

Schedule of Amortization of Deferred Customer Contract Acquisition Costs

Three Months Ended
April 30, Nine Months Ended
April 30,
2020 2019 2020 2019
(in thousands)
Amortization of deferred customer contract acquisition costs $ 616 $ 466 $ 1,781 $ 1,218

	2021		2020		2021		2020
	Three Months Ended April 30,				Nine Months Ended April 30,
	2021		2020		2021		2020
	(in thousands)
Amortization of deferred customer contract acquisition costs	$	950	$	616	$	2,581	$	1,781

Note 3—4—Leases

~~On August 1, 2019, the Company adopted Accounting Standards Update No. 2016-02,~~~~Leases (Topic 842)~~, and the amendments thereto, related to the accounting for leases (collectively referred to as “ASC 842”). ASC 842 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on its balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Entities have the option to continue to apply historical accounting under Topic 840, the previously applicable standard, including its disclosure requirements, in comparative periods presented in the year of adoption. An entity that elects this option will recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption instead of the earliest period presented.

The Company elected to apply the optional ASC 842 transition provisions beginning on August 1, 2019. Accordingly, the Company will continue to apply Topic 840 prior to August 1, 2019, including Topic 840 disclosure requirements, in the comparative periods presented. The Company elected the package of practical expedients for all its leases that commenced before August 1, 2019. In addition, the Company elected not to apply the recognition requirements of ASC 842 for its short-term leases.

The Company’s leases primarily consist of operating leases for office space. These leases have remaining terms from one to ~~six~~five years. net2phone-UCaaS also has operating leases for office equipment. Certain of these leases ~~include~~contain renewal options that may be exercised and/or options to terminate the lease. The Company has concluded that it is not reasonably certain that it would exercise the options to extend ~~the lease~~ or terminate the ~~lease.~~leases.

The adoption of ASC 842 resulted in the recognition of operating lease liabilities of $12.4 million and operating ROU assets of the same amount as of August 1, 2019 based on the present value of the remaining minimum rental payments associated with the Company’s leases. As the Company’s leases do not provide an implicit rate, nor is one readily available, the Company used its incremental borrowing rate based on information available at August 1, 2019 to determine the present value of its future minimum rental payments.

~~net2phone~~net2phone-UCaaS has equipment leases that ~~were~~are classified as ~~capital leases under Topic 840 and are~~ finance leases, ~~under ASC 842. net2phone~~and net2phone-UCaaS is ~~also~~ the lessor in various equipment leases that ~~were classified as sales-type capital leases under Topic 840, that~~ are classified as sales-type finance ~~leases under ASC 842.~~leases. The assets and liabilities related to these finance leases are not material to the Company’s consolidated balance sheets.

On March 26, 2018, the Company completed a pro rata distribution of the common stock that the Company held in the Company’s former subsidiary, Rafael Holdings, Inc. (“Rafael”) to the Company’s stockholders of record as of the close of business on March 13, ~~2018.~~2018 (the “Rafael Spin-Off”). Howard S. Jonas, the Chairman of the Company’s Board of Directors, is also the Chairman of the Board of Directors of Rafael. The Company leases office space and parking in Rafael’s building and parking garage located at 520 Broad St, Newark, New Jersey. The Company also leases office space in Israel from Rafael. The Newark lease expires in April 2025 and the Israel lease expires in July 2025. In each of the three months ended April 30, ~~2020~~2021 and ~~2019,~~2020, the Company incurred lease costs of ~~$0.5~~$0.5 million, and ~~$0.5 million, respectively, and~~ in each of the nine months ended April 30, ~~2020~~2021 and ~~2019,~~2020, the Company incurred lease costs of ~~$1.4~~$1.4 million ~~and $1.3 million, respectively,~~ in connection with the Rafael leases, which is included in operating lease cost in the table below.

Supplemental disclosures related to the Company’s operating leases were as follows:

Schedule of Supplemental Disclosures Related to the Company's Operating Leases

					2021		2020		2021		2020
					Three Months Ended April 30,				Nine Months Ended April 30,
	Three Months Ended April 30, 2020		Nine Months Ended April 30, 2020		2021		2020		2021		2020
	(in thousands)				(in thousands)
Operating lease cost	$	707	$	2,130	$	700	$	707	$	2,125	$	2,130
Short-term lease cost		66		198		217		66		412		198

Total lease cost	$	773	$	2,328	$	917	$	773	$	2,537	$	2,328

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	687	$	2,056	$	694	$	687	$	2,076	$	2,056

	~~April 30,~~ ~~2020~~
~~Weighted-average remaining lease term-operating leases~~		~~4.4 years~~
~~Weighted-average discount rate-operating leases~~		~~3.12~~	%

Schedule of Supplemental Disclosures Related Weighted Average Operating Leases

April 30,

2021

July 31,

2020

Weighted-average remaining lease term-operating leases

3.5 years

4.2 years

Weighted-average discount rate-operating leases

2.9

3.12

On September 1, 2020, the Company entered into a new lease with an aggregate operating lease liability of $0.6 million. The Company’s aggregate operating lease liability was as follows:

April 30,
2020
(in thousands)
Operating lease liabilities included in “Other current liabilities” $ 2,400
Operating lease liabilities included in noncurrent liabilities 8,109
Total $ 10,509

Schedule of Aggregate Operating Lease Liability

	April 30, 2021		July 31, 2020
	(in thousands)
Operating lease liabilities included in “Other current liabilities”	$	2,516	$	2,350
Operating lease liabilities included in noncurrent liabilities		6,108		7,353
Total	$	8,624	$	9,703

Future minimum maturities of operating lease liabilities were as ~~follows:~~follows (in thousands):

Schedule of Future Minimum Maturities of Operating Lease Liabilities

	Twelve-month period ending April 30,
	(in thousands)
2021	$	2,691
Twelve-month period ending April 30:				Apr 30, 2021
2022		2,566		$	2,787
2023		2,237			2,489
2024		1,861			1,949
2025		1,896			1,853
2026					33
Thereafter		41			—
Total lease payments		11,292			9,111
Less imputed interest		(783	)		(487	)
Total operating lease liabilities	$	10,509		$	8,624

Note 4—5—Cash, Cash Equivalents, and Restricted Cash and Cash Equivalents

The following table provides a reconciliation of cash, cash equivalents, and restricted cash and cash equivalents reported in the consolidated balance ~~sheet~~sheets that equals the total of the same amounts reported in the consolidated ~~statement~~statements of cash flows:

Schedule of Cash, Cash Equivalents, and Restricted Cash and Cash Equivalents

	April 30, 2020		July 31, 2019		April 30, 2021		July 31, 2020
	(in thousands)				(in thousands)
Cash and cash equivalents	$	51,786	$	80,168	$	84,017	$	84,860
Restricted cash and cash equivalents		114,667		177,031		110,992		116,362
Total cash, cash equivalents, and restricted cash and cash equivalents	$	166,453	$	257,199	$	195,009	$	201,222

At April 30, ~~2020~~2021 and July 31, ~~2019,~~2020, restricted cash and cash equivalents included ~~$114.6~~ $110.9 million and ~~$176.8~~ $116.3 million, respectively, in restricted cash and cash equivalents for customer deposits held by IDT Financial Services Limited, the Company’s Gibraltar-based bank.

Note 5—6—Debt Securities

The following is a summary of available-for-sale debt securities:

Schedule of Available-for-sale Securities

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)									(in thousands)
April 30, 2020:
April 30, 2021:
Certificates of deposit*	$	12,864	$	85	$	(1	)	$	12,948	$	1,927	$	—	$	—		$	1,927
July 31, 2019:
Certificates of deposit*	$	2,234	$	—	$	—		$	2,234
U.S. Treasury bills and notes											1,672		—		(28	)		1,644
Corporate bonds											6,283		21		(112	)		6,192
Municipal bonds		300		—		—			300		7,091		—		(2	)		7,089
Total	$	2,534	$	—	$	—		$	2,534	$	16,973	$	21	$	(142	)	$	16,852

July 31, 2020:
Certificates of deposit*										$	13,844	$	58	$	—		$	13,902
U.S. Treasury bills											2,498		—		—			2,498
Municipal bonds											1,979		—		(16	)		1,963
Total										$	18,321	$	58	$	(16	)	$	18,363

Each of the Company’s certificates of deposit has a CUSIP, was purchased in the secondary market through a broker and may be sold in the secondary market.

Proceeds from maturities and sales of debt securities and redemptions of equity investments were ~~$1.6~~ $7.1 million and ~~$0.8~~ $1.6 million in the three months ended April 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$4.3~~ $18.7 million and ~~$6.3~~ $4.3 million in the nine months ended April 30, ~~2020~~2021 and ~~2019,~~2020, respectively. There were no realized gains or realized losses from sales of debt securities in the three and nine months ended April 30, ~~2020~~2021 and ~~2019.~~2020. The Company uses the specific identification method in computing the realized gains and realized losses on the sales of debt securities.

The contractual maturities of the Company’s available-for-sale debt securities at April 30, ~~2020~~2021 were as follows:

Schedule of Contractual Maturities of Available-for-sale Debt Securities

	Fair Value		Fair Value
	(in thousands)		(in thousands)
Within one year	$	11,728	$	5,048
After one year through five years		1,220		5,986
After five years through ten years		—		5,399
After ten years		—		419
Total	$	12,948	$	16,852

The following available-for-sale debt securities were in an unrealized loss position for which other-than-temporary impairments ~~have~~were not ~~been~~ recognized:

Schedule of Available-for-sale Securities, Unrealized Loss Position

Unrealized Losses Fair Value
(in thousands)
April 30, 2020:
Certificates of deposit $ 1 $ 384
July 31, 2019:
Total $ — $ —

	Unrealized Losses		Fair Value
	(in thousands)
April 30, 2021:
U.S. Treasury bills and notes	$	28	$	1,644
Corporate bonds		112		5,535
Municipal bonds		2		5,399
Total	$	142	$	12,578
July 31, 2020:
Municipal bonds	$	16	$	1,963

At April 30, ~~2020~~2021 and July 31, ~~2019,~~2020, there were no securities in a continuous unrealized loss position for 12 months or longer.

Note 6—7—Equity Investments

Equity investments consist of the following:

Schedule of Equity Investments

	April 30, 2020		July 31, 2019		April 30, 2021		July 31, 2020
	(in thousands)				(in thousands)
Zedge, Inc. Class B common stock, 42,282 shares at April 30, 2020 and July 31, 2019	$	47	$	68
Rafael Holdings, Inc. Class B common stock, 27,419 shares at April 30, 2020 and July 31, 2019		387		567
Mutual funds		5,282		5,053
Zedge, Inc. Class B common stock, 42,282 shares at April 30, 2021 and July 31, 2020					$	562	$	59
Rafael Holdings, Inc. Class B common stock, 28,320 and 27,806 shares at April 30, 2021 and July 31, 2020, respectively						1,171		389
Rafael Holdings, Inc. restricted Class B common stock, 261,894 and nil shares at April 30, 2021 and July 31, 2020, respectively						10,827		—
Other marketable equity securities						1,956		—
Fixed income mutual funds						23,070		5,516
Current equity investments	$	5,716	$	5,688	$	37,586	$	5,964

Visa Inc. Series C Convertible Participating Preferred Stock (“Visa Series C Preferred”)	$	3,633	$	3,619	$	2,343	$	3,825
Visa Inc. Series A Convertible Participating Preferred Stock (“Visa Series A Preferred”)						2,920		—
Series B convertible preferred stock in equity method investment						3,472		—
Hedge funds		4,711		5,475		3,462		4,783
Other		225		225		2,725		225
Noncurrent equity investments	$	8,569	$	9,319	$	14,922	$	8,833

On June 1, 2016, the Company completed a pro rata distribution of the common stock that the Company held in the Company’s subsidiary Zedge, Inc. (“Zedge”) to the Company’s stockholders of record as of the close of business on May 26, 2016. Howard S. Jonas is the Vice-Chairman of the Board of Directors of Zedge. The Company received the Zedge Class B common shares and the unrestricted Rafael Class B common shares set forth in the table above in connection with the lapsing of restrictions on Zedge and Rafael restricted stock held by certain of the Company’s employees and the Company’s payment of taxes related thereto.

On December 7, 2020, the Company purchased from Rafael 218,245 newly issued shares of Rafael’s Class B common stock and a warrant to purchase up to 43,649 shares of Rafael’s Class B common stock at an exercise price of $22.91 at any time on or after December 7, 2020 and on or prior to June 6, 2022. The aggregate purchase price of $5.0 million was allocated $4.6 million to the shares and $0.4 million to the warrant based on their relative purchase date fair values. The fair value of the warrant on the acquisition date was estimated using a Black-Scholes valuation model that represented a Level 3 measurement. The purchase price was based on a per share price of $22.91, which was the closing price of Rafael’s Class B common stock on the New York Stock Exchange on the trading day immediately preceding the purchase date. On March 15, 2021, the Company exercised the warrant in full and purchased 43,649 shares of Rafael’s Class B common stock for cash of $1.0million. At April 30, 2021, these 261,894shares of Rafael’s Class B common stock were not available for sale, assignment, or transfer. These restrictions will lapse in June 2021 for 218,245shares and September 2021 for 43,649shares.

In June 2016, upon the acquisition of Visa Europe Limited by Visa, Inc. (“Visa”), IDT Financial Services Limited received 1,830 shares of Visa Series C Preferred among other consideration. ~~Each~~At July 31, 2020, each share of Visa Series C Preferred iswas convertible into ~~13.884~~13.722 shares of Visa Class A common stock (the “Conversion Adjustment), subject to certain conditions, ~~starting in June 2020~~ and will be convertible at the holder’s option beginning in June 2028. On September 24, 2020, in connection with Visa’s first mandatory release assessment, the Company received 125 shares of Visa Series A Preferred and the Conversion Adjustment for Visa Series C Preferred was reduced to 6.861. The 125 shares of Visa Series A Preferred are convertible into 12,500 shares of Visa Class A common stock.

The changes in the carrying value of the Company’s equity investments without readily determinable fair values for which the Company elected the measurement alternative was as follows:

Schedule of Carrying Value of Equity Investments

											2021			2020			2021			2020
	Three Months Ended April 30,					Nine Months Ended April 30,					Three Months Ended April 30,						Nine Months Ended April 30,
	2020			2019		2020		2019			2021			2020			2021			2020
	(in thousands)										(in thousands)
Balance, beginning of period	$	4,345		$	3,045	$	3,919	$	1,883		$	2,223		$	4,345		$	4,109		$	3,919
Adoption of change in accounting for equity investments		—			—		—		1,213
Adjusted balance		4,345			3,045		3,919		3,096
Redemption for Visa mandatory release assessment												—			—			(1,870	)		—
Adjustment for observable transactions involving a similar investment from the same issuer		(412	)		599		14		550			404			(412	)		388			14
Redemptions		—			—		—		(2	)		(6	)		—			(6	)		—
Impairments		—			—		—		—			—			—			—			—
Balance, end of the period	$	3,933		$	3,644	$	3,933	$	3,644		$	2,621		$	3,933		$	2,621		$	3,933

~~The~~In the three months ended April 30, 2021 and the nine months ended April 30, 2021 and 2020, the Company ~~decreased~~increased the carrying value of the ~~1,830~~ shares of Visa Series C Preferred it held by ~~$0.4~~ $0.4 million, $0.4 million, and $14,000, respectively, and in the three months ended April 30, 2020, ~~and increased~~the Company decreased the carrying value of the shares of Visa Series C Preferred it held by ~~$0.6~~ $0.4 million, ~~in the three months ended April 30, 2019, and by $14,000 and $0.6 million in the nine months ended April 30, 2020 and 2019, respectively,~~ based on the fair value of Visa Class A common stock and a discount for lack of current marketability.

Unrealized gains and losses for all equity investments included the following:

Schedule of Unrealized (losses) Gains for All Equity Investments

Three Months Ended
April 30, Nine Months Ended
April 30,
2020 2019 2020 2019
(in thousands)
Net (losses) gains recognized during the period on equity investments $ (1,226 ) $ 623 $ (817 ) $ 704
Less: net gains and losses recognized during the period on equity investments redeemed during the period — — — —
Unrealized (losses) gains recognized during the period on equity investments still held at the reporting date $ (1,226 ) $ 623 $ (817 ) $ 704

	2021		2020			2021		2020
	Three Months Ended April 30,					Nine Months Ended April 30,
	2021		2020			2021		2020
	(in thousands)
Net gains (losses) recognized during the period on equity investments	$	5,435	$	(1,226	)	$	5,822	$	(817	)
Less: net gains and losses recognized during the period on equity investments sold during the period		—		—			—		—
Unrealized gains (losses) recognized during the period on equity investments still held at the reporting date	$	5,435	$	(1,226	)	$	5,822	$	(817	)

Equity Method Investment

On February 2, 2021, the Company paid $4.0 million to purchase shares of series B convertible preferred stock of a communications company (the equity method investee, or “EMI”). The shares purchased represent 23.95% of the outstanding shares of the EMI on an as converted basis. The Company accounts for this investment using the equity method since the series B convertible preferred stock is in-substance common stock, and the Company can exercise significant influence over the operating and financial policies of the EMI.

The following table summarizes the change in the balance of the Company’s equity method investment:

Summary of Changes in Equity Method Investments

	Nine Months Ended April 30,
	2021			2020
	(in thousands)
Balance, beginning of period	$	—		$	—
Purchase of series B convertible preferred stock		4,000			—
Equity in the net loss of investee		(386	)		—
Amortization of equity method basis difference		(142	)		—

Balance, end of period	$	3,472		$	—

The Company determined that on the date of the acquisition, there was a difference of $2.7 million between its investment in the EMI and its proportional interest in the equity of the EMI, which represented the Company’s share of the EMI’s customer list on the date of acquisition. This basis difference is being amortized over the 6-year estimated life of the customer list. In the accompanying consolidated statements of operations, amortization of equity method basis difference is included in the equity in the net loss of investee, which is recorded in “Other income (expense), net” (see Note 7—15).

