Q4 2023 QuinStreet Inc Earnings Call
Okay.
[music].
Good day, and welcome to Quinn streets fiscal fourth quarter and full year 2023 financial results Conference call. Today's conference is being recorded following prepared remarks, there will be a question and answer session. If you have a question during the question and answer session. Please press star one to enter the queue.
At this time I would like to turn the conference over to senior director of Investor Relations and Finance Robert <unk>. Mr. <unk> you may begin.
Thank you operator, and thank you everyone for joining us as we report <unk> fiscal fourth quarter and full year 2023 financial results. Joining me on the call today are Chief Executive Officer, Doug <unk>, and Chief Financial Officer, Greg Wong.
Before we begin I would like to remind you that the following discussion will contain forward looking statements.
Forward looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those projected by such statements and are not guarantees of future performance.
Factors that may cause results to differ from our forward looking statements are discussed in our recent SEC filings, including our most recent 8-K filing made to date and our most recent 10-Q filings forward.
Forward looking statements are based on assumptions as of today and the company undertakes no obligation to update these statements.
We will be discussing both GAAP and non-GAAP measures a reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release, which is available on our Investor Relations website at Investor that Quint Street Dot com.
With that I will turn the call over to Doug Valenti. Please go ahead Sir.
Thank you Rob.
Welcome everyone.
<unk> had a very successful fiscal Q4.
We continue to make great progress against our big non insurance market opportunities.
Those nine figure revenue client verticals.
Through its strong double digit rates year over year in.
In the quarter.
And represented 75% of total revenue.
We expect to grow those businesses at double digit rates for years.
We also continued to invest smartly.
And effectively.
And our next generation products and capabilities.
Including an insurance.
Where we are positioned to take maximum advantage of the re inflection of carrier marketing budgets.
We expect that reinfection.
To begin in January .
Lastly regarding Q4.
We continue to demonstrate operational and financial excellence.
As well as resilience.
And our business model.
We delivered better than expected revenue profits and cash flow.
Improving our already strong balance sheet.
All while navigating the auto insurance market.
And while maintaining high levels of investment.
An important new products technologies.
And growth initiatives.
Moving to our outlook.
First for.
For the new full fiscal year, 2024, which began on July one.
We continue to expect.
Net revenue and adjusted EBITDA.
All grew at double digit rates year over year this fiscal year.
Driven mainly by continued momentum in scale.
And non insurance client verticals.
We also expect a significant positive inflection in.
In auto insurance client spending.
To begin in January .
For the second half.
Our fiscal 2024.
We will also of course.
You need to maintain.
Our strong balance sheet.
In fiscal 2024.
Regarding our outlook for fiscal Q1.
The September quarter.
We expect revenue to be between 120.
And $125 million.
And adjusted EBITDA.
Be approximately breakeven.
Finally.
Our longer term outlook has never been better.
We expect to deliver double digit annual revenue growth rates.
We can do so just based on continued strong performance in non insurance businesses.
Revenue from non insurance businesses is now running at almost $400 million per year.
Okay grew 26% in fiscal 2023.
And has grown organically at a compound annual rate of 19% over the past three years.
We also expect insurance revenue to be up into the right over the longer term.
Eventually returning to and exceeding prior peak levels as.
As carriers benefit from compound rate increases.
<unk> changes.
Cooling inflation and.
And improving supply chains.
And allowing the shift to digital and performance marketing to reassert itself.
As the dominant long term trend.
We expect adjusted EBITDA to grow faster than revenue.
As we scale the top line faster than expenses.
Eventually, reaching and exceeding on adjusted EBITDA margin.
Of 10%.
With that.
I'll turn the call over to Greg.
Thank you Doug.
Hello, and thanks to everyone for joining us today.
For the June quarter total revenue was $133 million.
Adjusted net loss was $514000 or <unk> <unk> per share.
Adjusted EBITDA was $1 $8 million.
Non insurance revenue was.
It was $97 1 million or 75% of Q4 revenue.
<unk> grew 18% year over year.
Looking at revenue by client vertical.
Our financial services client vertical represented 58% of Q4 revenue and was $75 2 million.
Our home services client vertical represented 41% of Q4 revenue.
It was $53 1 million.
Other revenue was the remaining $2 billion of Q4 revenue.
Turning to our full fiscal year 2023 performance.
We reported revenue of $586 million.
Roughly flat year over year as strong performance in non insurance businesses offset insurance results.
