• Total Revenue: $198 million, up 52% year over year.
• Adjusted EBITDA: Over $11 million, up about 500% year over year.
• Cash and Equivalents: Over $50 million, with no bank debt.
• Auto Insurance Revenue Growth: Over 200% year over year.
• Non-Insurance Financial Services Revenue Growth: 13% year over year.
• Home Services Revenue Growth: 12% year over year.
• Financial Services Client Vertical Revenue: $136.9 million, representing 69% of Q4 revenue, up 82% year over year.
• Home Services Client Vertical Revenue: $59.3 million, representing 30% of Q4 revenue, up 12% year over year.
• Adjusted Net Income: $6.5 million or $0.11 per share.
• Full Fiscal Year 2024 Revenue: $613.5 million, up 6% year over year.
• Full Fiscal Year 2024 Adjusted EBITDA: $20.4 million.

• Warning! GuruFocus has detected 3 Warning Sign with QNST.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• QuinStreet Inc (NASDAQ:QNST) reported a record revenue of $198 million for fiscal Q4, marking a 52% year-over-year growth.
• The company experienced a significant re-ramp in auto insurance revenue, which grew over 200% year over year.
• Adjusted EBITDA increased by approximately 500% year over year, reaching over $11 million.
• QuinStreet Inc (NASDAQ:QNST) has a strong balance sheet with over $50 million in cash and no bank debt.
• The company expects continued strong revenue growth and margin expansion in fiscal Q1 and the full fiscal year 2025.

Negative Points

• The auto insurance segment, despite its growth, operates at lower margins due to its scale and competitiveness.
• There is a potential impact from new TCPA regulations affecting 20% to 30% of the business, particularly in home services.
• The company remains cautious with its fiscal year guidance, indicating a conservative approach due to early-year uncertainties.
• Some significant carriers have not yet returned to their pre-COVID peak levels in terms of geographic and product coverage.
• The independent agency channel in auto insurance is still lagging, as they are just starting to get products back from carriers.

Q & A Highlights

Q: On the FY25 revenue guidance, the high end of your range is above where consensus is for FY26. Do you expect a deceleration in home services or anything non-auto? A: We do not expect a deceleration in any of our businesses. We expect all of our businesses to grow at strong double-digit rates this year. It's the first guide of the year, so we're being conservative. The insurance ramp has been spectacular, and we want to see how it settles out as we and others work to regrow and optimize media to align better with the surge in demand.

Q: Can you talk about the margin flow through and industry consolidation? A: We think that 10% margins are still where we're heading. The heavier mix of auto insurance doesn't help that as it comes in at a lower margin. We expect margins in auto insurance to improve as we optimize media against the surge in demand. Regarding consolidation, there are arguments for and against it. Some clients want more than one player, and consolidation might not yield the expected synergies.

Q: Can you give insight into where you're seeing strength among the carriers and how you expect that to continue? A: It's more broad-based than ever. We have several clients doing multiple millions of dollars per month with us. We're seeing demand across direct carriers and agent-driven carriers, and across product mixes like clicks, calls, and leads. However, no one is back to their pre-COVID peak in terms of footprint coverage.

Q: How are you preparing for the one-to-one consent regulations under the TCPA going into effect next year? A: The regulation mainly affects home services, which is 20% to 30% of our business. We've been preparing for it and believe any impact is well accounted for in our outlook. In the long run, it will clean up the channel and make leads more valuable, which benefits QuinStreet.

Q: Are there any M&A opportunities on the horizon? A: We're always looking, but nothing is imminent. We are a natural consolidator of small to mid-sized players in media, client, or technology. We've had good results from past acquisitions and will continue to be opportunistic.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.