[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company presents its unaudited condensed consolidated financial statements for the three and nine months ended March 31, 2025, showing significant revenue growth and a return to net income. Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $81,815 | $50,488 | | Total current assets | $228,384 | $169,087 | | Total assets | $417,235 | $368,546 | | Total current liabilities | $156,674 | $126,398 | | Total liabilities | $181,760 | $151,721 | | Total stockholders' equity | $235,475 | $216,825 | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $269,842 | $168,587 | $831,657 | $415,193 | | Gross profit | $27,862 | $14,311 | $83,021 | $28,813 | | Operating income (loss) | $4,912 | $(5,332) | $2,317 | $(26,626) | | Net income (loss) | $4,416 | $(7,048) | $1,501 | $(29,167) | | Diluted EPS | $0.08 | $(0.13) | $0.03 | $(0.53) | Condensed Consolidated Statements of Cash Flows (Nine Months Ended Mar 31, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $55,083 | $(4,517) | | Net cash used in investing activities | $(8,387) | $(19,086) | | Net cash used in financing activities | $(15,385) | $(10,485) | | Net increase (decrease) in cash | $31,328 | $(34,075) | | Cash at end of period | $81,831 | $39,617 | - The company operates as one reportable segment, as the chief operating decision maker reviews financial information on a consolidated basis[75](index=75&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strong performance, highlighting a significant 100% YoY revenue increase for the nine-month period, driven by a 147% surge in the financial services vertical, particularly the insurance business. [Management Overview](index=29&type=section&id=Management%20Overview) QuinStreet is a leader in performance marketplaces for financial and home services, focusing on sustainable revenue growth and long-term market opportunity. - The company's primary financial objective is to create sustainable revenue growth at target profitability levels, not to maximize short-term profits[83](index=83&type=chunk) Revenue Contribution by Vertical (Three and Nine Months Ended Mar 31, 2025) | Vertical | % of Net Revenue (Q3 2025) | % of Net Revenue (9M 2025) | | :--- | :--- | :--- | | Financial Services | 74% | 76% | | Home Services | 24% | 23% | | Other | 2% | 1% | - A single client in the financial services vertical accounted for **27% of net revenue** for the three months ended March 31, 2025. For the nine-month period, two clients accounted for **23% and 13% of net revenue**, respectively[86](index=86&type=chunk) - The auto insurance industry, a key part of the financial services vertical, began to recover in calendar 2024 due to rate increases and optimizations, leading to increased advertising spending and a return to net income for the company starting in the quarter ended March 31, 2025[88](index=88&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) For the third quarter of fiscal 2025, net revenue grew 60% year-over-year to $269.8 million, driven by a 78% increase in the Financial Services vertical. Net Revenue by Vertical (in thousands) | Vertical | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :--- | :--- | :--- | :--- | :--- | | Financial Services | $199,724 | $112,250 | $630,549 | $255,708 | | Home Services | $65,448 | $53,908 | $190,098 | $152,636 | | Total Net Revenue | $269,842 | $168,587 | $831,657 | $415,193 | - The increase in gross profit margin for both the three and nine-month periods was attributed to a decrease in personnel cost and depreciation as a percentage of net revenue, partially offset by a higher revenue mix from the financial services vertical, which has a higher media cost[116](index=116&type=chunk)[117](index=117&type=chunk) - General and administrative expenses for the nine months ended March 31, 2025, increased by **$17.3 million (75%) YoY**, primarily due to a **$12.4 million adjustment** to the fair value of contingent consideration related to an acquisition and a **$1.9 million increase** in stock-based compensation[124](index=124&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company's principal liquidity source was $81.8 million in cash and cash equivalents, with strong cash from operations. - As of March 31, 2025, principal sources of liquidity consisted of cash and cash equivalents of **$81.8 million**[127](index=127&type=chunk) Cash Flow Summary (Nine Months Ended Mar 31, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $55,083 | $(4,517) | | Net cash used in investing activities | $(8,387) | $(19,086) | | Net cash used in financing activities | $(15,385) | $(10,485) | - The **$55.1 million** in cash from operations for the nine months ended March 31, 2025, was primarily driven by net income of **$1.5 million** and non-cash adjustments of **$57.4 million** (including **$24.5 million stock compensation** and **$12.4 million change in fair value of contingent consideration**), offset by a **$3.8 million use of cash** for working capital[131](index=131&type=chunk)[132](index=132&type=chunk) - As of March 31, 2025, approximately **$16.8 million** remained available