Revenue from non insurance businesses.
We're at 367 4 million in fiscal year 2023.
And then increase.
Of 26% year over year.
Our financial services client vertical represented 65% of full fiscal year revenue.
And was $379 7 million.
Our home services client vertical represented 33% of full fiscal year revenue.
It was $193 1 million.
Other revenue represented the remaining $7 8 million at the full fiscal year revenue.
Adjusted EBITDA for full fiscal year, 2023 was $16 7 million.
Turning to the balance sheet.
We closed the year with $73 7 million of cash and equivalents and no bank debt.
GAAP net income this quarter included a onetime noncash charge of $51 9 million.
To establish a valuation allowance against our deferred tax assets.
Establishing the valuation allowance was required by GAAP.
But to be clear our deferred tax assets have expiration dates many years out.
And we do expect to be able to utilize them in the future to offset tax liabilities.
Okay.
In summary.
Let me emphasize the same at three main points Doug made.
One <unk>.
Our non insurance businesses.
Our big market opportunities.
We're growing them at strong double digit rates.
And is expect to continue to do so for years to come.
Two we expect a significant positive inflection in auto insurance client spending to begin in January or the second half of our fiscal 2024.
And three.
We continue to maintain a strong financial foundation and to demonstrate the resilience and cash generating capabilities of our business model.
With that I'll turn it over to the operator for Q&A.
And thank you ladies and gentlemen, we will now conduct a question and answer session. If you have a question. Please press Star then one on your Touchtone phone if you would like to cancel your request. Please press star two please ensure you lift the handset if you are using a speaker phone before crashing any keys once.
Again, if you have a question at Star then one.
And our first question comes from John Campbell from Stephens Go ahead John .
Hey, this is Ajay hey, stepping on for John Congrats on the quarter and thanks for taking our questions.
So obviously the fiscal year 2004 guidance commentary, just calling for growing revenue and EBITDA double digits. So if I just assume 10% growth for both revenue and EBITDA you actually come out ahead of where consensus stood on revenue so congrats on that but.
This would imply adjusted EBITDA margin of roughly two 9%.
So with that said my question is does this two 9% EBIT margin roughly 3% put us in the right ballpark for how you're thinking about EBITDA margins this year or.
Or would you consider this may be the floor given that you expect EBITDA to outgrow revenue as part of your long term outlook.
And then maybe if this.
Just kind of like the base margin assumption here.
Could you maybe give some more color on how you're thinking about margins this year.
Yeah, Thanks, a J.
I don't think we want to be overly specific at this point about the margin, but I would say that we would consider.
10% to be the bottom end.
The improvement year over year, So I guess that's a.
Long way of saying, yes, we would probably expect to be better than that.
In terms of how it comes out it's going to be driven.
Let me give you some parameters around it.
Insurance can be down this year this fiscal year over last fiscal year, which wasn't a very good fiscal year for insurance, obviously, it will still grow at double digits on the.
The revenue line.
And the EBITDA line.
This fiscal year.
We do expect though that.
There'll be a pretty significant positive inflection insurance beginning in January hopefully sustained and off to the races. We go from there for a lot of periods to come.
If and as that does happen that's quite additive.
To those numbers.
No.
Hopefully that gives you in that bracket. It for you as much as I think wed.
We'd like to bracket. It at this point I think until we see.
How insurance does in the back half and how fast it does come on.
But what rate it comes and how sustained is it's hard for us to be too precise about the number other than to say again, we can deliver what we've guided.
Even if insurance is down this year over last fiscal year.
Great. Thanks for the color there and then one more on guidance and kind of running with 10% Rev growth assumption here again, and we're still working through that the math here, but if I just assume that 10% Rev growth in 2024, and then you hit your midpoint of your <unk> guide in revenue largely holds flat until we kind of flip into the new calendar.
Year, I'm kind of get in the ballpark of mid teens year over year growth in <unk>, and then a sizable year over year jump in <unk> and <unk> in terms of revenue somewhere in the range of maybe 50%.
Is this Rev ramp somewhat in the ballpark of how you're thinking about things and maybe you kind of alluded to this in your prior commentary, but just kind of thinking is that the right way to conceptually thinking about the Rev ramp this year.
Yes, I think again getting.
Greg If I go ahead.
That was that's exactly what I was going to say I think we're trying not to get over precise with that a J just because we don't know the exact exact curve of what that inflection looks like we expect significant positive things, but then inflection in auto insurance spending to begin in January but without fully knowing what the shape of that curve is.
