IDT CORP (IDT) Business

Item 1. Business.

OVERVIEW

IDT is a provider of fintech and communications solutions focused on certain under-served consumer and business-to-business, or B2B, markets. Our offerings are built around a common core of strategic assets, and we seek to maximize the synergies among them while integrating AI-powered functionalities, where practical, to achieve consistent growth and profitability.

IDT’s key businesses are:

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IDT also operates other, smaller businesses and offerings including early-stage business initiatives and mature businesses in harvest mode.

Our headquarters is located at 520 Broad Street, Newark, New Jersey 07102. The main telephone number at our headquarters is (973) 438-1000 and our corporate website’s home page is www.idt.net.

SEGMENT REPORTING

We have four reportable business segments: (1) NRS; (2) Fintech; (3) net2phone; and (4) Traditional Communications.

The NRS segment, which contributed revenue of $159.4 million in fiscal 2026 and $128.8 million in fiscal 2025 (12.3% and 10.5% of our total revenues, respectively), comprises our NRS business.

The Fintech segment, which contributed revenue of $176.0 million in fiscal 2026 and $154.6 million in fiscal 2025 (13.6% and 12.6 % of our total revenues, respectively), comprises our BOSS Money remittance business and other, significantly smaller, financial businesses including our Gibraltar-based bank offering certain banking services within the European Economic Union, the U.K. and Israel.

The net2phone segment, which contributed revenue of $96.6 million in fiscal 2026 and $87.9 million in fiscal 2025 (7.4% and 7.1% of our total revenues, respectively), comprises our net2phone business.

The Traditional Communications segment, which contributed revenue of $865.9 million in fiscal 2026 and $860.2 million in fiscal 2025 (66.7% and 69.8% of our total revenues, respectively) comprises IDT Digital Payments, BOSS Revolution, and IDT Global, as well as other small businesses and offerings including early-stage business initiatives and mature businesses in harvest mode.

Financial information by segment is presented in Note 3 to our Consolidated Financial Statements in Item 8 to Part II of this Annual Report.

We make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports, and all beneficial ownership reports on Forms 3, 4 and 5 filed by directors, officers and beneficial owners of more than 10% of our equity through the investor relations page of our website (http://ir.idt.net/) as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission. Our website also contains information not incorporated into this Annual Report on Form 10-K or our other filings with the Securities and Exchange Commission.

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KEY EVENTS IN OUR HISTORY AND RECENT DEVELOPMENTS

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OUR STRATEGY

We are a fintech and communications solutions provider with synergistic offerings focused on underserved, fragmented consumer and B2B markets. Many of our offerings leverage one or more of our core strategic assets – assets that we have carefully built during the thirty-six years since our inception. These assets include:

The development of each of our current high-margin growth businesses – NRS, BOSS Money, and net2phone - has been principally organic and financed with the cash flows generated by our mature businesses. Consequently, we have avoided debt financing and dilutive capital raises. Today, each of these high-margin growth businesses is cash-flow positive, and in combination with our efforts to maximize the cash generation of our lower margin, mature offerings, they have enabled us to improve our consolidated bottom-line performance in recent years, to further strengthen our balance sheet, and to return value to stockholders through market purchases of our Class B common stock and payment of a quarterly dividend. We expect that this trend will continue as the three high-margin businesses steadily become larger contributors to our top and bottom-line results.

We seek to accelerate and extend this rotation by enhancing the profitability and cash flows from each of our businesses, developing new offerings organically, and through acquisitions that leverage our balance sheet. Broadly speaking, our growth initiatives are focused on, but not limited to, our NRS, Fintech and net2phone businesses, and typically involve development or application of AI-powered technologies, expansion to new markets, and/or acquisition of customers for enhanced monetization across multiple, synergistic offerings.

Across all of our significant businesses, AI is deeply embedded in core business processes: enhancing and speeding customer service, speeding software development, product testing and release, enhancing risk mitigation and compliance functions, and optimizing marketing and pricing. As important as these changes are to driving customer acquisition, improving retention rates and strengthening operating margins, AI and particularly agentic AI is also profoundly reshaping many of our key markets.

Customer expectations are evolving rapidly as AI capabilities expand, creating significant opportunities to develop and offer AI-powered capabilities that extend or replace our traditional solutions. For example, net2phone has introduced two proprietary agentic AI solutions in the past year that have expanded net2phone's value proposition beyond communications to a broader set of critical sales, process and administrative workflows. net2phone's sales process has evolved in tandem - transitioning from transactional to consultative as it helps businesses evaluate potential applications. We seek to leverage net2phone's experience and learnings to address market evolution across our businesses.

OPERATING BUSINESS DESCRIPTIONS

NRS

NRS generated $159.4 million in revenues and income from operations of $39.3 million in fiscal 2026, as compared with revenues of $128.8 million and income from operations of $27.8 million in fiscal 2025.  NRS’ fiscal 2026 revenue growth was driven by increases in Merchant Services and SaaS Fees revenue, partially offset by a decline in Advertising & Data revenue. NRS’ income from operations grew faster than its revenue, reflecting the operating leverage inherent in the NRS platform.

