Fair Value Measurements

12 Months Ended

Jul. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 9—Fair Value Measurements

The following table presents the balance of assets and liabilities measured at fair value on a recurring basis:

(in thousands)	Level 1		Level 2		Level 3			Total
July 31, 2023
Debt securities	$	31,038	$	11,376	$	—		$	42,414
Equity investments included in current assets		6,198		—		—			6,198
Equity investments included in noncurrent assets		—		2,500		1,263			3,763
TOTAL	$	37,236	$	13,876	$	1,263		$	52,375
Acquisition consideration included in:
Other current liabilities	$	—	$	—	$	(2,032	)	$	(2,032	)
Other noncurrent liabilities		—		—		(2,773	)		(2,773	)
TOTAL	$	—	$	—	$	(4,805	)	$	(4,805	)
July 31, 2022
Debt securities	$	13,734	$	8,569	$	—		$	22,303
Equity investments included in current assets		17,091		—		—			17,091
Equity investments included in noncurrent assets		—		1,730		1,132			2,862
TOTAL	$	30,825	$	10,299	$	1,132		$	42,256
Acquisition consideration included in:
Other current liabilities	$	—	$	—	$	(2,578	)	$	(2,578	)
Other noncurrent liabilities		—		—		(5,968	)		(5,968	)
TOTAL	$	—	$	—	$	(8,546	)	$	(8,546	)

IDT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At July 31, 2023 and 2022, the Company had $3.0 million and $3.2 million, respectively, in investments in hedge funds, which were included in noncurrent “Equity investments” in the accompanying consolidated balance sheets. The Company’s investments in hedge funds were accounted for using the equity method, therefore they were not measured at fair value.

The following tables summarize the change in the balance of the Company’s assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

Year ended July 31, (in thousands)	2023		2022			2021
Balance, beginning of period	$	1,132	$	2,465		$	3,825
Purchase of Rafael Holdings, Inc. warrant		—		—			354
Exercise of Rafael Holdings, Inc. warrant		—		—			(380	)
Redemption for Visa mandatory release assessment		—		(1,230	)		(1,870	)
Total gains (losses) included in “Other (expense) income, net”		131		(103	)		536
BALANCE, END OF PERIOD	$	1,263	$	1,132		$	2,465
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the period	$	—	$	—		$	—

The following tables summarize the change in the balance of the Company’s liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

Year ended July 31, (in thousands)	2023			2022			2021
Balance, beginning of period	$	8,546		$	1,025		$	396
Transfer into Level 3 from acquisitions		—			7,849			628
Payments		(2,494	)		—			—
Total (gain) loss included in:
“Other operating (expense) gain, net”		(1,349	)		(303	)		—
Interest expense included in “Interest income, net”		97			—			—
“Foreign currency translation adjustments”		5			(25	)		1
BALANCE, END OF PERIOD	$	4,805		$	8,546		$	1,025
Change in unrealized gains or losses for the period included in earnings for liabilities at the end of the period	$	—		$	—		$	—

In fiscal 2023, the Company paid an aggregate of $2.5 million in contingent consideration related to prior acquisitions, which included 3,051 shares of the Company’s Class B common stock with a value of $0.1 million. In addition, the Company recorded gains of $1.6 million and $0.3 million in fiscal 2023 and fiscal 2022, respectively, on the write-off of contingent consideration payment obligations, which were included in “Other operating (expense) gain, net” in the accompanying consolidated statements of income. Also, in fiscal 2023, the Company increased the estimated fair value of acquisition-related contingent consideration by $0.2 million, which was included in “Other operating (expense) gain, net” in the accompanying consolidated statements of income. There were no other changes in the estimated fair value of contingent consideration in fiscal 2023, fiscal 2022, and fiscal 2021.

IDT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fair Value of Other Financial Instruments

The estimated fair value of the Company’s other financial instruments was determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting these data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

Cash and cash equivalents, restricted cash and cash equivalents, settlement assets, other current assets, customer deposits, settlement liabilities, and other current liabilities. At July 31, 2023 and 2022, the carrying amount of these assets and liabilities approximated fair value because of the short period of time to maturity. The fair value estimates for cash, cash equivalents, and restricted cash and cash equivalents were classified as Level 1 and settlement assets, other current assets, customer deposits, settlement liabilities, and other current liabilities were classified as Level 2 of the fair value hierarchy.

Other assets and other liabilities. At July 31, 2023 and 2022, the carrying amount of these assets and liabilities approximated fair value. The fair values were estimated based on the Company’s assumptions, which were classified as Level 3 of the fair value hierarchy.