IDT Corporation (NYSE: IDT) reported diluted earnings per share (EPS) of $0.48 and Non-GAAP diluted EPS* of $0.50 on revenue of $368.1 million for the fourth quarter of its fiscal year 2016, the three months ended July 31, 2016.

For FY 2016, IDT reported diluted EPS of $1.03 and Non-GAAP diluted EPS* of $1.63 on revenue of $1,496.3 million.

FOURTH QUARTER AND FULL FISCAL YEAR 2016 HIGHLIGHTS(Results for 4Q16 are compared to 4Q15, and results for FY 2016 are compared to FY 2015).

• Revenue in 4Q16 was $368.1 million compared to $405.8 million. FY 2016 revenue was $1,496.3 millioncompared to $1,596.8 million;
• Income from operations in 4Q16 was $6.2 million compared to $7.2 million. FY 2016 income from operations was $26.2 million compared to $93.1 million;
• Adjusted EBITDA* in 4Q16 was $10.0 million compared to $12.4 million. FY 2016 Adjusted EBITDA* was$45.0 million compared to $44.5 million;
• Diluted EPS in 4Q16 was $0.48 compared to $0.05. FY 2016 diluted EPS was $1.03 compared to $3.63;
• Non-GAAP diluted EPS* in 4Q16 was $0.50 compared to $0.25. FY 2016 Non-GAAP diluted EPS* was$1.63 compared to $1.27;
• IDT has declared a dividend of $0.19 per share for 4Q16 to be paid on or about October 20, 2016;
• On June 1, 2016, IDT completed the spin-off of Zedge to its stockholders.

MANAGEMENT REMARKS

Shmuel Jonas, IDT's Chief Executive Officer, said, "Our financial results in the fourth quarter were consistent with recent trends. Our core telecom offerings continued to face revenue and margin pressure stemming in significant part from deregulation of the Mexico telecom market. The impact was mitigated by our continued focus on reducing SG&A expense."

"Operationally, our BOSS Revolution international money transfer business, Net2Phone's unified communications as a service offerings and our National Retail Solutions initiative are all meeting or beating expectations. As they achieve scale, each of these initiatives has the potential to become a significant contributor to IDT's bottom line. In addition, we beta launched two new products after the quarter close -- PicuP, a telephony solution for very small businesses and, just two weeks ago, the next generation of the BOSS Revolution app with free peer-to-peer calling and messaging. Both are getting rave reviews. Across the IDT enterprise, we are intensifying our commitment to developing, deploying, investing and supporting innovative growth initiatives," Mr. Jonas added.

Retail Communications revenue was $165.3 million in 4Q16, a decrease from $185.0 million (-10.6%) in the year ago quarter, due to declines in our BOSS Revolution PIN-less service's sales on the US - Mexico corridor and in sales of our legacy traditional card products both in the U.S. and overseas. For FY 2016, Retail Communications revenue totaled $672.2 million, a decrease from $735.0 million (-8.6%) in FY 2015.

Wholesale Carrier Services' revenue decreased to $136.5 million from $151.5 million (-9.9%) in 4Q15. For the full year, Wholesale Carrier Services' revenue decreased to $555.1 million from $590.9 million (-6.1%) in FY 2015. The quarterly and full year decreases resulted primarily from the termination of a Latin American pricing opportunity pertaining to local currency exchange rate disparities coupled with declining sales of traditional carrier services.

Payment Services' revenue decreased to $55.5 million from $55.7 million (-0.5%). The decrease reflected declines in revenue from IDT's Gibraltar-based bank and in sales of International Mobile Top-Up (IMTU) products, partially offset by a 52% increase in revenue from the BOSS Revolution international money transfer business. FY 2016 Payment Services' revenue increased to $219.2 million from $208.3 million (+5.2%) in FY 2015. The full year increase was driven primarily by continued growth of both IMTU products and international money transfer sales.

Hosted Platform Solutions' revenue decreased to $7.8 million from $8.6 million (-9.9%) while full year revenue declined to $31.4 million from $38.5 million (-18.5%) for FY 2015. The decreases were in-line with expectations as they reflected lower rates incorporated into contract renewals with key cable telephony customers.

