Q1 2024 QuinStreet Inc Earnings Call

[music].

Good day and welcome to Clinton Street fiscal first quarter 2024 financial results Conference call.

At a conference is being recorded.

Following prepared remarks that will be a question and answer session.

At this time I would like to tell them the confidence Silva, two senior director of Investor Relations and finance.

Robert <unk>.

What's the pedal you'll may begin.

Thank you operator.

Thank you everyone for joining us as we report when she reached fiscal first quarter 2024 for natural result.

Me on the call today, our Chief Executive Officer.

And Chief Financial Officer quite long.

Well, 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'd been cause actual results differ materially from those projected by such statements and are not guarantee of future performance.

Factors that may cause results to differ from our forces. These statements are discussed in our recent SEC filings.

Our most recent filing me today and our most recent 10-K filings.

It will be statements are based on assumptions as of today and their company undertakes no obligation to update these statements.

We will be discussing both gas and non-GAAP measures a reconciliation of gas and non-GAAP financial measures included in today's earnings press release, which is available on our Investor Relations website, as an investor Dot <unk> dot com with that I will turn the call over to dump Lucky. Please go ahead Sir.

Thank you Rob.

And thank you all for joining.

If I could get one with another successful quarter.

Noninsurance revenue grew 18% year over year Andrew.

Represented 79% of the total revenue.

We continue to invest the important product and growth initiatives across the business.

Including in staying position to take full advantage of the revamp of auto insurance client spending.

We did all that while continuing to deliver on our commitment to maintain our strong financial position.

Once again, demonstrating operational and financial excellence.

And the resilience of our business model.

Auto insurance clients are communicating their intentions for calendar year 2024.

And there was indications support our expectation of a significant positive inflection and they're spending beginning in January.

We are spring loaded for that infection.

[noise] would expect total company rabbit.

Dramatically in the back half of the fiscal year.

And adjusted EBITDA to grow faster than revenue.

We expect auto insurance revenue to be even further up until the right over the longer term.

Centrally returning to and exceeding prior peak levels.

As carriers benefit from compound rate increases product optimizations, and cooling inflation and supply chains.

Allowing the shifts the digital and performance marketing.

Assert itself.

As the dominant longterm trend.

Turning to our outlook.

First for the current fiscal year, which ends next June.

We expect full fiscal year 2024 revenue to grow between five and 15% year over year, implying as I indicated earlier.

Nick wicket positive inflection an auto insurance spending in the back half.

Auto insurance clients are giving us considerable detail about their footprint and budget expansion plans for January forward.

While it is still difficult to predict the exact scared when slope of the auto insurance revamp.

Our bottoms up estimates imply expected total company quarterly revenue in the second half of the fiscal year.

Two average over $180 million per quarter.

We expect quarterly adjusted EBITDA margin in the second half could be between five and 10% of revenue.

For the current quarter.

This whole queue too.

We expect total company revenue.

Between 113 and $118 million.

In line with typical sequential seasonality.

We expect adjusted EBITDA.

It'd be between negative half a million dollars and positive half a million dollars.

We will of course continue to maintain our strong balance sheet.

And strong overall financial position.

And discipline.

Finally.

A longterm outlook has never been better.

We are extraordinarily well positioned to take advantage of the re ramp up auto insurance plan spending.

And to expand our product and market footprint.

And that important client vertical.

We also continued to scale noninsurance businesses, which now total about $400 billion in annual revenue.

Andrew 18% year over year last quarter.

And are they 19% compound annual growth rate over the past three years.

With that I'll.

I'll turn the call over to Greg.

Thank you Doug.

Hello, and thanks to everyone for joining us today.

So the September quarter total revenue was $123.9 million.

Oh, just a net loss was $1.4 million or three cents per share.

The Justice EBITDA was $1 million.

Noninsurance revenue.

Was $98.5 million or 79%, a Q1 revenue and grew 18% year over year.

Looking at revenue by client vertical our financial services quite vertical represented 58% you want rather than.

Almost $72.1 million.

We continue to see excellent performance from our personal loans and credit cards and banking client verticals, which grew 33 per cent combined.

Our armed services claim vertical.

Represented 40 per cent coupon revenue grew 6% year over year to $49.4 million.

Our strategy to drive longterm growth here is simple.

One grow our business from our existing 15, or so service offerings examples being window replacement.

Solar sails and installation.

And bathroom remodeling.

None of which we believe are anywhere close to their full potential.

And two.

Expand into new service offerings, well received the opportunity to at least triple the number of these <unk>. We currently serve.

This multi Bronx pronged growth strategy is expected to drive double digit average annual growth for the foreseeable future.

Oh, the revenue was the remaining $2.4 million off coupon rabbit.

Turning to the balance sheet, we closed the quarter with $56.3 million cash and equivalents and know bankrupt.

As we look ahead in the queue to I'd like to remind everyone of the seasonality characteristics of our business as I do every year at this time.

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

This is due to reduce quite a staffing and budgets during the holidays and ended up your period.

Outside or media market and changes in consumer shopping behavior.

This trend generally reverse as in January.

For fiscal queue to our December quarter, we expect revenue to be between 113 and $118 million in line with the consequential seasonality and adjusted EBITDA to be between a negative $500000, but the positive $500000.

Oh, sorry, let me reiterate doug's earlier poets.

One we are extraordinarily well positioned to take advantage of the re ramp a auto insurance claim spending.

We expect to begin in January.

Two we will also continue scale are noninsurance businesses, which now total about $400 million in annual revenue and grew 18% year over year last quarter.

And three weeks that total company revenue to jump dramatically in the back half of our fiscal year, and we expect adjusted EBITDA to increasing faster.

With that I'll turn the call over to the operator, you and I.

Thank you.

Ladies and gentlemen, we will all be conducting a question and answer session.