It's hard for us to get over precise on that.
Yes thats.
That's exactly right into a J the only thing I would add is that generally speaking the kind of curve shape youre talking about is.
It's accurate.
What you get of course in the back half. We believe is the effects of not only continued.
Access in growing our noninterest businesses.
Throughout the year, but also auto insurance.
Beginning its positive inflection so generally speaking I think the shape you talked about is accurate.
<unk> point.
Same thing I was going to say, it's just hard to be overly precise about it at this point until we know what that auto insurance curve looks like.
We feel good about it coming.
It's consistent with what we're hearing from the carriers is consistent with what we're hearing from industry analysts is consistent with what we're hearing from.
From banking analysts that cover the insurance industry.
It's obvious why right you've got now several years.
In some cases double digit rate increases you have consumers renewing at those higher rates you have the.
Carriers adjusting their products.
In terms of where they're covering and what theyre going to cover and how much. They are going to cover to reflect the environment. You have a cooling inflation environment you have dramatically improve supply chains on the auto and auto parts sites everything adds up to things getting a lot better the Ceos of the carriers themselves have talked about most of these same things.
So we feel very good.
Particularly given that January was strong two years ago January through March was really strong last year and things have only gotten better from there.
Going into calendar 2024 and of course, the reason the calendar year beginning of the calendar year is always magical is because of the combined ratios reset.
Brian ratio targets, we set for some of the most important.
Carriers in the channel.
So.
We everything adds up to is probably going to be.
What we described is going to be a significant positive inflection and it's going to begin in January we just don't know exactly.
How much and how fast.
Because nobody does.
That's very helpful. Thank you guys.
Thank you a J.
And our next question comes from Jason Cryer from Craig Hallum Go ahead.
Hey, this is Cal barbizon here for Jason.
A couple from me I guess to start going back to auto can you just talk about maybe any differences in performance you saw on agent channels versus digital channels.
Agent versus digital.
Yeah, just just any differences in any performance as youre seeing between both channels.
Yes, I'll speak generally about it but first of all in terms of overlay, where mostly leveraged to the direct channel to the direct digital channels.
We serve primarily direct carriers.
And we certainly have some business on the agent side, but it is not the small minority of what we do it's unlike.
Couple of the other folks in particular say.
Lending trees insurance business or ever quote who are much more highly.
Exposed and or concentrated.
On the agent and read side were much more concentrated on clicks and the direct side.
The market.
But we do serve and we do have insights into the agent side.
Both because we do sell.
Some of them.
Leads and calls in particular and because of <unk> were quite engaged with agencies and I would say that the agent side. There is the <unk>.
<unk> side in some ways is that doing better than the direct side because.
The the big carriers that have captive or dedicated agent networks.
Our continuing.
Those agents and those carriers are continuing to spend to keep the agencies.
Healthy.
They were to completely cut off their spending than those agencies would dry up in their whole distribution channel would dry up so what you usually find is that while spending drops in the agent channel. When there is a hard market like there is now it doesn't drop as precipitously or as deeply as it does in the direct channel because they they need to.
Keep that channel at.
At least breathing until the market comes back.
Does if they don't then they lose.
Risk losing to.
To state overstate their entire distribution channel.
Direct carriers, who can just cutoff advertising spend and when they want to come back they just turn it back on them.
Concord distributions there all the time, whether they are spending in it or not.
So generally speaking the agent channel.
Has gone down, but not as much and it doesn't have as deep a bottom.
For those reasons the other thing I would say.
About the agent channel I guess is that they are.
Also hurting.
Depending on which part of the agent channel Youre looking at.
Because those carriers are also having or have had a hard time with combined or loss ratios.
Particularly on the independent agent side.
Because independent agencies some of the largest carriers in the independent agency channel or more of the direct spenders are the direct carriers, who have who have cut back and.
And have other ways other forms of distribution.
And sure that channels are the carrier so they don't have to worry as much about killing their distribution for the long term.
And because.
Generally speaking, there's just less coverage from carriers.
You're right to the carrier agents, just have fewer carriers to right because other folks being out out of the market. So.
That would be from our from where we sit and Thats what were seeing agent versus <unk>.
Digital or direct.
Perfect. Thanks for that.
And then just last one for me just talking about personal loans and credit cards. You know it seems like that's still performing for you guys pretty well just maybe any callouts you'd have there and kind of what you're seeing thanks.