TPS' direct cost of revenue as a percentage of TPS' revenue was 84.4% in 4Q16, an increase of 10 basis points year over year and an increase of 100 basis points sequentially. For FY 2016, TPS' direct cost of revenue was 84.1% of TPS' revenue – unchanged from the prior year.

TPS' SG&A expense decreased to $44.9 million from $49.4 million (-8.9%) in 4Q15 and from $46.7 million(-3.8%) in 3Q16. The year over year and sequential decreases primarily reflect reduced employee compensation and legal costs. Expressed as a percentage of TPS' revenue, TPS' 4Q16 SG&A remained at 12.3% compared to the year ago quarter and dropped 100 basis points compared to the prior quarter. TPS' SG&A expense in FY 2016 decreased to $186.6 million from $199.6 million (-6.5%) in FY 2015, reflecting reduced employee headcount and compensation expense, marketing and advertising costs, and call center expense. As a percentage of revenue, SG&A expense in FY 2016 decreased 10 basis points to 12.6% compared to FY 2015.

TPS' depreciation and amortization expense increased to $4.5 million from $4.3 million (+4.1%) in 4Q15 and decreased from $4.9 million (-8.5%) in 3Q16. Depreciation increased year-over-year due to higher levels of capital expenditures in recent periods to support investments in new products, including Net2Phone's 'unified communications as a service' offerings, National Retail Solutions and the new BOSS Revolution calling app with messaging. For FY 2016, depreciation and amortization expense increased to $18.5 million from $16.2 million(+14.7%) in FY 2015 for the same reason.

TPS' income from operations increased to $8.9 million from $8.8 million (+0.7%) in 4Q15 and from $6.3 million(+40.3%) in 3Q16. For FY 2016, TPS' income from operations totaled $31.2 million compared to $27.0 million(+15.8%) in FY 2015. Income from operations in 4Q16 and FY 2016 include severance expense of $6.0 million(compared to $0.2 million in both 4Q15 and 3Q16) and a gain of $7.5 million on the sale of IDT's Gibraltarbased bank's member interest in Visa Europe. In FY 2015, TPS' income from operations also included $7.7 million in severance expense.

TPS' Adjusted EBITDA decreased to $11.9 million from $13.4 million (-11.3%) in 4Q15 and increased from$11.5 million (+3.4%) in 3Q16. For FY 2016, Adjusted EBITDA decreased to $48.8 million from $50.8 million(-3.9%) in FY 2015.

CPS

Consumer Phone Services (CPS) sells local and long distance services domestically in 11 states, marketed under the brand name IDT America. CPS has been in harvest mode since fiscal 2006 - maximizing revenue from current customers while maintaining SG&A and other expenses at the minimum levels essential to operate the business. Results this quarter and fiscal year conformed to expectations.

CPS' revenue decreased to $1.6 million from $2.0 million (-19.2%) in 4Q15 and from $1.7 million (-5.0%) in the prior quarter. FY 2016 revenue decreased to $6.9 million from $8.6 million (-20.3%) in FY 2015. CPS' income from operations decreased to $0.2 million from $0.3 million (-12.3%) in 4Q15 and $0.4 million (-31.7%) in 3Q16. Income from operations in FY 2016 was $1.2 million compared to $1.3 million (-3.2%) in FY 2015.

ALL OTHER

All Other includes IDT's real estate holdings comprised of its public garage in Newark and commercial properties in Newark, Piscataway and Jerusalem, as well as other small businesses and investments.

All Other previously included Zedge, a platform and mobile app centered on self-expression, and Fabrix, a software development company specializing in cloud-based video storage and processing. Zedge was spun off from IDT to IDT's shareholders on June 1, 2016. Because the disposition of Zedge did not meet the criteria to be reported as a discontinued operation, Zedge's assets, liabilities, results of operations and cash flows were not reclassified. Accordingly, 4Q16 and FY 2016 results of operations for All Other include only one month and ten months of Zedge activity, respectively.

