Investment Thesis
iQSTEL exhibits severe operational distress despite impressive revenue growth of 96% YoY, with negative profitability across all levels (gross margin 2.8%, operating margin -0.8%, net margin -2.5%). The company is burning cash with negative operating cash flow of -2.6M and negative free cash flow, indicating the growth is unprofitable and unsustainable without significant operational restructuring.
Strengths
- Strong revenue growth of 96% YoY demonstrates market demand or successful business expansion
- Conservative balance sheet with low debt-to-equity ratio of 0.15x providing financial flexibility
- Adequate liquidity with current ratio of 1.04x meeting minimum operational needs
Risks
- Severe profitability crisis: negative gross margin of 2.8% indicates fundamental pricing or cost structure problems
- Negative cash generation: operating cash flow of -2.6M with negative free cash flow of -2.7M unsustainable long-term
- Deteriorating shareholder value: ROE of -32.6% and ROA of -12.4% with worsening diluted EPS trend (-300% YoY)
- Ultra-thin gross margins suggest the business model or competitive positioning is fundamentally challenged
Key Metrics to Watch
- Gross margin trend and cost of goods sold reduction initiatives
- Operating cash flow return to positive territory and path to profitability
- Operating expenses as percentage of revenue and management's ability to achieve operational leverage
Financial Metrics
Revenue
232.7M
Net Income
-5.8M
EPS (Diluted)
$-1.97
Free Cash Flow
-2.7M
Total Assets
46.9M
Cash
2.3M
Profitability Ratios
Gross Margin
2.8%
Operating Margin
-0.8%
Net Margin
-2.5%
ROE
-32.6%
ROA
-12.4%
FCF Margin
-1.2%
Balance Sheet & Liquidity
Current Ratio
1.04x
Quick Ratio
1.04x
Debt/Equity
0.15x
Debt/Assets
61.9%
Interest Coverage
-0.52x
Long-term Debt
2.7M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-03-29T13:10:10.039492 |
Data as of: 2025-09-30 |
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