QNST - Earnings call transcript Q2 2020

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Operator

Good day, ladies and gentlemen, and welcome to the QuinStreet Second Quarter Fiscal 2020 Financial Results Conference. Today's call is being recorded.

At this time, I would like to hand things over to Ms. Erica Abrams. Please go ahead.

Erica Abrams

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

Joining me Greg QuinStreet. and Doug Valenti, on the call Wong, today CFO are CEO; of

section webcast the simultaneously www.quinstreet.com. being is website at call Investor This Relations of our on

and I These differ by Before statements. could remind you contains involve cause not uncertainties materially that a projected number are actual like that we would statements future to to following from of the those performance. such get discussion and results started, statements forward-looking guarantees of risks

Factors from that including discussed recent to may our cause the filings, our in results differ SEC filing. are forward-looking statements XX-Q most recent our

based no the on are of as Company statements obligation today, these undertakes update and Forward-looking to assumptions statements.

and to earnings of A GAAP Today, available non-GAAP which measures. non-GAAP website. measures today's in we our GAAP will press included release, on are is reconciliation discussing Relations financial be Investor both

over go CEO turn I'll Doug, of to that, Please QuinStreet. the With call ahead.

Douglas Valenti

you record financial for be us and revenue accelerating quarter outlook Thank opportunity home and you, line grew EBITDA. were all business, and our There verticals, in the continues joining particularly revenue. second client in second Erica, momentum delivered today. We quarter for core and with which full-year good in results fiscal thank our to and services Fiscal services XX% year-over-year.

quarters. revenue that also Good record coming growth results, to quarter company. expect we initiatives set strong fiscal made a yield expected progress improving third operating for to quarterly being in Current is and quarter our and results on the are

estimate the opportunity in $XX now agency represent already launch with is signed six our to QRP to quick million insurance that a clients We expected and ramp start revenue QRP Notably, shortly. signed QuinStreet. annual clients off to over large

advanced the opportunity. $XX represent stage estimated In clients pipeline, the more is at but stage, million revenue not yet sales over contract that of addition, in in QRP signed, annual

of range a range possible to indicated. this alternatives, of review generated alternatives point, we alternatives, At are has of Regarding the full broad Sachs-led strategic indications to process the Goldman process interest as company. including the reviewing previously along the acquire options

of We options. qualifying and are early the in stages assessing

In and for and we to our to Goldman done This and value continue broader is with to, have us performance divest maximum we the in strategies move parallel up with shareholder underperforming set complimentary begun to see meantime, businesses. ahead process Sachs. being as with,

resources The market divestitures businesses smaller plan an of are part best-performing efforts and a align to them. narrow overall of opportunities our and to our to with and to focus restructure number

good are progress. making We early

and the February. sold have our process stages potential Education of A of We our buyer Services. spinning Brazil Brazil final is business of the before deal that already of end with on diligence in acquiring close another due are out client verticals of in a the Financial

to narrow deliver to to These result smaller opportunities our discussions, and market and growth. moves number performance our in are expected a simplify execution and of focus improved predictable and best-performing more faster businesses strategic

businesses a with to review leverage and faster a may outcomes to margins with would expect take new any of alternatives, other and the heavier of full SaaS-like cost base strategic a expansion we transition the expect also to We from process format including topline number footprint on from beginning mix Not broader margin period QRP. from result smaller that a quarters.

Greg. to over call the turn I'll that, With

Gregory Wong

us everyone today. Thank Doug. Hello, and for thanks joining you, to

verticals. Services the the quarter, our to results second Services and driven our strength deliver Home technologies in client in continued core solid Financial of marketplace We by

million to our million per of diluted cash income or a quarter, to $X.X we In revenue a XX% basis. was and equivalents. the was revenue. net share million Total second cash $X.X for the EBITDA close $XX.X fully quarter million quarter fiscal $X.X increased of $XXX.X $X.XX QuinStreet. grew record X% million, year-over-year Adjusted or balance with Adjusted by on

by vertical. revenue client at Looking

Our client of million. to revenue QX represented $XX.X XX% year-over-year grew and vertical XX% Financial Services

the our year-over-year with of in double-digit Financial All Services businesses quarter. the delivered mortgage, of growth revenue exception strong

