- Record quarterly revenue of $279 million, up 125%
YoY
- Record auto insurance quarterly revenue, up 664% YoY; Strong
demand continues
- Record home services quarterly revenue, up 32% YoY
- Raising full fiscal year 2025 revenue and Adjusted EBITDA
outlook
QuinStreet, Inc. (Nasdaq: QNST), a leader in performance
marketplaces and technologies for the financial services and home
services industries, today announced financial results for the
fiscal first quarter ended September 30, 2024.
For the fiscal first quarter, the Company reported revenue of
$279.2 million, up 125% year-over-year.
GAAP loss for the fiscal first quarter was $1.4 million, or
$(0.02) per diluted share. Adjusted net income for the fiscal first
quarter was $12.5 million, or $0.22 per diluted share.
Adjusted EBITDA for the fiscal first quarter was $20.3
million.
“Fiscal first quarter revenue grew 125% year-over-year and 41%
sequentially. Adjusted EBITDA jumped to over $20 million in the
quarter,” commented Doug Valenti, CEO of QuinStreet. “The strong
results were driven by the broad based ramp of auto insurance
carrier budgets, and by our expanded client, media, and product
footprints. Total Financial Services revenue grew 192% year over
year in the quarter; Home Services revenue grew 32%.
“The outlook for auto insurance going forward remains strong.
Carriers continue to report good results overall and from our
channel. We are focused on increasing and optimizing media supply
to meet surging carrier demand. Those efforts should eventually
further expand margins. Turning to our outlook for fiscal Q2, we
expect revenue to be between $235 and $245 million, and adjusted
EBITDA to be between $17.5 and $18.5 million.
“Though it is still early, we are raising our full fiscal year
2025 outlook. Full fiscal year revenue is now expected to be
between $975 million and $1.025 billion. Full fiscal year adjusted
EBITDA is expected to be between $75 million and $80 million. We
will continue to update our outlook as warranted as the fiscal year
progresses.
“Finally, we know FCC changes to TCPA rules scheduled to go into
effect in January are an area of investor interest. We have
included the expected impact from the transition to the new rules
in our outlook. Beyond the period of transition to the new rules,
we expect the changes to be a positive for QuinStreet and for the
channel by raising the bar on competition, and by improving client
and consumer results,” concluded Valenti.
Conference Call Today at 2:30 p.m.
PT
The Company will host a conference call and corresponding live
webcast at 2:30 p.m. PT. To access the conference call dial +1
800-717-1738 (domestic) or +1 646-307-1865 (international). A
replay of the conference call will be available beginning
approximately two hours after the completion of the call by dialing
+1 844-512-2921 (domestic) or +1 412-317-6671 (international) and
using passcode #1189299. The webcast of the conference call will be
available live and via replay on the investor relations section of
the Company's website at http://investor.quinstreet.com.
About QuinStreet
QuinStreet, Inc. (Nasdaq: QNST) is a leader in performance
marketplaces and technologies for the financial services and home
services industries. QuinStreet is a pioneer in delivering online
marketplace solutions to match searchers with brands in digital
media, and is committed to providing consumers with the information
and tools they need to research, find and select the products and
brands that meet their needs.
Non-GAAP Financial Measures and
Definitions of Client Verticals
This release and the accompanying tables include a discussion of
adjusted EBITDA, adjusted net income, adjusted diluted net income
per share and free cash flow and normalized free cash flow, all of
which are non-GAAP financial measures that are provided as a
complement to results provided in accordance with accounting
principles generally accepted in the United States of America
("GAAP"). The term "adjusted EBITDA" refers to a financial measure
that we define as net loss less provision for income taxes,
depreciation expense, amortization expense, stock-based
compensation expense, interest and other expense, net, acquisition
costs, contingent consideration adjustment, litigation settlement
expense, and restructuring costs. The term "adjusted net income"
refers to a financial measure that we define as net loss adjusted
for amortization expense, stock-based compensation expense,
acquisition costs, contingent consideration adjustment, litigation
settlement expense, and restructuring costs, net of estimated
taxes. The term "adjusted diluted net income per share" refers to a
financial measure that we define as adjusted net income divided by
weighted average diluted shares outstanding. The term “free cash
flow” refers to a financial measure that we define as net cash
provided by operating activities, less capital expenditures and
internal software development costs. The term “normalized free cash
flow” refers to free cash flow less changes in operating assets and
liabilities. These non-GAAP measures should be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP results.
