Company Information QuinStreet, Inc. is a Delaware corporation that filed its 10-K annual report for the fiscal year ended June 30, 2025 - QuinStreet, Inc. is a Delaware corporation that filed its 10-K annual report for the fiscal year ended June 30, 20252 Company Information Details | Metric | Details | | :--- | :--- | | Ticker Symbol | QNST | | Registered Exchange | Nasdaq Global Select Market | | Well-Known Seasoned Issuer | Yes | | Accelerated Filer Type | Large Accelerated Filer | | Aggregate Market Value of Non-Affiliate Voting Stock (as of December 31, 2024) | $1,249,815,185 | | Number of Common Shares Outstanding (as of August 11, 2025) | 57,676,080 | | Internal Control Effectiveness Report | Yes | | Error Correction Restatement | No | | Shell Company | No | PART I CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS This report contains numerous forward-looking statements regarding the company's future financial condition, business strategies, and operational objectives, which are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from expectations, with no obligation to update these statements - Forward-looking statements cover future financial condition, business strategies, and management's operational objectives, identified by words like 'believe,' 'may,' 'estimate,' 'expect,' etc12 - Key risks and uncertainties include industry developments, regulatory changes, reliance on third-party media and internet search companies, economic conditions, banking risks, cybersecurity, product development capabilities, M&A integration, and scrutiny of environmental, social, and governance (ESG) practices1214 - The company assumes no obligation to update forward-looking statements and cautions readers about risks and uncertainties13 Item 1. Business QuinStreet is a leading performance marketing platform and technology provider in the financial and home services industries, acquiring high-intent digital media traffic for clients on a pay-per-click, pay-per-lead, or pay-per-action basis through proprietary technology and data, primarily generating revenue from North America while investing in technology and data advantages Our Company QuinStreet is a leading performance marketing platform and technology provider for the financial and home services industries, leveraging proprietary technology to deliver high-intent digital media traffic to clients through various measurable formats, with revenue primarily generated via pay-per-click, pay-per-lead, or other 'pay-per-action' models, and competitive advantages rooted in media buying power, technology, data, and market share - QuinStreet is a leading performance marketing platform and technology provider for the financial and home services industries15 - The company uses proprietary performance marketing technology to provide high-intent digital media traffic to clients, in forms such as qualified clicks, leads, calls, applications, and customers15 - Revenue is primarily generated through pay-per-click, pay-per-lead, or other 'pay-per-action' models, with the company bearing media costs16 - Competitive advantages include media buying power, proprietary technology, extensive performance marketing data and experience, and significant online media market share in its service markets17181920 Market Opportunity Marketing strategies are shifting from offline analog advertising to digital, requiring new core capabilities and driving demand for the company's vertical marketing and media services due to increasing online marketing complexity - Marketing strategies are shifting from offline analog advertising to digital advertising, requiring new core capabilities22 - Market trends include a shift from qualitative, impression-driven to analytical, data-driven marketing; from customer management to results-oriented customer relationships; from passive push to audience-initiated information acquisition; and from mass media buying to fragmented media optimization22232425 - Increasing complexity in online marketing drives demand for the company's vertical marketing and media services, which aggregate multi-client offerings and effectively match visitor needs26 Our Business Model The company generates revenue by delivering measurable marketing results such as qualified clicks, leads, or customers, managing media costs and profitability through optimization of media sources, creative capabilities, proprietary technology, and data application, while diversifying internet visitor sources - The company generates revenue by providing measurable marketing results such as qualified clicks, leads, calls, applications, or customers27 - The company bears media costs and balances customer acquisition costs with its own media costs and revenue targets by optimizing media sources, creative capabilities, proprietary technology, and data application28 - The company effectively manages media cost risks and ensures profitability through a revenue-sharing model with third-party publishers28 - Internet visitor sources are diversified, including proprietary websites, PPC advertising, third-party media, email lists, and online advertising networks2931 Our Strategy The company aims to be a leading internet performance marketing firm by focusing on sustainable revenue through measurable client value, ethical practices, vertical specialization, world-class organization building, continuous product and technology evolution, data advantage utilization, and customer-centric media source development - The company aims to be one of the largest and most successful performance marketing companies on the internet, achieving this through key components3236 - Focus on generating sustainable revenue by providing measurable value to clients - Ethically build the company and industry by providing quality content and website experiences - Maintain vertical focus, growing by deepening expertise and coverage in existing client verticals, and selectively entering new ones through organic growth and acquisitions - Build a world-class organization with optimal capabilities for delivering measurable marketing results and high media cost returns for clients - Develop and evolve best-in-class products, technology, and platforms to manage successful internet performance marketing campaigns, focusing on technology that improves media yield, enhances client outcomes, and achieves scale efficiencies - Build and apply unique data advantages through long-running, large-scale marketing campaigns in client verticals, including steep learning curves for optimizing each media type and client outcome - Build and partner with vertical content websites that attract high-intent visitors - Be a client-centric organization and develop broad media sources and capabilities to reliably meet client needs Client Revenue Concentration | Fiscal Year | Number of Clients Accounting for 23% of Net Revenue | Number