Quest Resource Holding Corporation Reports Third Quarter 2026 Financial Results

Quest narrows losses and boosts margins, but remains unprofitable despite operational gains.

What the company is saying

Quest Resource Holding Corporation reports that third quarter 2026 revenue reached $63.8 million, up 0.7% year-over-year, while gross profit was $11.4 million, down 0.7% from the prior year but up 9.1% sequentially. The company highlights a 150 basis point sequential improvement in gross margin to 17.8%, attributing this to margin gains with industrial customers and ongoing business optimization. Management, led by CEO Perry W. Moss and CFO Brett Johnston, frames the narrative around operational efficiency, cost discipline, and a more diversified revenue base, citing sequential growth in non-industrial revenue and renewals with four customers. The addition of a new Senior Vice President of Technology is presented as a strategic move to accelerate optimization efforts. The company emphasizes a 'healthy' sales pipeline with late-stage national brand opportunities, but does not provide quantitative details. The tone is confident, focusing on steady progress and long-term risk mitigation through diversification.

What the data suggests

The financials show modest improvement: revenue increased to $63,779,000 from $63,341,000 a year ago, and adjusted EBITDA rose to $3,432,000 from $2,938,000. Gross margin improved to 17.8% from 16.3% sequentially, but remains below the 18.1% level of the prior year. GAAP net loss narrowed to $(495,000) from $(1,349,000) year-over-year and from $(12,217,000) in the previous quarter, which included an $11,000,000 goodwill impairment. SG&A expenses fell to $8,501,000 from $9,240,000, supporting the cost discipline narrative. Cash declined to $943,000 from $1,014,000 at year-end, while total assets dropped to $133,276,000 from $145,551,000 and equity fell to $26,607,000 from $40,512,000. The company remains unprofitable on a GAAP basis, and while operational metrics are improving, claims about non-industrial revenue growth and customer renewals are not substantiated with segment or contract-level data. The pipeline commentary is qualitative, with no disclosed size or value.

Analysis

The announcement presents a positive tone, emphasizing sequential and year-over-year improvements in Adjusted EBITDA, gross margin, and narrowing net loss. These claims are supported by detailed financial disclosures, including revenue, gross profit, net loss, and Adjusted EBITDA, which show modest but real operational progress. However, some narrative elements—such as the 'healthy sales pipeline,' 'significant opportunities,' and 'expanding share-of-wallet'—are forward-looking and lack quantitative support or customer specifics. The language around diversification and customer renewals is not backed by segment data or contract values. While the company is still loss-making, the improvement in core metrics justifies a weak_positive signal, but the moderate hype level reflects the embellishment of qualitative achievements without hard evidence. There is no indication of a large capital outlay or long-dated, uncertain returns in this release.

Risk flags

• ●Quest continues to operate at a net loss, with $(495,000) lost in the quarter and an accumulated deficit of $(155,523,000), raising concerns about the path to sustained profitability and cash flow. Persistent losses could pressure liquidity, especially as cash declined to $943,000.
• ●The company’s balance sheet weakened, with total assets falling to $133,276,000 and equity dropping sharply to $26,607,000, while liabilities remain high at $106,669,000. High leverage and declining equity increase financial risk if operational improvements stall.
• ●Narrative claims about customer renewals, non-industrial revenue growth, and a strong sales pipeline are not supported by quantitative disclosures. The lack of segment data or contract values makes it difficult to assess the durability of these trends or the likelihood of near-term revenue acceleration.

Bottom line

Quest Resource Holding Corporation’s third quarter 2026 results show incremental operational progress, with improved margins, lower SG&A, and a narrowing net loss. However, the company remains unprofitable, and cash reserves have declined, highlighting ongoing financial risk. While management points to a more diversified revenue base and a healthy pipeline, these claims lack quantitative backing, leaving the scale and timing of future growth uncertain. The addition of a new Senior Vice President of Technology signals a focus on further optimization, but the impact of this hire is not yet measurable. Investors should focus on whether Quest can translate operational gains into sustained profitability and improved liquidity. The most important takeaway is that while the trajectory is improving, the company’s financial position remains vulnerable until consistent profits and cash generation are achieved.

Announcement summary

(NASDAQ:QRHC) Quest Resource Holding Corporation announced its financial results for the third quarter ended September 30, 2026. Revenue for the third quarter of 2026 was $63.8 million, representing a 0.7% increase compared to the third quarter of 2025 and a 0.5% decrease from the second quarter of 2026. Gross profit for the quarter was $11.4 million, a 0.7% decrease from the third quarter of 2025 and a 9.1% increase from the second quarter of 2026. Gross margin was 17.8% of revenue, compared to 18.1% in the third quarter of 2025 and 16.3% in the second quarter of 2026. GAAP net loss was $(0.5) million, compared to a net loss of $(1.3) million in the third quarter of 2025 and a net loss of $(12.2) million in the second quarter of 2026, which included a non-cash goodwill impairment loss of $(11.0) million. GAAP net loss per basic and diluted share attributable to common stockholders was $(0.02), compared to $(0.06) for the third quarter of 2025 and $(0.57) for the second quarter of 2026. Adjusted EBITDA was $3.4 million, compared to $2.9 million for the third quarter of 2025 and $2.8 million for the second quarter of 2026. Non-industrial revenue grew sequentially, contributing to a more balanced and diversified revenue base. Gross margin improved by 150 basis points sequentially to 17.8%, driven by margin gains with industrial customers and continued optimization of the business. The company secured renewals with four customers and continued to expand share-of-wallet with existing customers. The sales pipeline remains healthy with several significant opportunities with national brands in late-stage discussions. The leadership team was strengthened through the addition of a new Senior Vice President of Technology with strong industry experience. Perry W. Moss, Chief Executive Officer, stated that the third quarter results reflect progress in building a more balanced and diversified business, with consistent performance and operating efficiencies driving Adjusted EBITDA growth both sequentially and year-over-year. Brett Johnston, Chief Financial Officer, noted that margin improvement with industrial customers and ongoing optimization of the service network drove a 150-basis point sequential increase in gross margin, and that disciplined cost management led to meaningful year-over-year SG&A savings. On the balance sheet, cash and cash equivalents were $943 thousand as of September 30, 2026, compared to $1,014 thousand as of December 31, 2025. Accounts receivable, less allowance for doubtful accounts, were $49,947 thousand as of September 30, 2026. Goodwill was $70,065 thousand as of September 30, 2026, compared to $81,065 thousand as of December 31, 2025. Intangible assets, net, were $5,436 thousand as of September 30, 2026. Property and equipment, net, and other assets were $5,217 thousand as of September 30, 2026. Total assets were $133,276 thousand as of September 30, 2026, compared to $145,551 thousand as of December 31, 2025. Accounts payable and accrued liabilities were $42,462 thousand as of September 30, 2026, compared to $38,384 thousand as of December 31, 2025. Current portion of notes payable was $540 thousand as of September 30, 2026. Notes payable, net, was $60,013 thousand as of September 30, 2026, compared to $63,999 thousand as of December 31, 2025. Total liabilities were $106,669 thousand as of September 30, 2026. Total stockholders’ equity was $26,607 thousand as of September 30, 2026, compared to $40,512 thousand as of December 31, 2025. Weighted average number of common shares outstanding, basic and diluted, was 21,474 thousand for the three months ended September 30, 2026. The company will host a conference call on November 5, 2026, at 5:00 PM ET to review the financial results.

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