Q4 2021 Quinstreet Inc Earnings Call
[music].
Good day, and welcome to the Queen Street fourth quarter and fiscal year 2021financial results Conference call. Today's conference is being recorded at this time I would like to turn the conference over to Mr. Hayden Blair. Mr. Blair you may begin.
Thank you Casey.
We thank you for everyone joining us as we report Queen Street fourth quarter and fiscal year 2021 financial results.
Joining me on the call today are Chief Executive Officer, Doug, The Linky and Chief Financial Officer, Greg 1 of them.
Before we begin I would like to remind you that the following discussion will contain forward looking statements for.
Looking statements involve the 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 are included in today's earnings press release, which is available on our Investor Relations website at Investor Day, Quint Street Dot com.
With that I will turn the call over to Doug Valenti. Please go ahead.
Thank you Hayden.
And welcome everyone.
We just completed a very successful quarter on fiscal year.
And we entered the new fiscal year.
With great momentum.
And with more capabilities.
And confidence about our future.
Then on anytime in the company's 22 year history.
Fiscal Q4, and fiscal 2021 results again demonstrated the underlying strength and momentum of our business.
As we continue to be a leader in serving 1 of the biggest long term trends.
And market opportunities and.
In the world.
That is the shift.
The effective.
Payable.
Brand safe.
And the consumer friendly.
Digital marketing and advertising.
Revenue in our just completed fiscal year 2021 set of company record.
And approached $600 million.
Growth in quarterly revenue, excluding divested businesses.
The accelerated to 47% year over year in the June quarter.
Shedding of Q4 record.
Adjusted EBITDA.
Grew 71%.
Expanding margin.
Even as we aggressively invest.
And a wide range of growth.
And the product development initiatives.
And.
We finished the year.
With over $110 million on cash.
More than we had at the beginning of fiscal 2021.
Even after outlays of over $60 million and of the year.
For acquisitions.
And strategic investments.
We delivered all of that in FY 'twenty 1.
After divesting businesses that did almost $75 billion of revenue in FY 'twenty.
And.
While overcoming the pandemic impact.
On credit driven client verticals.
Looking forward.
We believe the market opportunity in our current footprint.
Represents billions of dollars of potential revenue for.
<unk> Street.
We believe we are better positioned.
To compete.
And execute against that opportunity.
And at any time in company history.
And we are investing in for.
Big new initiatives and opportunities in.
The number.
And at a pace.
Unprecedented.
In company history.
In the meantime.
Current business momentum is strong.
Everything is up and to the right.
All of our client verticals and all of our major initiatives performed well in fiscal Q4.
And continue to do so.
Insurance budgets continue to migrate to digital.
And 2 our performance marketplace solutions.
We had more major carriers.
Spending over $1 million per month with us in Q4.
And at any time in company history.
And most of those clients.
We are still early in the ramp to the wallet share we eventually expect to earn.
Also on insurance.
We are successfully adding and scaling multiple new product and service offerings.
Including of course.
Q RFP.
Which continues to progress with the pipeline continuing to strengthen.
And where our estimates of the size of the opportunity.
Only gotten bigger.
We expect revenue from the ratings platform.
To inflect.
From just over a million dollars in FY 'twenty 1.
At least several multiples of that.
In FY 'twenty 2.
Home services continued to grow at high rates in Q4.
And we expect strong organic growth in FY 'twenty 2.
As we add to existing client budgets.
Sign new clients.
And expand into new service verticals.
In a market where client budgets continue to migrate to digital.
As consumer shopping habits.
That's 3 big execution of growth vectors.
In the midst of a long term rising tide.
And home services.
1 of our largest addressable markets.
Then the other credit driven client verticals.
Mainly personal loans and credit cards the.
It returned to year over year growth in the June quarter.
We are well positioned.
We continue the momentum in personal loans and credit cards and FY 'twenty 2.
As the economy.
And employment.
Improve.
In total.
And in summary.
There has simply never been a better time for Quint Street.
Turning to our financial outlook.
As you probably by now realized.
We expect double digit organic revenue growth to continue in fiscal Q1.