Summarized unaudited statements of operations of the EMI from the date of acquisition was as follows:

Summary of Unaudited Statements of Operations

	Three Months Ended April 30,
	2021			2020
	(in thousands)
Revenues	$	718		$	—
Costs and expenses:
Direct cost of revenues		804			—
Selling, general and administrative		1,525			—
Total costs and expenses		2,329			—
Loss from operations and net loss	$	(1,611	)	$	—

Note 8—Fair Value Measurements

The following ~~tables present~~table presents the balance of assets and liabilities measured at fair value on a recurring basis:

Level 1 (1) Level 2 (2) Level 3 (3) Total
(in thousands)
April 30, 2020
Debt securities $ — $ 12,948 $ — $ 12,948
Equity investments included in current assets 5,716 — — 5,716
Equity investments included in noncurrent assets — — 3,633 3,633
Total $ 5,716 $ 12,948 $ 3,633 $ 22,297

Contingent consideration included in other noncurrent liabilities (see Note 8) $ — $ — $ 365 $ 365

July 31, 2019
Debt securities $ — $ 2,534 $ — $ 2,534
Equity investments included in current assets 5,688 — — 5,688
Equity investments included in noncurrent assets — — 3,619 3,619
Total $ 5,688 $ 2,534 $ 3,619 $ 11,841

Schedule of Balance of Assets Measured at Fair Value on a Recurring Basis

~~(1) – quoted prices in active markets for identical assets or liabilities~~

	Level 1 (1)		Level 2 (2)		Level 3 (3)			Total
	(in thousands)
April 30, 2021
Debt securities	$	1,644	$	15,208	$	—		$	16,852
Equity investments included in current assets		26,759		10,827		—			37,586
Equity investments included in noncurrent assets		—		2,920		2,343			5,263

Total	$	28,403	$	28,955	$	2,343		$	59,701

Contingent consideration included in other noncurrent liabilities	$	—	$	—	$	(795	)	$	(795	)

July 31, 2020
Debt securities	$	2,498	$	15,865	$	—		$	18,363
Equity investments included in current assets		5,964		—		—			5,964
Equity investments included in noncurrent assets		—		—		3,825			3,825

Total	$	8,462	$	15,865	$	3,825		$	28,152

Contingent consideration included in other noncurrent liabilities	$	—	$	—	$	(396	)	$	(396	)

~~(2) – observable inputs other than quoted prices in active markets for identical assets and liabilities~~

~~(3) – no observable pricing inputs in the market~~

~~At July 31, 2019, the Company did not have any liabilities measured at fair value on a recurring basis.~~

(1)	–	quoted prices in active markets for identical assets or liabilities
(2)	–	observable inputs other than quoted prices in active markets for identical assets and liabilities
(3)	–	no observable pricing inputs in the market

At April 30, ~~2020~~2021 and July 31, ~~2019,~~2020, the Company had ~~$4.7~~$3.5 million and ~~$5.5~~$4.8 million, respectively, in investments in hedge funds, which were included in noncurrent “Equity investments” in the accompanying consolidated balance sheets. The Company’s investments in hedge funds were accounted for using the equity method, therefore they were not measured at fair value.

The following table summarizes the change in the balance of the Company’s assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3).:

Schedule of Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

	Three Months Ended April 30,					Nine Months Ended April 30,				Three Months Ended April 30,						Nine Months Ended April 30,
	2020			2019		2020		2019		2021			2020			2021			2020
	(in thousands)									(in thousands)
Balance, beginning of period	$	4,045		$	2,745	$	3,619	$	—	$	2,319		$	4,045		$	3,825		$	3,619
Transfer into Level 3 from adoption of change in accounting for equity investments		—			—		—		2,794
Total (losses) gains recognized in “Other (expense) income, net”		(412	)		599		14		550
Purchase of Rafael Holdings, Inc. warrant											—			—			354			—
Exercise of Rafael Holdings, Inc. warrant											(380	)		—			(380	)		—
Redemption for Visa mandatory release assessment											—			—			(1,870	)		—
Total gains (losses) recognized in “Other income (expense), net”											404			(412	)		414			14

Balance, end of period	$	3,633		$	3,344	$	3,633	$	3,344	$	2,343		$	3,633		$	2,343		$	3,633

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the period	$	(412	)	$	599	$	14	$	550	$	—		$	—		$	—		$	—

The following table summarizes the change in the balance of the Company’s liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3)~~. There were no liabilities measured~~:

Schedule of Liabilities Measured at ~~fair value~~Fair Value on a ~~recurring basis using significant unobservable inputs~~Recurring Basis Using Significant Unobservable Inputs (Level 3) ~~in the three and nine months ended April 30, 2019.~~

	Three Months Ended April 30,						Nine Months Ended April 30,
	2021			2020			2021		2020
	(in thousands)
Balance, beginning of period	$	799		$	370		$	396	$	—
Transfer into Level 3 from acquisitions (see Note 9)		—			—			393		375
Total (gains) losses included in “Foreign currency translation adjustment”		(4	)		(5	)		6		(10	)
Balance, end of period	$	795		$	365		$	795	$	365
Change in unrealized gains or losses for the period included in earnings for liabilities held at the end of the period	$	—		$	—		$	—	$	—

Three Months Ended
April 30,
Nine Months Ended
April 30,

2020

2019

2020

2019

(in thousands)
Balance, beginning of period $ 370 $ — $ — $ —
Transfer into Level 3 from acquisition (see Note 8) — — 375 —
Total losses recognized in “Foreign currency translation adjustments” (5 ) — (10 ) —

Balance, end of period $ 365 $ — $ 365 $ —

Change in unrealized gains or losses for the period included in earnings for liabilities held at the end of the period $ — $ — $ — $ —

Fair Value of Other Financial Instruments

The estimated fair value of the Company’s other financial instruments was determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting these data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

Cash and cash equivalents, restricted cash and cash equivalents, other current assets, customer deposits, and other current liabilities.At April 30, ~~2020~~2021 and July 31, ~~2019,~~2020, the carrying amount of these assets and liabilities approximated fair value because of the short period of time to maturity. The fair value estimates for cash, cash equivalents, and restricted cash and cash equivalents were classified as Level 1 and other current assets, customer deposits, and other current liabilities were classified as Level 2 of the fair value hierarchy.

Other assets and other liabilities.At April 30, ~~2020~~2021 and July 31, ~~2019,~~2020, the carrying amount of these assets and liabilities approximated fair value. The fair values were estimated based on the Company’s assumptions, which were classified as Level 3 of the fair value hierarchy.

Note 8—9—Acquisitions

~~Ringsouth Europa, S.L.~~

On December ~~11, 2019,~~3, 2020, the Company’s subsidiary ~~net2phone,~~IDT International Telecom, Inc. (“IDTIT”) acquired ~~100%~~51% of the ~~outstanding~~issued shares of ~~Ringsouth Europa, S.L. (“Ringsouth”),~~ a ~~business communications provider headquartered in Murcia, Spain.~~company that provides a digital distribution platform facilitating supply and distribution of mobile airtime and data top-ups and other services across borders via a single point application programming interface. The ~~acquisition expands net2phone’s business into Spain. Ringsouth’s~~ operating results of the acquired company from the date of acquisition, which were not significant, are included in the Company’s consolidated financial statements.

The acquisition date fair value of the consideration consisted of the following (in thousands):

Schedule of Acquisition Date Fair Value of Consideration

				December 03 2020
Cash paid	$	450	$	2,732
Cash acquired				(344	)
Cash paid, net of cash acquired				2,388
Contingent consideration		375		393
Total fair value of consideration	$	825
Total fair value of consideration, net of cash acquired			$	2,781

The contingent consideration ~~includes two potential payments to~~of $0.5 million will be paid (a) no later than November 30, 2021 if the ~~seller~~acquired company generates EBITDA (as defined in the purchase agreement) of ~~$0.4~~no less than $1.0 million ~~each, based on monthly recurring revenue targets to be achieved over a 36-month period~~between October 1, 2020 and ~~48-month period.~~ September 30, 2021; or (b) no later than November 30, 2022 if the acquired company generates EBITDA of no less than $1.0 million between October 1, 2021 and September 30, 2022.The ~~second potential payment is not contingent upon meeting the target for the first payment. The~~acquisition-date fair value of the contingent consideration was estimated using discounted cash flow ~~models and Monte Carlo simulations.~~models. This fair value measurement was based on significant inputs not observable in the market and therefore represents a Level 3 measurement. There was no change in the estimated fair value of the contingent consideration in the period from the acquisition date to April 30, ~~2020, although the balance changed due to foreign currency translation adjustments.~~2021.

The impact of the acquisition’s ~~preliminary~~ purchase price allocations on the Company’s consolidated balance sheet was as follows (in thousands):

Schedule of Impact of Acquisition's Purchase Price Allocations on Consolidated Balance Sheet

		April 30, 2020
Trade accounts receivable	$	656
Prepaid expenses		1,644
Property, plant and equipment		75
Goodwill		2,025
Customer relationships (15-year useful lives)		1,960
Tradenames (20-year useful lives)		440
Deferred income tax assets		197
Other assets		30
Trade accounts payable		(1,306	)
Accrued expenses		(423	)
Other current liabilities		(329	)
Noncontrolling interests		(2,188	)
Net assets excluding cash acquired	$	2,781

Pursuant to a Put/Call Option Agreement related to the 5% of the issued shares of the acquired company that the seller did not initially sell to IDTIT (“Option Shares”), the seller exercised its option and on March 22, 2021, IDTIT purchased the Option Shares for $0.3 million. The purchase of the Option Shares resulted in a $0.2 million reduction in “Noncontrolling interests” and a $21,000 reduction in “Additional paid-in capital” in the consolidated balance sheets.

Trade accounts receivable $ 142
Other current assets 21
Property, plant and equipment 84
Goodwill 1,437
Non-compete agreement (4-year useful life) 50
Customer relationships (7-year useful life) 130
Tradename (2-year useful life) 30
Deferred income tax assets 118
Other assets 10
Trade accounts payable (302 )
Accrued expenses (136 )
Other current liabilities (408 )
Other liabilities (351 )
Net assets acquired $ 825

The goodwill was assigned to the ~~net2phone~~Traditional Communications segment and was attributable primarily to ~~Ringsouth’s~~the assembled ~~workforce~~workforces and the expected synergies from the business combination. The goodwill is not expected to be deductible for income tax purposes.

The Company’s pro forma results of operations as if the acquisition occurred on August 1, 2019 were not materially different from the actual results of operations.

Ringsouth Europa, S.L.

On December 11, 2019, the Company’s subsidiary, net2phone, Inc. acquired 100% of the outstanding shares of Ringsouth Europa, S.L. (“Ringsouth”), a regional provider of cloud communications services to businesses in Spain. The acquisition date fair value of the consideration consisted of the following (in thousands):

Schedule of Acquisition Date Fair Value of Consideration

		December 11, 2019
Cash paid	$	450
Contingent consideration		375
Total fair value of consideration	$	825

Ringsouth’s operating results from the date of acquisition, which were not significant, were included in the Company’s consolidated financial statements. The Company’s pro forma results of operations as if the Ringsouth acquisition occurred on August 1, ~~2018~~2019 were not materially different from the actual results of operations.

~~Versature Corp.~~

On September 14, 2018, the Company acquired 100% of the outstanding shares of Versature Corp., a UCaaS provider serving the Canadian market, for cash of $5.9 million. Versature’s operating results from the date of acquisition, which were not significant, are included in the Company’s consolidated financial statements.

~~The Company’s pro forma results of operations as if the Versature acquisition occurred on August 1, 2018 were not materially different from the actual results of operations.~~

Note 9—10—Other Operating ~~Expense,~~Gain (Expense), Net

The following table summarizes the other operating ~~expense,~~gain (expense), net by business segment:

Schedule of Other Operating Gain (Expense), Net

Three Months Ended
April 30, Nine Months Ended
April 30,
2020 2019 2020 2019
(in thousands)
Corporate—Straight Path Communications Inc. class action legal fees net of insurance proceeds $ 152 $ (120 ) $ (269 ) $ (645 )
net2phone—indemnification claim (386 ) — (920 ) —
net2phone—other, net — — (63 ) 25
Telecom & Payment Services—accrual for non-income related taxes related to a foreign subsidiary — (2,300 ) (2,150 ) (5,400 )
Telecom & Payment Services—gain on sale of calling card business in Asia — — — 215
Total other operating expense, net $ (234 ) $ (2,420 ) $ (3,402 ) $ (5,805 )

	Three Months Ended April 30,						Nine Months Ended April 30,
	2021			2020			2021			2020
	(in thousands)
Corporate—Straight Path Communications Inc. class action insurance claims net of legal fees/(legal fees net of insurance claims)	$	605		$	152		$	601		$	(269	)
net2phone-UCaaS—other, net		—			—			(100	)		(63	)
Fintech—money transfer settlement		45			—			45			—
Traditional Communications—gain from sale of rights under class action lawsuit		—			—			2,000			—
Traditional Communications—net2phone indemnification claim		(55	)		(386	)		(442	)		(920	)
Traditional Communications—Carrier Services settlement		—			—			(554	)		—
Traditional Communications—accrual for non-income related taxes related to a foreign subsidiary		—			—			—			(2,150	)
Total other operating gain (expense), net	$	595		$	(234	)	$	1,550		$	(3,402	)

Straight Path Communications Inc. Class Action

On July 31, 2013, the Company completed a pro rata distribution of the common stock of the Company’s subsidiary Straight Path Communications Inc. (“Straight Path”) to the Company’s stockholders of record as of the close of business on July 25, 2013. As discussed in Note ~~15,~~14, there is a pending putative class action on behalf of Straight Path’s stockholders and derivative complaint ~~was filed~~ naming the Company, among others. The Company incurred legal fees of ~~$1.2~~ $0.3 million and ~~$0.1~~ $1.2 million in the three months ended April 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$2.5~~ $2.0 million and ~~$0.6~~ $2.5 million in the nine months ended April 30, ~~2020~~2021 and ~~2019,~~2020, respectively, related to this action. Also, the Company recorded offsetting gains from insurance claims for this matter of $0.9 million and $1.4 million in the three months ended April 30, 2021 and 2020, respectively, and $2.6 million and $2.2 million in the nine months ended April 30, 2021 and 2020, respectively.

Gain from Sale of Rights under Class Action Lawsuit

On December 21, 2020, the Company ~~recorded~~received $2.0 million from the sale to a ~~gain from insurance proceeds for this matter~~third party of ~~$1.4 million~~all its rights under the Payment Card Interchange Fee and ~~$2.2 million, respectively.~~Merchant Discount Antitrust Litigation. The lawsuit is about claims that merchants paid excessive fees to accept Visa and Mastercard cards between January 1, 2004 and January 25, 2019 because Visa and Mastercard, individually, and together with their respective member banks, violated the antitrust laws.

Indemnification Claim

In June 2019, as part of a commercial resolution, the Company indemnified a net2phone cable telephony customer related to patent infringement claims brought against the customer.

Accrual for Non-Income Related Taxes

In the ~~fourth quarter of fiscal 2019,~~nine months ended April 30, 2020, the Company recorded an ~~$8.0 million~~ accrual for non-income related taxes related to one of its foreign subsidiaries. A portion of the accrual related to each of the fiscal quarters in fiscal 2019. Accordingly, the Company corrected its consolidated financial statements for the three months ended October 31, 2018, January 31, 2019, and April 30, 2019 to include the accrued expense and the related income tax benefit. The Company has determined that the adjustments were not material to its previously issued quarterly financial statements. The impact of the correction on the Company’s previously issued consolidated financial statements for the three and nine months ended April 30, 2019 was as follows:

Three Months Ended April 30, 2019
Previously Reported Error Correction As Adjusted
(in thousands, except per share data)

Consolidated Statement of Operations:
Other operating expense, net $ (120 ) $ (2,300 ) $ (2,420 )
Benefit from income taxes $ 871 $ 600 $ 1,471
Net income $ 4,157 $ (1,700 ) $ 2,457
Net income attributable to IDT Corporation $ 3,870 $ (1,700 ) $ 2,170
Earnings per share attributable to IDT Corporation common stockholders:
Basic $ 0.15 $ (0.07 ) $ 0.08
Diluted $ 0.15 $ (0.07 ) $ 0.08

Nine Months Ended April 30, 2019

Previously Reported

Error Correction

As Adjusted

(in thousands, except per share data)

Consolidated Statement of Operations:
Other operating expense, net $ (405 ) $ (5,400 ) $ (5,805 )
Provision for income taxes $ (2,054 ) $ 1,350 $ (704 )
Net income (loss) $ 3,498 $ (4,050 ) $ (552 )
Net income (loss) attributable to IDT Corporation $ 2,610 $ (4,050 ) $ (1,440 )
Earnings (loss) per share attributable to IDT Corporation common stockholders:
Basic $ 0.10 $ (0.16 ) $ (0.06 )
Diluted $ 0.10 $ (0.16 ) $ (0.06 )

Note ~~10—~~11—Equity

Stock Repurchases

The Company has an existing stock repurchase program authorized by its Board of Directors for the repurchase of shares of the Company’s Class B common stock. The Board of Directors authorized the repurchase of up to 8.0 million shares in the aggregate. In the nine months ended April 30, ~~2020,~~2021, the Company repurchased ~~40,763~~ 463,792 shares of Class B common stock for an aggregate purchase price of ~~$0.2~~$2.8 million. In the nine months ended April 30, ~~2019,~~2020, the Company repurchased ~~729,110~~40,763 shares of Class B common stock for an aggregate purchase price of ~~$3.9~~$0.2 million. At April 30, ~~2020, 6.9~~2021, 5.8 million shares remained available for repurchase under the stock repurchase program.

In the nine months ended April 30, ~~2020~~2021 and ~~2019,~~2020, the Company paid ~~$0.3~~$1.3 million and ~~$28,000,~~$0.3 million, respectively, to repurchase ~~37,348~~109,381 and ~~3,748~~37,348 shares, respectively, of the Company’s Class B common stock that were tendered by employees of the Company to satisfy the employees’ tax withholding obligations in connection with the lapsing of restrictions on awards of deferred stock units (“DSUs”) and restricted stock. Such shares were repurchased by the Company based on their fair market value on the trading day immediately prior to the vesting date.

Deferred Stock Units Equity Incentive Program

The Company has an existing equity incentive program in the form of DSUs that, upon vesting, will entitle the grantees to receive shares of the Company’s Class B common stock. On January ~~6, 2020,~~5, 2021, the ~~first~~second vesting date under the program, in accordance with the program and based on ~~certain~~ elections made by certain grantees, the Company issued ~~100,284~~283,838 shares of its Class B common stock ~~for~~in respect of vested DSUs. Based on those elections, vesting for ~~38,024~~19,919 DSUs was delayed until January 5, ~~2021.~~2022. At April 30, ~~2020,~~2021, there were ~~314,516~~154,169 unvested DSUs ~~outstanding.~~outstanding, all of which are eligible to vest (if the conditions therefor are satisfied) on January 5, 2022.

2015 Stock Option and Incentive Plan

In the nine months ended April 30, 2021 and 2020, the Company received proceeds from the exercise of stock options of ~~$0.3~~$0.7 million and $0.3 million, respectively, for which the Company issued 81,041 and 32,551 shares, respectively, of its Class B common stock. ~~There were no stock option exercises~~

Grant of Restricted Equity in ~~the nine months ended April 30, 2019.~~net2phone 2.0, Inc.

