Given the strong ramp-up in Q2, is it fair to expect this growth trend to continue into Q3 FY26?

Management confirmed that the growth rates observed in the second half of Q2 have been sustained into the first six weeks of Q3 FY26. “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.”

What factors contributed to the significant reduction in SG&A expenses, and will expenses need to increase as revenues grow?

The reduction was partly due to high legal fees in Q2 FY25 related to a past attempted takeover. Current favorability is mainly from regaining operating leverage and economies of scale, with some additional cuts post-MRI divestiture. No specific plans to add back expenses were mentioned, implying current structure can support growth. “the second quarter of last year had an enormous amount of legal fees related to -- related to TrueBlue, the attempted takeover of TrueBlue. And so that created part of the favorability. But really, we didn't -- we -- I'd love to say we had some silver bullets. We bought some AI or something. So it's nothing like that. It's really just -- we're finally getting some restoration of our operating leverage that we lost over the last 3 years of a kind of a dead market.”

What indicators provide management with confidence in the outlook for the second half of 2026?

Confidence stems from strong business performance six weeks into Q3, a robust pipeline of opportunities from the national accounts department, and a clear industry-wide trend of movement back towards temporary staffing. “There's 3 things, I would say. Number 1 is, again, we're roughly 6 weeks into a 13-week quarter and business has been strong already... The other 2 things that are where we have our visibility is just our pipeline even from our national accounts department... And then the third thing is just looking at the overall staffing market and you look at who's already reported and stuff like that. Is there -- there is clearly -- there is clearly a movement back towards temporary staffing.”

HQI

HireQuest (HQI) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 10, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Overall Business Performance	Positive results high materiality	Balance of 2026 · FY26	Medium
Q3 FY26 Weekly YoY Growth Rate	Held the growth from the second half of the second quarter medium materiality	Q3 · FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Selling Franchisees This group of franchisees significantly contributed to top-line growth by capitalizing on the manufacturing labor market uptick.	—	almost 15%	—	—

Deals & partnerships

MRI Network Divestiture of MRI Network assets

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

Risks & headwinds

Macroeconomic Factors Impacting Hiring Ongoing

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 Jobs Ongoing

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

Weekly YoY Growth Rate

Q3 FY26

Current 12-13% (late Q2 FY26)

Target Continued 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.

Find out whether HQI delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.