And FY 'twenty 2.
And frankly well.
Beyond.
As a reminder.
We lapped the modernized acquisition on July 1.
Revenue in the September quarter.
Our fiscal Q1.
Is expected to be between 150.
And $155 million.
Seasonally consistent.
With last quarter's outperformance.
And representing 20% year over year growth, excluding divested businesses.
At the midpoint of the range.
We expect fiscal Q1 adjusted EBITDA.
To be between 13.
And $13.5 million.
Our initial outlook for full fiscal year 2022.
Is that revenue will be between 635.
And $665 million.
Representing 15% year over year growth, excluding divested businesses.
At the midpoint of the range.
With full fiscal year 2022 adjusted EBITDA.
Estimated to be between 63.5.
The $66.5 million.
Millions of dollars.
Representing about 25% growth.
At the midpoint of the range.
And another year.
Of margin expansion.
With that.
I'll turn the call over to Greg.
Thank you Doug.
Hello, and thanks to everyone for joining us today.
Q4 wrapped up a phenomenal year for Quint Street.
For the fourth quarter total revenue was $151.2 million.
Grew 47% year over year, excluding divested businesses.
Adjusted EBITDA was $14.3 million.
On grew 71% year over year.
Adjusted net income was $9.6 million for.
For <unk> 17 per share.
Looking at revenue by client vertical our financial services client vertical represented 75% of Q4 revenue and grew 27% year over year to $112.2 million.
As expected we saw all of our financial services businesses delivered year over year revenue growth in the fourth quarter.
Our home services client vertical represented 24% of Q4 revenue and grew 157% year over year to $36.9 million a.
For a record quarter for that business.
On services continues to outpace our expectations.
Due to strong organic growth.
And of the continued success of the integration of capturing of synergies from the modernized acquisition.
Total organic growth in home services.
It was 47% year over year.
Other revenue.
Which consists primarily of performance marketing agency and technology services was the remaining $2.1 million of Q4 revenue.
Turning to our full fiscal year of 2021 performance for.
For the full year.
We posted record revenue of $578.5 million.
And grew 18% year over year.
Total revenue, excluding divested businesses was $566.8 million.
<unk> grew 36% year over year.
Our financial services client vertical.
<unk> represented 74% of full year revenue and grew 17% year over year, excluding divested businesses.
During the fiscal year, we accelerated our year over year growth rates in financial services.
Going from 4% growth in Q1.
The 18% growth in Q2 in Q3, 2 now delivering 27% growth in Q4.
Our home services client vertical.
Represented 23% of full year revenue and grew 169% year over year to $134.5 million.
Okay.
Total full year organic growth in home services was 23%.
Other revenue represented the remaining $5.4 million of full year revenue.
Adjusted EBITDA for the full fiscal year, 2021 was $52.3 million or.
For 9% of revenue and grew 44% year over year.
Turning to the balance sheet, we closed the year with $110.3 million of cash equivalents.
We began the year with $107.5 million on the big movement throughout the year for the generation of $56 million in operating cash flow and $20 million from the sale of our education business.
Offset by cash outflows of $61 million for acquisitions and strategic investments Inc.
The $5.1 million of Capex.
Looking back.
Fiscal 2021 was a transformative year for Quint Street.
We completed our strategic program to narrow our footprint through our best and fastest growing opportunities with the divestiture of our education client vertical.
We also greatly expanded our presence in our home services client vertical with the successful acquisition of modernized.
In addition.
We executed on a wide range of initiatives in our financial services client vertical which resulted in accelerated revenue growth throughout the year.
And we expanded margins, while continuing to invest in our people.
<unk> and technologies for future growth.
I want to thank and congratulate the entire Quint Street team for the successes amidst the backdrop of the pandemic.
With that I will turn the call over to the operator for Q&A.
Thank you if you'd like to ask a question. Please click on my pressing star 1 on your telephone keypad now.
Using a speaker phone. Please make sure your mute function is turned off to allow your taking on to reach of our equipment.
And again Thats Star 1 if you would like to ask a question for Paul.