On December ~~12, 2019,~~31, 2020, the previously approved compensatory arrangement with each of Howard S. Jonas and Shmuel Jonas, the Company’s ~~stockholders approved an amendment to the Company’s 2015 Stock Option~~Chief Executive Officer, was finalized. Howard S. Jonas and ~~Incentive Plan to increase the number~~Shmuel Jonas each received fifty restricted shares of ~~shares of the Company’s~~net2phone 2.0, Inc. (“net2phone 2.0”) Class B common stock, ~~available~~which represents 5% of the outstanding common stock of net2phone 2.0. net2phone 2.0 is a new entity that owns and operates the net2phone-UCaaS segment. The restricted shares will vest if: (a) for any fiscal quarter of net2phone 2.0 between November 1, 2020 and October 31, 2023, net2phone 2.0 records subscription revenue that is at least $18 million, and (b) as of October 31, 2023, the valuation of net2phone 2.0 is $100 million or more. The restricted shares will also vest in the event, prior to October 31, 2023, net2phone 2.0 or its assets are sold at an equity valuation and on a cash-free basis of $100 million or more, regardless of whether the revenue threshold was satisfied prior thereto. The restricted shares entitle each grantee to proceeds only on a sale, spin-off, initial public offering, or other monetization of net2phone 2.0 and have protection from dilution for the first $15 million invested in the net2phone 2.0 following the grant. The aggregate estimated fair value on the grant ~~of awards thereunder by an additional 0.4~~date was $0.2 million, ~~shares. At April 30, 2020,~~which will be recognized over the ~~Company had 0.6 million shares available for future grants under its 2015 Stock Option and Incentive Plan.~~vesting period.

~~Fiscal 2019 Sale of Class B Common Stock to Howard S. Jonas~~401(k) Plan Matching Contribution – Subsequent Event

On ~~December 21, 2018,~~May 27, 2021, the Company ~~sold 2,546,689~~contributed 35,839 newly issued shares of its Class B common stock ~~that were held in treasury to Howard S. Jonas, the Chairman of the Board of the Company, for aggregate consideration of $14.8 million. The price per share of $5.89 was equal~~ to the ~~closing price of the~~ Company’s Class B common stock on April 16, 2018, the last closing price before approval of the sale by the Company’s Board of Directors and its Corporate Governance Committee. On May 31, 2018, Mr. Jonas paid $1.5401(k) Plan for $1.0 million of the purchase price, and he paid the balance of the purchase price on December 21, 2018 after approval of the sale by the Company’s stockholders at the 2018 annual meeting of stockholders. The purchase price was reduced by approximately $0.2 million, which was the amount of dividends paid on 2,546,689 shares of the Company’s Class B common stock whose record date was between April 16, 2018 and the issuance of the shares.matching contributions.

Note ~~11—~~12—Earnings (Loss) Per Share

Basic earnings per share is computed by dividing net income attributable to all classes of common stockholders of the Company by the weighted average number of shares of all classes of common stock outstanding during the applicable period. Diluted earnings per share is computed in the same manner as basic earnings per share, except that the number of shares is increased to include restricted stock still subject to risk of forfeiture and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase is anti-dilutive.

The weighted-average number of shares used in the calculation of basic and diluted earnings (loss) per share attributable to the Company’s common stockholders consists of the following:

Schedule of Weighted-average Number of Shares Used in Calculation of Basic and Diluted Earnings (Loss) Per Share

	Three Months Ended April 30,				Nine Months Ended April 30,				Three Months Ended April 30,				Nine Months Ended April 30,
	2020		2019		2020		2019		2021		2020		2021		2020
	(in thousands)								(in thousands)
Basic weighted-average number of shares		26,371		26,263		26,323		24,970		25,530		26,371		25,475		26,323
Effect of dilutive securities:
Stock options		—		—		—		—		295		—		101		—
Non-vested restricted Class B common stock		135		—		—		—		311		135		327		—
Diluted weighted-average number of shares		26,506		26,263		26,323		24,970		26,136		26,506		25,903		26,323

The following shares were excluded from the calculation of diluted ~~loss~~earnings (loss) per share:

Schedule of Shares Excluded from the Diluted Earnings (Loss) Per Share

	Three Months Ended April 30,				Nine Months Ended April 30,
	2021		2020		2021		2020
	(in thousands)
Stock options		—		1,126		713		1,126
Non-vested restricted Class B common stock		—		—		—		520
Shares excluded from the calculation of diluted earnings per share		—		1,126		713		1,646

There were no shares excluded from the calculation of diluted earnings per share ~~computations:~~

Three Months Ended
April 30, Nine Months Ended
April 30,
2020 2019 2020 2019
(in thousands)
Stock options 1,126 1,223 1,126 1,223
Non-vested restricted Class B common stock — — 520 16
Shares excluded from the calculation of diluted earnings per share 1,126 1,223 1,646 1,239

Inin the three months ended April 30, ~~2020~~2021. In the nine months ended April 30, 2021 and ~~2019,~~in the three months ended April 30, 2020, stock options with an exercise price that was greater than the average market price of the Company’s stock during the period were excluded from the diluted earnings per share computation. The diluted loss per share equals basic loss per share in the nine months ended April 30, 2020 ~~and 2019~~ because the Company had a net loss and the impact of the assumed exercise of stock options and the vesting of restricted stock would have been anti-dilutive.

~~Note 12—Note Payable and Revolving Credit Loan Payable~~

~~Note Payable~~

On April 20, 2020, IDT Domestic Telecom, Inc. (“IDT DT”), a subsidiary of the Company, received loan proceeds of $10.0 million (the “PPP Loan”) from TD Bank, N.A, pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration. On April 29, 2020, IDT DT returned all $10.0 million in proceeds from the PPP Loan. In light of the oversubscription of applications for loans under the PPP, and despite IDT DT’s need for the funds to support its operations, IDT DT returned the loan proceeds in order to make those funds available to other borrowers that may be in greater need than IDT DT.

~~Revolving Credit Loan Payable~~

As of October 31, 2019, the Company’s subsidiary, IDT Telecom, Inc., entered into a credit agreement with TD Bank, N.A. for a line of credit facility for up to a maximum principal amount of $25.0 million. IDT Telecom may use the proceeds to finance working capital requirements, acquisitions and other general corporate purposes. The line of credit facility is secured by primarily all of IDT Telecom’s assets. The principal outstanding bears interest per annum at the LIBOR rate adjusted by the Regulation D maximum reserve requirement plus 125 basis points. Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest is due on the maturity date of July 15, 2020. At April 30, 2020, there was no amount outstanding under the facility. IDT Telecom pays a quarterly unused commitment fee of 0.3% per annum on the average daily balance of the unused portion of the $25.0 million commitment. IDT Telecom is required to comply with various affirmative and negative covenants as well as maintain certain financial targets and ratios during the term of the facility, including IDT Telecom may not pay any dividend on its capital stock.

Note 13—Accumulated Other Comprehensive Loss

The accumulated balances for each classification of other comprehensive ~~loss~~(loss) income were as follows:

Schedule of Accumulated Balances for Each Classification of Other Comprehensive (Loss) Income

Unrealized
Gain (Loss) on
Available-for-
Sale Securities Foreign
Currency
Translation Accumulated
Other
Comprehensive
Loss
(in thousands)
Balance, July 31, 2019 $ — $ (4,858 ) $ (4,858 )
Other comprehensive income (loss) attributable to IDT Corporation 84 (2,364 ) (2,280 )
Balance, April 30, 2020 $ 84 $ (7,222 ) $ (7,138 )

	Unrealized Gain (Loss) on Available-for-Sale Securities			Foreign Currency Translation			Accumulated Other Comprehensive Loss
	(in thousands)
Balance, July 31, 2020	$	42		$	(7,452	)	$	(7,410	)
Other comprehensive loss attributable to IDT Corporation		(163	)		(817	)		(980	)
Balance, April 30, 2021	$	(121	)	$	(8,269	)	$	(8,390	)

Note 14—~~Business Segment Information~~

The Company has two reportable business segments, Telecom & Payment Services and net2phone. The Company’s reportable segments are distinguished by types of service, customers and methods used to provide their services. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker. The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its business segments based primarily on income (loss) from operations.

The Telecom & Payment Services segment provides retail telecommunications and payment offerings as well as wholesale international long-distance traffic termination. The net2phone segment provides unified cloud communications and telephony services to business customers. Depreciation and amortization are allocated to Telecom & Payment Services and net2phone because the related assets are not tracked separately by segment. There are no other significant asymmetrical allocations to segments.

Corporate costs include compensation, consulting fees, treasury and accounts payable, tax and accounting services, human resources and payroll, corporate purchasing, corporate governance including Board of Directors’ fees, internal and external audit, investor relations, corporate insurance, corporate legal, business development, charitable contributions, travel, and other corporate-related general and administrative expenses. Corporate does not generate any revenues, nor does it incur any direct cost of revenues.

~~Operating results for the business segments of the Company are as follows:~~

(in thousands) Telecom
& Payment
Services net2phone Corporate Total
Three Months Ended April 30, 2020
Revenues $ 308,790 $ 12,546 $ — $ 321,336
Income (loss) from operations 9,934 (3,932 ) (2,210 ) 3,792
Other operating expense, net — (386 ) 152 (234 )

Three Months Ended April 30, 2019
Revenues $ 328,838 $ 12,417 $ — $ 341,255
Income (loss) from operations 4,245 (1,266 ) (2,530 ) 449
Other operating expense, net (2,300 ) — (120 ) (2,420 )

Nine Months Ended April 30, 2020
Revenues $ 947,342 $ 38,083 $ — $ 985,425
Income (loss) from operations 21,441 (10,512 ) (7,207 ) 3,722
Other operating expense, net (2,150 ) (983 ) (269 ) (3,402 )

Nine Months Ended April 30, 2019
Revenues $ 1,018,637 $ 34,407 $ — $ 1,053,044
Income (loss) from operations 12,605 (4,663 ) (7,768 ) 174
Other operating expense, net (5,185 ) 25 (645 ) (5,805 )

~~Note 15—~~Commitments and Contingencies

Coronavirus Disease (COVID-19)

~~During the first~~The Company continues to monitor and ~~second quarters of calendar 2020, the world experienced the unprecedented impacts of the coronavirus disease 2019 (COVID-19) pandemic. There are many uncertainties regarding~~respond to the impacts of the COVID-19 pandemic ~~and the Company is monitoring those impacts~~ on all aspects of its business, including ~~how it will impact~~ its customers, employees, suppliers, vendors, and business partners.

Operationally, the Company’s employees transitioned to work-from-home during the third quarter of fiscal ~~quarter. In particular, the Company’s~~2020 and, to a large degree, continue to work-from-home. Its salespeople and delivery employees ~~continued~~continue to serve ~~the Company’s~~its independent retailers and channel partners with minimal interruption.

COVID-19 had a mixed financial ~~impact~~impacts on the Company during the three months ended April 30, 2020. The COVID-19 pandemic drove significant increases in demand for the Company’s consumer offerings through digital channels. Conversely, sales originating through retailers and channel partners slowed in March and April before beginning to rebound in May. COVID-19 related demand helped to boost Mobile Top-Up and BOSS Revolution Money Transfer revenues and slowed the rate of decline in BOSS Revolution Calling revenues. net2phone-UCaaS’ customer base growth slowed in the ~~second half~~third quarter of fiscal 2020 and continuing through the ~~Company’s~~ third quarter of fiscal ~~quarter as sales became increasingly difficult as the pandemic spread in key markets. Carrier Services’ revenue was impacted by the closure of corporate offices and the decline of commerce globally.~~2021.

As of the date of this filing, management believes that the Company continues to have sufficient liquidity and capital resources for the foreseeable future. Looking ahead, current economic conditions, if enduring, will create additional hardship for many of the Company’s customers. Over the longer term, sustained levels of high unemployment along with declining economic activity and less favorable foreign exchange market conditions could materially and adversely impact the Company by dampening demand for both its consumer and business-to-business offerings. The situation remains fluid and the Company cannot predict with certainty the potential impact of COVID-19 on its business, results of operations, financial condition and cash flows.

Legal Proceedings

On April 12, 2019, Scarleth Samara filed a putative class action against IDT Telecom in the U.S. District Court for the Eastern District of Louisiana alleging certain violations of the Telephone Consumer Protection Act of 1991. Plaintiff alleges that in October of 2017, IDT Telecom sent unauthorized marketing messages to her cellphone. IDT Telecom filed a motion to compel arbitration. On or about August 19, 2019, the plaintiff agreed to dismiss the pending court action and the parties intend to proceed with arbitration. At this stage, the Company is unable to estimate its potential liability, if any. The Company intends to vigorously defend the claim.

On January 22, 2019, Jose Rosales filed a putative class action against IDT America, IDT Domestic Telecom and IDT International in California state court alleging certain violations of employment law. Plaintiff alleges that these companies failed to compensate members of the putative class in accordance with California law. ~~The Company is evaluating the claims, and at this stage, is unable to estimate its potential liability, if any. The Company intends to vigorously defend the claims.~~ In August 2019, the Company filed a cross complaint against Rosales alleging trade secret and other violations. The parties are now seeking court approval of a settlement agreement.

On May 2, 2018, Jean Carlos Sanchez filed a putative class action against IDT Telecom in the U.S. District Court for the Northern District of Illinois alleging that the Company sent unauthorized marketing messages to cellphones in violation of the Telephone Consumer Protection Act of 1991. On July 26, 2018, the parties filed a stipulation of dismissal. The Company is evaluating the claim, and at this stage, is unable to estimate its potential liability, if any. The Company intends to vigorously defend this matter.

On April 24, 2018, Sprint Communications Company L.P. filed a patent infringement claim against the Company and certain of its affiliates in the U.S. District Court for the District of Delaware alleging infringement of U.S. Patent Nos. 6,298,064; 6,330,224; 6,343,084; 6,452,932; 6,463,052; 6,473,429; 6,563,918; 6,633,561; 6,697,340; 6,999,463; 7,286,561; 7,324,534; 7,327,728; 7,505,454; and 7,693,131. Plaintiff was seeking damages and injunctive relief. On June 28, 2018, Sprint dismissed the complaint without prejudice. The Company is evaluating the underlying claim, and at this stage, is unable to estimate its potential liability, if any. The Company intends to vigorously defend any claim of infringement of the listed patents.

On July 5, 2017, plaintiff JDS1, LLC, on behalf of itself and all other similarly situated stockholders of Straight Path, and derivatively on behalf of Straight Path as nominal defendant, filed a putative class action and derivative complaint in the Court of Chancery of the State of Delaware against the Company, The Patrick Henry Trust (a trust formed by Howard S. Jonas that held record and beneficial ownership of certain shares of Straight Path he formerly held), Howard S. Jonas, and each of Straight Path’s directors. The complaint alleges that the Company aided and abetted Straight Path Chairman of the Board and Chief Executive Officer Davidi Jonas, and Howard S. Jonas in his capacity as controlling stockholder of Straight Path, in breaching their fiduciary duties to Straight Path in connection with the settlement of claims between Straight Path and the Company related to potential indemnification claims concerning Straight Path’s obligations under the Consent Decree it entered into with the Federal Communications Commission (“FCC”), as well as the sale of Straight Path’s subsidiary Straight Path IP Group, Inc. to the Company in connection with that settlement. That action was consolidated with a similar action that was initiated by The Arbitrage Fund. The Plaintiffs are seeking, among other things, (i) a declaration that the action may be maintained as a class action or in the alternative, that demand on the Straight Path Board is excused; (ii) that the term sheet is invalid; (iii) awarding damages for the unfair price stockholders received in the merger between Straight Path and Verizon Communications Inc. for their shares of Straight Path’s Class B common stock; and (iv) ordering Howard S. Jonas, Davidi Jonas, and the Company to disgorge any profits for the benefit of the class Plaintiffs. On August 28, 2017, the Plaintiffs filed an amended complaint. On September 24, 2017, the Company filed a motion to dismiss the amended ~~complaint. Following closing of the transaction, the Delaware Chancery Court~~complaint, which was ultimately denied, ~~the motion to dismiss. On February 22, 2019,~~and which denial was affirmed by the Delaware Supreme ~~Court affirmed the denial of the motion to dismiss.~~Court. The parties are engaged in discovery. The trial is currently scheduled for December 2021. The Company intends to vigorously defend this matter (see Note 9)10). At this stage, the Company is unable to estimate its potential liability, if any.

In addition to the foregoing, the Company is subject to other legal proceedings that have arisen in the ordinary course of business and have not been finally adjudicated. Although there can be no assurance in this regard, the Company believes that none of the other legal proceedings to which the Company is a party will have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

Sales Tax Contingency

On June 21, 2018, the United States Supreme Court rendered a decision in South Dakota v. Wayfair, Inc., holding that a state may require a remote seller with no physical presence in the state to collect and remit sales tax on goods and services provided to purchasers in the state, overturning certain existing court precedent. The Company ~~is evaluating~~has evaluated its state tax filings with respect to the Wayfair decision and is in the process of reviewing its ~~collection~~remittance practices. It is possible that one or more jurisdictions may assert that the Company has liability for periods for which it has not collected sales, use or other similar taxes, and if such an assertion or assertions were successful it could materially and adversely affect the Company’s business, financial position, and operating results. One or more jurisdictions may change their laws or policies to apply their sales, use or other similar taxes to the Company’s operations, and if such changes were made it could materially and adversely affect the Company’s business, financial position, and operating results.

Regulatory ~~Fee~~Fees Audit

The Company’s 2017 FCC Form 499-A, which reports its calendar year 2016 revenue, ~~related to payments due to the FCC,~~ is currently under audit by the Universal Service Administrative Company (“USAC”). The Internal Audit Division of USAC issued preliminary audit findings and the Company has, in accordance with audit procedures, appealed certain of the findings. The Company awaits a final decision by USAC on the preliminary audit findings. Depending on the findings contained in the final decision, the Company may further appeal to the FCC. Although a final decision remains pending, the Company has been invoiced $2.9 million and $1.8 million on behalf of the Federal Telecommunications Relay Services Fund and on behalf of the Universal Service ~~Administrative Company.~~Fund, respectively. The Company does not intend to remit payment for these fees unless and until a negative decision on its appeal has been issued. In response to the aforementioned preliminary audit findings, the Company made certain changes to its filing policies and procedures for years that remain potentially under audit. At April 30, ~~2020~~2021 and July 31, ~~2019,~~2020, the Company’s accrued expenses included ~~$40.0~~$41.6 million and ~~$44.7~~$40.8 million, respectively, for ~~these~~FCC-related regulatory fees for the ~~years~~year covered by the audit, as well as prior and subsequent years.

Purchase Commitments

At April 30, ~~2020,~~2021, the Company had purchase commitments of ~~$8.7~~$3.4 million ~~including the aggregate commitment of $5.7 million under the Memorandum of Understanding (“MOU”) described below.~~primarily for certain equipment and services.

~~Telecom Services Commitments~~

In May 2019, the Company entered into a MOU with a telecom operator in Central America for among other things, termination of inbound and outbound international long-distance voice calls. The MOU is effective until June 30, 2020 unless superseded by the execution of a definitive agreement. The Company has committed to pay such telecom operator monthly committed amounts during the term of the MOU. The parties intend to draft and execute a definitive agreement as soon as practicable.

In August 2017, the Company entered into a Reciprocal Services Agreement, as amended, with a telecom operator in Central America for a full range of services, including, but not limited to, termination of inbound and outbound international long-distance voice calls. This agreement was terminated on April 30, 2020. Pursuant to the agreement, the Company deposited $9.2 million into an escrow account as security for the benefit of the telecom operator, which was included in “Other current assets” in the accompanying consolidated balance sheet based on the terms and conditions of the agreement. On May 11, 2020, the $9.2 million security deposit was released from escrow and returned to the Company.

