FOSTER CITY, Calif.,
Nov. 3, 2021 /PRNewswire/
-- 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 first quarter ended September 30,
2021.
For the fiscal first quarter, the Company reported revenue of
$159.6 million. Revenue grew 15%
year-over-year. Revenue excluding divested businesses grew 25%
year-over-year.
GAAP net income for the fiscal first quarter was $3.1 million, or $0.06 per diluted share. Adjusted net income was
$9.4 million, or $0.17 per diluted share.
Adjusted EBITDA for the fiscal first quarter was $13.4 million.
The Company generated $5.8 million
in operating cash flow and $11.4
million in normalized free cash flow in the fiscal first
quarter, and closed the quarter with $105.9
million in cash and equivalents.
"We delivered good results again in the September quarter due to
strong momentum and execution in our client verticals. Revenue in
all client verticals grew at double-digit rates or better
year-over-year, including in auto insurance," commented
Doug Valenti, QuinStreet CEO. "We
also continued to invest and made excellent progress on key
technology, product and growth initiatives. Our outlook for the
business remains strongly positive."
"We are raising our outlook for full fiscal year 2022. We now
expect revenue to be between $650
million and $670 million, and
adjusted EBITDA to be between $65
million and $67 million. The
raise is driven by specific indications from auto insurance clients
of budget increases in the January to June period, stronger than
expected momentum in our credit-driven client verticals, and
acceleration of growth initiatives across the business, including
QRP. Our outlook fully reflects the expected impact on auto
insurance client marketing budgets from increased claim costs. For
the December quarter, our fiscal Q2, we expect revenue to be
between $130 million and $135 million, and adjusted EBITDA to be between
$7 million and $8 million. The Q2 outlook reflects normal
seasonality and the expected short-term effects of increased claim
costs on auto insurance client budgets."
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 +1 877-502-9276 (domestic) or +1
313-209-4906 (international callers) using passcode #5800057. A
replay of the conference call will be available beginning
approximately two hours after the completion of the call by
dialing +1 888-203-1112 (domestic) or +1 719-457-0820
(international callers) and using passcode #5800057. 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 income
less provision for income taxes, depreciation expense, amortization
expense, stock-based compensation expense, interest and other
expense, net, acquisition and divestiture costs, gain on
divestitures of businesses, net, strategic review costs, contingent
consideration adjustment, litigation settlement expense, tax
settlement expense, and restructuring costs. The term "adjusted net
income" refers to a financial measure that we define as net income
adjusted for amortization expense, stock-based compensation
expense, acquisition and divestiture costs, gain on divestitures of
businesses, net, strategic review costs, contingent consideration
adjustment, litigation settlement expense, tax 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, tax settlement expense, acquisition
and divestiture costs, gain or loss on divestitures of businesses,
contingent consideration adjustment, strategic review costs,
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 without unreasonable
efforts to the most directly comparable GAAP financial measure 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.
FY2020 results in our Education Client Vertical include revenue
from US, (historically) Brazil,
and India. Revenue in our
Financial Services Client Vertical includes Auto Insurance (auto,
home, motorcycle, and small business), Life Insurance, Health
Insurance, Personal Loans, Credit Cards, Banking, and
(historically) Mortgage. Revenue in our Other Client Vertical
includes Home Services and (historically) B2B. In fiscal Q3 2020,
we divested our B2B client vertical and Brazil operations. In fiscal Q4 2020, we
divested our Mortgage business. In fiscal Q1 2021, we divested our
Education business.
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. 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 from risks and
uncertainties relating to the COVID-19 pandemic and its aftermath;
the impact of changes in industry standards and government
regulation including, but not limited to investigation or
enforcement activities of the Federal Trade Commission and other
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 quarterly report on Form
10-Q for the quarter ended September
30, 2021, 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.
