IDT (IDT) risk factors, FY2025 10-K

Risks Related to Our Businesses and Operations

1. 01Errors in our technology or technological issues outside our control could cause delays or interruptions to our customers
2. 02Cyberattacks impacting our networks or systems could have an adverse effect on our business
3. 03Changes to immigrant populations could negatively impact certain of our businessesNew
4. 04We could be harmed by network disruptions, security breaches, or other significant disruptions or failures of our IT infrastructure and related systems or of those we operate for certain of our customers
5. 05If technology that drives one or more of our products fails, or is perceived to fail, or if there are technical defects, our reputation could be harmed, our market share may decline, and we could be subject to various liability claims
6. 06Failure in our data centers or services could lead to significant costs and disruptions
7. 07Our revenues and profits will suffer if our distributors and sales representatives fail to effectively market and distribute our products and services
8. 08Our global operations subjects us to geopolitical and other risks that may harm our results of operations and financial condition
9. 09Our global operations subject us to additional risks which could have an adverse effect on our business, operating results, and financial condition
10. 10Our technology and development(“T&D”) may be adversely affected by ongoing developments in Belarus and Ukraine28% rewritten
11. 11Should the military conflict expand to Belarus, our operations there could likely be impacted, including due to availability of personnel, electrical outages, cyberattacks, and actual battles in areas where we have personnel33% rewritten
12. 12Global and regional economic conditions could materially adversely affect our business, results of operations, financial condition, and growth
13. 13Our financial performance is subject to risks associated with changes in the value of the U.S. dollar relative to other currencies
14. 14We depend upon industry standard protocols and third-party software, including but not limited to open-source software
15. 15Certain functions related to our business depend on a single supplier or small group of suppliers to carry out our business, and the inability to do business with some or all of these suppliers could have a materially adverse effect on our business and financial results
16. 16Our success depends in part upon our ability to provide customer service that effectively supports the needs of our customers
17. 17Changes to rates by our suppliers and increasing regulatory charges, tariffs or excise taxes may require us to raise prices, which could adversely affect our financial result and business35% rewritten
18. 18Our customers, particularly our IDT Global customers, could experience financial difficulties, which could adversely affect our revenues and profitability if we experience difficulties in collecting our receivables24% rewritten
19. 19We rely on highly skilled personnel and, if we are unable to retain or motivate key personnel, hire qualified personnel, or maintain our corporate culture, we may not be able to grow effectively
20. 20New and existing technologies could affect our ability to track the results of ads and/or could block ads online, which would harm our business

Risks Related to Our NRS Business

1. 21Substantial and increasingly intense competition in the POS industry may harm NRS’ business
2. 22If NRS fails to increase advertising on its platform, our business could be adversely affected
3. 23The long-term success of NRS depends on its ability to develop products and services to address the rapidly evolving market for POS products and services, and, if it cannot implement successful enhancements and new features for its products and services, our business could be materially and adversely affected

Risks Related to Our BOSS Money Business

1. 24BOSS Money and its retailers face a complex and dynamic regulatory landscape; changes in laws and regulations can impact business operations, and non-compliance or failure to comply with laws can result in hefty fines, penalties, operational restrictions and reputational damage
2. 25BOSS Money depends on a licensed network of agents for its retail money remittance business
3. 26BOSS Money has financial and business exposure to fluctuations in the foreign exchange markets26% rewritten
4. 27BOSS Money can be vulnerable to illegal activities and fraud schemes
5. 28BOSS Money’s rapid growth can strain resources and internal controls which could potentially lead to, among other things, operational inefficiencies, increased costs and reduced profitability
6. 29The rapid evolution of payment technologies and shifts in consumer preferences along with adoption of new technologies could disrupt the money transfer industry
7. 30Disruptions in mobile networks or changes in consumer preferences for mobile devices could impact our business
8. 31BOSS Money has less brand recognition than many of its competitors in the money remittance space which could make it harder to attract and retain customers
9. 32BOSS Money relies on partnerships with global banks and payout agents to process transactions in its receiving markets

Risks Related to Our net2phone Business

1. 33net2phone’s VoIP or cloud-based communications service competes against established well financed alternative voice communication providers who may provide comparable services at comparable or lower pricing or deploy new services that net2phone is unable to offer
2. 34net2phone depends in part upon the capacity, reliability, and performance of several third-party providers and their network infrastructure, the failure of which could cause delays or interruptions of net2phone’s service and impact our revenue and profitability
3. 35net2phone faces risks from the outsourcing of the manufacturing of its desktop telephones (“desktop devices”)
4. 36net2phone targets sales to small, mid-market and enterprise customers. Not properly managing these customers could negatively affect our business, cash flow and operations
5. 37If net2phone’s existing customers terminate their subscriptions or reduce their subscriptions and related usage, its revenues and earnings will be harmed, and we will be required to spend more money to grow net2phone’s customer base
6. 38net2phone must acquire new customers on an ongoing basis to maintain and increase its customers and revenues, and the significant costs to acquire new customers may hinder profitability
7. 39net2phone’s customer churn rate may increase in future periods, which may adversely impact its revenue or require it to spend more money to grow its customer base
8. 40net2phone may not be able to scale its business efficiently or quickly enough to meet its customers’ growing needs, in which case our operating results could be harmed