of Clients Accounting for 12% of Net Revenue | Top 20 Clients as % of Net Revenue | | :--- | :--- | :--- | :--- | | 2025 | 2 | 1 | 62% | | 2024 | 1 | 1 | 46% | Product Development Expenses | Fiscal Year | Product Development Expenses (Millions USD) | | :--- | :--- | | 2025 | 33.9 | | 2024 | 30.0 | Intellectual Property The company protects its proprietary rights through patents, trade secrets, trademarks, and copyright laws, supplemented by confidentiality agreements and technological measures - The company protects its proprietary rights through patents, trade secrets, trademarks, and copyright laws, as well as confidentiality agreements and technological measures37 - QuinStreet is a registered trademark in the U.S. and other jurisdictions, and owns registered and unregistered trademarks and domain name registrations for many websites37 Our Competitors The company competes with advertising and direct marketing service agencies, as well as online marketing and media companies, based on factors such as return on marketing spend, price, media acquisition capabilities, lead generation, and reliability - The company primarily competes with advertising and direct marketing service agencies, as well as online marketing and media companies38 - Competitive factors include return on marketing spend, price, ability to acquire targeted media, ability to provide large volumes or precise customer leads, and reliability38 - Specific competitors include LendingTree and MediaAlpha in financial services, and large websites or portals like Google, Yahoo!, Microsoft, and Meta3940 Government Regulation The company's operations are subject to various federal and state laws and regulations, including those governing spam, telemarketing, user privacy, data security, intellectual property, and taxation, with additional compliance requirements in highly regulated sectors like financial services - The company's business is subject to multiple federal and state laws and regulations, including those concerning spam (CAN-SPAM Act), telemarketing (Telemarketing Sales Rule, TCPA), user privacy, data security, intellectual property, and taxation41 - In highly regulated industries like financial services, the company must also comply with state licensing laws, federal and state laws prohibiting unfair acts and practices, and advertising laws; the company holds licensed insurance agent qualifications in all fifty states42 Human Capital Resources The company is committed to employee development, attraction, and retention, guided by core values of leadership, ownership, embracing new ideas, understanding stakeholder needs, and pursuing excellence, investing in professional growth and competitive compensation - The company is committed to employee development, attraction, and retention, guided by core values of leadership, ownership, embracing new ideas, understanding stakeholder needs, and pursuing excellence43 - The company invests in professional learning and personal development opportunities, and is committed to pay equity and equality, offering market-competitive compensation packages including short-term and long-term incentives434647 Employee Composition as of June 30, 2025 | Department | Number of Employees | | :--- | :--- | | Operations | 519 | | Product Development | 305 | | Sales and Marketing | 68 | | Administration | 46 | | Total | 938 | Available Information The company files reports with the SEC, including 10-K, 10-Q, and 8-K, which are freely available on its investor relations website and the SEC's public reference room or website - The company files reports with the U.S. Securities and Exchange Commission (SEC), including 10-K, 10-Q, and 8-K, which are freely available through its investor relations website48 - The public can review company filings at the SEC's public reference room or on its website (www.sec.gov)[49](index=49&type=chunk) Item 1A. Risk Factors Investing in the company's common stock involves high risks, including industry immaturity, reduced client marketing spend, reliance on third-party media and internet search companies, data privacy and security risks, economic and regulatory changes, technological adaptation challenges, volatile operating results, and risks related to intellectual property and common stock ownership, which could materially adversely affect the company's business, financial condition, and operating results Summary of Risks Associated with Our Business The company faces risks from an evolving industry and business model, potential reductions in client marketing spend, reliance on third-party media and search engines, data privacy and security threats, economic and regulatory shifts, technology adaptation challenges, and intellectual property protection issues - The industry is still developing, and business models are constantly evolving, making it difficult to evaluate business prospects - Reduced client online marketing spend, client churn, or declining advertising revenue could severely harm the business - Reliance on third-party media sources for visitors means reduced media supply or increased prices could lead to revenue decline or increased costs - Facing data privacy and security risks, failure to adequately protect personal information could result in significant expenses and reputational damage - Reliance on internet search companies to direct visitors means changes in search algorithms could lower website rankings and visitor numbers - Negative changes in economic and regulatory environments could materially adversely affect revenue, business, and growth - Cash and cash equivalents may face risks from banking institutions - Failure to continuously enhance and adapt products and services to keep pace with technological and industry standard changes could lead to loss of competitiveness - Operating results are volatile and difficult to predict, potentially falling below analyst and investor expectations - Changes in business models, increased investments, and rising expenditures could lead to fluctuations in Adjusted EBITDA margins - Disruptions or failures in information technology and communication systems could impair service delivery capabilities - Technologies or service providers that limit marketing or data collection and use capabilities could significantly reduce service value - Failure to adequately protect intellectual property could harm competitive position and business51 Risks Related to Our Business and Industry The company operates in an evolving industry, facing risks from regulatory changes, media availability, search engine dependence, cybersecurity threats, technology optimization, and M&A integration, alongside challenges from client marketing spend fluctuations, macroeconomic conditions, and operational disruptions - The company operates in an evolving industry with constantly changing business models, facing risks from