QuinStreet(US:QNST)2019-02-08 04:21Financial Data and Key Metrics Changes - Total revenue increased by 19% year-over-year to $104.1 million, setting a new fiscal Q2 record for the company [13][16] - Adjusted EBITDA grew by 42% year-over-year to $9.3 million, representing a 9% margin [16][23] - Adjusted net income rose by 76% year-over-year to $6.5 million, or $0.12 per share on a fully diluted basis [16] - Normalized free cash flow for the quarter was $9.4 million, or 9% of revenue [16][25] Business Line Data and Key Metrics Changes - Financial Services represented 71% of Q2 revenue, growing 19% year-over-year to $74.4 million, with double and triple-digit growth in insurance, personal loans, credit cards, and banking [18] - Education segment accounted for 16% of Q2 revenue, growing 5% year-over-year to $16.2 million, impacted by budget loss from the largest client [19] - Other client verticals, representing 13% of Q2 revenue, grew 38% year-over-year to $13.5 million, driven by home services and B2B business growth [20] Market Data and Key Metrics Changes - The company expects significant year-over-year revenue declines in education and mortgage sectors in the latter half of fiscal 2019, while other verticals are expected to continue strong growth [11][21] - Excluding mortgage, the Financial Services vertical grew by 33% in the quarter [18] Company Strategy and Development Direction - The company emphasizes the long-term opportunity in digital media marketing, aiming to leverage its unique combination of products, networks, and technologies [9][10] - The focus remains on expanding market share in early-stage markets, particularly in home services and personal loans, which are seen as significant growth opportunities [20][83] Management Comments on Operating Environment and Future Outlook - Management acknowledges cyclical softness in the mortgage market and restructuring challenges in the education sector, but remains optimistic about growth in other verticals [11][21] - The company expects continued revenue growth in the range of 15% to 20% for the full fiscal year 2019, leaning towards the lower end due to challenges in specific sectors [21] Other Important Information - A one-time tax benefit of $49.4 million was recorded due to the reversal of a valuation allowance against deferred tax assets [23] - The company closed the quarter with $62.4 million in cash and equivalents, having grown cash by $12 million net of the AmOne acquisition [25] Q&A Session Summary Question: What was the contribution of AmOne to revenue? - Management indicated that the integration of AmOne is going well, and while exact numbers were not provided, overall growth in Financial Services remained solid [36] Question: What is the outlook for the education vertical? - Management expects significant declines in the education vertical due to the loss of the DCEH budget but remains optimistic about long-term growth potential [52][62] Question: How is the mortgage business performing? - Management noted that the cyclical downturn in the mortgage market is expected to continue impacting performance for the rest of the fiscal year [47] Question: What is the growth rate in the insurance vertical? - Management characterized growth in the insurance vertical as solid double digits, with some large carriers growing at higher rates than Progressive [68] Question: How is the personal loans market expected to perform? - Management expressed optimism about the long-term opportunity in personal loans, particularly following the acquisition of AmOne, which enhances their market coverage [83]