Core Viewpoint - QuinStreet (QNST) reported quarterly earnings of $0.20 per share, missing the Zacks Consensus Estimate of $0.21 per share, but showing improvement from a loss of $0.04 per share a year ago [1][2] Financial Performance - The company posted revenues of $282.6 million for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 18.38% and significantly up from $122.68 million year-over-year [2] - Over the last four quarters, QuinStreet has surpassed consensus revenue estimates four times [2] Stock Performance - QuinStreet shares have increased approximately 8.4% since the beginning of the year, outperforming the S&P 500's gain of 3.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.25 on revenues of $249.03 million, and for the current fiscal year, it is $0.88 on revenues of $1 billion [7] - The estimate revisions trend for QuinStreet is mixed, which may change following the recent earnings report [6] Industry Context - The Internet - Delivery Services industry, to which QuinStreet belongs, is currently ranked in the top 21% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

QuinStreet (QNST) Q2 2025 Earnings Call February 06, 2025 05:00 PM ET Company Participants Robert Amparo - Senior Director-Investor Relations and FinanceDouglas Valenti - CEOGregory Wong - CFOJohn Campbell - Managing DirectorPatrick Sholl - Vice President Conference Call Participants Jason Kreyer - Senior Research AnalystZach Cummins - Senior Research AnalystChristopher Sakai - AnalystEric Martinuzzi - Senior Research Analyst Operator Good day, and welcome to Queen Street's Fiscal Second Quarter twenty twen ...

Revenue Growth - Record revenue of $282.6 million for Q2 FY2025, up 130% year-over-year[4] - Auto insurance revenue increased by 615% year-over-year, contributing significantly to overall growth[9] - Non-insurance revenue grew by 15% year-over-year[9] - Net revenue for the three months ended December 31, 2024, was $282.6 million, a significant increase from $122.7 million in the same period of 2023, representing a growth of 130%[24] - Financial Services net revenue for Q4 2024 reached $219.934 million, a significant increase from $71.334 million in Q4 2023, representing a growth of 208%[34] - Home Services net revenue for Q4 2024 was $59.575 million, up from $49.333 million in Q4 2023, reflecting a growth of 21%[34] - Financial Services net revenue for the first half of 2024 was $430.825 million, compared to $143.458 million in the same period of 2023, marking a growth of 200%[34] - Home Services net revenue for the first half of 2024 reached $124.650 million, up from $98.728 million in the first half of 2023, showing a growth of 26%[34] - Total net revenue for the first half of 2024 was $561.815 million, a substantial increase from $246.606 million in the first half of 2023, representing a growth of 128%[34] Financial Performance - Adjusted net income of $11.9 million, or $0.20 per diluted share[4] - Adjusted EBITDA for Q2 FY2025 was $19.4 million[5] - Fiscal Q3 revenue guidance set between $265 million and $275 million[5] - Full fiscal year 2025 revenue outlook raised to between $1.065 billion and $1.105 billion[5] - Adjusted EBITDA guidance for FY2025 increased to between $80 million and $85 million[5] - Gross profit for the six months ended December 31, 2024, reached $55.2 million, compared to $14.5 million in the prior year, indicating an increase of 280%[24] - The net loss for the three months ended December 31, 2024, was $1.5 million, a reduction from a net loss of $11.6 million in the same period of 2023, showing an improvement of 87%[24] - Adjusted net income for the three months ended December 31, 2024, was $11.9 million, compared to a loss of $2.3 million in the same period of 2023[28] - Free cash flow for the three months ended December 31, 2024, was $35.9 million, compared to a negative free cash flow of $7.9 million in the same period of 2023[32] Assets and Equity - Total assets as of December 31, 2024, were $409.6 million, up from $368.5 million as of June 30, 2024[22] - Total stockholders' equity increased to $224.3 million from $216.8 million[22] - Cash, cash equivalents, and restricted cash at the end of the period totaled $57.9 million, up from $45.5 million at the end of December 2023[26] Operating Expenses - Operating expenses for the three months ended December 31, 2024, were $28.1 million, compared to $18.3 million in the same period of 2023, reflecting an increase of 53%[24] - The company reported stock-based compensation of $9.1 million for the three months ended December 31, 2024, compared to $6.1 million in the same period of 2023[28] Share Information - The weighted-average shares used in computing net loss per share for the three months ended December 31, 2024, were 56.3 million, compared to 54.8 million in the same period of 2023[24] Contingent Consideration - The company recognized a contingent consideration adjustment of $5 million for the three months ended December 31, 2024, contributing to the adjusted EBITDA of $19.4 million for the same period[30]