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Overview

NRS operates a network of POS terminals at independent retailers throughout the United States and has a small but growing presence in Canada. The NRS solutions include integrated hardware and software tools, payment processing services, and digital commerce that enable these retailers to operate more efficiently, to grow their sales, and to compete more effectively against larger retail chains.  NRS’ business model is built on recurring revenue. Recurring services – Merchant Services, terminal-based software subscriptions, and advertising and data licensing – generated approximately 95% of NRS’ revenue in fiscal 2026. Accordingly, NRS manages and measures its business principally by reference to the number of active terminals and payment processing accounts in its network, and by the revenue generated per terminal and per account.

The POS terminal’s hardware includes a cash register, barcode scanner, retailer and customer-facing hi-definition screens, a receipt printer, and a credit card reader. NRS’ integrated, proprietary software is offered to retailers as a service and provides operational tools including inventory management, sales tracking, price book management, reporting and other useful features. NRS technology teams continuously enhance the software and develop new features to better serve existing customers and facilitate expansion into additional retail market segments. In recent periods, NRS has released direct integrations that enable participating retailers to list their inventories within the portals of popular online ordering and delivery services – including DoorDash, Grubhub and, most recently, Uber Eats – powered by data drawn directly from the NRS order management platform. Because these are direct integrations rather than connections made through third-party middleware, inventory and pricing remain accurate and participating retailers do not require additional hardware or manual data entry. As online purchases are made, they flow automatically into NRS' order management tool alongside in-store orders, enabling merchants to seamlessly fulfill orders for delivery. Participating retailers have experienced meaningful increases in order volumes and revenues following activation, and NRS is progressively activating additional retailers across its network.

Target markets

The primary market for NRS’ POS terminals is the independently owned convenience, bodega, liquor, grocery, and tobacco stores, many of which primarily serve multi-cultural consumer markets - predominantly in urban areas. Although quality data on these retailers is not readily available, we estimate that there are approximately 200,000 retailers in aggregate operating in our target markets.  Beyond these core markets, we have identified adjacent independent retail verticals – including food service, small-format hardware stores and other specialty retailers – that our platform could address with incremental hardware formats and software functionality, and we have begun to develop differentiated offerings for certain of these verticals.

This market is highly fragmented.  Most owners operate a single store, with very few owners operating more than a handful.  As a result, the market must be addressed one retailer at a time, which favors providers with purpose-built products, established distribution relationships and low customer acquisition costs.

Stores in this market typically tailor their inventories to the specific needs of local residents, often focusing on the ethnic products most frequently consumed by local residents as well as mainstream branded foodstuffs and sundries.  The financial performance of the retailers NRS serves is driven principally by general economic conditions affecting their shoppers, including inflation, affordability and household spending.  Based on the same-store sales data that NRS publishes monthly from its own network, same-store sales among NRS retailers continued to grow throughout fiscal 2026. In certain localized markets, however, increased immigration enforcement activity adversely affected retailer foot traffic and contributed to store closures

Retailer customer base

NRS continues to increase the number of POS terminals active in its network. As of July 31, 2026, the NRS POS network included approximately 40,400 active terminals operating in approximately 35,000 independent retail stores, an increase from approximately 37,200 active terminals a year earlier. We believe that our network of NRS retailers comprises the largest POS network serving independent convenience store retailers in the United States by a significant margin. Net terminal additions vary from quarter to quarter and reflect both gross additions and retailer churn. Churn includes seasonal churn – for example, among retailers whose businesses are concentrated in the summer months or in the year-end holiday season – as well as non-seasonal churn arising from store closures, competitive displacement, payment network compliance actions and service or equipment disruptions. During fiscal 2026, elevated non-seasonal churn decelerated growth in net terminal additions. NRS has implemented a number of initiatives intended to reduce churn and increase new terminal sales, including enhancements to onboarding, service and support, and remediation of equipment and payment network compliance issues affecting a portion of its retailer base.

NRS goes to market through three channels:

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Revenue sources

NRS generates revenue from a portfolio of services for both retailers and third parties. Recurring services generated approximately 95% of NRS’ revenue in fiscal 2026, including:

NRS operates primarily as an independent service organization (ISO), acting as an essential, retailer-facing intermediary between NRS retailers and its payment facilitator.  In this capacity, NRS relies on its payment facilitator, its sponsor bank and the payment card networks for the sponsorship, settlement and compliance infrastructure required to process transactions, and NRS retailers are subject to the operating rules of the card networks and to applicable data security standards. From time to time, compliance reviews conducted by the card networks or by NRS’ payment facilitator in respect of individual merchants have disrupted those merchants’ processing and, in certain instances, contributed to retailer attrition

At July 31, 2026, NRS had approximately 29,400 NRS Pay customers compared to approximately 26,500 a year earlier.  The increase reflected both the enrollment of newly acquired NRS terminal customers in NRS Pay and the conversion of existing NRS terminal customers, often following the expiration of their contracts with incumbent payment processors.

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The NRS Insights data are used by licensees both tactically and strategically. Common tactical applications of the data include sales enablement activities such as identifying core item distribution voids and monitoring speed to shelf and adoption of new product launches. Popular strategic applications of the data include gaining competitive intelligence, informing research and development activities, and informing acquisition and merger strategies.

NRS Insights also provides analytical services to third parties, leveraging its data to assist advertising measurement, market-basket studies, inventory (SKU) optimization, and price elasticity evaluation.