for stock repurchases under the authorized program[129](index=129&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure stems from interest rate fluctuations on its cash and cash equivalents, which management deems not material. - The company's main market risk is interest rate risk on its cash and cash equivalents, which are held in money market funds with maturities of 90 days or less[142](index=142&type=chunk)[143](index=143&type=chunk) - Management believes the exposure to interest rate changes is not material, and a hypothetical **1% decline** in interest rates would not have a material effect on the financial statements[143](index=143&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting. - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[144](index=144&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[145](index=145&type=chunk) [PART II. OTHER INFORMATION](index=43&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, none of which are expected to have a material adverse effect on its financial position. - The company is involved in legal proceedings from time to time in the ordinary course of business[147](index=147&type=chunk) - Management does not believe that any pending legal proceedings will have a material adverse effect on the company's financial position, results of operations, and cash flows[147](index=147&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) The company outlines significant risks including client concentration, reliance on third-party media, data privacy concerns, regulatory changes, and the need to adapt to new technologies like AI. - A substantial portion of revenue is generated from a limited number of clients. One client accounted for **27% of net revenue** for the three months ended March 31, 2025, and two clients accounted for **23% and 13%** for the nine-month period[156](index=156&type=chunk) - The company is exposed to significant data privacy and security risks, including cyber-attacks and ransomware. A failure to protect personal information could lead to significant expenses, regulatory action, and reputational damage[160](index=160&type=chunk)[161](index=161&type=chunk) - The business is highly dependent on internet search companies and third-party media partners. Changes in search engine algorithms or the loss of key media sources could significantly harm revenue[158](index=158&type=chunk)[166](index=166&type=chunk) - The business is subject to a complex and evolving regulatory environment, including the TCPA for telemarketing, state privacy laws (e.g., CCPA), and new FCC rules, which could increase costs and legal risks[173](index=173&type=chunk)[174](index=174&type=chunk)[178](index=178&type=chunk) - Failure to adapt to rapidly changing technologies, including the successful implementation and management of Artificial Intelligence (AIML), could render services obsolete and harm the company's competitive position[189](index=189&type=chunk)[190](index=190&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=84&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales or purchases of its equity securities during the quarter ended March 31, 2025. - There were no unregistered sales of equity securities during the period[266](index=266&type=chunk) - The company made no purchases of its own equity securities during the period[267](index=267&type=chunk) [Defaults Upon Senior Securities](index=84&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported that there were no defaults upon its senior securities during the reporting period. - None[268](index=268&type=chunk) [Mine Safety Disclosures](index=84&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business. - Not Applicable[269](index=269&type=chunk) [Other Information](index=84&type=section&id=Item%205.%20Other%20Information) The company disclosed that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the third quarter of fiscal 2025. - During the three months ended March 31, 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement[270](index=270&type=chunk) [Exhibits](index=85&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL financial data files. - The filing includes CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906[272](index=272&type=chunk) - The filing includes Inline XBRL Instance Document, Taxonomy Extension Schema, and Cover Page Interactive Data File[272](index=272&type=chunk)

Core Viewpoint - QuinStreet, Inc. reported its fiscal third quarter 2025 financial results during a conference call, highlighting key financial metrics and future outlook [1][2]. Financial Results - The company discussed both GAAP and non-GAAP financial measures, with a reconciliation provided in the earnings press release available on their Investor Relations website [4]. Conference Call Participants - The conference call included key participants such as the CEO Doug Valenti and CFO Greg Wong, along with analysts from various research firms [1][2]. Forward-Looking Statements - The discussion included forward-looking statements that involve risks and uncertainties, with a reminder that actual results may differ from projections [3].

