- Record quarterly revenue of $198 million, up 52%
YoY
- Seeing significantly improved profitability with operating
leverage
- Steep re-ramp of auto insurance revenue continues and is
broad-based
- Expect strong FY2025 revenue growth and further margin
expansion
- Strong cash flow and balance sheet, no bank debt
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 fourth quarter and fiscal year ended June 30, 2024.
For the fiscal fourth quarter, the Company reported revenue of
$198.3 million, up 52% year-over-year.
GAAP net loss for the fiscal fourth quarter was $(2.2) million,
or $(0.04) per diluted share. Adjusted net income for the fiscal
fourth quarter was $6.5 million, or $0.11 per diluted share.
Adjusted EBITDA for the fiscal fourth quarter was $11.0
million.
For full fiscal year 2024, the Company reported revenue of
$613.5 million, up 6% year-over-year.
GAAP net loss for fiscal year 2024 was $(31.3) million, or
$(0.57) per share. Adjusted net income for fiscal year 2024 was
$6.3 million or $0.11 per diluted share.
Adjusted EBITDA for fiscal year 2024 was $20.4 million.
For the fiscal fourth quarter, the Company closed the year with
$50.5 million in cash and cash equivalents and no bank debt.
“The strong re-ramp of Auto Insurance revenue continued in
fiscal Q4, and our outlook going forward for that important client
vertical remains strongly and confidently positive,” commented Doug
Valenti, CEO of QuinStreet. “The demand from carrier clients is
steeply up and to the right, and is broad-based. Our focus in Auto
Insurance has shifted to optimizing media supply to best meet the
extraordinary demand.
“Total Company revenue in fiscal Q4 grew 52% year-over-year to a
record $198 million. Auto Insurance revenue grew over 200%
year-over-year. Performance in our other client verticals was also
strong. Non-Insurance Financial Services revenue grew 13%
year-over-year and Home Services revenue grew 12%
year-over-year.
“Adjusted EBITDA grew about 500% year-over-year in fiscal
Q4.
“Turning to our outlook for the September quarter, or Q1 of our
fiscal 2025, we expect continued strong momentum in Auto Insurance
and across the business. Revenue is expected to be $220 to $230
million, growth of 82% year-over-year at the midpoint of the range.
Adjusted EBITDA is expected to be $14 to $16 million, growth of
over 1400% at the midpoint of the range.
“Looking at our expectations for full fiscal year 2025, we
expect continued strength in Auto Insurance demand. We also expect
continued momentum in our other client verticals. As an initial
full fiscal year 2025 outlook, we expect revenue of $800 to $850
million, growth of 34% year-over-year at the midpoint of the range,
and adjusted EBITDA of $50 to $60 million, growth of 170%
year-over-year at the midpoint of the range. We believe that there
are opportunities to scale revenue and expand margins even further,
and we will refine our outlook as the year progresses,” concluded
Valenti.
Conference Call Today at 2:00 p.m.