Services the mortgage, strength in in Financial increased Services Financial saw a our grew meaningful year-over-year, where year-over-year. large insurance, XX% quarter, client vertical carrier of second auto broad a largest reflecting XX% clients. We Excluding from spending revenue increase in range

performance more budget marketplaces our budget We they to expect digital more digital spend clients in this trend and shift continue as to of more marketplaces. to more spending

XX% Our of declined $XX.X Education million. QX revenue represented XX% year-over-year and client vertical to

X% delivered QX client includes Services of to was other revenue vertical, and vertical, in We and client $XX.X in which grew year-over-year million. softness Services Home which growth Our offset revenue strong the remaining BXB. XX% Home by represented BXB, our

head EBITDA. adjusted X% fiscal our we due semi-fixed was we cost as of the which our expected Moving March slightly is sequentially. revenue, lower base, half or year of revenue million falling June revenue the down EBITDA quarters. Adjusted in Adjusted stronger quarter, do to expand not on EBITDA back seasonally to for and of seasonality. to $X.X on in December seasonally This into is the top adjust

the quarter notes the outflows of cash quarter. by million and for CapEx. grew began million offset flow, generated to quarter acquisition $X.X million $X with balance sheet. We cash related million the of and in the closed operating of equivalents. Turning $XX.X million, $X We by our balance in $X.X with We cash $XX.X million

Normalized to quarter free our revenue. drops of of free $X.X normalized our EBITDA or business cash to of low capital due Most was flow adjusted the flow requirements model. cash the for X% million

than initiatives big company history. In growth we and against have in more summary, believe that point identified them at any we opportunities

transformation divest in take we press to to a new and businesses footprint quarters. release, format and that underperforming to have number noted begun we a of our expect As

outlook last delivered were line EBITDA for we outlook, the full-year Regarding revenue QX that and in provided with quarter. the results

the results strategic revenue or deliver divestitures process. with line and in expect EBITDA, outlook impact also that to any including We are from that not QX for

the operator to With that, over the I'll turn Q&A. call for

Operator

our Instructions] first Thank Campbell, Stephens you, sir. from John Inc. today take question [Operator We'll

John Campbell

afternoon. Hey, Good guys.

Douglas Valenti

Hey, John.

John Campbell

work I grip that sure the Is you guidance? want not get So guys. development assume question of the a the to kind you good meant guidance. I great want QRP it make QRP. on first is really down to it That's a sure guess make some of for exciting in I are safe I divestitures? is get to Or still just pat. guys offset contributions to including on I that

Douglas Valenti

in guidance. have don't still QRP We our any

John Campbell

rev be Okay. a and for bit it this, And how too then take QRP it customers guess are typically long just might I signed? that but little to once recognize early does –

Douglas Valenti

said as it. In forecasting sure, pilot, not got we've you not launch John. really number, part it's before, That's We're us we're and the don't be in Yes. of the quick as usage what from the they'll talk We've expect pretty a revenue. reason, know, launching. heard begin you've to – done as pace process it usage, we it don't before. you haven't Exactly we about, of quarters. because We know just yet to

We strong. Folks think We've just really strong than of pilot. we to it before value is in the done lot extraordinarily months, it XXX%, and putting launching. interest know the really The we don't other feedback. likely into but through haven't are pilot. effort a done it's proposition since There's super

on, that from just expect to them sure would given most initially quickly again, in pilot We to and pretty that roll done small use expect benefits. will we functionality get our group training they out then it make it tested. experience, a there based And the

the you and the of saw in functionality. and a lift usability which organization platform the surprising pilot given about in power the As is know, – this XX% pilot not productivity, the

at we what So incentive lot out would again, expect it don't rate will ramp. But a fast. just of know drawn we

not it. a we're few until comfortable going folks So these we projecting have of through

John Campbell

going an I think ball I'd this air a Okay. launching, of launch one, thought makes speaking lot of it to And give That shot. then but sense. a on I I'm

Or a On the you this of actually is at received guys any strategic – it basically exploratory have stage? live kind offers? just review, live

Douglas Valenti

We live received have offers.

John Campbell

I'll back queue. Okay. guys. in Thanks get

Douglas Valenti

Thank you, John.