For just a moment to allow everyone an opportunity the signal for questions.
We'll take the first question from John Campbell with Stephens incorporated.
Hey, guys. Good afternoon, congrats on a great quarter and the great guidance.
Thank you Tom Thanks sure sure.
Sure.
Looking at the FY 'twenty 2 with the guidance you guys it looks like low.
The mid teens growth I guess, it was 20% the extra divestitures and clearly you guys expect kind of a continuation of good growth but on.
It also sounds like.
From the Q on P side that maybe a little bit of of pop of the queue on P. Revenue. So that's great to see as well but on.
I know the gross margin thats can be highly influenced kind of kind of on the top line scale. So I'm guessing you guys are expecting gross margin expansion next year, but how should we just generally be thinking about the pace from here.
On gross margin, Greg you want to take that.
Yeah, I mean I would.
John similar to what we've talked about in the past, we're primarily of topline driven model, which means incremental.
The incremental revenue falls on the income statement on top of the semi fixed cost base that grows at a much lower rate. So as we see the topline growth throughout the year I expect to realize of that margin expansion with the additional topline leverage.
So again in the guide, we assume and we expect to expand margin again into the double digits. This year.
For the full year and then Greg I'm curious what have you considered for TRP revenue in guidance or have you factored any of that in.
To be honest, John very very little right now is factored into the into the outlook. It's still very early for us in the we've talked about.
It's very hard for us to predict the ramp of that accurately so as part of the outlook. It's very little is included.
In terms of the outlook.
Okay, and then on the on the personal loans and credit cards, I mean, we've heard from others in the channel. It sounds like things are firming up there nicely kind of from the backdrop standpoint, but just curious about kind of the rate of recovery.
Not just in the quarter, but kind of what you saw on July if the pace kind of accelerated just any kind of call out there.
We saw great expansion.
The acceleration kind of April may June on <unk>.
July was a continuation, though the slope moderated.
So I would say that we.
We had a big ramp.
Ben It's we're not yet back to pre COVID-19 levels.
The.
I think the Delta variant has had a little bit of the suppression of effect.
It hasnt pushed the per back down.
Slowed the ramp of little bit we fully expect that we will be back.
We've regained a lot we think we'll be back we'll be back to pre COVID-19 levels by the end of the fiscal year, though based on the everything.
Everything we're seeing in terms of activity both in media and with the clients and if I could John Let me go back to the cure of P comment just to make sure there's not misunderstood.
We have very little QR P revenue in the guide not because we don't expect to do.
At least several million dollars of implied in the.
In the in my comments because of that ramp is going very well.
Frankly, because we want to start the year being relatively conservative.
And the and again, we don't know the exact shape of that curve and frankly, we don't have to put very much in there to still have the.
Pretty strong outlook on results.
Certainly appreciate that approach for sure thanks, guys.
Thank you John.
Yeah.
Our next question will come from Jason <unk> with Craig Hallum.
Hey, gentlemen, good afternoon, and congrats on the quarter delegate.
I love hearing the enthusiasm from you.
It certainly seems like you're starting to see some competitive separation of our right I guess looking at the numbers, maybe you've been seeing competitive separation for for a few quarters now, but I'm. Just curious if you can maybe at a high level talk through what you think is driving that in terms of your vision or what you are.
Hearing from customers, that's allowing you to maybe take on more budget than we're seeing from other people.
Thank you, Jason and good to hear your voice too.
Hi.
I do think we're seeing competitive separation.
And I think it's.
It has it been.
On a while ago.
I think there are some compounding effects.
We've been investing very aggressively in what we think is the real future state.
Of this channel.
And of these verticals and the products necessary to do that on the relationships and integrations with time.
Clients.
And with our media partners to do that.
And we are definitely beginning to see those take hold and have an impact.
We went through a few years, there where there was a lot of competition coming into the channel.
And a lot of folks are.
Doing things of that would just say kind of glorified circuit 2005.
The models, but the.
However, the investing.
And the future of the channel for the consumer on for the clients.
And we're doing that and it is exciting to me.