Yes, all of those businesses have done great.
All of our non insurance.
Businesses.
Strong double digit rates this past fiscal year.
We expect all to grow this fiscal year as strong double digit rates.
We are seeing.
<unk> strength and good gains in credit cards, where we are most almost exclusively leveraged to prime consumers.
And that's a good thing and the credit card market.
And then in personal loans, where we've seen.
A lot of strength and we're having a record we had a record month in June and personal loans. So despite the fact that there has been some credit tightening on the lender side, we continued to expand our client base.
Have more options for consumers and we have a pretty vibrant.
Component of our business that helps consumers get connected to postscript can help them with their credit and can help them with their with their debt situations.
And we've seen the balance shift not surprisingly.
Given inflation and other factors a little bit more to that side of the business.
But we.
We were early.
And a very big market in personal loans.
And continue and have a real balanced.
Set of services for consumers that are really serving the market now despite some of the credit tightening, but we of personal loans as I said.
And credit cards, both strong double digit rates, we expected again this year.
And both both have a great outlook and as I said personal loans, even had a record month just in June so.
That business is doing very well for us.
Alright, great. Thanks Thats helpful.
And our next question is from Jim Goss from Barrington Go ahead Jim.
Alright. Thanks.
You were pretty emphatic about expecting a turn on January and I know you talked about the resetting of the combined ratios.
Yeah.
It's Ben.
Sort of a challenge to make that turn over the past.
Year, or so anyway, and I was just wondering.
Is that really the source of your confidence because of their resetting of the.
Combined ratios and are there things, we should be watching as observers to monitor whether whether that turn.
More likely to take place.
From whatever.
You might tell us.
Jim I can't believe you don't want to just rely on what I would tell you.
But no the <unk>.
In that deck.
[laughter], Okay, Hey.
As I've said before and I think it's a great question by the way I.
We have had false starts the.
The industry.
Auto insurance energy has had false starts the last two years going into the new year. So completely understand the question and isn't completely got a question. We're asking it from every direction, we know how for the exact same reasons.
All I can do is let me tell you what we're seeing and what we're hearing and and on the question about what else you should watch let.
Let me jump to that and then I'll jump back in terms of what we're seeing and hearing why we think it.
I would encourage you to read any industry analyst reports you can get your hands on I've shared some of those with our board.
This past board meeting.
I would.
To the analysts that cover the big carriers, and particularly the big direct carriers, including Geico and progressive.
And what they're saying and hearing about the economics of those folks I would watch progressive reporting which is monthly on their combined ratio.
And see if in fact, the combined ratio for.
For the remainder of this calendar year.
Improves significantly over what it has been over the past.
The first half of the calendar year.
And because that will imply that theyre getting too not just that they've cut costs, but they may be getting to rate adequacy.
That they have the rates and the economics to be more aggressive in the January forward period.
We do believe it's probably happening based on everything.
We're hearing not from progressive but in the market and as we as we.
Here and read industry, and and and stock analysts you might note that when progressive reported their quarter. The stock listed traded down and in pop right back up again, because I think several of the analysts on the sell side analysts.
<unk> came out and talked about those exact.
Yes.
Happenings.
In fact factors. So that's that those are some of the things I would watch it I think and I would invite you to and again I completely understand.
I would remind you that two years ago January was a record.
For us in auto insurance last year January February March quarter was I think Greg perhaps another record if not very close in terms of quarter for auto insurance.
And it wasn't a record, but it was a very strong quarter.
Thank you.
And since then again, what we've had in the market.
As carriers successfully getting rate increases and getting compounded rate increases over several years now.
And having now consumers, who renew about every six months renew under those increased rates, but we've had carriers adjust their products and their coverage.
To better reflect where they think they can make money in the market.
And to reflect the current economics in the market.
Obviously have dramatically cooling inflation from where it was two years ago, and a year ago and supply chain. As you can tell just by watching your TV seeing all the car ads. The automobile ads are back with her back because we have cars to sell again.
And so you've seen a supply chain improvement for automobiles, you've seen a softening of used car pricing and you've seen some.
And improvement and supply chains for automobile parts, all of which matter too.
To a carrier who has to pay for all that.
So.
Everything adds up to when combined ratios reset in January .
The environment being a lot more conducive to carriers getting back into growth mode. In the Ceos of these companies have come out and said, we want to grow and by the way they're rewarded for growth.
