Yahoo Finance QuinStreet, Inc. (NASDAQ:QNST) Q3 2024 Earnings Call Transcript
QuinStreet, Inc. (NASDAQ:QNST) Q3 2024 Earnings Call Transcript May 8, 2024
QuinStreet, Inc. misses on earnings expectations. Reported EPS is $-0.12799 EPS, expectations were $0.07. QNST isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day, and welcome to QuinStreet's Fiscal Third Quarter 2024 Financial Results Conference Call. Today's conference is being recorded. Following prepared remarks, there will be a question-and-answer session. [Operator Instructions] At this time, I would like to turn the conference over to Senior Director of Investor Relations and Finance, Robert Amparo. Mr. Amparo, you may begin.
Robert Amparo: Thank you, operator. And thank you, everyone, for joining us as we report QuinStreet's fiscal third quarter 2024 financial results. Joining me on the call today are Chief Executive Officer, Doug Valenti; and Chief Financial Officer, Greg Wong. Before we begin, I would like to remind you that the following discussion will contain forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those projected by such statements and are not guarantees of future performance. Factors that may cause results to differ from our forward-looking statements are discussed in our recent SEC filings, including our most recent 8-K filing made today and our most recent 10-Q filing.
Forward-looking statements are based on assumptions as of today, and the company undertakes no obligation to update these statements. Today, we will be discussing both GAAP and non-GAAP measures. A reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release, which is available on our Investor Relations website at investor.quinstreet.com. With that, I will turn the call over to Doug Valenti. Please go ahead, sir.
Doug Valenti: Thank you, Rob. Welcome, everyone. Company revenue grew about 40% sequentially in fiscal Q3, fueled by a significant positive inflection in auto insurance carrier spending, as we had forecast. The ramp of auto insurance carrier spending continued through Q3 and has extended into the current quarter, fiscal Q4. Auto insurance carrier activity and spending are broad-based and continue to be supported by reports of good carrier results. We expect the ramp of auto insurance spending to continue in coming quarters as carriers expand their product and market footprints and are enabled by increased rates and improved profitability. Overall, we expect auto insurance revenue to grow for the foreseeable future as the fundamental shift of budgets to digital and performance marketing reasserts itself as the dominant long-term trend.
Adjusted EBITDA jumped to almost $8 million in FYQ3 due to the leverage from the higher revenue. We expect adjusted EBITDA margin and dollars to continue to grow as revenue continues to ramp. Turning to our outlook for the current quarter, or fiscal Q4, we expect revenue to be between $180 million and $190 million, a quarterly record revenue for QuinStreet and implying year-over-year growth of over 40% at the midpoint of the range. We expect adjusted EBITDA to be between $10 million and $11 million, implying year-over-year growth of over 400%. Our fiscal year 2025 begins this July 1. I would point out that the annual run rate of our fiscal Q4 revenue outlook already implies growth of 20% or more over full fiscal year 2024. We are excited about the size of our market opportunities, about the resilience we have demonstrated in our business, about our plans and initiatives to keep growing revenue and profits into the future, and of course, about our continued strong financial position.
With that, I will turn the call over to Greg.
Greg Wong: Thank you, Doug. Hello, and thanks to everyone for joining us today. Fiscal Q3 was another solid quarter for QuinnStreet. Total revenue was $168.6 million. Adjusted net income was $3.4 million, or $0.06 cents per share. And adjusted EBITDA was $7.9 million. The significant positive inflection in auto insurance client spending has indeed begun. In fiscal Q3, we saw auto insurance revenue continue to ramp throughout the quarter. That said, we are still in the early innings of the re-ramp of auto insurance and continue to expect growth for many quarters ahead. Looking at revenue by client vertical, our financial services client vertical represented 67% of Q3 revenue in those $112 million. Our home services client vertical represented 32% of Q3 revenue and was $54 million, a record quarter for that business.
Other revenue was the remaining $2.4 million of Q3 revenue. Turning to the balance sheet. We closed the quarter with $40 million of cash and equivalents and no bank debt. A more normalized view ending cash balance would be approximately $48 million. We received a payment of approximately $8.5 million two days after quarter end. Moving to our outlook. For fiscal Q4, our June quarter. We expect revenue to be between $180 million and $190 million and adjusted EBITDA to be between $10 million and $11 million. As Doug pointed out, the annual run rate of our fiscal Q4 revenue outlook already implies revenue growth of 20% or more over full fiscal year 2024. We also expect adjusted EBITDA to continue to expand faster than revenue. In closing, our outlook on the business has never been brighter.
We expect a record revenue quarter in fiscal Q4 and further margin expansion. We remain well positioned to benefit from the re-ramp of auto insurance client spending and are seeing continued momentum in our noninsurance client verticals. We expect strong total company revenue growth and adjusted EBITDA expansion driven by our diversified portfolio of client verticals. With that, I'll turn it over to the operator for Q&A.
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