QNST - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

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

Erica Abrams

Thank you, Katherine. gentlemen. and ladies afternoon, Good Thank you quarter report second today joining year XXXX us fiscal to financial QuinStreet's for results.

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

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

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

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

Douglas Valenti

joining product and to marketing. clients developed performance be to by Erica, in digital our execution strategies by was the the media fiscal continues and us propelled Thank all X%. in momentum positive and QuinStreet the was The XX% Results and you and media business spending years, adjusted again you, year-over-year, second were strong thank up past roll-out today. Revenue for over the more shifting and few quarter. EBITDA margin of

themes general these expect to continue. We

services adjusted and new Business full for revenue our in furthest deployment XX%, and to outlook QuinStreet our client particularly strong about momentum adoption X%. vertical, We where financial of are of the products along approximately margin we strategies. are the in fiscal EBITDA year is raising growth with the

our quarter. in education known company We itself and of better a an company, The trends with certain as also Katch assets LLC, continued seeing in Katch, Media the acquired verticals. That's BrokersWeb. other previously Vantage acquired marketing and had are We generally was 'K'. client performance online

the expect accounted have revenue as year-over-year about but growth X% little absorbed The media and nicely be cost. we to accretive fixed Katch for quarter. in We acquisition acquisition of the

estimates $X detail. to Our going Greg million approximately with forward. the acquisition acquisition that, turn be model in financials I'll revenues Katch per the will quarter associated over With more call the to discuss

Gregory Wong

and Thanks Doug. everyone to Hello joining thanks today. us for

results expansion, growth financial years, our in cash continued revenue flow eight were with Our strong, highest second over margin quarter and strong generation.

with in and normalized EBITDA and about $X.X the Adjusted or In are growth effective year-over-year strategies $XX.X of QuinStreet the We second cash and more quarter million quarter. online media allow $XX.X spend acquired to income $X related or per generated was Katch business $X.X year-over-year Revenue million. free the of product the million grew million $X.X million better closed the excited adjusted equivalents. X% was approximately net marketing to $X.XX We in and of flow quarter, was that and media revenue of cash success second share. or million XX% yields. X% revenue,

$XX.X vertical represented client QX grew million. to services to Moving revenue our vertical, financial and XX% by client year-over-year revenue XX% of

shift strong All cost-effective in at results to growth sustainable continue in quarter. spend delivers measurable, of online media businesses our had for marketing scale. and to the largest Clients and them QuinStreet financial services

now quarters. not-for-profit education U.S. our revenue, of X% clients. represented of vertical comes improved XX% for-profit education Over of the or XX% million. revenue. from over year-over-year to generally QX client revenue Our total and in education education several was Trends $XX.X declined have last XX% international

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

to the and quarter sheet, no and we million cash Turning the with $XX.X equivalents balance debt. in closed

years, requirements business spent QX flow cash business X% where expansion, for balance the strong due in The of was the free model. drops of in our of normalized momentum revenue delivered cash revenue. for we million a quarter the over Most strong In our free acquisition to $XX maintained or very million operating of was $X.X capital adjusted our we a quarter cash and generated flow generation, EBITDA million flow in During is our summary, good strong. cash QuinStreet growth $X.X year-over-year to and highest margin Katch. flow low sheet. eight continued Normalized

revenue you over full-year turn for look With more the outlook coming that, quarters. We forward XX%. our to the to raising over reporting are Q&A. call the growth to operator approximately to We for progress I'll

Operator

to We'll go Instructions] Campbell Stephens. with [Operator John

John Campbell

Congrats on a super quarter.

is sustainable new profit, not really like on of the gross result. kind that a of is was I year revenue run it That's lift of a good or one-time higher Xx there On kind rate? that's you growth. anything there, or last kind mean go-forward looks of there, XX% guys expecting degree than lift any that that Were

Gregory Wong

that's John. on to at the expecting expect of revenue quarter would nothing kind unsustainable, be this it's continue. That's level and that to No, were what I we

John Campbell

early deal, of that say helpful. you when the that's And on kind congrats Okay, close, then did Katch, in quarter? that on did

Douglas Valenti

of the mid-quarter. was in about that a had the revenue John. We couple quarter, of from November In months It close. closed

John Campbell

And help forward. if million I Okay. there, profile, think or also any seasonality rev then kind and you with Anything the maybe EBITDA per going could around so margin $X of you us quarter in said contributions?