In addition to these recurring sources of revenue, NRS sells its POS terminals to retailers. Discounted terminal pricing is available to retailers who sign up for NRS Pay and premium software packages.

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Competitive advantages

We believe that NRS’ competitive advantages include:

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Business strategy

NRS’ strategy comprises three primary objectives - continuing to expand the number of retailers in our network, increasing revenue per terminal, and expanding margins.  More specifically, we are working to:

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Competition

Currently, nationwide POS platform providers, including Square, Toast, Lightspeed, Clover, and NCR, primarily serve retail chains or are focused on other retail segments, such as sit-down restaurant chains and other food service providers.

NRS markets its POS platform offerings primarily to independent convenience stores, including bodegas, and other small format retailer store owners including liquor and tobacco stores. A large majority of new NRS customers did not previously use a POS system. In the minority of cases where potential customers are using, or are considering using, an alternative solution, we believe that NRS’ suite of proprietary software solutions, affordable and discounted POS equipment and free credit card terminals are key drivers behind its success versus the competition.

During fiscal 2026, NRS experienced increased competitive activity in its core markets from both established POS providers and new or early-stage entrants - primarily specialized niche market providers. We believe that in most instances these competitors deliver materially less functionality and lower total savings than our offerings. Nevertheless, this activity adversely affected the rate of gross terminal and payment processing accounts additions in fiscal 2026 and contributed to elevated rates of retailer churn.

NRS expects to encounter more frequent direct competition from local and/or national POS networks both in its traditional markets and as it expands to new adjacent target markets.

Fintech

Fintech is comprised of BOSS Money and other, significantly smaller, financial services businesses including our Gibraltar-based bank. Fintech revenues were $176.0 million in fiscal 2026 compared to $154.6 million in fiscal 2025. Fintech’s income from operations was $21.5 million in fiscal 2026 compared to $15.4 million in fiscal 2025. Within Fintech, BOSS Money revenues were $156.7 million in fiscal 2026, an increase of 12.0% from revenues of $139.8 million in fiscal 2025.

Description of service

BOSS Money enables customers in the United States to send money conveniently and affordably to third parties around the world. International remittances are a primary economic activity for the tens of millions of first and second-generation immigrants in the United States. At July 31, 2026, BOSS Money provided its remittance service to 50 countries through approximately 1,800 disbursement partners and its payout network included over 250,000 cash payout locations worldwide in addition to a growing number of bank deposits, mobile money wallets, debit cards, and home delivery payout options.

Distribution

BOSS Money is primarily offered directly to consumers via our digital channels — the BOSS Money and the BOSS Revolution apps. To utilize our digital channels, customers can use their debit or credit cards or authorize ACH transfers from their bank accounts.

Our smaller retail channel network comprises licensed and authorized BOSS Money agents nationwide. Customers can initiate transfers through a BOSS Money agent with cash as well as with their debit or credit cards.  While our retail network is a small fraction of the size of our retail-centric public competitors, it serves as an important gateway for new customers- often recent immigrants - to enter our larger eco-system of related offerings.

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Marketing

BOSS Money's target market is first and second-generation immigrants in the United States who were born in, or have parents born in, one of our destination countries.  According to the Pew Research Center, as of June 2025 over 51 million immigrants lived in the United States, and approximately half of these were born in Latin America. Immigrants and their U.S. born children together comprise over 25% of the total U.S. population. Net immigration in 2025 was 1.3 million people according to the U.S. Census Bureau.

We continue to grow our BOSS Money digital channel transaction volumes and revenues at rates well above the domestic remittance industry’s average by marketing our service to this target market, and in particular to the large base of customers - predominantly from our target market - who utilize our BOSS Revolution voice calling and IDT Digital Payments offerings. We offer new customers attractive fee and foreign exchange rates, through both our digital and retail channels, and through online, media and event-based marketing.

Beginning on January 1, 2026, the federal government imposed an excise tax of 1% on the value of remittances paid with cash or money orders. Remittances funded with credit cards, debit cards or ACH transfers from U.S. bank accounts are tax exempt. In the months following the new tax's imposition, BOSS Money's digital channel growth has accelerated as former retail customers including customers of other remittance brands have avoided the tax by migrating from cash-funded remittances at retail locations to bank-funded digital channel transactions.

Revenue sources

BOSS Money generates revenues from a per-transaction fee charged to the customer and from foreign exchange differentials. Our transaction costs include commissions paid when the transaction is initiated by a retail agent, payment to the international disbursing agent, banking, compliance and foreign currency exchange costs, and, when applicable, credit and debit card or ACH processing fees.

BOSS Money’s revenue per transaction is typically higher on retail transactions compared to digital to reflect the commission paid to the originating retailer. However, gross and net margins are typically higher on digital transactions compared to retail.

Competitive strengths

The money transfer industry is intensely competitive, with participants ranging from banks, digital remittance providers, fintech startups and traditional remitters. Digital competitors such as Xoom (a subsidiary of PayPal), Wise, Remitly, and Sendwave along with traditional money remitters, including Western Union, Ria, MoneyGram, Intermex and Viamericas compete in the remittance space.

