Q2 2023 Quinstreet Inc Earnings Call
[music].
Thank you for joining Quinn streets second quarter fiscal 2023 earnings call.
Today's call will be recorded today, we're joined by Quint Street C O, Doug Valenti, and Quint Street C F O Greg Wong.
Following the prepared remarks, there'll be a Q&A session to ask a question. Please press star one on your telephone keypad.
And with that I'll pass it over to lane younger.
Thank you everyone for joining us as we report Queen Street second quarter of fiscal 2023 financial results.
Joining me on the call today are C. E O does valenti M. C. F. L. <unk> before I begin I would like to remind you that the following discussion well contained forward looking statements.
Looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those projected by such statements and.
And are not guarantees of future performance doctors that may cause results to differ from our forward looking statements are discussed in a 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 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 and.
Investor Dot Quinn Street, Dotcom with that I'll turn the call over to Doug Valenti. Please go ahead Sir.
Thank you lane.
And everyone.
Well personally headlines.
The anticipated sharp re ramp up auto insurance quiet Mark marketing spending has begun.
And it looks like it's up into the right from here.
Our auto insurance revenue is expected to drop by over 60% the score March quarter versus the December quarter.
So we are saying significant positive inflection you anticipated.
Excitingly, though.
Even with the January search and it's immediate positive impact on our results. We are so early in the full recovery and reran a auto insurance.
We expect much more to come.
We've been predicting this this significant positive infection auto insurance, our biggest client vertical for some time.
And we have been preparing for it.
We believe that we are at the beginning.
Ramp.
About overcoming quarters.
Back to auto insurance clients spending levels Saint prior to the inflation challenges or the past couple of years.
And then to further strong growth.
There is the shared marketing budgets and consumer shopping represented by digital media.
Tenuous, it's relentless March up until the right.
The return of auto insurance marketing spending is due mainly to carry your progress adjusting their products.
And increasing their rates.
All set higher cost.
And two the resetting a carrier combined ratio targets as of January 1st.
Consumer shopping traffic online for auto insurance is also up.
As expected.
Largely by the rate increases.
Quint Street revenue and margins are increasing rapidly.
That was broken insurance.
Combines with already strong momentum and our other two nine figure annual revenue client verticals.
Of course.
[noise] home services and.
And credit driven financial services.
As a result.
We expect a record total company revenue.
Current March quarter.
A significant jump and adjusted EBITDA.
We expect record revenue again, and a further job and adjusted EBITDA and the June quarter.
Looking back at the December quarter, which was our fiscal cute too.
Results were good.
Especially given conditions auto insurance and the shifting macroeconomic environment and a quarter.
Our business model once again demonstrated its resilience.
We once again demonstrated our ability.
To successfully and profitably navigate.
Even the most complicated environment.
We grew revenue year over year and cute too.
Generated positive EBITDA.
And what is our softest sneezing a quarter.
And despite facing both the bottom of the auto insurance market.
And the shifting macroeconomic environment.
December quarter results also included continued investment spending.
Unexciting longterm growth initiatives and capabilities.
As promised.
And.
Positive results demonstrate.
We are making those investments with the efficiency.
And margin and cost discipline, you have come to expect from Quinn Street.
Our commitment to continue our disciplined investment and long term initiatives through the transitory challenges in the insurance market.
It's paying off.
Revenue and margins are rebounding quickly.
We expect them to continue to ramp and coming course.
Long term prospects have never been better.
I wanted to make some brief comments about the macroeconomic environment.
Which we continue to assess.
We believe it's reflected in our outlook.
Most important.
We expect the reran auto insurance spending to be the dominant drive.
Our performance trends.
F y Q3.
March quarter.
And likely.
Quarters to come.
Spending continues to revamp.
Related.
And in addition.
Consumer shopping for auto insurance typically increases during periods of economic uncertainty.
We would expect that would be another net positive for our insurance results.
Especially given rate increases.
Asheboro Noninsurance client verticals.
The majority of our business there is leveraged to homeowners.
And have to pry and near Prime consumers.
As you have heard from the banks.
Credit card companies.
<unk> sheets.
Credit.
Spending levels of those consumers.
Continue to be in.
In good shape.
Turning to our outlook.
We expect total revenue in fiscal two three.
It'd be between 160 and one.
$170 million.
A company record.
We expect adjusted EBITDA and physical Q3 can.
Be between seven and 8 million Marsh.
