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Taking Stock of IDT’s Risk Factors
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Taking Stock of IDT’s Risk Factors

Shares of IDT (IDT) have gained 393% over the past 12 months. The company provides fintech, cloud communications, and traditional communications services.

Let’s have a look at IDT’s Q4 2021 financials, as well as what has changed in its key risk factors that investors should know.

Revenue increased 8% year-over-year to $390 million, primarily due to a 10% growth in the Traditional communications segment. IDT witnessed a 41% increase in Mobile Top-Up revenue, 46% growth in net2phone subscription revenue, and 76% growth in National Retail Solutions (NRS).

During this period, income from operations grew 19% year-over-year to $16.9 million. The growth in top line, coupled with a positive impact from the reversal of income tax valuation allowances, helped IDT generate earnings per share of $1.46, as compared to a year-ago figure of $0.82. (See Insiders’ Hot Stocks on TipRanks)

Shmuel Jonas, CEO of IDT remarked, “We expect that our efforts over the past year to expand our Mobile Top-Up business into the African market — led by the recent acquisition of a majority stake in a mobile top-up operator with an extensive footprint in Africa, our increased focus in the BB space, as well as the growing demand for data-heavy services worldwide — will continue to drive Mobile Top-Up revenue growth.”

IDT scores a “Perfect 10” on TipRanks’ Smart Score rating system, suggesting that the stock is likely to outperform the broader market.

Risk Factors

According to the new TipRanks Risk Factors tool, IDT’s main risk category is Legal & Regulatory, accounting for 35% of the total 43 risks identified. In the recent annual report, the company has added two risk factors.

Under the Tech & Innovation risk category, IDT highlighted that impact from any cyberattacks on its networks or systems could negatively affect its business. Additionally, any ransomware attack may possibly deny the use of IDT’s systems until a ransom is paid. Developing and maintaining systems to prevent such attacks is costly.

In case of a cyberattack, IDT may have to offer expensive incentives to customers and business partners to retain their business. Such an event may also result in lost revenue, litigation, and increased spending on cyber security as well as a negative impact on the company’s reputation and investor confidence.

Under the Legal & Regulatory risk category, IDT noted that it may be impacted by certain imminent FCC orders and rules stemming from TRACED Act, which affects the telecommunications marketplace.

The sector average Legal & Regulatory risk factor is 21%.

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