Investor Contact:
Hayden Blair
(650) 578-7824
hblair@quinstreet.com
QUINSTREET,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
September
30,
|
|
|
June
30,
|
|
|
|
2021
|
|
|
2021
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
105,928
|
|
|
$
|
110,318
|
|
Accounts receivable,
net
|
|
|
88,421
|
|
|
|
87,928
|
|
Prepaid expenses and
other assets
|
|
|
8,466
|
|
|
|
7,930
|
|
Total current
assets
|
|
|
202,815
|
|
|
|
206,176
|
|
Property and
equipment, net
|
|
|
7,333
|
|
|
|
6,849
|
|
Operating lease
right-of-use assets
|
|
|
9,802
|
|
|
|
10,983
|
|
Goodwill
|
|
|
117,833
|
|
|
|
117,833
|
|
Other intangible
assets, net
|
|
|
56,161
|
|
|
|
59,177
|
|
Deferred tax assets,
noncurrent
|
|
|
42,802
|
|
|
|
43,336
|
|
Other assets,
noncurrent
|
|
|
5,187
|
|
|
|
5,161
|
|
Total
assets
|
|
$
|
441,933
|
|
|
$
|
449,515
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
48,354
|
|
|
$
|
45,231
|
|
Accrued
liabilities
|
|
|
48,897
|
|
|
|
57,650
|
|
Deferred
revenue
|
|
|
34
|
|
|
|
33
|
|
Other
liabilities
|
|
|
13,171
|
|
|
|
12,697
|
|
Total current
liabilities
|
|
|
110,456
|
|
|
|
115,611
|
|
Operating lease
liabilities, noncurrent
|
|
|
7,248
|
|
|
|
8,545
|
|
Other liabilities,
noncurrent
|
|
|
24,534
|
|
|
|
30,211
|
|
Total
liabilities
|
|
|
142,238
|
|
|
|
154,367
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
54
|
|
|
|
54
|
|
Additional paid-in
capital
|
|
|
321,769
|
|
|
|
320,315
|
|
Accumulated other
comprehensive loss
|
|
|
(255)
|
|
|
|
(255)
|
|
Accumulated
deficit
|
|
|
(21,873)
|
|
|
|
(24,966)
|
|
Total stockholders'
equity
|
|
|
299,695
|
|
|
|
295,148
|
|
Total liabilities and
stockholders' equity
|
|
$
|
441,933
|
|
|
$
|
449,515
|
|
QUINSTREET,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
September
30,
|
|
|
|
2021
|
|
|
2020
|
|
Net
revenue
|
|
$
|
159,608
|
|
|
$
|
139,269
|
|
Cost of revenue
(1)
|
|
|
141,505
|
|
|
|
122,231
|
|
Gross
profit
|
|
|
18,103
|
|
|
|
17,038
|
|
Operating expenses:
(1)
|
|
|
|
|
|
|
|
|
Product
development
|
|
|
4,625
|
|
|
|
4,891
|
|
Sales and
marketing
|
|
|
2,906
|
|
|
|
2,643
|
|
General and
administrative
|
|
|
6,634
|
|
|
|
6,581
|
|
Operating
income
|
|
|
3,938
|
|
|
|
2,923
|
|
Interest
income
|
|
|
—
|
|
|
|
22
|
|
Interest
expense
|
|
|
(273)
|
|
|
|
(339)
|
|
Other income,
net
|
|
|
4
|
|
|
|
16,689
|
|
Income before income
taxes
|
|
|
3,669
|
|
|
|
19,295
|
|
Provision for income
taxes
|
|
|
(576)
|
|
|
|
(4,614)
|
|
Net income
|
|
$
|
3,093
|
|
|
$
|
14,681
|
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.06
|
|
|
$
|
0.28
|
|
Diluted
|
|
$
|
0.06
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computing net income per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
53,993
|
|
|
|
52,492
|
|
Diluted
|
|
|
55,789
|
|
|
|
54,269
|
|
|
|
|
|
|
|
|
|
|
(1) Cost of revenue and operating
expenses include stock-based compensation expense as
follows:
|
|
Cost of
revenue
|
|
$
|
1,821
|
|
|
$
|
2,201
|
|
Product
development
|
|
|
606
|
|
|
|
549
|
|
Sales and
marketing
|
|
|
732
|
|
|
|
547
|
|
General and
administrative
|
|
|
1,747
|
|
|
|
1,483
|
|
QUINSTREET,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
September
30,
|
|
|
|
2021
|
|
|
