QuinStreet(US:QNST)2025-05-07 20:09Financial Highlights and Outlook 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 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 debt569 Fiscal Year 2025 Outlook 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 - The outlook range for Q4 is wider than usual to account for risks and potential volatility related to tariffs and client spending6 Financial Statements This section presents the company's condensed consolidated balance sheets, statements of operations, and cash flows for the reported periods Condensed Consolidated Balance Sheets 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 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 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 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 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 results10 - 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 charges111213 - 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 items1417 Reconciliation of Net Income (Loss) to Adjusted Net Income 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 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 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 This section provides a detailed disaggregation of the company's net revenue by client vertical Disaggregation of Revenue 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% |