If you would like to ask a question. Please Beth star and one on your telephone keypad.

Confirmation dawn will indicate to your line isn't a question Q.

You May press Star and two if you would like to remove your question from the queue.

All participants using speaker equipment, it may be necessary to pick up your handset before pressing desktop Keith.

Ladies and gentlemen, we will wait for a moment, while we fall for questions.

Our first question comes from John Campbell Vet Stephens, Inc. Please go ahead.

Hey, guys. It's johnna the bass on for John Campbell. Thank you for taking our questions. It looks like the home services segment sound a little bit of deceleration. This quarter can you give some color on what you're seeing there and then maybe what specific verticals are seen slower growth.

Yeah, Jonathan home services grew I think it's six per cent.

Reported year over year, we expect come services to grow this corporate calendar sorry, this full fiscal year.

At double digits, which has been the case for the past several years. There. So I kind of I guess that kind of thing nothing to see there are just some quarters.

You know between things converge in one way or another quarters, they converge and others. So.

I haven't don't expect that there's no nothing to see her nothing to report in terms of any sort.

Dr Deceleration.

Okay got it and then with your commentary around the expected insurance marketing spend coming in January Ah do you guys have any insight on what the potential trajectory of this bank could look like throughout the year.

We.

We don't have we.

We have some input on that from clients. There is at least one client that's given us very specific.

Numbers in terms of what their plans are.

By state and coverage for the first half of calendar twenty-four which of course would be the second half of our fiscal 24.

They haven't given us much cover.

Beyond that.

Just general guidance in terms of their hopes and expectations for the year.

So trajectory why we are assuming.

Is that the ramp will begin in January and be a pretty significant infection. As we've we said for the past few quarters.

And that in in a pretty big step function increase over the December quarter's numbers.

What's your running along multiyear lows as you know.

That that rapid continue and go up and the June quarter based on what <unk> clients have told us their plans are.

Very typically the March quarter is a peak and then we go down a little and the and the the June quarter, but based on what the client you're telling US react you expect to have to step function up from December to the March quarter, and then it continued ramp up into the right through the June quarter, and then probably typical seasonality will kick yet.

Which would be pretty flat June too.

September quarter, and then as Greg said, you know a downward shift in the December quarter, as we work through that sequential seasonal.

Okay. Thank you for the color.

You bet.

Thank you.

Our next question comes from Jim Voss, but Barrington Research. Please go ahead.

Thanks, I was wondering.

How many of your various insurance carrier clients.

Are exhibiting the.

The types.

Types of signs that would support your optimism about a sharp.

And how very do you expect.

The timing of any recovery among those clients to be in in terms of not all happening at once perhaps but maybe it's over Beverly.

Every week or several month period.

What do you think <unk> I know you said you don't really know the scale and the slope, but maybe there's a little Mark How're you can go to those expectations.

Yeah, Jim we.

I'd say the majority.

One of our carrier clients have expressed that next year in particular.

Most <unk> most beginning in January.

Will be a higher spend your for them and the channel.

Because of their success and getting rate increases.

Over the past few years.

And because of a cooling inflationary environment.

To your point, they have varying degrees of plans for how and where they're going to ramp.

Some decent.

Decent specificity.

Unfortunately, some of our bigger ones have that I've, given us that kind of level of detail.

And others with with less but on balance what we've done is we've taken the and then the input from.

All of the clients the and we have you know very good and probably the best relationships with these clients in the industry.

And we've gotten taken their inputs and we've done a bottoms up estimate based on also immediately and ability and <unk>.

Expected traffic patterns.

And pricing.

And we put together our you know our best bottoms up and that is a big part of what results in the range. We gave you for the year.

We know you can do math. So we went ahead and told you what you would have figured out any way, which is based on our guidance.

Even at the bottom and we'll be doing actually an average of about $185 million a quarter in the second half the fiscal year.

As I said, probably a little bit of a ramp from Q3 Q for giving what we're hearing from many insurers.

To give you a little bit more detail on that this might be a help answer your question.

To bracket, maybe a little bit for Ya.

Where we expect auto insurance, we do not expect auto insurance on the March quarter, even though we expect to do $180 million in revenue in that quarter on average for that and the debit card and then in the second quarter.

John Campbell: [inaudible] Campbell, John Campbell, John Campbell, Thank you, Rob, and thank you all for joining us. FIQ1 was another successful quarter, non-insurance revenue grew 18% year of year and represented 79% of total revenue. We continued to invest in important product and growth initiatives across the business, including staying position to take full advantage of the re-wamp of auto-insurance client spending.

I'm, sorry that for fiscal quarter or second counter corner.

Okay 1980 $895 million, we we don't expect auto insurance to reach the.

The same level than we did last.

March four so this coming March quarter.

Quite a big jump in our revenue.

We are not projecting that our auto insurance, rather it won't be as.

As high as it was last March quarter.

And we expect a ramp swung the march quarter to the June quarter, but even in the June court.

We don't expect yet.

<unk> auto insurance revenue will reach.

The revenue levels of auto insurance last March court, so we're not going way out on a limb here, it's gonna be a big step up but it's only a big step up because we're down so low.

An auto insurance and then a multiyear though is you know.

And I would remind you that the pink auto insurance quarter for us revenue wise, what's a coupla years ago on the March quarter, and that was 90 99 zero million dollars.

And the last March quarters.

Revenue Orange Wrecks Avenue, which I hope, you're not gonna get too and the Mark tore the June quarters based on our current forecasts or.

It was $63 million.

So we got a long way to go and get back to the peak, which we expect to do over the next couple of years may be shorter time and.

But we're we're the step function up as well in line with.

What are you interested in any kind of reasonable expectation W. Ramped.

Particularly given the relative to again.

A year ago and peak if that's helpful.