2020
|
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
3,093
|
|
|
$
|
14,681
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
4,200
|
|
|
|
4,133
|
|
Provision for (benefit
from) sales returns and doubtful accounts receivable
|
|
|
200
|
|
|
|
(95)
|
|
Stock-based
compensation
|
|
|
4,906
|
|
|
|
4,780
|
|
Non-cash lease
expense
|
|
|
(230)
|
|
|
|
(169)
|
|
Deferred income
taxes
|
|
|
555
|
|
|
|
4,525
|
|
Gain on divestitures
of businesses, net
|
|
|
—
|
|
|
|
(16,615)
|
|
Other adjustments,
net
|
|
|
84
|
|
|
|
339
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(693)
|
|
|
|
(296)
|
|
Prepaid expenses and
other assets
|
|
|
(559)
|
|
|
|
(19)
|
|
Accounts
payable
|
|
|
3,161
|
|
|
|
8,982
|
|
Accrued
liabilities
|
|
|
(8,965)
|
|
|
|
(2,713)
|
|
Deferred
revenue
|
|
|
1
|
|
|
|
25
|
|
Net cash provided by
operating activities
|
|
|
5,753
|
|
|
|
17,558
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(409)
|
|
|
|
(437)
|
|
Internal software
development costs
|
|
|
(965)
|
|
|
|
(696)
|
|
Business
acquisitions, net of cash acquired
|
|
|
—
|
|
|
|
(40,304)
|
|
Proceeds from
divestitures of businesses, net of cash divested
|
|
|
—
|
|
|
|
20,730
|
|
Net cash used in
investing activities
|
|
|
(1,374)
|
|
|
|
(20,707)
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from
exercise of common stock options
|
|
|
393
|
|
|
|
1,167
|
|
Payment of
withholding taxes related to release of restricted stock, net of
share settlement
|
|
|
(3,847)
|
|
|
|
(2,874)
|
|
Post-closing payments
and contingent consideration related to acquisitions
|
|
|
(5,310)
|
|
|
|
(348)
|
|
Net cash used in
financing activities
|
|
|
(8,764)
|
|
|
|
(2,055)
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
|
(5)
|
|
|
|
(61)
|
|
Net decrease in cash,
cash equivalents and restricted cash
|
|
|
(4,390)
|
|
|
|
(5,265)
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
|
|
110,333
|
|
|
|
107,523
|
|
Cash, cash
equivalents and restricted cash at end of period
|
|
$
|
105,943
|
|
|
$
|
102,258
|
|
Reconciliation of
cash, cash equivalents, and restricted cash to the condensed
consolidated balance sheets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
105,928
|
|
|
$
|
102,244
|
|
Restricted cash
included in other assets, noncurrent
|
|
|
15
|
|
|
|
14
|
|
Total cash, cash
equivalents and restricted cash
|
|
$
|
105,943
|
|
|
$
|
102,258
|
|
QUINSTREET,
INC.
|
RECONCILIATION OF
NET INCOME TO
|
ADJUSTED NET
INCOME
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
September
30,
|
|
|
|
2021
|
|
|
2020
|
|
Net income
|
|
$
|
3,093
|
|
|
$
|
14,681
|
|
Amortization of
intangible assets
|
|
|
3,016
|
|
|
|
3,128
|
|
Stock-based
compensation
|
|
|
4,906
|
|
|
|
4,780
|
|
Acquisition and
divestiture costs
|
|
|
362
|
|
|
|
276
|
|
Gain on divestitures
of businesses, net
|
|
|
—
|
|
|
|
(16,615)
|
|
Restructuring
costs
|
|
|
33
|
|
|
|
391
|
|
Tax impact of non-GAAP
items
|
|
|
(2,001)
|
|
|
|
2,204
|
|
Adjusted net
income
|
|
$
|
9,409
|
|
|
$
|
8,845
|
|
Adjusted diluted net
income per share
|
|
$
|
0.17
|
|
|
$
|
0.16
|
|
Weighted average
shares used in computing adjusted diluted net income per
share
|
|
|
55,789
|
|
|
|
54,269
|
|
QUINSTREET,
INC.
