Q1 2023 Quinstreet Inc Earnings Call

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The first quarter of fiscal 2023 financial results joining me on the call today, our chief Executive are dug Valenti and Chief Financial Officer, Greg Wong.

Before 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 to differ materially from those projected by such statements and.

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 upcoming 10-Q.

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 gap and non-GAAP measure a reconciliation of gap to non-GAAP financial measures are included in today's earnings press release, which is available on our Investor Relations website at Investor Dot Quinn Street Dot com with that I will turn the call over to <unk>. Please go ahead Sir.

Thank you <unk> and.

Welcome everyone.

The September quarter was a good start to our fiscal 2023.

We again delivered good results in a complex environment and.

We expect to continue to do Sir.

Just for Q1 performance included yet another quarter of strong double digit year over year revenue growth in our home services and credit driven carnivals.

Strengthen those two vertical.

Both of which are now over $100 million in annual revenue.

Largely offset auto insurance.

The good overall financial results in the quarter reflect with the strength and resilience of our business model and footprint as.

As well as excellent execution across the company.

We also continue to invest in.

And to make great progress against.

Are enormous longterm market opportunity.

Our positioning and.

And capabilities have never been better.

Which bodes well for the future.

Including the back half.

Of our current fiscal year.

Looking ahead, we expect the trends of the past couple of quarters to continue in the December quarter or fiscal Q too.

Strengthen home services and credit driven coin vertical.

Is expected to continue to offset auto insurance.

We also continue to expect a significant positive inflection in auto insurance.

Getting in January as last year's reset.

Carriers benefit from rate increases.

And consumer shopping intensifies in response to higher rates.

The auto insurance inflection is expected to quickly impact our results leading.

Leading to a return to strong revenue growth rates and re expanding EBITDA margin.

Revenue in fiscal Q2 is expected to be generally flat year over year.

And about in line with typical seasonality sequentially.

With a little added conservatism.

Auto insurance.

Is curious fully absorb the effects of hurricane Ian.

And otherwise finish out a challenging calendar year.

That industry.

We expect fiscal Q2 revenue to.

To be between 120 and $130 million.

We expect adjusted EBITDA in fiscal Q2 to be approximately breakeven.

Well in line with the expected seasonal decline in top line up average.

And consistent with our planning and expectations and.

Including of course <unk>.

<unk> to continue to invest in important growth and product initiatives through this transitory period and auto insurance.

For the full fiscal year, we continued to expect revenue and adjusted EBITDA results.

Generally flat with.

Or better than last year.

Just as we indicated in last quarter's call.

Our balance sheet is strong.

With almost $90 million of cash and no bank debt.

And we still have $20 million remaining in our authorization per share repurchases.

Now as I did last quarter.

Wanted to make a few comments on the macroeconomic environment.

Obviously, an area of some uncertainty.

And concern ma'am.

Most importantly, we have done contingency planning for a possible recession.

In the event of a recession, we would still expect current full fiscal year revenue to be flat or better versus last year.

And that we would still deliver nicely positive cash flow and EBITDA.

We haven't grown profitably through both two previous recessions.

Our market penetration opportunity is likely to continue to offset much of any reasonably expected effects from a macroeconomic soda.

Also in our favor.

Performance marketing is often one of the last budgets to be cut by marketers as the economy softens because by definition spend it can be tied more directly to revenue.

Further advantage in us in this environment as in the past.

Our business helps consumers better shop, and save for needed products and services.

Something they do more of when times get tougher.

In particular consumer.

Consumers shopping for auto insurance, our biggest client vertical tends to increase in a softer economy as consumers look to see on this non discretionary expense.

Increased shopping.

<unk> and more traffic to our marketplaces.

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

Thank you done.

Hello, and thanks to everyone for joining us today.

Does does stated earlier the first quarter was a good start to fiscal year 2023.

The total revenue of $143.6 million.

Adjusted net income was $2.5 million or five cents per share.

EBITDA was $4.8 million.

All of our businesses, except insurance delivered year over year revenue growth in the first quarter.