Okay, a couple of more things if I might when education was your dominant business and you hit a wall.

Did have a rebound develop in some of these other areas and I'm wondering.

Yeah. This is Greg was saying with the potential to do more within certain areas and and or other areas within home services as well as some of the financial area.

Did you see.

Colonel competition among your.

Various sectors trying.

Trying to become that next great thing, even though you're hoping to have that return and the auto area.

You know and then you're running on more cylinders and also are there other insurance areas within these muscle and carriers you deal with it.

Who you know that would benefit from the same sort of technology you employ.

Even though they might not be required like auto insurance or that sort of thing.

But that might offer some other opportunity within those companies.

I'd say that we have a number next great things going on we just grew you know are not insurance business is 18%, we've gone up 19% on a compound annual growth rate basis, and they've all grown strong double digit fernandes not being carried by any one of those quiet.

Politicals, We've said I think a number of times at home services.

May well be our biggest addressable market and Greg has has pointed out it's pretty straightforward path to continuing growth, thereby growing the service areas or the trades were currently in.

And then adding other trade your service areas and wish you good strong opportunity in past there. So certainly we expect continued right.

John Campbell: We did all that while continuing to deliver on our commitment to maintain our strong financial position, once again demonstrating operational and financial excellence, and the resilience of our business model. Audenturance clients were communicating their intentions for calendar year 2024. And those indications support our expectation of a significant positive inflection in their spending, beginning in January. We are spring-loaded for that inflection, and would expect total company revenue to jump dramatically into the back half of the fiscal year, and adjust the divot on to grow faster than revenue.

<unk> and strength in home services.

I'll also in our other financial services work was not insurance financial services work goes I think Greg pointed out would be 33% year over here on the corner.

And those businesses are are approaching $200 million in annual revenues now if they haven't already gotten there.

And those and I'm getting better at home services is over $200 million is at an annual revenue.

So and we see tons of those are all big markets banking credit cards personal loans enormous markets were very early and all of them.

And I think they the folks that run those businesses certainly believed that they have the opportunity to create many many hundreds of millions of dollars in revenue in a couple of them certainly think they can get to a billion.

John Campbell: We expect auto-insurance revenue to be even further up into the right over the longer trend, eventually returning to and exceeding prior peak levels, as carriers benefit from compound rate increases, product optimizations, and cooling inflation and supply chains, thus allowing the shifts to digital and performance marketing, reassert itself, at the dominant long-term trend.

Based on just simple analysis, his wallet Sharon market size opportunity to expand.

Print.

In terms of the expansion quick credit insurance, we have opportunity expand footprint in all of our client politicos, including insurance is a good question, how weird dominantly an insurance.

Click to to direct carrier model.

And certainly one of the two if not the.

Premier company doing that in the in the channel.

John Campbell: Turning to our outlook, first for the current fiscal year, which ends next June. We expect full fiscal year 2024 revenue to grow between 5 and 15% year of a year, implying that, as I indicated earlier, a significant positive inflection in auto-insurance spending in the back half. Audenturance clients are giving us considerable detail about their footprint and budget expansion plans, for January forward. While it is still difficult to predict the exact scale and slope of the auto-insurance program, our bottoms up estimates, imply expected total company quarterly revenue in the second half of the fiscal year, to average over $180 million per quarter.

That's only half the market.

The other half the market, which is largely served by the lead aggregator networks.

Is leads and cause primary to agents instead of direct carriers and leads and calls instead of clicks.

And so yeah, you'll see us continue to expand our footprint, we won't do it by.

<unk> the current lead aggregator model, because we think that's both tired and.

And over capacity wise, but we are we have created a number of opportunities for us to continue to expand our business there under expanding quite dramatically. This year in fact in that part of the market.

And expect that we will be able to continue to do that for many years.

There are also other components of insurance sub verticals of insurance, if you will like commercial which represents an enormous opportunity that were early in two.

John Campbell: We expect quarterly adjusted divot on margin in the second half to be between 5 and 10% of revenue. For the current quarter, our fiscal Q2, we expect total company revenue to be between 113 and 118 million dollars in line with typical sequential seasonality. We expect adjusted divot to be between negative half million dollars and positive half million dollars.

But most of our big multi line carrier clients, all sorts serve that industry and its most of your small business and that's a good fit with us. So we are expanding their and will continue to expand their and of course, we've talked a lot about Q R. P and the writing platform and the opportunities that opens up for us to serve agencies in a whole new way.

But the integrations, we already have.

And to create opportunities with them.

Broader than what we can do.

Directly with the direct carriers or with the with the carriers, even with the ones that a big agent network components. So yeah, a lot of new dimensions of insurance to come.

John Campbell: We will of course continue to maintain our strong balance sheet and strong overall financial and Discipline. Finally, our long-term outlook has never been better. We are extraordinarily well-positioned to take advantage of the re-ramp-of-auto insurance client spending and to expand our product and market footprint in that important client vertical. We also continue to scale our non-insurance businesses, which now totaled about $400 million in annual revenue and who've 18% year-over-year-last quarter. And at a 19% compound annual growth rate over the past three years.

Step one will be getting the insurance market healthy again, which it.

It looks like we're on the cusp.

There was a large client that had a call today that described their plans for the budget next year as robust.

Word we liked that word it's consistent with what we've heard from them.

And what we know the plans are going into next year. So.

A lot of opportunity to continue to grow and we certainly don't think that we are anywhere near the.

The point of slowing down are scaling penetration.

Penetration of any of these markets all of which are quite big sweep.

