QuinStreet(QNST) - 2025 Q4 - Annual Results

Executive Summary & Highlights QuinStreet reported strong financial results for Q4 and FY2025, with significant year-over-year growth in revenue, GAAP net income, adjusted net income, and adjusted EBITDA. The company also generated substantial operating cash flow for the full fiscal year Fiscal Fourth Quarter and Full Year 2025 Financial Performance QuinStreet reported strong financial results for Q4 and FY2025, with significant year-over-year growth in revenue, GAAP net income, adjusted net income, and adjusted EBITDA. The company also generated substantial operating cash flow for the full fiscal year | Metric | Q4 FY25 | Q4 FY24 | YoY Change (Q4) | FY25 | FY24 | YoY Change (FY) | | :-------------------------- | :-------- | :-------- | :-------------- | :--------- | :--------- | :-------------- | | Revenue | $262.1M | $198.3M | +32% | $1.1B | $613.5M | +78% | | GAAP Net Income | $3.2M | ($2.2M) | N/A | $4.7M | ($31.3M) | N/A | | GAAP Diluted EPS | $0.06 | ($0.04) | N/A | $0.08 | ($0.57) | N/A | | Adjusted Net Income | $14.7M | $6.5M | +126% | $51.4M | $6.3M | +716% | | Adjusted Diluted EPS | $0.25 | $0.11 | +127% | $0.88 | $0.11 | +700% | | Adjusted EBITDA | $22.1M | $11.0M | +101% | $81.3M | $20.4M | +299% | | FY25 Operating Cash Flow | N/A | N/A | N/A | $85.0M | N/A | N/A | | FY25 Cash & Equivalents | N/A | N/A | N/A | $101.1M | N/A | N/A | CEO Commentary and Strategic Outlook CEO Doug Valenti highlighted strong revenue growth and margin expansion in FY25, driven by investments and early contributions from new initiatives. He noted renewed demand in Auto Insurance, despite moderation in H2 FY25 due to tariff uncertainties, and anticipates strong sequential growth in Q1 FY26. The company plans continued aggressive investment to capitalize on pent-up demand in Auto Insurance and expects further margin expansion in FY26 - Full year revenue grew 78% and Adjusted EBITDA grew 299%, reflecting ongoing investments and early contributions from new market and product initiatives[7] - Renewed demand from Auto Insurance clients was a key driver for FY25 success, with some clients re-accelerating spending, leading to an expectation of strong sequential Auto Insurance revenue growth in FYQ1[7] - The company expects FYQ1 revenue of approximately $280 million and Adjusted EBITDA of about $20 million. For full fiscal year 2026, revenue is projected to grow about 10% and Adjusted EBITDA about 20%, with continued margin expansion efforts[7] Key Performance Indicators (Exhibit 99.1) Exhibit 99.1 reiterated key financial and operational achievements for Q4 and FY25, emphasizing strong revenue growth, significant improvement in net income and adjusted EBITDA, and a healthy balance sheet with expectations for continued margin expansion in FY26 - FYQ4 Revenue increased 32% YoY to $262 million, accompanied by strong margin growth[9] - FYQ4 Auto Insurance revenue surged 62% YoY, while Home Services revenue grew 21%[9] - FY25 Revenue reached $1.1 billion, a 78% YoY increase, and Net Income improved to $4.7 million from a $31.3 million net loss in FY24[9] - FY25 Adjusted EBITDA grew 299% to $81.3 million from $20.4 million in FY24, with expectations for continued margin expansion in FY26[9] - The company maintains strong cash flows and a healthy balance sheet, with over $100 million in cash and no bank debt[9] Company Overview QuinStreet, Inc. is a leading provider of performance marketplaces and technologies, primarily serving the financial services and home services industries About QuinStreet QuinStreet, Inc. is a leading provider of performance marketplaces and technologies, primarily serving the financial services and home services industries. The company specializes in online marketplace solutions that connect consumers with relevant brands and products - QuinStreet, Inc. is a leader in performance marketplaces and technologies for the financial services and home services industries[10] - The company pioneers online marketplace solutions to match searchers with brands in digital media, providing consumers with information and tools to select products and brands[10] Non-GAAP Financial Measures This section defines several non-GAAP financial measures and explains their rationale for complementing GAAP results, offering additional insights into operating performance and resource allocation Definitions and Rationale This section defines several non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted Net Income per Share, Free Cash Flow, and Normalized Free Cash Flow. It explains that these measures are provided to complement GAAP results, offering additional insights into operating performance, resource allocation, and ongoing operating trends, though they should not be considered substitutes for GAAP - Adjusted EBITDA is defined as net