Executive Summary
InnSuites Hospitality Trust (IHT) reported QQ2 2025 results with modest year-over-year revenue growth but sizable deterioration in profitability and cash flow metrics, underscoring a high-leverage balance sheet and ongoing earnings volatility for this small hotel REIT. Revenue for the quarter was $1.84 million, up 6.93% from the prior-year period but down 19.77% versus the immediately preceding quarter, as occupancy and rate dynamics likely shifted through the backdrop of a slower near-term hotel cycle. Gross margin remained robust at about 41.3%, yet the company posted an operating loss of $285.96k and a net loss of $370.88k, translating to an EPS of -$0.0402. Negative EBITDA of $112.92k and an EBITDARatio of -0.0614 highlight ongoing cost and revenue discipline challenges despite a relatively healthy gross margin.
Liquidity and liquidity-adjusted cash flow pressures persisted. Net cash provided by operating activities was negative $44.60k, and free cash flow was similarly negative, driven in part by working capital changes and sizable fixed costs. Cash balance stood at $418.0k at quarter-end, with total debt of $12.21 million and net debt of $11.79 million, yielding a debt ratio of 0.81 and a debt-to-equity ratio of 2.22. Interest coverage remained negative, signaling near-term vulnerability to rising rates absent operational improvements or refinancing.
Management commentary is not captured in the provided transcript data, so quotes and call-specific guidance are not included here. Given the limited free cash flow, dividend payout activity, and high leverage, the near-term investment thesis remains cautious. The key questions for investors center on debt maturities and refinancing flexibility, occupancy/RERP recovery potential, operating efficiency improvements, and the ability to fund maintenance capex and potential growth initiatives without exacerbating leverage.
Key Performance Indicators
QoQ: -16.15% | YoY:-18.40%
QoQ: -260.26% | YoY:-95.81%
QoQ: -149.67% | YoY:-2 067.03%
QoQ: -135.09% | YoY:-2 014.29%
Key Insights
Revenue: $1,840,392 in QQ2 2025, up 6.93% YoY and down -19.77% QoQ. Gross Profit: $760,806; gross margin 41.33% (YoY margin -18.40%, QoQ margin -16.15%).
Operating Income: -$285,956; operating margin -15.54% (YoY change -95.81%, QoQ change -260.26%).
Net Income: -$370,883; net margin -20.15% (YoY change -2067.03%, QoQ change -149.67%).
Earnings Per Share (EPS): -$0.0402 (YoY change -2014.29%, QoQ change -135.09%).
EBITDA: -$112,918; EBITDA margin implied by available data (-6.13% to -6.14% r...
Financial Highlights
Revenue: $1,840,392 in QQ2 2025, up 6.93% YoY and down -19.77% QoQ. Gross Profit: $760,806; gross margin 41.33% (YoY margin -18.40%, QoQ margin -16.15%).
Operating Income: -$285,956; operating margin -15.54% (YoY change -95.81%, QoQ change -260.26%).
Net Income: -$370,883; net margin -20.15% (YoY change -2067.03%, QoQ change -149.67%).
Earnings Per Share (EPS): -$0.0402 (YoY change -2014.29%, QoQ change -135.09%).
EBITDA: -$112,918; EBITDA margin implied by available data (-6.13% to -6.14% range given EBITDARatio -0.0614).
Cash Flow: Operating cash flow (CFO) -$44,595; Free cash flow -$44,595. Net change in cash: -$19,310; cash at end of period: $418,033.
Balance Sheet: Total assets $15.09M; total liabilities $13.13M; total debt $12.21M; long-term debt $11.11M; cash and equivalents $418k; current ratio 1.22; debt ratio 0.81; debt/equity 2.22; interest coverage negative (-2.23).
Dividends and capex: Dividends paid -$90,237; capital expenditures (net) -$101,113; acquisitions net $35,000.
Valuation/Multiples: Price-to-book 2.65; price-to-sales 7.91; dividend yield 0.62%.
Strength and risk indicator snapshot: high gross margin suggests pricing power on a per-unit basis, but earnings are heavily burdened by fixed costs, debt service, and potential non-cash depreciation/amortization dynamics. Negative cash flow from operations and a high debt load constrain financial flexibility.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.84M |
6.93% |
-19.77% |
| Gross Profit |
760.81K |
-18.40% |
-16.15% |
| Operating Income |
-285.96K |
-95.81% |
-260.26% |
| Net Income |
-370.88K |
-2 067.03% |
-149.67% |
| EPS |
-0.04 |
-2 014.29% |
-135.09% |
Key Financial Ratios
operatingProfitMargin
-15.5%
operatingCashFlowPerShare
$-0
dividendPayoutRatio
-24.3%
Management Commentary
Note: The earnings transcript data were not provided in the input. As such, no management quotes or quote-by-theme highlights can be extracted from the call. If you can share the transcript or a link, I will extract themes (strategy, operations, market conditions) and quote-attribution accordingly.
Forward Guidance
There is no formal management guidance included in the provided data for QQ3 2025 or beyond. Given the leverage profile and near-term profitability pressures, the forward outlook hinges on (1) occupancy/ADR recovery to drive topline growth with a lower cost base, (2) refinancing options to extend maturities and reduce interest expense, and (3) ongoing cost discipline and potential asset-level improvements. Investor monitoring focus should include: occupancy and RevPAR trends across InnSuites properties, capital allocation decisions (dividend policy vs. deleveraging), progress on debt refinancing or debt mix optimization, and any announced strategic initiatives (asset dispositions, portfolio optimization, or branding/operational efficiencies). If management signals a clear debt-reduction plan and stabilizing occupancy, the investment case could shift toward a more constructive stance; absent that, risk factors remain elevated given negative profitability and cash flow metrics.