10-Q: iQSTEL Q3 2025 Revenue Soars, Net Loss Widens

iQSTEL Inc. reported a substantial 89.62% increase in Q3 2025 consolidated revenue to $102.87 million, driven by strong telecom performance and the Globetopper acquisition, yet recorded a widened net loss of $2.33 million for the quarter.

Summary

• Consolidated revenues for the nine months ended September 30, 2025, increased by 26.22% to $232.68 million, up from $184.35 million in the prior year.
• Gross profit for the nine months ended September 30, 2025, rose by 16.73% to $6.55 million, compared to $5.61 million in the same period of 2024.
• The company reported a net loss of $5.82 million for the nine months ended September 30, 2025, significantly wider than the $3.32 million net loss for the same period in 2024.
• Operating expenses (General and Administration) increased by 36.16% to $8.37 million for the nine months ended September 30, 2025, primarily due to the addition of QXTEL and Globetopper.
• Operating loss for the nine months ended September 30, 2025, widened to $1.82 million from $0.54 million in the prior year.
• Adjusted EBITDA for the nine months ended September 30, 2025, was a negative $0.94 million.
• The Telecom Division generated positive operating income of $1.12 million and Adjusted EBITDA of $1.71 million for the nine months ended September 30, 2025.
• The Fintech Division, including the newly acquired Globetopper LLC, began generating revenue and reported a positive operating income of $78,314 and Adjusted EBITDA of $78,675 for the nine months ended September 30, 2025.
• The company completed a 1-for-80 reverse stock split effective May 2, 2025, and subsequently increased authorized common shares to 26,000,000.
• Acquired 51% of Globetopper LLC on July 1, 2025, for a total purchase price of $985,175, paid in cash, promissory notes, common stock, and contingent liability.
• Management identified material weaknesses in internal control over financial reporting, including inadequate segregation of duties and insufficient written policies and procedures.
• The company's ability to continue as a going concern is dependent on achieving profitability and raising additional capital.

Sentiment

Score: 4

Explanation: While revenue growth is strong and working capital improved, the significant widening of net losses, negative Adjusted EBITDA, and the explicit 'going concern' warning, coupled with identified material weaknesses in internal controls, indicate substantial financial challenges and risks. The positive operational performance of core divisions is overshadowed by corporate-level expenses and debt settlements.

Positives

• Consolidated revenue increased by 89.62% for the three months ended September 30, 2025, to $102.87 million, and by 26.22% for the nine months ended September 30, 2025, to $232.68 million.
• Gross profit increased by 16.73% for the nine months ended September 30, 2025, reaching $6.55 million.
• The Telecom Division continues to be a high-performing segment, generating positive operating income of $1.12 million and Adjusted EBITDA of $1.71 million for the nine months ended September 30, 2025.
• The Fintech Division, including the recent acquisition of Globetopper LLC, began generating revenue and achieved positive operating income and Adjusted EBITDA for the nine months ended September 30, 2025.
• Working capital turned positive to $1,095,053 as of September 30, 2025, compared to a negative working capital of $(806,150) at December 31, 2024.
• Customer concentration improved, with the largest customer representing 8.75% of total accounts receivable as of September 30, 2025, down from 40.39% as of December 31, 2024.
• Organic revenue growth (excluding new acquisitions) accounted for 70% of the total revenue increase for the three and nine months ended September 30, 2025, indicating strong performance from existing subsidiaries.

Negatives

• Net loss widened significantly to $(5,819,244) for the nine months ended September 30, 2025, compared to $(3,317,107) for the same period in 2024.
• Operating loss increased to $(1,819,538) for the nine months ended September 30, 2025, from $(535,952) in the prior year.
• Basic and diluted loss per common share worsened to $(1.97) for the nine months ended September 30, 2025, from $(1.67) in 2024.
• The company reported a negative Adjusted EBITDA of $(940,029) for the nine months ended September 30, 2025.
• Cash used in operating activities slightly increased to $(2,602,320) for the nine months ended September 30, 2025, from $(2,526,651) in 2024.
• Significant losses on settlement of debt were recorded, totaling $2,224,481 for the nine months ended September 30, 2025.
• A loss on settlement of salary payable of $216,981 was recorded for the nine months ended September 30, 2025, related to the issuance of Series B Preferred Stock to the CEO and CFO.

Risks

• The company has suffered recurring losses from operations and does not have an established source of revenues sufficient to cover its operating costs, raising substantial doubt about its ability to continue as a going concern.
• The company is dependent upon its ability to successfully accomplish its business plan and eventually attain profitable operations, and may experience a cash shortfall requiring additional capital.
• There is no assurance that the company will be able to obtain additional financing through future public or private offerings or loans on acceptable terms or at all.
• Management concluded that disclosure controls and procedures were ineffective as of September 30, 2025, due to inadequate segregation of duties, ineffective risk assessment, and insufficient written policies and procedures for accounting and financial reporting.
• The company's financial instruments are exposed to concentrations of credit risk, particularly in accounts receivable, with approximately 80% of total accounts receivable concentrated in balances from the top 25 customers.
• The company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain, with factors such as changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, and competition posing risks.