In addition, our definition of adjusted EBITDA, adjusted net
income, adjusted diluted net income per share and free cash flow
and normalized free cash flow may not be comparable to the
definitions as reported by other companies.
We believe adjusted EBITDA, adjusted net income and adjusted
diluted net income per share are relevant and useful information
because they provide us and investors with additional measurements
to analyze the Company's operating performance.
Adjusted EBITDA is useful to us and investors because (i) we
seek to manage our business to a level of adjusted EBITDA as a
percentage of net revenue, (ii) it is used internally by us for
planning purposes, including preparation of internal budgets; to
allocate resources; to evaluate the effectiveness of operational
strategies and capital expenditures as well as the capacity to
service debt, (iii) it is a key basis upon which we assess our
operating performance, (iv) it is one of the primary metrics
investors use in evaluating Internet marketing companies, (v) it is
a factor in determining compensation, (vi) it is an element of
certain financial covenants under our historical borrowing
arrangements, and (vii) it is a factor that assists investors in
the analysis of ongoing operating trends. In addition, we believe
adjusted EBITDA and similar measures are widely used by investors,
securities analysts, ratings agencies and other interested parties
in our industry as a measure of financial performance, debt-service
capabilities and as a metric for analyzing company valuations.
We use adjusted EBITDA as a key performance measure because we
believe it facilitates operating performance comparisons from
period to period by excluding potential differences caused by
variations in capital structures (affecting interest expense), tax
positions (such as the impact of changes in effective tax rates or
fluctuations in permanent differences or discrete quarterly items),
non-recurring charges, certain other items that we do not believe
are indicative of core operating activities (such as litigation
settlement expense, acquisition costs, contingent consideration
adjustment, restructuring costs and other income and expense) and
the non-cash impact of depreciation expense, amortization expense
and stock-based compensation expense.
With respect to our adjusted EBITDA guidance, the Company is not
able to provide a quantitative reconciliation to the most directly
comparable GAAP financial measure without unreasonable efforts due
to the high variability, complexity and low visibility with respect
to certain items such as taxes, and income and expense from changes
in fair value of contingent consideration from acquisitions. We
expect the variability of these items to have a potentially
unpredictable and potentially significant impact on future GAAP
financial results, and, as such, we also believe that any
reconciliations provided would imply a degree of precision that
would be confusing or misleading to investors.
Adjusted net income and adjusted diluted net income per share
are useful to us and investors because they present an additional
measurement of our financial performance, taking into account
depreciation, which we believe is an ongoing cost of doing
business, but excluding the impact of certain non-cash expenses
(stock-based compensation, amortization of intangible assets, and
contingent consideration adjustment), non-recurring charges and
certain other items that we do not believe are indicative of core
operating activities. We believe that analysts and investors use
adjusted net income and adjusted diluted net income per share as
supplemental measures to evaluate the overall operating performance
of companies in our industry.
Free cash flow is useful to investors and us because it
represents the cash that our business generates from operations,
before taking into account cash movements that are non-operational,
and is a metric commonly used in our industry to understand the
underlying cash generating capacity of a company’s financial model.
Normalized free cash flow is useful as it removes the fluctuations
in operating assets and liabilities that occur in any given quarter
due to the timing of payments and cash receipts and therefore helps
investors understand the underlying cash flow of the business as a
quarterly metric and the cash flow generation potential of the
business model. We believe that analysts and investors use free
cash flow multiples as a metric for analyzing company valuations in
our industry.
We intend to provide these non-GAAP financial measures as part
of our future earnings discussions and, therefore, the inclusion of
these non-GAAP financial measures will provide consistency in our
financial reporting. A reconciliation of these non-GAAP measures to
GAAP is provided in the accompanying tables.