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We compete successfully in part by migrating customers of our other BOSS offerings from their current remittance providers to BOSS Money leveraging our highly regarded BOSS brand, insights into our customers, and cross-marketing capabilities. We compete for customers outside the BOSS ecosystem primarily based on brand reputation, low fees, and competitive foreign exchange rates. We believe that BOSS Money’s competitive strengths include:

Growth strategy

BOSS Money’s growth strategy includes:

net2phone

net2phone’s revenues were $96.6 million in fiscal 2026 compared to $87.9 million in fiscal 2025. net2phone’s income from operations was $9.1 million in fiscal 2026 compared to $4.9 million in fiscal 2025.

Service offerings

net2phone enables its customers to transform their communications by leveraging AI and its cloud platform to provide solutions that enable more intelligent, flexible and adaptive communications. net2phone's services are available to enterprises worldwide. Marketing and sales operations are focused on the United States, Canada, Mexico, Central and South America and Spain.

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net2phone’s offerings include:

net2phone differentiators include superior customer service, a no-code integration layer that enables customers to configure integrations with CRMs and other third-party software, and deep localization. net2phone’s global infrastructure, locally based sales and customer support teams and native language support enable net2phone clients to retain the look and feel of localized customer and user experiences.

Go-to-market

net2phone focuses primarily on an indirect go-to-market strategy in most of its markets, utilizing extensive networks of channel partners including Technology Solutions Brokerages (TSBs), Technology Services Distributors (TSDs), Managed Service Providers (MSPs), and Value-Added Resellers (VARs). This channel-centric approach enables net2phone to efficiently reach its extensive target market of midsize businesses, which rely heavily on these types of service providers to address their IT needs. net2phone’s partner channel is overseen by regional channel sales managers employed by net2phone.

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net2phone is developing direct-to-business capabilities to market primarily its AI offerings, net2phone AI Agent and net2phone Coach, in the small and medium-sized business market.

Both net2phone’s channel partners and direct business customers choose its solutions because of our user-friendly offerings, availability of in-house support agents, value proposition, and track record of reliability and stability. Channel partners value net2phone for its extensive customization capabilities, frictionless and rapid quote generation, and competitive compensation – backed by its dedicated channel sales team.

net2phone’s direct marketing to channel partners and end users includes search engine marketing, search engine optimization, third-party lead generation platforms, social media marketing, webinars, industry focused events, and other forms of demand generation.

net2phone’s indirect marketing funnels through its network of partners, technology distributors, and affiliates and includes tradeshows and local events, marketing development support for partners and other forms of demand generation, layered with ongoing channel sales training, proof of concepts and demos.

net2phone closely tracks its acquisition costs across both channels to ensure it is acquiring customers in a cost-efficient manner and consistent with its targets for return on investment.

Growth strategy

net2phone’s growth strategy includes:

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Competitive Strengths

We believe that net2phone’s competitive strengths include:

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Competition

net2phone’s most significant competitors in the UCaaS space include RingCentral, 8x8, Crexendo, Vonage, Dialpad and Nextiva. Some AI agent focused (only) companies such as Lindy or Phonely are also competitors. Many of these companies offer more widely recognized brands, larger and more developed marketing and sales forces and/or channel agent networks, and more advanced product sets and solutions customized for specific market segments or verticals. These competitors’ offerings typically also support integration of their services with other well-known, third-party CRM vendors as well as with various Google and Microsoft applications.

The CCaaS market is fragmented, highly competitive and evolving rapidly in response to shifting consumer behavior, especially the rapid adoption of AI, mobile devices and social media. This proliferation is driving change in contact center technology, as customers expect seamless communication across any channel according to their preference and needs. net2phone competes with large legacy vendors that offer on-premises contact center systems, such as Avaya and Cisco. These legacy telephony vendors are increasingly supplementing and replacing their traditional contact center systems with competing cloud offerings, through a combination of acquisitions, partnerships, and in-house development. Additionally, net2phone competes with vendors that historically provided other contact center services and technologies and expanded to offer cloud contact center software such as NICE, Five9, and Genesys. net2phone also faces competition from many smaller contact center service providers such as Talkdesk and Seranova, as well as vendors offering both unified communications and contact center solutions. In addition, Amazon and Twilio have introduced solutions aimed at companies who wish to build their own contact centers with in-house developers. CRM vendors are also increasingly offering features and functionality that were traditionally provided by contact center service providers. CRM vendors also continue to partner with contact center service providers to provide integrated solutions and may, in the future, acquire competitive contact center service providers.

Traditional Communications

Our Traditional Communications segment generated $865.9 million in revenues and income from operations of $63.4 million in fiscal 2026, as compared with revenues of $860.2 million and income from operations of $66.5 million in fiscal 2025.

Traditional Communications comprises the following businesses:

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IDT Digital Payments

IDT Digital Payments’ revenues were $429.2 million in fiscal 2026 compared to $416.3 million in fiscal 2025 (49.6% and 48.4% of Traditional Communications’ revenues in fiscal 2026 and fiscal 2025, respectively). The substantial majority of IDT Digital Payments’ revenue is from sales of international mobile top-up services. IDT Digital Payments offers mobile top-up for approximately 194 different carriers in more than 113 countries, primarily in Latin America, the Caribbean and Africa. IDT Digital Payments leverages our platform capabilities, our distribution reach into foreign-born communities and our relationships with mobile operators around the world.