Gregory Wong: With that, I'll turn the call over to Greg. Thank you, Doug. Hello and thanks to everyone for joining us today. For the September quarter, total revenue was $123.9 million. Adjustment loss was $1.4 million or $3 cents per share and adjusted EBITDA was $1 million. Non-insurance revenue was $98.5 million or 79% of Q1 revenue and grew 18% year-over-year. Looking at revenue by client vertical, our financial services client vertical represented 58% of Q1 revenue and was $72.1 million. We continue to see excellent performance from our personal loans, credit cards and banking client verticals, which grew 33% combined. Our own services client vertical represented 40% of Q1 revenue and grew 6% year-over-year to $49.4 million.

We consider ourselves like multi billion dollar revenue opportunity company and can just a question is how many <unk> we can get.

Mmm.

Thanks, very much seems diversification is your friend.

[laughter]. Thank you Jim I think it's yeah absolutely.

Okay. Thank you.

Thank you.

Next question comes from Jason Cry with Grey Cat Capital Group. Please go ahead.

Thank you very much. This is <unk> for Jason first question for me I guess, giving me continue to see new highs and mortgage rates and you think that gives you guys a longer duration growth opportunity at home services with maybe people continuing to look at renovations over a movie.

We do.

Yeah, No I mean, it's.

Yeah. I mean, you you you described it it's exactly right. So I'm really not much to add but we are and we believe we will continue to see that.

Alright, and just the last one for me can you just maybe extrapolate out personal wants a little bit between loans and credit repair you know I'm just curious if personal one side is just you know obviously you guys put up strong growth right, but you know just as it continued to maintain a strong trajectory despite tighter credit.

Gregory Wong: Our strategy to drive long-term growth here is simple. One, grow our business from our existing 15 or so service offerings, examples of being window replacement, solar, sales and installation, and bathroom modeling, none of which we believe are anywhere close to their full potential. And two, expand into new service offerings, where we see the opportunity that at least tripled the number of these sub-eracles would be currently served. This multi-pronged growth strategy is expected to drive double-digit average annual growth for the foreseeable future. Other revenue was remaining $2.4 million of Q1 revenue.

Higher lending rates things like that.

Yeah, we we.

We have a broad portfolio of lenders and we have seen typing just like everybody has over the past year or so maybe a little bit more than a year.

I think that's being offset by the fact that we do have a broad set of lenders a cover a lot of credit bands and a lot of different types of launch we're continuing on constantly expanding that and will continue to do so to make sure that we can serve greater and greater number of consumers of media.

Gregory Wong: Turning to the balance sheet, we closed the quarter with 56.3 million of cash and equipment in no bank debt. As we look ahead in the Q2, I'd like to remind everyone of the seasonality characteristics of our business as I do every year at this time. The December quarter, our fiscal second quarter, typically declined about 10% sequentially. This is due to reduced client staffing and budgets during the holidays and end-to-beer period, a tighter media market, and changes in consumer shopping behavior.

We also have a <unk> I would say the best.

Offerings of other solutions for consumers.

Gregory Wong: This trend generally reverses in January. For fiscal Q2, our December quarter, we expect revenue to be between 113 and 118 million dollars, in line with typical sequential seasonality and adjusted to be between a negative $500, and a positive $500,000.

From credit repair to debt settlement high quality providers of those services and that can really help consumers.

Whatever their credit challenge might be.

And I think that that is a is a big part of our.

Being able to better serve media.

Because we have the opportunity to have a solution for consumers and it's a big part of why we've done better than.

Then most of the other players in this market over the past year plus.

Perfect. Thank you very much.

Thank you.

Our next question comes from the line of Dante that be Riley security.

Please go ahead.

Yeah afternoon, guys. Appreciate you taking the questions just on the insurance side I know you don't provide like a quote request metric or anything along those lines, but just in general like he's rate hike starting to get passed on to consumers that I'd have to imagine that shopping activity is is pretty active right now and if there's not kind of any demand.

Gregory Wong: In summary, let me reiterate Doug's earlier points. One, we are extraordinarily well positioned to take advantage of the reramp of auto insurance client spending, which we expect to begin in January. Two, we will also continue to scale our non-insurance businesses, which now total about $400 million in annual revenue, and grew 18% year of year last quarter. And three, we expect total company revenue to jump dramatically in the back half of our fiscal year, and we expect to just be able to do increasing faster.

Yeah. So just anything directional you can provide on quote request or any other relevant metrics. You think are important is supply is there we just need to demand to come back as you think it will in January.

Yeah, then I think you're you're you're right on it with all the rate increases we've seen.

Pretty significant.

Increase in shopping consumers, an auto and home insurance as you would expect people get the rate increases Amy didn't think gosh, maybe I can go get a cheaper somewhere Austin and that's particularly exacerbated by the fact that you got for some folks big inflationary effects on other parts of the inside their personal income statement.

Operator: With that, I'll turn the call over to the operator, Q&A. Thank you.

Operator: Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. For confirmation tone, we'll indicate your line is in the question Q. You may press star and two, if you'd like to remove your questions from the Q. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

And and a little bit of a slowing economy.

Theoretically, although we haven't really had a pretty robust broke right last quarter.

So I I think it depends on the segment, but generally speaking we are seeing increase shopping I think one of our.

What are the other companies in the space that they're seeing record consumer shopping for insurance I don't know if we're seeing record, but if we're not we certainly are seeing significant increase over a year ago, which was an increase over two years ago all driven by.

Operator: Ladies and gentlemen, we will wait for a moment while we pull for questions.

John Campbell: Our first question, done from John Campbell, with Stephen's ink. Please go ahead. Hey guys, it's John of the Bass on for John Campbell. Thank you for taking our questions. It looks like the home services segment, a little bit of deceleration, this quarter. Can you give some color on what you're seeing there, and then maybe what specific verticals are seeing slower growth? Yes, John. The home services grew, I think it's 6% as Greg LePort and you'll view.

The the rate increases, which you have been you know average and double digit for a coupla years now I think three years actually so we are seeing a lot of <unk>. The the problem is there are so many ensures that on and market right now that those shoppers aren't planning.

