QNST - Earnings call transcript Q1 2018

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Operator

Good day ladies and gentlemen. Welcome to the QuinStreet First Quarter Fiscal 2018 Financial Results Conference Call. Today's conference is being recorded. I would now like to turn the conference over to Ms. Erica Abrams. ma’am. ahead go Please

Erica Abrams

Good today and quarter to results. XXXX Catherine. for fiscal Thank joining financial us report afternoon, you, gentlemen. ladies you year Thank QuinStreet’s first

and call is call simultaneously website webcast Relations Doug Joining at QuinStreet. Investor being today the of on CFO of the Valenti, me CEO; section Greg on www.quinstreet.com. Wong, This are our

could future statements statements on Factors Before cause are and are by and September discussion contains X, including our not following guarantees you differ that filings, we forward-looking SEC the risks differ may to get started, of to the results such XXXX. of statements statements. actual from I involve most These recent our materially would uncertainties performance. results recent made projected cause filing our number in like that to discussed that XX-K remind those a forward-looking from

will obligation today’s and GAAP our undertakes financial Forward-looking release, these statements. statements the and are to are company we discussing available is Relations based which today press Investor on to in website. reconciliation included of update of measures measures. A as be both no earnings non-GAAP assumptions on Today, non-GAAP GAAP

call go Doug, over turn of QuinStreet. CEO Please will I Now, ahead. the to

Douglas Valenti

about performance clients product for our long-term the shifting Improved Thank Revenue by the was media strategies Results fiscal adjusted performance of you, was and driven joining first continues media to be new up you Erica, X%. more and and digital were and thank margin trend to all EBITDA quarter. today. to us strong in and marketing. XX% spending by year-over-year,

market quickly make in and solution affordable media are more digital our clients effective high allow to model consumers Our research find and consideration technologies these that providers in compare for measurably verticals. and performance and effectively marketplaces and mode

across business. relatively still the and in products the are media new of early implementation our strategies We

model and to the are We client digital budget early digital of our in of marketing. still shifting best-in-class to in relatively also performance channel the

In improve XX% XXXX the our year-over-year and offset continues businesses, be this which decline quarter. strong of improved company About services business. year-over-year about Strong Those our small since education XX% will either of the year-over-year March the our in revenue clients. financial growth, in the revenue the there in time for of client and be growth EBITDA revenue and XXXX. to quarter education revenue and highest represent grew to or continue by the education of businesses International XX% not U.S. to our that vertical in home of first revenue years. performance. Trends is was two addition highest international momentum primary services now in quarter driver since grew strong for combined A in September profit with

our Given the year growth the strong carrying in we are now in to to into momentum and first QX, full we the the our fiscal call again Greg. adjusted revenue quarter of EBITDA performance year fiscal QX turn With XX% that, range be after be margin X%. results. reporting and over full at net look We’ll XX% outlook I’ll about will expect to

Gregory Wong

performance Thanks, for and Doug. strong a our financial cash driven our pleased quarter are with strong generated in adjusted EBITDA third for best revenue We delivered increased continued everyone We X.X from record the the Hello, quarter services overall product first and client our the straight thanks joining new vertical years, business. us improvements strategies. to revenues today. media from and and flow had momentum and by and

with cash was EBITDA For million flow generated per revenue. million normalized million quarter $X.X Adjusted share in of We $XX.X the to cash first $X.X million. total adjusted $X.XX quarter, and equivalents. the of or million revenue XX% $XX.X year-over-year $X.X free income was grew X% and or closed net

by $XX.X XX% of to year-over-year another XX% We XX% QX Moving revenue year-over-year strong and had vertical, financial sequentially. to grew represented XX% revenue which our grew and million. vertical client quarter services client in insurance

business include XX% Our products mortgage, vertical, further in client deposits of and a our grew the the personal financial in loans cards, which year-over-year our strategies. demonstrating effectiveness credit services combined media and quarter new other

growth Our by year-over-year have quarter. education as in QX million. a revenue year-over-year vertical education X% improve return client trends $XX.X represented to grew XX% evidenced to in and of continued to modest The revenue the

business have not-for-profit U.S. with or We slightly in now down offset Brazil. education clients. by strong international our XX% was revenue Our about education growth of

verticals and represented year-over-year to client revenue $X.X other of remaining declined X% QX XX% Our million.

