QuinStreet(US:QNST)2022-02-09 00:50Financial Data and Key Metrics Changes - Revenue in Q2 2022 declined 7% year-over-year to $125.3 million [25] - GAAP net loss was $5.6 million or $0.10 per share, while adjusted net income was $3.2 million or $0.06 per share [25] - Adjusted EBITDA was $5.6 million [25] - Cash balance increased by $6 million, closing the quarter with $115 million in cash and equivalents [29] Business Line Data and Key Metrics Changes - Financial Services client vertical represented 72% of Q2 revenue, declining 13% year-over-year to $90.2 million [26] - Non-insurance client verticals saw revenue growth of 36% year-over-year in the December quarter [21] - Home Services client vertical represented 27% of Q2 revenue, growing 16% year-over-year to $33.8 million [28] Market Data and Key Metrics Changes - Insurance client spending rebounded strongly in January, up almost 80% over December, but faced significant cuts again in February [8][10] - The auto and home insurance market is experiencing increased claim frequencies and higher repair costs due to supply chain issues and inflation [12][14] Company Strategy and Development Direction - The company aims to grow revenue and generate between $40 million and $45 million of adjusted EBITDA for the fiscal year [11] - Focus on expanding core trades in Home Services and scaling growth rates in early development stages [28] - Continued investment in QRP, expecting revenue to exceed $1 million per month by June [22] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over the reduced spending from insurance clients but remains optimistic about medium to long-term growth [10][12] - The transition period in the auto and home insurance market is expected to last around six months, with a return to normalized spending anticipated between late spring and early fall [16][19] - Management highlighted strong momentum in non-insurance verticals and the potential for increased consumer shopping activity in auto insurance [20][19] Other Important Information - The company is open to considering buybacks if there is a significant dislocation between business performance and investor sentiment [59] - A one-time charge of approximately $2.7 million was taken to adjust the fair value of an earn-out associated with a recent acquisition [90] Q&A Session Summary Question: Can you clarify the cadence of spending from insurance clients? - Management confirmed that spending was strong in January but faced cuts again in February due to changing loss ratios and economic conditions [36][38] Question: How do you see the concentration of spending changes across carriers? - Management indicated that the spending cuts are widespread across various carriers, not isolated to a few [42][44] Question: What strategies will the company employ to gain market share during this period? - Management plans to deepen relationships with carriers and continue investing in QRP to assist agencies during this transition [48][50] Question: What are the expectations for non-insurance revenue growth? - Management expects credit-driven verticals to return to pre-pandemic levels soon, with strong growth rates anticipated [62][64] Question: How does the company view future investments and acquisitions? - The company prioritizes finding opportunities outside the insurance vertical to boost growth in other areas [84]