regulatory changes, media availability, reliance on search companies, cybersecurity, technology optimization, and M&A integration5356 - Reduced client marketing spend or client churn, especially from major clients (two clients accounted for 23% and 12% of net revenue in FY2025, respectively), could lead to rapid revenue decline55575859 - The company heavily relies on third-party media sources for visitors, and reduced media supply, increased prices, or regulatory actions could lead to revenue decline or increased costs60 - Data privacy and security risks are significant, especially when handling personal information and using AI technology; any security breach or data leak could result in legal liabilities, reputational damage, and business losses61626364 - Reliance on internet search companies to direct visitors means changes in search algorithms (including AI integration) could lead to lower website rankings, reduced visitor traffic, and revenue65666768 - Macroeconomic conditions (such as tariffs, geopolitical conflicts, inflation, recession) and evolving regulatory environments (such as TCPA amendments, data privacy laws, CFPB guidance) could materially adversely affect the company's business, revenue, and growth6970717273747576777879 - Cash and cash equivalents may face risks from banking institutions, such as bank failures potentially limiting access to funds8283 - Failure to continuously adapt to rapidly changing technology and industry standards (including artificial intelligence and machine learning) could lead to decreased competitiveness, client churn, or reduced advertising inventory84858687 - Operating results are influenced by various factors, including client volume, media availability, seasonality, interest rate fluctuations, and regulatory changes, leading to volatile quarterly and annual performance that is difficult to predict889092 - Changes in business models and significant investments in new businesses, products, and technologies could lead to fluctuations in Adjusted EBITDA margins89 - Disruptions or failures in information technology and communication systems (such as natural disasters, cyberattacks) could impair service delivery capabilities, leading to revenue loss and reputational damage106107108 - Acquisitions, investments, and divestitures may complicate operations, leading to dilution, liabilities, amortization expenses, or goodwill impairment, and diverting management's attention109110111112 - Reliance on third-party call centers, internet, and data center providers means service disruptions or failures could harm the business113114 - Underdevelopment or slow growth of the online marketing services market, and client acceptance issues with new metrics, could limit business success and revenue growth117118119 - Failure to effectively detect click fraud or other advertising fraud could lead to client dissatisfaction, churn, and revenue loss120 - Technologies, service providers, or other factors limiting the collection and use of user data, could significantly reduce service value and revenue generation capabilities121122124125 - Increasing scrutiny from investors, clients, and employees regarding environmental, social, and governance (ESG) practices and reporting could lead to additional costs, resource allocation, and risks, impacting reputation, client acquisition, and employee retention126 Risks Related to Our Intellectual Property Failure to adequately protect intellectual property could harm the company's competitive position and business, including unauthorized disclosure of confidential information, costly infringement litigation, and management distraction - Failure to adequately protect intellectual property could harm the company's competitive position and business, including unauthorized disclosure of confidential information, costs of infringement litigation, and management distraction127128 - Third parties may sue the company for intellectual property infringement, which, even if successful, could result in high defense or settlement costs and may require changes in business practices129130131 - As a content creator and distributor, the company may face legal claims for defamation, negligence, deceptive advertising, copyright or trademark infringement due to the nature of its content, leading to damages and business harm132 Risks Related to the Ownership of Our Common Stock The company's stock price is highly volatile, influenced by performance, analyst expectations, negative publicity, economic downturns, media availability, trading volume, insider sales, M&A announcements, and litigation threats, with additional risks from internal control deficiencies, goodwill impairment, anti-takeover provisions, and the absence of common stock dividends - The company's stock price is highly volatile and may be affected by various factors, including performance, analyst expectations, negative publicity, economic downturns, media availability, trading volume, executive/major shareholder stock sales, M&A announcements, and litigation threats133134136 - Analysts ceasing coverage or issuing negative opinions could lead to a decline in stock price and trading volume137 - Stock repurchase programs may not be fully executed or enhance long-term shareholder value, and could increase stock price volatility or reduce cash reserves138 - The company may face short-selling strategies, leading to stock price declines and potentially triggering shareholder lawsuits139 - Future large sales of stock by shareholders could depress the stock price and affect the company's ability to raise capital through new stock issuance140 - Failure to maintain appropriate and effective internal controls could impair the ability to accurately and timely prepare financial statements or effectively prevent fraud141142143 - Goodwill or intangible asset impairment could result in significant earnings write-offs, affecting financial condition and operating results144145 - Provisions in the company's charter and Delaware law may deter acquisitions that shareholders deem favorable and could entrench management146148 - The company currently does not intend to pay common stock dividends, and shareholder returns will depend on stock price appreciation147 General Risk Factors The company faces general risks including counterparty non-performance, reliance on key management and employees, reputational damage from various sources, potential need for additional capital, and challenges associated with international operations such as adapting to foreign preferences, regulatory compliance, political and economic changes, tariffs, exchange rate fluctuations, and intellectual property protection - Counterparty failure to fulfill obligations could result in losses for the company or negatively impact operating results and cash flows149 - The company relies on its management team and other key