Breaking Down HireQuest, Inc. (HQI) Financial Health: Key Insights for Investors

If you're looking at HireQuest, Inc. (HQI) right now, you're seeing a classic mixed signal: revenue is shrinking, but the bottom line is surprisingly strong. The staffing market is soft, with Q3 2025 total revenue dropping 9.8% year-over-year to $8.5 million, and system-wide sales for the year-to-date period falling 11.9% to $377.9 million. But here's the quick math that matters: the company flipped a massive loss into a significant gain, reporting a Q3 2025 net income of $2.3 million, or $0.16 per diluted share, a huge turnaround from a net loss of $(2.2 million) a year ago. Honestly, that resilience comes from their franchise model and sharp cost controls, which delivered an Adjusted EBITDA of $4.7 million for the quarter, plus they maintain a solid working capital position of $31.5 million as of September 30, 2025. The core question for investors is whether their cost discipline can continue to offset the clear macroeconomic headwinds impacting their top-line growth.

Revenue Analysis

You're looking at HireQuest, Inc. (HQI) because you want to know if their franchise model is a defensive play in a softening labor market. The direct takeaway is that while the franchise structure is keeping the company profitable, top-line revenue is under pressure. For the third quarter of 2025, total revenue was $8.5 million, a year-over-year decrease of 9.8%.

The core of HireQuest, Inc.'s business isn't selling staffing services directly; it's selling the right to operate under their brand. That means the vast majority of their revenue is in the form of franchise royalties, which is a much higher-margin business than direct staffing. This is why they can remain profitable even as system-wide sales decline.

Here is the quick math on the Q3 2025 revenue breakdown, which clearly shows the dominance of the franchise model:

• Franchise Royalties: $8.1 million
• Service Revenue: $387,000

That means franchise royalties accounted for over 95% of the total revenue for the quarter. The trailing twelve months (TTM) revenue ending September 30, 2025, was $31.69 million, reflecting a broader decline of 12.65% year-over-year, which is a clear trend you need to monitor.

The revenue streams are also segmented by the type of staffing. The company's temporary and day labor segments, which operate under brands like HireQuest Direct and Snelling, have shown more resilience, with management noting some early Q4 weeks even beating prior-year levels. Conversely, the executive search and permanent placement segment, primarily the MRI Network, has been pressured, partly due to franchisee non-renewals earlier in the year. This tells you that while the macro-environment is tough for all staffing, the permanent placement business is defintely feeling a sharper downturn.

The decline in franchise royalties-the main revenue driver-from $9.0 million in Q3 2024 to $8.1 million in Q3 2025 is the most significant change, directly correlating with a 10.1% drop in system-wide sales to $133.6 million. The model is resilient, but it is not immune to a muted hiring landscape. This link provides a deeper dive into who is betting on this model: Exploring HireQuest, Inc. (HQI) Investor Profile: Who's Buying and Why?

The table below summarizes the key revenue figures for the most recent quarter:

Your next step should be to look closely at the cost side of the equation-specifically, how the company's improved workers' compensation expense control is offsetting this revenue contraction. Finance: cross-reference the Q3 2025 revenue decline with the net income surge by Friday.

Profitability Metrics

You need to know if HireQuest, Inc. (HQI) is a margin-focused business or a volume-driven one, especially as the temporary staffing market softens. The direct takeaway is that HQI's franchise-heavy model delivers exceptional gross margins, but the true test of its operational efficiency is its 55% Adjusted EBITDA margin in Q3 2025, which is significantly better than the staffing industry's average EBIT margin of 14.94%.

HQI's profitability structure is unique because it's a franchisor, not a traditional staffing firm. This means its primary revenue stream is franchise royalties, not the low-margin temporary labor sales that most competitors rely on. This structure translates into a Gross Profit Margin that is near 100% because the company's 'Cost of Goods Sold' (COGS) is minimal-it is not paying the wages and employer taxes for the temporary workers. This is a critical distinction to make in your analysis.

