Good day, and welcome to QuinStreet's Fiscal Third Quarter 2024 Financial Results Conference Call. Today's conference is being recorded. Following the prepared remarks, there will be a question-and-answer session. If at any time during the call you require operator assistance, please press star zero. At this time, I would like to turn the conference over to Senior Director of Investor Relations and Finance, Robert Amparo. Mr. Amparo, you may now begin. Thank you, operator, and thank you, everyone, for joining us as we report QuinStreet's fiscal third quarter 2024 financial results. Joining me on the call today are Chief Executive Officer, Doug Valenti, and Chief Financial Officer, Greg Wong. Before we begin, I would like to remind you that the following discussion will contain forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those projected by such statements and are not guarantees of future performance. Factors that may cause results to differ from our forward-looking statements are discussed in our recent SEC filings, including our most recent 8-K filing made today and our most recent 10-Q filing. Forward-looking statements are based on assumptions as of today, and the company undertakes no obligation to update these statements. Today, we will be discussing both GAAP and non-GAAP measures. A reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release, which is available on our investor relations website at investor.quinstreet.com. With that, I will turn the call over to Doug Valenti. Please go ahead, sir. Thank you, Rob. Welcome, everyone. Company revenue grew about 40% sequentially in fiscal Q3, fueled by a significant positive inflection in auto insurance carrier spending as we had forecast. The ramp of auto insurance carrier spending continued through Q3 and has extended into the current quarter, fiscal Q4. Auto insurance carrier activity and spending are broad-based and continue to be supported by reports of good carrier results. We expect the ramp of auto insurance spending to continue in coming quarters as carriers expand their product and market footprints and are enabled by increased rates and improved profitability. Overall, we expect auto insurance revenue to grow for the foreseeable future as the fundamental shift of budgets to digital and performance marketing reasserts itself as the dominant long-term trend. Adjusted EBITDA jumped to almost $8 million in FY Q3 due to the leverage from the higher revenue. We expect Adjusted EBITDA margin and dollars to continue to grow as revenue continues to ramp. Turning to our outlook for the current quarter or fiscal Q4, we expect revenue to be between $180 million and $190 million, a quarterly record revenue for QuinStreet, and implying year-over-year growth of over 40% at the midpoint of the range. We expect Adjusted EBITDA to be between $10 million and $11 million, implying year-over-year growth of over 400%. Our fiscal year 2025 begins this July 1. I would point out that the annual run rate of our fiscal Q4 revenue outlook already implies growth of 20% or more over full fiscal year 2024. We are excited about the size of our market opportunities, about the resilience we have demonstrated in our business, about our plans and initiatives to keep growing revenue and profits into the future, and of course, about our continued strong financial position. With that, I will turn the call over to Greg. Thank you, Doug. Hello, and thanks to everyone for joining us today. Fiscal Q3 was another solid quarter for QuinStreet. Total revenue was $168.6 million. Adjusted net income was $3.4 million, or $0.06 per share, and adjusted EBITDA was $7.9 million. The significant positive inflection in auto insurance client spending has indeed begun. In fiscal Q3, we saw auto insurance revenue continue to ramp throughout the quarter. That said, we are still in the early innings of the re-ramp of auto insurance and continue to expect growth for many quarters ahead. Looking at revenue by client vertical, our financial services client vertical represented 67% of Q3 revenue and was $112 million. Our Home Services client vertical represented 32% of Q3 revenue and was $54 million, a record quarter for that business. Other revenue was a remaining $2.4 million of Q3 revenue. Turning to the balance sheet. We closed the quarter with $40 million of cash and equivalents and no bank debt. A more normalized year operating cash balance would be approximately $48 million. We received a payment of approximately $8.5 million two days after quarter end. Moving to our outlook for fiscal Q4, our June quarter. We expect revenue to be between $180 million and 190 million, and Adjusted EBITDA to be between $10 million and 11 million. As Doug pointed out, the annual run rate of our fiscal Q4 revenue outlook already implies revenue growth of 20% or more over full fiscal year 2024. We also expect Adjusted EBITDA to continue to expand faster than revenue. In closing, our outlook on the business has never been brighter. We expect a record revenue quarter in fiscal Q4 and further margin expansion. We remain well positioned to benefit from the re-ramp of auto insurance client spending and are seeing continued momentum in our non-insurance client verticals. We expect strong total company revenue growth and Adjusted EBITDA expansion, driven by our diversified portfolio of client verticals. With that, I'll turn it over to the operator for Q&A. