10-Q: iQSTEL Inc. Reports 70% Revenue Growth in Q1 2026

iQSTEL Inc. announced a 70% year-over-year revenue increase for the first quarter of 2026, reaching $97.9 million, driven by its Telecom and Fintech divisions, despite a net loss of $1.39 million.

Summary

• iQSTEL Inc. reported a significant 70% increase in revenue for the first quarter of 2026, reaching $97,919,836, up from $57,632,816 in the same period of 2025.
• The company experienced a net loss of $1,385,936 for the quarter, an increase from the $1,144,461 net loss in Q1 2025.
• Total current assets stood at $29,726,482, with current liabilities at $30,028,395, resulting in negative working capital of $301,913.
• Operating activities used $175,447 in cash for the quarter, an improvement from the $1,906,969 used in Q1 2025.
• The company's Telecom Division accounted for 87% of revenues, while the Fintech Division, including the recent acquisition of GlobeTopper LLC, contributed 13%.
• Management noted that the company is in a transitional period, focusing on scaling operations and investing in growth initiatives, while also identifying areas for cost-cutting and operational improvements.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to the increased net loss, negative operating income, and substantial doubt about the company's ability to continue as a going concern, despite significant revenue growth.

Positives

• Revenue increased by 70% year-over-year to $97,919,836 in Q1 2026.
• Gross profit increased by 8% year-over-year to $2,080,698.
• The Telecom Division showed strong performance, with Etelix.com USA, LLC revenue increasing to $20,436,467 from $8,720,701 and IoT Labs LLC revenue increasing to $28,785,144 from $24,904,457.
• The acquisition of GlobeTopper LLC, which closed on July 1, 2025, contributed $12,993,408 in revenue and $12,734,958 in cost of revenue, representing 13% of total revenues.
• Operating cash flow usage decreased significantly, from $1,906,969 in Q1 2025 to $175,447 in Q1 2026.
• The company is actively working on operational synergies and cost efficiencies across its subsidiaries.

Negatives

• The company reported a net loss of $1,385,936 for the quarter, an increase from the prior year's loss.
• Negative working capital of $301,913 as of March 31, 2026.
• Operating income was negative at $(958,009) for the quarter, compared to $(604,226) in the prior year.
• The company's ability to continue as a going concern is subject to substantial doubt due to recurring losses, negative working capital, and insufficient revenues to cover operating costs.
• Significant interest expense of $350,998 in Q1 2026, partly related to the acquisition of GlobeTopper LLC.

Risks

• The company's ability to continue as a going concern is dependent on successfully accomplishing its business plan and achieving profitable operations.
• The company may experience a cash shortfall and require additional capital, with no assurance of obtaining it.
• Failure to secure additional financing could have a material adverse effect on operations and stockholders.
• The company faces risks related to economic conditions, legislative/regulatory changes, availability of capital, interest rates, and competition.
• Concentration of accounts receivable among a few customers could pose a credit risk.

Future Outlook

The company is in a transitional period, focusing on scaling operations and investing in growth initiatives, with a greater focus on cash preservation, working capital management, and non-cash financing tools. Management has identified areas for cost-cutting and operational improvements. The company plans to seek additional funding through public and private equity offerings.

Management Comments

• The continued growth of our revenue is the result of the development of our business strategy, which includes the strengthening of our commercial and operating activities and expanding the synergies among our subsidiaries, particularly those engaged in VOIP Telecom services, due to a higher volume of intercompany transactions.
• The increase also includes the contribution from a newly acquired subsidiary, GlobeTopper LLC, which closed on July 1, 2025.
• A significant reduction in intercompany transactions is also observed for the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025, which did not impact the overall position. This reflects the joint efforts of the companies to strengthen their position with third parties through new commercial agreements.
• The organic growth during the three months ended March 31, 2026 was 87% of the total revenue for those periods. This reflects the solid foundation of our revenue and the growth capacity the Company has with its current operations.
• The behavior in the costs shows a logical correlation with the behavior of the revenue commented above, as each additional unit sold (minutes and SMS) has its corresponding termination cost.
• This quarter, compared to 2025, reflects the positive impact of the portfolio restructuring. While intercompany transactions decreased, traffic shifted toward third parties, strengthening external relationships. This transition helped maintain growth and is expected to continue supporting revenue and margins going forward.
• The net results of the periods reported are highly impacted by the expenses in the holding entity (IQSTEL), which has a high component of interest and other financial expenses related to the funds borrowed for the acquisition of QXTEL Limited and GlobeTopper LLC.
• As previously stated, our strategy remains focused on strengthening the telecommunications segment as the main growth engine to support the development and expansion of new business lines, including our Fintech Division with the inclusion of Globetopper, which we expect to contribute positively to future performance and enhance our market positioning.
• Consolidated figures show a slightly negative Adjusted EBITDA; while this isnt ideal, in our opinion it implies the Company is close to breaking even and might achieve positive Adjusted EBITDA with small improvements in efficiency or revenue growth.
• We are in a transitional period, scaling operations and investing heavily in growth initiatives with the execution of our M&A plan. Management has also identified areas for cost-cutting and operational improvements and has acted in that direction.