employees, and the loss of any key employee could harm the business150 - Reputational damage could adversely affect business, financial condition, and operating results, stemming from legal proceedings, government investigations, negative media coverage, or security breaches151152153154 - Additional capital may be required in the future to meet financial obligations and business objectives, but such capital may not be available or on favorable terms155 - Operating in international markets may expose the company to additional risks, including adapting to foreign customer preferences, complying with foreign laws and regulations, changes in political and economic conditions, tariffs, exchange rate fluctuations, taxation, language and cultural differences, inadequate intellectual property protection, and challenges in managing overseas operations156157 Item 1B. Unresolved Staff Comments There are no unresolved staff comments in this report - No unresolved staff comments158 Item 1C. Cybersecurity The company's cybersecurity program, part of its overall risk management framework, aims to identify, assess, and respond to cybersecurity threats through regular security committee meetings, employee training, multiple information security policies, and third-party support and vendor management, with no material cybersecurity incidents impacting business strategy, operating results, or financial condition to date Risk Management and Strategy The company's cybersecurity risk management plan employs a risk-based approach to identify, assess, and respond to threats that could impact data, networks, or consumer information, supported by regular security committee meetings, employee training, and comprehensive information security policies - The company's cybersecurity risk management plan employs a risk-based approach to identify, assess, and respond to cybersecurity threats that could affect data, networks, or consumer information160 - Regular security committee meetings are held to report on cybersecurity threats, responses, strategies, and improvement plans - New employees receive cybersecurity training, which is also conducted annually, with more detailed training for employees with higher data and system access - Over twenty information security policies have been developed, covering specific aspects like vendor management - Third-party consultants are engaged for penetration testing and SOC 2 Type II certification to supplement internal testing and audits - Background checks are conducted for employees and contractors, and user access is managed using the principle of least privilege, reviewed at least quarterly - The information security team reviews privacy impact assessments to ensure third-party data access and information sharing practices are controlled within the company's cybersecurity environment161162 Impact of Cybersecurity Risks on Business Strategy, Results of Operations or Financial Condition Given that almost all of the company's business is online, cybersecurity incidents could materially adversely affect business strategy, operating results, or financial condition, although no such material incidents have occurred to date, and cyber liability insurance coverage may not be sufficient for all related claims - Almost all of the company's business is conducted online, and cybersecurity incidents could materially adversely affect business strategy, operating results, or financial condition163 - To date, the company has not experienced any cybersecurity incidents that have had a material impact on its business strategy, operating results, or financial condition163 - The company purchases cyber liability insurance, but its coverage may not be sufficient to address all related claims163 Cybersecurity Governance The Audit Committee reviews management's assessment and plans for cybersecurity and other enterprise risks, receiving regular updates from the security committee, while the information security team is responsible for identifying, assessing, and mitigating cybersecurity risks and reports to a security committee comprising the CTO, CEO, CFO, and Chief Legal Officer - The Audit Committee reviews management's assessment and plans for the company's cybersecurity and other enterprise risks, and regularly receives updates from the security committee164 - The information security team is responsible for identifying, assessing, and mitigating cybersecurity risks, reporting to a security committee composed of the Chief Technology Officer, CEO, CFO, and Chief Legal Officer165 Item 2. Properties As of June 30, 2025, the company's headquarters in Foster City, California, spans approximately 22,915 square feet under a lease extending to October 2028, with additional leased facilities in the U.S., India, and Mexico supporting engineering, sales, marketing, and operations, all deemed sufficient for current needs - The company's headquarters is located in Foster City, California, with a lease term until October 2028166 - The company leases other facilities in the U.S., India, and Mexico for engineering, sales, marketing, and operations167 - The company believes its existing facilities are sufficient to meet current needs167 Item 3. Legal Proceedings The company may be involved in legal proceedings and claims in the ordinary course of business, including cases with uncertain damage amounts, for which liabilities are accrued when losses are probable and reasonably estimable; based on current information, the company does not believe that pending or threatened legal proceedings, individually or in aggregate, will have a material adverse effect on its financial condition, results of operations, or cash flows - The company may be involved in legal proceedings and claims in the ordinary course of business, including cases with uncertain damage amounts168 - The company accrues liabilities when losses are probable and reasonably estimable168 - Based on current knowledge, the company does not believe that pending or threatened legal proceedings will have a material adverse effect on its financial condition, operating results, and cash flows168 Item 4. Mine Safety Disclosures Not applicable - Not applicable169 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the Nasdaq Global Select Market under the symbol QNST, with a closing price of $14.51 per share and approximately 35 registered shareholders as of August 11, 2025; the company has never declared or paid common stock dividends and does not intend to in the near term, while a board-authorized stock repurchase program from April 2022 allows for up to $40 million in common stock repurchases, with approximately $16.8 million available as of June 30, 2025 - The company's common stock trades on the Nasdaq Global Select Market under the symbol QNST171 Common Stock Information | Metric | Details | | :--- | :--- | | Closing Price as of August 11, 