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator's Instructions]. Your first question is from the line of John Campbell from Stephens. Please go ahead. Hey, guys. Good afternoon. Hey, John. Hey, so, you know, over the last year, you guys have talked to getting back, you know, eventually to, you know, the 10% EBITDA margins, I guess, as the insurance channel just normalizes, and you kind of rebuild the top-line scale. I'm not asking you to really pinpoint exactly, you know, when all that comes together, but just based on the fixed cost base you guys have now, and what you know, the plans you have to grow it from here, I'm hoping you guys can maybe outline the level of it or the degree of revenue you need to get back to those kind of low double-digit EBITDA margins. Gosh, I'd say I'm hard to pinpoint the exact level of revenue, John, because it depends so much on the mix. As you can see, we'll get up into the mid- to high-single digits in terms of percentage next quarter, and we have a lot of growth beyond that that we can see coming, given the demand that we're seeing and the initiatives that we have. So, again, I'd have a hard time giving you the exact number because it in terms of revenue, but it's not too far off, if that's helpful. I would say it's likely to be in, you know, very likely to hit next year. Next fiscal year is my opinion, but we'll have to wait and see what the mix looks like and the planning and the forecast. Of course, we'll give you a more precise view of that in our next call as we look out to fiscal 2025. Okay. That's, that's totally fair. And then, Doug, you know, if you take, you know, your guidance, the high end, which you guys have pretty consistently outpaced your high end of your guidance, I mean, that puts you well above consensus for next year. Obviously, that's annualizing that on a, kind of an early cycle or early stage of the cycle recovery for insurance. And, you know, I think it's helpful for investors to maybe kind of size up where we're at, as far as that recovery cycle. You guys mentioned early, that can be defined a couple different ways, but, maybe if you can start off with, like, the progression, like month-to-month increases. I don't know if you want to get granular to the percent increase, but just maybe broadly, the acceleration throughout the month, whether that's continued in April, and then as you look out past, you know, couple years, where we are coming today versus past, you know, prior peaks. No. It's a great question. We did see growth throughout the quarter. February was bigger than January, March was bigger than February, April was bigger than March. We expect May to be bigger than April and June to be only because it has fewer days in it, pretty consistent with May, maybe a little bit higher. And then we, as we look out, we've done the early looks at our forecasting for next year. Despite historic seasonality, we expect next fiscal year that we will have sequential growth every quarter. So every quarter will be higher than the quarter before it, despite the fact that, as you know, we often have seasonality in both the December and June quarters. So we will be a lot better than seasonality, this quarter over last quarter, and then we expect that to continue throughout next year. So it's a pretty relentless ramp. We have extraordinary activity and demand from the clients. And we are all ramping our media and to recover, and to regrow it, out of the, you know, more dormant period we've been through as fast as we can. So just a lot of vectors going up into the right. And so yeah, the, the notion of annualizing the fourth quarter, just to kind of give you what we would perceive to be a, a, a floor, we have a lot more coming, not just in auto insurance, certainly in auto insurance, which I know is what you're asking about. But a lot more coming from the other businesses as well, next fiscal year. I think there was another part of the question, though, in terms of where we are, in terms of the re-ramp to the previous peaks, maybe, as part of was, I think part of your question. We're about 60% back, from where we bottomed to the previous peak. So that also gives you a sense for why we are so bullish about what's coming in the future. By the way, despite that, we grew, we've now listened to the calls from the other folks in our space, of course, and we grew much faster, auto, in auto insurance, sequentially than anybody else. We were well over 100%, and we, in our forecast is embedded the assumption, and again, we've listened to the others and looked at their numbers. We will once again grow much faster in auto insurance than they will in the current, our fiscal Q4 or calendar Q2. So, we're doing very well with the ramp, and there's a lot more to come. It's great to hear. Thanks for all the color, Doug. Really appreciate it. You bet. Your next question is from the line of Jim Goss from Barrington. Please go ahead. Thank you. This is Pat on for Jim. I was just wondering, with the improved trajectory in insurance spending, I'm just wondering if you could provide an update on the development