Reflecting the immediate.
Significant.
But still early impact.
Top line beverage.
Reramping insurance revenue.
444 for fiscal year 2023.
June we.
We expect revenue to be between 610 and $630 million.
And we expect full fiscal year adjusted EBITDA.
You'd be between 25 and $30 million.
Our financial position remains excellent.
With a strong balance sheet with almost $80 million of cash and no bank.
And we are entering a period.
Believe will be represented by ramping revenues.
Expanding margins.
And strong cash flows.
With that I'll turn the call over to Craig.
Thank you done.
Hello, and thanks to everyone for joining us today.
The December quarter demonstrated the strength and resilience of our business model.
Vertical footprint.
We delivered solid year over year revenue growth of 7% to $134 million. Despite.
Despite challenges on auto insurance.
As well as a shifting macroeconomic environment.
Or non insurance claim vehicles.
Represented 64% of total Q2 revenue.
In groups, 31% year over year.
Looking at revenue by client vertical.
Our financial services claimed vertical represented 67% a cue to revenue.
And it was $89.3 million approximately flat year over year.
This was a result of the continued strength and our credit driven and banking client verticals, which largely offset expected challenges and the insurance and insurance on the corner.
Well, it's an insurance curious continued.
Limited or marketing spending the December quarter to manage calendar year 2022 combined ratio targets.
That said as anticipated we've now seen the significant positive inflection and revenue beginning in January .
Just carry a combined ratio is reset.
Carriers begin to benefit from rate increases.
Mmm consumer shopping intensifies in response to our race.
Most importantly.
We expect insurance revenue.
Continue the ramp up until the right over the coming quarters as we believe we're in the early stages of the full recovery of that market.
Ah credit driven client verticals of personal loans and credit cards as well as our banking business deliberate excellent results in queue to growing a combined 35% year over year.
Revenue or an in home services client vertical grew 27% year over year.
$43 million or 32 per cent of total revenue.
As we've discussed in the past services may be your largest addressable market.
And our strategy to drive longterm girls here is simple.
One.
Business from existing service offerings like window replacements solar system sales and installation and bathroom remodel.
None of which we believe are anywhere close to their full potential.
And two.
Expanding the new service offerings.
Where we see the opportunity to at least triple the number of the sub vertical we currently serve.
This multi prong growth strategy.
Is expected to draw double digit organic growth.
Foreseeable future.
Oh, the revenue was the remaining $1.8 million a cue to rather.
Adjusted EBITDA Francisco Q2 was $1 million.
Turn into the balance sheet, we close the quarter was $79.1 million of cash and equivalents.
No bank debt.
In closing we.
Excited about our business and financial model as we head into the back half of our fiscal year.
The significant positive inflection you were seeing an insurance combined with the continued strength of Noninsurance client vertical.
Is expected to dress strong total company revenue growth and rapid expansion, both adjusted EBITDA and cash flow in the March quarter.
We also expect revenue growth adjusted EBITDA and cash flow to strengthen again and the June quarter.
What's that alter.
I'll turn the call over the operator for Q&A.
Thank you.
And at this time, we will be conducting our question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad.
Confirmation tome indicate that you're in line as in the question queue you.
You May press Star too if you would like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
One moment, while we pull for questions.
Our first question comes from Jason Cryer with Craig Hallum Police that your question.
Thank you gentlemen, just wondering if you could help us bridge the profitability gap cause I I certainly appreciate the the record revenue that you're forecasting over the next couple of quarters, but if we go back a couple of years like the back half of 21.
Last time, you were kind of at revenues at these levels were saying EBITDA margins and kind of the double digit range. So I'm just wondering what's different about it this time or do you expect that to maybe a couple of quarters out from now.
Yeah, that's a great question, Jason and thank you for it I would say in in a short answer would be we expect it to come pretty soon.
The longer answer is you know we're spending on growth initiatives across the company.
And including the insurance.
And we're doing that because we see big attractive growth opportunities.
With great.
Very good margins.
And because we have the capacity and a surplus to do it.
We are getting great results from them.
Well, we are nowhere near back.
Two where we expect to get with insurance over the next few of course it is still.
Very early in the revamped there so we're not getting.
The kind of top line leveraged from insurance or the full top on average you would expect that there were about $20 million a quarter.
Even in the March quarter will still be about $20 million order short.
Pre downturn.
[noise] downturn peak and insurance.
