Hackensack, N.J.- September 27, 1999 - Net2Phone Inc. (NASDAQ: NTOP) today reported net revenues totaling $11.1 million for the fourth quarter ended July 31, 1999, nearly triple the net revenues of $4.1 million for the fourth quarter of 1998, and a 22% increase over the prior quarter. Pro forma net loss from operations for the fourth quarter of 1999 excluding the non-cash compensation charge was ($3.9) million or ($0.10) per share, as compared to a net loss of ($2.9) million or ($0.09) per share for the fourth quarter of 1998 and ($0.80) million or ($0.03) per share in the prior quarter. The pro forma per share amounts assume the conversion of the preferred stock to common stock subsequent to the IPO, occurred on May 17, 1999.

Net revenues for fiscal 1999 were $33.3 million, nearly triple the net revenues of $12.0 for fiscal 1998. Pro forma net loss from operations for Fiscal Year 1999 excluding the non-cash compensation charge was ($6.5) million or ($0.20) per share compared to a net loss from operations of ($3.5) million or ($0.11) per share in fiscal 1998.

EBITDA before the non-cash compensation charges for the fourth quarter was ($2.7) million or ($0.07) per share as compared to EBITDA of ($2.6) million or ($0.08) per share for the same quarter year-ago, and ($0.4) million or ($0.01) per share in the third quarter of fiscal year 1999. EBITDA margins improved as a percentage of total revenues.

Gross margins for the quarter were 46.0% as compared to 19.6% in the same quarter year-ago and 49.9% in the prior quarter. Depreciation for the fourth quarter was $0.9 million as compared to $0.3 million in the same quarter year-ago, and $0.5 million for the prior quarter.

Gross margins for Fiscal Year 1999 were 46.4% up from 43.0% in Fiscal Year 1998. Depreciation for Fiscal Year 1999 was $2.1 million as compared to $0.7 million in the prior year.

Pro forma shares used to calculate earnings per share for the fourth quarter were 39.9 million, which assumes the conversion of the preferred to common on May 17, 1999.

"Fiscal Year 1999 was a landmark year for Net2Phone. Aside from going public and raising strategic equity from prestigious global corporations, we locked up strong distribution agreements with the top players in the Internet today," said Howie Balter, CEO of Net2Phone. "Our constant evaluation and upgrading of our product as well as the introduction of value-added services will help us dominate the market as well as increase revenues and customer base."

PUBLIC OFFERING
In August, Net2Phone completed an initial public offering of 6.2 million shares of Common Stock at a price of $15 per share, or $93 million in gross proceeds, through a syndicate of underwriters led by Hambrecht & Quist LLC, BT Alex. Brown, and Bear Stearns. IDT Corporation (NASDAQ: IDTC), Net2Phone's parent, owns 57% of the Company, with SOFTBANK Technology Ventures as the second largest stockholder with 9.6%. America Online and GE Capital (NYSE: GE) own 5.9% and 5.5% respectively. Following their earlier investments in the Company, AOL and GE/NBC invested an additional $12.5 million at the IPO.

MINUTES OF USE
Net2Phone minutes of use for Fiscal Year 1999 were 229 million, a 445% increase over 42 million minutes for Fiscal Year 1998. Total Net2Phone minutes of use grew to 77 million minutes for the quarter, a 20% increase over the prior quarter's 64 million minutes and a 250% increase over 22 million minutes for the same quarter year-ago. To date, over 300 million minutes of use have been routed using Net2Phone's Internet telephony services by more than one million customers in over 200 countries. International Data Corp. recently rated Net2Phone #1 in Internet telephony minutes with a 39.4% market share. As of July 31, 1999, Net2Phone had over 325,000 active customers who had used Net2Phone's services during the past three months, a 30% increase over the prior quarter.

DISTRIBUTION
PC-to-phone In addition to ongoing distribution with Yahoo! (NASDAQ: YHOO), Excite (NASDAQ: ATHM), and IBM (NYSE: IBM), Net2Phone has also entered into a four-year contract with AOL's ICQ (NYSE: AOL), the leading instant messaging company with over 40 million users, to market Net2Phone's PC-to-PC, PC-to-phone, phone-to-phone, and phone-to-PC services. Additionally, Net2Phone will be embedded exclusively on Netscape's new browser in a multi-year exclusive deal and throughout the Netcenter web portal. The ICQ and Netscape deals are scheduled to go live in the next two quarters. This past fiscal year, Net2Phone signed PC-to-phone distribution agreements with Compaq (NYSE: CPQ), Geocities (NASDAQ: GCTY), Commtouch (Nasdaq: CTCH), Creative Labs (NASDAQ: CREAF), and ZDNet (NYSE: ZDZ).

PHONE-TO-PHONE
Net2Phone has also signed distribution agreements with Sprint (NYSE: FON) to market Net2Phone's phone-to-phone services. Through other agreements, Net2Phone will begin offering phone-to-phone services from Brazil, Russia, Philippines, Spain, Italy, and Oman.