2025 | $14.51/share | | Number of Registered Shareholders as of August 11, 2025 | Approximately 35 | | Dividend Policy | Never declared or paid, no intention to pay in the short term | | Stock Repurchase Program Authorized Amount (April 2022) | $40.0 Million | | Amount Available for Repurchase as of June 30, 2025 | $16.8 Million | | FY2025 Repurchase Activity | None | | Shares Repurchased in FY2024 | 247,618 shares | | Total Repurchase Cost in FY2024 | $2.2 Million | - No sales of unregistered equity securities occurred in FY2025179 Item 6. [Reserved] This item is reserved - This item is reserved180 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's financial condition and operating results for the fiscal year ended June 30, 2025, highlighting its business model as a performance marketing leader in financial and home services, key financial objectives, and business trends; FY2025 saw significant growth in net revenue and gross profit, and a return to net income, primarily driven by strong performance in the financial services vertical, particularly insurance, with detailed analysis of operating expenses, interest and other income/expense, income taxes, Adjusted EBITDA, liquidity, and cash flows, alongside an overview of critical accounting policies and recent accounting pronouncements Management Overview The company is a leading performance marketing platform and technology provider in the financial and home services industries, focused on customer acquisition in high-value, information-intensive markets, generating revenue through measurable marketing results and achieving robust financial outcomes by managing media costs and profit margins, with a primary financial objective of sustainable revenue growth and target profitability while investing in growth initiatives - The company is a leading performance marketing platform and technology provider in the financial and home services industries, focused on customer acquisition in high-value, information-intensive markets182 - The company generates revenue by providing measurable marketing results such as qualified clicks, leads, calls, applications, or customers, achieving robust financial outcomes through media costs and profit margins183 - The company's primary financial objectives are to achieve sustainable revenue growth and target profitability levels while investing in growth initiatives184 FY2025 Net Revenue Composition | Client Vertical | % of Net Revenue | | :--- | :--- | | Financial Services | 75% | | Home Services | 24% | | Other Revenue | 1% | Trends Affecting our Business The financial services vertical, particularly auto insurance, faced challenges from media availability, competition, and search algorithm changes, but recovered in FY2025 due to rate increases and product optimization, while the company expanded through acquisitions and strategic partnerships, with overall performance influenced by seasonality and evolving federal, state, and industry regulations - The financial services vertical previously faced challenges from limited high-quality media availability, increased competition, and changes in search algorithms, but the company responded by enhancing products, strategic partnerships, and acquisitions188 - The auto insurance industry was affected by macroeconomic, weather, and supply chain events, leading to higher loss ratios and reduced advertising spend, but began to benefit from rate increases and product optimization in calendar year 2024, increasing advertising spend, and the company saw a recovery in net revenue in Q3 and Q4 of FY2025189190 - The company expands client and media relationships through acquisitions (e.g., BestCompany and AquaVida) and develops new media sources and strategic partnerships to address media acquisition challenges191192 - The company's performance is subject to seasonal fluctuations, with the second fiscal quarter (ending December 31) typically weaker and the third fiscal quarter (ending March 31) typically stronger, and the home services vertical also exhibits seasonal trends193194 - Changes and enforcement of federal, state, and industry regulations (such as TCPA amendments) directly and indirectly impact the company's business, potentially leading to fluctuations in business volume and mix195196197 Basis of Presentation Net revenue is primarily derived from fees earned by providing qualified marketing results across financial services, home services, and other verticals, while cost of revenue includes media, personnel, amortization, depreciation, and facility expenses, and operating expenses are categorized into product development, sales and marketing, and general and administrative, with interest and other net expenses and income tax provisions reflecting the company's tax liabilities - Net revenue primarily derives from fees earned by providing qualified marketing results such as clicks, leads, calls, applications, or customers, categorized into financial services, home services, and other revenue verticals198 - Cost of revenue primarily includes media and marketing costs, personnel costs, intangible asset amortization, depreciation expense, and facility expenses199 - Operating expenses are categorized into product development, sales and marketing, and general and administrative expenses, primarily comprising personnel costs, professional service fees, and facility expenses200201202 - Interest and other (expense) income, net, primarily includes interest expense, interest income, and other non-operating items203 - The provision for income taxes reflects the company's tax liabilities in the U.S. and other operating jurisdictions204 Results of Operations In FY2025, the company achieved significant growth in net revenue and gross profit, returning to net income, driven by a 108% increase in financial services revenue, particularly insurance, while managing a 73% increase in cost of revenue and a 41% rise in operating expenses, with a notable improvement in Adjusted EBITDA and a higher effective tax rate due to profitability Consolidated Results of Operations Overview (FY2023-2025) | Metric (Thousands USD) | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | Net Revenue | $1,093,711 | $613,514 | $580,624 | | Cost of Revenue | $982,840 | $567,268 | $532,101 | | Gross Profit | $110,871 | $46,246 | $48,523 | | Gross Margin | 10.1% | 7.5% | 8.4% | | Operating Income (Loss) | $6,193 | $(28,065) | $(20,816) | | Income (Loss) Before Income Taxes | $5,633 | $(30,396) | $(21,362) | | Provision for Income Taxes | $(926) | $(935) | $(47,504) | | Net Income (Loss) | $4,707 | $(31,331) | $(68,866) | Net Revenue by Vertical Change (FY2025 vs FY2024) | Vertical | FY2025 (Thousands USD) | FY2024 (Thousands USD) | Change Amount (Thousands USD) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Financial Services | $817,157 | $392,579 | $424,578 | 108% | | - Insurance