Operator

Our will from next Kreyer, Jason question come Craig-Hallum.

Jason Kreyer

questions. you again. six just that expect don't gets can this with Thank process, to in on that pilot of there's QRP agencies just were specific running. commentary part all wanted heard Maybe and if that of contract as bit the on the little the good but kind margin then you're I touch I Hey, those wondering for afternoon. at from any taking that profile And you just touch feedback a up if any first around you've point? know kind of you those.

Douglas Valenti

without is costs our any which as Sure, media limited wise us service peripheral variable you Jason. it's semi-fixed – group that's high for margin know, base, because very or into Margin core a technology cost group. a is product to fairly product a drops that there is this

into it more grow cost we expect run because, gross to dropping margin And again, a fairly significantly to going from the slowly. the scales, that's XXs-plus-percent. or margin So in limited this a the semi-fixed margin you're that more basis, gets the business higher variable base

So I will initially with seven-figure go as probably any soon scale we to think and from as get there. of margin we'll we kind XX% go then out

engagement, a very – from I with a there's interest, the contract then into of engagement of the lot provide terms margin high been a can move it's now to and lot lot only launch. business in So moving fast a feedback, – pretty a – of from you pipeline demos the

pipeline so contract been anybody We the the lost haven't at stage. That's far.

It's stage, to just if get So a complicated it's pretty contracting we it's tend not contract think there fast. relationship. in to going

feedback seen product. far on well, or As of that side that team I launches major hard reports from haven't product only that are our any guess tell the hiccups all means. the but going that, is client in we thing it's terms beyond as the means either what our side are to

the to these first So of get launched. we're for now just in six waiting position

the by expectations the and by product – on be that resources, end team live, the be by to be the clients of folks communicated signed communicated they'll the but of are as somewhat expectations, and that dependent course, client there'll current quarter. that expectations our launched Again, to this current this us

then how the we'll update information we for lot signed you ramps think quarter we so where on be the watching contract more a you and we'll have give the went launches of stage. ramp only in about you are that next And Obviously, and told we'll – and can we've on we more the pipeline. terms

more a very, this deep pipeline so lot product, big have there's We come. for a to very

Jason Kreyer

divested, maybe last those take either how on there. little a that have a same the profitable over In looking underperforming already could regards about business the couple look that you. that the months models. the the few of businesses we at the around financials been a or seen contribution our would that just lines, we've to so as last any divestitures, along year kind Can or Thank kind impact then of would broadly classify talk you what you you And maybe to components less divest? Perfect. of

Douglas Valenti

Obviously, Yes. to in call Brazil numbers already in No. the a you terms of after that inputs Greg relatively question, have your be able businesses divested to will been are for that great the immaterial. models. give the

Beyond about difficult to closed. that, time of actually to hard it's us reasons. closed going them obvious for It’s you transactions for to the probably actually aren't deals say get be ahead until talk until particular

close, have we to or model. to estimates they don't the reconcile Once terms be this then to – we’ll But those and – give of of able you the point. in help to mean with that you allow financials will meant with what you numbers to provide have Greg that numbers

important margin. The but drag small, first a because were on and on two both they relatively growth are

its bigger it able which again we numbers materiality and next will numbers or of the this quarter and the a be whether on that that give point, get and we wait you to you by in we we till point end announced that expect, timing of the when and we expect at give The decide February if we'll – bit the little end not do on we'll is based one the hopefully then. provide be done the than at we'll

is and impact your going but point, their as this some the terms on immaterial scale significant meaningful But the given of margins. starting a operations, Brazil to the will have point be next But meaningful and more at impact. in of relatively one relative small

Gregory Wong

one, Yes. in annually current The Brazil is revenue. single Jason, millions digits

So it's immaterial.