|
RECONCILIATION OF
NET INCOME TO
|
ADJUSTED
EBITDA
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
September
30,
|
|
|
|
2021
|
|
|
2020
|
|
Net income
|
|
$
|
3,093
|
|
|
$
|
14,681
|
|
Interest and other
expense, net
|
|
|
269
|
|
|
|
243
|
|
Provision for income
taxes
|
|
|
576
|
|
|
|
4,614
|
|
Depreciation and
amortization
|
|
|
4,200
|
|
|
|
4,133
|
|
Stock-based
compensation
|
|
|
4,906
|
|
|
|
4,780
|
|
Acquisition and
divestiture costs
|
|
|
362
|
|
|
|
276
|
|
Gain on divestitures
of businesses, net
|
|
|
—
|
|
|
|
(16,615)
|
|
Restructuring
costs
|
|
|
33
|
|
|
|
391
|
|
Adjusted
EBITDA
|
|
$
|
13,439
|
|
|
$
|
12,503
|
|
QUINSTREET,
INC.
|
RECONCILIATION OF
CASH PROVIDED BY
|
OPERATING
ACTIVITIES TO FREE CASH FLOW
|
AND NORMALIZED
FREE CASH FLOW
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
September
30,
|
|
|
|
2021
|
|
|
2020
|
|
Net cash provided by
operating activities
|
|
$
|
5,753
|
|
|
$
|
17,558
|
|
Capital
expenditures
|
|
|
(409)
|
|
|
|
(437)
|
|
Internal software
development costs
|
|
|
(965)
|
|
|
|
(696)
|
|
Free cash
flow
|
|
$
|
4,379
|
|
|
$
|
16,425
|
|
Changes in operating
assets and liabilities
|
|
|
7,055
|
|
|
|
(5,979)
|
|
Normalized free cash
flow
|
|
$
|
11,434
|
|
|
$
|
10,446
|
|
QUINSTREET, INC.
DISAGGREGATION OF
REVENUE
(In thousands)
(Unaudited)
In the first quarter of fiscal year 2021, the Company completed
the acquisition of Modernize, Inc. to increase the scale and
capabilities in the home services client vertical. In addition, the
Company divested its former education client vertical to narrow its
focus to the best performing businesses and market opportunities.
As a result of these activities, in the second quarter of fiscal
year 2021, the Company updated its reporting structure which
resulted in two client verticals: financial services and home
services, which was applied on a retrospective basis. All remaining
businesses that are not significant enough for separate reporting
are included in other revenue. The following table presents the
Company's net revenue disaggregated by vertical:
|
|
Three Months
Ended
|
|
|
|
September
30,
|
|
|
|
2021
|
|
|
2020
|
|
Net
revenue:
|
|
|
|
|
|
|
|
|
Financial
Services
|
|
$
|
117,912
|
|
|
$
|
94,213
|
|
Home
Services
|
|
|
39,986
|
|
|
|
33,469
|
|
Other
Revenue
|
|
|
1,710
|
|
|
|
—
|
|
Divested
Business
|
|
|
—
|
|
|
|
11,587
|
|
Total net
revenue
|
|
$
|
159,608
|
|
|
$
|
139,269
|
|
View original
content:https://www.prnewswire.com/news-releases/quinstreet-reports-first-quarter-fiscal-year-2022-results-301415657.html
SOURCE QuinStreet, Inc.