Legal Notice Regarding Forward Looking
Statements
This press release and its attachments contain forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 that involve risks and uncertainties. Words
such as "estimate", "will”, "believe", “expect”, "intend",
“outlook”, "potential", “promises” and similar expressions are
intended to identify forward-looking statements. These
forward-looking statements include the statements in quotations
from management in this press release, as well as any statements
regarding the Company's anticipated financial results, growth and
strategic and operational plans and results of analyses on
impairment charges. The Company's actual results may differ
materially from those anticipated in these forward-looking
statements. Factors that may contribute to such differences
include, but are not limited to: the Company’s ability to maintain
and increase client marketing spend; the Company's ability, whether
within or outside the Company’s control, to maintain and increase
the number of visitors to its websites and to convert those
visitors and those to its third-party publishers' websites into
client prospects in a cost-effective manner; the Company's exposure
to data privacy and security risks; the impact of changes in
industry standards and government regulation including, but not
limited to investigation enforcement activities or regulatory
activity by the Federal Trade Commission, the Federal
Communications Commission, the Consumer Finance Protection Bureau
and other state and federal regulatory agencies; the impact of
changes in our business, our industry, and the current economic and
regulatory climate on the Company’s quarterly and annual results of
operations; the Company's ability to compete effectively against
others in the online marketing and media industry both for client
budget and access to third-party media; the Company’s ability to
protect our intellectual property rights; and the impact from risks
relating to counterparties on the Company's business. More
information about potential factors that could affect the Company's
business and financial results are contained in the Company's
annual report on Form 10-K and quarterly reports on Form 10-Q as
filed with the Securities and Exchange Commission ("SEC").
Additional information will also be set forth in the Company's
quarter report on Form 10-Q for the fiscal quarter ended September
30, 2024, which will be filed with the SEC. The Company does not
intend and undertakes no duty to release publicly any updates or
revisions to any forward-looking statements contained herein.
QUINSTREET, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
September 30,
June 30,
2024
2024
Assets
Current assets:
Cash and cash equivalents
$
24,982
$
50,488
Accounts receivable, net
173,904
111,786
Prepaid expenses and other assets
7,570
6,813
Total current assets
206,456
169,087
Property and equipment, net
18,913
19,858
Operating lease right-of-use assets
9,338
10,440
Goodwill
125,056
125,056
Intangible assets, net
35,526
38,008
Other assets, noncurrent
5,883
6,097
Total assets
$
401,172
$
368,546
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
60,404
$
48,204
Accrued liabilities
86,619
68,822
Other liabilities
10,865
9,372
Total current liabilities
157,888
126,398
Operating lease liabilities,
noncurrent
7,026
7,879
Other liabilities, noncurrent
16,440
17,444
Total liabilities
181,354
151,721
Stockholders' equity:
Common stock
56
55
Additional paid-in capital
351,807
347,449
Accumulated other comprehensive loss
(268
)
(268
)
Accumulated deficit
(131,777
)
(130,411
)
Total stockholders' equity
219,818
216,825
Total liabilities and stockholders'
equity
$
401,172
$
368,546
QUINSTREET, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
September 30,
2024
2023
Net revenue
$
279,219
$
123,923
Cost of revenue (1)
250,814
116,274
Gross profit
28,405
7,649
Operating expenses: (1)
Product development
8,620
7,637
Sales and marketing
4,144
3,124
General and administrative
16,848
6,787
Operating loss
(1,207
)
(9,899
)
Interest income
14
166
Interest expense
(124
)
(111
)
Other (expense) income
(98
)
29
Loss before income taxes
(1,415
)
(9,815
)
Benefit from (provision for) income
taxes
49
(750
)
Net loss
$
(1,366
)
$
(10,565
)
Net loss per share, basic and diluted
$
(0.02
)
$
(0.19
)
Weighted-average shares used in computing
