Equity Investments

12 Months Ended

Jul. 31, 2019

Equity Investments [Abstract]

Equity Investments

Note 8—Equity Investments

At August 1, 2018, the cumulative effect of adopting ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities (see Note 1) was a $1.2 million increase in noncurrent "Equity investments", a $33,000 decrease in "Accumulated other comprehensive loss" and a $1.1 million decrease in "Accumulated deficit", primarily from the measurement at fair value of the Company's shares of Visa Inc. Series C Convertible Participating Preferred Stock ("Visa Series C Preferred") and the derecognition of unrealized holding losses on equity securities classified as available-for-sale.

Equity investments consist of the following:

July 31 (dollars in thousands)	2019		2018
Zedge, Inc. Class B common stock, 42,282 shares at July 31, 2019 and 2018	$	68	$	125
Rafael Class B common stock, 27,419 and 25,803 shares at July 31, 2019 and 2018, respectively		567		235
Mutual funds		5,053		—
Current "Equity investments"	$	5,688	$	360
Visa Series C Preferred	$	3,619	$	1,580
Hedge funds		5,475		4,787
Other		225		266
Noncurrent "Equity investments"	$	9,319	$	6,633

On June 1, 2016, the Company completed a pro rata distribution of the common stock that the Company held in the Company's subsidiary Zedge, Inc. to the Company's stockholders of record as of the close of business on May 26, 2016 (the "Zedge Spin-Off"). The Company received the Zedge and Rafael shares in connection with the lapsing of restrictions on Zedge and Rafael restricted stock held by certain of the Company's employees and the Company's payment of taxes related thereto.

In June 2016, upon the acquisition of Visa Europe Limited by Visa, Inc., IDT Financial Services Limited received 1,830 shares of Visa Series C Preferred among other consideration. Each share of Visa Series C Preferred is convertible into 13.886 shares of Visa Class A common stock at Visa's option starting in June 2020 and will be convertible at the holder's option beginning in June 2028.

The changes in the carrying value of the Company's equity investments without readily determinable fair values for which the Company elected the measurement alternative was as follows:

Year ended July 31, 2019 (in thousands)
Balance at July 31, 2018	$	1,883
Adoption of change in accounting for equity investments		1,213
Balance at August 1, 2018		3,096
Adjustment for observable transactions involving a similar investment from the same issuer		826
Redemptions		(3	)
Impairments		—
BALANCE AT JULY 31, 2019	$	3,919

In fiscal 2019, the Company increased the carrying value of the 1,830 shares of Visa Series C Preferred it held by $0.8 million based on the fair value of Visa Class A common stock and a discount for lack of current marketability.

Unrealized gains and losses for all equity investments included the following:

Year ended July 31 (in thousands)	2019		2018			2017
Net gains (losses) recognized during the period on equity investments	$	1,779	$	(6	)	$	355
Less: net gains recognized during the period on equity investments redeemed during the period		—		—			(378	)
Unrealized gains (losses) recognized during the period on equity investments still held at the reporting date	$	1,779	$	(6	)	$	(23	)