Here's the quick math on the key profitability ratios for the 2025 fiscal year, using the most recent Trailing Twelve Months (TTM) and Q3 2025 data:

The TTM Net Profit Margin sits at a solid 11.58% based on $3.67 million in net income against $31.69 million in TTM revenue. But the real story is the trend. In Q3 2025, HireQuest, Inc. posted a GAAP Net Income of $2.3 million on $8.5 million in revenue, resulting in a strong 27.06% net margin. This is a massive turnaround from the net loss of $(2.2 million) reported in Q3 2024.

This profit surge, despite a 9.8% year-over-year revenue decline in Q3 2025, highlights exceptional operational efficiency and cost management. The company's Adjusted EBITDA margin of 55% for Q3 2025 is defintely a key metric to watch, showcasing the resilience of their asset-light franchise model in a contracting market. While system-wide sales-the total sales generated by all franchisees-declined 11.9% year-to-date to $377.9 million, the franchisor's own margins remain robust.

What this estimate hides is the underlying weakness in the staffing market itself. The industry average for EBIT margin is only 14.94%. HQI's high margins are a function of its business model, not necessarily superior market performance by its franchisees. Still, the ability to convert declining revenue into a net income turnaround is a clear sign of disciplined expense control, which is the hallmark of a mature franchisor. For a deeper dive into the ownership structure, you can read Exploring HireQuest, Inc. (HQI) Investor Profile: Who's Buying and Why?

• Monitor the Q4 2025 revenue forecast of $7.36 million for further contraction signals.
• Track franchise royalty trends, which make up the bulk of the high-margin revenue.
• The Q3 net income turnaround from a loss to $2.3 million is a significant positive action.

Debt vs. Equity Structure

You're looking at HireQuest, Inc. (HQI) because you want to know how they fund their growth-is it through borrowing or relying on shareholder capital? The direct takeaway is this: HireQuest, Inc. operates with an exceptionally conservative financial structure, preferring equity and operational cash flow over debt. They are barely leveraged, which gives them a huge buffer in a volatile staffing market.

As of late 2025, HireQuest, Inc.'s balance sheet shows a minimal reliance on external borrowing. Their total debt stands at just $2.20 million. This is a tiny figure compared to their total shareholder equity, which is approximately $67.83 million. Honestly, this is a capital structure built for defense, not offense, but it's defintely a low-risk profile for investors.

Here's the quick math on their leverage:

• Total Debt: $2.20 million
• Total Equity: $67.83 million
• Debt-to-Equity Ratio: 0.03 or 3.2%

The core metric we use to gauge this balance is the debt-to-equity ratio (D/E), which tells you how much debt a company uses to finance its assets relative to the value of shareholders' equity. HireQuest, Inc.'s D/E ratio is a mere 0.03. To be fair, a ratio under 1.0 is generally considered healthy, but the average for the Staffing & Employment Services industry in November 2025 is around 0.39. HireQuest, Inc. is operating at nearly one-tenth of the industry average, signaling a very low-risk approach to financing.

What this low leverage hides is a clear strategy: HireQuest, Inc. uses its strong cash flow and available credit for strategic growth, rather than long-term debt. Their debt is well covered by operating cash flow, boasting a coverage ratio of 640.2%.

The company's financing strategy is clearly built around flexibility and acquisitions (M&A). They maintain significant liquidity, including $34.8 million in available credit. This available capital is crucial for their long-term plan, which centers on expanding their franchise network through acquisitions-like their recent attempt to acquire TrueBlue, Inc. for approximately $220 million. Since that offer was rejected, the capital remains a dry powder reserve for future targets.

Their balance between debt and equity is heavily tilted toward the latter, meaning they are funding operations and growth primarily through retained earnings. They are also committed to returning capital to shareholders, evidenced by their consistent quarterly dividend of $0.06 per share.

Here is a snapshot of their liabilities, showing how minor the actual interest-bearing debt is compared to other obligations:

The bulk of their liabilities are operational, not financial. This equity-first model means the company is less exposed to rising interest rates, which is a significant advantage in the current economic environment. For a deeper dive into the company's long-term vision, you can review the Mission Statement, Vision, & Core Values of HireQuest, Inc. (HQI).