I'm trying to what they're looking for and so it's the the quote we're giving a lot of requests syrup out of traffic, but you wouldn't necessarily translate that into quote unquote quote request because there aren't enough.

John Campbell: We expect home services to grow this full-fit calendar, or sorry, this full fiscal year. That double digits, which has been the case for the past several years there. So I guess I kind of say nothing to see there. Just some quarters between things converge in one way and another quarters again. I don't expect that there's nothing to see or nothing to report in terms of any structural deceleration. Okay, got it. And then with the commentary around the expected insurance marketing spend coming in January, do you guys have any insight on what the potential trajectory of this spend could look like throughout the year?

Insurers in the market to match them and give them a quote request. So it's it's it's difficult to say how that match it would play out given the dynamics in the market, but the the main metric that matters right now is shopping and shopping is that.

It looks like based on what we're hearing from carriers the next year.

There'll be a lot more alternatives for those shoppers and a lot more options for those shoppers, which will result in a heck of a lot more quote and quote unquote request and then quotes.

Thanks for that I appreciate it just second one on the M&A environment, you've been pretty quiet on this front for awhile now I'll just anything interesting out there and just any areas you you'd be lucky to tack on if there is something out there that presents itself.

John Campbell: We don't have, we have some input on that from clients. There is at least one client that's given us very specific numbers in terms of what their plans are by state and coverage for the first half of calendar 24, which of course would be the second half of our fiscal 24. They haven't given us much color beyond that, just general guidance in terms of their hopes and expectations for the year. So trajectory-wise, what we are assuming is that the ramp will begin in January and be a pretty significant infection as we've said to the past few quarters.

Yeah, we will will continue to be opportunistic an active we've made a few small.

Acquisitions over the past year or so smaller.

We we are always looking were always open before things that add meaningfully and and two are vertical and we've got a couple in the Harper right now that we'd like a lot either I'm, a real big but they could be really impactful.

Uhm, we liked those best of course, it's great to find a company that has done well under their scale that we can kind of plug into our <unk>.

Networking and ramp and scale much more rapidly and that's that's kind of a.

John Campbell: And that a pretty big step function increase over the December quarters numbers which are running along multiple year lows, as you know. And that ramp would continue and go up in the June quarter based on what clients have told us their plans are. Very typically, the March quarter is a peak and then we go down a little in the June quarter. But based on what the clients are telling us, we actually expect to have the step function up from December to the March quarter.

Our our favorite opportunity and we've got a couple of those in the upper right now that we're pretty excited about and I'm sure. There will be more were also being conservative because of the insurance environment or the fact that our <unk>, our adjusted EBITDA us.

I'm kind of at the breakeven levels. So we're not replacing the cash were using were mindful of that.

But it hasn't caused us to pass on anything that we'd really like really like to do yet and and as I indicated we expect to return to pretty robust cashflow levels and the second half of the fiscal year.

John Campbell: And then a continued ramp up into the right through the June quarter. And then probably a typical seasonality will kick in which would be pretty flat June to September quarter. And then as Greg said, you know, a downward shift in the December quarter as we work through that sequential season out. Okay. Thank you for the color. You bet. Thank you.

Alright, Thank you I appreciate it.

Thank you Dan.

Thank you.

Our next question comes from Bruce Goldfarb with Lake Street Capital. Please go ahead.

Doug Greg. Thank you for taking my Cock and congrats on the results.

Thank you for.

<unk> are you are you guys planning any changes to the cost structure to drive margins higher.

James Goss: Our next question comes from Jim Goss with Baddington Research. Please go ahead. Thanks. I was wondering, Doug, how many of your various insurance carrier clients are exhibiting the types of signs that would support your optimism about a sharp turn? And how very do you expect the timing of any recovery among those clients to be in terms of not all happening at once perhaps, but maybe it's over several weeks or several months period?

And it.

Take advantage of the ramp.

We already have we position ourselves to take.

Okay, great advantage of the ramp including.

Being very mindful of cost of the past few years I would point out that if you did the math on the top one beverage that we lost over.

Over the past few quarters, we should not have done as much ebitdas we did.

We did that because we have been very focused on margin costs.

In order to make sure that we were able to sustain.

Positive adjusted EBITDA margins due to the period, where we lost so much top line.

James Goss: You know, what do you think? I know you said you don't really know the scale and the slope, but maybe there's a little more color you can go to those expectations. Yeah, Jim, we, I'd say the majority of our carrier clients have expressed that next year, in particular, and most in June, most beginning in January will be a higher spendier for them in the channel because of their success in getting rate increases.

But also to be prepared to really bounce up great.

Very rapidly as auto insurance comes back.

Alright, so short answered we have and we will continue to.

But we were training that off against making sure that we're continuing to invest in.

[noise] growth opportunities too and I think we've made a.

I I think we've done well balancing those two competing.

Objectives in fact, I'd say, we feel like we've done about as long as I can feel very good about where we are.

James Goss: Over the past few years, and because of a cooling inflationary environment, the, to your point, they have varying degrees of plans for how and where they're going to ramp some with decent specificity. Fortunately, some of our bigger ones have that given us that kind of a level of detail and others with less, but on balance, what we've done is we've taken the inputs from all the clients that, and we have, you know, very good and probably the best relationships with these clients in the industry, and we've gotten, taking their inputs and we've done a bottoms up estimate based on also media availability and expected traffic patterns and pricing.

<unk> I don't know if you break out customers, but the <unk>.

What percent was progressive in terms of per cent of revenue for the quarter.

If you're willing to do that or is this is Greg <unk> progressive.

Progressive was three per cent a rabbit.

Three per cent okay.

Great. Thank you and then just my last question somebody's larger insurance programs that you're talking about did they give you visibility.