income (loss) adjusted for taxes, depreciation, amortization, stock-based compensation, interest, acquisition costs, contingent consideration, litigation/tax settlement, and restructuring costs[11] - Adjusted Net Income is defined as net income (loss) adjusted for amortization, stock-based compensation, acquisition costs, contingent consideration, litigation/tax settlement, restructuring costs, and impairment of investment, net of estimated taxes[11] - Free Cash Flow is defined as net cash provided by operating activities less capital expenditures and internal software development costs, while Normalized Free Cash Flow further adjusts for changes in operating assets and liabilities[11][17] - These non-GAAP measures are considered relevant and useful for analyzing operating performance, internal planning, resource allocation, and evaluating operational strategies, and are widely used by investors and analysts in the industry[12][13][16][17] - The company cannot provide a quantitative reconciliation for Adjusted EBITDA guidance to GAAP without unreasonable efforts due to high variability and low visibility of certain items[15] Condensed Consolidated Financial Statements QuinStreet's financial statements reflect significant improvements in net income and cash flow for FY25, driven by strong revenue growth and effective cost management Condensed Consolidated Balance Sheets The balance sheet shows an increase in total assets and stockholders' equity from June 30, 2024, to June 30, 2025, primarily driven by a significant increase in cash and cash equivalents. Total liabilities also increased during the period | Balance Sheet Item (in thousands) | June 30, 2025 | June 30, 2024 | YoY Change | | :-------------------------------- | :------------ | :------------ | :--------- | | Cash and cash equivalents | $101,078 | $50,488 | +100.2% | | Accounts receivable, net | $135,804 | $111,786 | +21.5% | | Total current assets | $245,526 | $169,087 | +45.2% | | Total assets | $431,107 | $368,546 | +17.0% | | Total current liabilities | $163,044 | $126,398 | +29.0% | | Total liabilities | $187,063 | $151,721 | +23.3% | | Total stockholders' equity | $244,044 | $216,825 | +12.6% | Condensed Consolidated Statements of Operations QuinStreet demonstrated strong operational improvement, moving from a net loss in Q4 and FY24 to net income in Q4 and FY25. This was driven by substantial revenue growth and improved gross profit margins, despite increases in operating expenses | Income Statement Item (in thousands) | Q4 FY25 | Q4 FY24 | YoY Change (Q4) | FY25 | FY24 | YoY Change (FY) | | :----------------------------------- | :----------- | :----------- | :-------------- | :----------- | :----------- | :-------------- | | Net revenue | $262,054 | $198,321 | +32.1% | $1,093,711 | $613,514 | +78.3% | | Gross profit | $27,850 | $17,433 | +59.8% | $110,871 | $46,246 | +139.7% | | Operating income (loss) | $3,876 | ($1,439) | N/A | $6,193 | ($28,065) | N/A | | Net income (loss) | $3,206 | ($2,164) | N/A | $4,707 | ($31,331) | N/A | | Diluted EPS | $0.06 | ($0.04) | N/A | $0.08 | ($0.57) | N/A | Condensed Consolidated Statements of Cash Flows The company significantly increased cash generated from operating activities in both Q4 and FY25, leading to a substantial net increase in cash and cash equivalents for the full fiscal year, contrasting with a decrease in the prior year. Investing activities continued to use cash, while financing activities also resulted in a net cash outflow | Cash Flow Item (in thousands) | Q4 FY25 | Q4 FY24 | YoY Change (Q4) | FY25 | FY24 | YoY Change (FY) | | :---------------------------------------- | :----------- | :----------- | :-------------- | :----------- | :----------- | :-------------- | | Net cash provided by operating activities | $29,897 | $16,554 | +80.6% | $84,980 | $12,039 | +605.9% | | Net cash used in investing activities | ($3,056) | ($3,648) | -16.2% | ($11,443) | ($22,735) | -49.7% | | Net cash used in financing activities | ($7,611) | ($2,025) | +275.8% | ($22,996) | ($12,511) | +83.8% | | Net increase (decrease) in cash | $19,263 | $10,886 | +76.9% | $50,591 | ($23,189) | N/A | | Cash, cash equivalents at end of period | $101,094 | $50,503 | +100.2% | $101,094 | $50,503 | +100.2% | Non-GAAP Reconciliations This section provides reconciliations of GAAP net income to various non-GAAP measures, highlighting significant improvements in adjusted net income, adjusted EBITDA, and free cash flow for FY25 Reconciliation of Net Income (Loss) to Adjusted Net Income QuinStreet's Adjusted Net Income and Adjusted Diluted Net Income per Share saw substantial year-over-year increases for both the fourth quarter and the full fiscal year 2025, reflecting the exclusion of certain non-cash and non-recurring items from GAAP net income | Metric (in thousands, except per share) | Q4 