Next step: Check the cash flow statement to see if their operating cash flow can sustain the dividend and a major acquisition without tapping into that available credit line.

Liquidity and Solvency

You need to know if HireQuest, Inc. (HQI) has the cash to cover its short-term bills, especially in a tightening labor market. The short answer is yes, the company maintains a solid liquidity position, largely due to its asset-light, franchisor business model and strong cash generation from operations.

The key indicators for near-term financial health-the current ratio and quick ratio-show a comfortable buffer. As of the third quarter of 2025 (Q3 2025), HireQuest, Inc.'s current ratio sits at approximately 1.50. Here's the quick math: Current Assets of $94.9 million divided by Current Liabilities of $63.4 million gives you that 1.50 ratio. This means the company holds 1.5 times more liquid assets than it has short-term obligations due within a year. For a staffing franchisor that carries minimal inventory, the quick ratio (acid-test ratio) is essentially the same, making its short-term solvency defintely strong.

Analyzing the working capital (Current Assets minus Current Liabilities) reveals a positive trend. HireQuest, Inc.'s working capital increased to $31.5 million as of September 30, 2025, up from $25.1 million at the 2024 year-end. This $6.4 million increase in working capital over nine months shows a growing cushion to fund day-to-day operations and manage fluctuations in accounts receivable (money owed by franchisees and customers), which is the largest current asset for this kind of business. This is a good sign of operational efficiency and financial flexibility. You can dig deeper into the franchise model that drives this stability here: Exploring HireQuest, Inc. (HQI) Investor Profile: Who's Buying and Why?

The Cash Flow Statement for the trailing twelve months (TTM) ending September 30, 2025, tells a clear story of where the money is coming from and going. The core strength is in the operating cash flow (CFO), which was a substantial inflow of $14.1 million. This high CFO is typical for a profitable, asset-light franchisor; they collect royalties and fees without the heavy capital expenditure of owning all the physical assets.

• Operating Cash Flow (CFO): $14.1 million inflow (TTM Sep '25).
• Investing Cash Flow (CFI): $-0.99 million net outflow (TTM Sep '25).
• Financing Cash Flow (CFF): Primarily used for dividends and managing debt.

The cash flow from investing activities (CFI) shows a minimal net outflow of only $0.99 million, which reflects the company's low capital expenditure (CapEx) model. They spent only $0.11 million on CapEx. The financing cash flow (CFF) is dominated by shareholder returns, with the company paying a regular quarterly dividend of $0.06 per common share. Still, to manage short-term working capital needs, the company did have a $2.2 million draw on its credit facility as of September 30, 2025, which is a minor liquidity concern, but easily offset by the strong CFO. Overall, the consistent and strong operating cash flow provides the primary strength, mitigating any minor liquidity concerns and supporting the dividend program.

Valuation Analysis

You're looking at HireQuest, Inc. (HQI) after a tough year, and the question is simple: Is this stock a value trap or a genuine opportunity? The short answer is that the market is pricing in significant risk, but the core franchise model remains highly profitable, suggesting a potential undervaluation based on normalized earnings.

The stock has definitely been on a slide. Over the last 12 months, HireQuest, Inc.'s stock price has plummeted by over 41.66%, closing recently around $8.71 per share. That drop is a clear market signal about the headwinds in the staffing industry and the company's mixed Q3 2025 results. Still, the analyst consensus is a clear Buy, with a 1-Year Target Price of $14.00, indicating a potential upside of over 60% from the current price.

Here's the quick math on the key valuation multiples as of late November 2025:

• Price-to-Earnings (P/E) Ratio (TTM): 18.02x
• Price-to-Book (P/B) Ratio: 1.87x
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio (TTM): 12.7x

The P/B ratio of 1.87x is the most compelling figure here. For a franchisor with a capital-light model and a history of profitability, a P/B under 2.0x suggests the company's equity is not being valued much above its book value, which can be a sign of undervaluation in a service business. The EV/EBITDA of 12.7x is slightly elevated for a mature industrial services company, but it's still reasonable considering the TTM EBITDA of $11.36 million USD.