For almost a whole year I mean do you get like.

Some of your bigger customers.

They they give us a general objectives for the year and general plans for the year.

Subject to.

Stuff happening like you know how bad is the hurricane season.

James Goss: And we've put together our best bottoms up. And that big part of what results in the range we gave it for the year. We know you can do math, so we went and told you what you had at the bottom end. We'll be doing Ashley in the average of about $185 a dollar a quarter in the second half of fiscal year. As I said, probably a little bit of a ramp from Q3 to Q4, given what we're hearing from insurers.

So I would say they give us general views of what the object is will be and how they're thinking about the coming year.

And then varying degrees of detail.

<unk> quarters out.

And then pretty good detail coming before coming quarter.

And then typically those are decently accurate subject only to you know getting stuff coming up to date <unk>.

James Goss: To give you a little bit more detail on that, just might help answer your question. It could bracket it maybe a little bit for you. We expect auto insurance. We do not expect auto insurance in the March quarter, even though we expect to do $180 million in revenue in that quarter on average for that in the second quarter, but then answer our debt in the fiscal quarter or second counter quarter, up to an $180 million dollar.

Great.

Well, congrats again and thanks for taking my questions.

Thank you Bruce.

Thank you.

Our next question comes from Chris stop High with Cingular Research. Please go ahead.

Hi, Doug and Greg.

Hey, Chris had a question.

On the the revenue guidance that you gave him a 5% to 15%.

I just wanted to know if that somewhat of a downgrade from the previous quarter. When when you said that you would expect revenue and adjusted EBITDA to grow at double digit rates.

James Goss: We don't expect auto insurance to reach on the same level. We did last March quarter. So this coming March quarter, despite the big jump in our revenue, we are not projecting that our auto insurance revenue will be as high as it was last March quarter, and we expect a ramp from the March quarter to the June quarter, but even in the June quarter, we don't expect yet that auto insurance revenue will reach the revenue levels of auto insurance last March quarter.

I'd say, it's a being more specific for Ya I mean, we double digits coverage, an awful lot of ground right and so we we just decided to now that we know more.

Going into the back as we go looking at the back half and this quarter that we would bracket. It I would point out that the middle of that range is double digits, 10%.

And and then I still maintain that even if.

James Goss: So we're not going way out on the limb here. It's going to be a big step up, but it's only a big step up because we're down so low in auto insurance, and then a multi-year low as you know. And I would remind you that the peak potter insurance quarter for us revenue was a couple years ago in the March quarter, and that was 90, 90, 90 million dollars. And the last March quarter revenue, auto insurance revenue, which I said we're not going to get to in the March quarter, the June quarter, based on our current forecast, was 63 million dollars.

<unk> auto insurance, whereas flat year over year, we'd still go double digits because of the strength of Noninsurance. So.

There is no downgrade here, there's no lowering his expectations were just giving them more specificity as to the range and all the things. We said previously are still true.

Okay sounds good and then person to go back to personal alone. So in in June I had a very good month, how does how does the months this quarter compare.

James Goss: And so we've got a long way to go to get back to the peak, which we expect to do over the next couple of years, maybe shorter time in that. But we're the STEM function up is well in line that what you would soon be kind of reasonable expectations of the ramp, particularly given relative to, again, a year ago and peak, if that's helpful. Okay, a couple of more things, like when education was your dominant business, and you hit a wall, you did have a rebound develop in some of these other areas.

I'm, sorry, I didn't quite understand the question Chris ask again please.

I guess as far as as revenue goes from personal loans is concerned.

Yeah, I I recall, it's June was a very good month.

How does yeah, <unk> <unk> <unk>.

Yeah, we it's been okay personal loans continues to perform exceptionally well for us I think Greg pointed out that pushed one with credit cards and banking together with 33 per cent year over year and personal loans is more than half of that total.

More than half the total revenue.

Credit cards banking and personal loans.

James Goss: Now, I'm wondering if there's Greg was saying that the potential to do more within certain areas and other areas within home services as well as some of the financial areas. But did you see some internal competition among your various sectors trying to become that next great thing, even though you're hoping to have that return in the auto area and then you're running out more cylinders? And also, are there other insurance areas within these muscle and carriers you deal with, who, you know, that would benefit from the same sort of technology you employ, even though they might not be required, like auto insurance or that sort of thing, you know, but that might offer some other opportunity within those companies.

Personal loans and so you can extrapolate from that that it had a really good quarter last quarter, Greg I get that right.

Yeah, you did and just add onto that there was a very good quarter, you're right. Chris The June quarter is very strong some personal loans and I would add that the march quarter or the I'm sorry. The September quarter that we just finished was also a record quarter for personal allowance so very strong performance.

Okay, Great and then.

So by the third and fourth chord are are you guys expecting that all your segments will be growing sequentially.

I'd have to look at the <unk> say that third fiscal quarter, yes over a second fiscal quarter.

I have to look at going from third fiscal quarter to four fiscal quarter typically that is more it comes down from the peak in March. This are typical seasonal pattern, but as I said auto insurance is expected.

James Goss: Well, but I'd say that we have another next great thing going on, we just grew, you know, are not insurance businesses, 18%, we've gone a 19% on a company and you'll grow great basis and they've all grown at strong double digits, when that's not being carried by any one of those fine verticals, we've said I think a number of times at home services may well be our biggest addressable market and as great as has pointed out, pretty straightforward path that continue to grow there by growing the service areas or the trades will currently in and adding other trades or service areas, and we see a good strong opportunity to pass there. So certainly, we expect continued great growth and strength in home services, also in our other financial services work, but not insurance financial services work goes, I think, great point that would be 33% you're here in the quarter and those businesses are approaching $200 million in annual revenue now if they haven't already gotten there and those, again, by the home services is over $200 million and then revenue.