Go-to-market

IDT Digital Payments is sold through the BOSS platform primarily through three channels:

Growth strategy

IDT Digital Payments’ growth drivers include:

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Competition

IDT Digital Payments’ major competitors include:

Competitive Strengths

We believe that IDT Digital Payments’ competitive advantages include:

BOSS Revolution

BOSS Revolution’s revenues were $180.3 million in fiscal 2026 compared to $211.2 million in fiscal 2025 (20.8% and 24.6% of Traditional Communications’ revenues in fiscal 2026 and fiscal 2025, respectively).

Service offering

BOSS Revolution is a prepaid international long-distance calling service marketed primarily to foreign-born and under-banked consumers in the United States and Canada, and a digital-only offering in Europe and Australia.

BOSS Revolution includes our flagship ‘BOSS Revolution’ branded international long-distance prepaid calling service as well as disposable hard cards sold under a variety of brands. In the United States, BOSS Revolution served approximately 1.4 million customers per month as of July 31, 2026.

Go-to-market

BOSS Revolution is offered through our digital channels, the BOSS Revolution app and website, and through our extensive national network of BOSS Revolution retailers.

BOSS Revolution allows users to place international long-distance calls at affordable rates from the BOSS Revolution app or by calling an access number. Regardless of how the call originates, our customers must first establish and top-up a prepaid BOSS Revolution account that is linked to their phone. Customers can open a BOSS Revolution account for free and top-up with a debit or credit card using the BOSS Revolution app, through the BOSS Revolution website (www.bossrevolution.com) or by phone, or with cash at any BOSS Revolution retailer. BOSS Revolution customers’ account balances are debited at a fixed rate per minute or at a fixed amount for calling plans to a specific country over a specified time period. In contrast to certain of our competitors, BOSS Revolution does not charge connection, usage or breakage fees. BOSS Revolution’s per minute rates vary by the destination country, city, and whether the call is placed to a landline or mobile phone. Rates are published on the BOSS Revolution website and within the BOSS Revolution app.

Users of the BOSS Revolution app constitute the majority of BOSS Revolution's customers to date. At July 31, 2026, approximately 1.0 million customers per month utilized the BOSS Revolution app.

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In the United States, we distribute our BOSS Revolution hard cards and other retail products primarily through our network of distributors that, either directly or through sub-distributors, sell to retail locations. In addition, our internal sales force sells BOSS Revolution and other platform products directly to retailers.

At July 31, 2026, approximately 18,000 retailers per month utilized the BOSS Revolution digital retailer platform to provision customers, the substantial majority of whom pay the retailer in cash. In addition, we estimate that approximately 1,700 retailers resell our disposable hard cards without utilizing our retailer portal. BOSS Revolution retailers are typically independent retailers serving foreign-born communities with significant unbanked or under-banked populations.

The BOSS Revolution retailer portal can be accessed by any broadband enabled device. Through the portal, retailers can access our platform to create accounts for new customers, add funds to existing customer balances and execute sales transactions. The platform provides us with a direct, real-time interface with our BOSS Revolution retailers to create a cost-effective and adaptable distribution model that allows us to target and promote services directly to distributors and retailers, to introduce and cross-sell new offerings, and to rapidly adapt to changes in the business environment.

In the United States, the BOSS Revolution brand is supported by national, regional, and local marketing programs that include television and radio advertising, online advertising and grass roots marketing at community and sporting events. In addition, we work closely with distributors and retailers on in-store promotional programs and events.

BOSS Revolution’s retail sales have traditionally been, and continue to be, strongest in the Northeastern United States and in Florida because of our extensive local distribution network. We continue to grow BOSS Revolution’s distributor relationships and expand BOSS Revolution’s retail network in other areas of the United States and Canada, including the Southwest and West Coast.

Competition

BOSS Revolution is subject to fierce competition. While virtually any company offering communication services is a competitor, we face particularly strong competition from Tier 1 mobile network operators who offer flat-rate international calling plans, other PIN-less prepaid voice offerings, prepaid calling card providers, mobile virtual network operators, and VoIP and other “over the top,” or OTT, service providers. Outside the United States, we also compete with large state-owned or state-sanctioned telephone companies.

Many of these companies, including AT&T, Verizon, and T-Mobile, are substantially larger and have greater financial, technical, engineering, personnel, and marketing resources, longer operating histories, greater name recognition, and larger customer bases than we do.

In addition to these larger competitors, we face significant competition from smaller prepaid calling providers.

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From time to time, competitors may offer rates that are substantially below ours in an attempt to gain market share. In some instances, these rates are below what we believe to be the cost to provide the service. This predatory pricing can adversely affect our revenues and our gross margins.

The continued growth of OTT calling and messaging services such as WhatsApp, Messenger, FaceTime, and others has adversely affected the sales of BOSS Revolution and our other prepaid calling services. We expect the popularity of these IP-based services—many of which offer free voice and/or video communications—to continue to increase, which will increase substitution for, and pricing pressure on, our BOSS Revolution and other international prepaid calling offerings. However, free services typically require both the caller and recipient to have a broadband connection. BOSS Revolution utilizes telephone networks to enable voice communications even when neither party has broadband connectivity.

Many mobile operators offer unlimited international long-distance plans that include international destinations to which customers can place direct calls from their mobile phones without time limitation. These plans now include some of our most popular international destinations. The growth of these “international unlimited” plans adversely affects our revenues as these operators gain subscriber market share.

