HireQuest Sees Royalty Revenue Rise, Service Revenue Dip in Q2

TL;DR

**HQI's royalty growth is a green flag, but the service revenue drop is a red one; stay neutral until clarity emerges.**

AI Summary

HireQuest, Inc. reported a mixed financial performance for Q2 2025 and the six months ended June 30, 2025. Royalty revenue for Q2 2025 increased to $321,000 from $275,000 in Q2 2024, representing a 16.7% rise. However, service revenue saw a significant decline, falling to $876,000 for Q2 2025 compared to $773,000 in Q2 2024, a 13.3% decrease. For the six months ended June 30, 2025, royalty revenue grew to $1,000,000 from $1,000,000 in the prior year, indicating flat growth. Service revenue for the six-month period decreased to $0 from $0, which appears to be an anomaly in the provided data. Net income per share remained flat at $0.12 for Q2 2025 and $0.06 for the six months ended June 30, 2025, compared to the respective prior periods. The company's strategic outlook appears to focus on maintaining royalty revenue growth while managing the decline in service revenue, though specific strategic changes are not detailed in the provided excerpt. Risks include the volatility in service revenue and the potential impact on overall profitability.

Why It Matters

HireQuest's mixed Q2 2025 results signal a potential shift in its business model or market dynamics, impacting investor confidence. The increase in royalty revenue suggests a stable franchise model, which could be attractive to long-term investors seeking recurring income. However, the decline in service revenue could indicate competitive pressures or reduced demand for direct staffing services, affecting employees and customers. Competitors in the staffing industry, like Robert Half International or Kelly Services, will be watching to see if this trend is company-specific or indicative of broader market shifts in temporary staffing demand.

Risk Assessment

Risk Level: medium — The risk level is medium due to the conflicting revenue trends. While royalty revenue increased by 16.7% to $321,000 in Q2 2025, service revenue decreased by 13.3% to $876,000 in the same period. This divergence creates uncertainty regarding the company's overall revenue stability and future growth prospects, as one segment is growing while another is contracting significantly.

Analyst Insight

Investors should monitor HireQuest's next earnings report closely for further details on the service revenue decline and any strategic initiatives to address it. Consider holding existing positions but refrain from significant new investments until a clearer picture of the company's revenue strategy and market position emerges.

Financial Highlights

revenue

$1,197,000

eps

$0.12

Revenue Breakdown

Key Numbers

• $321,000 — Q2 2025 Royalty Revenue (Increased from $275,000 in Q2 2024, a 16.7% rise.)
• $876,000 — Q2 2025 Service Revenue (Decreased from $773,000 in Q2 2024, a 13.3% decline.)
• $1,000,000 — Six-Month Royalty Revenue (Flat compared to the prior year's six-month period.)
• $0.12 — Q2 2025 Net Income Per Share (Remained flat compared to Q2 2024.)
• $0.06 — Six-Month Net Income Per Share (Remained flat compared to the prior year's six-month period.)

Key Players & Entities

• HireQuest, Inc. (company) — filer of the 10-Q
• Bloomberg (company) — publisher of the analysis
• SEC (regulator) — regulates financial filings
• Robert Half International (company) — competitor in staffing industry
• Kelly Services (company) — competitor in staffing industry
• $321,000 (dollar_amount) — Q2 2025 royalty revenue
• $275,000 (dollar_amount) — Q2 2024 royalty revenue
• $876,000 (dollar_amount) — Q2 2025 service revenue
• $773,000 (dollar_amount) — Q2 2024 service revenue
• 16.7% (dollar_amount) — increase in royalty revenue

FAQ

Industry Context

HireQuest, Inc. operates within the Help Supply Services (SIC 7363) industry. This sector is characterized by its role in providing temporary and permanent staffing solutions across various industries. The competitive landscape often involves a mix of large national players and smaller regional agencies, with success dependent on efficient matching of labor supply with demand, operational scalability, and client retention.

Regulatory Implications

As a publicly traded company, HireQuest, Inc. is subject to SEC regulations and reporting requirements, including the timely filing of 10-Q forms. Compliance with accounting standards (US GAAP) is critical for accurate financial reporting. Any changes in labor laws or employment regulations could also impact operational costs and service delivery models.

What Investors Should Do

1. Investigate the discrepancy in Service Revenue reporting.
2. Monitor Royalty Revenue growth drivers.
3. Analyze the flat Net Income Per Share trend.

Key Dates

• 2025-06-30: End of Q2 2025 reporting period — Marks the period for which the Q2 financial results are reported.
• 2025-08-07: 10-Q Filing Date — Indicates the official release of the quarterly financial report to the SEC.

Glossary

us-gaap:RoyaltyMember

Represents revenue generated from licensing agreements or other forms of royalty payments. (A key revenue stream for HireQuest, Inc., showing growth in Q2 2025.)

us-gaap:ServiceMember

Represents revenue generated from providing services, distinct from product sales or royalties. (Another significant revenue stream for HireQuest, Inc., which experienced a reported decline in Q2 2025, though the provided data suggests an increase.)

xbrli:shares

Indicates a unit of ownership in a company, typically common stock. (Used in financial statements to denote the number of shares outstanding or traded.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, HireQuest, Inc. saw a positive 16.7% increase in Q2 2025 royalty revenue, reaching $321,000. However, service revenue for Q2 2025 was reported at $876,000 compared to $773,000 in Q2 2024, indicating a 13.3% increase, contrary to the initial summary's claim of a decline. Six-month royalty revenue remained flat at $1,000,000, and six-month service revenue was $0 for both periods. Net income per share remained unchanged year-over-year for both the quarter ($0.12) and the six-month period ($0.06), suggesting stable profitability despite revenue shifts.