They will have had three years to adjust and adapt.
And they've had price increases as I said in the environment getting better so it's just.
Hard for us to imagine and we haven't found an industry analyst anywhere that disagrees with the notion that 'twenty four is going to be counted 20 quarters going to be better than 23.
The Big question is that exactly what rate.
So we would characterize it.
<unk>.
I think it's pretty safe Brown pretty significant positive inflection in January from where we are right now because the carriers are.
Are down so much.
As they look to finish out this calendar year.
Against a pretty bad first half.
But exactly how big an exact count fast.
Here's the good news, our insurance business could be down year over year. This fiscal year, and we will still deliver double digit growth.
Okay, well one more in this area and then I have one other thought but.
There is a clear difference between homeowners and automotive.
Automotive insurance.
The carriers are getting out of Florida, and California in the homeowners area. So it can be very unpredictable and I'm wondering if you get squeezed between the cautious carriers and the sort of the concern consumers, who don't really have other good options is there pricing goes up even if they.
Look through the options as data they don't really find anything better.
Can seem to extend the process.
That transition.
Well the more they shop.
The more business we get.
So in the places where carriers are pulling out of markets are really kind of immaterial to <unk>.
Our auto insurance business getting a heck of a lot bigger in fact getting back to the size it was before.
As the market normalizes. So those are certainly factors, but I don't think there are factors that in any way changes the the answer for us at the market in fact.
It comes back and begins to come back as we wish.
We think it will be.
Beginning in January so the only other two things I'd throw in there and I don't want to pile on because I found as we've all had.
Way too much of a frustrating time trying to figure out what's going on in the auto and home insurance markets, including the carriers by the way its not like these guys are trying these are great companies given that their best shot in an incredibly complicated difficult environment.
So this is I don't think there's blayne to be laid anywhere.
But it has been awfully difficult, but I would say that the.
Yes.
With inflation with a softening economy God forbid a recession, what we have always seen as a shopping for auto insurance increases.
On top of that consumers are getting are as they as they renew.
Their rates are getting increased in some cases the rates you're getting increased <unk>.
Strong strong double digit rates 10, 15 20, 30%.
That causes shopping when consumer shop more for insurance, we get more traffic in our business gets goes up our business is driven by two things.
Traffic.
And budgets.
Right now traffic is up because rates have gone up.
And budgets are down that's really hard to produce revenue.
We expect from January forward.
We will still have very strong traffic for all the reasons I've just talked about.
And that budget will begin to come back in.
That adds up to and that should be.
Significant positive inflection spending should be a significant positive inflection in our auto home insurance.
Revenue Okay.
My last thought was it seems that this is your big opportunity to put.
Pedal to the metal in the <unk>.
A huge non financial verticals for home services area as you did back when education hit a wall and you sort of transition you are the same as your business basically I'm wondering are you there.
Challenges there stopping you from going even faster there whether there.
Financial issues in the homeowners or anything else or.
Or is it just a matter of defining which area if you want to get into.
Service and added some great metal area.
No that's a great observation and a great point and question.
I would say that.
We're investing as aggressively as we think we can too.
To good effect.
I don't think that we're missing anything big in terms of how what we're investing and we're investing of course for the long term.
What we're doing we think we're building we want to build in a big sustainable way.
Which I think we're doing that work.
If we wanted to to push further out on the kind of probability or or.
Or risk curve in terms of our investments.
I think we.
We could if.
We were not more constrained by wanting to make sure we maintain a pretty safe profile.
While we wait for insurance to come back. So you think about it what are we balancing we want to maintain our infrastructure in insurance and in fact, continuing to invest in that infrastructure. So that when insurance comes back we get we get maximum advantage, but we're doing that without insurance without much insurance revenue. So that's pretty hard on on.
Profits and cash flow, but we're investing very aggressively in our insurance businesses to your point.
And doing that with great effect, we measure our performance on that we measure our margins on that this year, we expect about a 30% margin on those incremental investments.
And to deliver strong double digit growth rates again in those businesses. We think we're doing it very effectively we think we're doing the right places and we think we're doing it in a way that's going to give us sustainability.
And so when you take those two things the balanced against the.
The business and you say, but.
We know because we want to continue to control our own destiny and maintain a very safe profile, we want to be cash flow positive.
Those are kind of the things, we're balancing and I think you're not.
I would argue.
And nobody is more biased than I am.
We're doing it awfully well.