Performance Bonds

The Company has performance bonds issued through third parties for the benefit of various states in order to comply with the states’ financial requirements for money remittance licenses and telecommunications resellers. At April 30, ~~2020,~~2021, the Company had aggregate performance bonds of ~~$18.0~~$19.8 million outstanding.

Company Restricted Cash and Cash Equivalents

The Company treats unrestricted cash and cash equivalents held by IDT Payment Services, which provides the Company’s international money transfer services in the United States, as substantially restricted and unavailable for other purposes. At April 30, ~~2020~~2021 and July 31, ~~2019,~~2020, “Cash and cash equivalents” in the Company’s consolidated balance sheets included an aggregate of ~~$6.6~~$15.3 million and ~~$13.2~~$11.0 million, respectively, held by IDT Payment Services that was unavailable for other purposes.

FCC Investigation of Straight Path Spectrum LLC

On September 20, 2016, the Company received a letter of inquiry from the Enforcement Bureau of the FCC requesting certain information and materials related to an investigation of potential violations by Straight Path Spectrum LLC (formerly a subsidiary of the Company and Straight Path) in connection with licenses to operate on the 28 GHz and 39 GHz bands of the Fixed Microwave Services. The Company has cooperated with the FCC in this matter and has responded to the letter of inquiry. If the FCC were to pursue separate action against the Company, the FCC could seek to fine or impose regulatory penalties or civil liability on the Company related to activities during the period of ownership by the Company.

Note ~~16—~~15—Other ~~(Expense)~~ Income (Expense), Net

Other income (expense) ~~income,~~, net consists of the following:

Schedule of Other Income (Expense), Net

	Three Months Ended April 30,						Nine Months Ended April 30,						2021			2020			2021			2020
	2020			2019			2020			2019			Three Months Ended April 30,						Nine Months Ended April 30,
	(in thousands)												2021			2020			2021			2020
Foreign currency transaction (losses) gains	$	(774	)	$	(3	)	$	175		$	(838	)
(Loss) gain on investments		(1,226	)		623			(817	)		704
													(in thousands)
Foreign currency transaction (losses) gains													$	(1,069	)	$	(774	)	$	396		$	175
Equity in the net loss of investee														(528	)		—			(528	)		—
Write-off of tax assets related to prior periods														—			(129	)		—			(742	)
Gain (loss) on investments														5,435			(1,226	)		5,822			(817	)
Other		(144	)		(260	)		(718	)		(360	)		(23	)		(15	)		(82	)		24
Total other (expense) income, net	$	(2,144	)	$	360		$	(1,360	)	$	(494	)
Total other income (expense), net													$	3,815		$	(2,144	)	$	5,608		$	(1,360	)

Note ~~17—Defined Contribution Plan~~16—Income Taxes

In the three and nine months ended April 30, 2021, the Company released $24.0 million of its valuation allowance on the portion of the deferred income tax assets that it is more likely than not going to utilize. The Company ~~maintains a 401(k) Plan available~~used the framework of Accounting Standards Codification Income Taxes (Topic 740) to ~~all employees meeting certain eligibility criteria.~~determine whether the valuation allowance should be maintained or reversed. The ~~Plan permits participants to contribute up to 20%~~Company considered the scheduled expiration of ~~their salary, not to exceed~~its net operating losses included in its deferred tax assets, projected future taxable income, and tax planning strategies in its assessment of the ~~limits established by~~valuation allowance. The primary factors that resulted in the ~~Internal Revenue Code. The Plan provides for discretionary matching contributions of 50%, up to~~valuation allowance release were the ~~first 6% of compensation. The discretionary matching contributions vest over the first five~~three consecutive years of ~~employment.~~profitability in the United States and expected future profitability in both the United States and the United Kingdom that will utilize a portion of the net operating losses. The ~~Plan permits~~Company’s tax planning strategies were not a significant factor in the discretionary matching contributions to be granted as of December 31 of each year. All contributions made by participants vest immediately into the participant’s account. On April 23, 2020, the Company paid cash of $1.0 million for calendar year 2019 matching contributions.analysis.

Note ~~18—~~17—Recently Issued Accounting Standards Not Yet Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13,Financial Instruments—Credit Losses (Topic 326),Measurement of Credit Losses on Financial Instruments,that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking current expected credit loss model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators, and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. The Company will adopt the new standard on August 1, 2023. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12,Income Taxes (Topic 740),Simplifying the Accounting for Income Taxes,that removes certain exceptions to the general principles in Topic 740, and clarifies and amends existing guidance in Topic 740. The Company will adopt the new standard on August 1, 2021. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.

In January 2020, the FASB issued ASU No. 2020-01,Investments—Equity Securities (Topic 321),Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), that clarifies the interactions between Topic 321, Topic 323, and Topic 815. The amendments in this ASU affect the application of the measurement alternative for certain equity securities and the equity method of accounting, and guidance for certain forward contracts and purchased options to purchase securities, that, upon settlement or exercise, would be accounted for under the equity method of accounting. The Company will adopt the new standard on August 1, 2021. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.

Note 18— Revolving Credit Facility—Subsequent Event

The Company’s subsidiary, IDT Telecom, Inc. (“IDT Telecom”), entered into a credit agreement, dated as of May 17, 2021, with TD Bank, N.A. for a revolving credit facility for up to a maximum principal amount of $25.0 million. IDT Telecom may use the proceeds to finance working capital requirements and for certain closing costs of the facility. The revolving credit facility is secured by primarily all of IDT Telecom’s assets. The principal outstanding bears interest per annum at the Intercontinental Exchange Benchmark Administration Ltd. LIBO rate multiplied by the Regulation D maximum reserve requirement plus 125 to 175 basis points, depending upon IDT Telecom’s leverage ratio as computed for the most recent fiscal quarter. Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest is due in May 2024. IDT Telecom pays a quarterly unused commitment fee on the average daily balance of the unused portion of the $25.0 million commitment of 30 to 85 basis points, depending upon IDT Telecom’s leverage ratio as computed for the most recent fiscal quarter. IDT Telecom is required to comply with various affirmative and negative covenants as well as maintain certain targets based on financial ratios during the term of the revolving credit facility. IDT Telecom was in compliance with all of the covenants as of the date of this Quarterly Report on Form 10-Q.

Item 2. ~~Item 2.~~ Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with the accompanying consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2019,~~2020, as filed with the U.S. Securities and Exchange Commission (or SEC).

We followed the disclosure requirements of Regulation S-K applicable to smaller reporting companies in this Quarterly Report on Form 10-Q. In accordance with Item 10(f)(2) of Regulation S-K, we qualify as a “smaller reporting company” because our public float was below $200 million as of January 31, 2020, the last business day of our second quarter in fiscal 2020. Our public float as of January 29, 2021, the last business day of our second quarter in fiscal 2021, was $292.2 million. Therefore, in accordance with Item 10(f)(1) of Regulation S-K, we will transition from the scaled disclosure available to smaller reporting companies to the disclosure requirements applicable to all other companies beginning with our Quarterly Report on Form 10-Q for our first quarter in fiscal 2022.

As used below, unless the context otherwise requires, the terms “the Company,” “IDT,” “we,” “us,” and “our” refer to IDT Corporation, a Delaware corporation, its predecessor, International Discount Telecommunications, Corp., a New York corporation, and their subsidiaries, collectively.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends,” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks, and uncertainties that could result in those differences include, but are not limited to, those discussed under Item 1A to Part I “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2019,~~2020, and under Item 1A to Part II “Risk Factors” in this Quarterly Report on Form 10-Q. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the SEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2019.~~2020.

~~Critical Accounting Policies~~

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our significant accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2019. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require application of management’s most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to the allowance for doubtful accounts, goodwill, valuation of long-lived assets, income taxes and regulatory agency fees, and direct cost of revenues—disputed amounts. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended July 31, 2019.

Recently Issued Accounting Standards Not Yet Adopted

In June 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-13,Financial Instruments—Credit Losses (Topic 326),Measurement of Credit Losses on Financial Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking current expected credit loss model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. We will adopt the new standard on August 1, 2023. We are evaluating the impact that the new standard will have on our consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12,Income Taxes (Topic 740),Simplifying the Accounting for Income Taxes,that removes certain exceptions to the general principles in Topic 740, and clarifies and amends existing guidance in Topic 740. We will adopt the new standard on August 1, 2021. We are evaluating the impact that the new standard will have on our consolidated financial statements.

In January 2020, the FASB issued ASU No. 2020-01,Investments—Equity Securities (Topic 321),Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), that clarifies the interactions between Topic 321, Topic 323, and Topic 815. The amendments in this ASU affect the application of the measurement alternative for certain equity securities and the equity method of accounting, and guidance for certain forward contracts and purchased options to purchase securities, that, upon settlement or exercise, would be accounted for under the equity method of accounting. We will adopt the new standard on August 1, 2021. We are evaluating the impact that the new standard will have on our consolidated financial statements.

Results of Operations

Coronavirus Disease (COVID-19)

~~During the first~~We continue to monitor and ~~second quarters of calendar 2020, the world experienced the unprecedented impacts of the coronavirus disease 2019 (COVID-19) pandemic. There are many uncertainties regarding~~respond to the impacts of the COVID-19 pandemic ~~and we are monitoring those impacts~~ on all aspects of our business, including ~~how it will impact~~ our customers, employees, suppliers, vendors, and business partners.

Operationally, our employees transitioned to work-from-home during the third quarter of fiscal ~~quarter. In particular, our~~2020 and, to a large degree, continue to work-from-home. Our salespeople and delivery employees ~~continued~~continue to serve our independent retailers and channel partners with minimal interruption.

COVID-19 had a mixed financial ~~impact~~impacts on ~~us during~~our businesses beginning in the ~~three months ended April 30, 2020. The COVID-19 pandemic~~third quarter of fiscal 2020 and continuing through the third quarter of fiscal 2021. It drove significant increases in demand for our consumer offerings, principally BOSS Revolution Money Transfer, BOSS Revolution Calling and Mobile Top-Up, through our digital ~~channels.~~channels during the latter half of March and into April 2020. Subsequently, digital transaction levels have continued to increase relative to retailer originated transactions. Conversely, sales of consumer offerings originating through retailers and channel partners slowed modestly in late March and April 2020 before ~~beginning~~stabilizing in the fourth quarter. National Retail Solutions, or NRS, was slightly impacted by the closure of some of its retailers in the third quarter, but most re-opened quickly and many attracted increased foot traffic following the onset of COVID-19 as local retailers are typically more accessible to ~~rebound in May. COVID-19 related demand helped~~pedestrian traffic than big box retailers. The resilience of local retailers has enabled NRS to ~~boost Mobile Top-Up~~continue to expand sales of terminals, payment processing, and ~~BOSS Revolution Money Transfer revenues and slowed the rate of decline in BOSS Revolution Calling revenues. net2phone-UCaaS’~~advertising services. net2phone-Unified Communications as a Service, or UCaaS’, customer base growth slowed somewhat in the second half of fiscal 2020 in certain Latin American markets. However, Latin American sales rebounded in the first quarter of fiscal 2021 and sales have remained strong in our ~~third fiscal quarter as sales became increasingly difficult as the pandemic spread in key~~United States and Canadian markets. Carrier Services’ revenue, ~~was impacted by~~which had been declining as communications globally transition away from traditional international long-distance voice, declined more rapidly following the ~~closure~~onset of ~~corporate offices~~COVID-19 as business communications shifted from calling to video conferencing and ~~the decline of commerce globally.~~other collaboration platforms.

As of the date of this ~~filing, management believes~~report, including the impact of COVID-19, we expect that our cash from operations and the balance of cash, cash equivalents, debt securities, and current equity investments that we ~~continue~~held on April 30, 2021 will be sufficient to ~~have sufficient liquidity~~meet our currently anticipated working capital and capital ~~resources for~~expenditure requirements during the ~~foreseeable future.~~twelve-month period ending April 30, 2022. Looking ahead, ~~current economic conditions, if enduring, will create additional hardship for many of our customers. Over~~ the longer term, sustained levels of high unemployment along with declining economic activity and less favorable foreign exchange market conditions could materially and adversely impact us by dampening demand for both our consumer and business-to-business offerings. The situation remains fluid and we cannot predict with certainty the potential impact of COVID-19 on our business, results of operations, financial condition, and cash flows.

Three and Nine Months Ended April 30, ~~2020~~2021 Compared to Three and Nine Months Ended April 30, ~~2019~~2020

~~We are a multinational company with operations primarily in the telecommunications and payment industries. We have two~~As of August 1, 2020, we revised our reportable business segments ~~Telecom & Payment Services~~to reflect the growth of our financial technology and net2phone. Our Telecom & Payment Services segment provides retail telecommunications and payment offerings as well as wholesale international long-distance traffic termination. Our net2phone segment provides unified cloud communications businesses and ~~telephony services~~their increased contributions to our consolidated results. We now have three reportable business ~~customers.~~segments, Fintech, net2phone-UCaaS, and Traditional Communications. The revised reportable business segments reflect management’s approach to analyzing results, its resource allocation strategy, and its assessment of business performance. Comparative segment information has been reclassified and restated in all periods to conform to the current period presentation. We evaluate the performance of our ~~operating~~ business segments based primarily on income (loss) from operations. Accordingly, the income and expense line items below income (loss) from operations are only included in our discussion of the consolidated results of operations.

Our results of operations discussion include ~~two key~~the following performance metrics: ~~minutes of use and~~ direct cost of revenues as a percentage of revenues, subscription revenue, seats, and minutes of use. Direct cost of revenues as a percentage of revenues is a financial metric that measures changes in our direct cost of revenues relative to changes in revenues during the same period. Direct cost of revenues is the numerator and revenues are the denominator in this ratio. Direct cost of revenues as a percentage of revenues is a useful metric for monitoring and evaluating trends in the net contribution of our revenues. net2phone-UCaaS’s cloud communications offering is priced on a per-seat basis, with each customer employee identity constituting a seat, and its subscription revenue is a monthly base fee per seat. The number of seats served and subscription revenue trends and comparisons between periods are used in the analysis of net2phone-UCaaS’s revenues and direct cost of revenues. Minutes of use is a nonfinancial metric that measures aggregate customer usage during a reporting period for our BOSS Revolution Calling and Carrier Services businesses, as well as other, smaller telephony offerings. Minutes of use represent the volume of certain of our core offerings and that volume, together with revenues and the relationship between revenues and direct cost of revenues, is an indicator of the performance of those business units.period. Minutes of use is an important factor in BOSS Revolution ~~Calling~~Calling’s and Carrier Services’ revenue recognition since satisfaction of our performance obligation occurs when the customer uses our service. Minutes of use trends and comparisons between periods are used in the analysis of revenues and direct cost of revenues. ~~Direct cost~~

Fintech Segment

Fintech, which represented 4.5% and 4.6% of ~~revenues as a percentage of revenues is a financial metric that measures changes in~~ our ~~direct cost of~~total revenues relative to changes in revenues during the same period. Direct cost of revenues as a percentage of revenues is a ratio in which direct cost of revenues is the numerator and revenues are the denominator. It is useful for monitoring trends in the ~~direct cost of revenues generation as well as for evaluating the net contribution of our revenues.~~

~~Telecom & Payment Services Segment~~

~~Telecom & Payment Services, which represented 96.1%~~three months ended April 30, 2021 and ~~96.7%~~2020, respectively, and 5.2% and 3.4% of our total revenues in the nine months ended April 30, 2021 and 2020, respectively, comprises BOSS Revolution Money Transfer, a provider of international money remittance and ~~2019, respectively, markets~~related value/payment transfer services, and ~~distributes the following communications~~NRS, operator of a nationwide point of sale, or POS, retail network providing payment processing, digital advertising, transaction data, and ~~payment services:~~

●

~~Core includes~~ancillary services. BOSS Revolution Money Transfer and NRS were previously included in our three largest communications and payments offerings by revenue: BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States, Carrier Services, which provides international long-distance termination and outsourced traffic management solutions to telecoms worldwide, and Mobile Top-Up, which enables customers to transfer airtime and bundles of airtime, messaging and data credits to mobile accounts internationally and domestically. Core also includes smaller communications and payments offerings, many in harvest mode.

●

Growth comprises National Retail Solutions, which operates a point-of-sale, or POS, terminal-based network for independent retailers, BOSS Revolution Money Transfer, an international money remittance service for customers in the United States, and BOSS Revolution Mobile, a mobile virtual network operator which provides mobile phone service over a third-party network for customers in the United States.

~~Our~~ Telecom & Payment Services ~~segment’s~~segment.

	Three months ended April 30,						Change						Nine months ended April 30,						Change
	2021			2020			$			%			2021			2020			$			%
	(in millions)
Revenues:
BOSS Revolution Money Transfer	$	10.2		$	11.8		$	(1.6	)		(13.2	)%	$	38.7		$	26.7		$	12.0			45.0	%
National Retail Solutions		6.4			2.9			3.5			122.7			16.5			7.3			9.2			126.3
Total revenues		16.6			14.7			1.9			13.3			55.2			34.0			21.2			62.5
Direct cost of revenues		(6.0	)		(5.1	)		(0.9	)		(18.5	)		(18.7	)		(13.3	)		(5.4	)		(40.3	)
Selling, general and administrative		(11.6	)		(8.8	)		(2.8	)		(31.1	)		(33.8	)		(25.2	)		(8.6	)		(34.2	)
Depreciation and amortization		(0.5	)		(0.7	)		0.2			22.2			(1.3	)		(1.2	)		(0.1	)		(10.0	)
Other operating gain		0.1			—			0.1			nm			0.1			—			0.1			nm
(Loss) income from operations	$	(1.4	)	$	0.1		$	(1.5	)		nm		$	1.5		$	(5.7	)	$	7.2			126.1	%

nm—not meaningful

Revenues. Revenues from BOSS Revolution Money Transfer decreased in the three months ended April 30, 2021 compared to the similar period in fiscal 2020 primarily because transient foreign exchange market conditions that positively impacted BOSS Revolution Money Transfer’s results in the third quarter of fiscal 2020 through the second quarter of fiscal 2021 ceased by the end of the second quarter of fiscal 2021. Revenues from BOSS Revolution Money Transfer increased in the nine months ended April 30, 2021 compared to the similar period in fiscal 2020 driven primarily by increased transaction volume in its digital channel, and a significant but diminished benefit from transient foreign exchange market conditions. Revenues from NRS increased in the three and nine months ended April 30, 2021 compared to the similar periods in fiscal 2020 driven primarily by the expansion of its POS network, and revenue growth from its payment processing services and digital out-of-home advertising.

Direct Cost of Revenues. Direct cost of revenues increased in the three and nine months ended April 30, 2021 compared to the similar periods in fiscal 2020 primarily due to the increase in revenues. BOSS Revolution Money Transfer’s direct cost of revenues increased in the three and nine months ended April 30, 2021 compared to the similar periods in fiscal 2020 due to increased direct cost of revenues in its digital channel. NRS’ direct cost of revenues decreased slightly in the three months ended April 30, 2021 compared to the similar period in fiscal 2020 and increased in the nine months ended April 30, 2021 compared to the similar period in fiscal 2020.