delivered business was we our revenue The product as new BXB again work our through technology by Our home in business growth. offset growth services cycle. year-over-year headwinds

Moving on EBITDA, profitability. on adjusted we focused to remain

For the million our quarter prior delivering increased million years. to quarter, EBITDA of X% from or revenue, EBITDA adjusted up $X.X four in adjusted the in of $X.X quarter highest

million operator over look of momentum of Most to lot positive to to due Q&A. I’ll balance growth the remains free five for we delivering of summary, cash the adjusted a the revenue. over closing strong returning quarter balance forward in that, In in the Normalized business our million $X.X executed flow EBITDA sheet over quarter revenue is you in adjusted or with and cash reporting the maintaining There capital a growing low level We a and model. in to debt. to highest the years was cash In year-over-year flow years, normalize our million well against $XX.X four the requirements quarter Turning of EBITDA highest generated time. no quarter, With X% in the we revenue drops progress to our our priorities operating equivalents to sheet, flow. more business. double-digit cash strong for the sheet. the $X.X business turn balance in call to

Operator

Our Incorporated. Campbell Stephens first come will from [Operator Instructions] John question with

John Campbell

on continuous well congrats progress, guys, and Hey quarter the the done.

Douglas Valenti

Thank you, John.

Gregory Wong

Thank you, John.

John Campbell

second. base a to want dig Just for expense on the

done guys cost largely you are first, with base? guess the So

Douglas Valenti

are cost that improve always to said We cost implemented, saves looking constantly – base. the are are we that fully

John Campbell

then, within expense? COGS maybe the helpful variable that’s I Okay, broad operating just and sense of then within, guess, – and other fixed for kind any versus within

Douglas Valenti

The bulk of are outside of and headcount. media our our expenses, COGS cost John are, operating

headcount one other is there things. course We’d two-thirds percentages. notionally, like And have I John, some about as the of media this, is say, is facilities so, media third, line would the rent we there is COGS would those of cost, and in margin but of manage of other but it, exact first the the you income things look to and majority expenses and call at it, kinds really know, statement operating dominantly think I always which in terms media, in

you but after have we you can when morning, guys get there. that So, can precision get you the the Greg call more much in

John Campbell

mean, expansion as I directionally, lot the that just growth? just like Okay, expense I long that’s expect guess, revenue of it pretty base is as largely good helpful would that you then, sounds you so, margin fixed and and get

Douglas Valenti

Yes, top-line pretty line. part we revenue approximately EBITDA to big of margin. XX% be story to much fully expect EBITDA to of that expand Notionally, to to $X the is continue drop down going the ought a revenue

John Campbell

I what Okay, looking that’s was for.

I look to from think the I if relative margins. mean, the quarters, ago XXX% quarters two incremental I two past it year margins past was like incremental at So,

so saves you are lapping XX% we I incremental? but lap going through, closer guess, cost along was thinking to everything those those, or that are then and forward, So we once

Douglas Valenti

of through Yes, but now media be the it’s fixed into revenue would is really XXs, and really think margin we the the that at million $XX $XX how we dropping kind the it’s million probably cost case XXs, the dollars in least low pretty think. It’s base but incremental. it of the about next to

John Campbell

And starting the of mean, vertical, out. fair been over I education mean, gun jumping years helpful. XX% see battling that, it fantastic pretty I you hard last mean, decline for-profit growth, the that’s modest where that? there. Okay, was, to of from or flatten I guess, kind have one mean, then, the are is start me, on but I business, are that to that guys know I for-profit the is to Is results. still the I of we getting say that you

Douglas Valenti

then and product XX% our the It exposed the in think, that. on revenue for-profits evolution the XX% of was set stable Those worst They’ve that further about, locked long spin-off or largely their a be a of work are talked and this that out. about blending new have worst what the shaken for to is adaptation of – I been lot course would that the to which you in now to lately more the in their certainly long time, with the left not are and international shape. – environment are in schools environment, has been not-for-profits and between product new expecting explicitly set them the in we designed the new

are coming continue So, a stable the is the including performance signs that those to make of schools there part for and by lot hopefully most factors a better. publicly are we are of themselves to seeing that better report just that more together doing place

it combine there. such is, when going out those for it So a to be been as else, But get it’s is – of we I signs relative and to given to us. place, spooky it think it’s you factors, unlike bad bit get lot to to it’s us It’s think was a that still are feel have a all for good so there there hard everything of environment. I big then on little a as because size be certainly going place it’s for it’s like hard difficult the impact to

John Campbell

back Okay, will that’s helpful. I jump know. the Thanks to Good queue. in guys.