To actually ramp from the March to the June quarter.

Other businesses are probably expected to be flat to down a little as typical seasonality holds Greg is do you have that in front of you I don't know if that's yeah, no that makes sense.

Exactly it makes sense, yes.

Okay.

Sounds good and and lots would be I guess.

What you were saying last quarter as far as expecting to for an improvement as far as an.

Auto insurance.

Are you still seeing that and are you seeing what what you expected last quarter play out into into this quarter.

I think we said last quarter that we expected a significant positive infection in auto insurance to begin in January.

And we <unk>, we <unk> <unk> exactly continued to expect that.

This quarter the current the December quarter we.

We expect it to continue to be a quarter, where auto insurance was challenged.

Until they get to January and reset their combined ratio targets.

James Goss: So and we see tons of, there's all big markets, banking, credit cards, personal loans, enormous markets, we're very early in all of them and I think the folks that run those businesses certainly believe that they have the opportunity to create many, many hundreds of millions of dollars in revenue when a couple of them certainly think they can get to a billion based on just simple analysis of wallet share and market size opportunity to expand the footprint. In terms of the expense of quick print insurance, we have opportunity to spend quick print and all of our client verticals, including insurance, there's a good question, and we're dominant being insurance a quick to direct carrier model and certainly one of the two is not the premier company doing that in the channel, and that's only half the market.

And get new budgets and and so that's continues to be the case this quarter.

Is about like last quarter, an auto insurance and that's exactly what we expected and we expect and you said, we expect the January quarter to begin a significant pause infection or the the March quarter opinion anyway to think about it and we still expect that as we said.

And we've gotten a little bit more granular because you've gotten more more specific indications in terms of as best we can do in the bottoms up on what that means for the range for the for the entire business in the in the back half of them for the year. So yeah, I I guess the short hamsters, yes.

Okay, great. Thanks.

Thank you.

James Goss: So the other half the market, which is largely served by the lead aggregator networks, is leads and calls, primarily agents instead of direct carriers and leads and calls instead of clicks. And so yeah, you'll see us continue to expand our footprint. We won't do it by mimicking the current lead aggregator model because we think that's both tired and overcapacitized. But we have created a number of opportunities for us to continue to expand our business there and the expanded quite dramatically this year, in fact, in that part of the market.

Thank you.

And there are no further questions at this time.

Thank you everyone for taking the time to join Quint Street <unk>.

Replay inflammation is available on the Onyx press release issued this afternoon.

This concludes today's call. Thank you for joining us.

[noise] [music].

James Goss: And expect that we will be able to continue to do that for many years. There are also other components of insurance, sub verticals of insurance if you would like commercial, which represents an enormous opportunity that we're early into, but most of our big multi-line carrier clients also serve that industry and it's mostly small business and that's a good fit with us so we are expanding there and we'll continue to expand there and of course we've talked a lot about QRP and the rating platform and the opportunities that opens up to us.

James Goss: To serve agencies in a whole new way with the integrations we already have, and to create opportunities with them that are broader than what we can do, directly with the direct carriers or with the carriers, even with the ones that have a big agent network components. So yeah, a lot of new dimensions of insurance to come. Step one will be getting the insurance market healthy again, which it looks like we're on the cuspah.

James Goss: There was a large client that had a call today that described their plans for the budget next year as low bus. Great word, we like that word. It's consistent with what we've heard from them and what we know the plans are going into next year. So a lot of opportunity to continue to grow and we certainly don't think that we are anywhere near the point of slowing down our scaling or penetration of any of these markets all of which are quite big.

James Goss: So we consider ourselves a multi-billion dollar revenue opportunity company and we just question how many multi we can get to. Thanks very much. Seems diversification is your friend. Thank you, Jim. I think it's, yeah, absolutely. Okay. Thank you.

Operator: Our next question comes from Jason Krayer with Craig Hatt and Capital Group. Please go ahead. Thank you very much.

Operator: This is cowbuck is all on for Jason. First question for me, I guess, given we continue to see new highs and mortgage rates. You think that gives you guys a longer duration growth opportunity at home services with maybe people continue to look at renovations over movie. We do. Yeah, no. I mean, you, you, you described it. It's exactly right. So I really, not much to add, but we are. And to believe we will continue to see that.

Operator: All right. And just last one for me. He just maybe extrapolate our personal long, little bit between loans and credit repair. You know, just curious if personal loan side is just obviously you guys could up strong growth rate. But, you know, just as it continue to maintain a strong trajectory despite tighter credit, higher lending rates, things like that. Yeah, we, we, we have a broad portfolio of lenders. And we have same tightening just like everybody has on the past year or so.

Operator: Maybe a little bit more than a year. Now, I think that's being offset by the fact that we do have a broad set of lenders that cover a lot of different credit fans, a lot of different types of loans. We're continuing, we're constantly expanding that and we'll continue to do so. To make sure that we can serve greater and greater number of consumers in media. We also have a, I would say, the best offerings of other solutions for consumers from credit repair to debt settlement, high quality providers of those services and that can really help consumers do whatever their credit challenge might be.

Operator: And I think that that is a big part of our being able to better serve media because we have the opportunity to have a solution for our consumers and as a big part of why we've done better than most of the players in this market over the past year plus. Perfect, thank you very much.

Operator: Thank you.

Daniel Day: Our next question comes from the line of Dan Day with B. Riley Securities, please go ahead. Yeah, afternoon guys, appreciate you taking the questions. Just on the insurance side, I know you don't provide like a quote request metric or anything along those lines, but just in general, like these rate hikes starting to get passed on to consumers, I'd have to imagine that shopping activity is pretty active right now and if there's not kind of any demand to meet yet.