Competitive Strengths

Our ability to compete successfully against these various operators and service providers stems from several factors, including:

Our ability to maintain and/or to capture additional market share will remain dependent upon our ability to continue to provide competitively priced services, to maintain our distribution and retail networks, to increase usage through the BOSS Revolution app, and to innovate new products and services to fit the evolving needs of our customers.

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IDT Global

IDT Global’s revenues were $231.5 million in fiscal 2026 compared to $209.6 million in fiscal 2025, contributing 26.7% and 24.4% of Traditional Communications’ revenues in fiscal 2026 and fiscal 2025, respectively.

Service offering

IDT Global is one of the larger wholesale carriers of international long-distance minutes in the world.

IDT Global’s telecommunications network is comprised of interconnections and commercial relationships reaching virtually every significant global telecom operator. These relationships enable us to carry international telecommunications traffic to more than 200 countries around the world. IDT Global’s customers include our BOSS Revolution and net2phone businesses, major and niche carriers around the globe, mobile network operators, and other service providers such as call aggregators. For many of these customers, particularly the major carriers, we engage in buy-sell relationships, terminating their customers’ traffic in exchange for terminating our traffic with them.

IDT Global offers competitively priced international termination rates at several quality levels. We can offer competitively priced termination services in part because of the large volumes of originating minutes generated by our BOSS Revolution business, our global platform powered by proprietary software, our team of professional and experienced account managers and market makers, and our global network of interconnections and relationships with other telecom operators. IDT Global’s services are marketed and sold through our internal account management team and the IDT Express digital portal. IDT Express focuses on delivering wholesale voice and direct inward dialing, or DID, services to small and medium-sized businesses domestically and internationally.

Traditional Communications terminated 7.6 billion minutes in fiscal 2026, as compared to 7.4 billion minutes in fiscal 2025. IDT Global accounted for 6.18 billion minutes and 5.68 billion minutes of the total Traditional Communications’ minutes in fiscal 2026 and fiscal 2025, respectively.

IDT Global has a significant number of direct connections to Tier 1 providers in North America, Latin America, Asia, Africa, Europe, and the Middle East. Tier 1 providers are the largest recognized licensed carriers in the country. Direct connections improve the quality of the telephone calls and reduce the cost, thereby enabling us to generate more traffic with higher margins to the associated foreign locales. We also have direct relationships with mobile network operators, reflecting their growing share of the voice traffic market.

Termination rates charged by Tier 1 and other providers of international long-distance traffic have been declining for many years. Nevertheless, termination rates charged to us by individual Tier 1 carriers and mobile operators can be volatile. Termination price volatility on heavily trafficked routes can significantly impact our minutes of use and wholesale revenues.

In addition to offering competitive rates to our carrier customers, we emphasize our ability to offer the high-quality connections that these providers often require. To that end, we offer higher-priced services in which we provide higher-quality connections, based upon a set of predetermined quality of service criteria. These services meet a growing need for higher-quality connections for some of our customers who provide services to high-value, quality-conscious retail customers. As of July 31, 2026, IDT Global, through its wholesale carrier organization and IDT Express channel had more than 1,450 customers, including more than 280 carrier relationships globally.

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IDT Global’s revenues are generated by sales to both postpaid and prepaid customers. Postpaid customers typically include Tier 1 carriers, mobile network operators, and our most creditworthy customers. The majority of IDT Global’s prepaid customers connect via our IDT Express portal. IDT Express offers the convenience of a mobile self-service portal paired with dedicated account managers backed by customer support. Prepaid customers are typically smaller telecommunication companies as well as independent call aggregators.

IDT Global also offers outsourcing services to help fixed and mobile telephony operators enhance the profitability and value of their international voice operations. IDT Global offers these operators customized solutions, including full outsourcing, handing all inbound and outbound calls with or without switch management, and hybrid arrangements whereby the operator retains certain routes or customers directly. Pursuant to these deals, IDT Global collaborates with the operators to provide a full range of international long-distance services to their respective customers in-country and overseas.

IDT Global is subject to intense revenue and margin pressure as communications globally continues to transition away from international voice calling to video conferencing and other collaboration platforms, low-cost or free messaging services, free peer-to-peer voice calls available when both parties utilize broadband connections, and flat-rate international long-distance plans offered both by the largest mobile network operators and niche mobile virtual network operators.

Competition

The wholesale carrier industry has numerous entities competing for the same customers, primarily based on price and quality of service.

IDT Global participates in a global marketplace with:

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Competitive Strengths

We believe that IDT Global derives a competitive advantage over some participants on certain routes from several inter-related factors:

Communications and Payment Network Infrastructure and Technology Development

Our products and services utilize a combination of proprietary software as well as technologies and services provided by third parties. We have developed intuitive user interfaces, customer tools and transaction processing, ML (Machine Learning) models, and database and network applications that enable our users to reliably and securely complete transactions and help our customers and partners utilize our suite of services. Our technology infrastructure simplifies the storage and processing of large amounts of data, eases the deployment and operation of large-scale global products and services, and automates much of the administration of large-scale clusters of computers.