Non insurance client verticals represented 58%, a Q1 revenue and grew 20% year over year.

Looking at revenue by client vertical our financial services client vertical represented 66% a Q1 revenue.

And it was $95 million.

Insurance carriers continued experience combined ratio challenges due primarily do inflation and they're working through a drawn out rewriting process.

We continue to expect a positive inflection in carrier insurance revenue in January as loss ratios reset.

Curious benefit for rate increases and.

And could the shopping intensifies in response to higher rates.

Within our credit driven client verticals, a personal loans and credit cards.

We continued to be pleased with our performance and execution in Q1.

Grown combined revenue twenty-three percent year over year.

Rebel or in our armed services client vertical grew.

Grew 17% year over year to $46 $7 million or 33% of total <unk>.

A record quarter for business.

As we've discussed in the past Homeservices, maybe our largest addressable market and our strategy to continue to drive growth near a simple.

One.

Continue to sculpt or 16 existing service offerings.

Examples of which include window replacement solar systems and bathroom remodeling.

All of which are still.

Early in our market penetration.

And to expand into new service offerings.

We believe we see the opportunity to serve dozens more.

This multi prong growth strategy is expected to draw double digit organic growth for the foreseeable future.

Other revenue was the remaining $1.9 million a Q1 revenue.

Just an EBITDA for fiscal two one was $4.8 million.

Turning to the balance sheet, we generated $5.7 million of operating cash flow in Q1, the close of the quarter with $88.4 million with cash and equivalents and no <unk>.

As a reminder, and May we announced to share repurchase program reflective of the expect the transitory nature of the insurance industry challenges the.

The strength of our under what is this model and financial position and confidence in our long term outlook for the business.

To date, we have repurchased over 1.9 million shares of common stock or 4% of shares outstanding at a total cost of $20 million.

As we look ahead into Q2, I'd like to remind everyone of the seasonality characteristics of our business.

December quarter or fiscal second quarter, typically declines 10% sequentially.

This is due to reduced client staffing and budgets during the holidays.

Interviewer period.

Tighter media market.

And changes in consumer shopping pets.

The shrimp generally versus in January .

March quarter is generally our largest of the fiscal year staffing levels and marketing budgets renewed.

For fiscal queue to our December quarter, we expect revenue to be between 120 and $130 million and adjusted EBITDA debate approximately breakeven.

In closing, we feel great about our long term business prospects and financial model.

Growth and our Noninsurance client vertical of 20% in the first quarter should support a period of strong total company growth when we get to the other side of the environment and insurance.

With that I'll turn off the Carl over the operator for Q&A.

Thank you Sir.

Minded to the participants if you would like to ask a question. Please signaled by pressing star one on your telephone keypad.

Using a spoon. Please make sure your mute function is turned off with all your signal to reach over the equipment again press star one to ask a question. We both suggest a moment to allow everyone. The opportunity to signals quick question.

We will take the first question from Jason <unk> from <unk>. Your line is open. Please go ahead.

Hey, guys. Good afternoon. Thank you for taking my question I wanted to start out talking about profitability and and the Guy that you gave the the breakeven Guy that you gave the December quarter.

And the time, we've covered you guys like we have not seen a break even EBIT like order you know that through COVID-19 that through kind of volatility in education and things like that and I'm. Just I'm curious if you can talk about what's different this quarter or or maybe if there's just a higher degree of conservatism that you're applying to the guide right now.

Hey, Jason Yeah, I think what's different is the top line pressure, we're getting from the insurance industry issues.

And combine that with the December quarter seniority.

And we're just had a revenue level, where with the expense base. We have we're we're willing to go down to breakeven because what we don't want to do.

Given that we know insurance is coming back.

Actually it's gonna be coming back we think quite strongly starting in January we don't think it makes sense to cut expenses and cut our investment and growth initiatives across the board you can see those are paying off.

So it's no more than that we we.

We expect to be ramped.

<unk> back up too.

The kind of levels of EBITDA, you would expect from us within a quarter or two.

And.

Z and beyond frankly, as we get that leverage back from insurance and get that volume back, but right now it's just a volume related thing.