of additional efforts within insurance, such as QRP, and getting that back into a growth stage? Yeah, good question, Pat. QRP was obviously went kind of dormant during the insurance downturn. We've talked about that. There just wasn't any product for the agencies. The agencies had to cut way back because they didn't have product. So the re-ramp and rescaling or getting back on track to scale QRP is gonna lag the overall market coming back for those reasons, because the agencies now have to get product, and they still don't have a full footprint product, and they have to restaff and retool and get, you know, geared back up. So just a natural lag to it that before I think we'll start seeing a return to strong ramp there. That said, we have 2 big clients of QRP going live. One's already live with a pilot that will be ramping over coming months. And another will be going getting live with their pilot and re-ramp starting in June, and they are two of the biggest players in the industry and certainly our two biggest clients in terms of their scale in the channel or in the industry. So we expect that we will—it will return. We'll get back on track. We'll get back on the ramp. It's been delayed, obviously, and it's gonna lag a little bit, but we're excited. We're as excited as we've ever been about that product and what it represents for the future of the channel, and we're super excited to have two big clients beginning their activities again in a pretty earnest way, beginning in June. Okay, and sort of building off of the prior question on EBITDA and margins, I was just wondering if you are seeing anything in terms of media costs or talent retention that kind of limits some of the flow-through versus historical trends? No, not really. It's, again, as I told John, it's really gonna depend on the, on the mix that, we're, you know, we're still fully staffed in auto insurance because we want to take full advantage of that industry coming back, which I indicated. When I gave you the numbers on how we're doing versus others, we are taking full advantage, but we're only 60% back, and then you've got a different mix of different, in the other businesses. So, but there's nothing structural or fundamental that would indicate that we're not gonna have all the top-line leverage that, we would have had historically and, and that we, you would expect from us. Okay, and just the last one for me. Within Home Services, when you launch a new service availability, I guess, is there any sort of like ramp-up like startup cost to that for reaching sort of like an initial level of profitability? And just how some of those services may differ in consumer- Yeah and customer profile. Yeah, no, it's a great observation slash question. Yes, is the answer, and so we manage that mix pretty carefully, but when you begin to build out a new trade, you're initially quite inefficient from a media standpoint because you just don't have coverage, and that's more the case in home services than it is in our other client verticals, because home services is such a fragmented industry. And so we have to be kind of step by step, build up the client coverage, get more media, then get more client coverage and get more media. But it does create some inefficiencies for the period of time while we're in the ramp because we don't have full coverage yet. So that is, that's part of the formula. We still do quite well in terms of our media margin and home services, but it absolutely is the case that when we're in new trades, they have less media efficiency and than the more mature trades. But we manage that and balance that and still, you know, maintain very good, strong media margins in home services. Okay, thank you. Thank you. Your next question is from the line of Zach Cummins from B. Riley Securities. Please go ahead. Yep. Hi, good afternoon. I apologize, I was late joining the call, hopping on from another one. But Doug, could you go into kind of any sort of impact that you saw in the Home Services vertical in the current quarter? And kind of what are your expectations for what we should be assuming for a sustainable growth rate on that side of the business moving forward? Sure. First of all, last quarter was a record revenue quarter in Home Services, and we expect another record revenue quarter in Home Services this quarter. We will return once again to double-digit year-over-year growth, again this quarter, fiscal Q4, and we will grow, home services in the fiscal year double digits over last year. So long way of saying, we still have the same outlook we've always had, which is we think Home Services gives us the scale, and we have the opportunities and the initiatives to grow at double digits on average, because, of course, last quarter grew 7%, year-over-year in the quarter. For as far as we can see into the future, it is a massive, massive business opportunity. I think we just sized it again at $69 billion of addressable market, and we're running now $200 and something million, and have a lot of wind at our backs and a lot of demand and a lot of opportunities. Really more of a making sure we, you know, we're focusing on the right things in the right ways at the right time than it is any, any, any lack of opportunity or capabilities to