HireQuest Reports Financial Results for Third Quarter 2026

HireQuest posts steady Q3 revenue but net income drops on higher expenses.

What the company is saying

HireQuest, led by President and CEO Rick Hermanns, reports Q3 2026 financials emphasizing resilience and growth in core commercial staffing brands. The company frames its narrative around year-over-year revenue growth and the strength of its franchise model, highlighting a 1.5% increase in franchise royalties to $8.2 million and a 4.0% rise in total revenue to $8.8 million. Management attributes the drop in net income to a $1.3 million write down of notes receivable tied to a franchised location repossession and higher workers' compensation expense. The company stresses its strong balance sheet, ample liquidity, and disciplined capital allocation. Pro forma adjustments for the MRINetwork Assets Divestiture are used to present higher underlying growth rates, with franchise royalties up 7.9% and total revenue up 11.1%. The tone is measured, focusing on operational execution and positioning for continued profitability into 2027.

What the data suggests

Q3 2026 franchise royalties were $8.2 million, up 1.5% from $8.1 million in Q3 2025, while service revenue rose to $604,000 from $387,000. Total revenue increased 4.0% to $8.8 million, but net income declined to $1.7 million ($0.12 per diluted share) from $2.3 million ($0.16 per share) due to a $1.3 million write down of notes receivable and a swing in workers' compensation from a $99,000 benefit to a $434,000 expense. Adjusted net income fell to $3.0 million ($0.22 per share) from $3.3 million ($0.23 per share), while adjusted EBITDA was flat at $4.5 million. System-wide sales dipped to $131.2 million from $133.6 million, mainly because of the MRINetwork Assets Divestiture, but pro forma system-wide sales rose 11.4%. Year-to-date, net income improved to $5.9 million ($0.43 per share) from $4.7 million ($0.34 per share), and adjusted EBITDA increased to $11.8 million from $10.6 million. Cash fell to $1.1 million from $3.9 million at year-end, but working capital increased to $38.0 million. The company paid a $0.06 per share quarterly dividend and maintains $40.5 million available under its line of credit.

Analysis

The announcement is a standard quarterly financial results release, presenting realised and audited figures for Q3 and the first nine months of 2026. All key claims are directly supported by disclosed numerical data, including revenue, net income, adjusted net income, adjusted EBITDA, and system-wide sales. The only forward-looking statement is the intention to continue paying a quarterly dividend, which is explicitly caveated as subject to board discretion and business results. There is no promotional or exaggerated language, and no claims of future growth or transformative initiatives without evidence. The financial direction is mixed for the quarter but positive year-to-date, especially when adjusted for the MRINetwork Assets Divestiture. No large capital outlay or long-dated, uncertain returns are discussed. The tone is factual and proportionate to the results.

Risk flags

• ●Net income declined in Q3 2026 to $1.7 million from $2.3 million in Q3 2025, primarily due to a $1.3 million write down of notes receivable and increased workers' compensation expense. This indicates exposure to credit risk from franchisees and volatility in insurance-related costs.
• ●Cash on hand decreased to $1.1 million as of September 30, 2026, from $3.9 million at year-end 2025, which could constrain flexibility if further unexpected expenses arise, despite $40.5 million in available credit.
• ●System-wide sales and revenue comparisons are complicated by the MRINetwork Assets Divestiture, requiring pro forma adjustments to reveal underlying growth. This adds complexity to assessing true organic performance and may obscure operational challenges in the core business.

Bottom line

HireQuest's Q3 2026 results show modest top-line growth but a notable drop in net income, driven by a one-time $1.3 million write down and higher workers' compensation costs. Adjusted EBITDA held steady at $4.5 million, and pro forma figures suggest underlying revenue and sales growth after accounting for the MRINetwork divestiture. The company maintains a solid balance sheet with $38.0 million in working capital and access to $40.5 million in credit, but cash reserves have declined. The quarterly dividend of $0.06 per share continues, but future payouts remain at the board's discretion. Investors should focus on the sustainability of earnings growth, the impact of non-recurring charges, and the company's ability to convert pro forma gains into reported profitability. The key takeaway is that while underlying trends are positive after adjustments, headline net income and cash flow are under pressure from operational and credit risks.