In a lawsuit topline leverage while wanting to carry.

A normal expense load and normal investments in the future instead of cutting costs cutting investments in the future because we have a temporary issue and insurance and if you. If you do a kind of top line leverage analysis, you'll find that it's all very consistent there's no degradation.

A medium margin, which of course is what your variable marketing margin wherever you want to call. It which is really what drives our gross margin and our business. In fact, it's it's up sequentially and it's flat year over year and so good margins. Despite some degradation in insurance because of the weakness there.

Because and because of the strength and the other verticals and his insurance comes back on this.

<unk> you know the spring kind of get unloaded here uhm, both in the top line and an EBITDA margin expansion right back where you would expect it for their revenue levels will be January .

Alright. Thank you always appreciate the colored dog I also just wanted to talk about hurricane and a little bit I mean.

Are there any changes or notable trend in your different sorry in your business that changed from from before the hurricane hit until after or or maybe the same question. Just in terms of carrier dialogue. If there's been kind of any short term pauses from carriers as they try to kind of recover from the losses.

That brought in.

Yeah, it's we would've beaten by even more if it hadn't been for Ian.

Did it kind of <unk>.

<unk> the carriers back even more in terms of combined ratios, which are now loss ratios of course.

And caused a number of carriers to pass further.

And cut budgets for Wednesday pause it they tend to kind of shut down states, where they have the the the or the economics or at least attractive.

And so there were incremental budget cuts and state pauses due to Ian and the impact Ian had on combined ratios.

And again, we would've been by even more of this quarter if it hadn't been for that it has not affected what we've heard from the carriers with respect to their out but January forward because as you know.

Combined ratio is reset on the calendar year basis.

The carriers themselves have made great progress and to re rating.

Uhm and getting their rates increased against the inflationary backdrop.

And are in the ones that are furthest along and some of the biggest ones are quite far along and pretty much done.

Really good shape financially and seeing Super results in terms of rape versus versus a cost and claims.

And our our our giving giving us very strong indications of their intent intent to be aggressive beginning in January .

Just as we expected it would just have more confidence of it.

Going forward, but yeah, he and have an impact but it was a kind of backward looking impact at this point.

Lisa.

I mean with respect to January 4th but December .

Definitely this quarter is definitely.

Weaker because of the in the end of last quarter was weaker.

Because of Ian at the end of the September part of it.

As we sit here kind of in the early November timeframe have you seen that start to read me you mentioned some some carriers pause certain states have you seen yeah now normal is a month or so after the hurricane.

Not so much no I mean the the.

It's affecting this year a few December .

And so we are we still expect that.

It's reflected in our in our outlook.

Inch auto insurance is going to be even weaker than it was going to be because of inflation and the December quarter because of it.

But again.

Give me just gave you the guy for December .

The January forward it does not have an impact but December wise.

It is going to have an impact on this quarter, but we've fully reflected that in our guide and I don't I don't expect that the carriers are going to.

Cover add more budget.

To December partly because of the and and the impact it had on loss ratios, but it does you know, but they are there, but they're also focused on really is January forward as ratios reset and they they get ready to ramp into what they expect to be a very strongly you're given that they've got rates increased appropriately for.

Inflation and given that they expect consumers shopping can be very very aggressive.

Due to both the higher rates.

And potentially due to a softening economy, both of those things will drive consumers shopping which drives volume Indian insurance market.

I'll always appreciate the commentary dog. Thank you.

Thank you Jason.

The next question from John Campbell Stiffened, Inc.

Oh could you. Please go ahead.

Hey, guys. Good afternoon, congrats on on a on a.

Corner.

Thank you.

Sure Dog, you know I've I've known you long enough to know that D. V. I mean, obviously you expect a lot out of your team you've got some big aspirations around where you can you know you can take this insurance business over time, but just thinking about this you know near to kind of medium term do you feel like you've got the necessary things kind of lining up to get back to you know.

It was past peak insurance.

New levels again, and you know and maybe that's just on a run rate at some stage you know next year and before you entered that don't don't worry I'm not gonna.