Because we did it in the state that it would work out.
And because we obviously saw evidence and had had the alignment with our clients and our partners, but we are beginning to see that have a real impact and that's even before.
We get into the the fat part of the growth curve on 2 of our P which is coming.
On a couple of other products.
That we're rolling out 1 of which has every bit as much opportunity in potential QR P.
And so on.
I think it's we've always been more technology focused and really than our than the than our competition. Despite what some of them say.
We have rolled that investment forward.
It is investment debt, we think aligns with the exact things you have to be able to do better to win in the long run on.
Both with the consumer and with the clients.
And I think as I said, I think we're getting of time and compounding on debt and we definitely are beginning to see the curves based on what we're seeing in the market and what we're hearing in the market and based on our wins of budget.
And our wins with media, we're starting to see theres per of separate.
Okay.
Perfect I appreciate that I wanted to ask kind of a multi part question on Q RP. So just curious if you can give some color on on.
What's driving this critical mass that's causing an inflection that you expect this year and then on the margin side I mean do you still expect to see those type of software margins, we've talked about before and then curious if there is a certain revenue level you need to hit before we start seeing those types of of margins.
Yeah, the the thing Thats driving the the view on the inflection is just more and more of these clients that we had signed for some time and then had to go through the integration phase and the testing phase and the early rollout phase just further and further on the pipeline.
And.
And beginning to see them.
Ramp up on the other side of that.
And we've had nobody that hasnt been successful to those phases by the way and so you just kind of getting what you typically get in the pipeline is that folks are moving ahead, and we're getting to the point where debt.
They're hitting the the revenue ramps online rather than the testing ramp for the integration ran for the the other sides of it. So it's just a progression of the pipeline and we do expect it to be quite an inflection because so many of them are getting to that point.
And because frankly, we have some very big partnerships and they're gonna be either.
Ramping soon for.
Getting into the early stages of testing soon and some of those are.
I'm kind of game changing numbers for for <unk>. So just an awful lot of momentum.
And the natural progression of pumps coming through the pipeline and frankly at the end of the Covid. That's helped some in the Covid.
<unk> waning at least for awhile help some because we had a little bit more activity on the pipeline it slowed a little bit just because folks.
The werent.
As aggressive on new projects.
<unk> presence in the office.
So.
A lot of good activity.
Activities all of acceleration as well on the pipe on terms of margin, yeah, which handset fixed we are basically of fixed price and fixed cost.
Our engineering teams and product teams and that revenue comes in at.
The incremental variable margin of basically 100% it doesn't cost us anything to sort of another another rate to another partner.
And so while we will have to add some more heads.
The you know the.
On the margins on this product.
Are going to be 80, 90% all of them.
Any easily and you don't have to get the to the huge volume to get there I mean, I think we get to that point somewhere and Greg to make sure I get this right probably somewhere in the.
Between 5 and $10 million year on revenue, we probably start getting to the 80% margin all in.
And because it's just not this is the product that we've had for a long time.
Debt we.
It had been running for a long time for some of our partners to be able to show comparative rates.
And so the incremental team members.
On a really minimal.
The first is the revenue ramp.
I think that's just kind of debt the.
How we see it.
And I apologize for 1 more here, but several times, you've mentioned kind of new products and investments and the opportunities. Just wondering if you can maybe shine a little bit of of light on on what you've got on the pipeline there.
Yes, I'd love to but you know our competitors listen to these calls too so [laughter].
I can tell your debt.
The when I say that these are not small banks and the we are we've got let me size. Some of them for you. We had 1 that we launched in a meaningful way probably 6.8 months ago.
Debt looks like we will do will do over $3 billion a month here shortly.
We've got another 1 that is a is a SaaS like margin profile product.
That fits into.
A couple of our verticals, where we think the.
The opportunity is.
As in the us.
Well north of a $100 million for Queen Street, not on like QR P.
And that 1 is is 1 that we've made some strategic investments into 2 so we're quite a ways down the path of solder mask.
On a twinkle in the right that's on that.
The real product and some real verticals, where we have real traction with the real.
With the.