Future Outlook

Management's strategy remains centered on strengthening the telecommunications segment to serve as a growth engine for the development and expansion of new business lines like Fintech and Cybersecurity. The company is continually identifying operational synergies among its subsidiaries for cost efficiency and expects this trend to strengthen, positively impacting revenues and margins. They are in a transitional period, scaling operations and investing heavily in growth initiatives with the execution of their M&A plan, and have identified and acted on areas for cost-cutting and operational improvements. The company intends to fund operations through increased sales and debt and/or equity financing arrangements to strengthen liquidity and capital resources.

Management Comments

• The growth in consolidated revenue mainly reflects higher activity across most subsidiaries, particularly those engaged in VOIP Telecom services, due to a higher volume of intercompany transactions.
• Intercompany transactions are part of our strategy to optimize operations across subsidiaries by leveraging more efficient routing alternatives for our voice and SMS services, cost reductions, and improved service delivery.
• The organic growth during the three and nine months ended September 30, 2025, was 70% of the total revenue for those periods, reflecting the solid foundation of our revenue and the growth capacity the Company has with its current operations.
• The inclusion of GlobeTopper in the consolidation process, along with the traffic volumes by QXTEL and the reorganizing of the portfolio among subsidiaries, reflects the synergies derived from the commercial and operational integration of all group companies.
• Our strategy remains centered on strengthening the telecommunications segment to serve as a growth engine for the development and expansion of new business lines.
• Our pre-revenue companies are operating with minimal expenses, focused solely on completing product and service development prior to their market launch.
• 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.
• Our Telecom and Fintech Divisions, the divisions presently generating revenue, have a positive operating income when presented separately.
• Consolidated figures show a slightly negative Adjusted EBITDA; while this isn't 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

iQSTEL operates in the dynamic telecommunications, electric vehicle (EV), fintech, and AI-enhanced metaverse industries. The significant revenue growth in its Telecom Division, which constitutes the majority of its operations, aligns with the ongoing demand for VoIP, SMS, and international connectivity services. The company's strategic acquisitions, such as Globetopper LLC, and its focus on leveraging intercompany synergies, reflect a broader industry trend towards consolidation and integrated service offerings to optimize costs and enhance market position. The expansion into Fintech, EV, and AI-enhanced metaverse divisions indicates an effort to diversify revenue streams and capitalize on emerging high-growth technology sectors, although these are currently in developmental or early revenue stages. The company's global presence across 20 countries positions it to tap into diverse international markets.

Management Changes

Corporate Governance

Related Party Transactions

• The company had $668,177 due from related parties as of September 30, 2025, representing unsecured, non-interest bearing loans due on demand.
• The company had $65,829 due to related parties as of September 30, 2025, representing unsecured, non-interest bearing amounts due on demand, including $39,216 paid by a related party for a vehicle on behalf of the company.
• 6,571 shares of Series B Preferred Stock were issued to settle $631,500 in salary payable for the CEO and CFO, resulting in a $216,981 loss on settlement of salary payable.

Stakeholder Impact

• Shareholders face potential dilution from the issuance of common stock and Series D Preferred Stock for debt settlements and compensation, as well as the risk associated with the 'going concern' warning.
• Employees, particularly the CEO and CFO, had salary payable settled through the issuance of Series B Preferred Stock, indicating a non-cash compensation strategy.
• Creditors involved in debt settlements received common stock or Series D Preferred Stock, which may convert into common stock, impacting their recovery and the company's capital structure.
• Customers benefit from the company's expanded service offerings and operational synergies, but the company's financial health and internal control weaknesses could pose long-term risks to service reliability.

Next Steps

• Continual development of business operations, including product and service development for pre-revenue companies.
• Maintaining good standing in the industry and continuing marketing efforts.
• Identifying and implementing further cost-cutting and operational improvements.
• Seeking additional financing through public or private offerings of stock or loans from private investors to address liquidity and capital resource needs.
• Strengthening the telecommunications segment to serve as a growth engine for new business lines like Fintech and Cybersecurity.

Key Dates

Recommendation

While iQSTEL Inc. demonstrated impressive revenue growth and improved gross profit, driven by its core Telecom division and strategic acquisitions like Globetopper, the significant widening of its net loss and operating loss, coupled with a negative Adjusted EBITDA, raises serious concerns about its underlying profitability and cost management. The explicit 'going concern' warning and identified material weaknesses in internal controls present substantial risks. The company's reliance on future capital raises for operations further adds to the uncertainty. For a seasoned investor, the mixed results suggest a 'hold' position, acknowledging the growth potential in its operating divisions but exercising caution due to the severe financial challenges and governance issues that need to be addressed for long-term viability.

Keywords

iQSTEL, IQST, Quarterly Report, Telecom, Fintech, Revenue Growth, Net Loss, Going Concern, Globetopper, Reverse Stock Split, Convertible Notes, SEC Filing