Put that in the forecasts, even if you are feeling pretty confident about it I'm just trying to get a better sense for how you're feeling about the extent of the rebound and insurance and maybe how long do you think it takes to kind of get back the past prior levels.

Yeah, No. That's a great question here, we we don't know for sure because we haven't been through something like this before but if you look at the indications from the clients and you look at some of the do we have in terms of what they spent last January .

They intended to spin this year had they not done tangled up with inflation and then he and.

I I'd say that I and then if you look you combine that with the list of initiatives, we have going on in the the the things we're working on to continue to expand and insurance because insurance is not nearly as mature as as you might think are folks might think it's there's still an awful lot.

To be done and insurance and when it comes to losing budgets.

Activate the digital and effectively to perform its marketing the way performance marketing ought to be done literally a lot more there I would say I have never been more confident I mean will will absolutely get back to prior year run rates perfect.

Peak run rates, our expectation of ourselves.

When you look at all that together.

<unk> is that we will you know that we can grow insurance two way beyond that our aspirations insurance are still to be the double our previous peaks over time as we as we look at adding more footprint, bringing more client budget online taking that budget to the kind of performance levels and performance approaches.

<unk> to get to.

And then implementing new product initiatives like Q R. P and all things related to Q R. P. Because there are a lot of new opportunities springing off a Q R. P. All of this has been kind of slow down and kind of stunted by this past year with inflation effects carriers economics, but that's all gonna you know this is a.

Sure. That's a short term thing where rerated now mostly related carriers are gonna continue to finish up that rewriting process. The good news is the carriers that have gotten mostly through it <unk>.

<unk>, great success, and they got the rates right and they are getting your economics are back in there you know and they're very much in growth mode and that again combined with our market expansion bunch of expansion and penetration and new product initiatives gives me great confidence that will get way past previous peaks and insurance.

That's very helpful. That's great answer also on the personal loans and credit cards, I think I think pretty clearly where the results. This quarter. They held up very well it seems like it I'll spend a lot of its decline.

I'm just curious about kind of how that trend you know if you can break it out by both types credit card and the personal loans kind of how it got it in the quarter.

Maybe if there's any kind of clarity or an indication on how that looked in October and then maybe just bigger picture. How you think those businesses hold up in a in a maybe it was a softening macro.

Yeah. That's a great question of personal loans, I think with 35% year over here in the corner.

That business.

Is doing extraordinarily well.

For lots of reasons. One is we're just executing well we're in very much in market share.

Sure gained market expansion mode, there and and then implementing.

The latest product and optimization capabilities, we have which <unk>, which we're still a long way from four will be getting implemented in personal loans, what we did see in the quarter.

It was some tightening of filters by the lenders the and and that affected some of the budget on the lending side and what we saw was a next shift.

When that happened over more to some of the the credit repair credit services credit counseling debt debt management.

Services that we also.

Provide for a match consumers too.

And so that well off set the some of the softening on the lender side.

And you know that business is in really good shape going forward. The we've our folks just came back from a big industry Conference I think it was Monday, 2020, or something like that but.

And and they report that the lenders are all saying that they feel like they're in great shape that the changes they made to their filters into their underwriting criteria to reflect.

Inflation and a bit of a weakening in the economy and put them in great shape. They all report being very stable having.

Have a good sources of capital <unk>, the cost of capital or up but they're interested but the rates they're charging her up.

So that that industry seems to be wearing it very well again, a little bit of tightening a little bit of a make shift in it but we can't are hedged because we do have those other services that we also offer to match the consumers and.

Those are some very very good services for so.

Personal loans, we expect to continue to have a lot of momentum for those reasons for all that all that stuff combined credit cards is is doing really well that market is super healthy right. Now travel is up dramatically as you know we're most leveraged to travel in our credit card business were were most leveraged to prime consumers and her crew.

Edit car business, we have very little exposure to the lower end of the.

Credit spectrum.

On the lower end is worth getting hurt right now the upper ends in really good shape you heard that from every Beaver that for me the the economist's you're hearing that from the Big banks, you know I think delinquencies haven't even yet.