Business | - | - | $414,400 | 200% | | - Banking and Credit Card Business | - | - | $11,700 | - | | Home Services | $261,794 | $211,944 | $49,850 | 24% | | Other Revenue | $14,760 | $8,991 | $5,769 | 64% | | Total Net Revenue | $1,093,711 | $613,514 | $480,197 | 78% | - Cost of revenue increased by $415.6 million (73%) in FY2025, primarily driven by a $406.8 million increase in media and marketing costs due to higher revenue volume; gross margin increased from 8% in FY2024 to 10% in FY2025, mainly due to lower personnel costs and depreciation as a percentage of net revenue, partially offset by a higher proportion of revenue from the financial services vertical, which has a higher media cost-to-revenue ratio209210 Operating Expense Changes (FY2025 vs FY2024) | Operating Expense (Thousands USD) | FY2025 | FY2024 | Change Amount (Thousands USD) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Product Development | $33,872 | $30,045 | $3,827 | 13% | | Sales and Marketing | $18,289 | $13,607 | $4,682 | 34% | | General and Administrative | $52,517 | $30,659 | $21,858 | 71% | | Total Operating Expenses | $104,678 | $74,311 | $30,367 | 41% | - Interest and other (expense) income, net, was a negative $0.56 million in FY2025, a 76% reduction from negative $2.331 million in FY2024, primarily due to reduced interest on estimated deferred payments related to acquisitions and lower impairment charges on equity investments recorded in FY2024215 Provision for Income Taxes and Effective Tax Rate (FY2023-2025) | Metric (Thousands USD) | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | Provision for Income Taxes | $(926) | $(935) | $(47,504) | | Effective Tax Rate | 16.5% | (3.1%) | (222.4%) | - The effective tax rate increased in FY2025 primarily because the company generated pre-tax income, compared to a pre-tax loss in the prior year; the significant increase in the provision for income taxes in FY2023 was mainly due to a $52.4 million valuation allowance recorded against net deferred tax assets218219 Adjusted EBITDA (FY2023-2025) | Metric (Thousands USD) | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $81,263 | $20,365 | $16,690 | - Adjusted EBITDA is defined as net income (loss) adjusted for depreciation and amortization, stock-based compensation expense, interest and other net expenses, provision for income taxes, restructuring costs, acquisition costs, litigation settlement expenses, tax settlement expenses, and contingent consideration adjustments221 Liquidity and Capital Resources As of June 30, 2025, the company's primary liquidity sources include $101.1 million in cash and cash equivalents and future cash generated from operations, which are deemed sufficient to meet short-term and long-term needs for working capital, capital expenditures, internal software development, common stock repurchases, and acquisitions, with approximately $16.8 million remaining for repurchases under a board-authorized program - As of June 30, 2025, the company's primary liquidity sources include $101.1 million in cash and cash equivalents and cash generated from future operations226 - Short-term and long-term liquidity needs primarily stem from working capital, capital expenditures, internal software development costs, common stock repurchases, and acquisitions227 - The company's Board of Directors authorized a new stock repurchase program in April 2022, allowing for repurchases of up to $40.0 million of common stock; as of June 30, 2025, approximately $16.8 million remained available for repurchases228 - The company believes its primary liquidity sources are sufficient to meet cash needs for at least the next 12 months and the foreseeable future229 Cash Flows In FY2025, the company generated $85.0 million in net cash from operating activities, driven by net income and non-cash adjustments, while investing activities resulted in $11.4 million in outflows for software development and capital expenditures, and financing activities saw $23.0 million in outflows primarily for acquisition-related deferred payments and tax withholdings on restricted stock releases, partially offset by stock option exercises Cash Flow Overview (FY2023-2025) | Cash Flow (Thousands USD) | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | $84,980 | $12,039 | $11,838 | | Net Cash from Investing Activities | $(11,443) | $(22,735) | $(15,125) | | Net Cash from Financing Activities | $(22,996) | $(12,511) | $(19,459) | - Net cash inflow from operating activities was $85.0 million in FY2025, primarily driven by $4.7 million in net income, $76.0 million in non-cash adjustments (including stock-based compensation, depreciation and amortization, fair value changes in contingent consideration), and a $4.2 million net increase in working capital changes232233 - Net cash outflow from investing activities was $11.4 million in FY2025, primarily for $9.4 million in internal software development costs and $2.1 million in capital expenditures235236 - Net cash outflow from financing activities was $23.0 million in FY2025, primarily for $13.7 million in acquisition-related deferred payments and contingent consideration, and $13.2 million in tax withholdings related to restricted stock releases, partially offset by $4.0 million from stock option exercises and common stock issuances under the employee stock purchase plan237238 Contractual Obligations As of June 30, 2025, the company's total contractual obligations amount to $36.9 million, comprising $13.2 million in operating leases, $10.2 million in acquisition-related deferred payments, and $13.6 million in acquisition-related contingent consideration, with the majority due within three years, excluding certain uncommenced operating leases and long-term income tax liabilities whose timing and amount cannot be reasonably estimated Contractual Obligations Payment Schedule as of June 30, 2025 (Thousands USD) | Contractual Obligation | Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Leases | $13,201 | $3,482 | $6,627 | $3,059 | $33 | | Acquisition-Related Deferred Payments | $10,179 | $8,416 | $1,763 | $0 | $0 | | Acquisition-Related Contingent Consideration | $13,558 | $5,155 | $8,403 | $0 | $0 | | Total | $36,938 | $17,053 | $16,793 | $3,059 | $33 | - This table excludes approximately $0.5 million in future minimum payments for uncommenced operating leases and approximately $2.8 million in long-term income tax liabilities, as the timing and amount of payment cannot be reasonably estimated241242 Critical Accounting Policies and Estimates The company's consolidated financial statements are prepared under GAAP, requiring management estimates and assumptions that impact reported assets, liabilities, contingencies, revenues, and expenses, with key policies covering revenue recognition, stock-based compensation, income taxes, acquisitions, goodwill, and long-lived asset impairment - The