Core Viewpoint - The market anticipates QuinStreet (QNST) to report a significant year-over-year increase in earnings and revenues for the quarter ended December 2024, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - QuinStreet is expected to post quarterly earnings of $0.21 per share, reflecting a year-over-year increase of +625% [3]. - Revenues are projected to reach $238.73 million, which is a 94.6% increase compared to the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating a stable outlook from covering analysts [4]. - The Most Accurate Estimate for QuinStreet is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -10.94%, suggesting a bearish sentiment among analysts [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict the likelihood of actual earnings deviating from consensus estimates, with positive readings being more reliable [7][8]. - QuinStreet's current Zacks Rank is 3, which complicates the prediction of an earnings beat [11]. Historical Performance - In the last reported quarter, QuinStreet exceeded the expected earnings of $0.18 per share by delivering $0.22, resulting in a surprise of +22.22% [12]. - Over the past four quarters, QuinStreet has beaten consensus EPS estimates two times [13]. Conclusion - While QuinStreet does not appear to be a strong candidate for an earnings beat, investors should consider other factors influencing stock performance ahead of the earnings release [16].

Financial Data and Key Metrics - Fiscal Q1 2025 revenue grew 125% YoY and 41% sequentially, driven by auto insurance carrier budgets and expanded client, media, and product footprints [6] - Adjusted EBITDA jumped to over $20 million in Q1 [6] - Auto Insurance revenue grew 664% YoY to a record level, while Financial Services revenue grew 192% and Home Services revenue grew 32% [7] - Total revenue for Q1 was $279.2 million, with adjusted net income of $12.5 million or $0.22 per share, and adjusted EBITDA of $20.3 million [13] - Financial Services represented 76% of Q1 revenue, growing 192% YoY to $210.9 million, driven by Auto Insurance [14] - Home Services represented 23% of Q1 revenue, growing 32% YoY to a record $65.1 million [14] Business Line Performance - Auto Insurance revenue reached a record level, with a 664% YoY growth, driven by increased carrier budgets and media optimization [7][14] - Non-insurance Financial Services, including personal loans, credit cards, and banking, grew 18% combined [14] - Home Services revenue grew 32% YoY, reflecting strong market opportunities and progress on growth initiatives [14][32] Market Performance - The company expects strong continued growth in Auto Insurance, with carriers reporting good results and increased demand [7] - The Home Services market is expected to grow at strong double-digit rates over the long term, despite potential short-term impacts from TCPA rule changes [32] Strategic Direction and Industry Competition - The company is focused on increasing and optimizing media supply to meet surging carrier demand, which should further expand margins [7] - FCC changes to TCPA rules are expected to accelerate industry rationalization and consolidation, benefiting the company disproportionately [10] - The company is expanding its media supply through both partnerships and owned-and-operated properties, with a focus on improving margins [27][29] Management Commentary on Operating Environment and Future Outlook - The company raised its full fiscal year 2025 outlook, expecting revenue of about $1 billion and adjusted EBITDA between $75 million to $80 million [8][16] - Management remains bullish on the Auto Insurance market, with no signs of a slowdown from carriers [20] - The company is maintaining a conservative posture regarding FCC rule changes and potential election-related disruptions [23][24] Other Important Information - The company closed Q1 with $25 million in cash and equivalents, with a normalized cash balance of approximately $47 million after receiving $22 million in payments post-quarter end [15] - Seasonality is expected to impact Q2, with a typical 10% sequential decline in