Company Performance - QuinStreet reported quarterly earnings of $0.21 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.06 per share a year ago [1] - The company posted revenues of $269.84 million for the quarter ended March 2025, slightly missing the Zacks Consensus Estimate by 0.02%, and up from $168.59 million year-over-year [2] - QuinStreet has surpassed consensus revenue estimates three times over the last four quarters [2] Stock Movement and Outlook - QuinStreet shares have declined approximately 23.1% since the beginning of the year, compared to a 4.7% decline in the S&P 500 [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is $0.25 on revenues of $253.22 million, and for the current fiscal year, it is $0.88 on revenues of $1.08 billion [7] Industry Context - The Internet - Delivery Services industry, to which QuinStreet belongs, is currently ranked in the bottom 19% of over 250 Zacks industries, indicating potential challenges [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact QuinStreet's performance [5][6]

Financial Data and Key Metrics Changes - The company reported a revenue growth of 60% year over year, reaching $269.8 million in fiscal Q3 [5][9] - Adjusted EBITDA increased by 145%, amounting to $19.4 million [5][9] - Adjusted net income was $12.4 million, translating to $0.21 per share [9] Business Line Data and Key Metrics Changes - Financial services client vertical revenue grew 78% year over year, contributing $199.7 million, with auto insurance specifically up 165% [5][10] - Home services revenue increased by 21% year over year, achieving a new quarterly record of $65.4 million [5][10] - Other revenue accounted for $4.7 million [10] Market Data and Key Metrics Changes - The company ended the quarter with over $80 million in cash and no bank debt, indicating a strengthened financial position [6][10] - The outlook for full fiscal year revenue is projected between $1.065 billion and $1.105 billion, implying at least 18% growth year over year in fiscal Q4 [7][11] Company Strategy and Development Direction - The company aims to maintain double-digit year-over-year revenue and profit growth in both the short and long term [6][7] - Focus areas include expense and cash flow management, margin expansion, and maintaining a strong balance sheet [6][8] - The company is investing in new product, media, and client expansion initiatives to fuel future performance [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to perform well regardless of macroeconomic conditions, emphasizing strong market opportunities and competitive advantages [12] - There is a cautious outlook regarding tariffs and their potential impact on client spending, leading to a wider range in fiscal Q4 guidance [7][11] Other Important Information - The company is adapting its media strategy to focus on proprietary media, which has shown higher margins compared to third-party sources [20][22] - New product initiatives are expected to contribute positively to margins, particularly in the personal loans and home services sectors [24][70] Q&A Session Summary Question: Insights into conversations with auto carriers regarding profitability and tariffs - Management noted that auto carriers are currently in a stable spending mode, with no material reductions in spending observed due to tariffs [16][18] Question: Approach to margin expansion versus investments - The company is focusing on top-line leverage and new media initiatives to sustain margin improvements while continuing to invest in growth [19][20] Question: Impact of tariffs on home services - Management indicated that while some clients are concerned about tariffs, there have been no significant reductions in spending [31][32] Question: Confidence in growth for fiscal year 2026 - Management expressed confidence in maintaining double-digit growth, despite uncertainties related to tariffs [45] Question: Performance of auto insurance business sequentially - The auto insurance business saw a sequential decline due to an exceptionally strong prior quarter, but overall spending remains stable [50][66] Question: Trends across different auto insurance carriers - The company has seen a broader engagement with more clients spending significant budgets online, indicating a positive trend in the market [58][60]