company prepares consolidated financial statements in accordance with GAAP, requiring estimates and assumptions that impact reported assets, liabilities, contingent matters, and amounts of revenue and expenses243244 - Revenue Recognition: Revenue primarily derives from providing qualified marketing results, recognized under the five-step framework of ASC 606; contracts are typically one-month terms, terminable at will; the company identifies a single performance obligation, a series of distinct services, and recognizes revenue as services are provided; transaction prices are fixed, with no need to estimate variable consideration; the company assesses whether it is a principal (recognizing revenue on a gross basis) or an agent (recognizing revenue on a net basis) - Stock-Based Compensation: Stock-based compensation expense is measured at fair value on the grant date; fair value of service-based restricted stock units (RSUs) is determined based on the closing price of common stock on the grant date; fair value of stock options and Employee Stock Purchase Plan (ESPP) purchase rights is estimated using the Black-Scholes option pricing model; expense is recognized on a straight-line or graded vesting basis, with an estimated future forfeiture rate - Income Taxes: Deferred taxes are recorded using the asset and liability method; realizability of deferred tax assets is assessed, and a valuation allowance is recorded based on factors like cumulative losses and future earnings projections; tax benefits from uncertain tax positions are recognized only when it is 'more likely than not' that they will be sustained - Acquisitions and Business Combinations: Transactions are evaluated as either asset acquisitions or business combinations; asset acquisitions are accounted for using a cost accumulation and allocation model; business combinations use the acquisition method, allocating the total consideration to the fair value of acquired assets and assumed liabilities; goodwill is the excess of the purchase price over the fair value of identifiable assets and liabilities; contingent consideration is measured at fair value and adjusted periodically - Goodwill: Goodwill impairment is tested at least annually at the reporting unit level, with qualitative factors such as economic conditions, industry competition, stock price, and cash flows used to assess the need for a quantitative test; no impairment was identified as of April 30, 2025 - Long-Lived Assets: Long-lived assets (such as property, plant, and equipment and finite-lived purchased intangible assets) are evaluated for impairment when events or changes in circumstances indicate that their carrying amount may not be recoverable; no impairment was identified as of April 30, 2025246247248249250251252253254255256257259260261262263264265266268 Recent Accounting Pronouncements The company has adopted ASU No. 2023-07, 'Segment Reporting: Improvements to Reportable Segment Disclosures,' effective June 30, 2025, with no material impact, and is currently evaluating the impact of ASU 2023-09, 'Income Taxes: Improvements to Income Tax Disclosures,' and ASU 2024-03, 'Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures,' which will become effective in future fiscal years - Adopted: ASU No. 2023-07, 'Segment Reporting: Improvements to Reportable Segment Disclosures,' became effective on June 30, 2025, with no material impact on consolidated financial statements - Not Yet Adopted: ASU 2023-09, 'Income Taxes: Improvements to Income Tax Disclosures,' will be effective for fiscal years beginning after December 15, 2024, and the company is evaluating its impact on financial statement disclosures - Not Yet Adopted: ASU 2024-03, 'Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures,' will be effective for fiscal years beginning after December 15, 2026, and the company is evaluating its impact on financial statement disclosures269348349350 Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company faces market risk primarily from interest rate fluctuations, but considers the impact of interest rate changes on the fair value of its cash equivalents, invested in money market funds, to be immaterial due to their short-term nature, with a hypothetical 1% decrease in interest rates not expected to materially affect consolidated financial statements - The company's primary market risk exposure is interest rate fluctuations270 - The company invests cash equivalents in money market funds, and due to the short-term nature of these investments, believes that changes in interest rates do not have a material impact on their fair value271 - A hypothetical 1% decrease in interest rates would not have a material impact on the consolidated financial statements271 Item 8. Financial Statements and Supplementary Data This section includes the company's consolidated financial statements for the fiscal year ended June 30, 2025, comprising the balance sheets, statements of operations and comprehensive income (loss), statements of stockholders' equity, and statements of cash flows, along with the independent registered public accounting firm's report from PwC, and detailed notes covering company overview, significant accounting policies, revenue, net income (loss) per share, fair value measurements, acquisitions, balance sheet components, intangible assets and goodwill, income taxes, leases, commitments and contingencies, stockholders' equity, and stock benefit plans Report of Independent Registered Public Accounting Firm PwC issued an unqualified opinion on the company's consolidated balance sheets as of June 30, 2025 and 2024, and the consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows for the three years ended June 30, 2025, also providing an unqualified opinion on the effectiveness of internal control over financial reporting as of June 30, 2025, with revenue recognition identified as a key audit matter - PricewaterhouseCoopers LLP (PwC) issued an unqualified opinion on the company's consolidated balance sheets as of June 30, 2025 and 2024, and the consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows for the three years ended June 30, 2025277278 - PwC also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of June 30, 2025278 - Key audit matters include revenue recognition, where auditors dedicated significant effort and evaluated the effectiveness of the company's revenue recognition process controls and related audit evidence284285286287 Consolidated Balance Sheets The consolidated balance sheets present the company's financial position as of June 30, 2025 and 2024, detailing assets including $101.1 million in cash and cash equivalents and $135.8 million in net accounts receivable, alongside liabilities such as $62.2 million in accounts payable and $87.2 million in accrued liabilities, culminating in total assets of $431.1 million and total