deliver against that opportunity. So we're, you know, we love that opportunity. We love that business. We love where... what we have in terms of product, footprint, and where we're going with it, and we think double digits is the right expectation for many, many years to come. Understood. Just one question for Greg. In terms of free cash flow generation, how should we be thinking about that as you start to hit the upcycle in auto insurance? What's your typical conversion from adjusted EBITDA to free cash flow? And how are you thinking about putting excess cash to use, since your balance sheet's already pretty strong? Yeah, it's a great question. If you look at it, the general model is, the bulk of our adjusted EBITDA, less CapEx, drops to free cash flow or normalized free cash flow. As you can see, depending on your working capital and your, and your receivables, we could be, you know, like this quarter, we collected $8.5 million two days after the quarter end, which we typically would have gotten before the quarter. But typically, if you look at our adjusted EBITDA, less CapEx is what drops to free cash flow. So if you look at our CapEx right now, it's going to run anywhere, I would say a good model to look at is, you know, $11 million-$15 million a year. So that's kind of how I think about the conversion of EBITDA to cash flow. Understood. Well, thanks for taking my questions, and best of luck with the rest of the quarter. Thank you, Zach. Your next question is from the line of Mark Hagen from Lake Street Capital Markets. Please go ahead. Hi, thank you for taking my questions. Just kind of curious if you're seeing any impact on the, let's call it, higher-for-longer rate environment on some of the other financial services business, call it maybe ex-auto insurance and maybe even home services as well? I think it's a mixed bag, really, Mark. Higher for longer is not a bad thing for home services because we believe, and industry reports suggest that consumers are spending more on their existing home. I sort of kind of vertical by vertical. On credit cards, higher for longer is not a bad thing. Our core credit cards consumer is a prime consumer in our mix, and so those consumers are in very good shape. The higher interest rates for longer, actually, the banks are making a lot of money on the outstanding balances, so they have a lot of money to continue marketing. In personal loans, we have seen that the higher for longer is having an effect on the demand for and the underwriting models of the lenders. So I think we talked about this in past quarters, but we've seen less demand for lending, but more demand for other credit solutions, and we are the strongest in the industry at other credit solutions. And we, once again, this past quarter, way outperformed the results reported by everybody else that we know in our industry, in that business. And it doesn't really affect much in auto insurance, except that to the extent it puts pressure on consumers at the low end, which it does, we see increased shopping and for auto insurance, and that continues to be a dynamic we are seeing. There's a J.D. Power puts out a report. They just put out their most recent report on insurance shopping habits a couple weeks ago, and it was the highest level of shopping behavior by consumers for auto insurance they'd ever seen in their, in their history of the report. Not surprising, given how, how far and fast, you know, the, the rates have come up on insurance. And so I guess net, net overall, pretty good for QuinStreet's profile. Fair enough. Thank you, guys. Thank you. Your next question is from the line of Jason Kreyer from Craig-Hallum. Please go ahead. Great, thank you. This is Cal Bartyzal on for Jason. Just to start, kind of as this, as autos kind of picked up, can you just kind of speak to any pockets where spend is yet to return? And, you know, how these eventually coming back, that expectation contributes to confidence in this being a, a long duration tailwind of, auto resurgence? W e've got a lot of data points. First of all, we now have more, last year was pretty concentrated ramp from mainly the biggest player in the channel. And they were, I don't know, 60-something%, I think, of auto insurance revenue in the third quarter, and were reporting mid- to high-90s combined ratios. This year, that same client is well under 50% of revenue, although still very strong. And it's really because we have more other clients, other carriers now spending over $1 million a month with us than we've had in the history of the company, period. I mean, we, we've got much broader footprint, much bigger spend from, you know, a lot, a lot more carriers. And so, I mean, that. And then we have, activity-wise, every one of those carriers is asking for a lot more than we can actually deliver right now. So we're really more, you know, reworking on the other side of the market ramp, the media ramp, than we are the client demand ramp at this point. Because our, you know, the breadth of our relationships, the breadth of the demand for the breadth of our products, and the, again, as I said, the demand for those clients. And then you have the Combined Ratio reporting. Combined ratios being reported this year are, you know, in the mid-80s to low 