The P/E ratio of 18.02x is lower than its 12-month average of 75.9x, which is a defintely positive trend. A P/E this low, especially after a significant price decline, suggests that the market believes future earnings will be flat or declining, or that the stock is simply cheap. This is a classic value-versus-growth debate.

The dividend story is where you need to pay close attention. HireQuest, Inc. maintains an annualized dividend of $0.24 per share, which gives a TTM Dividend Yield of about 2.66%. That's a decent yield in this market, but what this estimate hides is the payout ratio, which is currently at a concerning 133.33%. A payout ratio over 100% means the company is paying out more in dividends than it is earning in net income, which is simply not sustainable long-term without drawing down cash or taking on debt. They paid a quarterly dividend of $0.06 per share in September 2025, so for now, the dividend is intact.

To be fair, the high payout ratio is likely temporary, driven by the recent earnings pressure from a muted hiring landscape in 2025. If you want to dig deeper into the institutional ownership behind these price movements, you should be Exploring HireQuest, Inc. (HQI) Investor Profile: Who's Buying and Why?

Your next step is clear: Finance/Analyst: Model a 2026 Payout Ratio scenario assuming a 10% rebound in TTM EPS by the end of Q2 2026, and assess dividend sustainability.

Risk Factors

You're looking at HireQuest, Inc. (HQI) right now and seeing a company that's profitable, but you also see the revenue numbers for 2025 and you're asking, 'What's the real headwind here?' The core risk isn't internal mismanagement; it's the external market. The staffing industry has been in a protracted period of softness for over two years, and HQI's franchise model, while resilient, isn't immune to that macro pressure.

The biggest near-term risk is the continued decline in system-wide sales (SWS). For the first nine months of 2025, SWS fell by 11.9% to $377.9 million compared to the same period in 2024. This directly translates to lower franchise royalties, the company's main revenue source. Total revenue for the third quarter of 2025 was $8.5 million, a drop of 9.8% year-over-year. That's a clear signal: demand for temporary and contract labor is muted as employers adopt a 'wait and see' approach to hiring.

Operational and Segment-Specific Risks

Not all of HireQuest, Inc.'s segments are performing equally. The executive search business, the MRINetwork segment, faces continuing challenges in this tough economic environment. Honestly, that segment is a drag on the overall performance. In the second quarter of 2025 alone, the MRI segment saw a reported revenue decline of $10.3 million, partly due to franchisee exits and broader market weakness for permanent placement services.

Plus, while the core temporary staffing and day labor segments are more stable, they face intense competition. The company relies on its franchise network of over 400 offices to maintain local market share. Any significant erosion of that network-say, if a wave of franchisees decided to leave-would defintely hit the revenue stream hard.

• Market Softness: System-wide sales down 11.9% year-to-date 2025.
• Segment Weakness: MRI segment revenue facing significant decline.
• Franchisee Risk: Reliance on over 400 independent operators.

Financial and Regulatory Risks

The company maintains profitability through disciplined cost control, reporting a strong Adjusted EBITDA margin of 55% in Q3 2025, with Adjusted EBITDA at $4.7 million. But a closer look at the dividend reveals a potential financial risk. Despite the revenue decline, HireQuest, Inc. has maintained its quarterly dividend of $0.06 per share. Here's the quick math: the dividend payout ratio (DPR) is currently high at 133.33%, meaning the company is paying out more in dividends than it is earning in net income. This raises a red flag for long-term dividend sustainability if the revenue slump continues.

On the regulatory front, the company operates in a space sensitive to government policy. Economic and political shifts, including new federal legislation and trade tariffs, are cited as wildcards that could impact activity. However, HireQuest, Inc. views enhanced enforcement of immigration regulations as a competitive advantage, as their status as an E-Verify employer helps create a level playing field in the light industrial sector.