PRODUCT ENHANCEMENTS
This year, Net2Phone unveiled a redesigned version of its PC-to-phone software. The software downloads 30% faster than previous versions, installs considerably more quickly than its predecessors, and takes up less space in a computer. Software enhancements include a new compact graphical user interface, enhanced e-commerce functionality with the ability to push web pages from sales and customer service centers, and up to 100 programmable speed-dial numbers. Additionally, Net2Phone 9.0 enables improved speech quality and a streamlined user interface with a cell phone-like appearance.

Net2Phone also introduced "My Account" Interactive Information center on its secure web site, enabling the Company's Internet telephony users to access real-time information about their accounts, including the time, length, destination, and charge for each call as well as a history of all payments and credits.

Net2Phone also launched Net2Fax, its new PC-to-fax software, allowing PC users to send faxes through the Internet to any fax machine in the world, providing a dual benefit to Net2Phone's current users.

Over the course of the coming year, Net2Phone plans to unveil a series of new products, particularly an all-inclusive communications software next generation client that will contain PC-to-PC, PC-to-fax, PC-to-phone, and phone-to-PC calling. Additionally, the Company plans to release a unified messaging product which will enable users to send and receive voice mail, fax, and e-mail from anywhere in the world using the web as the platform for all communications management.

E-COMMERCE SERVICES
Voice-enabling the web has been key to Net2Phone's mission. To that end, Net2Phone has signed up 800-FLOWERS (NASDAQ: FLWS), Lands' End (NYSE: LE), and over 150 other e-commerce sites to voice-enable their web sites by adding Click2Talk, Net2Phone's web-to-phone application. Users can speak through their computers to sales and customer service representatives on the telephone via the Internet. Click2Talk offers web users a live phone connection without the inconvenience of having to log off the Internet, while offering businesses the opportunity to enhance client relations by adding the element of human voice to customer interaction.

DIRECTORY SERVICES
In the past fiscal year, Net2Phone has voice-enabled more than 90% of online white and yellow pages. Through agreements with Infospace.com (NASDAQ: INSP), Netcenter, WorldPages, and Bigfoot, users can place phone calls over the Internet simply by clicking on a phone number they've found in a directory and save up to 95 percent on traditional long distance calls. Recipients of these calls simply answer their telephones as they would an ordinary telephone call.

Net2Phone is a leading provider of voice-enhanced Internet communications services to individuals and businesses worldwide. Net2Phone enables people to place low-cost high quality calls from their computer, telephone, or fax machine to any telephone or fax machine in the world. Net2Phone develops and markets technology and services for IP voice and e-commerce solutions for the web and other IP networks. For more information about Net2Phone's products and services, please visit www.net2phone.com.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, among other things, Net2Phone's expected operating performance in the future. Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainty of financial estimates and projections, the competitive environment for Internet telephony, changes of rates of all related telco rates and services, legislation that may affect the Internet telephony industry, and Net2Phone's ability to operate the services described on a large scale commercial level.The forward-looking statements are made as of the date of this press release, and Net2Phone assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth herein and the other information set forth from time to time in Net2Phone's reports filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934.

Net2Phone, Inc. Operating Results
	Year Ended July 31		Quarter Ended July 31
	(in thousands except per share data)
Revenues	$12,006	$33,256	$ 4,052	$11,053
Direct Cost	$6,849	$17,818	$ 3,259	$ 5,970
Gross Margin	$ 5,157	$15,438	$ 793	$ 5,083
Gross Profit	43.0%	46.4%	19.6%	46.0%
Selling, General, & Administrative	$ 7,975	$19,872	$ 3,359	$ 7,828
Depreciation & Amortization	$ 727	$ 2,108	$ 305	$ 891
Non-Cash Compensation Expense (a)	$    -	$14,813	$    -	$14,813
Total Expenses	$ 8,702	$36,793	$ 3,664	$23,532
Operating Loss	(3,545)	(21,355)	(2,871)	(18,449)
Interest Expense (net)	$    -	$ 243	$    -	$ 243
Net Loss	(3,545)	(21,598)	(2,871)	(18,692)
Net Loss	(3,545)	(21,598)	(2,871)	(18,692)
Pro forma Net Loss per Share Excluding Non-Cash Compensation Expense (b)	$    -	(0.20)	$    -	(0.10)
Pro forma Net Loss per Share (b)	$    -	(0.65)	$    -	(0.47)
Weighted Average Shares Outstanding - Pro forma	$    -	$33,172	$    -	$39,931
Net Loss per Share (c)	$ (0.12)	$ (1.63)	$ (0.09)	$ (1.49)
Weighted Average Shares Outstanding	$30,186	$31,236	$30,960	$32,081

(a) - From the issuance of stock options in May, 1999.
(b) - Assumes the conversion of 3,140,000 shares of preferred stock into        9,420,000 shares of common stock on May 17, 1999.
(c) - Available for common shareholders after preferred stock dividends

Sarah Hofstetter
Vice President, Corporate Communications
Net2Phone
201-928-2882
sarah@net2phone.com