The results come as IDT reported revenue of $370 million in Q3 2017 because of the falling sales in carrier minutes. Capacity understands that IDT has recently made over 200 people redundant as part of a major cost-cutting exercise.
“Our revenue decrease was primarily the result of a loss of high volume but low margin wholesale carrier minutes and had no significant impact on our gross profit,” said Shmuel Jonas, CEO of IDT Corp.
The report goes on to say that this is largely as a result of diminished volumes on certain heavily trafficked, low revenue-per-minute routes. Wholesale Carrier Services’ revenue has historically been more volatile than retail communications’ revenue, and changes in revenue do not necessarily generate corresponding changes in gross profit.
Ongoing litigation and operation costs also impacted the results, with loss from operations totally $1.7 million including charges of $0.3 million for litigation related expenses. $3.7 million for severance, compared to a loss from operations of $6.5 million, including a charge of $10.2 million for a legal settlement.
“Although our bottom line reflected $3.7 million in severance expense, overall it was good quarter. We were happy with the revenue growth generated by our early stage business initiatives and the relative resilience of our core BOSS Revolution calling service,” added Jonas.
Adjusted EBITDA came in at $8.1 million compared to $9.1 million in Q3 2017 and IDT confirmed a dividend of $0.09 per share for Q3 18.
However there were a number of highlights for the period. The spin off of Rafael Holdings to IDT stockholders was completed on 26 March 2018.
“The spin-off of Rafael Holdings in March marked another important step in our effort to maximise long-term stockholder value. Following the spin-off, we implemented a restructuring to reduce SG&A expense by over $2 million per quarter - offsetting potential reductions in gross profit generated by our mature retail and wholesale businesses while facilitating continued investment in our growth initiatives,” continued Jonas.
In addition, IDT chairman, Howard Jonas, agreed to purchase 2.55 million shares of IDT class B common stock from the company for $15 million an initial payment of $1.5 million was received on 31 May 2018.
“Finally, our net2phone cloud-based business communications service is growing impressively. Following the successful launches in Brazil and Argentina in 2017, net2phone expanded its offering to Colombia in May, and we plan to launch in Hong Kong and Mexico later this calendar year” said Jonas.
