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    HQI
    Earnings call· Jun 2026(Q2 FY26)

    HireQuest Q2 FY26 earnings call HQI

    Aug 10, 2026 Source

    Executive summary

    HireQuest Q2 FY26 — Strong Revenue Growth and Profitability Amid Market Stabilization

    HireQuest reported a strong Q2 FY26, driven by improving demand for temporary staffing services and effective expense management, leading to significant GAAP profitability and adjusted EBITDA growth. The market is stabilizing after a two-year downturn, with positive year-over-year comparisons accelerating through the quarter, supported by immigration policies, manufacturing labor market strength, and national accounts program investments. The company is encouraged by current trends and expects positive results through the balance of 2026.

    Highlights

    5

    • Total revenue increased 6% year-over-year to $8.1 million.

    • Pro forma total revenue (excluding MRI divestiture) increased 16.6% year-over-year.

    • Adjusted EBITDA grew to $4.6 million from $3.3 million in the prior year.

    • Adjusted net income rose to $3.2 million, or $0.23 per diluted share, from $2.1 million, or $0.15 per diluted share.

    • Selling franchisees grew their top line by almost 15%.

    Concerns

    3

    • System-wide sales decreased to $117.8 million from $125.9 million in the prior year (though pro forma growth was 6.9%).

    • The market experienced a downturn for the better part of the last two years, impacting overall industry growth.

    • Q2 FY25 SG&A expenses included approximately $633,000 related to divested MRI network assets and an 'enormous amount of legal fees' related to an attempted takeover.

    Guidance & targets

    2
    CategoryTargetConfidence
    Overall Business Performance
    Positive results
    high materiality
    Medium
    Q3 FY26 Weekly YoY Growth Rate
    Held the growth from the second half of the second quarter
    medium materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Selling Franchisees
    This group of franchisees significantly contributed to top-line growth by capitalizing on the manufacturing labor market uptick.
    		—almost 15%——

    Operational metrics

    19
    Total Revenue (Pro Forma)
    $8.1Mup 16.6% YoY
    Q2 FY26

    Pro forma for the divestiture of MRI network assets.

    Franchise Royalties
    $7.6Mup 4.1% YoY
    Q2 FY26

    Primary source of revenue.

    Franchise Royalties (Pro Forma Growth)
    13.8%YoY
    Q2 FY26

    Underlying franchise royalties growth after adjusting for divestiture.

    Service Revenue
    $513,000vs $354,000 YoY
    Q2 FY26

    Generated from services and interest charged to franchisees.

    System-wide Sales
    $117.8Mvs $125.9M YoY
    Q2 FY26

    Reflects sales at all offices, including discontinued; not part of company revenue but a contextual performance indicator.

    System-wide Sales (Pro Forma Growth)
    6.9%YoY
    Q2 FY26

    Pro forma growth after adjusting for MRI network divestiture.

    SG&A Expenses
    $4Mvs $5.9M YoY
    Q2 FY26

    Includes workers' compensation expense.

    Workers' Compensation Expense
    $39,000vs $127,000 YoY
    Q2 FY26

    Component of SG&A expenses.

    Core SG&A
    $3.8Mvs $4.7M YoY
    Q2 FY26

    Reconciled in press release; Q2 2025 included approximately $633,000 in SG&A related to divested MRI network assets.

    Adjusted Net Income
    $3.2Mvs $2.1M YoY
    Q2 FY26

    Non-GAAP profitability metric.

    Adjusted Diluted EPS
    $0.23vs $0.15 YoY
    Q2 FY26

    Non-GAAP profitability metric.

    Adjusted EBITDA
    $4.6Mvs $3.3M YoY
    Q2 FY26

    Non-GAAP profitability metric, relevant due to size of noncash operating expenses.

    Cash Balance
    $1.6Mvs $3.9M at Dec 31, 2025
    as of June 30, 2026

    Part of current assets.

    Net Accounts Receivable
    $48.9Mvs $39.3M at Dec 31, 2025
    as of June 30, 2026

    Part of current assets.

    Working Capital
    $35.1Mvs $33M at Dec 31, 2025
    as of June 30, 2026

    Working capital balance.

    Credit Facility Availability
    $41M
    as of June 30, 2026

    Assuming continued credit covenant compliance.

