Record quarterly revenue of $283 million, up 130% YoY
Record auto insurance quarterly revenue, up 615% YoY
Non-insurance revenue grew 15% YoY
Raising outlook for full fiscal year 2025 revenue and Adjusted EBITDA

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 second quarter ended December 31, 2024.

For the fiscal second quarter, the Company reported revenue of $282.6 million, up 130% year-over-year.

GAAP loss for the fiscal second quarter was $(1.5) million, or $(0.03) per diluted share. Adjusted net income for the fiscal second quarter was $11.9 million, or $0.20 per diluted share.

Adjusted EBITDA for the fiscal second quarter was $19.4 million.

"Record fiscal Q2 revenue results were driven by the unprecedented ramp and broadening of Auto Insurance client demand and by double-digit growth in our other client verticals," commented Doug Valenti, CEO of QuinStreet.

"Adjusted EBITDA remained strong. We expect Adjusted EBITDA margin to expand further on optimization efforts, and as we continue to make progress on a range of other growth and margin expansion initiatives."

"We expect strong demand in Auto Insurance to continue, and we expect continued strong growth in our non-Insurance client verticals."

"Turning to our outlook, we expect fiscal Q3 revenue to be between $265 and $275 million, and fiscal Q3 Adjusted EBITDA to be between $19.5 and $20.0 million. We are raising our outlook for full fiscal year 2025. We now expect revenue to be between $1.065 and $1.105 billion, and Adjusted EBITDA to be between $80 and $85 million," 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 #1165226. 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 December 31, 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)

	December 31,			June 30,
		2024			2024
Assets
Current assets:
Cash and cash equivalents	$	57,835		$	50,488
Accounts receivable, net		150,360			111,786
Prepaid expenses and other assets		11,074			6,813
Total current assets		219,269			169,087
Property and equipment, net		17,732			19,858
Operating lease right-of-use assets		8,554			10,440
Goodwill		125,056			125,056
Intangible assets, net		33,072			38,008
Other assets, noncurrent		5,964			6,097
Total assets	$	409,647		$	368,546
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	55,357		$	48,204
Accrued liabilities		91,078			68,822
Other liabilities		13,256			9,372
Total current liabilities		159,691			126,398
Operating lease liabilities, noncurrent		6,554			7,879
Other liabilities, noncurrent		19,150			17,444
Total liabilities		185,395			151,721
Stockholders' equity:
Common stock		57			55
Additional paid-in capital		357,789			347,449
Accumulated other comprehensive loss		(268	)		(268	)
Accumulated deficit		(133,326	)		(130,411	)
Total stockholders' equity		224,252			216,825
Total liabilities and stockholders' equity	$	409,647		$	368,546

QUINSTREET, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
		2024			2023			2024			2023
Net revenue	$	282,596		$	122,683		$	561,815		$	246,606
Cost of revenue ⁽¹⁾		255,842			115,830			506,656			232,104
Gross profit		26,754			6,853			55,159			14,502
Operating expenses: ⁽¹⁾
Product development		8,710			7,272			17,330			14,909
Sales and marketing		5,083			3,325			9,227			6,449
General and administrative		14,349			7,651			31,197			14,438
Operating loss		(1,388	)		(11,395	)		(2,595	)		(21,294	)
Interest income		3			166			17			332
Interest expense		(126	)		(111	)		(250	)		(222	)
Other (expense) income		(83	)		38			(181	)		67
Loss before income taxes		(1,594	)		(11,302	)		(3,009	)		(21,117	)
Benefit from (provision for) income taxes		45			(252	)		94			(1,002	)
Net loss	$	(1,549	)	$	(11,554	)	$	(2,915	)	$	(22,119	)

Net loss per share, basic and diluted	$	(0.03	)	$	(0.21	)	$	(0.05	)	$	(0.41	)

Weighted-average shares used in computing net loss per share, basic and diluted		56,335			54,759			56,079			54,612


⁽¹⁾ Cost of revenue and operating expenses include stock-based compensation expense as follows:
Cost of revenue	$	3,337		$	2,229		$	6,212		$	4,281
Product development		1,236			837			2,282			1,610
Sales and marketing		1,325			723			2,420			1,363
General and administrative		3,154			2,279			6,545			4,089