net loss per share, basic and diluted
55,823
54,470
(1) Cost of revenue and operating expenses
include stock-based compensation expense as follows:
Cost of revenue
$
2,875
$
2,052
Product development
1,046
773
Sales and marketing
1,095
640
General and administrative
3,391
1,810
QUINSTREET, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
September 30,
2024
2023
Cash Flows from Operating
Activities
Net loss
$
(1,366
)
$
(10,565
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation
8,407
5,275
Depreciation and amortization
6,441
5,338
Change in the fair value of contingent
consideration
6,194
—
Provision for sales returns and doubtful
accounts receivable
1,476
223
Non-cash lease expense
(31
)
(253
)
Deferred income taxes
(98
)
544
Other adjustments, net
(352
)
(328
)
Changes in assets and liabilities:
Accounts receivable
(63,594
)
(159
)
Prepaid expenses and other assets
(757
)
1,089
Accounts payable
12,343
(3,603
)
Accrued liabilities
17,631
(2,534
)
Net cash used in operating activities
(13,706
)
(4,973
)
Cash Flows from Investing
Activities
Capital expenditures
(437
)
(1,624
)
Internal software development costs
(2,169
)
(3,470
)
Net cash used in investing activities
(2,606
)
(5,094
)
Cash Flows from Financing
Activities
Proceeds from exercise of stock options
and issuance of common stock under employee stock purchase plan
1,362
1,579
Payment of withholding taxes related to
release of restricted stock, net of share settlement
(5,424
)
(2,187
)
Post-closing payments and contingent
consideration related to acquisitions
(5,144
)
(5,277
)
Repurchase of common stock
—
(1,426
)
Net cash used in financing activities
(9,206
)
(7,311
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
12
6
Net decrease in cash, cash equivalents and
restricted cash
(25,506
)
(17,372
)
Cash, cash equivalents and restricted cash
at beginning of period
50,503
73,692
Cash, cash equivalents and restricted cash
at end of period
$
24,997
$
56,320
Reconciliation of cash, cash
equivalents, and restricted cash to the condensed consolidated
balance sheets
Cash and cash equivalents
$
24,982
56,305
Restricted cash included in other assets,
noncurrent
15
15
Total cash, cash equivalents and
restricted cash
$
24,997
$
56,320
QUINSTREET, INC.
RECONCILIATION OF NET LOSS
TO
ADJUSTED NET INCOME
(LOSS)
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
September 30,
2024
2023
Net loss
$
(1,366
)
$
(10,565
)
Amortization of intangible assets
2,482
2,578
Stock-based compensation
8,407
5,275
Contingent consideration adjustment
6,194
—
Restructuring costs
307
270
Litigation settlement expense
70
—
Acquisition costs
105
—
Tax impact of non-GAAP items
(3,656
)
1,023
Adjusted net income (loss)
$
12,543
$
(1,419
)
Adjusted diluted net income (loss) per
share
$
0.22
$
(0.03
)
Weighted average shares used in computing
adjusted diluted net income (loss) per share
57,877
54,470
QUINSTREET, INC.
RECONCILIATION OF NET LOSS
TO
ADJUSTED EBITDA
(In thousands)
(Unaudited)
Three Months Ended
September 30,
2024
2023
Net loss
$
(1,366
)
$
(10,565
)
Interest and other expense, net
208
(84
)
(Benefit from) provision for income
taxes
(49
)
750
Depreciation and amortization
6,441
5,338
Stock-based compensation
8,407
5,275
Contingent consideration adjustment
6,194
—
Restructuring costs
307
270
Litigation settlement expense
70
—
Acquisition costs
105
—
Adjusted EBITDA
$
20,317
$
984
QUINSTREET, INC.
RECONCILIATION OF CASH USED
IN
OPERATING ACTIVITIES TO FREE
CASH FLOW
AND NORMALIZED FREE CASH
FLOW
(In thousands)
(Unaudited)
Three Months Ended
September 30,
2024
2023
Net cash used in operating activities
$
(13,706
)
$
(4,973
)
Capital expenditures
(437
)
(1,624
)
Internal software development costs
(2,169
)
(3,470
)
Free cash flow
(16,312
)
(10,067
)
Changes in operating assets and
liabilities
34,377
5,096
Normalized free cash flow
$
18,065
$
(4,971
)
QUINSTREET, INC.
DISAGGREGATION OF
REVENUE
(In thousands)
(Unaudited)
Three Months Ended
September 30,
2024
2023
Net revenue:
Financial Services
$
210,891
$
72,125
Home Services
65,075
49,394
Other Revenue
3,253
2,404
Total net revenue
$
279,219
$
123,923
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241104662696/en/
Investor Contact: Robert
Amparo (347) 223-1682 ramparo@quinstreet.com
QuinStreet (NASDAQ:QNST)
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