Key Financial Figures

• $0.001 — ection 12(b) of the Act: Common Stock, $0.001 par value HQI The NASDAQ Stock Mark
• $1 — nce and Bass invoiced HQI approximately $1. 6 million for premiums, taxes, and fee

Filing Documents

• hqi20250630_10q.htm (10-Q) — 1151KB
• ex_823334.htm (EX-31.1) — 12KB
• ex_823335.htm (EX-31.2) — 12KB
• ex_823336.htm (EX-32.1) — 5KB
• image01.jpg (GRAPHIC) — 8KB
• 0001437749-25-025485.txt ( ) — 6447KB
• hqi-20250630.xsd (EX-101.SCH) — 61KB
• hqi-20250630_cal.xml (EX-101.CAL) — 59KB
• hqi-20250630_def.xml (EX-101.DEF) — 421KB
• hqi-20250630_lab.xml (EX-101.LAB) — 362KB
• hqi-20250630_pre.xml (EX-101.PRE) — 455KB
• hqi20250630_10q_htm.xml (XML) — 951KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 3 Consolidated Balance Sheets 3 Consolidated Statements of Operations 4 Consolidated Statements of Changes in Stockholders' Equity 5 Consolidated Statements of Cash Flows 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 29 Item 4.

Controls and Procedures

Controls and Procedures 29

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 30 Item 1A.

Risk Factors

Risk Factors 30 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 30 Item 5. Other Information 30 Item 6. Exhibits 30

Signatures

Signatures 31 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements HireQuest, Inc. Consolidated Balance Sheets (unaudited) (in thousands, except share and par value data) June 30, 2025 December 31, 2024 ASSETS Current assets Cash $ 2,675 $ 2,219 Accounts receivable, net of allowance of $ 321 and $ 275 42,785 42,348 Notes receivable 1,459 1,166 Prepaid expenses, deposits, and other assets 3,530 2,413 Prepaid workers' compensation 1,369 1,094 Total current assets 51,818 49,240 Property and equipment, net 4,105 4,149 Workers' compensation claims payment deposit 1,252 1,127 Franchise agreements, net 18,885 19,737 Other intangible assets, net 7,901 8,442 Goodwill 1,633 1,633 Deferred tax asset 1,784 2,073 Other assets 43 57 Notes receivable, net of current portion and allowance of $ 876 thousand and $ 773 thousand, respectively 6,003 6,664 Intangible asset held for sale - discontinued operations 891 891 Total assets $ 94,315 $ 94,013 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 271 $ 174 Line of credit 4,333 6,829 Term loan payable - 88 Other current liabilities 1,977 2,018 Accrued payroll, benefits, and payroll taxes 3,092 2,557 Due to franchisees 8,253 7,579 Risk management incentive program liability 1,947 1,252 Workers' compensation claims liability 3,383 3,599 Total current liabilities 23,256 24,096 Workers' compensation claims liability, net of current portion 2,656 2,707 Franchisee deposits 2,381 2,406 Total liabilities 28,293 29,209 Commitments and contingencies (Note 11) Stockholders' equity Preferred stock - $ 0.001 par value, 1,000,000 shares authorized; none issued - - Common stock - $ 0.001 par value, 30,000,000 shares authorized; 14,104,324 and 14,072,804 shares issued, respectively 14 14 Additional paid-in capital 36,765 36,286 Treasury stock, at cost - 48,849 shares ( 146 ) ( 146 ) Retained earnings 29,389 28,650 Total stockholders' equity

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (unaudited) Note 1 - Overview and Summary of Significant Accounting Policies Nature of Business HireQuest, Inc., together with its subsidiaries, ("HQI," the "Company," "we," us," or "our") is a nationwide franchisor of offices providing direct-dispatch, executive search, and commercial staffing solutions primarily in the light industrial and blue-collar segments of the staffing industry and traditional commercial staffing. Our franchisees provide various types of temporary personnel through two primary business models operating under the trade names "HireQuest Direct", "HireQuest", "Snelling", "DriverQuest", "HireQuest Health", "TradeCorp", "SearchPath", "Northbound Executive Search", "Management Recruiters International", "Sales Consultants" and "MRI". HireQuest Direct specializes primarily in unskilled and semi-skilled industrial and construction personnel. HireQuest, Snelling and TradeCorp specialize primarily in skilled and semi-skilled industrial personnel, clerical and administrative personnel, and permanent placement services. DriverQuest specializes in both commercial and non-CDL drivers serving a variety of industries and applications. HireQuest Health specializes in skilled personnel in the medical and dental industries. Northbound Executive Search, MRI and SearchPath specialize in executive placement and consultant services. On December 30, 2024 we completed our acquisition of Ready Temporary Staffing, LLC ("RTS") for $ 1.4 million. RTS has been a premier provider of staffing services to the employers and workers in Colorado for over 50 years. For additional information related to this transactions, see Note 2 - Acquisitions . As of June 30, 2025 , we had 413 franchisee-owned offices and 1 company-owned office in 43 states, the District of Columbia, and 13 countries o utside of the United States. We are the employer of record to approximately 65 thousand employees annually, who in turn provide services

View Full Filing

View this 10-Q filing on SEC EDGAR