Announcement summary

(NASDAQ:HQI) HireQuest reported financial results for the third quarter ended September 30, 2026. Franchise royalties in Q3 2026 were $8.2 million, up from $8.1 million in Q3 2025, representing a 1.5% increase. Service revenue for Q3 2026 was $604,000 compared to $387,000 in the prior-year period. The third quarter of 2025 included $479,000 in franchise royalties and $61,000 in MRINetwork national advertising fund fees within service revenue related to the MRINetwork Assets Divestiture on January 1, 2026. Pro forma for the MRINetwork Assets Divestiture, franchise royalties increased 7.9% in Q3 2026. Total revenue in Q3 2026 was $8.8 million, up from $8.5 million in Q3 2025, a 4.0% increase. Pro forma for the MRINetwork Assets Divestiture, total revenue increased 11.1% in Q3 2026. SG&A expenses in Q3 2026 were $6.1 million, up from $5.1 million in Q3 2025, a 20.7% increase. SG&A expenses included a $1.3 million write down of notes receivable, primarily related to the repossession of a franchised location. Net workers' compensation expense was $434,000 in Q3 2026 compared to a net benefit of $99,000 in Q3 2025. The third quarter of 2025 included $616,000 in operating expenses related to the MRINetwork Assets Divestiture. Depreciation and amortization in Q3 2026 was $763,000, compared to $752,000 in Q3 2025. Interest and other financing expense in Q3 2026 was $35,000 compared to $62,000 in Q3 2025. Net income in Q3 2026 was $1.7 million or $0.12 per diluted share, compared to $2.3 million or $0.16 per diluted share in Q3 2025. The decrease in net income was primarily due to the $1.3 million write down of notes receivable and higher net workers' compensation expense. Adjusted net income for Q3 2026 was $3.0 million or $0.22 per diluted share, compared to $3.3 million or $0.23 per diluted share in Q3 2025. Adjusted EBITDA for Q3 2026 was $4.5 million, consistent with Q3 2025. System-wide sales for Q3 2026 were $131.2 million compared to $133.6 million in Q3 2025. The decrease was primarily driven by $15.8 million in system-wide sales related to the MRINetwork Assets Divestiture, partially offset by a $7.5 million increase in system-wide sales of HireQuest Direct and a $6.6 million increase in system-wide sales of Snelling. Pro forma for the MRINetwork Assets Divestiture, system-wide sales increased 11.4% in Q3 2026. For the nine months ended September 30, 2026, franchise royalties were $21.8 million compared to $22.3 million in the same period of 2025, a decrease of 1.9%. Service revenue for the nine months was $1.6 million compared to $1.3 million in the prior-year period. The nine months ended September 30, 2025 included $1.6 million in franchise royalties and $205,000 in service revenue related to the MRINetwork Assets Divestiture. Pro forma for the MRINetwork Assets Divestiture, franchise royalties increased 5.7% for the period. Total revenue for the nine months was $23.4 million compared to $23.5 million in the same period of 2025, a decrease of 0.5%. The nine months ended September 30, 2025 included $1.8 million of total revenue related to the MRINetwork Assets Divestiture. Pro forma for the MRINetwork Assets Divestiture, total revenue increased 7.8% for the period. SG&A expenses for the first nine months of 2026 were $14.4 million compared to $16.2 million for the same period of 2025, a decrease of 11.1%. Workers' compensation expense was $513,000 for the first nine months of 2026 compared to $56,000 in the prior-year period. The nine months ended September 30, 2025 included $1.9 million in operating expenses related to the MRINetwork Assets Divestiture, $1.1 million in acquisition related charges, and $350,000 in write down of notes receivable expense. The nine months ended September 30, 2026 included a non-cash loss of $1.5 million in write down of notes receivable expense, primarily related to the repossession of a franchised location in Q3 2026. Depreciation and amortization in the first nine months of 2026 was $2.3 million, compared with $2.2 million in the first nine months of 2025. Interest and other financing expense for the nine months ended September 30, 2026 was $72,000 compared to $277,000 in the prior year period. Net income in the 2026 year-to-date period was $5.9 million or $0.43 per diluted share, compared to $4.7 million or $0.34 per diluted share in the same period of 2025. Adjusted net income for the nine-month period was $8.1 million or $0.59 per diluted share, compared to $7.2 million or $0.52 per diluted share in the first nine months of 2025. Adjusted EBITDA for the nine months ended September 30, 2026 was $11.8 million compared to $10.6 million in the same prior-year period. System-wide sales for the first nine months of 2026 were $351.6 million compared to $377.9 million in the same period of 2025. The decrease was primarily driven by the loss of $49.4 million in system-wide sales as a result of the MRINetwork Assets Divestiture. Pro forma for the MRINetwork Assets Divestiture, system-wide sales increased 7.1% for the period. As of September 30, 2026, cash was $1.1 million, total assets were $95.7 million, total liabilities were $25.7 million, and working capital was $38.0 million. As of December 31, 2025, cash was $3.9 million, total assets were $88.2 million, total liabilities were $19.9 million, and working capital was $33.0 million. As of September 30, 2026, availability under the line of credit was approximately $40.5 million, assuming continued covenant compliance. During Q3 2026, the company paid a quarterly cash dividend of $0.06 per share of common stock, declared on September 1, 2026. The company intends to pay a $0.06 cash dividend on a quarterly basis, subject to board discretion and business results.

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