PT
The Company will host a conference call and corresponding live
webcast at 2:00 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 #1170966. 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, tax 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, tax settlement expense,
restructuring costs, and impairment of investment, 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, tax 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
annual report on Form 10-K for the fiscal year ended June 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)
June 30,
June 30,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
50,488
$
73,677
Accounts receivable, net
111,786
67,748
Prepaid expenses and other assets
6,813
9,779
Total current assets
169,087
151,204
Property and equipment, net
19,858
16,749
Operating lease right-of-use assets
10,440
3,536
Goodwill
125,056
121,141
Intangible assets, net
38,008
38,700
Other assets, noncurrent
6,097
5,825
Total assets
$
368,546
$
337,155
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
48,204
$
37,926
Accrued liabilities
68,822
44,019
Other liabilities
9,372
7,875
Total current liabilities
126,398
89,820
Operating lease liabilities,
noncurrent
7,879
1,261
Other liabilities, noncurrent
17,444
16,273
Total liabilities
151,721
107,354
Stockholders' equity:
Common stock
55
54
Additional paid-in capital
347,449
329,093
Accumulated other comprehensive loss
(268
)
(266
)
Accumulated deficit
(130,411
)
(99,080
)
Total stockholders' equity
216,825
229,801
Total liabilities and stockholders'
equity
$
368,546
$
337,155
QUINSTREET, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
Fiscal Year Ended
June 30,
June 30,
2024
2023
2024
2023
Net revenue
$
198,321
$
130,312
$
613,514
$
580,624
Cost of revenue (1)
180,888
119,713
567,268
532,101
Gross profit
17,433
10,599
46,246
48,523
Operating expenses: (1)
Product development
7,588
7,061
30,045
28,893
Sales and marketing
3,531
2,891
13,607
12,542
General and administrative
7,753
5,985
30,659
27,904
Operating loss
(1,439
)
(5,338
)
(28,065
)
(20,816
)
Interest income
27
231
408
296
Interest expense
(165
)
(164
)
(680
)
(790
)
Other expense, net
(98
)
(8
)
(2,059
)
(52
)
Loss before income taxes
(1,675
)
(5,279
)
(30,396
)
(21,362
)
Provision for income taxes
(489
)
(50,612
)
(935
)
(47,504
)
Net loss
$
(2,164
)
$
(55,891
)
$
(31,331
)
$
(68,866
)
Net loss per share, basic and diluted
$
(0.04
)
$
(1.03
)
$
(0.57
)
$
(1.28
)
Weighted-average shares of common stock
used in computing net loss per share, basic and diluted
55,380
54,196
54,917
53,799
(1) Cost of revenue and operating expenses
include stock-based compensation expense as follows:
Cost of revenue
$
1,925
$
1,685
$
8,409
$
7,923
Product development
748
655
3,147
2,880
Sales and marketing
811
328
2,968
2,298
General and administrative
2,140
63
9,177
5,685
QUINSTREET, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
Fiscal Year Ended
June 30,
June 30,
2024
2023
2024
2023
Cash Flows from Operating
Activities
Net loss
$
(2,164
)
$
(55,891
)
$
(31,331
)
$
(68,866
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
6,681
5,151
23,957
19,155
Stock-based compensation
5,624
2,731
23,701
18,786
Impairment of investment in equity
securities
—
—
2,000
—
Provision for sales returns and doubtful
accounts receivable
188
1,848
896
2,745
Deferred income taxes
410
50,474
597
47,214
Non-cash lease expense
46
(259
)
(513
)
(1,081
)
Other adjustments, net
22
(3
)
(256
)
(149
)
Changes in assets and liabilities:
Accounts receivable
(12,335
)
36,011
(44,934
)
10,936
Prepaid expenses and other current
assets
659
(997
)
2,966
(4,802
)
Other assets, noncurrent
(1,049
)
145
(875
)
124
Accounts payable
8,183
(3,208
)
10,480
(4,770
)
Accrued liabilities
10,289
(18,032
)
25,351
(7,454
)
Net cash provided by operating
activities
16,554
17,970
12,039
11,838
Cash Flows from Investing
Activities
Internal software development costs
(2,474
)
(3,446
)
(11,377
)
(11,942
)
Capital expenditures
(1,174
)
(1,024
)
(5,348
)
(3,062
)
Acquisitions, net of cash acquired
—
—
(4,510
)
—
Other investing activities
—
(1
)
(1,500
)
(121
)
Net cash used in investing activities
(3,648
)
(4,471
)
(22,735
)
(15,125
)
Cash Flows from Financing
Activities
Proceeds from exercise of stock options
and issuance of common stock under employee stock purchase plan
196
14
3,491
3,219
Payment of withholding taxes related to
release of restricted stock, net of share settlement
(1,768
)
(645
)
(6,688
)
(5,389
)
Post-closing payments and contingent
consideration related to acquisitions
(453
)
(1,235
)
(7,026
)
(11,643
)
Repurchase of common stock
—
(915
)
(2,288
)
(5,646
)
Net cash used in financing activities
(2,025
)
(2,781
)
(12,511
)
(19,459
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
5
(2
)
18
(15
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
10,886
10,716
(23,189
)
(22,761
)
Cash, cash equivalents and restricted cash
at beginning of period
39,617
62,976
73,692
96,453
Cash, cash equivalents and restricted cash
at end of period
$
50,503
$
73,692
$
50,503
$
73,692
Reconciliation of cash, cash
equivalents, and restricted cash to the condensed consolidated
balance sheets
Cash and cash equivalents
$
50,488
$
73,677
$
50,488
$
73,677
Restricted cash included in other assets,
noncurrent
15
15
15
15
Total cash, cash equivalents and
restricted cash
$
50,503
$
73,692
$
50,503
$
73,692
QUINSTREET, INC.