Fabrix was included in All Other until it was sold and deconsolidated in October 2014. In FY 2015, All Other includes two months of Fabrix' results of operations compared to none in FY 2016 and none in the fourth quarter of either fiscal year.

All Other's revenue was $1.4 million, a decrease from $3.0 million (-54.5%) in 4Q15. Zedge contributed revenue of $0.8 million in 4Q16 and $2.4 million in 4Q15. All Other's FY 2016 revenue was $11.5 millioncompared to $15.4 million (-25.5%) in FY 2015. Zedge contributed $9.5 million and $9.1 million of All Other's revenue in FY 2016 and FY 2015, respectively. In FY 2015, Fabrix contributed revenue of $4.2 million.

All Other's income from operations in 4Q16 was $86 thousand compared to $449 thousand in 4Q15. Zedge generated a loss from operations of $32 thousand in 4Q16 and income from operations of $270 thousand in the year ago quarter. All Other's income from operations was $4.2 million in FY 2016 compared $78.0 million in FY 2015. Zedge contributed $2.3 million to income from operations in FY 2016 and $100 thousand in FY 2015. Fabrix's income from operations in FY 2015 was $948 thousand. All Other's results also included a gain of $1.1 million in FY 2016 and $76.9 million in FY 2015 on the sale of IDT's interest in Fabrix.

OTHER CONSOLIDATED RESULTS

Consolidated results for all periods presented include corporate overhead. In 4Q16, corporate G&A expense increased to $2.7 million from $2.3 million (+15.9%) in the year ago quarter and decreased from $2.8 million(-5.0%) in the prior quarter. Corporate G&A expense was $10.1 million in FY 2016 compared to $10.9 million(-7.8%) in FY 2015.

4Q16 net income attributable to IDT increased to $11.0 million from $1.3 million in the year ago quarter and from $4.2 million in 3Q16. Net income attributable to IDT in 4Q16 included a $2.7 million gain on foreign currency transactions and a benefit from income taxes of $2.1 million. For 4Q15, net income attributable to IDT was $1.3 million including a foreign currency transaction loss of $0.9 million and a provision for income taxes of$3.8 million. Net income attributable to IDT in 3Q16 included a foreign currency transaction gain of $0.6 millionand a provision for income taxes of $1.3 million. FY 2016 net income attributable to IDT was $23.5 millionincluding a $1.0 million gain on foreign currency transactions and a provision for income taxes of $4.1 million. In FY 2015, net income attributable to IDT was $84.5 million including a $1.7 million loss on foreign currency transactions and a provision for income taxes of $6.1 million. The full year decrease primarily reflects the $76.9 million gain on the sale of IDT's interest in Fabrix in FY 2015.

At July 31, 2016, IDT had $162.5 million in unrestricted cash, cash equivalents and marketable securities. Additionally, at that date, IDT reported $98.8 million in current restricted cash and cash equivalents, which included $98.5 million of customer deposits held by IDT's Gibraltar-based bank. Current assets and liabilities were $339.1 million and $343.8 million, respectively.

Net cash provided by operating activities during 4Q16 was $13.2 million, compared to $2.8 million during 4Q15 and $10.7 million in 3Q16. For the same periods, capital expenditures were $4.4 million compared to $5.7 million and $4.7 million, respectively. For FY 2016, cash provided by operating activities was $49.1 millioncompared to $30.5 million in FY 2015. Capital expenditures for FY 2016 totaled $18.4 million compared to$28.6 million in the prior year. The full year decrease in capital expenditures pertains primarily to investments made in FY 2015 to refurbish IDT's headquarters building at 520 Broad Street in Newark, New Jersey.

About IDT:

IDT Corporation (NYSE: IDT), through its IDT Telecom division, provides telecommunications and payment services to individuals and businesses primarily through its flagship BOSS Revolution® and Net2Phone®brands. IDT Telecom's wholesale business is a leading global carrier of international long distance calls. For more information on IDT, visit www.idt.net.