	Three months ended April 30,									Nine months ended April 30,
	2021			2020			Change			2021			2020			Change
Direct cost of revenues as a percentage of revenues		36.2	%		34.7	%		1.5	%		33.9	%		39.2	%		(5.3	)%

Direct cost of revenues as a percentage of revenues increased 150 basis points in the three months ended April 30, 2021 compared to the similar period in fiscal 2020 due to an increase in direct cost of revenues as a percentage of revenues in BOSS Revolution Money Transfer. BOSS Revolution Money Transfer’s direct cost of revenues as a percentage of revenues increased largely from the decrease in foreign exchange revenue. Direct cost of revenues as a percentage of revenues decreased 530 basis points in the nine months ended April 30, 2021 compared to the similar period in fiscal 2020 due to decreases in direct cost of revenues as a percentage of revenues in both BOSS Revolution Money Transfer and NRS.

Selling, General and Administrative. Selling, general and administrative expense increased in the three and nine months ended April 30, 2021 compared to the similar periods in fiscal 2020 primarily due to increases in employee compensation, marketing, debit and credit card processing charges, and sales commissions. The increase in card processing charges was the result of increased credit and debit card transactions through our BOSS Revolution app and other digital channels. As a percentage of Fintech’s revenue, Fintech’s selling, general and administrative expense increased to 69.6% from 60.2% in the three months ended April 30, 2021 and 2020, respectively, and decreased to 61.2% from 74.1% in the nine months ended April 30, 2021 and 2020, respectively.

Depreciation and Amortization. Depreciation and amortization expense decreased in the three months ended April 30, 2021 compared to the similar period in fiscal 2020. Depreciation and amortization expense increased in the nine months ended April 30, 2021 compared to the similar period in fiscal 2020 primarily due to increased depreciation of capitalized costs of consultants and employees developing internal use software and increased depreciation of NRS’ POS equipment.

Other Operating Gain. Other operating gain in the three and nine months ended April 30, 2021 was due to the settlement of a claim related to the money transfer business.

net2phone-UCaaS Segment

The net2phone-UCaaS segment, which represented 3.0% and 2.5% of our total revenues in the three months ended April 30, 2021 and 2020, respectively, and 3.0% and 2.4% of our total revenues in the nine months ended April 30, 2021 and 2020, respectively, comprises net2phone’s cloud communications offerings, which were previously included in our net2phone segment.

	Three months ended April 30,						Change						Nine months ended April 30,						Change
	2021			2020			$			%			2021			2020			$		%
	(in millions)
Revenues	$	11.3		$	8.1		$	3.2			38.9	%	$	31.6		$	23.2		$	8.4		36.1	%
Direct cost of revenues		2.0			1.6			0.4			26.2			5.9			4.6			1.3		26.8
Selling, general and administrative		11.6			9.3			2.3			24.5			32.7			26.7			6.0		22.2
Depreciation and amortization		1.4			0.8			0.6			57.1			3.6			2.9			0.7		26.8
Other operating expense, net		—			—			—			—			0.1			0.1			—		58.7
Loss from operations	$	(3.7	)	$	(3.6	)	$	(0.1	)		(1.1	)%	$	(10.7	)	$	(11.1	)	$	0.4		3.5	%

Revenues. net2phone-UCaaS’s revenues increased in the three and nine months ended April 30, 2021 compared to the similar periods in fiscal 2020 primarily driven by growth in the United States, although revenue increased in all net2phone-UCaaS regions. Seats served increased 51% to 210,000 at April 30, 2021 from 139,000 at April 30, 2020 and from 154,000 at July 31, 2020. Subscription revenue increased 39.4% to $10.7 million in the three months ended April 30, 2021 from $7.7 million in the three months ended April 30, 2020 and increased 35.9% to $29.8 million in the nine months ended April 30, 2021 from $21.9 million in the nine months ended April 30, 2020, led by growth in the U.S. market. net2phone-UCaaS launched its integration with Slack in the three months ended April 30, 2021, building on its prior integrations with Zoho and Microsoft Teams. More recently, net2phone-UCaaS launched an integration with Salesforce. Also, in November 2020, net2phone-UCaaS announced it had launched its service in Peru and expanded coverage to six additional cities in Brazil in December 2020.

	Three months ended April 30,									Nine months ended April 30,
	2021			2020			Change			2021			2020			Change
Direct cost of revenues as a percentage of revenues		17.7	%		19.5	%		(1.8	)%		18.7	%		20.0	%		(1.3	)%

Direct cost of revenues as a percentage of revenues decreased 180 and 130 basis points in the three and nine months ended April 30, 2021, respectively, compared to the similar periods in fiscal 2020 primarily because of decreases in direct cost of revenues as a percentage of revenues in the United States.

Selling, General and Administrative. Selling, general and administrative expense increased in the three and nine months ended April 30, 2021 compared to the similar periods in fiscal 2020 primarily due to increases in employee compensation and sales commissions. As a percentage of net2phone-UCaaS’ revenues, net2phone-UCaaS’ selling, general and administrative expenses decreased to 102.7% from 114.5% in the three months ended April 30, 2021 and 2020, respectively, and decreased to 103.4% from 115.2% in the nine months ended April 30, 2021 and 2020, respectively.

Depreciation and Amortization. Depreciation and amortization expense increased in the three and nine months ended April 30, 2021 compared to the similar periods in fiscal 2020 due to increased depreciation of net2phone-UCaaS’ customer premises equipment and capitalized costs of consultants and employees developing internal use software.

Other Operating Expense, net. Other operating expense, net of $0.1 million in the nine months ended April 30, 2021 was due to the settlement of a legal matter. Other operating expense, net of $0.1 million in the nine months ended April 30, 2020 was due to the write-off of certain capitalized assets related to a cancelled project.

Traditional Communications Segment

The Traditional Communications segment, which represented 92.5% and 92.9% of our total revenues in the three months ended April 30, 2021 and 2020, respectively, and 91.8% and 94.2% of our total revenues in the nine months ended April 30, 2021 and 2020, respectively, includes Mobile Top-Up, which enables customers to transfer airtime and bundles of airtime, messaging, and data to international and domestic mobile accounts, BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States, and Carrier Services, a wholesale provider of international voice and SMS termination and outsourced traffic management solutions to telecoms worldwide. Traditional Communications also includes net2phone-Platform Services, which provides telephony services to cable operators and other offerings that leverage a common technology platform, as well as smaller communications and payments offerings, many in harvest mode. Most of the Traditional Communications segment was previously included in our Telecom & Payment Services segment except for net2phone-Platform Services, which was previously included in our net2phone segment.

Traditional Communications’ most significant revenue streams are from ~~BOSS Revolution Calling, Carrier Services, and~~ Mobile ~~Top-Up.~~Top-Up, BOSS Revolution Calling, and Carrier Services. Mobile Top-Up and BOSS Revolution Calling are sold direct-to-consumers and through distributors and retailers. We receive payments for BOSS Revolution Calling, traditional calling cards, and Mobile Top-Up prior to providing the services. We recognize the revenue when services are provided to the customer. ~~International prepaid calling~~Traditional Communications’ revenues tend to be somewhat seasonal, with the second fiscal quarter (which contains Christmas and New Year’s Day) and the fourth fiscal quarter (which contains Mother’s Day and Father’s Day) typically showing higher minute volumes.

	Three months ended April 30,				Change						Nine months ended April 30,				Change						Three months ended April 30,						Change						Nine months ended April 30,						Change
	2020		2019		$			%			2020		2019		$			%			2021			2020			$/#			%			2021			2020			$/#			%
	(in millions)																				(in millions)
Revenues	$	308.8	$	328.8	$	(20.0	)		(6.1	)%	$	947.3	$	1,018.6	$	(71.3	)		(7.0	)%
Revenues:
Mobile Top-Up																					$	132.6		$	85.1		$	47.5			55.8	%	$	325.0		$	237.8		$	87.2			36.7	%
BOSS Revolution Calling																						111.4			112.5			(1.1	)		(1.0	)		342.7			343.7			(1.0	)		(0.3	)
Carrier Services																						88.6			87.4			1.2			1.4			263.6			302.6			(39.0	)		(12.9	)
Other																						13.3			13.5			(0.2	)		(1.2	)		38.9			44.1			(5.2	)		(11.6	)
Total revenues																						345.9			298.5			47.4			15.9			970.2			928.2			42.0			4.5
Direct cost of revenues		256.0		279.4		(23.4	)		(8.4	)		792.2		869.0		(76.8	)		(8.8	)		(292.8	)		(252.1	)		(40.7	)		(16.1	)		(818.5	)		(783.0	)		(35.5	)		(4.5	)
Selling, general and administrative		39.2		38.1		1.1			2.7			120.5		119.4		1.1			1.0			(30.3	)		(32.2	)		1.9			5.8			(89.3	)		(101.0	)		11.7			11.6
Depreciation and amortization		3.1		4.2		(1.1	)		(24.4	)		9.3		11.8		(2.5	)		(21.9	)		(2.5	)		(3.7	)		1.2			31.5			(8.4	)		(11.6	)		3.2			27.7
Severance		0.6		0.6		—			8.8			1.7		0.6		1.1			209.8			(0.2	)		(0.6	)		0.4			69.5			(0.4	)		(1.7	)		1.3			74.4
Other operating expense, net		—		2.3		(2.3	)		(100.0	)		2.2		5.2		(3.0	)		(58.5	)
Other operating (expense) gain, net																						—			(0.4	)		0.4			85.6			1.0			(3.1	)		4.1			132.7
Income from operations	$	9.9	$	4.2	$	5.7			134.0	%	$	21.4	$	12.6	$	8.8			70.1	%	$	20.1		$	9.5		$	10.6			110.8	%	$	54.6		$	27.8		$	26.8			96.2	%

Minutes of use:
BOSS Revolution Calling																						876			953			(77	)		(8.1	)		2,701			2,913			(212	)		(7.3	)
Carrier Services																						2,460			3,347			(887	)		(26.5	)		8,185			11,589			(3,404	)		(29.4	)

Revenues. ~~Telecom & Payment Services’ revenues and minutes of use for~~Revenues from Mobile Top-Up increased in the three and nine months ended April 30, 2021 compared to the similar periods in fiscal 2020 primarily from product expansion and ~~2019 consisted~~continued growth across all of ~~the following:~~our distribution channels.

Three months ended
April 30, Change Nine months ended
April 30, Change
2020 2019 $/# % 2020 2019 $/# %
(in millions)
Core Operations:
BOSS Revolution Calling $ 111.6 $ 120.4 $ (8.8 ) (7.4 )% $ 340.5 $ 366.1 $ (25.6 ) (7.0 )%
Carrier Services 87.3 121.0 (33.7 ) (27.8 ) 302.5 391.1 (88.6 ) (22.7 )
Mobile Top-Up 85.1 67.6 17.5 26.0 237.7 197.2 40.5 20.6
Other 10.1 12.2 (2.1 ) (17.0 ) 32.5 43.7 (11.2 ) (25.7 )
Growth 14.7 7.6 7.1 92.0 34.1 20.5 13.6 66.0
Total revenues $ 308.8 $ 328.8 $ (20.0 ) (6.1 )% $ 947.3 $ 1,018.6 $ (71.3 ) (7.0 )%

Minutes of use
BOSS Revolution Calling 953 1,048 (95 ) (9.0 )% 2,913 3,245 (332 ) (10.2 )%
Carrier Services 3,347 4,031 (684 ) (17.0 ) 11,589 13,379 (1,790 ) (13.4 )

Revenues and minutes of use from BOSS Revolution Calling decreased in the three and nine months ended April 30, ~~2020~~2021 compared to the similar periods in fiscal ~~2019, although~~2020 because COVID-19 related demand ~~helped to slow~~in the three and nine months ended April 30, 2021 slowed the rate of decline in BOSS Revolution Calling revenue ~~compared to prior~~that we have experienced in recent periods. BOSS Revolution Calling continues to be impacted by persistent, market-wide trends, including the proliferation of unlimited calling plans offered by wireless carriers and mobile virtual network operators, and the increasing penetration of free and paid over-the-top voice, video conferencing, and messaging services.

Revenues from Carrier Services slightly increased in the three months ended April 30, 2021 compared to the similar period in fiscal 2020 although minutes of use decreased in the three months ended April 30, 2021 compared to the similar period in fiscal 2020. Revenues and minutes of use from Carrier Services decreased in the ~~three and~~ nine months ended April 30, ~~2020~~2021 compared to the similar ~~periods~~period in fiscal ~~2019 due~~2020 as communications globally continued to transition away from international voice calling. This trend was accelerated by the ~~closure~~impact of ~~corporate offices~~COVID-19 as business communications shifted from calling to video conferencing and ~~the decline of commerce globally. Over the long-term, we~~other collaboration platforms. We expect that Carrier Services will continue to be adversely impacted ~~as communications globally transition away from traditional international long-distance voice operators. Carrier Services’~~by these trends, and minutes of use and revenues will likely continue to decline from quarter-to-quarter, as we seek to maximize economics rather than necessarily sustain minutes of use or revenues.

Direct Cost of Revenues ~~from Mobile Top-Up~~. Direct cost of revenues increased in the three and nine months ended April 30, ~~2020~~2021 compared to the similar periods in fiscal ~~2019 due to COVID-19 related demand, as well as expanded bundled offerings of minutes, text and data, and growth from the addition of new mobile partners.~~

~~Revenues from our Growth initiatives increased in the three and nine months ended April 30,~~ 2020 compared to the similar periods in fiscal 2019. BOSS Revolution Money Transfer revenues increased 95% to $11.8 million in the three months ended April 30, 2020 compared to the similar period in fiscal 2019 and increased 66% to $26.7 million in the nine months ended April 30, 2020 compared to the similar period in fiscal 2019 driven byincreased transaction volumes partially related to COVID-19 and increased foreign exchange revenue derived, in part, from strategies leveraging the strengthened U.S. dollar and other transient foreign exchange market conditions. National Retail Solutions’ revenues increased 88% to $2.9 million in the three months ended April 30, 2020 compared to the similar period in fiscal 2019 and increased 70% to $7.3 million in the nine months ended April 30, 2020 compared to the similar period in fiscal 2019 driven by growth in monthly subscription fees, advertising sales, and credit card processing customers.

~~Direct Cost of Revenues~~~~. Direct cost of revenues in Telecom & Payment Services decreased in the three and nine months ended April 30, 2020 compared to the similar periods in fiscal 2019~~ primarily due to decreases in Carrier Services’ and BOSS Revolution Calling’s direct cost of revenues in the three and nine months ended April 30, 2020 compared to the similar periods in fiscal 2019, partially offset by an increaseincreases in Mobile Top-Up’s direct cost of revenues in the three and nine months ended April 30, ~~2020~~2021 compared to the similar periods in fiscal ~~2019.~~2020, primarily due to the increase in its revenues. In the nine months ended April 30, 2021 compared to the similar period in fiscal 2020, the increase in Mobile Top-Up’s direct cost of revenues was partially offset by decreases in Carrier Services’ and BOSS Revolution Calling’s direct cost of revenues.

Three months ended
April 30, Nine months ended
April 30,
2020 2019 Change 2020 2019 Change

Direct cost of revenues as a percentage of revenues 82.9 % 85.0 % (2.1 )% 83.6 % 85.3 % (1.7 )%

	Three months ended April 30,									Nine months ended April 30,
	2021			2020			Change			2021			2020			Change
Direct cost of revenues as a percentage of revenues		84.6	%		84.5	%		0.1	%		84.4	%		84.4	%		—

Direct cost of revenues as a percentage of revenues ~~in Telecom & Payment Services decreased 210 and 170~~increased 10 basis points in the three months ended April 30, 2021 compared to the similar period in fiscal 2020 and direct cost of revenues as a percentage of revenues was substantially unchanged in the nine months ended April 30, 2021 compared to the similar period in fiscal 2020. Direct cost of revenues as a percentage of revenues increased in Carrier Services in the three and nine months ended April 30, ~~2020, respectively,~~2021 compared to the similar periods in fiscal ~~2019~~2020. Direct cost of revenues as a percentage of revenues decreased in Mobile Top-Up and BOSS Revolution Calling in the three and nine months ended April 30, 2021 compared to the similar periods in fiscal 2020 primarily due to ~~decreases~~the continued migration of customers to digital platforms. The increased adoption of our digital, direct-to-consumer channels is expected to endure and contribute to future reductions in direct cost of revenues as a percentage of revenues in BOSS Revolution Money Transfer, Mobile Top-Up, BOSS Revolution Calling, and National Retail Solutions. BOSS Revolution Money Transfer’s direct cost of revenues as a percentage of revenues decreased largely from increased foreign exchange revenue derived, in part, from strategies leveraging the strengthened U.S. dollar and other transient foreign exchange market conditions. BOSS Revolution Calling’s direct cost of revenues as a percentage of revenues decreased primarily due to the continued migration of customers to the direct-to-consumer channel.revenues.

Selling, General and Administrative. Selling, general and administrative expense in our Telecom & Payment Services segment increased in the three and nine months ended April 30, 2020 compared to the similar periods in fiscal 2019 primarily due to increases in credit card charges and stock-based compensation, partially offset by decreases in marketing expense. In addition, selling, general and administrative expense in our Telecom & Payment Services segment increased in the nine months ended April 30, 2020 compared to the similar period in fiscal 2019 due to an increase in employee compensation. As a percentage of Telecom & Payment Services’ revenue, Telecom & Payment Services’ selling, general and administrative expense increased to 12.7% from 11.6% in the three months ended April 30, 2020 and 2019, respectively, and increased to 12.7% from 11.7% in the nine months ended April 30, 2020 and 2019, respectively.

~~Depreciation and Amortization.~~ ~~Depreciation and amortization expense in our Telecom & Payment Services segment~~ decreased in the three and nine months ended April 30, ~~2020~~2021 compared to the similar periods in fiscal ~~2019~~2020 primarily due to decreases in employee compensation, stock-based compensation, marketing expense, and travel and related expense, partially offset by increases in debit and credit card processing charges. The increases in card processing charges were the result of the shift in the sales of our consumer offerings from cash transactions at retailers to credit and debit card transactions through our BOSS Revolution apps and other digital channels. As a percentage of Traditional Communications’ revenue, Traditional Communications’ selling, general and administrative expense decreased to 8.8% from 10.8% in the three months ended April 30, 2021 and 2020, respectively, and decreased to 9.2% from 10.9% in the nine months ended April 30, 2021 and 2020, respectively.

Depreciation and Amortization. Depreciation and amortization expense decreased in the three and nine months ended April 30, 2021 compared to the similar periods in fiscal 2020 as more of our property, plant, and equipment became fully depreciated, partially offset by depreciation of equipment added to our telecommunications network and capitalized costs of consultants and employees developing internal use software.

~~Severance.~~Severance Expense. In the three months ended April 30, 2021 and 2020, ~~and 2019, Telecom & Payment Services~~we incurred severance expense of ~~$0.6~~$0.2 million and $0.6 million, respectively, and in the nine months ended April 30, 2021 and 2020, ~~and 2019, Telecom & Payment Services~~we incurred severance expense of $0.4 million and $1.7 million, ~~and $0.6 million,~~ respectively. Severance expense in the three and nine months ended April 30, 2020 was incurred mostly for technology and software development employees in the United States, Carrier Services employees in Europe, and retail-related employees in Asia.

