IDT CORPORATION The following information should be read in conjunction with the accompanying consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the notes thereto and our Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year endedJuly 31, 2019 , as filed with theU.S. Securities and Exchange Commission (orSEC ). As used below, unless the context otherwise requires, the terms "the Company," "IDT," "we," "us," and "our" refer toIDT Corporation , aDelaware corporation, its predecessor, International Discount Telecommunications, Corp., aNew York corporation, and their subsidiaries, collectively. Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words "believes," "anticipates," "expects," "plans," "intends," and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed under Item 1A to Part I "Risk Factors" in our Annual Report on Form 10-K for the fiscal year endedJuly 31, 2019 , and under Item 1A to Part II "Risk Factors" in this Quarterly Report on Form 10-Q. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with theSEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our Annual Report on Form 10-K for the fiscal year endedJuly 31, 2019 . Critical Accounting Policies Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted inthe United States of America , orU.S. GAAP. Our significant accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year endedJuly 31, 2019 . The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require application of management's most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to the allowance for doubtful accounts, goodwill, valuation of long-lived assets, income taxes and regulatory agency fees, and direct cost of revenues-disputed amounts. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year endedJuly 31, 2019 .
Recently Issued Accounting Standards Not Yet Adopted
InJune 2016 , theFinancial Accounting Standards Board , or FASB, issued Accounting Standards Update, or ASU, No. 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking current expected credit loss model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. We will adopt the new standard onAugust 1, 2023 . We are evaluating the impact that the new standard will have on our consolidated financial statements. InDecember 2019 , the FASB issued ASU No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, that removes certain exceptions to the general principles in Topic 740, and clarifies and amends existing guidance in Topic 740. We will adopt the new standard onAugust 1, 2021 . We are evaluating the impact that the new standard will have on our consolidated financial statements. InJanuary 2020 , the FASB issued ASU No. 2020-01,Investments-Equity Securities (Topic 321),Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), that clarifies the interactions between Topic 321, Topic 323, and Topic 815. The amendments in this ASU affect the application of the measurement alternative for certain equity securities and the equity method of accounting, and guidance for certain forward contracts and purchased options to purchase securities, that, upon settlement or exercise, would be accounted for under the equity method of accounting. We will adopt the new standard onAugust 1, 2021 . We are evaluating the impact that the new standard will have on our consolidated financial statements. 23 Results of Operations
Coronavirus Disease (COVID-19)
During the first and second quarters of calendar 2020, the world experienced the unprecedented impacts of the coronavirus disease 2019 (COVID-19) pandemic. There are many uncertainties regarding the impacts of the COVID-19 pandemic, and we are monitoring those impacts on all aspects of our business, including how it will impact our customers, employees, suppliers, vendors, and business partners.
Operationally, our employees transitioned to work-from-home during the fiscal quarter. In particular, our salespeople and delivery employees continued to serve our independent retailers and channel partners with minimal interruption.
COVID-19 had a mixed financial impact on us during the three months endedApril 30, 2020 . The COVID-19 pandemic drove significant increases in demand for our consumer offerings through digital channels. Conversely, sales originating through retailers and channel partners slowed in March and April before beginning to rebound in May. COVID-19 related demand helped to boost Mobile Top-Up and BOSS Revolution Money Transfer revenues and slowed the rate of decline in BOSS Revolution Calling revenues. net2phone-UCaaS' customer base growth slowed in the second half of our third fiscal quarter as sales became increasingly difficult as the pandemic spread in key markets. Carrier Services' revenue was impacted by the closure of corporate offices and the decline of commerce globally. As of the date of this filing, management believes that we continue to have sufficient liquidity and capital resources for the foreseeable future. Looking ahead, current economic conditions, if enduring, will create additional hardship for many of our customers. Over the longer term, sustained levels of high unemployment along with declining economic activity and less favorable foreign exchange market conditions could materially and adversely impact us by dampening demand for both our consumer and business-to-business offerings. The situation remains fluid and we cannot predict with certainty the potential impact of COVID-19 on our business, results of operations, financial condition and cash flows.
