QuinStreet(QNST) - 2024 Q3 - Quarterly Report

Financial Performance - Net revenue decreased by $4.1 million, or 2%, for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to a $8.0 million decrease in the financial services client vertical[123]. - For the nine months ended March 31, 2024, net revenue decreased by $35.1 million, or 8%, with a $48.8 million decrease in the financial services client vertical, partially offset by a $12.6 million increase in the home services client vertical[124]. - The company recorded a net loss of $7.0 million, or 4.3%, for the three months ended March 31, 2024, compared to a net loss of $479,000, or 0.3%, for the same period in 2023[122]. - The net loss for the nine months ended March 31, 2024 was $29.2 million, with non-cash adjustments totaling $37.4 million[141]. Revenue Sources - Financial services client vertical represented 67% and 62% of net revenue for the three and nine months ended March 31, 2024, compared to 70% and 68% for the same periods in 2023[93]. - One client in the financial services vertical accounted for 15% of net revenue for the three months ended March 31, 2024, down from 25% in the same period of 2023[94]. - Revenue from the home services vertical represented 32% and 37% of net revenue for the three and nine months ended March 31, 2024, compared to 29% and 31% for the same periods in 2023[93]. - Revenue from the home services client vertical increased by $3.6 million, or 7%, for the three months ended March 31, 2024, due to increased client budgets[123]. - The company generates revenue primarily from fees earned through the delivery of qualified inquiries such as clicks, leads, calls, applications, or customers[108]. Costs and Expenses - Cost of revenue consists mainly of media and marketing costs, which include fees paid to third-party publishers and media owners[109]. - Cost of revenue decreased by $1.4 million, or 1%, for the three months ended March 31, 2024, primarily driven by decreased media and marketing costs[125]. - Gross profit margin was 8% for the three months ended March 31, 2024, down from 10% in the same period of 2023, attributed to increased compensation costs and depreciation[125]. - Operating expenses increased by $1.2 million, or 17%, for the three months ended March 31, 2024, primarily due to increased stock-based compensation expense[131]. - General and administrative expenses increased by $1.0 million, or 5%, for the nine months ended March 31, 2024, primarily due to increased stock-based compensation expense[132]. Strategic Initiatives - The company completed several strategic acquisitions, including BestCompany and AquaVida in fiscal year 2024, to enhance its market position[99]. - The home services client vertical has been expanding, driven by successful growth initiatives and synergies from the acquisition of Modernize[97]. - The company aims to create revenue growth from sustainable sources while achieving target levels of profitability, rather than maximizing short-term profits[91]. Cash Flow and Liquidity - Cash and cash equivalents as of March 31, 2024, totaled $39.6 million, with liquidity maintained in highly liquid investments[135]. - Cash used in operating activities was $4.5 million for the nine months ended March 31, 2024, compared to cash provided by operating activities of $6.1 million for the same period in 2023[140]. - Cash used in investing activities was $19.1 million for the nine months ended March 31, 2024, compared to $10.7 million for the same period in 2023[145]. - Cash used in financing activities was $10.5 million for the nine months ended March 31, 2024, a decrease from $16.7 million in the same period of 2023[148]. - The company may consider obtaining debt financing or issuing additional equity securities for various reasons, despite not needing additional funds for anticipated liquidity requirements[136]. - The company authorized a new stock repurchase program allowing the repurchase of up to $40.0 million worth of common stock, with $1.6 million and $0.6 million spent in the first and second quarters of fiscal year 2024 respectively[137]. - As of March 31, 2024, approximately $16.8 million remained available for stock repurchases under the board authorization[137]. Working Capital and Accounts Receivable - The increase in accounts receivable for the nine months ended March 31, 2024 was $32.6 million, primarily due to higher revenue levels[141]. - The company reported a net decrease in cash from changes in working capital of $12.8 million for the nine months ended March 31, 2024[141]. Market Conditions - Increased competition for high-quality media and changes in search engine algorithms have posed challenges to the financial services vertical[95]. - The business is affected by seasonality, with typically lower media availability and client budgets in the second fiscal quarter[103]. - The company does not have material exposure to changes in interest rates due to the short-term nature of its investments[155].