IDT Corp - Class B

IDT Australia Ltd (IDT) announced a very poor FY25 result with increased losses despite >40% revenue growth. It is clear that revenues were pursued with insufficient regard for costs. The CEO tendered his resignation in early August. We expect cost reductions and a focus on achieving profitability to be key objectives for the Board and management team.

IDT Australia Ltd has demonstrated strong growth, with revenue increasing by 30% compared to the prior corresponding period. The company secured a significant five-year manufacturing contract with Nacuity Pharmaceuticals for a treatment related to retinitis pigmentosa, starting with an initial $3.2 million statement of work. The outlook remains robust, bolstered by new client proposals totaling $25.5 million in the quarter, contributing to a total of $61.8 million in open proposals. This positions IDT well despite the current volatile global trade environment.

IDT Australia Ltd (IDT) announced another positive update with 1QFY25 revenue nearly doubling to $5.3 million. 1HFY25 revenue is expected to be $10.5 million, an 82% increase on the prior period. The company won $12.9 million of contracts in 2QFY25, mainly from returning customers and US based customers. This bodes well for continued revenue growth going forward along with improved profitability as customers transition from development work to higher margin manufacturing contracts. Importantly, the strongest growth is coming from the Advanced Therapies vertical, which typically attracts higher margins due to the need for more complex manufacturing processes.

IDT Australia Ltd (IDT) has been experiencing strong revenue growth since the management changes two years ago. Although profitability has not yet been achieved, the company is focused on improving profits and cash flow. The expectation is that continued revenue growth will outpace costs from investments in infrastructure and personnel, leading to improved financial performance in the second half of the financial year. Additionally, there is potential for higher margins as revenue shifts towards Advanced Therapies products.