Reached pre pandemic levels for consumers. So the the the core consumer base that we serve and credit cards is in very good shape and in fact that market is very strong right now with a lot of good limited time offers very attractive Lunitidal limited time offers a lot of aggressive marketing by the banks.

And a consumer this in really good shape looking and again travel is just extraordinarily strong right now.

So you know I'd say that in both of those cases and you heard Greg.

Businesses together I think combined with about 23 per cent year over year.

Credit cards was his biggest personal loans, but it wasn't that credit cards was the strongest just that it had such a tough cop from last year cause last year was a really strong quote and credit cards with some really unique unlimited time offers that kind of kind of pushed that business way beyond <unk>, even the normal high growth rate would expect so we expect to be able to.

Those businesses are gonna continue the weather well now if we habits recession, we have in our recession planning.

We have said that this you know instead of growing and continuing to progress like we think we can and credit cards and personal loans that that those businesses are gonna in particular credit cards, just gonna we've got it down pretty dramatically in a recession scenario I think more than we need to for that for that contingency planning but.

I think I think.

We don't if it's if if there's a recession, we expect it <unk> said, we still expect to do more revenue than we did last fiscal year are still expect to be nicely positive and casually EBITDA.

And that includes taken a pretty big haircut to credit cards and that contingency or in that in that plan I don't think it's gonna happen not at that level. We've taken not if you look at the strength of the consumer.

And if you look at how we leveraged to the prime consumer I, just don't I, just don't see a recession I mean that as big an impact as we reflected in her contingency planning on that on that second.

Okay, Oh, great to hear thank you done thank you John .

We will take Eric Martinez Z from Lake Street.

<unk>. Please go ahead.

Yeah, I wanted to revisit the queue to guide with regard to the flat roofs and the.

Roughly breakeven on the adjusted EBITDA, If I go back to Q2, a year ago, you know the $125 million, but generated nearly $6 million of adjusted EBITDA could you helped me better understand that 6 million dollar or five 6 million dollar Delta what are we investing in here.

Now yeah.

Once a year ago.

Yeah, no. It's great questionnaire I mean as I indicated a couple of times you know, we're not stopping our investments across the business, a new product initiatives and we're investing very aggressively.

The business is that we can grow in this environment, including personal loans credit cards banking, which is a part of our business. We don't talk a lot about but is on fire, which is a source of funds account.

Service, we provide two two financial institutions, particularly banks and home services and so we have a lot more expenses.

In the system right now for continuing to invest in growing those businesses at the rates were growing them now for the long term than we had last year and in an auto insurance and insurance January we have we have the same extent space, we had last year, despite that business being down.

You know I don't know, Greg what was it down you'll be around a quarter uhm 30 to 40 per cent.

Yep.

Something like that because we know what's a temporary thing and what we don't want to do.

This is stop investing there.

When we know that the industry and the market's gonna come right back and we have got even more investments and and Q R. P and the and the products rank you repeat. This is you know those investments are in the future that is <unk>.

Represent extraordinarily big opportunities and tons of economic and financial leverage to the company.

So we're we're gonna we have continued to invest there and as I indicated with that kind of new opportunities springing off of that that those are enabling that we'll talk more about future calls that are also very big so it's just continuing to invest aggressively across the business and and and the the noninsurance preside as well as any.

Insurance side.

Because we know that the insurance issues are temporary and we want to keep growing fast and get bigger and bigger over the next few years, but we didn't want to slow that down and again.

Yeah and get we're in the fortunate position.

Position to be able to do it I mean, we can do all that.

Have a quarter of only $125 million in revenue because of what's gone on insurance and still be at least cash flow breakeven and still have over $90 million in cash in the bank and no bank debt. So we think it's a period, where we should do that because most of our competitors don't have all those advantages. So it's we don't think it's a time to back.

With extra time to push forward.

Okay, and then Craig that we.

Progressive what percentage of revenues progressive in the corner.

Progressive was about 25 per cent of total revenue in the quarter.

