IDT Corporation – Investment Thesis
Note: The following analysis is only for education purposes and do not represent any type of financial advice
Introduction to IDT
IDT is a family-owned US conglomerate of companies that has produced an amazing return since it was founded 1990. If one had held IDT and its spinoffs during the decade from 2010-2020, one would have a CAGR of +50%. IDT acts as a business incubator before spinning off the successful businesses they grow organically.
The current IDT is a mix of 3 high-growth, asset-light and high-margin companies in the tech sector and a set of declining legacy asset-heavy communications businesses belonging to the old economy that in 2024 still generated most of the revenue and EBITDA.
Understanding IDT is not a simple exercise, which added to the fact that there it has no analyst coverage on IDT, allows IDT to fly under the radar of most value investors. Its complex reporting and structure hide the tremendous economics behind the 3 rapid-growth businesses. This conglomerate structure also allows IDT to reinvest the cash flows of the legacy business in a tax efficient manner with high ROIs into NRS, N2P and BOSS Money (the 3 fast-growth businesses in the POS, UCaaS and Money Transfer industries, respectively), allowing to compound their intrinsic value at a superior pace than their respective competitors.
The successful operations of IDT have had a constant during its 34-year history; that constant is the leadership of Howard Jonas, the visionary founder, self-made billionaire and current Chairman of IDT. The Jonas family owns +20% of the company and his son Shmuel Joans is the CEO. The stake of the family through class A shares provides them control of the company.
A year and a half ago, as IDT was waiting on the verdict for a billion-dollar lawsuit against them, IDT’s valuation collapsed as the market feared a bankruptcy, if the court ruled against IDT (IDT’s market cap was less than a billion back then). In the last year the stock price has recovered, but it is still not close to the levels of what we believe it is worth.
We believe that Fiscal Year 2025 (started in August 2024) is the year when the value of IDT’s high growth business is going to blossom and finally become glaring to investors. In FY2025, these growing businesses are expected to account for nearly 50% of the EBITDA of IDT, causing a big spike in the consolidated EBITDA margins and a consolidated +25% bottom line growth. We believe that these numbers will catch the attention of Wall Street and make IDT pop up in every screener.
We are going in depth into this investment opportunity, making our initial analysis of IDT, a company that one of the MORAM team members has held for years and that we follow closely. We believe that there is no such detailed analysis on IDT on the Internet even remotely similar to the one we present today.We are discussing IDT’s history, getting to know the impressive story behind its Chairman and analysing its structure, each of its business segments in detail, the economics of the group, valuation and our thoughts about IDT.
Furthermore, we have already prepared a follow-up publication solely discussing National Retail Solutions (NRS), the crow-jewel of IDT that could be more than the entire market cap of IDT today