Actionable Mitigation Strategies

HireQuest, Inc. is not just sitting back; they are focused on controlling what they can. They have shown impressive cost management, specifically reducing workers' compensation expense to approximately $99,000 in Q3 2025 from a net expense of $499,000 in the prior-year period. This is a material saving that helps prop up the bottom line. Their primary strategic move is M&A. They have an available credit line of $35.9 million for potential acquisitions, which they plan to use to expand their geographic footprint and market reach, positioning themselves to benefit when demand returns in earnest. You can see how this strategy aligns with their core values here: Mission Statement, Vision, & Core Values of HireQuest, Inc. (HQI).

Next Step: Portfolio Manager: Model a scenario where HQI's dividend is cut to $0.03/share and re-evaluate the stock's valuation by end of next week.

Growth Opportunities

You're looking at HireQuest, Inc. (HQI) right now, seeing a staffing company that's navigating a choppy labor market but still showing real financial resilience. The direct takeaway is this: HQI's growth isn't coming from a massive market boom, but from a calculated, franchise-driven expansion and a sharp focus on cost control, which is the smart play in this environment.

I've tracked this model for years, and what makes HQI compelling is its asset-light franchise structure. It minimizes capital expenditure and operating risk, which is defintely a competitive advantage (a core strength that competitors struggle to replicate). This model allows for rapid, accretive growth through acquisitions and conversions, a strategy that is clearly driving their near-term outlook.

Acquisitions and Market Expansion

HQI's primary growth engine is strategic acquisition, immediately converting the acquired operations into their franchise model. This is how they scale without ballooning corporate overhead. For example, they acquired certain assets of Ready Temporary Staffing, LLC for $1.4 million in late 2024, and they've also completed the acquisition of Northbound Executive Search Ltd., an executive search firm. Plus, their proposed acquisition of Trueblue, Inc. for $7.50 per share, announced in May 2025, shows they are actively pursuing scale across different staffing segments.

Their national footprint is a huge asset, with over 400 franchisee-owned offices across the U.S.. This community-based approach is perfectly positioned to capitalize on the 2026 labor market trend, where candidates increasingly favor local or hybrid roles over relocation.

• Acquisitions fuel rapid, low-risk geographic expansion.
• Franchise model reduces corporate operating expenses.
• Diversification across multiple brands (e.g., Snelling, MRINetwork) stabilizes revenue.

Future Revenue Projections and Earnings

The numbers for the 2025 fiscal year show a company maintaining profitability despite a challenging staffing industry. For the trailing twelve months (TTM) ending in 2025, HireQuest, Inc. reported revenue of $31.69 million. More importantly, the consensus Earnings Per Share (EPS) estimate for the full fiscal year 2025 has seen an upward trend, currently sitting around $0.64 per share. Here's the quick math on forward momentum: analysts expect earnings to grow from an estimated $0.28 per share to $0.83 per share next year, which is a massive expected increase of 196.43%.

What this estimate hides is the impact of improved profitability. Their disciplined expense management is working. For instance, they achieved a significant reduction in net workers' compensation expense, which decreased by $964,000 year-to-date in the first six months of 2025 compared to the year-ago period. This isn't just cost-cutting; it's structural improvement.

Strategic Initiatives and Demand Drivers

The company is strategically positioning itself for a 'reset' in the 2026 labor market. They anticipate a strong demand for specific, non-administrative roles. This includes skilled trades, healthcare, and logistics, areas where their diversified brands like HireQuest Direct and HireQuest Health can capture market share. Also, the rise of fractional and contract roles is a huge tailwind, indicating a shift toward a more blended workforce model that favors their on-demand staffing services.

Another factor is the potential increase in demand for temporary and day labor services, which management believes could be driven by enhanced enforcement of immigration laws. This is a macro trend that directly benefits their core business. The key is that they are not waiting for a general hiring boom; they are targeting specific, high-demand sectors and using their franchise model to quickly adapt to regional needs. You can get a deeper dive into who is betting on this model by Exploring HireQuest, Inc. (HQI) Investor Profile: Who's Buying and Why?

Finance: Monitor the integration of new acquisitions and track the realization of workers' compensation savings against the $964,000 year-to-date reduction by the end of Q4 2025.