FY25 | Q4 FY24 | YoY Change (Q4) | FY25 | FY24 | YoY Change (FY) | | :-------------------------------------- | :----------- | :----------- | :-------------- | :----------- | :----------- | :-------------- | | Net income (loss) | $3,206 | ($2,164) | N/A | $4,707 | ($31,331) | N/A | | Adjusted net income | $14,676 | $6,541 | +124.4% | $51,440 | $6,303 | +716.1% | | Adjusted diluted net income per share | $0.25 | $0.11 | +127.3% | $0.88 | $0.11 | +700.0% | Reconciliation of Net Income (Loss) to Adjusted EBITDA Adjusted EBITDA experienced significant growth in both Q4 and FY25, more than doubling in the quarter and nearly quadrupling for the full year, indicating strong operational performance when excluding non-cash and certain non-recurring expenses | Metric (in thousands) | Q4 FY25 | Q4 FY24 | YoY Change (Q4) | FY25 | FY24 | YoY Change (FY) | | :-------------------- | :----------- | :----------- | :-------------- | :----------- | :----------- | :-------------- | | Net income (loss) | $3,206 | ($2,164) | N/A | $4,707 | ($31,331) | N/A | | Adjusted EBITDA | $22,134 | $11,030 | +100.7% | $81,263 | $20,365 | +299.0% | Reconciliation of Cash Provided by Operating Activities to Free Cash Flow and Normalized Free Cash Flow QuinStreet achieved positive Free Cash Flow and Normalized Free Cash Flow for both Q4 and FY25, with substantial year-over-year improvements, particularly for the full fiscal year, demonstrating enhanced cash-generating capacity | Metric (in thousands) | Q4 FY25 | Q4 FY24 | YoY Change (Q4) | FY25 | FY24 | YoY Change (FY) | | :---------------------------------------- | :----------- | :----------- | :-------------- | :----------- | :----------- | :-------------- | | Net cash provided by operating activities | $29,897 | $16,554 | +80.6% | $84,980 | $12,039 | +605.9% | | Free cash flow | $26,842 | $12,906 | +107.9% | $73,538 | ($4,686) | N/A | | Normalized free cash flow | $18,767 | $7,159 | +162.1% | $69,291 | $2,326 | +2877.3% | Revenue Disaggregation QuinStreet's revenue growth in Q4 and FY25 was significantly driven by both Financial Services and Home Services segments, with Financial Services remaining the largest contributor Revenue by Segment Both Financial Services and Home Services segments contributed significantly to QuinStreet's revenue growth in Q4 and FY25. Financial Services remained the largest segment and showed robust growth, while Home Services also delivered solid performance | Revenue Segment (in thousands) | Q4 FY25 | Q4 FY24 | YoY Change (Q4) | FY25 | FY24 | YoY Change (FY) | | :----------------------------- | :----------- | :----------- | :-------------- | :----------- | :----------- | :-------------- | | Financial Services | $186,608 | $136,870 | +36.3% | $817,157 | $392,579 | +108.1% | | Home Services | $71,696 | $59,309 | +20.9% | $261,794 | $211,944 | +23.5% | | Other Revenue | $3,750 | $2,142 | +75.1% | $14,760 | $8,991 | +64.2% | | Total net revenue | $262,054 | $198,321 | +32.1% | $1,093,711 | $613,514 | +78.3% | Additional Information This section provides important legal disclaimers regarding forward-looking statements, investor contact details, and information for accessing the financial results conference call Legal Notice Regarding Forward-Looking Statements This section serves as a legal disclaimer, identifying forward-looking statements within the press release and outlining various risks and uncertainties that could cause actual results to differ materially from those projected. It also directs readers to SEC filings for more information - The press release contains forward-looking statements identified by words like 'estimate', 'will', 'believe', 'expect', 'intend', 'outlook', 'potential', 'promises' and similar expressions[19] - Actual results may differ materially due to factors such as client marketing spend, visitor conversion, data privacy risks, regulatory changes, competition, intellectual property rights, and counterparty risks[19] - More information on potential factors affecting the business and financial results can be found in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC[19] Investor Relations Contact Provides contact information for investor relations inquiries - Investor Contact: Robert Amparo, (347) 223-1682, ramparo@quinstreet.com[20] Conference Call Details Details for accessing the conference call and live webcast to discuss the financial results, including dial-in numbers and webcast link, along with replay information - A conference call and live webcast were scheduled for August 7, 2025, at 2:00 p.m. PT[8] - Domestic dial-in: +1 800-717-1738; International dial-in: +1 646-307-1865. Webcast available at http://investor.quinstreet.com[8](index=8&type=chunk) - A replay of the call is available by dialing +1 844-512-2921 (domestic) or +1 412-317-6671 (international) using passcode 1170966[8]