Other Operating ~~Expense,~~(Expense) Gain, net. Telecom & Payment Services recorded accruals for non-income related taxes related to one of its foreign subsidiaries of nil and $2.3 million in the three months ended April 30, 2020 and 2019, respectively, and $2.2 million and $5.4 millionOther operating gain, net in the nine months ended April 30, ~~2020 and 2019, respectively. In addition, in the nine months ended April 30, 2019, other operating expense, net was partially offset by a gain of $0.2~~2021 included $2.0 million received from the sale to a third party of ~~a calling card business in Asia.~~

~~net2phone Segment~~

~~Our net2phone segment, which represented 3.9%~~all our rights under the Payment Card Interchange Fee and ~~3.3% of our total revenues in the nine months ended April 30, 2020~~Merchant Discount Antitrust Litigation. The lawsuit is about claims that merchants paid excessive fees to accept Visa and ~~2019, respectively, is comprised of two verticals:~~

●

~~net2phone-Unified Communications as a Service, or UCaaS, a unified cloud communications service for businesses in North and South America and certain other international markets; and~~

●

~~net2phone-Platform Services, which provides telephony services to cable operators and other businesses by leveraging a common technology platform.~~

Three months ended
April 30, Change Nine months ended
April 30, Change
2020 2019 $ % 2020 2019 $ %
(in millions)
Revenues $ 12.5 $ 12.4 $ 0.1 1.0 % $ 38.1 $ 34.4 $ 3.7 10.7 %
Direct cost of revenues 2.9 3.3 (0.4 ) (13.8 ) 8.8 9.6 (0.8 ) (8.7 )
Selling, general and administrative 11.1 9.0 2.1 24.0 32.4 24.5 7.9 32.5
Depreciation and amortization 2.0 1.4 0.6 52.1 6.4 5.0 1.4 28.0
Other operating expense, net 0.4 — 0.4 nm 1.0 — 1.0 nm
Loss from operations $ (3.9 ) $ (1.3 ) $ (2.6 ) (210.5 )% $ (10.5 ) $ (4.7 ) $ (5.8 ) (125.4 )%

~~nm—not meaningful~~

~~Revenues.~~ ~~net2phone’s revenues in the three~~Mastercard cards between January 1, 2004 and ~~nine months ended April 30, 2020 and 2019 consisted of the following:~~

Three months ended
April 30, Change Nine months ended
April 30, Change
2020 2019 $ % 2020 2019 $ %
(in millions)
net2phone-UCaaS $ 8.1 $ 6.6 $ 1.5 22.3 % $ 23.3 $ 17.5 $ 5.8 33.3 %
net2phone-Platform Services 4.4 5.8 (1.4 ) (23.5 ) 14.8 16.9 (2.1 ) (12.6 )
Total revenues $ 12.5 $ 12.4 $ 0.1 1.0 % $ 38.1 $ 34.4 $ 3.7 10.7 %

net2phone-UCaaS’ revenues increased in the three and nine months ended April 30, 2020 compared to the similar periods in fiscal 2019 driven by growth in its international and U.S. markets, partially offset by strengthening of the U.S. dollar compared to local currencies in key overseas markets. On September 14, 2018, net2phone-UCaaS entered the Canadian market through the acquisition of Versature Corp. Versature’s revenues increased $0.2 million and $1.5 million in the three and nine months ended April 30, 2020, respectively, compared to the similar periods in fiscal 2019. On December 11, 2019, we acquired Ringsouth Europa, S.L., which expanded net2phone-UCaaS’ business into Spain. Ringsouth’s revenues were $0.2 million and $0.4 million in the three and nine months ended April 30, 2020, respectively. net2phone-UCaaS’ customer base growth slowed in the second half of our third fiscal quarter as sales became increasingly difficult as the pandemic spread in key markets. During the third quarter of fiscal 2020, net2phone-UCaaS introduced an integration of its cloud communications offering with Microsoft Teams and its secure video conferencing solution, Huddle (in beta).

net2phone-Platform Services’ revenues decreased in the three and nine months ended April 30, 2020 compared to the similar periods in fiscal 2019 due to changes in contractual terms for telephony services that were effective beginning in January ~~2020.~~

~~Direct Cost of Revenues~~~~. Direct cost of revenues decreased in the three and nine months ended April 30, 2020 compared to the similar periods in fiscal~~25, 2019 because ~~of decreases in~~Visa and Mastercard, individually, and together with their respective member banks, violated the ~~direct cost of revenues in both net2phone-UCaaS and net2phone-Platform Services.~~

Three months ended
April 30, Nine months ended
April 30,
2020 2019 Change 2020 2019 Change

Direct cost of revenues as a percentage of revenues 23.0 % 27.0 % (4.0 )% 23.1 % 28.0 % (4.9 )%

Direct cost of revenues as a percentage of revenues decreased 400 and 490 basis points in the three and nine months ended April 30, 2020, respectively, compared to the similar periods in fiscal 2019 primarily because of decreases in direct cost of revenues as a percentage of revenues in net2phone-UCaaS. Direct cost of revenues as a percentage of revenues in net2phone-Platform Services increased in the three months ended April 30, 2020 compared to the similar period in fiscal 2019 and decreased in the nine months ended April 30, 2020 compared to the similar period in fiscal 2019.

~~Selling, General and Administrative~~. Selling, general and administrative expense increased in the three and nine months ended April 30, 2020 compared to the similar periods in fiscal 2019 due to increases in employee compensation, stock-based compensation, and sales commissions. As a percentage of net2phone’s revenues, net2phone’s selling, general and administrative expenses were 88.7% and 72.2% in the three months ended April 30, 2020 and 2019, respectively, and 85.1% and 71.1% in the nine months ended April 30, 2020 and 2019, respectively.

~~Depreciation and Amortization.~~ The increase in depreciation and amortization expense in the three and nine months ended April 30, 2020 compared to the similar periods in fiscal 2019 was due to increases in depreciation of net2phone-UCaaS’ customer premises equipment, additional depreciation and amortization in Versature, and increases in depreciation of capitalized costs of consultants and employees developing internal use software.

~~Other Operating Expense, net.~~antitrust laws. Other operating gain (expense), net also included expense ~~net of $0.4 million and $1.0 million in~~for the ~~three and nine months ended April 30, 2020, respectively, was primarily due to our~~ indemnification of a net2phone cable telephony customer related to patent infringement claims brought against the ~~customer.~~customer of $0.1 million and $0.4 million in the three months ended April 30, 2021 and 2020, respectively, and $0.4 million and $0.9 million in the nine months ended April 30, 2021 and 2020, respectively. Other operating gain, net in the nine months ended April 30, 2021 also included expense for a settlement of a Carrier Services’ claim for $0.6 million. In addition, other operating expense, net in the nine months ended April 30, 2020 included an accrual for non-income related taxes related to one of our foreign subsidiaries of $2.2 million.

Corporate

Three months ended
April 30, Change Nine months ended
April 30, Change
2020 2019 $ % 2020 2019 $ %
(in millions)
General and administrative $ (2.4 ) $ (2.4 ) $ — 2.6 % $ (6.9 ) $ (7.2 ) $ 0.3 3.0 %
Other operating gain (expense), net 0.2 (0.1 ) 0.3 226.6 (0.3 ) (0.6 ) 0.3 58.3
Loss from operations $ (2.2 ) $ (2.5 ) $ 0.3 12.6 % $ (7.2 ) $ (7.8 ) $ 0.6 7.2 %

	Three months ended April 30,						Change					Nine months ended April 30,						Change
	2021			2020			$		%			2021			2020			$		%
	(in millions)
General and administrative	$	(1.7	)	$	(2.4	)	$	0.7		27.5	%	$	(5.9	)	$	(6.9	)	$	1.0		15.8	%
Other operating gain (expense), net		0.6			0.2			0.4		298.4			0.6			(0.3	)		0.9		323.6
Loss from operations	$	(1.1	)	$	(2.2	)	$	1.1		49.6	%	$	(5.3	)	$	(7.2	)	$	1.9		26.8	%

Corporate costs include compensation, consulting fees, treasury, ~~and accounts payable,~~ tax and accounting services, human resources, ~~and payroll,~~ corporate purchasing, corporate governance including Board of Directors’ fees, internal and external audit, investor relations, corporate insurance, corporate legal, charitable contributions, travel, and other corporate-related general and administrative expenses. Corporate does not generate any revenues, nor does it incur any direct cost of revenues.

General and Administrative.Corporate general and administrative expense ~~was basically unchanged~~decreased in the three months ended April 30, ~~2020~~2021 compared to the similar period in fiscal ~~2019~~2020 primarily because of ~~a decrease~~decreases in ~~employee~~stock-based compensation ~~partially offset by an increase in stock-based~~and employee compensation. Corporate general and administrative expense decreased in the nine months ended April 30, ~~2020~~2021 compared to the similar period in fiscal ~~2019~~2020 primarily because of ~~decreases~~a decrease in ~~employee~~stock-based compensation, ~~legal fees, and consulting expense, partially offset by an increase~~as well as a decrease in ~~stock-based~~employee compensation. As a percentage of our total consolidated revenues, Corporate general and administrative expense was 0.5% and 0.7% in the three months ended April 30, 2021 and 2020, respectively, and 0.6% and 0.7% in the nine months ended April 30, 2021 and 2020, ~~and 2019.~~respectively.

Other Operating Gain (Expense), net.On July 31, 2013, we completed a pro rata distribution of the common stock of our former subsidiary Straight Path Communications Inc., or Straight Path, to our stockholders. As discussed in Note 1514 to the Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q, there is a pending putative class action on behalf of Straight Path’s stockholders and derivative complaint ~~was filed~~ naming us, among others. We incurred legal fees of ~~$1.2~~$0.3 million and ~~$0.1~~$1.2 million in the three months ended April 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$2.5~~$2.0 million and ~~$0.6~~$2.5 million in the nine months ended April 30, ~~2020~~2021 and ~~2019,~~2020, respectively, related to this action. Also, we recorded offsetting gains from insurance claims for this matter of $0.9 million and $1.4 million in the three months ended April 30, 2021 and 2020, respectively, and $2.6 million and $2.2 million in the nine months ended April 30, 2021 and 2020, ~~we recorded a gain from insurance proceeds for this matter of $1.4 million and $2.2 million,~~ respectively.

Consolidated

The following is a discussion of certain of our consolidated expenses, and our consolidated income and expense line items below income from operations.

Related Party Lease Costs. On March 26, 2018, we completed a pro rata distribution of the common stock of our former subsidiary, Rafael Holdings, Inc., or Rafael, to our stockholders of record as of the close of business on March 13, 2018, which we refer to as the Rafael Spin-Off. We lease office space and parking in Rafael’s building and parking garage located at 520 Broad St, Newark, New Jersey. We also lease office space in Israel from Rafael. The Newark lease expires in April 2025 and the Israel lease expires in July 2025. InWe incurred lease costs of $0.5 million in each of the three months ended April 30, 2021 and 2020, and ~~2019, we incurred lease costs~~$1.4 million in each of ~~$0.5 million and $0.5 million, respectively, and in~~ the nine months ended April 30, ~~2020~~2021 and ~~2019, we incurred lease costs of $1.4 million and $1.3 million, respectively,~~2020, in connection with the Rafael leases, which is included in consolidated selling, general and administrative expenses.

Stock-Based Compensation Expense.Stock-based compensation expense included in consolidated selling, general and administrative expenses was ~~$0.8~~$0.3 million and ~~$0.3~~$0.8 million in the three months ended April 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$3.3~~$1.2 million and ~~$1.2~~$3.3 million in the nine months ended April 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The ~~increase~~decreases in stock-based compensation expense in the three and nine months ended April 30, ~~2020~~2021 compared to the similar periods in fiscal ~~2019 was~~2020 were primarily due to reductions in expense of deferred stock units granted in June ~~2019.~~2019 and stock options. At April 30, ~~2020,~~2021, unrecognized compensation cost related to non-vested stock-based compensation was an aggregate of ~~$2.3~~$0.9 million. The unrecognized compensation cost is expected to be recognized over the remaining vesting period that ends in ~~2022.~~fiscal 2024.

Three months ended
April 30, Change Nine months ended
April 30, Change
2020 2019 $ % 2020 2019 $ %
(in millions)
Income from operations $ 3.8 $ 0.4 $ 3.4 744.5 % $ 3.7 $ 0.2 $ 3.5 nm
Interest income, net 0.1 0.2 (0.1 ) (68.4 ) 0.5 0.5 — 11.2 %
Other (expense) income, net (2.1 ) 0.4 (2.5 ) (695.6 ) (1.4 ) (0.5 ) (0.9 ) (175.3 )
(Provision for) benefit from income taxes (1.4 ) 1.5 (2.9 ) (189.7 ) (3.0 ) (0.7 ) (2.3 ) (329.0 )

Net income (loss) 0.4 2.5 (2.1 ) (84.3 ) (0.2 ) (0.5 ) 0.3 75.9
Net loss (income) attributable to noncontrolling interests 0.1 (0.3 ) 0.4 146.3 0.1 (0.9 ) 1.0 107.9

Net income (loss) attributable to IDT Corporation $ 0.5 $ 2.2 $ (1.7 ) (76.1 )% $ (0.1 ) $ (1.4 ) $ 1.3 95.6 %

	Three months ended April 30,						Change						Nine months ended April 30,						Change
	2021			2020			$			%			2021			2020			$			%
	(in millions)
Income from operations	$	13.9		$	3.8		$	10.1			265.8	%	$	40.0		$	3.7		$	36.3			975.9	%
Interest income, net		0.1			0.1			—			123.2			0.2			0.5			(0.3	)		(57.5	)
Other income (expense), net		3.8			(2.1	)		5.9			277.9			5.6			(1.4	)		7.0			512.4
Benefit from (provision for) income taxes		18.6			(1.4	)		20.0			nm			12.2			(3.0	)		15.2			502.1
Net income (loss)		36.4			0.4			36.0			nm			58.0			(0.2	)		58.2			nm
Net (income) loss attributable to noncontrolling interests		(0.1	)		0.1			(0.2	)		(137.6	)		(0.3	)		0.1			(0.4	)		(491.4	)
Net income (loss) attributable to IDT Corporation	$	36.3		$	0.5		$	35.8			nm		$	57.7		$	(0.1	)	$	57.8			nm

nm—not meaningful

~~nm—not meaningful~~

Other Income (Expense) ~~Income,~~, net. Other income (expense) ~~income,~~, net consists of the following:

Three months ended
April 30, Nine months ended
April 30,
2020 2019 2020 2019
(in millions)
Foreign currency transaction (losses) gains $ (0.8 ) $ — $ 0.2 $ (0.8 )
(Loss) gain on investments (1.2 ) 0.6 (0.8 ) 0.7
Other (0.1 ) (0.2 ) (0.8 ) (0.4 )

Total other (expense) income, net $ (2.1 ) $ 0.4 $ (1.4 ) $ (0.5 )
Three months ended
April 30, Nine months ended
April 30,
2021 2020 2021 2020
(in millions)
Foreign currency transaction (losses) gains $ (1.1 ) $ (0.8 ) $ 0.4 $ 0.2
Equity in the net loss of investee (0.5 ) — (0.5 ) —
Write-off of tax assets related to prior periods — (0.1 ) — (0.8 )
Gain (loss) on investments 5.4 (1.2 ) 5.8 (0.8 )
Other — — (0.1 ) —
Total other income (expense), net $ 3.8 $ (2.1 ) $ 5.6 $ (1.4 )
31
On February 2, 2021, we paid $4.0 million to purchase shares of series B convertible preferred stock of a communications company (the equity method investee, or EMI). The shares purchased represent 23.95% of the outstanding shares of the EMI on an as converted basis. We account for this investment using the equity method since the series B convertible preferred stock is in-substance common stock, and we can exercise significant influence over the operating and financial policies of the EMI. We determined that on the date of the acquisition, there was a difference of $2.7 million between our investment in the EMI and our proportional interest in the equity of the EMI, which represented our share of the EMI’s customer list on the date of acquisition. This basis difference is being amortized over the 6-year estimated life of the customer list.
(Provision ~~for) Benefit from~~for Income Taxes. In the three and nine months ended April 30, 2021, we released $24.0 million of our valuation allowance on the portion of our deferred income tax assets that we are more likely than not going to utilize. We used the framework of Accounting Standards Codification Income Taxes (Topic 740) to determine whether the valuation allowance should be maintained or reversed. We considered the scheduled expiration of our net operating losses included in our deferred tax assets, projected future taxable income, and tax planning strategies in our assessment of the valuation allowance. The primary factors that resulted in the valuation allowance release were the three consecutive years of profitability in the United States and expected future profitability in both the United States and the United Kingdom that will utilize a portion of the net operating losses. Our tax planning strategies were not a significant factor in the analysis. The increase in income tax expense in the three and nine months ended April 30, ~~2020~~2021 compared to the similar periods in fiscal ~~2019~~2020, excluding the benefit from the valuation allowance released in fiscal 2021, was primarily due to differences in the amount of taxable income earned in the various taxing jurisdictions.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into U.S. federal law, which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions related to refundable payroll tax credits, deferment of the employer portion of social security payments, net operating loss carryback periods, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. For the three months ended April 30, 2020, the CARES Act did not have a significant impact on our consolidated financial statements. We will continue to assess the impact of the CARES Act on our consolidated financial statements.
Net (Income) Loss ~~(Income)~~ Attributable to Noncontrolling Interests. The change in the net (income) loss ~~(income)~~ attributable to noncontrolling interests in the three and nine months ended April 30, ~~2020~~2021 compared to the similar periods in fiscal ~~2019~~2020 was primarily due to the net loss attributable to noncontrolling interests of one of our subsidiaries of $0.4 million and $0.7 million in the three and nine months ended April 30, 2020, respectively. We did not record the net loss attributable to noncontrolling interests of this subsidiary in the similar periods in fiscal 2019. In addition, thea reduction in the net ~~income attributable to~~loss of NRS. In addition, in fiscal 2021, we had new noncontrolling interests from a business acquisition, and from equity granted in net2phone 2.0, Inc., or net2phone 2.0. In fiscal 2021, we acquired 56% of ~~other subsidiaries in~~ the ~~three and nine months ended April 30, 2020 compared to the similar periods in fiscal 2019 was the result~~issued shares of a ~~decrease in~~company that provides a digital distribution platform facilitating supply and distribution of mobile airtime and data top-ups and other services across borders via a single point application programming interface. On December 31, 2020, the ~~net income~~previously approved compensatory arrangement with each of ~~these subsidiaries.~~Howard S. Jonas, the Chairman of our Board of Directors, and Shmuel Jonas, our Chief Executive Officer, was finalized. Howard S. Jonas and Shmuel Jonas each received fifty restricted shares of net2phone 2.0 Class B common stock, which represents 5% of the outstanding common stock of net2phone 2.0. net2phone 2.0 is a new entity that owns and operates our net2phone-UCaaS segment.
Liquidity and Capital Resources
General
WeAs of the date of this report, including the impact of COVID-19, we currently expect our cash from operations ~~in the next twelve months~~ and the balance of cash, cash equivalents, debt securities, and current equity investments that we held on April 30, ~~2020 to~~2021 will be sufficient to meet our currently anticipated working capital and capital expenditure requirements during the twelve-month period ending April 30, ~~2021. As of the date of this filing, including the impact of COVID-19 on us, management believes that we continue to have sufficient liquidity and capital resources for the foreseeable future.~~2022.
At April 30, ~~2020,~~2021, we had cash, cash equivalents, debt securities, and unrestricted current equity investments of ~~$70.5~~$127.6 million and a working capital ~~deficit~~ (current ~~liabilities~~assets in excess of current ~~assets)~~liabilities) of ~~$16.6~~$26.7 million.