With real product in the real customers in terms of the the the integrations.
And the demand.
We have some.
Media New media initiatives.
1 of which is fairly early on.
But role of rolling out now and ramping now and we think that neither initiative.
Could get to be 60 plus million dollars a year on revenue at more than double our current margins in that particular vertical.
So and that's just 3 of them I can probably rattle off 7 to 10 like that.
So we've got some big game, moving largely technology and door partnership driven opportunities.
Debt, we see the trend lines coming and none of what I just mentioned.
1 on 2 of the 3.
Our proprietary to us none of our competitors.
Have anything like them in terms of capabilities on and just wouldn't be able to get there from here.
And then 1 is 1 that debt debt some of our competitors already do we just havent been active enough in but it's coming out of the SaaS force.
Perfect. We look forward to hearing about the other 7 to 10 on next quarter's call. Thanks, guys. Yeah, great. Thank you Jason.
Our next question will come from Adam Klauber with William Blair.
Hi, good afternoon. Thanks.
The.
Auto insurance companies are beginning to extend on some higher loss ratios as.
People returning to work for a return of driving sorry on.
And also some higher severity levels.
Progressive has talked about cutting the market marketing budget not necessarily the digital marketing budget day.
The ones really haven't mentioned yet so.
Are you I guess hearing or seeing any I guess response as far as digital budgets being cut.
Whereas profitability of the insurers.
We have not seen that yet Adam.
And we understand what you're referring to in terms of the industry dynamics are we.
<unk> reviewed your piece on progressive.
Which came out pretty recently, maybe even today.
Which we thought was insightful.
I think the.
So we understand and believe that what we might see.
Again, we have not seen.
Any of our clients lower their budgets to us or the pricing to us or anything else in anticipation of a reaction or response to this at this point.
But we do understand that with the higher activity levels.
On a lot of the carriers are seeing some of our loss ratios and then obviously when that happens very often that results in them cutting marketing spend broadly to your point, whether or not that will affect digital which is the best performing channel.
For.
Every client that we know of.
It remains to be seen.
How long it lasts remains to be seen because we also know and you noted in your piece.
The number the the carriers in the 1 of the leaders in particular is already bid on take rates up.
And in anticipation of.
Of getting in front of the curve and what happens when they do that.
Cause others will follow.
Is that you can drive shopping consumer shopping.
Because the first thing most consumers doing their rate goes up is going to see if they can find somebody else to buy insurance from cheaper.
And so we think that while there may be.
Some softening of auto insurance budgets, whether or not it happens in our channel on that remains to be seen and again, we have not.
And that happened yet.
We think we might be on the front end more importantly of a.
Shopping cycle.
Which is the <unk>.
Best thing that ever happens during our channel.
And <unk>.
And we know.
That the curve of increased shifting of budgets to digital overall, the overall arc of that for whatever happens in the short term fluctuations in loss ratios. They are still up into the right in and frankly accelerated and steeped in during COVID-19.
So you.
We feel really good about the.
The well right now we feel good about the short term because we're only getting more budgets.
If we see some softening we certainly.
Still feel good about this outlook.
And we feel great about the medium to long term.
Given the shopping.
Cycle and the overall trends of budgets to digital.
Okay, Thank you and along with that.
None of them look for exact numbers then the progressive is obviously very.
There is sizable but you know my understanding is particularly on the last 12.18 months, you've seen you know a lot of the other competitors really begin to ratchet up their share of digital wallet compared to what it's been historically, so I guess in the last 12.18 months would you say that's been driving more growth than it historically has and are you seeing that continue.
At some of the players who maybe just didn't really adopt the digital channel of couple of years ago.
Yeah 100 per cent no question as I've said in my prepared remarks, a record quarter last quarter in terms of number of carrier spending over $1 million per month with us and in fact June was the was the peak of the quarter. So just continuing ramp of that.
And we are seeing a lot more participation at a lot greater scale, a lot more carriers and digital.
Which is great obviously through our marketplace company and it's obviously great for us because it expands the overall.
Budgets, but also expands the choice for consumers so.
Absolutely yes.
