QuinStreet(QNST) - 2024 Q4 - Annual Results

Financial Highlights & Outlook QuinStreet reported strong fiscal year 2024 results, driven by significant growth in key segments, and provided an optimistic outlook for fiscal year 2025 with projected revenue and Adjusted EBITDA increases Fiscal Q4 & Full Year 2024 Performance QuinStreet reported record quarterly revenue of $198.3 million for Q4 FY2024, a 52% year-over-year increase, with full fiscal year 2024 revenue growing 6% to $613.5 million, showing significant improvement in Adjusted EBITDA despite GAAP net losses Q4 FY2024 Financial Highlights | Metric | Q4 FY2024 | YoY Change | | :--- | :--- | :--- | | Revenue | $198.3 million | +52% | | GAAP Net Loss | $(2.2) million | N/A | | GAAP EPS (diluted) | $(0.04) | N/A | | Adjusted Net Income | $6.5 million | N/A | | Adjusted EPS (diluted) | $0.11 | N/A | | Adjusted EBITDA | $11.0 million | ~+500% | Full Fiscal Year 2024 Financial Highlights | Metric | FY2024 | YoY Change | | :--- | :--- | :--- | | Revenue | $613.5 million | +6% | | GAAP Net Loss | $(31.3) million | N/A | | GAAP EPS | $(0.57) | N/A | | Adjusted Net Income | $6.3 million | N/A | | Adjusted EPS (diluted) | $0.11 | N/A | | Adjusted EBITDA | $20.4 million | N/A | - The company ended the fiscal year with a strong balance sheet, holding $50.5 million in cash and cash equivalents with no bank debt[2] Business Segment Performance The company's strong performance was primarily driven by a significant re-ramp in the Auto Insurance vertical, which saw revenue grow over 200% year-over-year in Q4, complemented by solid growth in Non-Insurance Financial Services and Home Services - The strong re-ramp of Auto Insurance revenue continued, with demand from carrier clients described as "steeply up and to the right, and is broad-based"[2] - The company's focus in Auto Insurance has shifted to optimizing media supply to meet extraordinary demand[2] Q4 FY2024 Revenue Growth by Segment (YoY) | Segment | YoY Growth | | :--- | :--- | | Auto Insurance | >200% | | Non-Insurance Financial Services | 13% | | Home Services | 12% | Fiscal 2025 Outlook QuinStreet provided a strong outlook for fiscal year 2025, anticipating continued momentum across all business verticals, projecting significant year-over-year growth in both revenue and Adjusted EBITDA for the first quarter and the full fiscal year Q1 FY2025 Outlook | Metric | Outlook Range | YoY Growth (Midpoint) | | :--- | :--- | :--- | | Revenue | $220 - $230 million | 82% | | Adjusted EBITDA | $14 - $16 million | >1400% | Full Fiscal Year 2025 Outlook | Metric | Outlook Range | YoY Growth (Midpoint) | | :--- | :--- | :--- | | Revenue | $800 - $850 million | 34% | | Adjusted EBITDA | $50 - $60 million | 170% | Financial Statements The company's financial statements for fiscal year 2024 reflect increased assets and liabilities, a widened operating loss, and positive cash flow from operations, with a net decrease in cash Condensed Consolidated Balance Sheets As of June 30, 2024, QuinStreet's total assets increased to $368.5 million from $337.2 million in the prior year, driven by a rise in accounts receivable and goodwill, while total liabilities also grew to $151.7 million, resulting in a decrease in total stockholders' equity Key Balance Sheet Items (in thousands) | Account | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $50,488 | $73,677 | | Accounts receivable, net | $111,786 | $67,748 | | Total assets | $368,546 | $337,155 | | Total liabilities | $151,721 | $107,354 | | Total stockholders' equity | $216,825 | $229,801 | Condensed Consolidated Statements of Operations For the fiscal year ended June 30, 2024, net revenue increased to $613.5 million, but higher cost of revenue and operating expenses led to a widened operating loss of $28.1 million, with the net loss improving to $31.3 million from $68.9 million in fiscal 2023 Fiscal Year Performance (in thousands) | Account | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net revenue | $613,514 | $580,624 | | Gross profit | $46,246 | $48,523 | | Operating loss | $(28,065) | $(20,816) | | Net loss | $(31,331) | $(68,866) | | Net loss per share, diluted | $(0.57) | $(1.28) | Condensed Consolidated Statements of Cash Flows For fiscal year 2024, the company generated $12.0 million in cash from operating activities, with cash used in investing activities of $22.7 million and financing activities of $12.5 million, resulting in a net decrease in cash of $23.2 million and a year-end cash balance of $50.5 million Fiscal Year Cash Flow Summary (in thousands) | Activity | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $12,039 | $11,838 | | Net cash used in investing activities | $(22,735) | $(15,125) | | Net cash