stockholders' equity of $244.0 million for FY2025 Consolidated Balance Sheets (Thousands USD) | Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $101,078 | $50,488 | | Accounts receivable, net | $135,804 | $111,786 | | Prepaid expenses and other assets | $8,644 | $6,813 | | Total current assets | $245,526 | $169,087 | | Property and equipment, net | $16,818 | $19,858 | | Operating lease right-of-use assets | $9,620 | $10,440 | | Goodwill | $125,056 | $125,056 | | Intangible assets, net | $28,475 | $38,008 | | Other non-current assets | $5,612 | $6,097 | | Total assets | $431,107 | $368,546 | | Liabilities and Stockholders' Equity | | | | Accounts payable | $62,247 | $48,204 | | Accrued liabilities | $87,225 | $68,822 | | Other current liabilities | $13,572 | $9,372 | | Total current liabilities | $163,044 | $126,398 | | Operating lease liabilities (non-current) | $7,382 | $7,879 | | Other non-current liabilities | $16,637 | $17,444 | | Total liabilities | $187,063 | $151,721 | | Stockholders' Equity | | | | Common stock | $58 | $55 | | Additional paid-in capital | $369,958 | $347,449 | | Accumulated other comprehensive loss | $(268) | $(268) | | Accumulated deficit | $(125,704) | $(130,411) | | Total stockholders' equity | $244,044 | $216,825 | | Total liabilities and stockholders' equity | $431,107 | $368,546 | Consolidated Statements of Operations and Comprehensive Income (Loss) The consolidated statements of operations and comprehensive income (loss) show the company's financial performance for FY2025, FY2024, and FY2023, reporting net income of $4.7 million in FY2025, a significant improvement from net losses of $31.3 million and $68.9 million in the prior two fiscal years, driven by $1.09 billion in net revenue and a gross profit of $110.9 million for FY2025 Consolidated Statements of Operations and Comprehensive Income (Loss) (Thousands USD, except per share data) | Item | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | Net revenue | $1,093,711 | $613,514 | $580,624 | | Cost of revenue | $982,840 | $567,268 | $532,101 | | Gross profit | $110,871 | $46,246 | $48,523 | | Operating expenses: | | | | | Product development | $33,872 | $30,045 | $28,893 | | Sales and marketing | $18,289 | $13,607 | $12,542 | | General and administrative | $52,517 | $30,659 | $27,904 | | Operating income (loss) | $6,193 | $(28,065) | $(20,816) | | Interest income | $23 | $408 | $296 | | Interest expense | $(400) | $(680) | $(790) | | Other (expense) income, net | $(183) | $(2,059) | $(52) | | Income (loss) before income taxes | $5,633 | $(30,396) | $(21,362) | | Provision for income taxes | $(926) | $(935) | $(47,504) | | Net income (loss) | $4,707 | $(31,331) | $(68,866) | | Comprehensive income (loss) | $4,707 | $(31,333) | $(68,871) | | Net income (loss) per share: | | | | | Basic | $0.08 | $(0.57) | $(1.28) | | Diluted | $0.08 | $(0.57) | $(1.28) | Consolidated Statements of Stockholders' Equity The consolidated statements of stockholders' equity detail changes in common stock, additional paid-in capital, accumulated other comprehensive loss, and accumulated deficit for the fiscal years ended June 30, 2025 and 2024, showing an increase in total stockholders' equity from $216.8 million in FY2024 to $244.0 million in FY2025, primarily due to net income of $4.7 million and an increase in additional paid-in capital of $22.5 million Consolidated Statements of Stockholders' Equity (Thousands USD, except share data) | Item | Balance as of June 30, 2023 | FY2024 Changes | Balance as of June 30, 2024 | FY2025 Changes | Balance as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Common stock (thousands of shares) | 54,193 | 1,281 | 55,473 | 1,686 | 57,160 | | Common stock (amount) | $54 | $1 | $55 | $3 | $58 | | Additional paid-in capital | $329,093 | $18,356 | $347,449 | $22,499 | $369,958 | | Accumulated other comprehensive loss | $(266) | $(2) | $(268) | $0 | $(268) | | Accumulated deficit | $(99,080) | $(31,331) | $(130,411) | $4,707 | $(125,704) | | Total stockholders' equity | $229,801 | $(15,196) | $216,825 | $27,219 | $244,044 | | Treasury stock (shares) | 0 | (247,618) | 0 | 0 | 0 | | Treasury stock (amount) | $0 | $(2,200) | $0 | $0 | $0 | Consolidated Statements of Cash Flows The consolidated statements of cash flows show a net increase in cash and cash equivalents of $50.6 million in FY2025, primarily driven by $85.0 million in net cash from operating activities, partially offset by $11.4 million in net cash used in investing activities and $23.0 million in net cash used in financing activities, resulting in ending cash and cash equivalents of $101.1 million Consolidated Statements of Cash Flows (Thousands USD) | Cash Flow Activity | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $84,980 | $12,039 | $11,838 | | Net cash from investing activities | $(11,443) | $(22,735) | $(15,125) | | Net cash from financing activities | $(22,996) | $(12,511) | $(19,459) | | Effect of exchange rate changes | $50 | $18 | $(15) | | Net increase (decrease) in cash and cash equivalents | $50,591 | $(23,189) | $(22,761) | | Cash and cash equivalents at beginning of period | $50,503 | $73,692 | $96,453 | | Cash and cash equivalents at end of period | $101,094 | $50,503 | $73,692 | Supplemental Cash Flow Information (Thousands USD) | Item | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | Income taxes paid | $576 | $470 | $372 | | Purchases of property and equipment included in accrued liabilities | $1,413 | $846 | $1,228 | Notes to Consolidated Financial Statements These notes provide detailed information supporting the consolidated financial statements, covering company overview, significant accounting policies, revenue, net income (loss) per share, fair value measurements, acquisitions, balance sheet components, intangible assets and goodwill, income taxes, leases, commitments and contingencies, stockholders' equity, and stock benefit plans 1. The Company QuinStreet, Inc., founded in April 1999 and reincorporated in Delaware in December 2009, is a leading performance marketing company in the financial and home services industries, headquartered in Foster City, California, with offices in the U.S., India, and Mexico, primarily deriving business and revenue from North America - QuinStreet, Inc. was founded in April 1999 and reincorporated in Delaware in December 2009, operating as a leading performance marketing company in the financial and home services industries298 - The company is headquartered in Foster City, California, with offices in the U.S., India, and Mexico, primarily deriving its business and revenue from North America298 2. Summary of Significant Accounting Policies This section outlines the company's significant accounting policies, including consolidation principles, use of estimates, revenue recognition, credit risk concentration,
QuinStreet(QNST) - 2025 Q4 - Annual Report