Note 8—Equity Investments

Equity investments consist of the following:

Howard Jonas, 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 assessments, 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-held Israeli company for initial consideration of $500,000, paid at closing. An additional $500,000 was paid in August 2026 upon the successful launch of the investee's mobile application, resulting in total consideration of $1.0 million, which was recorded as an increase to the cost basis of the investment. 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 control or significant influence over the investee.

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

Unrealized (losses) gains 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  July 31, 2026 and 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 because 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 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 expense, net” (see Note 18).

The following table summarizes the change in the balance of the Company’s equity method investment. End of period balances are classified as other current liabilities in the consolidated balance sheets.

In February 2025, the Company provided a revolving credit facility to MarketSpark 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. Between February 2025 and July 2025, the Company advanced MarketSpark $1.9 million under the facility. In June 2026, the Company advanced MarketSpark an additional $0.1 million, fully drawing the facility. In July 2026, the Company provided MarketSpark an additional $0.2 million under a new subordinated loan agreement, due and payable in January 2027.  As of   July 31, 2026, $2.2 million of principal was outstanding under the revolving credit facility and subordinated loan agreement.

Because the Company has committed and provided up to $2.2 million in funding to MarketSpark under the revolving credit facility and subordinated loan agreement, it continues to recognize its share of MarketSpark’s losses in excess of its zero carrying value, up to that funding amount.