Alright, and then what leading indicators silly.

Doug talked about giving indications of their intent to be aggressive in January is there are any of you could share with us maybe not progressive specific but.

Auto insurance.

Leading indicators.

Yeah. The most important indicator is is that the rewriting has gone well the the carriers are reporting that the new rates.

Uhm match up well with the economics that they're seeing in the business and that gives them great confidence and wherewithal.

To really put the pedal to the metal in January and then we have gotten direct indications of course from <unk> from certain carriers over their intention to be aggressive coming.

Coming in January as it gets closer we don't have specific.

We have some specific budget indications, but uhm.

All of the indications we have gotten.

<unk> had been very positive regarding January forward, So and again, it's it's.

The underlying.

The actor and that is that the Rebating has gone well in that it worked that.

They got it done and the carriers and there are some curious who were almost completely through that process and or just have already begun to spin pretty aggressively.

Relatively speaking and are chomping at the bit for January 1st.

Thanks for taking my question. Thank you are alright.

You just take the next question from <unk> from Cingular Research. Your eyes opened please go ahead.

Hi, Doug and Greg.

Hey, Chris.

Sort of a macro question how do your different segments do in a rising interest rate environment.

Yeah, Uhm rising interest rates in and of themselves I don't think.

We can get you know.

<unk> that direct an impact with go go through them insurance generally speaking in a rising interest rate environment. They make more money because as you know they invest the float.

And interest rates being low had been hard on a lot of insurance carriers cause a dominantly invest in fixed income.

And so in in in most cases insurance economics get better in a rising interest rate environment. When it comes to that part of the business. When it comes to the core side of their business. The operating profit side of the business rising interest rates to the extent that they put pressure on consumers will drive consumers to shop more.

For insurance, we seem that the previous recessions are the carriers will tell you. The same thing the industry will tell you the same thing and.

So can you state rising interest rates <unk> inflation impact consumers.

We tend to see more consumer shopping for insurance because they they're trying to find any line item. They can in their monthly budget to reduce.

And usually with you shop for insurance you save on insurance, because it's such a difficult complicated market which to shop.

So we expect that as part of what could happen next year, although it hasn't really been included in our planning we haven't <unk> is a factor for increased shopping we're really thinking when we do our we've done our planet.

Been more focused on.

Find economics, <unk>, Rebating, and therefore client budgets and what they what they are willing to spend some boat, but both sides of the market ought to be helped by that and insurance and home services rising interest rates tend to slow down new home purchases.

Most of our business in home services existing homeowners, making improvements to their existing homes. What we saw in the last recession was that that was flat to the recession.

And to a softening home <unk> housing environment, mainly.

Mainly because you have puts and takes you have and on the one hand consumers doing more to the existing home because they can go buy a new home or they can't sell their existing home and so they're gonna stay there longer so there's the kitchen remodel the bathroom among with they've been putting off they're gonna go ahead and do it.

Because now they've got a stand that house anyway cause they can't sell it or they can't buy a new one on the downside it if it's something more discretionary and there's economic pressure on a consumer.

Will postpone jobs, they will put off Johns now.

Now as I said about credit cards by definition and home services were leveraged subprime consumers. These are homeowners.

And they are at this point.

In really good shape financially and balance sheet wise and home equity lines, even and even with declining prices and the expectation is that they will whether a recession certainly better than non homeowners are lower income lower credit folks and probably pretty well if it's structurally it where they are.

Going into this going into it environment of higher interest rates inflation and recession.

Two biggest businesses look pretty good and a rising interest rate environment.

You know the personal loans.

Personal loans folks as I said, what we have seen is continued good momentum and it's not surprising because what's gonna happen is as consumers have issues with credit card debt and rising interest rates on a credit card debt more of them are gonna look to consolidate that credit card debt to get a lower monthly payment and that's.

A personal loan.

And by the way you can refinance personal loans you can just get get another personal long replace your own personal alone. If you have to live in the same way.

So and then we have credit repair credit counseling debt forgiveness debt settlement, all those services and our personal loans business, which you wish you could see more demand for for the same reasons. So right now and again as we went through the analysis of recession with that business.