Risks Related to Our Traditional Communications Segment

1. 41Each of our BOSS Revolution and IDT Global businesses is highly sensitive to declining prices, which may adversely affect our revenues and profitability
2. 42We may not be able to obtain sufficient or cost-effective termination capacity to particular destinations, which could adversely affect our revenues and profits
3. 43The termination of our carrier agreements with partners or our inability to enter into carrier agreements in the future could materially and adversely affect our ability to compete, which could reduce our revenues and profits

Risk Related to Our Financial Condition

1. 44We hold cash, cash equivalents, debt securities and equity investments that are subject to various market risks
2. 45If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results, and current and potential stockholders may lose confidence in our financial reporting which could have a negative effect on the trading price of our stock
3. 46Intellectual Property, Tax, Regulatory, and Litigation RisksNew
4. 47We provide communications and payment services to consumers and are therefore subject to various federal and state laws and regulations
5. 48We may be adversely affected if we fail to protect our proprietary technology
6. 49We may incur costs in complying with, or face exposure from the failure to comply with, laws, regulation or initiatives regarding greenhouse gas emissions or reporting of our direct and indirect emissionsNew
7. 50We may be subject to claims of infringement of intellectual property rights of others, which could have a material adverse effect on our results of operations, financial condition, revenues, and profits
8. 51We are subject to tax and regulatory audits which could result in the imposition of liabilities that may or may not have been reserved
9. 52We are also subject to audits in various jurisdictions for various other taxes, including utility excise tax, sales and use tax, communications services tax, gross receipts tax, and property tax
10. 53The Dodd-Frank Act, as well as the regulations required by the Dodd-Frank Act and the Consumer Financial Protection Bureau could harm us and the scope of our activities, and could harm our operations, results of operations, and financial condition31% rewritten
11. 54We receive, store, process, and use personal information and other data, which subjects us to governmental regulation and other legal obligations related to privacy. Our actual or perceived failure to comply with such obligations could harm our business, financial condition, and results of operations
12. 55Additionally, with advances in computer capabilities and data protection requirements to address ongoing threats, we may be required to expend significant capital and other resources to protect against potential security breaches or to alleviate problems caused by security breaches
13. 56We may be harmed by certain imminent FCC Orders and rules that effect the telecommunications marketplace83% rewritten
14. 57The FCC’s rules present several concerns to all carriers. Notably, the FCC has prohibited STIR/SHAKEN compliant carriers, such as IDT, from doing business with non-compliant carriersNew
15. 58Federal and state regulations may be passed that could harm our business, financial condition, and results of operations
16. 59Our ability to offer services outside of the United States is subject to the local regulatory environment, which may be unfavorable, complicated, and often uncertain
17. 60net2phone’s VoIP services are subject to regulation in the United States and Canada. Future legislative, regulatory, or judicial actions could adversely affect net2phone’s business and expose it to liability and limit its growth potential
18. 61We are subject to legal proceedings in the ordinary course of business that may have a material adverse effect on our business, results of operations, cash flows, or financial condition
19. 62Our collection, processing, storage, use, and transmission of personal data could give rise to liabilities because of governmental regulation, conflicting legal requirements, differing views on data privacy, or security breaches
20. 63We could fail to comply with requirements for debit card, credit card, and other digital payment methods, which could have a material adverse effect on our revenues, results of operations, and financial condition
21. 64We face risks in our sales to certain market segments including, but not limited to, sales subject to HIPAA Regulations
22. 65Our ability to offer services outside the United States is subject to different regulations which may be unknown and uncertain
23. 66Examinations by relevant tax authorities may result in material changes in related tax reserves for tax positions taken in previously filed tax returns or may impact the valuation of certain deferred income tax assets, such as net operating loss carry-forwards
24. 67There may be a negative effect on our business going forward because of changes to net neutrality43% rewritten
25. 68States are adding regulations for VoIP providers which could increase our costs and change certain aspects of our service
26. 69Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added, or similar taxes, and any such assessments could adversely affect our business, financial condition, and results of operations

Risks Related to Our Capital Structure

1. 70Holders of our Class B common stock have significantly less voting power than holders of our Class A common stock
2. 71We are controlled by our principal stockholder, which limits the ability of other stockholders to affect the management of the Company33% rewritten