And we're also not getting the full media margin or or variable margin leverage we would be getting because all the carriers aren't back which means we have fewer matches for consumers, which means remedy efficiency in yoga down which means we don't have that that first of all the margin. So now all that being said.
We're gonna go from about breakeven in the December quarter.
To about five per cent adjusted EBITDA margin in the March quarter.
So you can see that it's coming back very rapidly.
And all indications are we're going to keep gaining.
The top line leverage and that media efficiency.
And therefore, you should just continue to see.
When you've already told you we expect to see continued expansion of adjusted EBITDA margin in the June quarter, and certainly beyond so that's the yeah, that's what's going on.
The but you know I think we're spending that money that they're spending on growth. I think is is is being done very effectively and obviously disciplined way effective they weren't great. We grew noninsurance work was 31 per cent at great scale.
The December quarter year over year.
And we are seeing a big fast Reramping bounceback as your insurers come back both on our top line to record levels and an adjusted EBITDA, just said from kind of break even to five per cent. So I think we're really well positioned.
For the next cycle and two in position to take advantage of continuing to scale all of our businesses, including insurance as it comes back and <unk> and you will see you won't see any degradation of vertical marches at variable margins were driving and noninsurance are very attractive.
Consistent with it in many cases above our historic levels. So that's happening it's just that insurance again top lines that for me back yet nor is the the media fish because not all the carriers are back for the although we have some they're just started coming back again this month.
Obviously, we have a number of them coming back in January and then we have even more on their way. So they don't look as is very very positive.
I would also argue that you know we've looked at we've been talking for the last couple of quarters about continuing to spend on these growth initiatives.
I would argue suspending more modest you momentarily, we've done that pretty optimally in.
In a week in December .
We spent just we didn't you know we spend very aggressively and everything that we think makes sense do you spend on for the future and the non insurance and insurance and.
And we still made a million dollars would be better.
So you know we're spending to the capacity, we think makes sense, because we have great big long term opportunities and were deliberating guessers opportunities to achieve more opportunities to keep doing that and to keep growing it big scale and to keep driving to the margins it big scale. So.
I'd say right, where we <unk>, we we'd love for insurance to come back faster.
It's gonna keep coming back it's very sustainable and it looks we're all we're all indications from the carriers are it's gonna continue to come in continuous scale would be sustainable because their rates.
Ah really reflective of the current environment and are doing a great results for them.
But super happy with where we are and you know it's what's happening is what whichever is gonna happen.
Okay. Thank you for all of that sorry apologies in advance I've got like a three part question on an auto insurance. So I know January was a tougher comp for you and then the cops E. As in February . So I just first of all just wondering if you can give a little bit more clarity on the cadence of what you've seen so far in early two.
Three and then second question just.
If there's any details you can provide on on how traffic is ramping up like if there's any numbers behind that and then the third question as you see these rate increases I'm just curious if that means you're making more money on on all the opportunities that your delivery into the characters.
Yeah Gotcha.
The kings of nearly 2023 is is kind of what we indicated Ah you know quick snap back.
From a few of the bigger client carriers.
Furthest along in terms of their right and product adjustments.
Pretty immediate and that's why you know 60 per cent government.
<unk> jumped from the December quarter to the March quarter, and and we have other carriers. Another big carrier I think just yesterday.
Or maybe it today coming.
Coming back into the channel they'd appreciate different way and and we're talking to <unk> and they're all at different stages of coming back in some art back in very strongly summer not yet, but finding it we haven't heard anybody say, hey, I'm just not gonna be big in 2023, that's just not something we're hearing.
So.
Kind of the cadence, but again work.
Even with all that.
We're $20 million shy.
<unk> downturn pecan auto insurance revenue per quarter. So it gives you a sense in a feel for how much more top line remember just to come.
And also as they as more carriers come back <unk>.
Not unimportant me we have more.
Places to match consumers.
Which means we have better media fish seemed better media margin better overall March and so you have the double effect.
On on overall margins at that happens so it's coming it's ramping the ramp is is it hard to say at this point the rapidly accelerating or not but it was steep ramp is you'll get 50 per cent quarter of quarter steep.
Deep ramp to begin with.
When we expect as we said continued ramping uhm, that's the indication of getting from everybody else you and in case, we're getting from the industry.
In terms of the rates at your location, we're getting from inflation.
What's happening with used car pricing and supply chains and another factor. So everything is lining up for this to be particularly with the rate increases of course.