used in financing activities | $(12,511) | $(19,459) | | Net decrease in cash | $(23,189) | $(22,761) | | Cash at end of period | $50,503 | $73,692 | Non-GAAP Financial Measures & Reconciliations This section defines key non-GAAP financial measures and provides detailed reconciliations from GAAP net loss to adjusted net income, adjusted EBITDA, and free cash flow, alongside a disaggregation of revenue by segment Definition of Non-GAAP Financial Measures QuinStreet utilizes non-GAAP financial measures such as adjusted EBITDA, adjusted net income, and free cash flow to supplement its GAAP results, providing investors with additional tools to analyze operating performance by excluding certain non-cash and non-recurring charges - Adjusted EBITDA is defined as net loss excluding taxes, depreciation, amortization, stock-based compensation, interest/other expense, and certain non-recurring costs, used internally for planning, resource allocation, and performance assessment[7][9] - Adjusted Net Income is defined as net loss adjusted for amortization, stock-based compensation, acquisition costs, and other non-recurring items, net of estimated taxes[7][12] - Free Cash Flow is defined as net cash from operating activities less capital expenditures and internal software development costs, used to measure the cash generating capacity of the business[7][13] Reconciliation of Net Loss to Adjusted Net Income (Loss) For fiscal year 2024, QuinStreet reconciled a GAAP net loss of $31.3 million to an adjusted net income of $6.3 million, primarily by adding back $23.7 million in stock-based compensation and $10.7 million in amortization of intangible assets, resulting in an adjusted diluted net income per share of $0.11 FY2024 Reconciliation of Net Loss to Adjusted Net Income (in thousands) | Description | Amount | | :--- | :--- | | Net loss | $(31,331) | | Amortization of intangible assets | $10,707 | | Stock-based compensation | $23,701 | | Impairment of investment | $2,000 | | Other adjustments | $1,226 | | Adjusted net income | $6,303 | Reconciliation of Net Loss to Adjusted EBITDA The company reconciled its fiscal year 2024 GAAP net loss of $31.3 million to an Adjusted EBITDA of $20.4 million, with key reconciling items including adding back $24.0 million for depreciation and amortization and $23.7 million for stock-based compensation expense FY2024 Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Description | Amount | | :--- | :--- | | Net loss | $(31,331) | | Interest and other expense, net | $2,331 | | Provision for income taxes | $935 | | Depreciation and amortization | $23,957 | | Stock-based compensation expense | $23,701 | | Other adjustments | $774 | | Adjusted EBITDA | $20,365 | Reconciliation of Cash Provided by Operating Activities to Free Cash Flow For fiscal year 2024, net cash provided by operating activities was $12.0 million, but after subtracting $5.3 million for capital expenditures and $11.4 million for internal software development costs, the company reported a negative free cash flow of $4.7 million FY2024 Free Cash Flow Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | Net cash provided by operating activities | $12,039 | | Capital expenditures | $(5,348) | | Internal software development costs | $(11,377) | | Free cash flow | $(4,686) | Disaggregation of Revenue In fiscal year 2024, Financial Services remained the largest revenue contributor at $392.6 million, showing modest growth, while the Home Services segment also grew, with revenue increasing to $211.9 million Revenue by Segment (in thousands) | Segment | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Financial Services | $392,579 | $379,723 | | Home Services | $211,944 | $193,133 | | Other Revenue | $8,991 | $7,768 | | Total net revenue | $613,514 | $580,624 | Other Information QuinStreet, a leader in performance marketplaces, provides an overview of its business and includes cautionary statements regarding forward-looking financial projections and potential risks About QuinStreet & Forward Looking Statements QuinStreet is a leader in performance marketplaces for the financial and home services industries, with the report containing forward-looking statements regarding future financial results and strategic plans subject to various risks and uncertainties - QuinStreet specializes in online marketplace solutions that match consumers with brands in digital media, particularly in the financial services and home services sectors[6] - The press release includes forward-looking statements concerning anticipated financial results and operational plans, where actual results may differ materially due to various factors, including client spending, competition, and regulatory changes[15]