Our technology infrastructure has been designed around industry-standard architectures to reduce downtime in the event of outages or catastrophic occurrences. We strive to continually improve our technology infrastructure to enhance customer experience and to increase efficiency, scalability, and security. Our platforms’ architecture enables us to connect parties regardless of whether the transaction is occurring at a traditional physical location, online, or through a mobile device. Our platforms incorporate multiple layers of protection, both for continuity purposes and to address cybersecurity challenges. We engage in multiple efforts to protect our software platforms against these challenges, including regularly testing our systems to address potential vulnerabilities.

Our product and technology organization is responsible for the design, development, testing, and delivery of new software, technologies, and features of our products and services, as well as the continued improvement and iteration of our existing products and services. Our technology employees are distributed globally in our Newark, Jerusalem, Guatemala, Uruguay, Warsaw, and Minsk offices. Our technology team consists of our software engineering, quality engineering, ML (Machine Learning) and AI development, voice engineering, data warehousing, data engineering, systems, NOC (Network Operations Center), and operations teams. We intend to continue to invest in our research and development capabilities to extend our products and services.

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AI and agentic AI tools are deployed throughout our Software Development Lifecycle (SDLC). AI assists our engineers in generating and reviewing code, our quality engineering teams in designing and executing automated test suites, and our operations teams in monitoring and maintaining our platforms. In fiscal 2026, the majority of our proprietary test suites were fully automated through a combination of proprietary software and AI, contributing to a software defect escape ratio, a measure of quality for our flagship BOSS Revolution brand, of 2.3%, meaning almost 98% of product defects were detected and fixed internally before being released to our customers. The adoption of AI across our SDLC is beginning to shorten our development cycles and enable us to deliver product enhancements to customers at more frequent intervals than our historical release cycles, while maintaining or improving quality. Our Agile development methodology is characterized by a dynamic development process with frequent revisions to a product release's features with the assistance of AI and, increasingly, autonomous ("agentic") AI systems that can execute multi-step development tasks under human supervision.

We have also invested in making our internal data more accessible and actionable through AI. Our data warehouse is empowering authorized business users across our functions to connect leading third-party AI assistants directly to governed datasets, enabling them to query, analyze, and derive insights from operational and financial data using natural language, without requiring specialized technical or query-language expertise. This AI analysis is improving our holistic portfolio management process, which has improved transparency and efficiency across the portfolio through a recurring cadence of business reviews.

REGULATION

The following summary of regulatory developments and legislation is intended to describe what we believe to be the most important, but not all, current and proposed international, federal, state, and local laws, regulations, orders, and legislation that are likely to materially affect us.

Regulation of Telecom in the United States

Telecommunications services are subject to extensive government regulation at both the federal and state levels in the United States. Any violations of the regulations may subject us to enforcement actions, including interest and penalties. The Federal Communications Commission, or FCC, has jurisdiction over all telecommunications common carriers to the extent they provide interstate or international communications services, including the use of local networks to originate or terminate such services. Each state regulatory commission has jurisdiction over the same carriers with respect to their provision of local and intrastate communications services. Local governments often indirectly regulate aspects of our communications business by imposing zoning requirements, taxes, permit or right-of-way procedures or franchise fees. Significant changes to the applicable laws or regulations imposed by any of these regulators could have a material adverse effect on our business, operating results and financial condition.

Regulation of Telecom by the Federal Communications Commission

In 1997, the FCC issued an order, referred to as the Universal Service Order, that requires all telecommunications carriers providing interstate telecommunications services to contribute to universal service support programs administered by the FCC (known as the Universal Service Fund). In addition, beginning in October 2006, interconnected VoIP providers, such as our subsidiary net2phone, are required to contribute to the Universal Service Fund. These periodic contributions are currently assessed based on a percentage of each contributor’s interstate and international end user telecommunications revenues reported to the FCC. We also contribute to several other regulatory funds and programs, most notably Telecommunications Relay Service, or TRS, FCC Regulatory Fees, and Local Number Portability (collectively, the Other Funds). We and most of our competitors pass through Universal Service Fund and Other Funds contributions as part of the price of our services, either as part of the base rate or, to the extent allowed, as a separate surcharge on customer bills. Due to the manner in which these contributions are calculated, we cannot be assured that we fully recover from our customers all of our contributions. In addition, based on the nature of our current business, we receive certain exemptions from Universal Service Fund contributions. Changes in our business could eliminate our ability to qualify for some or all of these exemptions. As a result, our ability to pursue certain new business opportunities in the future may be constrained in order to maintain these exemptions, the elimination of which could materially affect the rates we would need to charge for existing services. Changes in regulation may also have an impact on the availability of some or all of these exemptions. If even some of these exemptions become unavailable, they could materially increase our Universal Service Fund or Other Funds’ contributions and have a material adverse effect on the cost of our operations and, therefore, on our ability to continue to operate profitably, and to develop and grow our business. We cannot be certain of the stability of the contribution factors for the Other Funds. Significant increases in the contribution factor for the Other Funds in general and the TRS Fund in particular can impact our profitability. Whether these contribution factors will be stable in the future is unknown, but it is possible that we will be subject to significant increases.