Three and Nine Months Ended
We are a multinational company with operations primarily in the telecommunications and payment industries. We have two reportable business segments, Telecom & Payment Services and net2phone. Our Telecom & Payment Services segment provides retail telecommunications and payment offerings as well as wholesale international long-distance traffic termination. Our net2phone segment provides unified cloud communications and telephony services to business customers. We evaluate the performance of our operating business segments based primarily on income (loss) from operations. Accordingly, the income and expense line items below income (loss) from operations are only included in our discussion of the consolidated results of operations. Our results of operations discussion include two key performance metrics: minutes of use and direct cost of revenues as a percentage of revenues. Minutes of use is a nonfinancial metric that measures aggregate customer usage during a reporting period for our BOSS Revolution Calling and Carrier Services businesses, as well as other, smaller telephony offerings. Minutes of use represent the volume of certain of our core offerings and that volume, together with revenues and the relationship between revenues and direct cost of revenues, is an indicator of the performance of those business units. Minutes of use is an important factor in BOSS Revolution Calling and Carrier Services' revenue recognition since satisfaction of our performance obligation occurs when the customer uses our service. Minutes of use trends and comparisons between periods are used in the analysis of revenues and direct cost of revenues. Direct cost of revenues as a percentage of revenues is a financial metric that measures changes in our direct cost of revenues relative to changes in revenues during the same period. Direct cost of revenues as a percentage of revenues is a ratio in which direct cost of revenues is the numerator and revenues are the denominator. It is useful for monitoring trends in the direct cost of revenues generation as well as for evaluating the net contribution of our revenues.
Telecom & Payment Services Segment
Telecom & Payment Services, which represented 96.1% and 96.7% of our total
revenues in the nine months ended
? Core includes our three largest communications and payments offerings by
revenue: BOSS Revolution Calling, an international long-distance calling
service marketed primarily to immigrant communities in
Carrier Services, which provides international long-distance termination and
outsourced traffic management solutions to telecoms worldwide, and Mobile
Top-Up, which enables customers to transfer airtime and bundles of airtime,
messaging and data credits to mobile accounts internationally and domestically.
Core also includes smaller communications and payments offerings, many in
harvest mode.
24
? Growth comprises National Retail Solutions, which operates a point-of-sale, or
POS, terminal-based network for independent retailers, BOSS Revolution Money
Transfer, an international money remittance service for customers in the United
States, and BOSS Revolution Mobile, a mobile virtual network operator which
provides mobile phone service over a third-party network for customers in the
United States . Our Telecom & Payment Services segment's most significant revenue streams are from BOSS Revolution Calling, Carrier Services, and Mobile Top-Up. BOSS Revolution Calling and Mobile Top-Up are sold direct-to-consumers and through distributors and retailers. We receive payments for BOSS Revolution Calling, traditional calling cards, and Mobile Top-Up prior to providing the services. We recognize the revenue when services are provided to the customer. International prepaid calling revenues tend to be somewhat seasonal, with the second fiscal quarter (which contains Christmas andNew Year's Day ) and the fourth fiscal quarter (which containsMother's Day andFather's Day ) typically showing higher minute