Good year very good year in the beginning of a big cycle for insurers in terms of the details on the traffic Uhm I don't have the details in terms of how much yourself, but it wrapped up very quickly in January from December double digit for digit percentages plus.
We've seen that.
It came up and it wrapped in January and it's it's kind of plateaued platona significantly higher level than it was and the last part of last calendar year.
Also industry folks are reporting increases in shopping behavior J D power came out with a port report I think a week and a half two weeks ago.
Said that the <unk> the percentage of consumers shopping for insurance is the highest since they started tracking.
So now I'm getting nothing nothing about that is surprising right. We we know that everybody got their rates increased on them over the past year or so I will just about everybody and those rate increases were not small.
10 per cent, sometimes 15 20 per cent. So if you're a consumer even if the economy's good you're probably going to go and see if you can save money somewhere else. If you go to shop, you're you know a big percentage of that you were going to wind up on Quinn Street insurance market places. So you know a good solid ramp and <unk>.
Dissipation by consumers and not again, not unexpected and that should be a continued positive driver.
Of Ah revenue, an insurance for us the rate increases don't reflect themselves directly in our pricing.
But they certainly give the clients more surplus.
With which they can spend on marketing.
And higher lifetime value than they would have without the rate increases, which means that you know the the level that they can spend of the pricing. They can spend it can be higher so there's not a <unk> a super direct connection, but there's a very strong connection between the rate increases at and what the carriers doing what.
Generally seen with the carriers that have gotten the rates increased to the levels that they think are are working.
Good strong demand.
And good strong pricing.
Four segments of consumers.
Across the board, what's it's you know, it's what you would hope and expect US the rates now reflective of a healthy economic model and they're able to spend.
Yeah like they wouldn't open normal positive cycle on that on on attracting those segments and on an underwriting so that's.
Probably the best I can do on that.
That's perfect. Thank you Doug I appreciate it.
Thank you Jason.
Our next question comes from John Campbell with Stevens. Please state your question.
Hey, guys, good afternoon, and happy new year.
Hey, John Hey, Doug back to the guidance I mean really good revenue outlook, obviously, the mid point on the EBITDA. It looks like 90 minutes of kind of compassion year over year and you just touched on this but I'm gonna make sure I got a good grip on it so it sounds like it's not a make shift issue. It's it's it's basically you guys staffed up a good bit to basically handle a higher level of any.
<unk> and what you are seeing today, and maybe what you're expecting to see in the corner or to add but as the top line continues to kind of left from here, we should I guess I really expected to see you know better than average incremental margins, maybe as you move into the next fiscal year is that the way to think about it.
It is it absolutely is where we are very good incremental margins right now across the board accept an insurance.
Or the incremental margin define.
And an accretive but not yet where they will be.
As we get more top line out of out of that vertical and more media efficiency that vertical with the participation of more and more carriers.
That's kind of the gist of it.
Really pretty mathematically simple.
And and not complicated.
Exactly what's going on and you know we we we we said this all last year, which I <unk> I think we said it here before we we're not gonna stop investing in longterm growth and big initiatives.
During the insurance down drinks do newest transitory.
Wanted to be ready for you.
And this is the other side.
And as I said I, you know I think we kinda from our perspective.
Given the size and the attractive so the options we have in front of US we feel like it was pretty often we'd done again.
We did it even in December which was a very soft quarter from every angle with a lot going on.
Emily from you know insurance went down <unk> down again because of the late season Winter Storm and then you had we are starting to see some impact on.
The address on low income consumers and we still drove a million dollars adjusted even you know and you said this last call.
We know how to make money.
And so despite all of that.
Despite spending very aggressively but in a quint street kind of discipline away on big opportunities. We still made money. So you know, we're gonna make money and.
And we expect to just make more and more money in coming quarters as we continue to get more back insurance.
Okay that makes a lotta sense makes dog and then also on the you know the consumer credit driven verticals you know, there's a lot of fear out there around and kind of deteriorating consumer balance sheets, that's not necessarily bad for some of those businesses I guess, maybe personal loans. If you can go a little bit deeper down the spectrum, but I'm I'm looking for a little bit of commentary or just some color around how that progressive.
A quarter, maybe started the quarter and maybe even up until January kind of what you guys are seeing in that channel what the consumer appetite looks like versus you know the sources of credit.
Sure.