Jason Kreyer

of we if wondering just, kind hashed up back year. in calls pullback where I Okay. and saw over the But little going just of you a expectations into little last of kind two one of progression wondering media the over seen of three the of kind bit little I'm a forward? that. a last the conference We going terms we've profit try a can set so and we're kind out are two those in quarters there bit of margins or more appreciate to December of the that bit progressing to in sneak quarter in gross margins here. we've the half

Gregory Wong

outlook the our Yes. we margin over on on sequentially over I that give provide the color quarter standpoint little To from would – a we media don't forward-looking currently you grew where quarters. are, last quarter. this

we're good progress. And making so

As optimization revenue and on our you always about platforms, business growth. know, Jason, our new talked media Margin we've follows in take you as this. into

acceptable so initially up And sources at margin a we upfront can we over optimize new we margins. on level, at sometimes time take as that to where lower know

think the making sequentially September this good quarter, grew headway And media that on percentage over we path. I again, we're quarter. margin

Douglas Valenti

wouldn't I significant Yes. it. read into anything

In point variations mix margin we're any X.X a plus that and I it, Just business what to than and quarter, don't don't minus particular working add-on usually really at and seeing in media where our of case, terms this point we're time in or say think I is anything the target on long-term in of anything. mean media would opportunities. we're that other mean of opportunities to

sources And for in or as a get our feel particular model. newer may meaningful it time know, some on on bit a the more it's activity little we we up, we read to over be any where to are of respond structural I to us have and as – it to for quarter itself take business work out with to like while working into work we but you implications tends competition kind having not important – some we're not would any there, monetization that build

Jason Kreyer

Perfect. Thank color. you for the

Douglas Valenti

Thank Jason. you,

Operator

up Barrington Next is Research. Goss, Jim

James Goss

can Maybe been wondering there extent fact, you? nature to education I'm future. smaller foster Thanks. also role that beginning private with smaller, of plays trend and that In hurt companies? helped industry, become has it some and in a in deliver you the has has did what that if to OPM you even that Education position or And that you the an your given extent that for

Douglas Valenti

we particular education We'll is about I businesses. we Jim, as all we a short talk of as answer. where broader for along come won't make or transaction review reasons part we process have of think out And of any of actually business go in obvious the to will is dimensions. the whole our bunch a with the way until a decision we'll have dealing terms that through sensitivities different on

and a In relationships I at the trends, terms of we of clients don't it folks. see are with OPM as harmful all. have good mean, OPMs number those we that we have

a over can already ours are because do better job buys model of and a great know. marketing and we think And what be I many partners to time, media allow business the the do of their spin. the part OPMs them that's huge are in you as managing they

it's in not say opinion. I would So harmful my

many And focus, of more organization with times better and around sophistication you – who marketing. more – so we is more kinds it those do an frankly. scale has somewhat And organizations because quite helpful and probably have keen

net a already their positive, think have – I us relationship and working OPMs, to even serve probably there significant we don't we are more. we're most So growing again hard are any do try to don't and and with

it's focus a my with it I much a ours not for So It's been OPMs, number be guess years. I pretty the assessor of of a is positive. net a work to would a – would of – focus ours but

of are not for sure. – phenomenon but they to is ecosystem it's So us, growing it part new the a a

The the a the terms of know amongst of In not-for-profits. you see serve OPMs the largely still as lot for-profits, for-profits. we volatility

the continue our and still for-profit in about can. we volatility by is best to industry that to And postsecondary of try is side navigate as so the revenue we as there They’re half way.

of half their Just is about half for our context, not-for-profit and of revenue OPMs revenues scores for-profits. our about

James Goss

been the hasn't surprised with end is their tunnel? refinancing, of that turned there I've regard. around And Okay. the a the light at in that how mortgage

Douglas Valenti

priorities that's I a of been a One of things. think Yes, and is, couple matter focus. our

efforts the lot had us in needs And and is simple have mortgage We task. rebuild focus of a not to elsewhere. opportunities a for

And we're that better. been opportunities resource of we prioritization, allocation it’s just like so part against felt

change The things comes doing. rebuild make that mortgage it opportunities as in on we some that and a that we a own, back, that refi we strategy second is more base. good And sure solid some we as to do some that market to do media we're assets have with

resource a and fact differently the past resilient the more a than of we in the in market this next allocation going be business time we've seek refi combination that so that and bit and rebuild way to built we to will that little And prioritization it hope are turns.

with market to of refi going and put We're volatile. we'd with we market bit and market, the refi a with more a refi so blueprint fatigued kind refi and do to resilient with less up down business with market place and is the that a have though up down like in

so going work that's than the would bit And But mortgage back just I market. take how to characterize with now. right it's a more little up running