revenue due to reduced client staffing and budgets during the holiday period [15] Q&A Session Summary Question: Insurance growth and seasonality - Insurance revenue grew over 80% sequentially, with a typical 10% sequential decline expected in Q2 due to seasonality [19] - The company has factored in seasonality and remains positive about carrier demand [20] Question: Full-year guidance and back-half expectations - The company expects a more modest outlook for Home Services in the back half due to TCPA rule changes, but remains optimistic about long-term growth [21][22] - The company is maintaining a conservative posture regarding FCC rule changes and election-related disruptions [23][24] Question: Insurance market dynamics - The insurance market is seeing broader client participation and increased scale, with carriers becoming more sophisticated in their digital and performance strategies [26] Question: Media supply and margin opportunities - The company is increasing media supply through partnerships and owned-and-operated properties, with a focus on improving margins [27][29] Question: Home Services growth and TCPA impact - Home Services growth is driven by market opportunities and progress on initiatives, with TCPA expected to have a direct impact but higher conversion rates offsetting some effects [31][32] Question: Free cash flow and collections - Free cash flow was impacted by timing of payments, with collections expected to normalize in Q2 [33] Question: Carrier spend and LTV analysis - Carriers are becoming more sophisticated in analyzing spend versus lifetime value (LTV), with Progressive representing 20% of Q1 revenue [35][36] Question: CapEx and free cash flow estimates - CapEx expectations remain unchanged, with free cash flow estimates based on adjusted EBITDA minus CapEx [37] Question: Auto Insurance growth and scaling - The company expects strong double-digit growth in Auto Insurance, with no significant headwinds to scaling [39] Question: Election impact on Auto Insurance - The company is maintaining a conservative posture regarding potential election-related disruptions [40] Question: State insurance rate regulations - California remains a challenge for insurance rate adjustments, with no significant changes expected post-election [42][43] Question: Interest rate impact on verticals - Lower interest rates are expected to benefit credit cards and personal loans, while having a neutral impact on Home Services and insurance [44][45][46]

Core Insights - QuinStreet (QNST) reported quarterly earnings of $0.22 per share, exceeding the Zacks Consensus Estimate of $0.18 per share, and showing a significant improvement from a loss of $0.03 per share a year ago, resulting in an earnings surprise of 22.22% [1] - The company generated revenues of $279.22 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 25.18%, and showing a substantial increase from $123.92 million in the same quarter last year [2] - QuinStreet's stock has increased approximately 55.3% year-to-date, outperforming the S&P 500's gain of 20.1% [3] Earnings Outlook - The future performance of QuinStreet's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook, which includes current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is $0.10 on revenues of $179.31 million, and for the current fiscal year, it is $0.61 on revenues of $832.39 million [7] Industry Context - The Internet - Delivery Services industry, to which QuinStreet belongs, is currently ranked in the top 20% of over 250 Zacks industries, indicating a favorable outlook for the sector [8]

Revenue Growth - Record quarterly revenue of $279 million, up 125% YoY[1] - Auto insurance quarterly revenue increased by 664% YoY[1] - Home services quarterly revenue grew by 32% YoY[1] - Financial Services revenue grew 192% YoY in the quarter[3] - Financial Services revenue increased to $210,891 thousand from $72,125 thousand, a 192.4% growth[24] - Home Services revenue grew to $65,075 thousand from $49,394 thousand, a 31.7% increase[24] - Total net revenue rose to $279,219 thousand from $123,923 thousand, a 125.3% year-over-year growth[24] Adjusted EBITDA and Net Income - Adjusted EBITDA for the fiscal first quarter was $20.3 million[2] - Adjusted EBITDA improved significantly to $20,317 thousand from $984 thousand in the previous year[22] - Adjusted net income for the fiscal first quarter was $12.5 million, or $0.22 per diluted share[2] - Expected Q2 revenue between $235 and $245 million, and adjusted EBITDA between $17.5 and $18.5 million[4] - Full fiscal year adjusted EBITDA expected