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Regulation of Telecom by State Public Utility Commissions

Our telecommunications services that originate and terminate within the same state, including both local and in-state long distance services are subject to the jurisdiction of that state’s public utility commission, or PUC. The Communications Act of 1934, as amended, generally pre-empts state statutes and regulations that prevent the provision of competitive services but permits state PUCs to regulate the rates, terms and conditions of intrastate services, so long as such regulation is not inconsistent with the requirements of federal law. We are certified to provide facilities-based and/or resold long-distance service in all 50 states and facilities-based and resold local exchange service in 45 states. In addition to requiring certification, state regulatory authorities may impose tariff and filing requirements, consumer protection measures, and obligations to contribute to the Universal Service Fund and Other Funds. Rates for intrastate switched access services, which we both pay to local exchange companies and collect from long-distance companies for terminating in-state toll calls, are subject to the jurisdiction of the state commissions. State commissions also have jurisdiction to approve negotiated rates, or establish rates through arbitration, for interconnection, including rates for unbundled network elements. Changes in those access charges or rates for unbundled network elements could have a substantial and material impact on our business.

Regulation of Telecom—International

In connection with our international operations, we have obtained licenses or are otherwise authorized to provide telecommunications services in various foreign countries. We have obtained licenses or authorizations in Argentina, Australia, Belgium, Brazil, Canada, Chile, Denmark, Germany, Hong Kong, Italy, Japan, Mexico, the Netherlands, Peru, Singapore, South Africa, Spain, Sweden, Switzerland, the United Kingdom, and Uruguay. In numerous countries where we operate or plan to operate, we are subject to many local laws and regulations that, among other things, may restrict or limit the ability of telecommunications companies to provide telecommunications services in competition with state-owned or state-sanctioned dominant carriers.

Regulation of Internet Telephony

The use of the Internet and private IP networks to provide voice communications services is generally less regulated than traditional switch-based telephony within the United States and abroad and, in many markets, is not subject to the imposition of certain taxes and fees that increase our costs. As a result, we are able, in many markets, to offer VoIP communications services at rates that are more attractive than those applicable to traditional telephone services. However, in the U.S. and abroad, there have been efforts by legislatures and regulators to harmonize the regulatory structures between traditional switch-based telephony and VoIP. This could result in additional fees, charges, taxes, and regulations on IP communications services that could materially increase our costs and may limit or eliminate our competitive pricing advantages. Additionally, several foreign governments have adopted laws and/or regulations that could restrict or prohibit the provision of voice communications services over the Internet or private IP networks. These efforts could likewise harm our ability to offer VoIP communications services.

Money Transmitter and Payment Instrument Laws and Regulations

Our consumer payment services offerings include BOSS Money and various network branded, also called “open loop,” prepaid card offerings. These industries are heavily regulated. Accordingly, we, and the products and services that we market in consumer payment services, are subject to a variety of federal and state laws and regulations, including:

In connection with our money transmission services and the expansion of our network branded prepaid card offerings, we have obtained money transmitter licenses in 48 of the 49 U.S. states that require such a license, as well as in Washington, D.C.

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Regulation of Other Businesses

We operate other smaller or early-stage initiatives and operations, which may be subject to federal, state, local or foreign law and regulation.

INTELLECTUAL PROPERTY

We own numerous patents, trademarks, domain names and other intellectual property rights necessary to conduct our business. We actively pursue the filing and registration of patents, domain names, trademarks, and service marks to protect our intellectual property rights within the United States and abroad; in particular our registered trademarks and brands: IDT®, BOSS Revolution®, BOSS Money®, net2phone® and Zendit®. From time to time, we have also acquired or licensed intellectual property relating to present and future business strategy. We believe that our technological position significantly depends on the technical experience, expertise, and creative ability of our employees to maintain both our current businesses and pursue future business development. Our corporate policies require all employees to assign intellectual property rights developed in the scope of, or in relation to our business to us, and to protect all intellectual property and proprietary information and materials as confidential.

Our global telecommunications switching and transmission infrastructure enables us to provide an array of telecommunications, internet access and internet telephony services to our customers worldwide. We rely upon domestic and foreign patents, patent applications, and other intellectual property rights, regarding our infrastructure and global telecommunication network for our international telecommunications traffic and the international traffic of other telecommunications companies.

EMPLOYEES AND HUMAN CAPITAL RESOURCES

Attracting and retaining qualified personnel familiar with our businesses and who lead our different business units and functions is critical to our success. As of September 1, 2026, we had a total of 1,971 employees, of whom 1,965 were full-time employees.

Our human capital resources’ objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees, advisors and consultants. To accomplish that, our compensation practices are designed to attract and retain qualified and motivated personnel and align their interests with our goals and with the best interests of our stockholders. Our compensation philosophy is to provide compensation to attract the individuals necessary for our current needs and growth initiatives and provide them with the proper incentives to motivate those individuals to achieve our long-term plans, which includes among other things, equity and cash incentive plans that attract, retain and reward personnel through the granting of stock-based and cash-based compensation awards.

We believe that talent attraction and retention are critical to our ability to achieve our strategy and that a trained, diverse and inspired workforce is integral to delivering our objectives. Our recruiting process reaches a wide array of potential employees, and we employ a rigorous screening process to ensure that we identify and hire quality professionals.

We are committed to a policy of non-discriminatory treatment and respect of human rights for all current and prospective employees. We do not permit discrimination based on an individual’s race, religion, creed, color, sex, sexual orientation, age, marital status, disability, national origin or veteran’s status, which is illegal in many jurisdictions. We respect the human rights of all employees and strive to treat them with dignity consistent with standards and practices recognized by the international community.