Is iQSTEL (NASDAQ:IQST) Using Too Much Debt?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that iQSTEL Inc. (NASDAQ:IQST) does have debt on its balance sheet. But is this debt a concern to shareholders?

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When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. If things get really bad, the lenders can take control of the business. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is iQSTEL's Net Debt?

You can click the graphic below for the historical numbers, but it shows that iQSTEL had US$4.15m of debt in September 2025, down from US$7.73m, one year before. On the flip side, it has US$2.26m in cash leading to net debt of about US$1.89m.

How Strong Is iQSTEL's Balance Sheet?

According to the last reported balance sheet, iQSTEL had liabilities of US$28.7m due within 12 months, and liabilities of US$290.2k due beyond 12 months. Offsetting these obligations, it had cash of US$2.26m as well as receivables valued at US$24.9m due within 12 months. So it has liabilities totalling US$1.84m more than its cash and near-term receivables, combined.

Of course, iQSTEL has a market capitalization of US$16.5m, so these liabilities are probably manageable. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine iQSTEL's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Check out our latest analysis for iQSTEL

In the last year iQSTEL wasn't profitable at an EBIT level, but managed to grow its revenue by 43%, to US$332m. With any luck the company will be able to grow its way to profitability.

Caveat Emptor

While we can certainly appreciate iQSTEL's revenue growth, its earnings before interest and tax (EBIT) loss is not ideal. Indeed, it lost a very considerable US$2.0m at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through US$3.1m of cash over the last year. So suffice it to say we consider the stock very risky. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For example, we've discovered 4 warning signs for iQSTEL (2 are concerning!) that you should be aware of before investing here.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.