volumes. Three months ended Nine months ended April 30, Change April 30, Change 2020 2019 $ % 2020 2019 $ % (in millions) Revenues$ 308.8 $ 328.8 $ (20.0 ) (6.1 )%$ 947.3 $ 1,018.6 $ (71.3 ) (7.0 )% Direct cost of revenues 256.0 279.4 (23.4 ) (8.4 ) 792.2 869.0 (76.8 ) (8.8 ) Selling, general and administrative 39.2 38.1 1.1 2.7 120.5 119.4 1.1 1.0 Depreciation and amortization 3.1 4.2 (1.1 ) (24.4 ) 9.3 11.8 (2.5 ) (21.9 ) Severance 0.6 0.6 - 8.8 1.7 0.6 1.1 209.8 Other operating expense, net - 2.3 (2.3 ) (100.0 ) 2.2 5.2 (3.0 ) (58.5 ) Income from operations$ 9.9 $ 4.2 $ 5.7 134.0 %$ 21.4 $ 12.6 $ 8.8 70.1 %
Revenues. Telecom & Payment Services' revenues and minutes of use for the three
and nine months ended
Three months ended Nine months ended
April 30, Change April 30, Change
2020 2019 $/# % 2020 2019 $/# %
(in millions)
Core Operations:
BOSS Revolution
Calling $ 111.6 $ 120.4 $ (8.8 ) (7.4 )% $ 340.5 $ 366.1 $ (25.6 ) (7.0 )%
Carrier Services 87.3 121.0 (33.7 ) (27.8 ) 302.5 391.1 (88.6 ) (22.7 )
Mobile Top-Up 85.1 67.6 17.5 26.0 237.7 197.2 40.5 20.6 Other 10.1 12.2 (2.1 ) (17.0 ) 32.5 43.7 (11.2 ) (25.7 ) Growth 14.7 7.6 7.1 92.0
34.1 20.5 13.6 66.0
Total revenues
Minutes of use BOSS Revolution Calling 953 1,048 (95 ) (9.0 )%
2,913 3,245 (332 ) (10.2 )% Carrier Services 3,347 4,031 (684 ) (17.0 ) 11,589 13,379 (1,790 ) (13.4 )
Revenues and minutes of use from BOSS Revolution Calling decreased in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019, although COVID-19 related demand helped to slow the rate of decline in BOSS Revolution Calling revenue compared to prior periods. BOSS Revolution Calling continues to be impacted by persistent, market-wide trends, including the proliferation of unlimited calling plans offered by wireless carriers and mobile virtual network operators, and the increasing penetration of free and paid over-the-top voice and messaging services. Revenues and minutes of use from Carrier Services decreased in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019 due to the closure of corporate offices and the decline of commerce globally. Over the long-term, we expect that Carrier Services will continue to be adversely impacted as communications globally transition away from traditional international long-distance voice operators. Carrier Services' minutes of use and revenues will likely continue to decline from quarter-to-quarter, as we seek to maximize economics rather than necessarily sustain minutes of use or revenues. Revenues from Mobile Top-Up increased in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019 due to COVID-19 related demand, as well as expanded bundled offerings of minutes, text and data, and growth from the addition of new mobile partners. 25
Revenues from our Growth initiatives increased in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019. BOSS Revolution Money Transfer revenues increased 95% to$11.8 million in the three months endedApril 30, 2020 compared to the similar period in fiscal 2019 and increased 66% to$26.7 million in the nine months endedApril 30, 2020 compared to the similar period in fiscal 2019 driven by increased transaction volumes partially related to COVID-19 and increased foreign exchange revenue derived, in part, from strategies leveraging the strengthenedU.S. dollar and other transient foreign exchange market conditions. National Retail Solutions' revenues increased 88% to$2.9 million in the three months endedApril 30, 2020 compared to the similar period in fiscal 2019 and increased 70% to$7.3 million in the nine months endedApril 30, 2020 compared to the similar period in fiscal 2019 driven by growth in monthly subscription fees, advertising sales, and credit card processing customers. Direct Cost of Revenues. Direct cost of revenues in Telecom & Payment Services decreased in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019 primarily due to decreases in Carrier Services' and BOSS Revolution Calling's direct cost of revenues