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IDT Corporation IDT Corporation 2018 Annual Report Dear Fellow Stockholders: As we celebrate BOSS Revolution’s ten-year anniversary, we are very proud that our fl agship calling service has helped 8 million fi rst- and second-generation Americans stay close to their families and friends back home during the past year. Although alternative modes of communication are eroding the paid calling market globally, we continue to fi nd new opportunities to enhance and improve our core offerings including BOSS Revolution’s calling and mobile top-up services as well as our wholesale Carrier Services business. These three offerings will likely continue to contribute the lion’s share of IDT’s sales for years to come. From a gross profi t perspective, our key growth business initiatives are already contributing meaningfully to our consolidated results. Each of these initiatives progressed signifi cantly in fi scal 2018 and has tremendous potential to create value for our stockholders, employees and partners: • net2phone’s cloud communications business more than doubled this year. We expect comparable growth in fi scal 2019 powered by a recent acquisition, expansion to new international markets and the introduction of a proprietary platform providing a unifi ed communications experience across multiple channels (voice, webchat and messaging) and devices (PC and mobile); • National Retail Solutions (NRS) continues to build out its nationwide point-of-sale (POS) terminal network among the independent retailers and bodegas serving America’s multicultural communities. Although these independent retailers face stiff competition from large retail chains, NRS provisions the tools, services and supplemental revenue streams they need to grow their businesses, including inventory management, mobile ordering, store branding, working capital, credit card processing, marketing services and much more. As it scales, NRS’ POS network is also uniquely positioned to provide high value services to data analytics providers, advertisers, and consumer packaged good marketers seeking to gain insights and extend their reach into these vibrant urban markets; • The BOSS Revolution direct-to-consumer (DTC) money remittance business – transfers that originate either on the BOSS Revolution Money app or on our website – is surging. In fi scal 2018, DTC transaction volume increased by over 300% compared to the prior year. As we build out our proprietary exchange systems and payment networks, this business is poised for continued long-term growth. The telecom and payment industries are evolving rapidly as the pace of technological innovation quickens. Our long-term performance depends on the development of a robust pipeline of innovative offerings, and we are hard at work on multiple early stage initiatives. Within BOSS Revolution, initiatives include a digital wallet and a general-purpose reloadable card for our unbanked and underbanked customers, as well as our BOSS Revolution mobile service. Our wholesale Carrier Services business signed its fi rst deal supplying a national telecom provider with a comprehensive outsourced solution for international long-distance traffi c and is competing for more. We are also developing API-centric offerings that will enable other service and content providers to seamlessly incorporate our voice and messaging services. With continued investment and focused execution, these ventures will collectively transform IDT in the years to come just as comprehensively as BOSS Revolution did during the last decade. I look forward to reporting on our progress each quarter during the coming year, and thank you for your investment in IDT. Sincerely, Shmuel Jonas Chief Executive Offi cer [THIS PAGE INTENTIONALLY LEFT BLANK.] UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual report pursuant to section 13 or 15(d) of the securities exchange act of 1934 for the fi scal year ended July 31, 2018. or Transition report pursuant to section 13 or 15(d) of the securities exchange act of 1934. Commission File Number: 1-16371 IDT Corporation (Exact name of registrant as specifi ed in its charter) Delaware 22-3415036 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 520 Broad Street, Newark, New Jersey 07102 (Address of principal executive offi ces, 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 Exchange Securities registered pursuant to section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defi ned in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to fi le reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Indicate by check mark whether the registrant (1) has fi led all reports required to be fi led 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 fi le such reports), and (2) has been subject to such fi ling requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 fi les). Yes No Indicate by check mark if disclosure of delinquent fi lers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in defi nitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated fi ler, an accelerated fi ler, a non-accelerated fi ler, smaller reporting company, or an emerging growth company. See defi nitions of “large accelerated fi ler,” “accelerated fi ler,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) 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 fi nancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant is a shell company (as defi ned in Rule 12b-2 of the Act). Yes No The aggregate market value of the voting and non-voting stock held by non-affi liates of the registrant, based on the adjusted closing price on January 31, 2018 (the last business day of the registrant’s most recently completed second fi scal quarter) of the Class B common stock of $10.87 per share, as reported on the New York Stock Exchange, was approximately $220.2 million. As of October 9, 2018, the registrant had outstanding 22,143,898 shares of Class B common stock and 1,574,326 shares of Class A common stock. Excluded from these numbers are 3,450,600 shares of Class B common stock and 1,698,000 shares of Class A common stock held in treasury by IDT Corporation. DOCUMENTS INCORPORATED BY REFERENCE The defi nitive proxy statement relating to the registrant’s Annual Meeting of Stockholders, to be held December 13, 2018, is incorporated by reference into Part III of this Form 10-K to the extent described therein. [THIS PAGE INTENTIONALLY LEFT BLANK.] Index IDT Corporation Annual Report on Form 10-K Part I 1 Item 1. Business 1 Item 1A. Risk Factors 15 Item 1B. Unresolved Staff Comments 24 Item 2. Properties 24 Item 3. Legal Proceedings 24 Item 4. Mine Safety Disclosures 25 Part II 26 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. Selected Financial Data 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures about Market Risks 49 Item 8. Financial Statements and Supplementary Data 49 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 49 Item 9A. Controls and Procedures 49 Item 9B. Other Information 50 Part III 51 Item 10. Directors, Executive Officers and Corporate Governance 51 Item 11. Executive Compensation 51 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 52 Item 13. Certain Relationships and Related Transactions, and Director Independence 52 Item 14. Principal Accounting Fees and Services 52 Part IV 53 Item 15. Exhibits, Financial Statement Schedules 53 Item 16. Form 10-K Summary 54 Signatures 55 i [THIS PAGE INTENTIONALLY LEFT BLANK.] Part I As used in this Annual Report, 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 its subsidiaries, collectively. Each reference to a fi scal year in this Annual Report refers to the fi scal year ending in the
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