James Goss

way Okay. offers indicated I company, but And was the much seems to your on gotten actually be release the reshaping effort it has appears entire this some lastly, written, know – you more that that in trying and earlier earnings focused back terms review the have for to? positioning whole sort to Sachs that the us nature you're point of reading too and of the into of is Is the the of sectors the direction Goldman companies much exposure. you or

Douglas Valenti

in both parallel. it that's we much that we're we're fact might navigate to – too into reading say trying would feared doing I that No, that and the

in – looking Sachs And of we’re we're a to at number just things. mow so Goldman the process, be clear,

those qualifying and the processes of And familiar them of that theoretically, the have point to interest, we've you with not. at but takes gotten attractive these indications or time. actual some for the us those go point further where them and now getting kinds indications agreements to and of we assessing through of negotiated those are purchase of process We're to

full deliberate and to to and very the things want be dotted don't vetting Is that you crossed. and careful due And because not that want and of to you're that diligence about a all sure you take responding getting you make qualification to Ts and process

– when it's that job that, doing process We point are keep of that indications. with or moving at while our going And those some forward. the then we're the entering now are doing to of business –

and And if the as end, for that, where not for we get have compare the the company vetted to from Board, fully we to and the come in, the and do as option. independent go-forward or to that those that have we offers need going – to we're to a point qualified shareholders

we we best those can. shareholders. to And independent go-forward the to then the want and interest of Directors we think in long-term are is And best make decision option make sure as a Board we'll we continuing a develop of possible the compare that

lot on as you in a And there's business. the know, going

target. little evolving ways, a of some in bit there's So an

So full a just that well-run say and opinion, process. Sachs I getting would engaged in we are my are fully from value Goldman in

fully or guess, stage based We'll I would indications working over through are down of or so, working not. for narrowing offers from on indications timing. that to the at and going We the be qualified month next firm those

compare what and and what Board we to the at and are strategy, advisers point is think can say, a we'll help looks those attractive the with we'll where of like be "Okay, we most look be full will shareholders?" two a we together. business and take And go-forward two the for do in in think then the counsel the model the where those and able And we

work that can I a going into of you both. tell lot there's

it much we're of on So too and that be away said would strategic independent. into process way alternatives I the what from steering say reading to kind the focusing

both focused fully at point. this are We on

James Goss

response. Great it. Appreciate All right. Thanks.

Douglas Valenti

and thank you. bet You

Operator

the Capital has Northland question. Breza next Robert Markets from

Robert Breza

in your these, of Hi. first say, indications Good just Brazilian as Or we through – inference see, wave we asking? are of got we is process. work it a looking say said they getting of these you afternoon, Doug, this hard these maybe you're back and step at cleaned everybody. that as bit maybe little as up year-ago, the go and you a thing interest, let's to it do this

work? you curious a Or all work continue you're people's clean leaving? do hard make seen voluntary call obviously, Or are do then do at on to as an a I'm when involuntary, the Or look process they you – to desire forward. going they the willing you just curious just want it to to follow-up know, to people there's but of, the be up? have I undertaking, of and as that lot we hard to and it, to get understanding mean that,

Douglas Valenti

not These Sure. the made underperforming that process, recommendations Nobody's strategic if we on based nobody there's strategic that's whether the told for would create did in divest profile something. process assets we question. forward possible or the the the they to us And best said decisions move or would forward, do if something a not. make to Board not or going management's being business are sure to did

question be underperforming opinion at less some are talking included interested are the So to, of my we're assets in package. is don't the going these not your short answer own the time, no, to folks of if the same and that in – to but we none

that's why in So complementary. That's my said it's I important. I think obviously remarks prepared

some the with way, interfered wouldn't clearly in things they, if these do We process.

time. of excited process attrition, also that's key over strategy about as about go-forward the say a also of employees. been the and are excited attrition potentially, we've enthusiastic employees results would of team but process but And of developed the terms In are potentially, the going the about zero about had I no, management excited results key the that forward

the focusing agreement, are about new opportunities base professional going personal thing also this there their And employee creation. opportunities right growth team and the be for is excitement about and wealth agreement their unanimous the to senior key on there's business strong amongst for we're the and that and business

a employees would So along. enthusiasm I communicates, them company We're ever extraordinarily morale now, really, I've never and openly pretty and good. better. – right brings think don't is I'd engagement any think, they've with are really that, been that morale we say and transparently and say But good. I