to be between $75 million and $80 million[5] Financial Outlook - Expected Q2 revenue between $235 and $245 million, and adjusted EBITDA between $17.5 and $18.5 million[4] - Raised full fiscal year 2025 revenue outlook to between $975 million and $1.025 billion[5] - Full fiscal year adjusted EBITDA expected to be between $75 million and $80 million[5] Expenses - Cost of revenue increased to $2,875 thousand from $2,052 thousand, reflecting a 40.1% year-over-year growth[19] - Product development expenses rose to $1,046 thousand from $773 thousand, a 35.3% increase[19] - Sales and marketing expenses grew to $1,095 thousand from $640 thousand, up 71.1%[19] - General and administrative expenses surged to $3,391 thousand from $1,810 thousand, an 87.3% increase[19] Cash Flow and GAAP Loss - Net cash used in operating activities was $(13,706) thousand, compared to $(4,973) thousand in the prior year[20] - Normalized free cash flow improved to $18,065 thousand from $(4,971) thousand in the prior year[23] - GAAP loss for the fiscal first quarter was $1.4 million, or $(0.02) per diluted share[2]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Group 1: Company Overview - QuinStreet (QNST) currently holds a Momentum Style Score of A, indicating strong momentum potential [3] - The company has a Zacks Rank of 2 (Buy), suggesting it is positioned for outperformance in the market [4] Group 2: Price Performance - QNST shares have increased by 3.06% over the past week, matching the performance of the Zacks Internet - Delivery Services industry [6] - Over the past month, QNST's price has risen by 11.44%, significantly outperforming the industry's 4.13% [6] - In the last quarter, QNST shares have surged by 23.11%, and over the past year, they have gained 117.38%, compared to the S&P 500's increases of 4.07% and 28.21% respectively [7] Group 3: Trading Volume - The average 20-day trading volume for QNST is 344,611 shares, which serves as a bullish indicator when combined with rising stock prices [8] Group 4: Earnings Outlook - In the past two months, 3 earnings estimates for QNST have been revised upwards, while only 1 has been revised downwards, leading to an increase in the consensus estimate from $0.60 to $0.61 [10] - For the next fiscal year, there have been 3 upward revisions with no downward changes, indicating positive earnings momentum [10]

Financial Data and Key Metrics - Total company revenue grew 52% year-over-year to a record $198 million in Q4 [4] - Adjusted EBITDA jumped about 500% year-over-year in Q4 to over $11 million [4] - The company ended the year with $50.5 million in cash and no bank debt [8] - For Q1, revenue is expected to be between $220 million and $230 million, representing 82% year-over-year growth at the midpoint [6] - Adjusted EBITDA for Q1 is expected to be $14 million to $16 million, growth of over 1400% at the midpoint [6] - Full fiscal year 2025 revenue is expected to be between $800 million and $850 million, growth of 34% year-over-year at the midpoint [6] - Full fiscal year 2025 adjusted EBITDA is expected to be $50 million to $60 million, growth of 170% year-over-year at the midpoint [6] Business Line Data and Key Metrics - Auto Insurance revenue grew over 200% year-over-year in Q4 [4] - Non-insurance Financial Services client verticals grew 13% year-over-year in Q4 [4] - Home Services grew 12% year-over-year in Q4 [4] - Financial Services client vertical represented 69% of Q4 revenue and grew 82% year-over-year to $136.9 million [8] - Home Services client vertical represented 30% of Q4 revenue and grew 12% year-over-year to $59.3 million [8] - For full fiscal year 2024, Financial Services client vertical represented 64% of revenue and grew 3% year-over-year to $392.6 million [8] - Home Services client vertical represented 35% of full fiscal year revenue and grew 10% year-over-year to $211.9 million [8] Market Data and Key Metrics - Auto Insurance carriers continue to report attractive financial results and are still ramping their spend, with demand being broad-based [4][7] - The shift to digital performance marketing has returned as the dominant theme driving long-term channel and market growth in Auto Insurance [5][7] - The company is seeing strength across both direct carriers and agent-driven carriers in Auto Insurance [23] - The independent agency channel in Auto Insurance is still lagging, as carriers are just starting to get products back into the market [24] Company Strategy and Industry Competition - The company expects strong revenue growth and margin expansion in fiscal Q1 and full