    Quarterly Dividend
    $0.06
    Q2 FY26

    Paid on June 15, 2026, to shareholders of record as of June 1. Expected to continue quarterly, subject to Board discretion.

    Weekly YoY Growth Rate
    2-4%YoY
    Early Q2 FY26

    Year-over-year comparison for ongoing operations, primarily HireQuest direct and selling.

    Weekly YoY Growth Rate
    12-13%YoY
    Late Q2 FY26

    Year-over-year comparison for ongoing operations, primarily HireQuest direct and selling.

    Deals & partnerships

    1
    MRI NetworkDivestiture of MRI Network assets

    Assets were divested at the beginning of FY26. The divestiture created pro forma growth in revenue and royalties.

    Risks & headwinds

    2
    Macroeconomic Factors Impacting HiringOngoing

    Not quantified

    Mitigation: Differentiated franchise staffing model allows for nimbleness and flexibility regardless of market trends; focus on national accounts and technology to capture opportunities.

    Technological Displacement of Manufacturing JobsOngoing

    Not quantified

    Mitigation: Reshoring efforts are helping to recover jobs that might otherwise be lost, offsetting some of the impact.

    What to watch in Q3 FY26

    4

    Weekly YoY Growth Rate

    Q3 FY26
    Current12-13% (late Q2 FY26)
    TargetContinued growth at or above late Q2 levels

    Why it matters

    Indicates sustained market recovery and company performance, crucial for investment thesis.

    we're already what, 6 weeks. We're 6 weeks into the -- into the third quarter. And I would just say that we have held the growth from the second half of the second quarter, if that makes sense.

    Q&A highlights

    5

    Could management quantify the observation that the quarter's run rate improved towards the end of Q2 compared to the beginning?

    Management stated that weekly year-over-year growth started Q2 at 2-4% and accelerated to 12-13% in some weeks by the end of the quarter, excluding the impact of MRI Network divestiture.

    “we started the quarter running -- year-over-year, we were running maybe 2% to 4% ahead of, let's say, the year-over-year comparisons. By the end, we were running upwards to 12%, 13% in some weeks more than the prior year comparison.”

    asked by Michael Baker · answered by Richard Hermanns

    2 min read5 chapters

    Detailed Narrative

    01

    Market Stabilization and Demand Recovery

    HireQuest experienced improving demand for temporary staffing services in Q2 FY26, marking the first year-over-year revenue growth since Q3 FY24. The quarter saw consistent demand and favorable weekly year-over-year comparisons, with performance accelerating towards the end of Q2. This indicates a stabilizing market after a period of uncertainty, with initial 'tentative green shoots' gaining traction.

    02

    Key Growth Drivers and Strategic Initiatives

    Growth in Q2 was primarily driven by three factors: positive impacts from immigration policies enacted in early 2025, robust performance from selling franchisees who achieved nearly 15% top-line growth by capitalizing on the manufacturing labor market, and successful investments in the national accounts program. The national accounts program is now generating significant opportunities, particularly with large projects like data centers and reshoring initiatives.

    03

    Financial Performance and Expense Management

    The company achieved significantly improved GAAP profitability and earnings, maintaining GAAP profitability in every quarter since Q3 FY24 (excluding a one-time📎 noncash impairment charge of $6.4 million related to the MRI Network acquisition in Q3 FY24). Core SG&A expenses saw a notable reduction, partly due to lower legal fees compared to the prior year and the restoration of operating leverage as the market recovers. The company also benefited from economies of scale and efficiencies gained from the MRI divestiture.

    04

    Leveraging Technology for Market Penetration

    HireQuest is enhancing its market reach through technological investments, including an app for more effective electronic recruitment. This technology allows the company to secure business in regions without physical branches, exemplified by a large short-term project in upstate New York requiring 100 people daily for six weeks. This strategy enables greater flexibility and broader market penetration beyond traditional branch-based operations.

    05

    Industry Outlook and Macroeconomic Influences

    While reshoring and manufacturing activity provide a tailwind, the company acknowledges that technological advancements also lead to job displacement in manufacturing. The overall contraction in labor supply, influenced by immigration policies, is prompting more clients to utilize temporary staffing services. Additionally, the stabilization of the tariff environment has contributed to more predictable business decisions, further aiding market recovery.

    AI-generated summary of the company’s earnings call. Not investment advice.