Robert Breza

Fantastic. Maybe, Greg, you. a just follow-up question for accounting

off new the at we do P&L be business on – done point assessment, not of or going going that and view, it in the recognition you hadn't just bringing see should how I immediately. a look I you to line from QRP mean, you commented is before, know we daily As engagement? it revenue but Or rev it's to future rec-based obviously that the realize just hitting I be quarters? Doug

Gregory Wong

on rec No. per per rev quote the period, platform. We generated paid simple. The quote get

So the that. it's simpler kind we're any systems replacing. be recorded with quote's but – time will and comfortable be direct be the clear, guess, at platform. we're activity the and launching on of the of at the invoiced will That's generated, or rec a monthly, rev I alongside model business super, everybody's super recorded Couldn't of time basically the that

And then platform, and simple get revenue attractive very, straightforward a that the quote so and value-add very, historic per relative rec. therefore even systems, very again attractive, is of to model simple this to, rev price pay we very more given very and

Robert Breza

Thank you. Perfect.

Gregory Wong

you. Thank

Operator

Adam William will question Klauber, Blair. come from next Our

Adam Klauber

revenue? for reaffirm didn't you reason And would that the Is divestiture guidance because the you assuming year-end could your guidance that? no change Thanks. reaffirm divestiture,

Douglas Valenti

yes. and Yes

Adam Klauber

figured exactly… that Okay,

Douglas Valenti

think it would right, don't – yes, laid mean disagree. Greg – you I of Adam. Greg? figured I It's out correctly, kind exactly That

Gregory Wong

I would agree.

Douglas Valenti

Yes, yes. and

Adam Klauber

was Okay, give being And that of becoming heavy the Can that users great. pretty sounds engaged? spending engaged? been it haven't And us from insurance is even then money lot carriers more more a you like strong. some…? Is

Douglas Valenti

got we said users I or don't if finished – tell users think existing not, but being your if it couldn't a you I I know was question, new from it's combination. you insurance, off or cut on

we existing with to to had think with effectively large on platform. more spend work us great I growth find to ways the continuing clients

over at on the seven, spending period seven, on big I the the terms we a early of gosh, I'd large in least that. them, where in years levels have with years, for the past, go there breadth think Again, few spend, most large players had business. eight the the clients over back than and platform think, of at past eight look when large I early a was most it's ever. were record But we've amounts. a spending more spend record the at had the least broadest the lot clients to

And also had of with for quite then we spend number been have a time, who some more. folks lot us a big

month of I'd clients clients and say the ever record per into was significant of theme the month large front would in more among be of And I me. so spending the broadening have – spend biggest say a And than large to it spending probably us, millions want folks with amounts. but over I don't that numbers

that case. but was that, say won't have I that, impression the the I So

effectively would was them more channel. probably theme, to on the ways it the effectively and – on to spend find more but the to with work clients in continuing broadening a allow – be platform more and more the biggest So to money

Adam Klauber

agent is a far large, larger the tiers, tiering, three and going to tons extremely of universe mid-size Great. mid the about agents. the there's of tons independent QRP, small and small? agents, you sort marketing out large. Can you efforts? and talk There's those and actually And as there's How then as are your then marketing the

Douglas Valenti

Yes.

one our industry. it relationships that – basically case, to sales In have For with used the run we're for the national sales all folks one the all carriers. of agency large, in representation, large national managers the of that been doing of folks one

we're the largest who's terms early entities, going our on and carrier efforts. of is the larger for you partner, with in helping efforts partnership in partnership us the effort also So pipeline, well imagine, mostly that entities. sales can focused our on with as larger And

able we those are a kind be rather we in than at folks one into existing the where up time. and effects to systems go do should some implementations For sweep smaller, discussions having partnership have of one-too-many

for stage of that. partnership pretty We doing have kind in exciting one – very good at a

folks and industry cases, So with would carrier national I'm of that's real our one this the contacts, large. where literally And and entities in – focused on integration. for looking integration some sales partners, from partnership but product, can the of representation with on we thousands small, be working in expertise strategy general the dedicated some partnerships at capture, technical with

Adam Klauber

Great. of lot Thank a Thank sense. you. you. That makes

Douglas Valenti

You you, bet. Thank Adam.