Management team came back and said listen again puts and takes we're gonna have some tightening we're gonna have some folks have any issues, but they were gonna have.

We're gonna have more concerned consolidation, we're gonna have more services on the credit and debt side net net we think kind of <unk>.

Flattish versus are 35 per cent growth rate year over year, which is what you know what we just delivered is probably recession center and again I'm sorry, I know you asked about rising interest rates, but I'm taken at your interest rates broadly to try and take the direct effects on some secondary effects like like potential recession or other pressures on consumers. So I would say.

That business again as in pretty good shape going into it and and we understand the mix and we just heard from the clients that they feel very good about where they are just coming out of a conference last week.

In terms of where they are with their their rates versus the cost of capital R. Specifically, which is which was really good news and and was was helpful. Credit cards. You know I think I get kinda is gonna be one of those direct effect on the consumer how much of an effect on it and then the prime consumer you're probably not going to see much of that cause a lot of them.

Pay off the bill with a credit card Bill monthly.

Don't carry a balance of you carry a balance you're gonna have higher you're gonna have high rates, but.

Which you also see in a in a rising interest rate environments as consumers often.

Having pressure on the household income in the household economics, and having to use a credit card small.

You know again, we made an assumption that rising interest rates if it <unk> if it led to recession would have a pretty big impact on credit cards when did our contingency planning.

And I think we we feel good that we more than covered any potential downside there, but thank you for you and the credit card side is a little bit it might be other business a little bit at a little bit of down. The good news again is where leverage to the prime consumer credit card, we had very little exposure to nonprime consumers and credit cards and that puts us in <unk>.

Good shape relative to any you know inflation rising interest rates recessionary type scenarios relatives or anything else and then our banking business is on fire not surprisingly right. I mean, we've had this business for a long time, but I think it was our best performing business last quarter if.

Look at margin growth.

Uhm.

And media and or just margin dollar growth and Greg correct me, if that's not correct, but it's in that the reason is that for that is rising interest rates. It's finally attracted to put your money into a C D or put your money in your savings account and that is more attractive right now and given the volatility of equity markets and stuff.

So.

And the banks need more sources of funds as the fed tightens and so that market has a lot of vectors a tailwind behind it.

And and it's it's it's performing extraordinarily well and growing really rapidly forest and it again. It was it was a knife fight for years, there because interest rates are so low so.

We liked that business a lot, it's probably gonna be bigger in terms of medium large production this quarter.

Or or very soon that even credit cards, which is a good business for us and so.

That one is actually.

Does better and a rising interest rate environment and is is growing very rapidly for us and get into good you know pretty good scale.

Okay. Thanks to that answer just.

Just a question.

On the auto insurance side of things, if you're expecting and then a bump up in the second half.

Or do you have any inkling.

Inkling for potential acquisitions in this area and how our valuation concern.

Yeah, that's a great question.

It's one of those things where.

Everybody's back the valuations are down.

And the private side of course expectations have been down as much as the valuations have gone down. So you always have that issue the private market tends to lag and tends to be pretty resistant to these kind of periods on the public side valuations are down.

But the you know the owners therefore, I have no interest in talking about selling because they to know that the market's gonna come back and why would they sell at the bottom.

So I would say that.

Not a not a not.

Not a likely.

Thing to happen.

Unlikely, we will buy or murdered another insurance company in the near term.

Cause they're all going to wait for the market to come back and then they're gonna and they will expect appropriately that when the market comes back they'll perform better their valuation will go up in.

And they're not gonna sell unless they unless you're in distress.

They're really not gonna sell on this environment, particularly again given that you know.

The relief is right around the corner.

And I don't know of anyone that we <unk> that we would have any interest in acquiring this in distress. So I think that's that's where we are where we stand there.

Okay. Okay. Thanks, then.

Thank you Chris.

[noise].

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Teresa the line was cut off for my site just to re prom.

If everyone if any other Christian Please press star one on your phone keypad.

Do it for a few seconds.

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