We treat unrestricted cash and cash equivalents held by IDT Payment Services as substantially restricted and unavailable for other purposes. At April 30, ~~2020,~~2021, “Cash and cash equivalents” in our consolidated balance sheet included an aggregate of ~~$6.6~~$15.3 million held by IDT Payment Services that was unavailable for other purposes.
Nine months ended
April 30,
Nine months ended
April 30,

2020 2019
2021

2020

(in millions) (in millions)
Cash flows (used in) provided by:
Cash flows provided by (used in):
Operating activities $ (70.6 ) $ 47.3 $ 38.1 $ (70.6 )
Investing activities (22.8 ) (13.9 ) (46.8 ) (22.8 )
Financing activities (1.3 ) 7.6 (4.2 ) (1.3 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents 4.0 (2.0 ) 6.7 4.0

(Decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents $ (90.7 ) $ 39.0
Decrease in cash, cash equivalents, and restricted cash and cash equivalents $ (6.2 ) $ (90.7 )
Operating Activities
Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable.
Gross trade accounts receivable decreased to ~~$53.7~~$48.9 million at April 30, ~~2020~~2021 from ~~$63.5~~$50.3 million at July 31, ~~2019~~2020 primarily due to collections in the nine months ended April 30, ~~2020 in excess of~~2021 that were greater than the amounts billed during the period.
Deferred revenue arises from sales of prepaid products and varies from period to period depending on the mix and the timing of revenues. Deferred revenue ~~decreased~~increased to ~~$37.8~~$42.8 million at April 30, ~~2020~~2021 from ~~$42.5~~$40.1 million at July 31, ~~2019~~2020 primarily due to ~~decreases~~increases in the BOSS Revolution Calling and ~~net2phone-Platform Services~~Mobile Top-Up deferred revenue balances.
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Customer ~~deposits~~deposit liabilities at IDT Financial Services Limited, our Gibraltar-based bank, decreased to ~~$114.1~~$110.7 million at April 30, ~~2020~~2021 from ~~$175.0~~$116.0 million at July 31, ~~2019~~2020 mainly ~~because~~as a result of the ~~decline~~loss of passporting rights under European Union law following the expiration of the ~~bank’s travel related programs~~Brexit transition period, partially offset by an increase of $5.8 million due to the ~~effect of COVID-19.~~
~~In August 2017, we entered into a Reciprocal Services Agreement, as amended, with a telecom operator~~change in ~~Central America for a full range of services, including, but not limited to, termination of inbound~~the foreign exchange rate. Our restricted cash and ~~outbound international long-distance voice calls. This agreement was terminated on~~cash equivalents included $110.9 million and $116.3 million at April 30, ~~2020. Pursuant~~2021 and July 31, 2020, respectively, held by the bank.
On December 21, 2020, we received $2.0 million from the sale to a third party of all our rights under the ~~agreement, we deposited $9.2 million into an escrow account as security for~~Payment Card Interchange Fee and Merchant Discount Antitrust Litigation. The lawsuit is about claims that merchants paid excessive fees to accept Visa and Mastercard cards between January 1, 2004 and January 25, 2019 because Visa and Mastercard, individually, and together with their respective member banks, violated the ~~benefit of the telecom operator. On May 11, 2020, the $9.2 million security deposit was released from escrow and returned to us.~~antitrust laws.
On June 21, 2018, in South Dakota v Wayfair Inc., the United States Supreme Court held that states may charge sales tax on purchases made from out-of-state sellers, even if the seller does not have a physical presence in the taxing state. We ~~are evaluating~~have evaluated our state tax filings with respect to the Wayfair decision and are in the process of reviewing our ~~collection~~remittance practices. It is possible that one or more jurisdictions may assert that we have liability for periods for which we have not collected sales, use or other similar taxes, and if such an assertion or assertions were successful it could adversely affect our business, financial position, and operating results. One or more jurisdictions may change their laws or policies to apply their sales, use or other similar taxes to our operations, and if such changes were made it could materially and adversely affect our business, financial position, and operating results.
Investing Activities
Our capital expenditures were ~~$11.9~~$13.5 million and ~~$13.7~~$11.9 million in the nine months ended April 30, ~~2020~~2021 and ~~2019,~~2020, respectively. We currently anticipate that total capital expenditures for the twelve-month period ending April 30, ~~2021~~2022 will be ~~$14~~$18 million to ~~$16~~$20 million. We expect to fund our capital expenditures with our net cash provided by operating activities and cash, cash equivalents, debt securities, and current equity investments on hand.
On December 3, 2020, our subsidiary IDT International Telecom, Inc., or IDTIT, acquired 51% of the issued shares of a company for $2.4 million, net of cash acquired. We also recorded $0.4 million for the estimated fair value of contingent consideration. The contingent consideration is $0.5 million that will be paid (a) no later than November 30, 2021 if the acquired company generates EBITDA (as defined in the purchase agreement) of no less than $1.0 million between October 1, 2020 and September 30, 2021; or (b) no later than November 30, 2022 if the acquired company generates EBITDA of no less than $1.0 million between October 1, 2021 and September 30, 2022. Also, pursuant to a Put/Call Option Agreement related to the 5% of the issued shares of the acquired company that the seller did not initially sell to IDTIT, or the Option Shares, the seller exercised its option and on March 22, 2021, IDTIT purchased the Option Shares for $0.3 million.
On December 11, 2019, our subsidiary, net2phone, Inc. acquired 100% of the outstanding shares of Ringsouth Europa, S.L., a ~~business~~regional provider of cloud communications ~~provider headquartered~~services to businesses in ~~Murcia, Spain. The acquisition expands net2phone’s business into~~ Spain. The cash paid for the acquisition was $0.5 million. We also recorded $0.4 million for the estimated fair value of contingent consideration. The contingent consideration includes two potential payments to the seller of $0.4 million each, based on monthly recurring revenue targets to be achieved over a 36-month period and 48-month period. The second potential payment is not contingent upon meeting the target for the first payment.
On ~~September 14, 2018,~~December 7, 2020, we ~~acquired 100%~~purchased from Rafael 218,245 newly issued shares of Rafael’s Class B common stock and a warrant to purchase up to 43,649 shares of Rafael’s Class B common stock at an exercise price of $22.91 at any time on or after December 7, 2020 and on or prior to June 6, 2022. The aggregate purchase price was $5.0 million. The purchase price was based on a per share price of $22.91, which was the closing price of Rafael’s Class B common stock on the New York Stock Exchange on the trading day immediately preceding the purchase date. On March 15, 2021, we exercised the warrant in full and purchased 43,649 shares of Rafael’s Class B common stock for cash of $1.0 million.
On February 2, 2021, we paid $4.0 million to purchase shares of series B convertible preferred stock representing 23.95% of the outstanding shares of ~~Versature, a UCaaS provider serving~~ the ~~Canadian market. In the nine months ended April 30, 2019, the cash paid for the acquisition net of cash acquired was $5.5 million.~~EMI on an as converted basis.

Purchases of debt securities and equity investments were ~~$14.8~~$39.3 million and ~~$1.0~~$14.8 million in the nine months ended April 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Proceeds from maturities and sales of debt securities and redemptions of equity investments were ~~$4.3~~$18.7 million and ~~$6.3~~$4.3 million in the nine months ended April 30, 2021 and 2020, ~~and 2019,~~ respectively.
Financing Activities
We distributed cash of ~~$0.7~~$0.6 million and ~~$1.2~~$0.7 million in the nine months ended April 30, ~~2020~~2021 and ~~2019,~~2020, respectively, to the noncontrolling interests in certain of our subsidiaries.
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On December 21, 2018, we sold 2,546,689 shares of our Class B common stock that were held in treasury to Howard S. Jonas for aggregate consideration of $14.8 million. The price per share of $5.89 was equal to the closing price of our Class B common stock on April 16, 2018, the last closing price before approval of the sale by our Board of Directors and its Corporate Governance Committee. On May 31, 2018, Mr. Jonas paid $1.5 million of the purchase price, and he paid the balance of the purchase price on December 21, 2018 after approval of the sale by the Company’s stockholders at the 2018 annual meeting of stockholders. The purchase price was reduced by approximately $0.2 million, which was the amount of dividends paid on 2,546,689 shares of our Class B common stock whose record date was between April 16, 2018 and the issuance of the shares.
In the nine months ended April 30, ~~2020~~2021 and ~~2019,~~2020, we repaid financing-related other liabilities of $0.1 million and $0.4 million, ~~and $0.6 million,~~ respectively.
On April 20, 2020, our subsidiary, IDT Domestic Telecom, Inc., or IDT DT, received loan proceeds of $10.0 million from TD Bank, N.A, pursuant to the Paycheck Protection Program, or the PPP Loan, under the CARES Act, administered by the U.S. Small Business Administration. On April 29, 2020, IDT DT returned all $10.0 million in proceeds from the PPP Loan. In light of the oversubscription of applications for loans under the PPP, and despite IDT DT’s need for the funds to support its operations, IDT DT returned the loan proceeds in order to make those funds available to other borrowers that may be in greater need than IDT DT.
~~As of April 30, 2020, our~~Our subsidiary, IDT Telecom, Inc., entered into a credit agreement with TD Bank, N.A. for a line of credit facility for up to a maximum principal amount of $25.0 million. IDT Telecom may use the proceeds to finance working capital requirements, acquisitions and other general corporate purposes. The line of credit facility is secured by primarily all of IDT Telecom’s assets. The principal outstanding bears interest per annum at the LIBOR rate adjusted by the Regulation D maximum reserve requirement plus 125 basis points. Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest is due on the maturity date of July 15, 2020. IDT Telecom pays a quarterly unused commitment fee of 0.3% per annum on the average daily balance of the unused portion of the $25.0 million commitment. IDT Telecom is required to comply with various affirmative and negative covenants as well as maintain certain financial targets and ratios during the term of the facility, including IDT Telecom may not pay any dividend on its capital stock. At April 30, 2020, there was no amount outstanding under the facility. In the nine months ended April 30, 2020, IDT Telecom borrowed and repaid an aggregate of $1.4 million under the facility.
or IDT Telecom, had a credit agreement, dated as of ~~October 31, 2018,~~April 30, 2020, with TD Bank, N.A. for a line of credit facility for up to a maximum principal amount of $25.0 million. The credit agreement terminated on July 15, ~~2019.~~2020. In the nine months ended April 30, ~~2019,~~2020, IDT Telecom borrowed and repaid an aggregate of ~~$3.0~~$1.4 million under the facility.
Subsequent to the end of the third quarter of fiscal 2021, IDT Telecom entered into a credit agreement, dated as of May 17, 2021, with TD Bank, N.A. for a revolving credit facility for up to a maximum principal amount of $25.0 million. IDT Telecom may use the proceeds to finance working capital requirements and for certain closing costs of the facility. The revolving credit facility is secured by primarily all of IDT Telecom’s assets. The principal outstanding bears interest per annum at the Intercontinental Exchange Benchmark Administration Ltd. LIBO rate multiplied by the Regulation D maximum reserve requirement plus 125 to 175 basis points, depending upon IDT Telecom’s leverage ratio as computed for the most recent fiscal quarter. Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest is due in May 2024. IDT Telecom pays a quarterly unused commitment fee on the average daily balance of the unused portion of the $25.0 million commitment of 30 to 85 basis points, depending upon IDT Telecom’s leverage ratio as computed for the most recent fiscal quarter. IDT Telecom is required to comply with various affirmative and negative covenants as well as maintain certain targets based on financial ratios during the term of the revolving credit facility. IDT Telecom was in compliance with all of the covenants as of the date of this Quarterly Report on Form 10-Q.
In the nine months ended April 30, 2021, we received proceeds from the exercise of stock options of $0.7 million for which we issued 81,041 shares of our Class B common stock. In the nine months ended April 30, 2020, we received proceeds from the exercise of stock options of $0.3 million for which we issued 32,551 shares of our Class B common stock. ~~There were no stock option exercises in the nine months ended April 30, 2019.~~
We have an existing stock repurchase program authorized by our Board of Directors for the repurchase of shares of our Class B common stock. The Board of Directors authorized the repurchase of up to 8.0 million shares in the aggregate. In the nine months ended April 30, 2021, we repurchased 463,792 shares of our Class B common stock for an aggregate purchase price of $2.8 million. In the nine months ended April 30, 2020, we repurchased 40,763 shares of our Class B common stock for an aggregate purchase price of $0.2 million. ~~In the nine months ended April 30, 2019, we repurchased 729,110 shares of Class B common stock for an aggregate purchase price of $3.9 million.~~ At April 30, ~~2020, 6.9~~2021, 5.8 million shares remained available for repurchase under the stock repurchase program.
In the nine months ended April 30, ~~2020~~2021 and ~~2019,~~2020, we paid ~~$0.3~~$1.3 million and ~~$28,000,~~$0.3 million, respectively, to repurchase ~~37,348~~109,381 and ~~3,748~~37,348 shares, respectively, of our Class B common stock that were tendered by employees of ours to satisfy the employees’ tax withholding obligations in connection with the lapsing of restrictions on awards of deferred stock units and restricted stock. Such shares were repurchased by us based on their fair market value on the trading day immediately prior to the vesting date.
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Other Sources and Uses of Resources
We intend to, where appropriate, make strategic investments and acquisitions to complement, expand, and/or enter into new businesses. In considering acquisitions and investments, we search for opportunities to profitably grow our existing businesses and/or to add qualitatively to the range and diversification of businesses in our portfolio. At this time, we cannot guarantee that we will be presented with acquisition opportunities that meet our ~~return on investment~~return-on-investment criteria, or that our efforts to make acquisitions that meet our criteria will be successful.
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Contractual Obligations and Other Commercial Commitments
The following table quantifies our future contractual obligations and other commercial commitments at April 30, ~~2020:~~2021:

Payments Due by Period
(in millions)

Total

Less than 1 year

1–3 years

4–5 years

After 5 years
Total Less than
1 year 1–3 years 4–5 years After 5 years
Purchase commitments (1) $ 8.7 $ 8.7 $ — $ — $ —
Purchase commitments $ 3.4 $ 3.4 $ — $ — $ —
Connectivity obligations under service agreements 1.7 1.0 0.7 — — 1.1 0.8 0.3 — —
Operating leases including short-term leases 12.0 3.1 5.1 3.8 — 9.4 3.1 4.4 1.9 —
Total contractual obligations (2) $ 22.4 $ 12.8 $ 5.8 $ 3.8 $ —
Total contractual obligations (1) $ 13.9 $ 7.3 $ 4.7 $ 1.9 $ —
(1) Purchase commitments include the commitment under a Memorandum of Understanding with a telecom operator in Central America, including, but not limited to, termination of inbound and outbound international long-distance voice calls.
~~(2)~~ The above table does not include an aggregate of ~~$18.0~~$19.8 million in performance bonds ~~or $0.8~~and $1.3 million in potential contingent consideration related to ~~the Ringsouth acquisition~~business acquisitions due to the uncertainty of the amount and/or timing of any such payments.

