Note  8—Equity Investments

Equity investments consist of the following:

Howard Jonas, the Chairman of the Company and the Chairman of the Company’s Board of Directors is also the Vice-Chairman of the Board of Directors of Zedge, Inc. (“Zedge”) and the Chairman of the Board of Directors, Executive Chairman, Chief Executive Officer and President of Rafael Holdings, Inc. (“Rafael”).

In June 2025, pursuant to a Rafael rights offering, the Company purchased 168,122 shares of Rafael Class B common stock for an aggregate of $0.2 million.

In June 2016, upon the acquisition of Visa Europe Limited by Visa, Inc. (“Visa”), IDT Financial Services received 1,830 shares of Visa Series C Preferred among other consideration. In July 2024, in connection with Visa’s mandatory release assessment, the Company received 33 shares of Visa’s Series A Preferred. In August 2024, the 33 shares of Visa Series A Preferred were converted into 3,300 shares of Visa Class A common stock, which the Company sold for $0.9 million.

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:

The Company adjusted the carrying value of the shares of Visa Series C Preferred it held based on the fair value of Visa Class A common stock, including a discount for lack of current marketability, which is classified as “Adjustment for observable transactions involving a similar investment from the same issuer” in the table above. The Certificate of Designation with respect to the shares of Visa Series C Preferred restricts the transferability of the shares, there is no public market for the shares, and none is expected to develop. The shares become fully convertible into shares of Visa Class A common stock in June 2028.

In January 2026, the Company acquired an equity interest in a privately-owned Israeli company, for total consideration of $1.0 million, consisting of $500,000 paid at closing and an additional $500,000 payable upon the successful launch of the investee’s mobile application. The investment is accounted for under the measurement alternative in accordance with ASC 321, Investments—Equity Securities, because the investment does not have a readily determinable fair value and the Company does not have significant influence over the investee.

Unrealized (losses) gains for all equity investments measured at fair value included the following:

The unrealized (losses) gains and for all equity investments measured at fair value in the table above included the following:

Equity Method Investment

The Company has an investment in shares of convertible preferred stock of MarketSpark, Inc., a communications company (“MarketSpark”). As of both  April 30, 2026 and  July 31, 2025, the Company’s ownership was 33.4% of MarketSpark’s outstanding shares on an as converted basis. The Company accounts for this investment using the equity method since the Company can exercise significant influence over the operating and financial policies of MarketSpark but does not have a controlling interest.

The Company determined that on the dates of the acquisitions of MarketSpark’s shares, there were differences between its investment in MarketSpark and its proportional interest in the equity of MarketSpark of an aggregate of $8.2 million, which represented the share of MarketSpark’s customer list on the dates of the acquisitions attributed to the Company’s interest in MarketSpark. These basis differences are being amortized over the 6-year estimated life of the customer list. In the accompanying condensed consolidated statements of income, amortization of equity method basis difference is included in the equity in the net loss of investee, which is recorded in “Other income, net” (see Note 18).

The following table summarizes the change in the balance of the Company’s equity method investment:

In February 2025, the Company entered into a loan agreement with MarketSpark to provide a revolving credit facility with an aggregate principal amount of up to $2.0 million. Borrowings under the facility bear interest at 12% per annum payable semiannually, and are due and payable in February 2027. In February 2025, the Company loaned MarketSpark $0.5 million under the revolving credit facility. In May 2025, June 2025 and July 2025, the Company loaned MarketSpark an additional aggregate amount of $1.4 million. As of  April 30, 2026, $1.9 million of principal was outstanding under the revolving credit facility.

Because the Company has committed to provide up to $2.0 million in funding to MarketSpark under the revolving credit facility described above, the Company continues to recognize its share of MarketSpark’s losses even after the carrying value of its investment has been reduced to zero, up to the amount of its funding commitment.