Douglas Valenti

might of going more to best will to some that business seasonality. There takes and what on keep to going it. puts seasonality pretty those need what driven be to out as think be average, we and we figure by out. close But grow we're able we business real and close No effect. that's by be than details as take pretty the to the that estimate we can That's to

very once you our margin but ours into lower our it lift it we terms a much ours. pretty profile, put of to terms in little similar media mix, profile than margin up margins, to In of

know, – said margin revenue about the that expect profile. you would it with well. to still Katch So, and of incremental won't we in we've margin points as revenue is come XX what change got that It's tends

John Campbell

sounds elsewhere? I'm pieced then miss but guys of there And this, to pieces it like bought were going Okay. Was going out, you it the that assets were Katch.

Douglas Valenti

the I'm basically. and we – and bought, assets. life of and they tech chunks to technology two other we There And mortgage, home, were bought business which got pieces There the the mortgage had went auto the which But we at pay assets platform and understand that only we as it. think familiar and and the for with. We other some it were then then auto, big wanted piece health that what it, space at went were elsewhere we we piece insurance, looked that auto/home went wanted, the space. the elsewhere. the another we We I got all out insurance wanted, home assets, of and mortgage company not were to this platform wanted price and in we really pieces

John Campbell

at it price. Yes, it fantastic like got a you looks guys Congrats.

Operator

Barrington with Research. to now go Jim We'll Goss

James Goss

pulled come strength? second was quarter those have or how the the it gain a I quarters and by wondering really third recorded of are much bit fourth of forward in the out affected did not might the quarter, little you it so

Douglas Valenti

that We quarters, that expect not don't would and pulled something there's It through to think Jim. not I'm that way out came would was I'm all. up any anything nothing. of trying future in we with coming be, if at think

the strong no, this So, quarter. was in a just quarter good

James Goss

Katch, with I for it closed million contributed the million about mid-quarter $X quarter from per in you're $X looking And you Okay. and said think it. and about

strong just set seemed was like quarter, got million a – quarter the end the $X you it half run of of it did or million because $X have and if a more the than rate? So, it

Douglas Valenti

not overly was November. with precise the being mid-quarter was I in thing. It Yes,

we quarter. it So, in read with into I proportionate It's that. wouldn't time owned the the anything generally

James Goss

year EBITDA the That's you guidance? expect if Okay. you now. looked would X% of part there And and be you new – for margin an the said

Douglas Valenti

We're still yearly guidance, for EBITDA correct. the saying margin about X% that's

James Goss

or you EBITDA margin certain If from? to three a goal realistic you years, gross improve over is target be and/or the next can two looked margin think there a

Douglas Valenti

should add revenue, we the the over couple that trend than think as add and next grow add we we'll expect revenue. years that EBITDA margin will general be of because fixed we We grow significantly EBITDA to or slower costs margin semi-fixed

and disproportionately fixed and approximately comes before revenue, drop into should of that semi-fixed with so And costs, contribution XX% it it's EBITDA.

aspire to can don't model, again in other there. is margin aspire leverage, from number, into but of EBITDA as double terms than number the it would have continue that as expand pushing I specific to the we So, to through line and I that We intention actual soon our you. a for that top to general we digits get say keep

James Goss

Okay. And could above opportunistic grow you you over just any This have might your were from acquisition was Are you an I such on contribute going acquisitions. eye more you from presume. other organic the indicated acquisitions means had to there that think than organic and growth?

Douglas Valenti

are That being right for criteria. if look This fit I but our excited companies would continuously, now platform none adding space, about. was potential pretty We that our acquisitions said, in are opportunistic. are absolutely say there almost we at particularly good they we

of that our that's I going responsive So story engaged or growth forward. we said, strategy will part to continue be and That continue opportunistic. that. we to big expect certainly going a and to be review will don't

James Goss

the All Thanks right, thanks for answering very much. questions.

Operator

to John go Campbell We'll with Stephens.

John Campbell

that kind mood having hurricane coming behavior? in somewhat to insurance any wanted of that any see change kind whipsaw to relation on are of guys spend. you activity, and you that just the times, of follow-up the of kind change in or see there spend I I in guys a know or is just at

Douglas Valenti

hearing they haven't We haven't a last loss the strongly gotten effects their that. are carriers where to still from spending to the we anything go spend and not. in ratio order They from in that come from issues. hurricane after the carriers ratio the year's out are about back lot not associated wanted with us marketing. season said, completely and the But to with product losses aggressively That market are loss of

John Campbell

there, Okay. any like bottoming of growth is here last you there on kind guys there? of X% me, And you're take and or kind do for feel give just thoughts it then out education, or one