Daniel Day: So just anything directionally you can provide on quote requests or any other relevant metrics you think are important that the supply is there, we just need the demand to come back as you think it will in January. Yeah, Dan, I think you're right on it with all the rate increases. We've seen pretty significant increase in shopping consumers and auto and home insurance as you would expect. People get the rate increases and you think with gosh, maybe I can go get it cheaper somewhere else.

Daniel Day: And that's particularly exacerbated by the fact that you've got for some folks big inflationary effects on other parts of their personal income statement and a little bit of a slowing economy theoretically although we have pretty robust growth rate last quarter. So I think it depends on the segment, but generally speaking, we are seeing increased shopping. I think one of our, one of the other companies in the space that they're seeing record consumer shopping for insurance.

Daniel Day: I don't know if we're seeing record, but if we're not, we certainly are seeing significant increase over a year ago, which was an increase over two years ago, all driven by the rate increases, which have been averaging double digit for a couple of years now. I think three years actually. So we are seeing a lot of shoppers, the problem is there's so many insurers that aren't in market right now that those shoppers aren't finding our money what they're looking for.

Daniel Day: And so it's the quote, we're giving a lot of requests or a lot of traffic, but you wouldn't necessarily translate that into quote, quote, quote requests because there aren't enough insurers in the market to match them and give them a quote request. So it's difficult to say how that metric would play out given the dynamics in the market, but the main metric that matters right now is shopping and shopping is up.

Daniel Day: And it looks like based on what we're hearing from carriers the next year, there'll be a lot more alternatives for those shoppers and a lot more options for those shoppers, which will result in a heck of a lot more quotes and quote, a quote request and then quote, Thanks for that. I appreciate it.

Daniel Day: Just a second one on the M&A environment. We've been pretty quiet on this front for a while now. Just anything interesting out there in just any areas. You'd be looking to tack on if there is something out there that presents itself. Yeah, we will continue to be opportunistic and active. We've made a few small acquisitions over the past year or so. Smaller. We are always looking, we're always open for things that add meaning free and to our verticals.

Daniel Day: We've got a couple in the hopper right now that we like a lot. Neither of them are real big, but they could be really impactful. We like those best. Of course, it's great to find a company that has done well in their scale that we can kind of plug into our network and ramp and scale much more rapidly. That's our favorite opportunity. We've got a couple of those in the hopper right now that we're pretty excited about.

Daniel Day: I'm sure there will be more. We're also being conservative because of the insurance environment and the fact that we're adjusting the dust at the breaking and good levels. We're not replacing the cash we're using. We're mindful of that, but it hasn't caused us to pass on anything that we'd really like to do yet. As I indicated, we expect to return to pretty robust cash flow levels in the second half of the fiscal year. All right, thank you. I appreciate it. Thank you, Dan.

Bruce Goldfarb: Thank you. Our next question comes from Bruce Golfab with Lake Street Capital. Please go ahead. Doug Greg, thank you for taking my call and grab some results. Thank you, Bruce.

Douglas Valenti: Are you guys planning any changes to the cost structure to drive margins higher and take advantage of the ramp? We already have. We've positioned ourselves to take great advantage of the ramp, including being very mindful of costs of the past few years. I would point out that if you did the math on the top line leverage that we lost over the past few quarters, we should not have done as much EBITDA as we did.

Douglas Valenti: We did that because we have been very focused on margin costs in order to make sure that we were able to sustain positive adjusted EBITDA large into a period where we lost so much top line, but also to be prepared to really bounce up very rapidly as auto insurance comes back. So a short answer we have and we will continue to, but we're trading that off against making sure that we're continuing to invest in great growth opportunities too. I think we've made a, I think we've done well balancing those two, competing objectives. In fact, I'd say we feel like we've done about as well as we can. It's very good about where we are.

Douglas Valenti: Great. I don't know if you break out customers, but what percent was progressive terms of percent of revenue for the court? [inaudible] More than half the total revenue of credit cards banking and personal loans is personal loans and so you can extrapolate from that that it had a really good quarter last quarter. Great go get that right. Okay, great.

Douglas Valenti: And then so by the third and fourth quarter, are you guys expecting that all your segments will be growing sequentially? I'd have to look at the, I say that third fiscal quarter, yes, over second fiscal quarter, I have to look at going from third fiscal quarter to fourth fiscal quarter, typically that is more of it that comes down from the peak in March as our typical season pattern, but as I said auto insurance is expected to actually ramp from the March to the June quarter.

Douglas Valenti: The other businesses are probably expected to be flat to down the little as typical seasonality holds. Greg, do you have that in front of you? I didn't know that. Yeah, no, that makes sense. That exactly makes sense. Yes. Okay.

Douglas Valenti: Sounds good and lots for me. I guess what you were seeing last quarter as far as expecting for improvements as far as in auto insurance. Are you still seeing that and are you seeing what you expected last quarter play out into this quarter? I think we said last quarter that we expected a significant positive inflection in auto insurance to begin in January. We exactly continue to expect that. This quarter, the December quarter, we expected to continue to be a quarter where auto insurance is challenged until they get to January and reset their combined ratio targets and get new budgets.

Douglas Valenti: And so that continues to be the case. This quarter is about like last quarter, not insurance. And that's exactly what we expected. And we expect, we said we expect the January quarter to begin a significant positive inflection or the March quarter thing that anyone think about it and we still expect that as we said. And we've gotten a little bit more granular because we've gotten more specific indications in terms of as best we can do in the bottoms up on what that means for the range for the for the entire business and the in the back half and for the year. So yeah, I guess the short answer. Yes.

Operator: Okay.

Operator: Great. Thanks. Thank you.

Operator: And there are no further questions at this time. Thank you, everyone, for taking the time to join Quint Streets Owing School. Jadon.

Operator: This concludes today's call.

Operator: Thank you for joining us.