Okay. Okay. Thank you. Thank you for your answers. Thank you.
Most of your next question from Jim Goss with Barrington Research.
Okay. Thanks.
It seems like a light switch was turned on when you move from the company with some challenges too on firing on all cylinders I'm wondering if I know.
It wasn't exactly like that could you talk about factors affecting some of the some of those categories of were lagging in any of the timing.
And it doesn't have kind of a couple of others.
Yeah I think.
I think Jim the.
Much of it was timing of initiatives that we were working on for the businesses that we stayed in.
I think there are a couple of factors.
1 was initiatives that we had been investing in.
Beginning to come to fruition and we of all pipeline of those but we're finally getting to the point, where they were they were rolling out of an and and those had been diluted somewhat diluted somewhat by the fact that we were in a broader range of businesses and had the spread our resources.
More thinly and weren't able to focus as aggressively on those as we have done lately in terms of.
Of accelerating the progress and rollout of those initiatives. So that was a big part of our narrowing of the footprint what to say.
We got to we just have to put more wood behind some of these arrows and we can't do that when were in the in the format that we were in so I think that's a.
Big part of it.
And then you combine that with just the and I think that's the biggest part of it you combine that with the focus just general focus across the company.
On the businesses, we're in including the ability to wrap our minds around execute and integrate the modernized acquisition, which would have been very difficult for us to do if we had the broader footprint frankly again because of the dilution and spreading of efforts and resources.
And so I think generally speaking it's on.
The the program to do a strategic review to be very honest with ourselves about where we felt we had the the opportunity to to build the big business into wind and then to pare back and focus on those areas. So that we could get more progress on the key initiatives that we felt like we needed to draw.
<unk> as well as more focus in those areas from could bring all of our.
All of the capabilities to bear I think those are the main factors that you're seeing play out and Hey, we didn't you know when we pick these businesses. We've picked them for a reason again, we picked them because they are big opportunities and we've picked them because we believe.
We can win in them that we have great competitive capabilities and that we have the future state product.
Debt matches up with what we think is going to be required.
To be of Big winter in these verticals and I think youre seeing youre seeing those things come to fruition.
Okay.
Continuing down that path.
Even if you have say the 7 to 10.
50 to 100 million other business opportunities.
And on the back of the in home services. For example, do you think you would pick several to prioritize and that spread yourself too thin and then pursue those or maybe stagger them in just for that you don't run into a problem.
Or do you think he of has the capability of doing.
That money all at once.
Thanks for a great question I think that we've narrowed that's exactly what we have done is we prioritize down to the ones that we think of the biggest most impactful most sustainable.
And where we're putting our efforts into those and we've really you know that represents of room narrowing of the breadth of activity. We had long so many different dimensions. So it's just more unity.
And more focus on more cohesion around a smaller number of much bigger much.
More important long term opportunities and initiatives that we've had in many many many years so I I think.
You're 100% right.
And we are 100% doing debt.
Okay, and then maybe 1 final 1 for now.
He is here of.
Boosted the couple of your opportunities with some tuck in acquisitions.
Most notably for now.
Your on service.
Dublin the.
You did a year or so ago.
Are there other tuck in acquisition opportunities that would be similar that might might jumpstart some of those even more.
Yes, there are.
It's still a very.
The fragmented industry.
There's going to be a lot more consolidation. We are as you have seen with am 1.
And modernize and many many others before them even getting into insurance years ago. When we acquired share hits, we are a very effective platform for consolidating in the performance marketing channel and they are going to be many many more opportunities we'd look at the.
Literally dozens of certainly dozens of opportunities year, we'll look hard at probably.
These 10 opportunities here and we will do maybe 1 to 2 decent sized ones, but there are we are actively looking at some now.
Whether or not we do on will come down to the the to the pieces come together and all of the dimensions, we care about in terms of.
The opportunity the of the checks on the capabilities and what we the assets and of course, the the price, but yeah. There will be there are many more candidates and there will be more consolidating acquisitions by Quint Street to continue to accelerate.
What we do and and and.