fiscal year 2025, driven by the re-ramp of Auto Insurance and continued momentum in non-insurance client verticals [5][9] - The company is focused on optimizing media supply to align with the surge in demand in Auto Insurance [5][35] - The company believes there are opportunities to scale revenue and expand margins further than current guidance suggests [6][34] - The company is well-positioned to benefit from the shift to digital performance marketing in Auto Insurance, as most carriers are still below where they should be in terms of online spend [48][49] Management Commentary on Operating Environment and Future Outlook - Management expects all businesses to grow at strong double-digit rates in fiscal 2025, with no deceleration anticipated [13][14] - The company is confident in continued progress and performance across all client verticals, with Auto Insurance expected to remain very strong [5][14] - Management believes the company is well-positioned for any economic scenario, including a potential recession, as it has grown through past recessions [39][43] - The company expects consumer shopping in Auto Insurance to remain high due to inflation and rate increases, which should be a tailwind for the industry [51][52] Other Important Information - The company is preparing for TCPA one-to-one consent regulations that will impact 20% to 30% of its business, mainly in Home Services, but believes the impact is well-accounted for in its outlook [25][26][28] - The company sees the TCPA regulations as a long-term positive for the channel and for QuinStreet, as it will clean up the market and make leads more effective and valuable [29][30] - The company is always looking for M&A opportunities, particularly in the small to midsized players on the media client or technology side of the industry, but nothing is imminent [37][38] Q&A Summary John Campbell (Stephens) - Asked about potential deceleration in Home Services or non-auto businesses, to which management responded that no deceleration is expected and all businesses are expected to grow at strong double-digit rates [12][13] - Asked about industry consolidation and margin opportunities, with management noting that 10% margins are still the target and that consolidation is a complicated question with potential barriers [15][16][17][19] Zach Cummins (B Riley Securities) - Asked about strength among Auto Insurance carriers, with management noting broad-based demand across carriers and products, but that no carrier is back to pre-COVID peak levels [22][23][24] - Asked about TCPA regulations and their impact on Home Services, with management detailing preparations and the expected long-term benefits for the channel and QuinStreet [25][26][27][28][29][30] Jason Kreyer (Craig-Hallum) - Asked about opportunities to scale revenue and margins faster, with management noting potential upside based on current run rates and initiatives [33][34] - Asked about optimizing media supply, with management detailing efforts to right-price media and segment/match media to carriers [35][36] James Goss (Barrington Research) - Asked about M&A opportunities, with management noting nothing imminent but that the company is always looking and is a natural consolidator [37][38] - Asked about the impact of potential interest rate cuts, with management detailing expected dynamics across various businesses [39][40][41][42] - Asked about exposure to states avoiding new Auto Insurance policies, with management noting no material exposure [44][45] - Asked about new verticals, with management detailing plans to add new trades in Home Services, segments in banking, and areas in insurance [46] Chris Sakai (Singular Research) - Asked about the growth potential of Auto Insurance, with management noting the massive market opportunity as spend shifts online and detailing expansion into commercial insurance and other areas [48][49][50] - Asked about the impact of fires and storms on insurance revenue, with management noting record shopping levels due to inflation and rate increases, but limited carrier willingness to cover California [51][52]

QuinStreet (QNST) came out with quarterly earnings of $0.11 per share, in line with the Zacks Consensus Estimate. This compares to loss of $0.01 per share a year ago. These figures are adjusted for non-recurring items. A quarter ago, it was expected that this online marketing services company would post earnings of $0.07 per share when it actually produced earnings of $0.06, delivering a surprise of -14.29%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. QuinStreet ...