Start with credit cards that which is one of them is a big business for some good business for us.
We're seeing very strong consumer demand on particularly for travel related cards, which is what we're <unk> we have the most leverage too.
The biggest part of our our mix.
And particularly traveling headed cards with private near from consumers, which is the dominant.
Consumer base, it we sure and or credit cards business as far as the issue <unk> and their credit standards, we have seen.
Most no tightening.
Strong demand.
Louisiana.
Just for a limited time offers.
Any adjustments that we've seen has been very very incremental on the address would probably represent less than five per cent.
Packed on on on.
The aperture of the of their marketing appetite. So you know it's kind of full steam ahead with the big banks and the credit card issuers right issue threatening we serve all big credit card issuers.
And so we're keeping a close on it they're keeping a close eye on it but their balance eastern Grand change the consumers are not even yet back to pre pandemic.
Balance is or or delinquency rates and so yeah. We're the consumers in very good shape, there where we are seeing.
Some deterioration of credit.
And it's been in is fully incorporated into our into our outlook and offset as you said my other things we do in the same business isn't personal loss.
Little bit tight and a little bit more tightening their credit cards.
The lower income consumer is under more pressure.
Understandably from inflation.
And those crime in near <unk> consumers.
And so we have seen some effect there not huge but some <unk>.
And it <unk>.
Partly I almost said largely marching might be the better better advil, but let's say for now partly.
Set by the fact that as you know on a personal business. We also matched to credit or per per credit counseling in debt settlement clients and so.
Often times.
There are two things we can feed our personal business about credit one is as consumer drawn up more on their credit card balances you see stronger demand for credit card debt consolidation and personal loans.
And that is beginning to happen.
And we also see more consumers get into a little bit of trouble with their credit, particularly at the lower income levels.
They end up needing assistance and other types of assistance my credit repair credit counseling debt settlement, which we and we have a big business.
And big clients and high quality clients that that serve those consumers so net net.
<unk> business isn't really good <expletive>.
Okay very helpful. Thank you.
That's true.
Our next question comes from Max Michael This with Lake Street Capital markets Police to your question.
Hey, guys. Thanks for taking my question I, just Wanna touch on the guide for next quarter. So you had a nice quarter out of home services I think I grew 27%, maybe not growing that fast next quarter, but let's take mid teens low 20 per cent do you think two three grows at similar rates just trying to get a gauge on how much girl. So we could see.
Out of the auto insurance and then services segment. Thanks.
Thanks, Matt Greg I'm, not sure I mean, I think a year over year growth and the Guy is is what Greg for for <unk>.
Yeah, the at the mid point.
And the March quarter, it's 10% year over year growth.
Yeah, Yeah, and so I got.
I guess I'm trying to gauge whether or not we should see similar type girls out of the home services segment cause I'm trying to gauge how much financial services would grow year over year.
Okay, I guess, that's what I'm trying to ask.
We don't guide specifically by vertical so those are numbers that not numbers that we put out there that said I expect home services to continue like I said in my prepared remarks D. It's raw double digit organic growth rates, you know depending on the quarter. It can vary you know anywhere from 15 to what you just saw <unk>.
Seven so, but I expect that business to continue to perform well in trough double digit growth.
Yeah, that's gonna be in the same range as it has been you know in the Twentyish per cent range as it is not a bad assumption you might be off plus or minus a couple of points, but that businesses are pretty solid 20 per cent your quarter to quarter and has been for awhile and we check will be into the future had a particularly strong quarter last quarter of course, and we will have those as well, but just you know.
It's not a bad range to to consider being in Max that's all.
Okay. Thanks, and the last one for me, where you guys active in the buyback this quarter.
We were not this this past quarter.
Okay. Thanks, guys.
Thanks Max.
Our next question comes from Jim Josh with Barrington Research. Please to your question.
Alright. Thank you a couple of questions. The first one.
One one of the trends recently has been auto sales have been at low levels for both new and used cars over the past couple of years and mixes varied and I'm wondering if if that makes element does have any impact and then the demand for your insurance for the pricing of the policies I imagine it would that I'm wondering what she is hot.
[noise].
Not meaningful demand has it doesn't change the market and a meeting flu meaningful way.
And we've we've not heard that from carriers and we haven't seen it in their budget allocations.
Most insurance is you know is really bought.
Just the ownership.
Not that there aren't getting policies hold for new ownership.
Most of that is for existing ownership and the softening Israeli incremental in this market. So.
