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Equity Investments

3 Months Ended

Oct. 31, 2020

Equity Investments Disclosure [Abstract]

Note 7—Equity Investments

Equity investments consist of the following:

	October 31, 2020		July 31, 2020
	(in thousands)
Zedge, Inc. Class B common stock, 42,282 shares at October 31, 2020 and July 31, 2020	$	144	$	59
Rafael Holdings, Inc. Class B common stock, 28,320 and 27,806 shares at October 31, 2020 and July 31, 2020, respectively		465		389
Mutual funds		20,427		5,516
Current equity investments	$	21,036	$	5,964

Visa Inc. Series C Convertible Participating Preferred Stock (“Visa Series C Preferred”)	$	1,825	$	3,825
Visa Inc. Series A Convertible Participating Preferred Stock (“Visa Series A Preferred”)		2,271		—
Hedge funds		3,427		4,783
Other		2,225		225
Noncurrent equity investments	$	9,748	$	8,833

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. (“Zedge”) to the Company’s stockholders of record as of the close of business on May 26, 2016. The Company received the Zedge Class B common shares and the Rafael Class B common shares set forth in the table above 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. (“Visa”), IDT Financial Services Limited received 1,830 shares of Visa Series C Preferred among other consideration. At July 31, 2020, each share of Visa Series C Preferred was convertible into 13.722 shares of Visa Class A common stock (the “Conversion Adjustment), subject to certain conditions, and will be convertible at the holder’s option beginning in June 2028. On September 24, 2020, in connection with Visa’s first mandatory release assessment, the Company received 125 shares of Visa Series A Preferred and the Conversion Adjustment for Visa Series C Preferred was reduced to 6.861. The 125 shares of Visa Series A Preferred are convertible into 12,500 shares of Visa Class A common stock.

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:

	Three Months Ended October 31,
	2020			2019
	(in thousands)
Balance, beginning of period	$	4,109		$	3,919
Redemption for Visa mandatory release assessment		(1,870	)		—
Adjustment for observable transactions involving a similar investment from the same issuer		(130	)		18
Impairments		—			—
Balance, end of the period	$	2,109		$	3,937

In the three months ended October 31, 2020, the Company decreased the carrying value of the shares of Visa Series C Preferred it held by $0.1 million and in the three months ended October 31, 2019, the Company increased the carrying value of the shares of Visa Series C Preferred it held by $18,000, based on the fair value of Visa Class A common stock and a discount for lack of current marketability.

Unrealized (losses) gains for all equity investments included the following:

	Three Months Ended October 31,
	2020			2019
	(in thousands)
Net (losses) gains recognized during the period on equity investments	$	(920	)	$	26
Less: net gains and losses recognized during the period on equity investments sold during the period		—			—
Unrealized (losses) gains recognized during the period on equity investments still held at the reporting date	$	(920	)	$	26