Quest Resource 2025 Q2 Earnings Net Loss Widens 30.2%

Quest Resource (QRHC) reported its fiscal 2025 Q2 earnings on August 11, 2025, delivering results that significantly underperformed both revenue and profit expectations.

The company's total revenue for the quarter decreased by 18.6% year-over-year to $59.54 million, a substantial decline from $73.14 million in the prior-year period. This downturn was driven by a contraction in the services segment, which brought in $56.31 million, while product sales and other segments combined for $3.23 million. The drop in revenue underscores a challenging market environment and declining demand across key offerings. Meanwhile, Quest Resource posted a widened net loss of $-1.97 million, or $-0.09 per share, representing a 30.2% increase in losses compared to the $-1.51 million, or $-0.07 per share loss in the same period of 2024. The deterioration in net income highlights ongoing operational inefficiencies and margin pressures.

The stock price of Quest Resource has continued to decline, with a 4.85% drop during the latest trading day and a 7.55% decline month-to-date. The performance has been further exacerbated by a poorly performing post-earnings trading strategy, as investors who bought the stock following the earnings release faced a -11.10% return over the following 30 days. This strategy underperformed the benchmark return of 84.92% and was characterized by a negative Sharpe ratio of -0.04, indicating a failure to generate risk-adjusted returns.

CEO Perry W. Moss emphasized ongoing operational improvements and a shift in company culture toward accountability and client-centric solutions. Despite challenges in the industrial sector, Moss expressed cautious optimism about growth in the food and retail segments. The company expects flat to slightly down gross profit in Q3 2025, with margin pressures partially offset by cost savings and new client ramp-ups. For the remainder of the year, cash flow improvements and continued debt reduction remain strategic priorities.

Revenue
Services accounted for the lion's share of revenue with $56.31 million, while product sales and other contributions totaled $3.23 million, bringing the company's total revenue to $59.54 million for the quarter. The significant decline in revenue compared to the prior-year period reflects ongoing challenges in securing contracts and maintaining pricing power.

Earnings/Net Income
Net losses widened considerably, with the company posting a $-1.97 million loss in Q2 2025, a 30.2% increase in losses compared to the $-1.51 million recorded in Q2 2024. On a per-share basis, the loss expanded to $-0.09 from $-0.07, representing a 28.6% deterioration. The widening net loss indicates that cost optimization initiatives and operational improvements have not yet translated into profitability.

Price Action
The stock of Quest Resource has continued to struggle, with the price declining 4.85% during the latest trading day and a 4.85% decline during the most recent full trading week. The monthly decline stands at 7.55%, reflecting investor pessimism about the company’s short-term outlook.

Post-Earnings Price Action Review
The post-earnings trading strategy, which involved buying QRHC when it reported higher-than-expected revenue and holding for 30 days, proved unsuccessful. Investors following this approach experienced a -11.10% return, significantly underperforming the benchmark return of 84.92%. The strategy’s poor performance was exacerbated by a maximum drawdown of 0.00% and a Sharpe ratio of -0.04, indicating a failure to manage risk effectively and generate positive returns.

CEO Commentary
Perry W. Moss, CEO of Quest Resource, highlighted the company’s ongoing operational improvements, emphasizing a culture shift toward accountability and client-centric solutions. He noted the benefits of workflow optimization and improved service execution, while acknowledging the challenges in the industrial sector. Moss expressed optimism about the food and retail segments and underscored the importance of expanding the company’s share of wallet with existing clients. He also highlighted new client additions, despite slower deal closures due to economic uncertainty, and maintained a cautiously optimistic tone regarding long-term improvements through cost optimization and operational excellence.

Guidance
The company expects sequential gross profit to be flat to slightly down in Q3 2025, with margin pressures partially offset by cost savings and new client ramp-ups. SG&A costs are expected to remain largely flat compared to Q2. Quest Resource also plans to continue its debt reduction efforts, having repaid $6.6 million year-to-date. For the full year, the company prioritizes cash flow improvements and debt reduction, while anticipating a seasonal slowdown in Q4 volumes that will partially offset gains.

Additional News
From August 11, 2025, to early September 2025, the most notable non-earnings related developments surrounding Quest Resource include:
1. M&A Activity: No significant M&A activity was reported in the 3-week window following the earnings announcement.
2. C-Level Changes: No executive-level changes were publicly disclosed within the period.
3. Debt Reduction Milestone: Quest Resource announced the repayment of $6.6 million in debt year-to-date, demonstrating a commitment to reducing leverage and improving financial flexibility.