It's not a big part of the overall mix annually and B, it's relatively wallets meaningful issue I'd like to be incremental on what's happening with with new and <unk> and when I say, new I mean, new whether they be brand new or used and so it's just not a meaningful impact we have not seen that and we have not heard that from our carrier partners.
Okay.
Doug also I wondered if the south period recently has given you an opportunity to maybe gain some share of budgets and some of the key carriers progressive that's always been a T. One that you've had a dry and.
Getting a bigger share certain of the other ones is that <unk> an issue for you. It's part of what we've been is part of why we've been spending so aggressively we wanted to ourselves.
[noise] ourselves in the position to as the market came back.
Have gained M b and to be able to benefit from I'm not sure as possible.
Okay. So we have we do believe we do believe we have gained sure uhm on.
From the clients.
Both the media side and the and the budget Sir.
Mmk and one last one I was wondering about a comment was made earlier about.
Tripling potentially the sub vertical served in the consumer products area.
Consumer services and I'm wondering how you would pay such growth in terms of the cost positioning it would be required to enter.
Your bedroom and new markets relative to.
Letting yourself further in existing markets.
Yeah. It's it's in the home services trades that Greg was talking about trade would be like kitchen remodel would be a trade or were in about a dozen political is there now trades. There now we think we can be in you know a lot more you know what you think we could triple the number we're in we pace that really based on how fast those.
We're able to do that within a reasonable contribution margin range uhm.
We invest a lot in home services, because there is such a big opportunity, but we can it's more limited by our execution capacity than it is in the financial capacity.
So we haven't found that it's been a drag.
And in fact home services to one of our highest contributing businesses would actually contribution I mean, you got several layers of March 1st letter margins. Your media efficiency. Secondly margin is <unk> that people in that business out and after immediate cost and that the people cause you have contribution margin we were.
Pushing home service is kind of as fast as we can execute.
To grow those markets and it's still one of our highest contributing businesses. So in terms of percentage <unk>, So where where it's not it's not limited financially and what we're doing in home services.
Alright, thanks, very much I appreciate it.
Okay. Thank you too.
And just a reminder to the audience to ask a question at this time press star one on your telephone keypad.
Have yourself from the question queue, you could press star two on your telephone keypad.
Our next question comes from Chris Sky with Cingular Research. Please state your question.
Hot dogs and Greg.
Hey, Chris.
Sounds like a great quarter, just uhm wanted to ask about insurance I know.
Talked about Q3 and Q4 just wanted to get your your feeling in color on on how it <unk> how it would continue into Q1 of next year.
Yeah. It's a good question, we would expect it to continue to work with.
We think we're in a very in a multi quarter ramp S.
As these carriers are getting their legs back on <unk>.
Economically with a rate increases.
Get the products and states are lined with those rate increases to get their portfolios, where they want then they got a lot to come back from.
As they had to you had to really.
Closed down along with their efforts in marketing and expansion.
Over the past couple of years with your issues. They had with a combined ratios. So every indication is it continued to ramp I think I've said three quarters. It goes out that we might be entering the super cycle. I think we are likely to have a good long multi you're cycling insurance.
Because the rate increases have been very healthy and very smart.
And you know the carriers I'm just gonna keep.
Can that actually was economics and reflecting them in their in their market activities and they are in the market presents so we expect.
Good long trend up until the ride for insurance and and that's again driven quite simply by the fact that they now have rates that are more reflective of the new cost environment. Both on the catastrophe side as well as on the right person.
Okay. Thanks, and then.
Can you help me understand more about the the increase in product development expense.
Is this gonna occur basically as long as insurance continues to Ram can can you help me understand that.
I think we won't keep increasing it I think we're kind of at the level, we're going to be out for a while.
And and now what's gonna happen is it won't grow it's been growing or not get grew this past couple of years, but revenue will and so that's how you get the margin expansion like you get more revenue driving more incremental variable margin on top of a semi fixed relatively fixed.
Development and other cost base, which is why you're gonna see that large nine continued to expand and why are you, saying the junk plug it did we.
We expect it to.
And the March quarter from you know getting breakeven to five per cent already and adjusted EBITDA March court and more than that and the drink orders you run your number joshi or assumptions there that they were gonna expand another point or two <unk>.
Okay. Okay. Thanks for the the answers.
You're welcome Chris.
Thank you.
And there are no further questions at this time today.
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