IQSTEL (NASDAQ: IQST) – A High-Margin AI-Telecom Play with Strong EBITDA Growth and Strategic Expansion

In the rapidly evolving landscape of global connectivity and artificial intelligence, IQSTEL (NASDAQ: IQST) stands out as a compelling case study of strategic reinvention. Once a traditional telecom operator, the company has pivoted to become a high-margin, AI-driven technology platform with a clear roadmap to $1 billion in revenue by 2027. This transformation, fueled by disciplined M&A, institutional interest, and margin-expanding fintech innovations, positions IQSTEL as a unique opportunity for investors seeking exposure to the intersection of telecom and AI.

EBITDA Growth and Margin Expansion: A Foundation for Value Creation

IQSTEL's recent financial performance underscores its ability to scale profitability. In Q1 2025, the company reported a 12% year-over-year revenue increase to $57.6 million, alongside a 40% jump in gross profit to $1.93 million. Gross margins expanded from 2.68% in Q1 2024 to 3.36%, reflecting operational efficiency gains. The acquisition of 51% of GlobeTopper in July 2025 further accelerates this trajectory. GlobeTopper, a fintech leader in B2B digital prepaid solutions, is projected to contribute $0.26 million in EBITDA for H2 2025, scaling to over $1 million in Adjusted EBITDA by FY-2026 through cross-selling synergies with IQSTEL's global telecom infrastructure.

The company's focus on high-margin AI and fintech products, such as IQ2Call.ai (an AI-powered call center platform) and its MasterCard Debit Card service, is critical to margin expansion. These offerings leverage IQSTEL's existing customer base of 600+ telecom operators, creating a flywheel effect of cross-selling and customer retention. With gross margins already improving by 25% YoY, the integration of GlobeTopper and AI-driven solutions could push margins closer to industry-leading levels.

Strategic M&A: Building a Diversified, Scalable Platform

IQSTEL's M&A strategy is a cornerstone of its growth narrative. Beyond the GlobeTopper acquisition, the company has executed 11 strategic acquisitions since 2018, including QXTel (which generated $85 million in revenue in 2024) and a planned investment of $1.2 million to accelerate GlobeTopper's expansion into Africa, Latin America, and Southeast Asia. These acquisitions are not merely revenue additive—they are designed to create operational synergies. For example, GlobeTopper's integration with IQSTEL's GlobalMoneyOne platform is expected to unlock $65 million in profitable revenue and $0.62 million in EBITDA for FY-2026.

The company's recent divestiture of its blockchain subsidiary, ItsBchain, to Accredited Solutions, Inc. (ASII) for $500,000 in shares further illustrates its focus on optimizing capital allocation. By shedding non-core assets and reinvesting in high-growth fintech and AI verticals, IQSTEL is refining its portfolio to align with its 80/20 revenue split (80% telecom, 20% tech/services) by 2027.

Institutional Interest and Valuation Realignment

Despite a recent 35.77% decline in its stock price from $13.39 to $8.60, IQSTEL has attracted growing institutional interest. Four institutional investors, including Geode Capital Management and IFP Advisors, now hold 30,000 shares (1.03% of outstanding shares). While institutional ownership has declined by 98.66% MoM, the company's Q2 2025 shareholder letter highlights emerging open-market purchases by funds, signaling confidence in its strategic direction.

The valuation gap remains significant. IQSTEL trades at an EV/EBITDA of 436.57 and 0.07x revenue, far below industry benchmarks of 1.0x revenue for comparable tech firms. However, this discount reflects its current stage of growth. With a $400 million annualized revenue run rate already achieved in Q3 2025 (five months ahead of schedule) and a $1 billion target by 2027, the company is primed for revaluation. A NASDAQ uplisting, expected to enhance visibility and attract institutional capital, could catalyze a shift in market perception.

AI and Fintech: The Next-Generation Growth Engines

IQSTEL's AI R&D unit, RealityBorder, is a key differentiator. Products like Airweb.ai and IQ2Call.ai are already generating traction in the $750 billion global call center market. Strategic partnerships with ONAR and Cycurion further validate its AI capabilities, with plans to develop next-generation cybersecurity solutions. In fintech, the company's remittance services, digital wallets, and no-SSN-required US bank accounts address unmet needs in financial inclusion, a $1.4 trillion market.

Investment Thesis and Risks

IQSTEL's transformation into a global AI-telecom leader is well underway, supported by:
1. Margin expansion through AI and fintech integration.
2. Strategic M&A to scale revenue and EBITDA.
3. Institutional interest and a valuation gap that could close as growth materializes.

However, risks include execution challenges in cross-border expansion and the integration of acquired assets. The company's debt reduction efforts (e.g., a $3.5 million reduction in July 2025) and strong balance sheet (Net Shareholder's Equity of $14.29 million) mitigate these concerns.

Conclusion: A High-Conviction Play for Long-Term Growth

IQSTEL is at an inflection point. Its disciplined M&A strategy, margin-expanding AI and fintech products, and institutional interest create a compelling case for investors willing to ride the wave of its transformation. While the current valuation appears undemanding, the company's trajectory toward $1 billion in revenue and a NASDAQ uplisting could unlock substantial upside. For those seeking exposure to the future of connectivity and AI-driven fintech, IQSTEL offers a rare combination of strategic clarity and execution momentum.