in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019, partially offset by an increase in Mobile Top-Up's direct cost of revenues in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019. Three months ended Nine months ended April 30, April 30, 2020 2019 Change 2020 2019 Change Direct cost of revenues as a percentage of revenues 82.9 % 85.0 % (2.1 )% 83.6 % 85.3 % (1.7 )% Direct cost of revenues as a percentage of revenues in Telecom & Payment Services decreased 210 and 170 basis points in the three and nine months endedApril 30, 2020 , respectively, compared to the similar periods in fiscal 2019 primarily due to decreases in direct cost of revenues as a percentage of revenues in BOSS Revolution Money Transfer, Mobile Top-Up, BOSS Revolution Calling, and National Retail Solutions. BOSS Revolution Money Transfer's direct cost of revenues as a percentage of revenues decreased largely from increased foreign exchange revenue derived, in part, from strategies leveraging the strengthenedU.S. dollar and other transient foreign exchange market conditions. BOSS Revolution Calling's direct cost of revenues as a percentage of revenues decreased primarily due to the continued migration of customers to the direct-to-consumer channel. Selling, General and Administrative. Selling, general and administrative expense in our Telecom & Payment Services segment increased in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019 primarily due to increases in credit card charges and stock-based compensation, partially offset by decreases in marketing expense. In addition, selling, general and administrative expense in our Telecom & Payment Services segment increased in the nine months endedApril 30, 2020 compared to the similar period in fiscal 2019 due to an increase in employee compensation. As a percentage of Telecom & Payment Services' revenue, Telecom & Payment Services' selling, general and administrative expense increased to 12.7% from 11.6% in the three months endedApril 30, 2020 and 2019, respectively, and increased to 12.7% from 11.7% in the nine months endedApril 30, 2020 and 2019, respectively. Depreciation and Amortization. Depreciation and amortization expense in our Telecom & Payment Services segment decreased in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019 as more of our property, plant and equipment became fully depreciated, partially offset by depreciation of equipment added to our telecommunications network and capitalized costs of consultants and employees developing internal use software. Severance. In the three months endedApril 30, 2020 and 2019, Telecom & Payment Services incurred severance expense of$0.6 million and$0.6 million , respectively, and in the nine months endedApril 30, 2020 and 2019, Telecom & Payment Services incurred severance expense of$1.7 million and$0.6 million , respectively. Severance expense in the three and nine months endedApril 30, 2020 was incurred mostly for technology and software development employees inthe United States , Carrier Services employees inEurope , and retail-related
employees inAsia . Other Operating Expense, net. Telecom & Payment Services recorded accruals for
non-income related taxes related to one of its foreign subsidiaries of nil and$2.3 million in the three months endedApril 30, 2020 and 2019, respectively, and$2.2 million and$5.4 million in the nine months endedApril 30, 2020 and 2019, respectively. In addition, in the nine months endedApril 30, 2019 , other operating expense, net was partially offset by a gain of$0.2 million from the sale of a calling card business inAsia . net2phone Segment Our net2phone segment, which represented 3.9% and 3.3% of our total revenues in the nine months endedApril 30, 2020 and 2019, respectively, is comprised of two verticals:
? net2phone-
communications service for businesses in
other international markets; and
26
? net2phone-Platform Services, which provides telephony services to cable
operators and other businesses by leveraging a common technology platform.