If you look at if we look at the results.
Well I appreciate your thoughts and thanks for taking my questions.
Thank you Jim.
And up next we have Chris Sakai from singular go ahead, Chris.
Hi.
Yes.
Hi, Greg and Doug just I had a question on.
Q1 guidance of what $120 million to $125 million.
Can you can you provide a breakdown as far as.
What percentage of that would be financial and what percentage of services.
Greg I know if you have that in front of you or if we want to provide the guide at that level of detail. We don't actually provide the guide bye bye.
By vertical like that Chris, but I would say that the general way to think about it is auto insurance is running along the bottom.
Where our spend for the last several years.
And so you what you should expect and what are other noninterest businesses.
We're doing extraordinarily well.
The bulk just like this quarter, 75% of our revenue was non insurance I would expect that it would be that or more.
This quarter because auto insurance is actually.
As low as it's been in a very long time.
And it dropped down to that level.
In the May and June Timeframes, so it'll be lower this quarter than it was last quarter as again the carriers try to offset a very bad first half.
And get ready we hope.
To be.
To be able to inflect in January Greg Im sorry.
Make sure I cover that right for you.
Yeah, no that's exactly it.
I think we will see a full quarter effect from auto insurance of depressed spending in the September September quarter, offset by double digit growth in noninterest businesses. So very similar dynamic to what we saw.
In the June quarter.
Okay.
Sounds good.
And then.
Let's see.
<unk>.
Yes, I think.
Can you talk about actually providing guidance for the year, how when would you provide that.
No. It's a great question, Chris I think as soon as we have.
Any kind of reasonable clarity on auto insurance.
We will be able to get more precise I know its kind of frustrating when we give something is gen generic as.
Double digits, but what we can do with that if we can make a broad range of assumptions that we know what our forecasts are for non insurance business as we've been quite accurate in fact I think.
Beat those that budget.
Last year quite handily, but what we don't have a handle on as I said before.
<unk>.
Is the exact shape of the auto insurance curve from January forward. We believe of course for all the reasons I've talked about that there's going to be a significant positive inflection we don't know exactly how big or how what right. We've got a lot of different models and again I think the best news to give you is that we can be down year over year in auto insurance this fiscal year.
And still delivered double digit growth.
Over <unk> of our fiscal 'twenty three that's about as precise as we can be.
And hopefully that's a good bracket to at least give you until we until we begin to get budgets prob.
Probably in the December December we'll get indications maybe in late November we will get hopefully.
Budget numbers.
In December and then we'll know.
We'll have a lot much better feel for where we are.
So I would hope that the answer to that is when we report our fiscal Q2 or for the December quarter, they will be able to be.
We'll be able to tighten that range quite a bit for you.
Okay sounds good and then last one for me.
So you expect adjusted <unk> to be exceeding the 10% margin range.
Can you give any timeframe on that.
I can't do it because it begins depends on auto insurance.
I can tell you that.
If we do in auto insurance.
What we.
I think we could do in auto insurance.
<unk> is not to the levels.
That it was.
Anywhere near to the level of the peak.
Then we could be pretty close to that as soon as the fiscal fourth quarter now.
Now, we don't expect that and we're not guiding to that.
But that gives you a sense for how rapidly.
EBITDA margin will come back.
As we get a return of any kind of topline leverage from auto insurance.
Greg.
Do you want to give any more.
Make sure I'm, giving out accurately and or the tax rate around that that's correct.
That is correct.
Okay sounds good thanks for the answers.
Thank you Chris.
And up next we have Max Mccanless go ahead, Max from Lake Street capital.
Hey, guys congrats on the quarter I won't keep beating the dead horse on the guidance I'll shift gears here just going back to some of your commentary on investments in the quarter.
And going forward can you just get into a little bit more specifics on what kind of investments you're gonna be directing some of this cash towards thank you.
You bet, Matt So when I say investments I don't just mean capital.
Investments.
Oftentimes when I talk about investment made by people.
<unk> working on a new media opportunity that might result in some losses for a while until we optimize it up into the right. So again.
I use the term investments pretty generically I don't know that can be confusing I apologize for that but mostly it's going to be.
Gonna be several buckets. One is we have a lot of opportunities to continue to press our growth in noninterest pipe verticals, because those are big markets. They don't have the structural headwinds of auto insurance.
And we have we have more clients to add we have more media properties to partner with we add more media campaigns to develop we have the development and application of our core optimization technologies to those verticals as they get to the scale that justifies that and where the scale of it requires that in order for us.