Operator

Martinuzzi, Lake Next up Eric is Street.

Eric Martinuzzi

Just revenue of first that September and revenue, the correct? that for got the a XXXX, was ended as high question. then a watermark and Is it I've The $XXX.X clarification quarter company's million.

Gregory Wong

was quarter, quarter. quarter September this This fiscal quarter. record was Record a the Correct. second

Eric Martinuzzi

Right. specifically that for referring company, expect QX. the to quarterly greater fiscal says meaning be I was the third quarter, it million for set outlook your to the record that in $XXX.X than revenue a you language would

Douglas Valenti

Yes.

also that line there. would expected in annual so triangulate of it said guidance, our be with we kind We that from

Eric Martinuzzi

QX. question having obviously, segment, as sees clean then Education the result had a the in And Okay. you year a that quarter comp my do has to DCEH, of third in ago. the versus if still Wondering with I a there – relief think, in segment some

Gregory Wong

we the been time, I better would did a we've of DCEH year of Yes. quarter. is in long affect said for at this the Education end see to November, quarter, that performance Eric, as expect we volatile it and it's space. it left the the fiscal that move loss forward second a and so in it

remains expect volatile. performance, performance, to expect to see see So but better when I it do better I say

Douglas Valenti

based expect the the forecast. year-over-year double we'd to in grow on current it now, quarter third Right digits

significant DCEH that, it definitely better answer now revenue. was that that loss would the given should – perform yes, is what such left we've was a hope you of So

Eric Martinuzzi

you. Thank Understand.

Operator

Singular next come will Sakai, Chris Our question from Research.

Christopher Sakai

and Hi, Greg. Doug

Douglas Valenti

Chris. Hey,

Christopher Sakai

margin. like – looking administrative. product three and operating categories: general with and My development, question sales income marketing looks at regards the and is It to I'm

year last leveling looked and be the I'm they've Over to they're soon. of wondering margins up – I'm a fronts. increasing goal what's six but on off is months, there been decreasing. your anytime like Or all those And wondering there? if going the have just

Gregory Wong

our acquisitions in a of couple expenses, see you'll Chris, year. what think last – we the as operating a at reminder, I end of did is

expenses grow operating perspective, about a growth. lower look you until model those and we than revenue we've at year-over-year we've lap operating you our you’ll to from general higher beyond will rate a communicated, expenses acquisitions. So if But our is talked our see lot as that, –

expect – digits about increase And that a expense operating base the would our year. so we over mid-single our long-term,

the be about. I trend think would would that So out

Christopher Sakai

Organically?

Gregory Wong

But Organically. we you year-over-year levels will elevated the higher or see lap a on Yes. acquisitions. basis until

Christopher Sakai

Okay. All all questions had. right. Thanks. I the That’s

Operator

come Stephens Campbell, John Inc. from will question Next

John Campbell

if Hey half question. what you said ones. the of you provide the quick think the can this hand, guys. two on I year, out DCEH have don't Doug, this back you digits this was Thanks double Greg, quarter? in Education. I but have know for growth past of or excluding I additional Education

Gregory Wong

apologize. that John, I don't I have offhand,

John Campbell

the that guess, loans, then fish later. accounting CECL one anything off can bit where, the little – impactful wall. potential that ratios? don't I did even know more influence had I that And out business a if to with for guys, does I but adjust cards probably Okay. is have the or the remotely loss credit that changes, second you I have any personal on to this you

Gregory Wong

that. not from we impact seen have any No,

John Campbell

Okay. I got. That’s Thanks all guys.

Gregory Wong

John. Thanks

Operator

at through [Operator Instructions] be of further XXth of Ladies passcode At and today conference. replay, a for available the this XXX-XXX-XXXX like February. starting time, enter replay conclude XXXXXXX. To call will free call your Time no and Central run and are questions. all today's does This today's access the We thank you toll the X:XX or to would participation. please there p.m. XXX-XXX-XXXX gentlemen,

now disconnect. You may

QuinStreet (QNST) 5 Feb 202020 Q2 Earnings call transcript