[Financial Highlights and Outlook](index=1&type=section&id=Financial%20Highlights%20and%20Outlook) This section provides an overview of QuinStreet's strong Q3 FY2025 financial performance and its maintained full fiscal year 2025 outlook [Q3 FY2025 Performance Summary](index=1&type=section&id=Q3%20FY2025%20Performance%20Summary) QuinStreet achieved strong Q3 FY2025 results with 60% revenue growth and 145% adjusted EBITDA growth, driven by Financial Services and Home Services segments Q3 FY2025 Key Financial Metrics | Metric | Q3 FY2025 | YoY Change | | :--- | :--- | :--- | | Revenue | $269.8 million | +60% | | GAAP Income | $4.4 million | N/A (from loss) | | GAAP Diluted EPS | $0.08 | N/A (from loss) | | Adjusted Net Income | $12.4 million | +260% | | Adjusted Diluted EPS | $0.21 | +250% | | Adjusted EBITDA | $19.4 million | +145% | | Operating Cash Flow | $30.1 million | +632% | Q3 FY2025 Revenue Growth by Vertical (YoY) | Client Vertical | YoY Growth | | :--- | :--- | | **Total Revenue** | **+60%** | | Financial Services | +78% | | - Auto Insurance | +165% | | Home Services | +21% | - The company strengthened its balance sheet, ending the quarter with **$81.8 million** in cash and cash equivalents and no bank debt[5](index=5&type=chunk)[6](index=6&type=chunk)[9](index=9&type=chunk) [Fiscal Year 2025 Outlook](index=1&type=section&id=Fiscal%20Year%202025%20Outlook) The company maintains its FY2025 outlook, projecting revenue between $1.065 billion and $1.105 billion and adjusted EBITDA between $80 million and $85 million Full Fiscal Year 2025 Outlook | Metric | Outlook Range | | :--- | :--- | | Revenue | $1.065 billion - $1.105 billion | | Adjusted EBITDA | $80 million - $85 million | - The outlook implies significant Q4 year-over-year growth: - Revenue growth of at least **18%** - Adjusted EBITDA growth of at least **89%**[6](index=6&type=chunk) - The outlook range for Q4 is wider than usual to account for risks and potential volatility related to tariffs and client spending[6](index=6&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents the company's condensed consolidated balance sheets, statements of operations, and cash flows for the reported periods [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to $417.2 million, driven by higher cash and accounts receivable, with total equity rising to $235.5 million Balance Sheet Summary (in thousands) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | **$228,384** | **$169,087** | | Cash and cash equivalents | $81,815 | $50,488 | | Accounts receivable, net | $137,241 | $111,786 | | **Total Assets** | **$417,235** | **$368,546** | | **Total Liabilities** | **$181,760** | **$151,721** | | **Total Stockholders' Equity** | **$235,475** | **$216,825** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q3 FY2025, net revenue increased 60% to $269.8 million, resulting in an operating income of $4.9 million and net income of $4.4 million, reversing prior-year losses Statement of Operations Summary - Three Months Ended March 31 (in thousands, except per share data) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net revenue | $269,842 | $168,587 | | Gross profit | $27,862 | $14,311 | | Operating income (loss) | $4,912 | $(5,332) | | Net income (loss) | $4,416 | $(7,048) | | Diluted net income (loss) per share | $0.08 | $(0.13) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q3 FY2025, the company generated $30.1 million in operating cash flow, leading to a net increase in cash of $24.0 million and a quarter-end balance of $81.8 million Statement of Cash Flows Summary - Three Months Ended March 31 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $30,111 | $4,113 | | Net cash used in investing activities | $(3,013) | $(9,709) | | Net cash used in financing activities | $(3,110) | $(320) | | Net increase (decrease) in cash | $23,981 | $(5,918) | | Cash at end of period | $81,831 | $39,617 | [Non-GAAP Financial Measures & Reconciliations](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section explains the company's use of non-GAAP financial measures and provides reconciliations to their most directly comparable GAAP counterparts [Explanation of Non-GAAP Measures](index=3&type=section&id=Explanation%20of%20Non-GAAP%20Measures) The company uses non-GAAP measures like adjusted EBITDA, adjusted net income, and free cash flow to provide insights into core operational performance by excluding certain non-recurring items - The company provides non-GAAP measures like **adjusted EBITDA**, **adjusted net income**, and **free cash flow** as a complement to **GAAP results**[10](index=10&type=chunk) - These measures are used to analyze operating