Three months ended Nine months ended
April 30, Change April 30, Change
2020 2019 $ % 2020 2019 $ %
(in millions)
Revenues $ 12.5 $ 12.4 $ 0.1 1.0 % $ 38.1 $ 34.4 $ 3.7 10.7 %
Direct cost of
revenues 2.9 3.3 (0.4 ) (13.8 ) 8.8 9.6 (0.8 ) (8.7 )
Selling, general
and
administrative 11.1 9.0 2.1 24.0 32.4 24.5 7.9 32.5
Depreciation and
amortization 2.0 1.4 0.6 52.1 6.4 5.0 1.4 28.0
Other operating
expense, net 0.4 - 0.4 nm 1.0 - 1.0 nm
Loss from
operations $ (3.9 ) $ (1.3 ) $ (2.6 ) (210.5 )% $ (10.5 ) $ (4.7 ) $ (5.8 ) (125.4 )%
nm-not meaningful
Revenues. net2phone's revenues in the three and nine months ended
Three months ended Nine months ended
April 30, Change April 30, Change
2020 2019 $ % 2020 2019 $ %
(in millions)
net2phone-UCaaS $ 8.1 $ 6.6 $ 1.5 22.3 % $ 23.3 $ 17.5 $ 5.8 33.3 %
net2phone-Platform
Services 4.4 5.8 (1.4 ) (23.5 ) 14.8 16.9 (2.1 ) (12.6 )
Total revenues $ 12.5 $ 12.4 $ 0.1 1.0 % $ 38.1 $ 34.4 $ 3.7 10.7 %
net2phone-UCaaS' revenues increased in the three and nine months ended April 30,
2020 compared to the similar periods in fiscal 2019 driven by growth in its
international and U.S. markets, partially offset by strengthening of the U.S.
dollar compared to local currencies in key overseas markets. On September 14,
2018 , net2phone-UCaaS entered the Canadian market through the acquisition of
Versature Corp. Versature's revenues increased $0.2 million and $1.5 million in
the three and nine months ended April 30, 2020 , respectively, compared to the
similar periods in fiscal 2019. On December 11, 2019 , we acquired Ringsouth
Europa, S.L ., which expanded net2phone-UCaaS' business into Spain . Ringsouth's
revenues were $0.2 million and $0.4 million in the three and nine months ended
April 30, 2020 , respectively. net2phone-UCaaS' customer base growth slowed in
the second half of our third fiscal quarter as sales became increasingly
difficult as the pandemic spread in key markets. During the third quarter of
fiscal 2020, net2phone-UCaaS introduced an integration of its cloud
communications offering with Microsoft Teams and its secure video conferencing
solution, Huddle (in beta).
net2phone-Platform Services' revenues decreased in the three and nine months
ended
Direct Cost of Revenues. Direct cost of revenues decreased in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019 because of decreases in the direct cost of revenues in both net2phone-UCaaS
and
net2phone-Platform Services.
Three months ended Nine months ended
April 30, April 30,
2020 2019 Change 2020 2019 Change
Direct cost of revenues as a
percentage of revenues 23.0 % 27.0 % (4.0 )% 23.1 % 28.0 % (4.9 )%
Direct cost of revenues as a percentage of revenues decreased 400 and 490 basis
points in the three and nine months ended April 30, 2020 , respectively, compared
to the similar periods in fiscal 2019 primarily because of decreases in direct
cost of revenues as a percentage of revenues in net2phone-UCaaS. Direct cost of
revenues as a percentage of revenues in net2phone-Platform Services increased in
the three months ended April 30, 2020 compared to the similar period in fiscal
2019 and decreased in the nine months ended April 30, 2020 compared to the
similar period in fiscal 2019.
Selling, General and Administrative. Selling, general and administrative expense
increased in the three and nine months ended April 30, 2020 compared to the
similar periods in fiscal 2019 due to increases in employee compensation,
stock-based compensation, and sales commissions. As a percentage of net2phone's
revenues, net2phone's selling, general and administrative expenses were 88.7%
and 72.2% in the three months ended April 30, 2020 and 2019, respectively, and
85.1% and 71.1% in the nine months ended April 30, 2020 and 2019, respectively.
27
Depreciation and Amortization. The increase in depreciation and amortization
expense in the three and nine months ended April 30, 2020 compared to the
similar periods in fiscal 2019 was due to increases in depreciation of
net2phone-UCaaS' customer premises equipment, additional depreciation and
amortization in Versature, and increases in depreciation of capitalized costs of
consultants and employees developing internal use software.
Other Operating Expense, net. Other operating expense, net of $0.4 million and
$1.0 million in the three and nine months ended April 30, 2020 , respectively,
was primarily due to our indemnification of a net2phone cable telephony customer
related to patent infringement claims brought against the customer.