RECONCILIATION OF NET LOSS
TO
ADJUSTED NET INCOME
(LOSS)
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
Fiscal Year Ended
June 30,
June 30,
2024
2023
2024
2023
Net loss
$
(2,164
)
$
(55,891
)
$
(31,331
)
$
(68,866
)
Amortization of intangible assets
2,873
2,661
10,707
11,115
Stock-based compensation
5,624
2,731
23,701
18,786
Acquisition costs
64
70
94
102
Litigation settlement expense
—
—
—
6
Impairment of investment in equity
securities
—
—
2,000
—
Tax settlement expense
—
(794
)
—
(755
)
Restructuring costs
100
28
678
212
Tax valuation allowance
—
51,922
—
51,922
Tax impact after non-GAAP items
44
(1,241
)
454
(5,254
)
Adjusted net income (loss)
$
6,541
$
(514
)
$
6,303
$
7,268
Adjusted diluted net income (loss) per
share
$
0.11
$
(0.01
)
$
0.11
$
0.13
Weighted average shares used in computing
adjusted diluted net income (loss) per share
57,367
54,196
56,248
54,978
QUINSTREET, INC.
RECONCILIATION OF NET LOSS
TO
ADJUSTED EBITDA
(In thousands)
(Unaudited)
Three Months Ended
Fiscal Year Ended
June 30,
June 30,
2024
2023
2024
2023
Net loss
$
(2,164
)
$
(55,891
)
$
(31,331
)
$
(68,866
)
Interest and other expense (income),
net
236
(59
)
2,331
546
Provision for income taxes
489
50,612
935
47,504
Depreciation and amortization
6,681
5,151
23,957
19,155
Stock-based compensation expense
5,624
2,731
23,701
18,786
Acquisition costs
64
70
94
102
Litigation settlement expense
—
—
—
6
Tax settlement expense
—
(794
)
—
(755
)
Restructuring costs
100
28
678
212
Adjusted EBITDA
$
11,030
$
1,848
$
20,365
$
16,690
QUINSTREET, INC.
RECONCILIATION OF CASH
PROVIDED BY
OPERATING ACTIVITIES TO FREE
CASH FLOW
AND NORMALIZED FREE CASH
FLOW
(In thousands)
(Unaudited)
Three Months Ended
Fiscal Year Ended
June 30,
June 30,
2024
2023
2024
2023
Net cash provided by operating
activities
$
16,554
$
17,970
$
12,039
$
11,838
Capital expenditures
(1,174
)
(1,024
)
(5,348
)
(3,062
)
Internal software development costs
(2,474
)
(3,446
)
(11,377
)
(11,942
)
Free cash flow
$
12,906
$
13,500
$
(4,686
)
$
(3,166
)
Changes in operating assets and
liabilities
(5,747
)
(13,919
)
7,012
5,965
Normalized free cash flow
$
7,159
$
(419
)
$
2,326
$
2,799
QUINSTREET, INC.
DISAGGREGATION OF
REVENUE
(In thousands)
(Unaudited)
Three Months Ended
Fiscal Year Ended
June 30,
June 30,
2024
2023
2024
2023
Net revenue:
Financial Services
$
136,870
$
75,203
$
392,579
$
379,723
Home Services
59,309
53,137
211,944
193,133
Other Revenue
2,142
1,972
8,991
7,768
Total net revenue
$
198,321
$
130,312
$
613,514
$
580,624
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808307003/en/
Investor Contact: Robert
Amparo (347) 223-1682 ramparo@quinstreet.com
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