performance, for internal planning, and to evaluate operational strategies, as they exclude items not indicative of core activities like **stock-based compensation**, **amortization**, and certain **non-recurring charges**[11](index=11&type=chunk)[12](index=12&type=chunk)[13](index=13&type=chunk) - A **reconciliation** of non-GAAP measures to the most directly comparable GAAP measures is provided, though a forward-looking reconciliation for guidance is not provided due to high variability of certain items[14](index=14&type=chunk)[17](index=17&type=chunk) [Reconciliation of Net Income (Loss) to Adjusted Net Income](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20%28Loss%29%20to%20Adjusted%20Net%20Income) GAAP net income of $4.4 million for Q3 FY2025 was reconciled to an adjusted net income of $12.4 million, primarily by adding back non-cash expenses Reconciliation to Adjusted Net Income - Three Months Ended March 31 (in thousands) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | **Net income (loss)** | **$4,416** | **$(7,048)** | | Amortization of intangible assets | $2,305 | $2,678 | | Stock-based compensation | $7,073 | $6,734 | | Other adjustments | $1,455 | $2,307 | | Tax impact of non-GAAP items | $(2,894) | $(1,235) | | **Adjusted net income** | **$12,355** | **$3,436** | | **Adjusted diluted net income per share** | **$0.21** | **$0.06** | [Reconciliation of Net Income (Loss) to Adjusted EBITDA](index=11&type=section&id=Reconciliation%20of%20Net%20Income%20%28Loss%29%20to%20Adjusted%20EBITDA) Adjusted EBITDA for Q3 FY2025 significantly increased to $19.4 million, reconciled from GAAP net income by adding back non-cash and non-operating expenses Reconciliation to Adjusted EBITDA - Three Months Ended March 31 (in thousands) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | **Net income (loss)** | **$4,416** | **$(7,048)** | | Interest and other expense, net | $19 | $2,272 | | (Benefit from) provision for income taxes | $477 | $(556) | | Depreciation and amortization | $5,969 | $6,225 | | Stock-based compensation | $7,073 | $6,734 | | Other adjustments | $1,455 | $307 | | **Adjusted EBITDA** | **$19,409** | **$7,934** | [Reconciliation to Free Cash Flow](index=12&type=section&id=Reconciliation%20to%20Free%20Cash%20Flow) The company generated $27.1 million in free cash flow for Q3 FY2025, a significant improvement, derived from $30.1 million in operating cash flow less capital expenditures and software development costs Reconciliation to Free Cash Flow - Three Months Ended March 31 (in thousands) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $30,111 | $4,113 | | Capital expenditures | $(639) | $(1,211) | | Internal software development costs | $(2,374) | $(2,488) | | **Free cash flow** | **$27,098** | **$414** | [Revenue Details](index=13&type=section&id=Revenue%20Details) This section provides a detailed disaggregation of the company's net revenue by client vertical [Disaggregation of Revenue](index=13&type=section&id=Disaggregation%20of%20Revenue) Total net revenue for Q3 FY2025 was $269.8 million, primarily driven by strong growth in the Financial Services and Home Services segments Disaggregation of Revenue - Three Months Ended March 31 (in thousands) | Segment | 2025 | 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Financial Services | $199,724 | $112,250 | +78% | | Home Services | $65,448 | $53,908 | +21% | | Other Revenue | $4,670 | $2,429 | +92% | | **Total net revenue** | **$269,842** | **$168,587** | **+60%** |

Company: QuinStreet (QNST) - QuinStreet shares increased by 8.6% to close at $15.97, following a broader market rally after President Trump's announcement regarding tariffs [1] - The stock had previously experienced a 15.3% loss over the past four weeks [1] - The upcoming quarterly earnings are expected to be $0.21 per share, reflecting a year-over-year increase of 250%, with revenues projected at $269.9 million, up 60.1% from the previous year [2] - The consensus EPS estimate for QuinStreet has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without earnings estimate revisions [3] Industry: Internet - Delivery Services - QuinStreet is part of the Zacks Internet - Delivery Services industry, which includes other companies like MakeMyTrip [3] - MakeMyTrip's consensus EPS estimate is $0.42, showing a year-over-year change of 10.5%, but it currently holds a Zacks Rank of 4 (Sell) [4]