Douglas Valenti

John. you, Thank

Operator

go Suisse. We’ll Credit [Operator to with Ju Instructions] Stephen

Stephen Ju

on Hey, as congratulations thanks well. guys and our results the

So…

Douglas Valenti

Steve. you, Thank

Stephen Ju

a Yes, Greg. put you here, of course. the spot to bit in Want little

you plus get XX% you latest comps growth tougher that all and year, just balance much XX% the for of on a for So growth with the to in on quarter that you the year. don’t revenue reported just the a this reported balance the of are guiding that the measurably XX

is of through this So years. Thank of I bit things if that the been couple you. wondering have last guys am lot you conservatism of a that just given

Gregory Wong

reminder, caution are a you I quarters, we back just more said, in quarter very right comps we do half second we into also and the difficult that the in deal right in Yes, quarter, those Stephen, we are quarters. lot growth March June early second the year, good quarter as as but now. lot the move year, the would again of of now pretty momentum and – a with carrying the into the one But a as expect that in

are not so, And ahead of ourselves trying right now. too we far to get

Stephen Ju

you. Thank Understood.

Operator

at this and gentlemen, for again conference. ladies conclude all time, participation. Thank your that you you. today’s And Thank does

have Instructions] We may follow-up well You - John a Campbell. [Operator from

John Campbell

impacts of in don’t from the on comps the rates, the just out there? another to the carriers. curious are the enough question any half the growth guys, Anything with those you of revenue that’s back alter kind I just if hurricanes, marketing of Hey know hearing about year spend

Douglas Valenti

like $X Yes, lost insurance, other good $X.X we between but quarter verticals, last our our a question, business services – of we for and enrollment in million due clients had issues, somewhere million that some of It affected shutdown. home both it and to down looks in hurricane-related affected our also with Florida We number in business. had centers – education got example John.

don’t was meaningful based this hearing a affect. think affect a we little expect from this It so, material little are looks we clients, a are based small it at - We as our point, on a seeing, wasn't that having there So it’s like would residual, quarter on impact an what but on impact similarly outlook. or very what we is large. and any

John Campbell

room case but a with left you’ve sounds does? little maybe yourself Okay, it in bit like it

Douglas Valenti

Greg we pretty year, up issues the to year, lot are And comps half second big the of that I insurance. as we first think were the said, the in loss last in half. the fiscal – facing back quarters remember, – two ratio popped

range, at think even back QX assume good still within we I you that’s a then given into the So we’ve we half if grow XX%, about about the to XX%. grow the and momentum carried of XX% you we in pretty well middle in and take, teens, the

to are realistic. be trying we So,

to not our over certainly trying are We either. wouldn't accuse of get us skis are, but way sandbagging I

John Campbell

allocation? the just you just, on kind are us is Okay, mean, of that’s heads from cash obviously, any can where as with not sheet, carrying far balance helpful. And then, debt, I are capital me, the last an provide at maybe one update you growing, as balance

Douglas Valenti

competitive in are the be use We advantages. priority that’s to invest our us – our would the for future to anything going momentum to grow first to strengthen the help and footprint and continue it

are We that. about opportunistic

or acquisition opportunities looking either We at opportunities. are always partnership

have We when super number close and could in which, at helpful and a number and of they big play right meaningful. be now opportunities if partnership it

as use won’t we we an the depending be of use, XXbX-Xplan now are be on it a huge the did We that’s are a use approve stock stock say, under timing impact. But things you two to is do priority. There a first will where and I’d of of buyback It always that. So volumes. at. a only some know, have the be enough little but bit looking right those will and the

John Campbell

great. guys. Okay, Thanks

Douglas Valenti

you. Thank

Operator

Thank you. with today's you queue, conference. the thank And again, for questions no up participation. your then, additional will again in Once wrap that

You may now disconnect.

QuinStreet (QNST) 30 Oct 172018 Q1 Earnings call transcript