Corporate
Three months ended Nine months ended
April 30, Change April 30, Change
2020 2019 $ % 2020 2019 $ %
(in millions)
General and
administrative $ (2.4 ) $ (2.4 ) $ - 2.6 % $ (6.9 ) $ (7.2 ) $ 0.3 3.0 %
Other operating
gain (expense),
net 0.2 (0.1 ) 0.3 226.6 (0.3 ) (0.6 ) 0.3 58.3
Loss from
operations $ (2.2 ) $ (2.5 ) $ 0.3 12.6 % $ (7.2 ) $ (7.8 ) $ 0.6 7.2 %
Corporate costs include compensation, consulting fees, treasury and accounts
payable, tax and accounting services, human resources and payroll, corporate
purchasing, corporate governance including Board of Directors' fees, internal
and external audit, investor relations, corporate insurance, corporate legal,
charitable contributions, travel, and other corporate-related general and
administrative expenses. Corporate does not generate any revenues, nor does it
incur any direct cost of revenues.
General and Administrative. Corporate general and administrative expense was
basically unchanged in the three months ended April 30, 2020 compared to the
similar period in fiscal 2019 primarily because of a decrease in employee
compensation, partially offset by an increase in stock-based compensation.
Corporate general and administrative expense decreased in the nine months ended
April 30, 2020 compared to the similar period in fiscal 2019 primarily because
of decreases in employee compensation, legal fees, and consulting expense,
partially offset by an increase in stock-based compensation. As a percentage of
our total consolidated revenues, Corporate general and administrative expense
was 0.7% in the three and nine months ended April 30, 2020 and 2019.
Other Operating Gain (Expense), net. On July 31, 2013 , we completed a pro rata
distribution of the common stock of our former subsidiary Straight Path
Communications Inc. , or Straight Path, to our stockholders. As discussed in Note
15 to the Consolidated Financial Statements included in Item 1 to Part I of this
Quarterly Report on Form 10-Q, a putative class action on behalf of Straight
Path's stockholders and derivative complaint was filed naming us, among others.
We incurred legal fees of $1.2 million and $0.1 million in the three months
ended April 30, 2020 and 2019, respectively, and $2.5 million and $0.6 million
in the nine months ended April 30, 2020 and 2019, respectively, related to this
action. Also, in the three and nine months ended April 30, 2020 , we recorded a
gain from insurance proceeds for this matter of $1.4 million and $2.2 million ,
respectively.
Consolidated
The following is a discussion of certain of our consolidated expenses, and our consolidated income and expense line items below income from operations.
Related Party Lease Costs. OnMarch 26, 2018 , we completed a pro rata distribution of the common stock of our former subsidiary, Rafael Holdings, Inc., or Rafael, to our stockholders of record as of the close of business onMarch 13, 2018 , which we refer to as the Rafael Spin-Off. We lease office space and parking in Rafael's building and parking garage located at520 Broad St ,Newark, New Jersey . We also lease office space inIsrael from Rafael. TheNewark lease expires inApril 2025 and theIsrael lease expires inJuly 2025 . In the three months endedApril 30, 2020 and 2019, we incurred lease costs of$0.5 million and$0.5 million , respectively, and in the nine months endedApril 30, 2020 and 2019, we incurred lease costs of$1.4 million and$1.3 million , respectively, in connection with the Rafael leases, which is included in consolidated selling, general and administrative expenses. Stock-Based Compensation Expense. Stock-based compensation expense included in consolidated selling, general and administrative expenses was$0.8 million and$0.3 million in the three months endedApril 30, 2020 and 2019, respectively, and$3.3 million and$1.2 million in the nine months endedApril 30, 2020 and 2019, respectively. The increase in stock-based compensation expense in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019 was primarily due to expense of deferred stock units granted inJune 2019 . AtApril 30, 2020 , unrecognized compensation cost related to non-vested stock-based compensation was an aggregate of$2.3 million . The unrecognized compensation cost is expected to be recognized over the remaining vesting period that ends in 2022. 