Revenue Composition - Financial services client vertical represented 78% and 77% of net revenue for the three and six months ended December 31, 2024, compared to 58% for both periods in 2023[84]. - Home services client vertical accounted for 21% and 22% of net revenue for the three and six months ended December 31, 2024, down from 40% for both periods in 2023[84]. - Two clients in the financial services vertical contributed 23% and 18% of net revenue for the three months ended December 31, 2024[85]. - Revenue from the insurance business increased by $146.3 million, or 492%, for the three months ended December 31, 2024, due to higher demand from carrier clients[112]. Financial Performance - Net revenue increased by $159.9 million, or 130%, for the three months ended December 31, 2024, compared to the same period in 2023, driven by a 208% increase in revenue from the financial services client vertical[112]. - Gross profit for the three months ended December 31, 2024, was $26.8 million, representing a 290% increase compared to $6.9 million in the same period of 2023[111]. - Gross profit margin improved to 9% for the three months ended December 31, 2024, compared to 6% for the same period in 2023[115]. - Cash provided by operating activities for the six months ended December 31, 2024, was $25.0 million, compared to cash used of $8.6 million for the same period in 2023[130]. - The net loss for the six months ended December 31, 2024, was $2.9 million, with non-cash adjustments totaling $42.8 million[131]. Costs and Expenses - Cost of revenue increased by $140.0 million, or 121%, for the three months ended December 31, 2024, primarily due to increased media and marketing costs[115]. - Operating expenses for the three months ended December 31, 2024, totaled $28.1 million, an increase of 54% compared to $18.2 million in the same period of 2023[117]. - General and administrative expenses increased by $6.7 million, or 88%, for the three months ended December 31, 2024, primarily due to an adjustment to the fair value of contingent consideration[122]. Strategic Initiatives - The company completed strategic acquisitions, including BestCompany and AquaVida in fiscal year 2024, to enhance its market position[89]. - The business model relies on delivering qualified inquiries such as clicks, leads, calls, applications, or customers, which are essential for generating revenue[83]. - The company aims for sustainable revenue growth while maintaining target profitability levels, rather than maximizing short-term profits[82]. Market and Regulatory Environment - Revenue from the auto insurance industry began to increase in calendar 2024 due to rate increases and product optimizations, positively impacting overall revenue[87]. - Seasonal fluctuations affect revenue, particularly with lower media availability during the holiday period and increased demand for home services in spring and summer[93][94]. - The company faces challenges in acquiring high-quality media due to increased competition and changes in search engine algorithms, prompting strategic partnerships and acquisitions[86][90]. - Regulatory changes, such as amendments to the Telephone Consumer Protection Act, may impact revenue and profitability due to their effects on client operations[97]. Cash and Financing - Cash and cash equivalents as of December 31, 2024, were $57.8 million, with expectations of generating additional cash from future operations[126]. - The company has approximately $16.8 million remaining available for stock repurchases as of December 31, 2024, from a previously authorized program[128]. - Cash used in investing activities was $5.4 million for the six months ended December 31, 2024, down from $9.4 million in the same period of 2023[133]. - Cash used in financing activities was $12.3 million for the six months ended December 31, 2024, compared to $10.2 million for the same period in 2023[135]. - Cash used in financing activities in 2024 included $8.5 million for withholding taxes related to restricted stock releases[136]. Accounts and Obligations - The increase in accounts receivable for the six months ended December 31, 2024, was $40.4 million, attributed to higher revenue levels[131]. - The company did not have any material off-balance sheet arrangements during the periods presented[138]. - There have been no material changes in the company's contractual obligations as of June 30, 2024[140]. - The company is primarily exposed to interest rate risk, but believes it does not have material exposure due to the short-term nature of its investments[143].