90s, which, again, that's right, lower is better, and when you talk Combined ratios in insurance. And that's from all the significant players who report their combined ratio results publicly. So you've got better fundamental underlying economics, a broader footprint with more clients, with more demand from all those clients, and higher spending from all those clients, and big indications from all those clients for coming quarters and years. So we really don't have any indications of anything, but not just sustainability, but acceleration of the ramp going forward. Perfect. Thank you. And then it just looked like, you guys have been broadening out the Home Services offering recently with some new verticals. Can you just kind of talk to the ambition for vertical expansion there in Home Services and what opportunities you're seeing in broadening out this offering? Yeah, we're in maybe 14 or 15 verticals with some level of presence. We think we can be in dozens. I can't really be more precise than that because it's, it's, you know, we have hypotheses about which we can be in, and we don't really know until we start doing more work and analysis and actually start doing some testing. But of the 14 or so, and I think it's a little bit more than that, actually, if you count everything, that we're in now, only two are at any reasonable scale. I wouldn't call either of those even mature. One of them, I think, represents 40% of Home Services revenue or something in that vicinity. So we're actually relatively concentrated. It happens to be the one we've been in the longest, really, you know, in a meaningful way. And so there's the two vectors are going to continue to be getting into more trades. But right now, we're more focused on scaling the trades we're already in, and that scaling is a matter of focusing our efforts and initiatives and teams, as well as, you know, getting signing more clients, getting more media that can be efficient with that client and then that client base, then going and sign more still more clients and getting more media and kind of working our way up that with. You know, we've got to work both sides of the market. As we talked about earlier, it's, and I think it was Pat that asked the question, that there is a sequencing and an iterating aspect to that as you try to work your way up to media efficiency. Now, we don't have any concerns about being able to do that. It just is something that does take some time. So one of the reasons you want to have as many, a lot of trades going on at once, so you can have different ones at different stages, delivering different growth rates and profitability. And, you know, we think we're pretty good at that. All right. Very helpful. Thank you. You bet. Ladies and gentlemen, [Operator's Instructions]. Your next question is from the line of Chris Sakai from Singular Research. Please go ahead. Hi, Doug and Greg. I just—I've got one question. Looks like back in last quarter, you had 2024 revenue growth of about 5% to 15%, but now you're guiding for Q4 revenue of $180 to 190, which puts the year revenue growth at about 2.5% to 4.5%. So I want to know, I mean what's going on? Why is there somewhat of a guide lower now for the year revenue growth? Please help me understand. Thanks. Yeah. Hey, Chris. I think a couple of things. We're pretty pleased with the ramp, first of all. Well, we just grew as fast as we did, you know, sequentially, 40% and over 100% in auto insurance, and we had a record quarter in home service. We had a record quarter in non-insurance, and we're going to have a record total company revenue quarter this quarter, Q4. By the way, we're going to have another record quarter in home services in Q4 as well, and another record quarter in non-insurance in Q4. So we're firing on all cylinders. That said, as we have indicated the last couple of quarters, the exact pace of the ramp in auto insurance is really hard to predict because the demand and activity there is just extraordinary. But the ability to convert that demand in a very complicated dynamic system and channel is less predictable. So we try to continue to give you guys the full range, and I would say that. And we also don't feel the need, given how well we're performing, to get way out over our skis. So, I'd say that, you know, the upper end of the current range gets you to the bottom end of the annual. And maybe, you know, we'll see if the slope, what the slope actually looks like and if we, you know, how we do from there. But I wouldn't read anything into that at all. I think what I would remember is, you know, we're already pacing at +20% faster growth for next year than we are this year, and we've got a lot to build on that, so we'll probably do much better than that. And all the record quarter numbers that I just gave in all the different businesses, which gives you a full indication of just how well everything's going. But I wouldn't read anything more than that into that number. Okay, thanks for that. You bet. Ladies and gentlemen, there are no further questions at this time. Thank you, everyone, for taking the time to join QuinStreet's earnings call. Replay information is available on the earnings press release issued this afternoon. This concludes today's call. Thank you.