QuinStreet(US:QNST)2019-11-11 01:38Financial Data and Key Metrics Changes - Revenue for Q1 2020 increased 12% year-over-year to $126.6 million, marking a record revenue quarter [16] - Adjusted EBITDA was $9.4 million, representing 7.5% of revenue, while adjusted net income was $6.2 million or $0.12 per share on a fully diluted basis [17] - Cash balance grew by $8 million to $70.5 million by the end of the quarter [17] Business Line Data and Key Metrics Changes - Financial services client vertical accounted for 73% of Q1 revenue, growing 20% year-over-year to $92.9 million; excluding mortgage, this segment grew 32% year-over-year [17][18] - Education client vertical represented 14% of revenue but declined 22% year-over-year to $17.4 million due to the collapse of a major client [19] - Other client verticals, including home services and B2B, grew 25% year-over-year to $16.3 million, representing 13% of total revenue [20] Market Data and Key Metrics Changes - The largest client represented 18% of total revenue, with a reduction in concentration due to increased spending from other clients in the insurance sector [18] - A record number of insurance clients spent $1 million or more per month, indicating a trend of clients increasing their budgets for digital and performance marketplaces [18] Company Strategy and Development Direction - The company is maintaining its full fiscal year outlook for both revenue and EBITDA, expecting higher margins due to a mix shift towards higher margin businesses [7][10] - A strategic review process has been initiated to explore alternatives for enhancing shareholder value, with Goldman Sachs leading the review [12][14] - The company is optimistic about long-term market opportunities and is focused on expanding profitability through media optimization and ramping new businesses with SaaS-like margins [21][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong results in Q2, citing positive impacts from operational changes and a favorable economic environment [13][14] - The mortgage business remains a challenge, with expectations of a long recovery cycle, but management is optimistic about rebuilding this segment [34][36] - The company is seeing good momentum in other areas and expects to continue delivering double-digit revenue growth and expanding margins [24][41] Other Important Information - The company has a strong pipeline for its new QRP product, with expectations of significant revenue opportunities from contracts expected to be signed by the end of December [63][68] - Management emphasized the importance of media investments and optimization as part of their business model, which is expected to contribute to future growth [21][50] Q&A Session Summary Question: What does the strategic review imply? - Management stated that the review will consider a broad range of options, not limited to a sale or breakup, and aims to enhance shareholder value [27] Question: How will operational improvements affect margins? - Management indicated that operational changes have already positively impacted margins and are expected to continue doing so [72] Question: What is the outlook for the mortgage business? - Management acknowledged ongoing challenges in the mortgage sector but expressed optimism about rebuilding efforts [36][88] Question: What are the plans for the cash balance? - Management plans to be opportunistic with acquisitions and maintain a conservative financial profile, with no immediate plans for buybacks or dividends [78][82] Question: How much did CloudControlMedia and MyBankTracker contribute to revenue? - Management noted that it is difficult to quantify their contributions as they are integrated into the overall business [84] Question: What is the expected impact of the mortgage headwind next quarter? - Management expects the mortgage headwind to remain similar to the current quarter's impact [90]