Financial Data and Key Metrics Changes - QuinStreet reported record revenue for fiscal Q2 2025, with total revenue growing 130% year-over-year to $282.6 million [11] - Adjusted net income was $11.9 million or $0.20 per share, and adjusted EBITDA was $19.4 million [12] - The company expects fiscal Q3 revenue to be between $265 million and $275 million and adjusted EBITDA to be between $19.5 million and $20 million [8][14] Business Line Data and Key Metrics Changes - The Financial Services client vertical represented 78% of Q2 revenue, growing 208% year-over-year to $219.9 million, primarily driven by auto insurance, which grew 615% year-over-year [12] - The Home Services client vertical represented 21% of Q2 revenue, growing 21% year-over-year to $59.6 million [12] - Other revenue accounted for $3.1 million of Q2 revenue [12] Market Data and Key Metrics Changes - The company noted strong demand in auto insurance and continued growth in non-insurance client verticals, with overall non-insurance businesses growing 15% year-over-year [7][68] - QuinStreet closed the quarter with $58 million in cash and equivalents and no bank debt [13] Company Strategy and Development Direction - QuinStreet is focusing on optimizing media efficiencies and client results in auto insurance while pursuing growth initiatives in other verticals [7][15] - The company plans to expand its exposure to agent-driven carriers and business insurance, which represent significant addressable markets [25][80] - Management anticipates reaching a target adjusted EBITDA margin of 10% through ongoing productivity improvements and new higher-margin opportunities [16][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining momentum in auto insurance demand and highlighted the potential for strong double-digit growth [24] - The company views the recent TCPA regulatory changes as a short-term disruption but believes it will lead to long-term improvements in the channel [42] - Management indicated that the volatility seen in the insurance market over the past couple of years is unlikely to continue, expecting a return to a more stable growth trajectory [89] Other Important Information - QuinStreet raised its full fiscal year 2025 revenue outlook to approximately $1.085 billion and adjusted EBITDA to about $82.5 million [9][14] - The company is optimistic about the impact of new regulations on consumer contact rates, believing they will be less disruptive than previously anticipated [10] Q&A Session Summary Question: About maintaining momentum in auto insurance - Management noted a record number of carriers spending significantly with QuinStreet and highlighted the potential for further growth as clients optimize their budgets [23] Question: On overall EBITDA margin expectations - Management acknowledged that margins were impacted by a heavy mix of auto insurance but expects improvements as optimization efforts continue [31][35] Question: Regarding TCPA compliance and its impact - Management indicated that preparations for TCPA compliance provided valuable insights that will enhance operational efficiency moving forward [40] Question: On supply constraints in the media market - Management observed that media companies are shifting focus back to auto insurance, which is expected to alleviate previous supply constraints [48][50] Question: About growth in home services - Management expects better performance in home services in the latter half of the fiscal year due to the lack of TCPA implementation impact [54] Question: On the contribution from top carriers in auto insurance - Management highlighted increased engagement from significant carriers in digital marketing, indicating a dramatic improvement in their capabilities [60] Question: On entering the business insurance market - Management projected that margins in business insurance could be similar to current averages as the market matures [80][82]

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 ...