28 Three months ended Nine months ended April 30, Change April 30, Change 2020 2019 $ % 2020 2019 $ % (in millions) Income from operations$ 3.8 $ 0.4 $ 3.4 744.5 %$ 3.7 $ 0.2 $ 3.5 nm Interest income, net 0.1 0.2 (0.1 ) (68.4 ) 0.5 0.5 - 11.2 % Other (expense) income, net (2.1 ) 0.4 (2.5 ) (695.6 ) (1.4 ) (0.5 ) (0.9 ) (175.3 ) (Provision for) benefit from income taxes (1.4 ) 1.5 (2.9 ) (189.7 ) (3.0 ) (0.7 ) (2.3 ) (329.0 ) Net income (loss) 0.4 2.5 (2.1 ) (84.3 ) (0.2 ) (0.5 ) 0.3 75.9 Net loss (income) attributable to noncontrolling interests 0.1 (0.3 ) 0.4 146.3 0.1 (0.9 ) 1.0 107.9 Net income (loss) attributable to IDT Corporation$ 0.5 $ 2.2 $ (1.7 ) (76.1 )%
$ (0.1 ) $ (1.4 ) $ 1.3 95.6 % nm-not meaningful Other (Expense) Income, net. Other (expense) income, net consists of the following: Three months ended Nine months ended April 30, April 30, 2020 2019 2020 2019 (in millions)
Foreign currency transaction (losses) gains
$ 0.2 $ (0.8 ) (Loss) gain on investments (1.2 ) 0.6 (0.8 ) 0.7 Other (0.1 ) (0.2
) (0.8 ) (0.4 )
Total other (expense) income, net$ (2.1 ) $ 0.4
$ (1.4 ) $ (0.5 ) (Provision for) Benefit from Income Taxes. The increase in income tax expense in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019 was primarily due to differences in the amount of taxable income earned in the various taxing jurisdictions. OnMarch 27, 2020 , the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed intoU.S. federal law, which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting theU.S. economy. The CARES Act, among other things, includes provisions related to refundable payroll tax credits, deferment of the employer portion of social security payments, net operating loss carryback periods, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. For the three months endedApril 30, 2020 , the CARES Act did not have a significant impact on our consolidated financial statements. We will continue to assess the impact of the CARES Act on our consolidated financial statements. Net Loss (Income) Attributable to Noncontrolling Interests. The change in the net loss (income) attributable to noncontrolling interests in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019 was primarily due to the net loss attributable to noncontrolling interests of one of our subsidiaries of$0.4 million and$0.7 million in the three and nine months endedApril 30, 2020 , respectively. We did not record the net loss attributable to noncontrolling interests of this subsidiary in the similar periods in fiscal 2019. In addition, the reduction in the net income attributable to noncontrolling interests of other subsidiaries in the three and nine months endedApril 30, 2020 compared to the similar periods in fiscal 2019 was the result of a decrease in the net income of these subsidiaries.
Liquidity and Capital Resources
General
We currently expect our cash from operations in the next twelve months and the balance of cash, cash equivalents, debt securities, and current equity investments that we held onApril 30, 2020 to be sufficient to meet our currently anticipated working capital and capital expenditure requirements during the twelve-month period endingApril 30, 2021 . As of the date of this filing, including the impact of COVID-19 on us, management believes that we continue to have sufficient liquidity and capital resources for the foreseeable future.
At
29
We treat unrestricted cash and cash equivalents held by IDT Payment Services as
substantially restricted and unavailable for other purposes. At April 30, 2020 ,
"Cash and cash equivalents" in our consolidated balance sheet included an
aggregate of $6.6 million held by IDT Payment Services that was unavailable for
other purposes.
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