HQI

• Overall Business Trend

  • After over two years of stalled hiring demand from clients, the staffing market began stabilizing in Q2 2026, with HireQuest achieving its first year-over-year total revenue growth since Q3 2024. Demand strengthened sequentially through the quarter, with better performance in the latter part of Q2 than the start.
  • The company remained profitable throughout the recent market downturn: it generated GAAP profitability in every quarter since the one-time $6.4 million non-cash impairment charge on the MRI Network acquisition in Q3 2024, and has never reported a non-GAAP loss. It holds a strong balance sheet with no debt and $41 million in available credit facility capacity as of Q2 end 2026, and has maintained a regular quarterly dividend since Q3 2020.

• Key Growth Drivers

  • Favorable labor supply impacts from 2025 immigration policy changes.
  • Strong performance from franchisees, particularly Snelling franchisees, who grew top-line by almost 15% on the back of an improving manufacturing labor market.
  • Return on investment from the company's national accounts program, which is driving new business wins.
  • HireQuest's differentiated franchise staffing model enables agility across varying market trends, allowing the company to outperform broader industry peers as the market recovers.

• Operational Updates

  • The company divested all MRI Network assets at the start of 2026, eliminating related ongoing expenses. Disciplined cost management, plus divestiture-related cost cuts and economies of scale returned by revenue growth, reduced SG&A expenses significantly year-over-year.
  • A new digital recruiting app has expanded operational capacity, allowing the company to pursue short-term large projects in geographic regions where it does not have existing brick-and-mortar branches.

• Management does not provide formal quantified guidance, but confirmed that the strong sequential growth rate achieved in the second half of Q2 2026 has been maintained through the first six weeks of Q3 2026.
• Management stated that with current visibility, they are confident the company will deliver positive results for the remainder of 2026, but note that longer-term performance (beyond the current quarter) remains dependent on broader macroeconomic and industry conditions, with no guarantee that current growth trends will extend into 2027.

HireQuest's total revenue has two primary operating segments: 1) Franchise Royalties: Q2 2026 revenue was $7.6 million, compared to $7.3 million in Q2 2025, representing a 4.1% year-over-year increase. Excluding the divested MRI Network assets, pro forma royalty revenue grew 13.8% year-over-year. This segment contributes 93.8% of total company revenue. 2) Service Revenue: Q2 2026 revenue was $513,000, compared to $354,000 in Q2 2025. This segment contributes 6.2% of total company revenue. System-wide sales (a contextual non-revenue performance metric) for Q2 2026 was $117.8 million, compared to $125.9 million in Q2 2025; pro forma for the MRI divestiture, system-wide sales grew 6.9% year-over-year.

• HireQuest's performance is heavily dependent on macroeconomic conditions: employer hiring decisions are heavily influenced by macro factors including interest rates and political policy, and broader industry demand dictates the company's topline results.
• While reshoring and manufacturing growth are current tailwinds, increasing automation is reducing overall demand for manufacturing labor, offsetting some of these gains.
• Long-term demand visibility is limited; unforeseen changes to economic or policy conditions could alter current growth trajectories.

Q: The CEO noted growth accelerated through Q2 2026. Can you quantify this acceleration, and can you confirm whether this compares ongoing operations only? / A: At the start of Q2, year-over-year growth for ongoing HireQuest Direct and Snelling operations was 2% to 4%. By the end of the quarter, weekly year-over-year growth reached 12% to 13% in some weeks. The comparison excludes the divested MRI Network assets, which will continue to create unfavorable base comparisons through December 2026.

Q: Can we expect this strong end-of-quarter growth rate to continue through the rest of 2026, and how should we model future expenses after the very low Q2 2026 SG&A? / A: Management confirms the growth rate from the second half of Q2 has held through the first six weeks of Q3. The lower Q2 SG&A was partially driven by one-time high legal fees related to a 2025 attempted True Blue takeover that did not recur in 2026, plus small additional cost cuts from the MRI divestiture. Most of the expense improvement comes from regained economies of scale as revenue grows, rather than one-off cuts, so operating leverage will continue to support margins as revenue ramps.

Q: What visibility supports management's confidence in the 2026 second half outlook, and what is driving momentum at the national accounts program that you have invested in? / A: Visibility comes from three sources: already strong early performance in Q3, a robust pipeline of prospective national account opportunities, and a broad industry-wide recovery in temporary staffing demand. National accounts momentum comes from increased sales and account management capacity to pursue large-scale new projects from data center construction and reshoring, and a new digital recruiting app that allows HireQuest to pursue short-term large projects in geographies without existing branches, opening new addressable opportunities.

Q: Is reshoring of manufacturing providing a material tailwind for HireQuest, and are there specific geographic or industry pockets of particularly strong growth? / A: Reshoring is a meaningful tailwind that offsets manufacturing job losses from automation, resulting in net stable labor demand. Tariff uncertainty from 2025 has also settled into predictable planning, supporting client hiring. Growth is broadly distributed across markets, but Texas is an area of particularly strong performance; growth is driven by a broader return of companies to using temporary staffing after years of low demand, supported by labor supply contractions tied to 2025 immigration policy.