Off-Balance Sheet Arrangements
We do not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources, other than the following.
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In connection with the Rafael Spin-Off in March 2018, we and Rafael entered into various agreements prior to the spin-off including a Separation and Distribution Agreement to effect the separation and provide a framework for our relationship with Rafael after the spin-off, and a Tax Separation Agreement, which sets forth the responsibilities of us and Rafael with respect to, among other things, liabilities for federal, state, local and foreign taxes for periods before and including the spin-off, the preparation and filing of tax returns for such periods and disputes with taxing authorities regarding taxes for such periods. Pursuant to the Separation and Distribution Agreement, we indemnify Rafael and Rafael indemnifies us for losses related to the failure of the other to pay, perform or otherwise discharge, any of the liabilities and obligations set forth in the agreement. Pursuant to the Tax Separation Agreement, we indemnify Rafael from all liability for taxes of ours, other than Rafael and its subsidiaries, for any taxable period, and from all liability for taxes due to the spin-off.
In connection with our spin-off of Straight Path in July 2013, we and Straight Path entered into various agreements prior to the spin-off including a Separation and Distribution Agreement to effect the separation and provide a framework for our relationship with Straight Path after the spin-off, and a Tax Separation Agreement, which sets forth the responsibilities of us and Straight Path with respect to, among other things, liabilities for federal, state, local and foreign taxes for periods before and including the spin-off, the preparation and filing of tax returns for such periods and disputes with taxing authorities regarding taxes for such periods. Pursuant to the Separation and Distribution Agreement, we indemnify Straight Path and Straight Path indemnifies us for losses related to the failure of the other to pay, perform or otherwise discharge, any of the liabilities and obligations set forth in the agreement. Pursuant to the Tax Separation Agreement, we indemnify Straight Path from all liability for taxes of Straight Path or any of its subsidiaries or relating to the Straight Path business with respect to taxable periods ending on or before the spin-off, from all liability for taxes of ours, other than Straight Path and its subsidiaries, for any taxable period, and from all liability for taxes due to the spin-off. (See Note 1514 to the Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q).
We have performance bonds issued through third parties for the benefit of various states in order to comply with the states’ financial requirements for money remittance licenses and telecommunications resellers. At April 30, ~~2020,~~2021, we had aggregate performance bonds of ~~$18.0~~$19.8 million outstanding.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
Smaller reporting companies are not required to provide the information required by this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were ~~not~~ effective as of April 30, 2020 because of a material weakness in our internal control over financial reporting relating to management review controls associated with non-income related taxes related to one of our foreign entities. This material weakness was initially identified as of July 31, 2019 (see Item 9A to Part II of our Annual Report on Form 10-K for fiscal year ended July 31, 2019).2021.
~~Remediation.~~As set forth below, following our Audit Committee’s independent review, management plans to take the following steps to remediate the material weakness identified above and improve our internal control over financial reporting:
● ~~Explore engaging an independent third party to assist in our evaluation of all non-income related taxes, relating to material foreign subsidiaries;~~
● ~~Provide additional outside training to employees responsible for tax compliance; and~~
● ~~Enhance internal documentation support related to our tax position.~~
At April 30, 2020, we had explored the engagement of a third party as described above and determined that at the present time it would not materially improve our evaluation of all non-income related taxes, relating to material foreign subsidiaries. As a matter of policy, we will continue to assess engaging specialists as deemed appropriate. In addition, employees responsible for tax compliance had completed relevant training, and the enhanced internal documentation support related to our tax position was in process. Management and our Audit Committee continue to monitor these remedial measures and expect to test the effectiveness of these internal controls and procedures during the quarter ending July 31, 2020.
Notwithstanding the material weakness described above, we have performed additional analyses and other procedures to enable management to conclude that our financial statements included in this Form 10-Q fairly present, in all material respects, our financial condition and results of operations as of and for the three and nine months ended April 30, 2020.
Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended April 30, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Legal proceedings in which we are involved are ~~more fully~~ described in Note 1514 to the Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
There are no material changes from the risk factors previously disclosed in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2019,~~2020, except for the following:
~~Our business, results of operation and financial condition could be adversely affected by the coronavirus COVID-19 pandemic and the restrictions put in place in connection therewith.~~
We are responding to the global outbreak of COVID-19 by taking steps to mitigate the potential risks to us posed by its spread and the impact of the restrictions put in place by governments to protect the population. We continue to execute our business continuity plan and have implemented a comprehensive set of actions for the health and safety of our employees, customers, and business partners. Our employees transitioned to work-from-home during the fiscal quarter where appropriate.
We continue to implement strong physical and cyber-security measures to ensure our systems remain functional to both serve our operational needs with a remote workforce and to provide uninterrupted service to our customers. We face challenges due to the need to operate with the remote workforce and are addressing those challenges to minimize the impact on our ability to operate.
In the three months ended April 30, 2020, the impacts of COVID-19 and related public health restrictions had a mixed financial impact on our business, operations and financial condition. Negative impacts of COVID-19 on us included the following:
● ~~net2phone-UCaaS’ customer base growth slowed as sales became increasingly difficult as the pandemic spread in key markets;~~
● ~~Reduction in the operations or the closure of independent retailers that offer our BOSS Revolution services or utilize our National Retail Solutions services;~~
● ~~Decreased retail consumer traffic resulting from concerns about the spread of COVID-19;~~
● ~~Carrier Services revenue was impacted by the closure of corporate offices and the decline of commerce globally; and~~
● ~~Reduced staffing levels at our call centers and field operations.~~
If the COVID-19 pandemic continues for a prolonged period or has a more significant impact than currently, our business, operations and financial condition could be impacted in more significant ways. The continued spread of COVID-19 and efforts to contain the virus could have the following impacts, in addition to exacerbating the impacts described above:
● ~~Adversely impact our strategic business plans and growth strategy;~~
● ~~Result in increases in bad debt expense and accounts receivable write-offs as a result of delayed or non-payment from our customers;~~
● ~~Reduce demand for our offerings as widespread unemployment reduces consumer buying power;~~
● ~~Reduce the availability and productivity of our employees and third-party resources;~~
● ~~Cause us to experience an increase in costs as a result of our emergency measures;~~
● ~~Cause impairments of goodwill or long-lived assets; and~~
● ~~Cause a deterioration in our financial metrics or the business environment that adversely impacts our credit ratings.~~
As of April 30, 2020, we have not experienced significant adverse impacts to our results of operations, financial condition, or cash flows. However, the situation remains fluid and we cannot predict with certainty the potential impact of COVID-19 on our business, results of operations, financial condition and cash flows.
Our U.K.-based businesses and business between the U.K. and other countries face risks related to the United Kingdom leaving the European Union (“Brexit”).
We operate our business worldwide, including meaningful operations in the United Kingdom. Accordingly, we are subjected to risks from changes in the regulatory environment in various countries. On June 23, 2016, the electorate in the United Kingdom voted in favor of leaving the European Union, or EU, (commonly referred to as “Brexit”). The United Kingdom formally left the EU on April 30, 2020, and ~~has~~had entered a transition period until December 31, 2020. ~~During~~The EU and the United Kingdom concluded the EU-UK Trade and Cooperation Agreement (the “TCA”) on December 24, 2020, which took effect provisionally on January 1, 2021, following the end of the formal transition period and will become formally applicable once ratified by both the United Kingdom and the EU. The TCA sets out the arrangements between the United Kingdom and EU on trade in certain areas (e.g. goods and some services, energy, fisheries, social security coordination), however there is still uncertainty over how its terms will play out in practice and there are still key aspects of the United Kingdom’s relationship with the EU which are not covered by the TCA, such as in respect of financial services. We expect that uncertainty over the terms of the TCA and other future agreements between the United Kingdom and EU will continue to cause political and economic uncertainty, which could harm our business and financial results. The withdrawal will, among other outcomes, disrupt the free movement of goods, services and people between the United Kingdom and the EU, ~~have stated~~and result in increased legal and regulatory complexities, as well as potential higher costs of conducting business in Europe. Until there is greater understanding on how the terms of the TCA will play out in practice, and until the terms of other potential agreements that ~~they will seek to negotiate a trade deal, and~~ the United Kingdom ~~will remain in both~~may eventually enter into with the EU ~~customs union and single market.~~

~~The~~are known, it is not possible to determine the extent of the impact that the United Kingdom’s departure from the EU and/or any related matters may have on us; however, any of these effects of Brexit, ~~will depend on agreements, if any, the United Kingdom makes to retain access to EU markets. Brexit creates an uncertain political~~ and ~~economic environment~~others we cannot anticipate, could adversely affect our business, business opportunities, results of operations, financial condition, and cash flows. Likewise, similar actions taken by European and other countries in ~~the United Kingdom and potentially across other EU member states for the foreseeable future, including while the terms of Brexit are being negotiated, and such uncertainties~~which we operate could ~~impair~~have a similar or ~~limit our ability to transact business in the member EU states.~~even more profound impact.
Further, Brexit could adversely affect European and worldwide economic or market conditions and could contribute to instability in global financial markets, and the value of the Pound Sterling currency or other currencies, including the Euro. We are exposed to the economic, market, and fiscal conditions in the United Kingdom and the EU and to changes in any of these conditions. ~~Depending on the terms reached regarding Brexit, it is possible that there may be adverse practical and/or operational implications on our business.~~
A significant amount of the regulatory regime that applies to us in the United Kingdom is derived from EU directives and regulations. Brexit could change the legal and regulatory framework within the United Kingdom where we operate and is likely to lead to legal uncertainty and potentially divergent national laws and regulations as the United Kingdom determines which EU laws to replace or replicate. Consequently, no assurance can be given as to the impact of Brexit and, in particular, no assurance can be given that our operating results, financial condition and prospects would not be adversely impacted by the result.
IDT Financial Services Limited, or IDTFS, our Gibraltar-based bank, currently operates under a license from the Gibraltar Financial Services Commission. As an overseas British Territory, following the expiration of the Brexit transition period, the passporting rights previously enjoyed by IDTFS under EU law ~~will cease~~have ceased to be in effect. ~~Absent other arrangements or accommodations provided by the EU or individual member states, IDTFS will not be permitted to provide services to customers in EU countries. We~~Although we are currently seeking an e-money license issued by an EU country, since this was not secured prior to expiration of the transition period, alternative arrangements were made with third parties to service customers in EU countries previously serviced by IDTFS. Our inability to service these customers will lead to a reduction in the revenues previously earned from them.
Eight trusts for the benefit of sons and daughters of Howard S. Jonas, our Chairman of the Board of Directors, hold shares that, in the aggregate, represent more than a majority of the combined voting power of our outstanding capital stock, which may limit the ability of other stockholders to affect our management.
Eight trusts for the benefit of children of Howard S. Jonas, (the “Trusts”), our Chairman of the Board, collectively have voting power over 1,574,326 shares of our common stock, (which is all the issued and outstanding shares of the Class A common stock), which are convertible into shares of our Class B common stock on a 1-for-1 basis, and 2,382,371 shares of our Class B common stock, representing approximately 69.5% of the combined voting power of our outstanding capital stock, as of June 2, 2021. In addition, as of June 2, 2021, The HSJ 2020 IDT Annuity Trust holds 2,502,899 shares of our Class B common stock. Each of the Trusts has a different, independent trustee.
Howard S. Jonas serves as our Chairman of the Board, which is not an officer position. However, he is our founder and served as an executive officer, including our Chief Executive Officer, for a very significant time period, and the members of the Board and management often look to him for guidance on major financial, operational and strategic matters.
37
Howard S. Jonas does not have the right to direct or control the voting of the shares of our common stock that is held by the Trusts, and the independent trustees hold sole voting and dispositive power over the common stock held by the Trusts. However, he is the trustor of the trusts and is the father of each of the beneficiaries of the Trusts and his views may be taken into account by the trustees and others related to the Trusts.
We are not aware of any voting agreement between or among any of the Trusts and/or Howard S. Jonas, but if such a voting agreement or other similar arrangement exists or were to be consummated, if all or several or all of the Trusts were to act in concert, or if we ~~cannot assure~~issued additional Class A common stock, certain or all of the Trusts and/or Howard S. Jonas along with holders of the Class A common stock would be able to control matters requiring approval by our stockholders, including the election of all of the directors, amendment of organizational documents and the approval of significant corporate transactions, including any merger, consolidation or sale of all or substantially all of our assets. As a result, the ability of any of our other stockholders to influence our management may be limited. In addition, our dual class structure has an anti-takeover effect, and accordingly, the holders of the shares of Class A common stock have the ability to prevent any change in control transactions that ~~any~~may otherwise be in the best interest of stockholders.
We may be harmed by certain imminent FCC Orders and rules that effect the telecommunications marketplace.
In the Telephone Robocall Abuse Criminal Enforcement and Deterrence, or TRACED, Act, Congress gave the FCC new tools to fight unwanted, and often illegal, robocalls, the top consumer complaint reported to the FCC annually. The TRACED Act required the FCC to mandate the STIR/SHAKEN caller identification framework. STIR/SHAKEN enables phone companies to verify that the caller ID information transmitted with a call matches the caller’s real phone number. The FCC has issued a series of Orders and adopted several rules to implement the TRACED Act. For example, by June 30, 2021, many domestic and foreign carriers must register with the FCC specifically for TRACED Act compliance and by September 28, 2021, we and other similarly situated carriers will not be able to accept certain IP-based telecommunications traffic from foreign and domestic carrier partners unless those carriers are registered with the FCC. Of equal importance, carriers such ~~license~~as us have the right to “sign” their traffic, effectively attesting that the traffic they are transmitting is not illegal robocalls.
The FCC’s rules present several concerns to all carriers. Notably, the rules extend to many foreign carriers, and it is unclear whether foreign carriers will be ~~issued~~sufficiently educated and experienced to implement U.S. rules and regulations. Foreign carrier compliance, or the lack thereof, could impact U.S. carriers as they seek to meet their own regulatory obligations. There may also be changes in the marketplace as foreign carriers may look to limit U.S. carrier partners to whom they transmit calls for termination in the U.S. that are subject to the STIR/SHAKEN rules.
We anticipate meeting our regulatory obligations under the STIR/SHAKEN rules and we are undertaking efforts to prevent us from being harmed by potential changes in the marketplace. Nevertheless, the FCC’s rules allow for the possibility that well-prepared carriers with anti-robocalling procedures in place may fail and be punished for their failure, despite their best efforts. Moreover, because the STIR/SHAKEN rules may have a ~~timely manner, if at all, or if~~significant impact on the ~~conditions~~telecommunications marketplace, it is difficult to predict their outcome. We are prepared for the implementation of ~~any such license that is issued will~~STIR/SHAKEN but are concerned about its impact on the ~~operations of IDTFS. If IDTFS does not obtain~~market as a ~~license in a timely manner, its operations~~whole and ~~ability to service its customers would be materially and adversely affected.~~on us specifically.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information with respect to purchases by us of our shares during the third quarter of fiscal ~~2020:~~2021:
Total
Number of
Shares
Purchased Average
Price
per Share Total Number
of Shares
Purchased as
part of
Publicly
Announced
Plans or
Programs Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Plans or
Programs (1)
February 1-29, 2020 — $ — — 6,903,406
March 1–31, 2020 8,560 $ 4.99 8,560 6,894,846
April 1–30, 2020 32,203 $ 5.21 32,203 6,862,643
Total 40,763 $ 5.17 40,763
~~(1)~~
Total
Number of
Shares
Purchased
Average
Price
per Share
Total Number
of Shares
Purchased as
part of
Publicly
Announced
Plans or
Programs
Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Plans or
Programs (1)
February 1-28, 2021 — $ — — 5,768,497
March 1–31, 2021 — $ — — 5,768,497
April 1–30, 2021 — $ — — 5,768,497
Total — $ — —
(1) On January 22, 2016, our Board of Directors approved a stock repurchase program to purchase up to 8.0 million shares of our Class B common stock.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
None

35
38
Item 6. Exhibits
Exhibit

Number

Description

31.1* Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.

31.2* Certification of Chief Financial Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.

32.1* Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

32.2* Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

101.INS*101.SCH* ~~XBRL Instance Document~~
101.SCH* XBRL Taxonomy Extension Schema Document

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* XBRL Taxonomy Extension Label Linkbase Document

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed or furnished herewith.

39
~~SIGNATURES~~
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
IDT C~~ORPORATION~~CORPORATION
June 9, ~~2020~~2021 By:
/s/S~~hmuel~~J~~onas~~Shmuel Jonas
Shmuel Jonas
Chief Executive Officer
June 9, ~~2020~~2021 By:
/s/M~~arcelo~~F~~ischer~~Marcelo Fischer
Marcelo Fischer
Chief Financial Officer
37
40

(in thousands)	Telecom & Payment Services		net2phone		Total
Three Months Ended April 30, 2020
United States	$	216,310	$	8,344	$	224,654
Outside the United States:
United Kingdom		26,360		3		26,363
Netherlands		52,237		—		52,237
Other		13,883		4,199		18,082
Total outside the United States		92,480		4,202		96,682
Total	$	308,790	$	12,546	$	321,336

	Three Months Ended April 30, 2019
	Previously Reported			Error Correction			As Adjusted
	(in thousands, except per share data)

Consolidated Statement of Operations:
Other operating expense, net	$	(120	)	$	(2,300	)	$	(2,420	)
Benefit from income taxes	$	871		$	600		$	1,471
Net income	$	4,157		$	(1,700	)	$	2,457
Net income attributable to IDT Corporation	$	3,870		$	(1,700	)	$	2,170
Earnings per share attributable to IDT Corporation common stockholders:
Basic	$	0.15		$	(0.07	)	$	0.08
Diluted	$	0.15		$	(0.07	)	$	0.08

	Nine Months Ended April 30, 2019
	Previously Reported			Error Correction			As Adjusted
	(in thousands, except per share data)

Consolidated Statement of Operations:
Other operating expense, net	$	(405	)	$	(5,400	)	$	(5,805	)
Provision for income taxes	$	(2,054	)	$	1,350		$	(704	)
Net income (loss)	$	3,498		$	(4,050	)	$	(552	)
Net income (loss) attributable to IDT Corporation	$	2,610		$	(4,050	)	$	(1,440	)
Earnings (loss) per share attributable to IDT Corporation common stockholders:
Basic	$	0.10		$	(0.16	)	$	(0.06	)
Diluted	$	0.10		$	(0.16	)	$	(0.06	)

	Unrealized Gain (Loss) on Available-for- Sale Securities		Foreign Currency Translation			Accumulated Other Comprehensive Loss
	(in thousands)
Balance, July 31, 2019	$	—	$	(4,858	)	$	(4,858	)
Other comprehensive income (loss) attributable to IDT Corporation		84		(2,364	)		(2,280	)
Balance, April 30, 2020	$	84	$	(7,222	)	$	(7,138	)

(in thousands)	Telecom & Payment Services			net2phone			Corporate			Total
Three Months Ended April 30, 2020
Revenues	$	308,790		$	12,546		$	—		$	321,336
Income (loss) from operations		9,934			(3,932	)		(2,210	)		3,792
Other operating expense, net		—			(386	)		152			(234	)

Three Months Ended April 30, 2019
Revenues	$	328,838		$	12,417		$	—		$	341,255
Income (loss) from operations		4,245			(1,266	)		(2,530	)		449
Other operating expense, net		(2,300	)		—			(120	)		(2,420	)

Nine Months Ended April 30, 2020
Revenues	$	947,342		$	38,083		$	—		$	985,425
Income (loss) from operations		21,441			(10,512	)		(7,207	)		3,722
Other operating expense, net		(2,150	)		(983	)		(269	)		(3,402	)

Nine Months Ended April 30, 2019
Revenues	$	1,018,637		$	34,407		$	—		$	1,053,044
Income (loss) from operations		12,605			(4,663	)		(7,768	)		174
Other operating expense, net		(5,185	)		25			(645	)		(5,805	)


Payments Due by Period (in millions)		Total		Less than 1 year		1–3 years		4–5 years		After 5 years	Total		Less than 1 year		1–3 years		4–5 years		After 5 years
Purchase commitments (1)	$	8.7	$	8.7	$	—	$	—	$	—
Purchase commitments											$	3.4	$	3.4	$	—	$	—	$	—
Connectivity obligations under service agreements		1.7		1.0		0.7		—		—		1.1		0.8		0.3		—		—
Operating leases including short-term leases		12.0		3.1		5.1		3.8		—		9.4		3.1		4.4		1.9		—
Total contractual obligations (2)	$	22.4	$	12.8	$	5.8	$	3.8	$	—
Total contractual obligations (1)											$	13.9	$	7.3	$	4.7	$	1.9	$	—

	●	~~net2phone-UCaaS’ customer base growth slowed as sales became increasingly difficult as the pandemic spread in key markets;~~

	●	~~Reduction in the operations or the closure of independent retailers that offer our BOSS Revolution services or utilize our National Retail Solutions services;~~

	●	~~Decreased retail consumer traffic resulting from concerns about the spread of COVID-19;~~

	●	~~Carrier Services revenue was impacted by the closure of corporate offices and the decline of commerce globally; and~~

	●	~~Adversely impact our strategic business plans and growth strategy;~~

	●	~~Result in increases in bad debt expense and accounts receivable write-offs as a result of delayed or non-payment from our customers;~~

	●	~~Reduce demand for our offerings as widespread unemployment reduces consumer buying power;~~

	●	~~Reduce the availability and productivity of our employees and third-party resources;~~

	●	~~Cause us to experience an increase in costs as a result of our emergency measures;~~

	●	~~Cause impairments of goodwill or long-lived assets; and~~

	Total Number of Shares Purchased		Average Price per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
February 1-29, 2020		—	$	—		—		6,903,406
March 1–31, 2020		8,560	$	4.99		8,560		6,894,846
April 1–30, 2020		32,203	$	5.21		32,203		6,862,643
Total		40,763	$	5.17		40,763

	~~(1)~~	Total Number of Shares Purchased		Average Price per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
February 1-28, 2021			—	$	—		—		5,768,497
March 1–31, 2021			—	$	—		—		5,768,497
April 1–30, 2021			—	$	—		—		5,768,497
Total			—	$	—		—

Exhibit Number		Description

31.1*		Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

101.INS101.SCH		~~XBRL Instance Document~~

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

		IDT C~~ORPORATION~~CORPORATION

June 9, ~~2020~~2021	By:	/s/S~~hmuel~~J~~onas~~Shmuel Jonas
		Shmuel Jonas Chief Executive Officer

June 9, ~~2020~~2021	By:	/s/M~~arcelo~~F~~ischer~~Marcelo Fischer
		Marcelo Fischer Chief Financial Officer