And they will likely have very similar success in terms of we you know we bought at 1 price and you know we.
We put it together our business and 1 plus 1 equals 3 like it almost literally has for both Amazon and modernized. So I think youre going to continue to see a more on more of those and it's just something that's it's natural for us it's natural for the channel.
Okay. Thanks for your responses.
Thank you Jim.
Our next question will come from Sam for Sam Flynn with Lake Street capital markets.
Hey, guys same plan on for Eric Martin Newsy.
Really quickly on seasonality I think you had mentioned that you expect a similar level of seasonality.
The first quarter of 2000 and to.
Just wanted to sort of get a better understanding of how youre thinking about that going into the full year and if theres going to be Oh, you think any change for that in 2022 of the whole.
Greg you want to take that.
Sure happy to Doug Yes.
The typical seasonality is from the June to the September quarter to be fairly flat.
And then as you move into the December quarter that is typically our weakest quarter from a seasonality basis and it's really the result of of the holidays, 1 the holidays, which means the clients typically have lower staffing, which means they are of lower demand for performance marketing products.
And you also have at the year budget. So on the December quarter, you are typically down about 8% to 10% sequentially.
You then come Roaring back in the March quarter, which is typically our largest quarter, where you have fully staffed at the clients fully staffed call centers et cetera et cetera, new.
The new marketing budgets for the year, where you're typically up 15% to 20% sequentially and then in the June quarter, you are typically down.
About.
5% to 10% or so sequentially. So that's the the normal seasonal trend obviously to grow you you outpace some of those trends on any given quarter, but that's the normal trend of the business that I wouldn't expect much different throughout the year.
From a seasonality perspective.
Moving on to our last question will be from Chris <unk> with singular research.
Hi, Doug and Greg.
Thats on the court of Chris.
Thank you.
Yeah great.
I just had a question I know.
On a somewhat you sort of already touched on it on M&A going I guess into the into the next year.
Wanted to get your thoughts on that.
Yes, Chris we are again, we are a natural acquirer in this in this industry and this industry continues to be both dynamics, there's a lot of creation of new business models.
And fragmented.
And we are it's a we have shown great success, and we're built to be able to be of platform model. So that we can take a business like that.
Typically drop it on to our system.
The either improved monetization, because we have more client budgets and better and better.
The technologies for for matching and optimizing on.
For better scale of it because somebody's got budget, but they don't have the access to the breadth of the media we have.
Or they havent done or just improve the performance of the business generally because we have technologies for segmentation matching and optimizing that are so critical in this data driven channel.
They haven't been able to invest and so we were on that it's in and it's the channel that has a natural opportunity for consolidation where a platform that has not only a a we're not really built to be able to consolidate but we've proven we can successfully consolidate and to add a lot of value to what.
We buy so you will see US continue to look for those opportunities, we may or may not do them because all of the pieces have to come into place of.
The 2 and improve including price, but generally speaking, we're able to pay a pretty good price for assets like that because we can get so much more out of them than the previous owner. So that's why you've seen us year on year out typically make a couple of decent sized.
Consolidating value, adding acquisitions in the various verticals.
Youll continue to see us do that you'll see us do that on media, sometimes you'll see us do that.
In particular verticals, where there might be accessed the client budget, we don't have youll see us do that as I said in places, where it's just a parallel business, but they don't have either on media reach of our client budgets for our technologies. So you.
You will likely see us continue to do that we always have an active pipeline we have some great professional sure.
Always working on that.
For us.
Okay.
And then I guess for my last other question was.
Have you guys considered of share buyback.
For your cash.
Our first and most important use of cash is to find more modernizes, the Nam warms and acquisition of like that so we're going to and you know on first for our size, we have quite of bit of cash. We don't have an excess amount of excessive amount of cash here. So I'd say that are you know our first priority for cash.
Is to keep a strong balance sheet to continue to give us the flexibility to do the things we need to do to grow the company in the long run including.
Making acquisitions Opportunistically, if and as they come along so those are the things we think about when we think about cash.
Okay, alright, great. Thanks.
Thank you Chris.
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Okay.
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