QUINSTREET, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
		2024			2023			2024			2023
Cash Flows from Operating Activities
Net loss	$	(1,549	)	$	(11,554	)	$	(2,915	)	$	(22,119	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		9,052			6,068			17,459			11,343
Depreciation and amortization		6,238			5,713			12,679			11,051
Change in the fair value of contingent consideration		5,000			—			11,194			—
Provision for sales returns and doubtful accounts receivable		317			159			1,793			382
Non-cash lease expense		114			(357	)		83			(610	)
Deferred income taxes		(56	)		201			(154	)		745
Other adjustments, net		105			98			(247	)		(230	)
Changes in assets and liabilities:
Accounts receivable		23,227			(7,202	)		(40,367	)		(7,361	)
Prepaid expenses and other assets		(3,505	)		911			(4,262	)		2,000
Accounts payable		(5,121	)		(1,123	)		7,222			(4,725	)
Accrued liabilities		4,856			3,431			22,487			897
Net cash provided by (used in) operating activities		38,678			(3,655	)		24,972			(8,627	)
Cash Flows from Investing Activities
Capital expenditures		(447	)		(1,339	)		(884	)		(2,962	)
Internal software development costs		(2,321	)		(2,945	)		(4,490	)		(6,415	)
Net cash used in investing activities		(2,768	)		(4,284	)		(5,374	)		(9,377	)
Cash Flows from Financing Activities
Proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan		7			122			1,369			1,700
Payment of withholding taxes related to release of restricted stock, net of share settlement		(3,076	)		(1,161	)		(8,500	)		(3,348	)
Post-closing payments and contingent consideration related to acquisitions		(0	)		(952	)		(5,144	)		(6,229	)
Repurchase of common stock		—			(862	)		—			(2,288	)
Net cash used in financing activities		(3,069	)		(2,853	)		(12,275	)		(10,165	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		12			7			24			12
Net decrease in cash, cash equivalents and restricted cash		32,853			(10,785	)		7,347			(28,157	)
Cash, cash equivalents and restricted cash at beginning of period		24,997			56,320			50,503			73,692
Cash, cash equivalents and restricted cash at end of period	$	57,850		$	45,535		$	57,850		$	45,535
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents	$	57,835		$	45,520		$	57,835		$	45,520
Restricted cash included in other assets, noncurrent		15			15			15			15
Total cash, cash equivalents and restricted cash	$	57,850		$	45,535		$	57,850		$	45,535

QUINSTREET, INC. RECONCILIATION OF NET LOSS TO ADJUSTED NET INCOME (LOSS) (In thousands, except per share data) (Unaudited)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
		2024			2023			2024			2023
Net income (loss)	$	(1,549	)	$	(11,554	)	$	(2,915	)	$	(22,119	)
Amortization of intangible assets		2,454			2,578			4,936			5,156
Stock-based compensation		9,052			6,068			17,459			11,343
Contingent consideration adjustment		5,000			—			11,194			—
Restructuring costs		72			31			379			301
Litigation settlement expense		429			—			499			—
Acquisition costs		—			—			105			—
Tax impact of non-GAAP items		(3,592	)		622			(7,248	)		1,645
Adjusted net income (loss)	$	11,866		$	(2,255	)	$	24,409		$	(3,674	)
Adjusted diluted net income (loss) per share	$	0.20		$	(0.04	)	$	0.42		$	(0.07	)
Weighted average shares used in computing adjusted diluted net income (loss) per share		58,438			54,759			58,158			54,612

QUINSTREET, INC. RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (In thousands) (Unaudited)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
		2024			2023			2024			2023
Net loss	$	(1,549	)	$	(11,554	)	$	(2,915	)	$	(22,119	)
Interest and other expense, net		206			(93	)		414			(177	)
(Benefit from) provision for income taxes		(45	)		252			(94	)		1,002
Depreciation and amortization		6,238			5,713			12,679			11,051
Stock-based compensation		9,052			6,068			17,459			11,343
Contingent consideration adjustment		5,000			—			11,194			—
Restructuring costs		72			31			379			301
Litigation settlement expense		429			—			499			—
Acquisition costs		—			—			105			—
Adjusted EBITDA	$	19,403		$	417		$	39,720		$	1,401

QUINSTREET, INC. RECONCILIATION OF CASH USED IN OPERATING ACTIVITIES TO FREE CASH FLOW AND NORMALIZED FREE CASH FLOW (In thousands) (Unaudited)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
		2024			2023			2024			2023
Net cash provided by (used in) operating activities	$	38,678		$	(3,655	)	$	24,972		$	(8,627	)
Capital expenditures		(447	)		(1,339	)		(884	)		(2,962	)
Internal software development costs		(2,321	)		(2,945	)		(4,490	)		(6,415	)
Free cash flow		35,910			(7,939	)		19,598			(18,004	)
Changes in operating assets and liabilities		(19,457	)		3,908			14,920			9,004
Normalized free cash flow	$	16,453		$	(4,031	)	$	34,518		$	(9,000	)

QUINSTREET, INC. DISAGGREGATION OF REVENUE (In thousands) (Unaudited)

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2024		2023		2024		2023
Net revenue:
Financial Services	$	219,934	$	71,334	$	430,825	$	143,458
Home Services		59,575		49,333		124,650		98,728
Other Revenue		3,087		2,016		6,340		4,420
Total net revenue	$	282,596	$	122,683	$	561,815	$	246,606

View source version on businesswire.com: https://www.businesswire.com/news/home/20250206955235/en/

Investor Contact:

Robert Amparo

(347) 223-1682

ramparo@quinstreet.com

QuinStreet Reports Record Results for Second Quarter Fiscal 2025