Douglas Valenti

few a are have trends exposed that new heard to now that regulations hard such least the the it's companies total continue The and downsized. only are of gone of the the operating most or you a still a say model. as in years education fully we've bottom the companies to the as were you've and have adapted who represents better, before, the period for But adapting of education our as new to either of difficult general not have call It's us into said. to me XX% lot companies way environment, because are for-profit a been most new to dramatically or of revenue. in proportion left a negative Most at business, look

only So, so us hurt it can much.

look I it we it engaged at and like for we're of like I So, kind because that. not are. to sound we mean make education, think don't hopeful

now, you next that's think years been I or than twist downside, business education the more versus think that in shift there profound potential so. a the we've in few client five where right you over that vertical past I'd tell that upside and if or over to be vertical may versus were pretty expectations I years my more arm

John Campbell

more. one have I lied. I Sure.

As far a as M&A allocation, use. sound of is it capital doesn't like much

You down. could here? What any cash we be to from thinking debt about pay don't have

Douglas Valenti

will when impact. we second makes leverage trading, finding most – like partnership, still return we we a that past we in the like sense be, or deploy and Number like [AWO] the gives have in make the a for to balance ever that terms excess, going whether foremost opportunities But not on the of cash I'm priority in We're cash there's and to the plenty going [AWO] is way if Board [ph], we review Katch will strong back continue and worth what or that stock. sheet the for see come. be business elements in [ph] to that flexibility part. strong will of sure one review you keeping a it balance strong us A And as strong it put to continue and to feel on sheet difference focus to to big think of buy resilience a distant and growing I a to have we'll we we're first we're have business lot to have and a of the keep years and to continue place we takes stock discuss as a where between we option. sure have think an cash the

plan Second few for is, that out had we stock review for it Katch and have opportunities as back we'll will over stock. or and there are is would has. in And done to years, type something buy [ph] be, trading think third we makes if That's have plans at we've place sense value place sense line of we periodically out makes the continue as if actually and not it are there. the levels and then [AWO] whether to a in the past well that we that with think that and maybe

John Campbell

guys. helpful. that's Okay, Thanks

Operator

Wadman Constitution from question Wally a with Research. take We'll

Wallace Wadman

us market. fiscal education changes and on give Just it I one next guidance, get technical some year, accounting any question, you on but also you doesn't know the or the then impact impact benefit you until new from a some color bill? whether tax can XXX quick and follow-up

Gregory Wong

XXX assessment is way disclosure our Wally, issue a our the a From really business standpoint, operates. more us initial it's for of

I a that it us but change What to affects do So taxpayer deferred fact business. assets, going under impact be a NOLs as your that tax we gross domestic-based, given is down, the expect quite valuation allowance and while. full From expect your not perspective, on on that have the I it big are a real your impact it we're have from are to won't any don't to a tax standpoint. primarily we don't for will

big expect So to I on our impact either don't a of business. have those

Wallace Wadman

been you And I couple to older actually and the had and for talking for-profit know the were yet, easing that the don't referring you companies? assume were and up taking Obama if enacted now regulations, on outlook in of I the thought [private] people about education, on have regulations when new [ph] proposed that education would some help administration, regulations [indiscernible], from a years whether I for-profit those the

Douglas Valenti

anymore, referring new You're promulgated and new I to The Wally. Obama right, regulations the administration. so in were not are those that was

the been number has the but right even is the or You're administration environment also loosening proposed and eliminating gainful otherwise Education education one. or control least the proactive this when it those perhaps promulgated better comes hasn't that yet provision. of efforts affect at to in for-profit certainly administration of than previous regulations in because new approved their regulations yet, Department less to employment is a the regulate That or

companies say and right would the that most this and the that but – we risk are even be the are assuming, regulations and administration in So, away, I this that all new loosened said, next that go the it think could won't administration, are that be of prudent, the regulations current if not insignificant again assuming I space in is democratic could back there's started. where

have regulations forever. to they're I to going So, operating they with for live most part are if the as think these

Operator

again, that your replay Ladies available X, you XXXXXXX. access enter will Time Thank Central after for dial A today's conference. all, PM. Again, code February X.XX the participation. X.XX confirmation at To gentlemen, enter does confirmation today and may you XXX-XXX-XXXX, for XXX-XXX-XXXX conclude through dial XXXXXXX. PM information, replay, replay XXXX code be and

disconnect. now may You

QuinStreet (QNST) 31 Jan 182018 Q2 Earnings call transcript