iQSTEL Inc. Q1 FY2026 earnings call

### Strategic Transformation - IQSTEL has evolved from a pure-play telecommunications company to a global commercial distribution platform for advanced digital services, leveraging its existing hard-to-replicate infrastructure, trusted global commercial relationships, and established operational footprint as a sustainable competitive moat. - The company currently holds commercial relationships with over 600 telecom operators across 21 countries, with a potential reach of approximately 2.3 billion end users and a ~$400 million annual revenue run rate. - New high-margin digital service priorities include AI-powered solutions, fintech, cybersecurity, digital health, enterprise communications, and other advanced digital business services. Leveraging existing relationships cuts go-to-market timelines, reduces customer acquisition costs and execution risk, and improves scalability relative to building a new distribution network from scratch.

### Operational Updates - A dedicated new subsidiary, IQSTEL Digital Services, has been launched to accelerate commercialization of high-margin digital offerings, led by newly appointed Jose Enrique Becerra, who brings prior experience selling digital services to over 100 million end users. - Early commercial validation has been secured through a growing partnership with Alhambra IT, demonstrating market demand for the company's enterprise digital capabilities. - The acquisition and integration of Globetrotter has successfully supported revenue growth and business diversification.

### Financial Position & Priorities - The company maintains a clean capital structure with no convertible debt and no outstanding shares placement, providing full financial flexibility to focus on execution and growth. - Current increased technology expenses are tied to strategic development of AI-powered solutions and finalization of the combined switching platform; management expects these investments to generate operating efficiencies and drive profitability once fully commercialized. - Closing the current valuation gap (the company trades at less than half of its net asset value, with book equity per share near $3 and a stock price around $1.30) is a key priority, with management expecting continued execution to drive a market re-rating.

Consolidated Q1 2026 revenue was $97.9 million, a 70% year-over-year increase from $57.6 million in Q1 2025. 87% of total revenue came from the telecommunications division, with organic growth from core subsidiaries (Ethelix, IoT Labs, Q-Excel, Smarvis, Swiss Link, Q-Global, Whistle) driving the majority of the overall revenue increase. FinTech segment, anchored by the recently integrated Globetrotter, contributed 13% of total revenue ($12.73 million) in its first full comparable quarter, adding $829,000 in gross profit which represented 42% of the company's total consolidated gross profit. Total consolidated gross profit reached $2 million, an increase of 7.8% year-over-year.

- Management reaffirms its full-year 2026 revenue target of $430 million, noting that even with Q1 typically being the company's seasonally weakest quarter, Q1 2026 performance supports confidence in meeting this annual goal. - Long-term strategic guidance targets building a $1 billion annual revenue business with a significantly larger mix of high-margin digital services.

- All forward-looking statements, including revenue and profitability targets, are subject to inherent risks and uncertainties that could cause actual results to differ materially from expectations, as detailed in the company's periodic SEC filings. The company assumes no obligation to update forward-looking statements unless required by law.

Q: With the company's new priority of expanding digital service sales to its global base of 600 telecom carriers, what progress has been made so far in 2026, and what can investors expect for the rest of the year? / A: Management recently launched cybersecurity, digital health, and fintech services at the large International Telecom Weeks industry event in Washington D.C., holding multiple introductory meetings with major telecom carriers. All participating carriers have expressed strong interest in exploring the new offerings, leveraging the company's existing long-term trusted relationship to create a strong foundation for new business traction. Management expects revenue results from these initiatives to materialize sooner than originally projected due to the positive reception.

Q: How will growth in these new digital services impact the company's profitability, given that they are marketed as high-margin offerings? / A: All new digital services carry gross margins of over 25%, with AI solutions expected to deliver gross margins near 40%, so growth in these segments will meaningfully improve overall company EBITDA, net income, and consolidated profitability. The company has invested two years in R&D to develop these services to meet the quality standards customers expect, and they are now ready for commercial launch. Management is confident positive profitability results will be visible in coming quarters.