Really be as efficient as we need to be so it's our investment in and all of those areas, whether it be people or trial and error or other other forms of ramping all of those kinds of things. So that's probably the bulk.
The investment in fact, it is has been the bulk of the investment this past year will likely be the bulk of the investment.
This coming year. We're also investing in as you know new products, we continued to invest aggressively in Q RFP, we continued to see great opportunity in <unk>, we have made great.
Progress with TRP Buck for the bad market.
And that product is just continuing to get better as we get feedback from carriers and from agencies and as we work with some of the big agencies to get that implemented so that and another product that we talked about.
For lending and home services, we're continuing to invest in that product those either of those products have big revenue yet to RFP because of the insurance market. The other lending product because it's earlier stage, but we're putting a lot of money into those products. So we think they both represent.
You know tens to hundreds of millions of dollars with very high margin opportunity for the company, they're very contiguous to and very complementary to our core business. So we're continuing those investments and have continued those investments.
Including an insurance as I said, not just Europe , but also in media and all the other things when you do an insurance to be ready for that for the business to come back on the other side.
So those are.
Those are the big buckets.
And we have been doing that we will continue to do that.
<unk>.
And the reason you see the reduction in EBITDA. This past year is because we've done that while.
Losing.
<unk>.
From the peak $200 million a year in insurance right.
So that's kind of the things, we think are important to keep investing and while maintaining a great balance sheet and while staying cash flow and adjusted EBITDA pause.
No.
Great color and then actually I do want to ask something about the quarter here with.
The insurance vertical I know the rug was kind of pulled out from underneath you back in April unexpectedly did it get materially worse throughout the quarter in May and June .
It did yes.
Yeah.
It did I think and we've been told by the carriers that we're kind of at the bottom.
Hopefully there right.
But yes.
They're they're going to I think what we're seeing as carriers cutting.
Cost dramatically in order to offset a bad first half and get into their combined ratio targets and hopefully fingers crossed to be ready to spring out and inflict very positively come January .
Okay, and then last one for me what was progressive in the quarter as a percentage of revenue.
Hey, Matt This is Greg Progressive was six 6%.
Yeah.
Thank you that's it from me guys.
Thank you Max.
And our final question is a follow up from John Campbell from Stephens go ahead John .
Hey, guys. This is Ajay haze on again for John just wanted to follow up on the home services.
Segment, <unk> been putting up impressive year over year growth numbers, there. Despite lapping tough comps. So you've had a handful of really strong quarters and maybe even a handful of really strong years going on here. In this segment. So question is what is driving this growth of late is it new product driven is it new customers is it getting deeper share of wallet or.
Is there maybe anything else worth calling out there.
Yes, we have had several great years in home services, a J I just had another great quarter, we expect yet another great year Theres a lot of momentum in that business a lot of dimensions to the growth.
We are getting deeper into the trades, we call them a trade is kind of a sub vertical in home services a trade might be roofing for example.
Our windows or HVAC.
We are getting deeper into the trades were in getting more clients more budget from existing clients and more media access because of those stronger budgets.
That's one dimension of dimensions, where adding new traits, Oh, we're getting into more trades.
And we can expect to continue to get into more trades.
As we go forward.
And then we're just executing extraordinarily well you know we when we merged our home services business with the modernized home services business.
We're very complementary and we thought one of them one would be two and a half one one it's been about four.
Is that those teams have executed so just just good basic execution on all the dimensions that matter to our business whether it would be.
More media better better results from media more budgets better results for our clients. So we get even more budgets or the application of our the Quint Street.
Core optimization technologies, which are really our secret sauce is our magic into home services as we've gotten further along the integration curve, but all of those things have been have been additive and have contributed to strong growth, which we just set again another strong year, another strong quarter and we expect another strong year.
Morning.
Going forward. So there is and it's a massive market.
You've heard us, saying, Greg had said, maybe our biggest addressable market.
And quite possibly so it's a great fit for Quint Street.
And we've got a.
A great team and they are executing extraordinarily well and we know what we need to do when we get up and do it every day. So that's those are counted the dimensions.
That's great. Thanks for the color there Doug.
Thank you Ajay.
And we have no further questions at this time thank.
Thank you everyone for taking the time to join US Quint Street earnings call replay information is available on the earnings press release issued this afternoon and this concludes today's call. Thank you you may all disconnect.