Industry Context

StockSavvy.ai notes that iQSTEL's significant revenue growth in the telecommunications and fintech sectors aligns with broader industry trends of increasing demand for digital communication and financial services, particularly in emerging markets. The company's strategy of leveraging synergies between its divisions and pursuing strategic acquisitions is a common approach in these competitive and rapidly evolving industries.

Comparison to Industry Standards

• The company's revenue growth of 70% in Q1 2026 is a strong indicator, though direct comparisons to industry benchmarks require specific segment data. For instance, in the global telecommunications market, growth rates can vary significantly by region and service type. Companies focused on emerging markets or specialized services like IoT and blockchain integration may see higher growth than established players.
• The reported net loss of $1.39 million, while concerning, is not uncommon for companies in high-growth phases, especially those undergoing acquisitions and investing heavily in new technologies like AI and blockchain. Many tech and telecom companies prioritize market share and expansion over immediate profitability in their early stages.
• The negative working capital of $301,913 indicates a tight liquidity position. Industry standards for working capital vary, but a negative balance suggests potential short-term liquidity challenges that need careful management, especially if the company relies on short-term financing.
• The company's focus on both Telecom and Fintech divisions reflects a diversification strategy seen in many modern tech companies. Competitors in the Fintech space, such as neobanks and remittance services, often face intense competition and regulatory scrutiny, while the Telecom sector is characterized by high infrastructure costs and evolving technologies.

Legal Proceedings

• The company is not a party to any material pending legal proceeding.
• The company is not aware of any pending legal proceeding to which any of its officers, directors, or any beneficial holders of 5% or more of its voting securities are adverse to it or have a material interest adverse to it.

Related Party Transactions

• During Q1 2026, the company loaned $13,701 to a related party and collected $6,700.
• As of March 31, 2026, amounts due from related parties were $496,520.
• As of March 31, 2026, amounts due to related parties were $65,829.
• Management salaries and bonus recorded for Q1 2026 were $211,500, with stock-based compensation bonuses of $4,920.
• Accrued management salaries as of March 31, 2026, were $71,364.

Stakeholder Impact

• Shareholders: The increased net loss and going concern doubt may negatively impact share value. The potential capital raise could dilute existing shareholders.
• Creditors: The negative working capital and going concern issues may raise concerns for creditors regarding the company's ability to meet its obligations.
• Employees: Continued investment in growth and operational improvements may lead to job security, but the going concern issue could create uncertainty.
• Suppliers: The company's financial health could impact its ability to meet payment obligations to suppliers.

Next Steps

• Continue development of operations, maintain industry standing, and continue marketing efforts.
• Seek additional capital through future public or private offerings of stock or loans from private investors.
• File a resale S-1 registration statement within 90 days and have it declared effective within 180 days for the M2B Funding Corp. agreement.
• Implement cost-cutting measures and operational improvements.
• Migrate all subsidiaries to the new switching platform for cost reduction.

Key Dates

Recommendation

While the significant revenue growth is a positive indicator, the increased net loss, negative operating income, and substantial doubt about the company's ability to continue as a going concern present significant risks. The planned capital raise also introduces dilution concerns. Therefore, a 'hold' recommendation is appropriate, pending further clarity on the company's path to profitability and successful capital raising efforts.

Keywords

iQSTEL Inc., Form 10-Q, Quarterly Report, Telecom, Fintech, Revenue Growth, Net Loss, Going Concern, Financial Statements, SEC Filing